S-0818.1/91       _______________________________________________


                                 SENATE BILL 5333



State of Washington              52nd Legislature             1991 Regular Session


By Senators von Reichbauer, Johnson, Pelz, Owen, Hayner, Vognild, Sellar, McMullen, Erwin, Rasmussen, West and Thorsness.


Read first time January 29, 1991.  Referred to Committee on Financial Institutions & Insurance.Permitting the creation of fraud bureaus for investigating insurance fraud.

     AN ACT Relating to insurance fraud; and adding a new chapter to Title 48 RCW.




     NEW SECTION.  Sec. 1.      (1) The commissioner may permit the organization of fraud bureaus for the investigation of fraudulent insurance practices and claims committed by policyholders and members of the public.

     (2) The bureau shall investigate any insurance matter submitted to it by the commissioner.  A bureau may investigate any insurance matter brought to its attention by member companies, other carriers, policyholders, or members of the public, or matters brought on its own.

     (3) A bureau may not operate unless licensed by the commissioner and the commissioner may limit the investigation to certain kinds of insurance.


     NEW SECTION.  Sec. 2.      (1) The commissioner may issue a license for a bureau only if the following conditions are met:

     (a) It is owned in trust for the benefit of all the insurers regularly using its services under a trust agreement approved by the commissioner;

     (b) It makes its services available without discrimination to all authorized insurers making application, subject to reasonable rules as to the obligations of insurers using its services;

     (c) It does not have a manager or other employee who is an employee of an insurer other than to the extent that the person is an employee of the bureau owned by insurers through the trust agreement; and

     (d) It pays to the commissioner a fee of one hundred dollars for issuance of its license.

     (2) The license is of indefinite duration and remains in force unless revoked by the commissioner or terminated at the request of the bureau.  The commissioner may revoke the license, after hearing, if the bureau:

     (a) Is no longer qualified;

     (b) Fails to comply with a proper order of the commissioner; or

     (c) Violates any provision of this chapter or other statute deemed relevant by the commissioner.

     (3) The commissioner may not issue a license to a bureau for the investigation of insurance fraud, if that kind of insurance fraud is being investigated by a then existing licensed fraud bureau.


     NEW SECTION.  Sec. 3.      Every bureau operating in this state is subject to the supervision of the commissioner and the commissioner shall examine it as provided in chapter 48.03 RCW.


     NEW SECTION.  Sec. 4.      The bureau shall keep adequate records of its activities and all information obtained by the bureau is confidential until made public by order of a superior court or by the manager of the bureau.


     NEW SECTION.  Sec. 5.      (1) The manager of the bureau and special deputy managers have the power to conduct an investigation for fraudulent practices against an insurer, health care service contractor, health maintenance organization, self-insured entity, government pooling organization, the department of labor and industries, the Washington health care authority, and hospital pooling organizations.

     (2)(a) The manager and special deputy managers shall enforce the law and rules adopted under this title.

     (b) The manager and special deputy managers may exercise the law enforcement powers adopted by the commissioner, in rule.


     NEW SECTION.  Sec. 6.      (1) The bureau shall submit all investigatory material to the appropriate agency or other governmental body when it appears to the bureau that an agency or governmental body should take action against a licensee.  Any agency or governmental body receiving a report that recommends action shall consider the recommendation and take appropriate action as soon as possible.

     (2) The bureau shall report criminal violations to any prosecuting attorney of the county where the criminal activity occurred.  The prosecuting attorney shall review the report as soon as possible and take appropriate action.


     NEW SECTION.  Sec. 7.      Sections 1 through 6 of this act shall constitute a new chapter in Title 48 RCW.


     NEW SECTION.  Sec. 8.      If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.