1557-S2.E AAS 4/10/95 S2937.2

1557-S2.E AAS 4/10/95 S2937.2

E2SHB 1557 - S COMM AMD

By Committee on Financial Institutions & Housing

ADOPTED 4/10/95

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that the business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. The payment of kickbacks, bribes, or rebates for referrals to service providers, as has been occurring with increasing regularity in this state, results in inflated or fraudulent insurance claims, results in greater insurance costs for all citizens, and is contrary to the public interest. In particular, the process whereby "cappers" buy and sell insurance claims without the controls of professional licensing and discipline creates a fertile ground for illegal activity and has, in this state, resulted in frauds committed against injured claimants, insurance companies, and the public. Operations that engage in this practice have some or all of the following characteristics: Cappers, acting under an agreement or understanding that they will receive a pecuniary benefit, refer claimants with real or imaginary claims, injuries, or property damage to service providers. This sets off a chain of events that corrupts both the provision of services and casualty or property insurance for all citizens. This chain of events includes false claims for services through the use of false estimates of repair; false prescriptions of care or rehabilitative therapy; services that either do not occur or are provided by persons unqualified to provide the services; submission of false claims; submission of and demands for fraudulent costs, lost wages, pain and suffering, and the like; and other devices meant to result in false claims under casualty or property insurance policies or contracts, whether insured or self-insured, and either directly or through subrogation.

The legislature finds that combatting these practices requires laws carefully fashioned to identify practices that mimic customary business practices. The legislature does not intend this law to be used against medical and other business referral practices that are otherwise legal, customary, and unrelated to the furtherance of some or all of the corrupt practices identified in this chapter.

NEW SECTION. Sec. 2. The definitions set forth in this section apply throughout this chapter unless the context clearly indicates otherwise.

(1) "Casualty or property insurance" includes both the insurance under which a claim is filed and insurance that receives a claim through subrogation, and means insurance as defined in RCW 48.11.040 and 48.11.070 and includes self-insurance arrangements.

(2) "Claimant" means a person who has or is believed by an actor to have an insurance claim.

(3) "Group-buying arrangement" means an arrangement made by a membership organization having one hundred or more members in which the organization asks for or receives valuable consideration in exchange for referring its members to a service provider; the consideration asked for or received will be or is used to benefit the entire organization, not just one or more individuals in positions of power or influence in the organization; and reasonable efforts are made to disclose to affected members of the organization the nature of the referral relationship, including the nature, extent, amount, and use of the consideration.

(4) "Health care services" means a service provided to a claimant for treatment of physical or mental illness or injury arising in whole or substantial part from trauma.

(5) "Insurance claim" means a claim for payment, benefits, or damages under a contract, plan, or policy of casualty or property insurance.

(6) "Legal provider" means an active member in good standing of the Washington state bar association, and any other person authorized by the Washington state supreme court to engage in full or limited practice of law.

(7) "Service provider" means a person who directly or indirectly provides, advertises, or otherwise claims to provide services.

(8) "Services" means health care services, motor vehicle body or other motor vehicle repair, and preparing, processing, presenting, or negotiating an insurance claim.

(9) "Trauma" means a physical injury or wound caused by external force or violence.

NEW SECTION. Sec. 3. (1) It is unlawful for a person:

(a) Knowing that the payment is for the referral of a claimant to a service provider, either to accept payment from a service provider or, being a service provider, to pay another; or

(b) To provide or claim or represent to have provided services to a claimant, knowing the claimant was referred in violation of (a) of this subsection.

(2) It is unlawful for a service provider to engage in a regular practice of waiving, rebating, giving, paying, or offering to waive, rebate, give, or pay all or any part of a claimant's casualty or property insurance deductible.

NEW SECTION. Sec. 4. In a proceeding under this chapter, it is a defense if proven by the defendant by a preponderance of the evidence that, at the time of the offense:

(1) The conduct alleged was authorized by the Rules of Professional Conduct or the Admission to Practice Rules for lawyers as adopted by the state supreme court, Washington business and professions licensing statutes, or rules adopted by the secretary of health or the director of licensing;

(2) The payment was an incidental nonmonetary gift or gratuity, or was purely social in nature;

(3) The conduct alleged was an exercise of a group-buying arrangement;

(4) The conduct alleged was a legal provider paying a service provider's bills from the proceeds of an insurance claim that included the bills;

(5) The conduct alleged was a legal provider paying for services of an expert witness, including reports, consultation, and testimony; or

(6) The conduct alleged was a service provider's purchase of advertising from an unrelated business that provides referrals from advertising for groups of ten or more service providers that are not related to the advertising business and not related to each other.

NEW SECTION. Sec. 5. A violation of section 3 of this act constitutes trafficking in insurance claims. A single violation is a gross misdemeanor. Each subsequent violation, whether alleged in the same or in subsequent prosecutions, is a class C felony.

NEW SECTION. Sec. 6. Independent of authority granted to the attorney general, the prosecuting attorney may petition the superior court for an injunction against a person who has violated this chapter. Remedies in an injunctive action brought by a prosecuting attorney are limited to an order enjoining, restraining, or preventing the doing of any act or practice that constitutes a violation of this chapter and imposing a civil penalty of up to five thousand dollars for each violation. The prevailing party in the action may, in the discretion of the court, recover its reasonable investigative costs and the costs of the action including a reasonable attorney's fee. The degree of proof required in an action brought under this section is a preponderance of the evidence. An action under this section must be brought within three years after the violation of this chapter occurred.

NEW SECTION. Sec. 7. Whenever a service provider or a person licensed by the state in a business or profession is convicted, enjoined, or found liable for damages or a civil penalty or other equitable relief under section 6 of this act, the attorney general or the prosecuting attorney shall provide written notification of the judgment to the appropriate regulatory or disciplinary body or agency.

NEW SECTION. Sec. 8. A violation of this chapter is cause for discipline and constitutes unprofessional conduct that could result in any regulatory penalty provided by law, including refusal, revocation, or suspension of a business or professional license, or right or admission to practice. Conduct that constitutes a violation of this chapter is unprofessional conduct in violation of RCW 18.130.180.

NEW SECTION. Sec. 9. Each insurer licensed to write direct insurance in this state shall institute and maintain an insurance antifraud plan. An insurer licensed on the effective date of this act shall file its antifraud plan with the insurance commissioner no later than December 31, 1995. An insurer licensed after the effective date of this act shall file its antifraud plan within six months of licensure. An insurer shall file any change to the antifraud plan with the insurance commissioner within thirty days after the plan has been modified.

NEW SECTION. Sec. 10. An insurer's antifraud plan must establish specific procedures to:

(1) Prevent insurance fraud, including internal fraud involving employees or company representatives, fraud resulting from misrepresentation on applications for insurance coverage, and claims fraud;

(2) Review claims in order to detect evidence of possible insurance fraud and to investigate claims where fraud is suspected;

(3) Report fraud to appropriate law enforcement agencies and cooperate with those agencies in their prosecution of fraud cases;

(4) Undertake civil actions against persons who have engaged in fraudulent activities;

(5) Train company employees and agents in the detection and prevention of fraud.

NEW SECTION. Sec. 11. If after review of an insurer's antifraud plan, the commissioner finds that the plan does not comply with section 10 of this act, the commissioner may disapprove the antifraud plan. Notice of disapproval must include a statement of the specific reasons for disapproval. The insurer shall refile a plan disapproved by the commissioner within sixty days of the date of the notice of disapproval. The commissioner may audit insurers to ensure compliance with antifraud plans.

NEW SECTION. Sec. 12. Each insurer shall annually provide to the insurance commissioner a summary report on actions taken under its antifraud plan to prevent and combat insurance fraud. The report must also include, but not be limited to, measures taken to protect and ensure the integrity of electronic data-processing-generated data and manually compiled data, statistical data on the amount of resources committed to combating fraud, and the amount of fraud identified and recovered during the reporting period. The antifraud plans and summary of the insurer's antifraud activities are not public records and are exempt from chapter 42.17 RCW, are proprietary, are not subject to public examination, and are not discoverable or admissible in civil litigation.

NEW SECTION. Sec. 13. An insurer that fails to file a timely antifraud plan or who does not make a good faith attempt to file an antifraud plan that complies with section 10 of this act, is subject to the penalty provisions of RCW 48.01.080, but no penalty may be imposed for the first filing made by an insurer under this chapter. An insurer that fails to follow the antifraud plan is subject to a civil penalty not to exceed ten thousand dollars for each violation, at the discretion of the commissioner after consideration of all relevant factors, including the willfulness of the violation.

NEW SECTION. Sec. 14. It is the duty of all peace officers, law enforcement officers, and law enforcement agencies within this state to investigate, enforce, and prosecute all violations of this chapter.

NEW SECTION. Sec. 15. A new section is added to chapter 42.17 RCW to read as follows:

Information provided under sections 9 through 12 of this act are exempt from disclosure under this chapter.

Sec. 16. RCW 48.01.030 and 1947 c 79 s .01.03 are each amended to read as follows:

The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.

Sec. 17. RCW 48.18.460 and 1949 c 190 s 26 are each amended to read as follows:

An insurer shall furnish, upon ((~~written~~)) request of any person claiming to have a loss under any insurance contract, forms of proof of loss for completion by such person. But such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion. If a person makes a claim under a policy of insurance, the insurer may require that the person be examined under an oath administered by a person authorized by state or federal law to administer oaths.

Sec. 18. RCW 48.30.210 and 1990 1st ex.s. c 3 s 10 are each amended to read as follows:

((~~Any agent, solicitor, broker, examining physician or other~~)) A person who knowingly makes a false or ((~~fraudulent~~)) misleading statement or ((~~representation~~)) impersonation, or who willfully fails to reveal a material fact, in or relative to an application for insurance ((in)) to an insurer ((~~transacting insurance under the provisions of this code, shall be~~)), is guilty of a gross misdemeanor, and the license of any such ((~~agent, solicitor, or broker who makes such a statement or representation~~)) person may be revoked.

Sec. 19. RCW 48.30.220 and 1965 ex.s. c 70 s 25 are each amended to read as follows:

Any person, who, with intent to defraud or prejudice the insurer thereof, ((~~wilfully~~)) burns or in any manner injures, destroys, secretes, abandons, or disposes of any property which is insured at the time against loss or damage by fire, theft, ((or)) embezzlement, or ((by)) any other casualty, whether the same be the property of or in the possession of such person or any other person, under ((~~such~~)) circumstances not making the offense arson in the first degree, is guilty of a class C felony.

Sec. 20. RCW 48.50.010 and 1979 ex.s. c 80 s 1 are each amended to read as follows:

This chapter shall be known and may be cited as the ((~~Arson~~)) Insurance Fraud Reporting Immunity Act.

Sec. 21. RCW 48.50.020 and 1986 c 266 s 77 are each amended to read as follows:

As used in this chapter the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Authorized agency" means a public agency or its official representative having legal authority to investigate criminal activity or the cause of a fire ((~~and~~)) or to initiate criminal proceedings ((~~or further investigations if the cause was not accidental~~)), including the following persons and agencies:

(a) The ((~~director~~)) department of community, trade, and economic development and the director of fire protection;

(b) The prosecuting attorney of the county where the ((~~fire~~)) criminal activity occurred;

(d) The state attorney general((~~, when engaged in a prosecution which is or may be connected with the fire~~));

((~~(d)~~)) (e) The Federal Bureau of Investigation, or any other federal law enforcement agency; ((~~and~~

~~(e)~~)) (f) The United States attorney's office ((~~when authorized or charged with investigation or prosecution concerning the fire~~)); and

(g) The office of the insurance commissioner.

(2) "Insurer" means any insurer, as defined in RCW 48.01.050((~~, which insures against loss by fire, and includes insurers under the Washington F.A.I.R. plan~~)) and any self-insurer.

(3) "Relevant information" means information having any tendency to make the existence of any fact that is of consequence to the investigation or determination of criminal activity or the cause of any fire more probable or less probable than it would be without the information.

Sec. 22. RCW 48.50.030 and 1979 ex.s. c 80 s 3 are each amended to read as follows:

(1) Any authorized agency may request, in writing, that an insurer release to the agency any or all relevant information or evidence which the insurer may have in its possession relating to ((~~a particular fire loss~~)) criminal activity, if such information or evidence is deemed important by the agency in its discretion.

(2) An insurer who has reason to believe that a person participated or is participating in criminal activity relating to a contract of insurance may report relevant information to an authorized agency.

(3) The information ((~~requested~~)) provided to an authorized agency under this section may include, without limitation:

(a) Pertinent insurance policy information relating to a ((~~fire loss~~)) claim under investigation and any application for such a policy;

(b) Policy premium payment records which are available;

(d) Material relating to the investigation of the loss, including statements of any person, proof of loss, and any other evidence found in the investigation.

((~~(2) An~~)) (4) The insurer receiving a request under subsection (1) of this section shall furnish all relevant information requested to the agency within a reasonable time, orally or in writing((~~, all relevant information requested~~)).

Sec. 23. RCW 48.50.040 and 1986 c 266 s 91 are each amended to read as follows:

(1) When an insurer has reason to believe that a fire loss reported to the insurer may be of other than accidental cause, the insurer shall notify the ((~~director~~)) department of community, trade, and economic development, through the director of fire protection, in the manner prescribed under RCW 48.05.320 concerning the circumstances of the fire loss, including any and all relevant material developed from the insurer's inquiry into the fire loss.

(2) Notification of the ((~~director~~)) department of community, trade, and economic development, through the director of fire protection, under subsection (1) of this section does not relieve the insurer of the duty to respond to a request for information from any other authorized agency and does not bar an insurer from other reporting under RCW 48.50.030(2).

Sec. 24. RCW 48.50.075 and 1981 c 320 s 2 are each amended to read as follows:

In denying a claim ((~~resulting from a fire~~)), an insurer who relies upon a written opinion from an authorized agency specifically enumerated in ((~~(a) through (e) of~~)) RCW 48.50.020(1) (a) through (g) that ((~~the fire was caused by arson~~)) criminal activity that is related to that claim is being investigated, or a crime has been charged, and that the ((~~insured was responsible for the fire, shall not be~~)) claimant is a target of the investigation or has been charged with a crime, is not liable for bad faith or other noncontractual theory of damages as a result of this reliance.

Immunity under this section shall exist only so long as the incident for which the ((~~insured~~)) claimant may be responsible is under active investigation or prosecution, or the authorized agency states its position that the claim includes or is a result of ((~~arson for~~)) criminal activity in which the ((~~insured~~)) claimant was ((~~responsible~~)) a participant.

Sec. 25. RCW 48.80.020 and 1986 c 243 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Claim" means any attempt to cause a health care payer to make a health care payment.

(2) "Deceptive" means presenting a claim to a health care payer that contains a statement of fact or fails to reveal a material fact, leading the health care payer to believe that the represented or suggested state of affairs is other than it actually is. For the purposes of this chapter, the determination of what constitutes a material fact is a question of law to be resolved by the court.

(3) "False" means wholly or partially untrue or deceptive.

(4) "Health care payment" means a payment for health care services or the right under a contract, certificate, or policy of insurance to have a payment made by a health care payer for a specified health care service.

(5) "Health care payer" means any insurance company authorized to provide health insurance in this state, any health care service contractor authorized under chapter 48.44 RCW, any health maintenance organization authorized under chapter 48.46 RCW, any legal entity which is self-insured and providing health care benefits to its employees, ((or)) and any insurer or other person responsible for paying for health care services.

(6) "Person" means an individual, corporation, partnership, association, or other legal entity.

(7) "Provider" means any person lawfully licensed or authorized to render any health service.

Sec. 26. RCW 2.48.180 and 1989 c 117 s 13 are each amended to read as follows:

((~~Any person who, not being an active member of the state bar, or who after he has been disbarred or while suspended from membership in the state bar, as by this chapter provided, shall~~))

(1) As used in this section:

(a) "Legal provider" means an active member in good standing of the state bar, and any other person authorized by the Washington state supreme court to engage in full or limited practice of law;

(b) "Nonlawyer" means a person to whom the Washington supreme court has granted a limited authorization to practice law but who practices law outside that authorization, and a person who is not an active member in good standing of the state bar, including persons who are disbarred or suspended from membership;

(c) "Ownership interest" means the right to control the affairs of a business, or the right to share in the profits of a business, and includes a loan to the business when the interest on the loan is based upon the income of the business or the loan carries more than a commercially reasonable rate of interest.

(2) The following constitutes unlawful practice of law:

(a) A nonlawyer practices law, or holds himself or herself out as entitled to practice law((, shall, except as provided in RCW 19.154.100, be guilty of a misdemeanor: PROVIDED, HOWEVER, Nothing herein contained shall be held to in any way affect the power of the courts to grant injunctive relief or to punish as for contempt));

(b) A legal provider holds an investment or ownership interest in a business primarily engaged in the practice of law, knowing that a nonlawyer holds an investment or ownership interest in the business;

(c) A nonlawyer knowingly holds an investment or ownership interest in a business primarily engaged in the practice of law;

(d) A legal provider works for a business that is primarily engaged in the practice of law, knowing that a nonlawyer holds an investment or ownership interest in the business; or

(e) A nonlawyer shares legal fees with a legal provider.

(3) Unlawful practice of law is a crime. A single violation of this section is a gross misdemeanor. Each subsequent violation, whether alleged in the same or in subsequent prosecutions, is a class C felony.

(4) Nothing contained in this section affects the power of the courts to grant injunctive or other equitable relief or to punish as for contempt.

(5) Whenever a legal provider or a person licensed by the state in a business or profession is convicted, enjoined, or found liable for damages or a civil penalty or other equitable relief under this section, the plaintiff's attorney shall provide written notification of the judgment to the appropriate regulatory or disciplinary body or agency.

(6) A violation of this section is cause for discipline and constitutes unprofessional conduct that could result in any regulatory penalty provided by law, including refusal, revocation, or suspension of a business or professional license, or right or admission to practice. Conduct that constitutes a violation of this section is unprofessional conduct in violation of RCW 18.130.180.

(7) In a proceeding under this section it is a defense if proven by the defendant by a preponderance of the evidence that, at the time of the offense, the conduct alleged was authorized by the Rules of Professional Conduct or the Admission to Practice Rules, or Washington business and professions licensing statutes or rules.

(8) Independent of authority granted to the attorney general, the prosecuting attorney may petition the superior court for an injunction against a person who has violated this chapter. Remedies in an injunctive action brought by a prosecuting attorney are limited to an order enjoining, restraining, or preventing the doing of any act or practice that constitutes a violation of this chapter and imposing a civil penalty of up to five thousand dollars for each violation. The prevailing party in the action may, in the discretion of the court, recover its reasonable investigative costs and the costs of the action including a reasonable attorney's fee. The degree of proof required in an action brought under this subsection is a preponderance of the evidence. An action under this subsection must be brought within three years after the violation of this chapter occurred.

Sec. 27. RCW 9.12.010 and 1915 c 165 s 1 are each amended to read as follows:

Every person who ((~~shall~~)) brings on his or her own behalf, or instigates, incites, or encourages another to bring, any false suit at law or in equity in any court of this state, with intent thereby to distress or harass a defendant ((therein; and every person, being an attorney or counselor at law, who shall personally, or through the agency of another, solicit employment as such attorney, in any suit pending or prospective, or, with intent to obtain such employment shall, directly or indirectly, loan any money or give or promise to give any money, property or other consideration to the person from whom such employment is sought; and every person who shall)) in the suit, or who serves or sends any paper or document purporting to be or resembling a judicial process, that is not in fact a judicial process ((~~shall be~~)), is guilty of a misdemeanor; and in case the person offending is an attorney, he or she may, in addition thereto be disbarred from practicing law within this state.

Sec. 28. RCW 9.94A.320 and 1994 sp.s. c 7 s 510, 1994 c 275 s 20, and 1994 c 53 s 2 are each reenacted and amended to read as follows:

TABLE 2

CRIMES INCLUDED WITHIN EACH SERIOUSNESS LEVEL

XVAggravated Murder 1 (RCW 10.95.020)

XIVMurder 1 (RCW 9A.32.030)

Homicide by abuse (RCW 9A.32.055)

XIIIMurder 2 (RCW 9A.32.050)

XIIAssault 1 (RCW 9A.36.011)

Assault of a Child 1 (RCW 9A.36.120)

XIRape 1 (RCW 9A.44.040)

Rape of a Child 1 (RCW 9A.44.073)

XKidnapping 1 (RCW 9A.40.020)

Rape 2 (RCW 9A.44.050)

Rape of a Child 2 (RCW 9A.44.076)

Child Molestation 1 (RCW 9A.44.083)

Damaging building, etc., by explosion with threat to human being (RCW 70.74.280(1))

Over 18 and deliver heroin or narcotic from Schedule I or II to someone under 18 (RCW 69.50.406)

Leading Organized Crime (RCW 9A.82.060(1)(a))

IXAssault of a Child 2 (RCW 9A.36.130)

Robbery 1 (RCW 9A.56.200)

Manslaughter 1 (RCW 9A.32.060)

Explosive devices prohibited (RCW 70.74.180)

Indecent Liberties (with forcible compulsion) (RCW 9A.44.100(1)(a))

Endangering life and property by explosives with threat to human being (RCW 70.74.270)

Over 18 and deliver narcotic from Schedule III, IV, or V or a nonnarcotic from Schedule I-V to someone under 18 and 3 years junior (RCW 69.50.406)

Controlled Substance Homicide (RCW 69.50.415)

Sexual Exploitation (RCW 9.68A.040)

Inciting Criminal Profiteering (RCW 9A.82.060(1)(b))

Vehicular Homicide, by being under the influence of intoxicating liquor or any drug (RCW 46.61.520)

VIIIArson 1 (RCW 9A.48.020)

Promoting Prostitution 1 (RCW 9A.88.070)

Selling for profit (controlled or counterfeit) any controlled substance (RCW 69.50.410)

Manufacture, deliver, or possess with intent to deliver heroin or cocaine (RCW 69.50.401(a)(1)(i))

Manufacture, deliver, or possess with intent to deliver methamphetamine (RCW 69.50.401(a)(1)(ii))

Vehicular Homicide, by the operation of any vehicle in a reckless manner (RCW 46.61.520)

VIIBurglary 1 (RCW 9A.52.020)

Vehicular Homicide, by disregard for the safety of others (RCW 46.61.520)

Introducing Contraband 1 (RCW 9A.76.140)

Indecent Liberties (without forcible compulsion) (RCW 9A.44.100(1) (b) and (c))

Child Molestation 2 (RCW 9A.44.086)

Dealing in depictions of minor engaged in sexually explicit conduct (RCW 9.68A.050)

Sending, bringing into state depictions of minor engaged in sexually explicit conduct (RCW 9.68A.060)

Involving a minor in drug dealing (RCW 69.50.401(f))

VIBribery (RCW 9A.68.010)

Manslaughter 2 (RCW 9A.32.070)

Rape of a Child 3 (RCW 9A.44.079)

Intimidating a Juror/Witness (RCW 9A.72.110, 9A.72.130)

Damaging building, etc., by explosion with no threat to human being (RCW 70.74.280(2))

Endangering life and property by explosives with no threat to human being (RCW 70.74.270)

Incest 1 (RCW 9A.64.020(1))

Manufacture, deliver, or possess with intent to deliver narcotics from Schedule I or II (except heroin or cocaine) (RCW 69.50.401(a)(1)(i))

Intimidating a Judge (RCW 9A.72.160)

Bail Jumping with Murder 1 (RCW 9A.76.170(2)(a))

VCriminal Mistreatment 1 (RCW 9A.42.020)

Theft of a Firearm (RCW 9A.56.300)

Reckless Endangerment 1 (RCW 9A.36.045)

Rape 3 (RCW 9A.44.060)

Sexual Misconduct with a Minor 1 (RCW 9A.44.093)

Child Molestation 3 (RCW 9A.44.089)

Kidnapping 2 (RCW 9A.40.030)

Extortion 1 (RCW 9A.56.120)

Incest 2 (RCW 9A.64.020(2))

Perjury 1 (RCW 9A.72.020)

Extortionate Extension of Credit (RCW 9A.82.020)

Advancing money or property for extortionate extension of credit (RCW 9A.82.030)

Extortionate Means to Collect Extensions of Credit (RCW 9A.82.040)

Rendering Criminal Assistance 1 (RCW 9A.76.070)

Bail Jumping with class A Felony (RCW 9A.76.170(2)(b))

Sexually Violating Human Remains (RCW 9A.44.105)

Delivery of imitation controlled substance by person eighteen or over to person under eighteen (RCW 69.52.030(2))

IVResidential Burglary (RCW 9A.52.025)

Theft of Livestock 1 (RCW 9A.56.080)

Robbery 2 (RCW 9A.56.210)

Assault 2 (RCW 9A.36.021)

Escape 1 (RCW 9A.76.110)

Arson 2 (RCW 9A.48.030)

Commercial Bribery (section 29 of this act)

Bribing a Witness/Bribe Received by Witness (RCW 9A.72.090, 9A.72.100)

Malicious Harassment (RCW 9A.36.080)

Threats to Bomb (RCW 9.61.160)

Willful Failure to Return from Furlough (RCW 72.66.060)

Hit and Run C Injury Accident (RCW 46.52.020(4))

Vehicular Assault (RCW 46.61.522)

Manufacture, deliver, or possess with intent to deliver narcotics from Schedule III, IV, or V or nonnarcotics from Schedule I-V (except marijuana or methamphetamines) (RCW 69.50.401(a)(1)(ii) through (iv))

Influencing Outcome of Sporting Event (RCW 9A.82.070)

Use of Proceeds of Criminal Profiteering (RCW 9A.82.080 (1) and (2))

Knowingly Trafficking in Stolen Property (RCW 9A.82.050(2))

IIICriminal Mistreatment 2 (RCW 9A.42.030)

Extortion 2 (RCW 9A.56.130)

Unlawful Imprisonment (RCW 9A.40.040)

Assault 3 (RCW 9A.36.031)

Assault of a Child 3 (RCW 9A.36.140)

Custodial Assault (RCW 9A.36.100)

Unlawful possession of firearm or pistol by felon (RCW 9.41.040)

Harassment (RCW 9A.46.020)

Promoting Prostitution 2 (RCW 9A.88.080)

Willful Failure to Return from Work Release (RCW 72.65.070)

Burglary 2 (RCW 9A.52.030)

Introducing Contraband 2 (RCW 9A.76.150)

Communication with a Minor for Immoral Purposes (RCW 9.68A.090)

Patronizing a Juvenile Prostitute (RCW 9.68A.100)

Escape 2 (RCW 9A.76.120)

Perjury 2 (RCW 9A.72.030)

Bail Jumping with class B or C Felony (RCW 9A.76.170(2)(c))

Intimidating a Public Servant (RCW 9A.76.180)

Tampering with a Witness (RCW 9A.72.120)

Manufacture, deliver, or possess with intent to deliver marijuana (RCW 69.50.401(a)(1)(ii))

Delivery of a material in lieu of a controlled substance (RCW 69.50.401(c))

Manufacture, distribute, or possess with intent to distribute an imitation controlled substance (RCW 69.52.030(1))

Recklessly Trafficking in Stolen Property (RCW 9A.82.050(1))

Theft of livestock 2 (RCW 9A.56.080)

Securities Act violation (RCW 21.20.400)

IIUnlawful Practice of Law (RCW 2.48.180)

Malicious Mischief 1 (RCW 9A.48.070)

Possession of Stolen Property 1 (RCW 9A.56.150)

Theft 1 (RCW 9A.56.030)

Trafficking in Insurance Claims (section 3 of this act)

Unlicensed Practice of a Profession or Business (RCW 18.130.190(7))

Health Care False Claims (RCW 48.80.030)

Possession of controlled substance that is either heroin or narcotics from Schedule I or II (RCW 69.50.401(d))

Possession of phencyclidine (PCP) (RCW 69.50.401(d))

Create, deliver, or possess a counterfeit controlled substance (RCW 69.50.401(b))

Computer Trespass 1 (RCW 9A.52.110)

Escape from Community Custody (RCW 72.09.310)

ITheft 2 (RCW 9A.56.040)

Possession of Stolen Property 2 (RCW 9A.56.160)

Forgery (RCW 9A.60.020)

Taking Motor Vehicle Without Permission (RCW 9A.56.070)

Vehicle Prowl 1 (RCW 9A.52.095)

Attempting to Elude a Pursuing Police Vehicle (RCW 46.61.024)

Malicious Mischief 2 (RCW 9A.48.080)

Reckless Burning 1 (RCW 9A.48.040)

Unlawful Issuance of Checks or Drafts (RCW 9A.56.060)

Unlawful Use of Food Stamps (RCW 9.91.140 (2) and (3))

False Verification for Welfare (RCW 74.08.055)

Forged Prescription (RCW 69.41.020)

Forged Prescription for a Controlled Substance (RCW 69.50.403)

Possess Controlled Substance that is a Narcotic from Schedule III, IV, or V or Non-narcotic from Schedule I-V (except phencyclidine) (RCW 69.50.401(d))

NEW SECTION. Sec. 29. A new section is added to chapter 9A.68 RCW to read as follows:

(1) For purposes of this section:

(a) "Claimant" means a person who has or is believed by an actor to have an insurance claim.

(b) "Service provider" means a person who directly or indirectly provides, advertises, or otherwise claims to provide services.

(c) "Services" means health care services, motor vehicle body or other motor vehicle repair, and preparing, processing, presenting, or negotiating an insurance claim.

(d) "Trusted person" means:

(i) An agent, employee, or partner of another;

(ii) An administrator, executor, conservator, guardian, receiver, or trustee of a person or an estate, or any other person acting in a fiduciary capacity;

(iii) An accountant, appraiser, attorney, physician, or other professional adviser;

(iv) An officer or director of a corporation, or any other person who participates in the affairs of a corporation, partnership, or unincorporated association; or

(v) An arbitrator, mediator, or other purportedly disinterested adjudicator or referee.

(2) A person is guilty of commercial bribery if:

(a) He or she offers, confers, or agrees to confer a pecuniary benefit directly or indirectly upon a trusted person under a request, agreement, or understanding that the trusted person will violate a duty of fidelity or trust arising from his or her position as a trusted person;

(b) Being a trusted person, he or she requests, accepts, or agrees to accept a pecuniary benefit for himself, herself, or another under a request, agreement, or understanding that he or she will violate a duty of fidelity or trust arising from his or her position as a trusted person; or

(c) Being an employee or agent of an insurer, he or she requests, accepts, or agrees to accept a pecuniary benefit for himself or herself, or a person other than the insurer, under a request, agreement, or understanding that he or she will or a threat that he or she will not refer or induce claimants to have services performed by a service provider.

(3) It is not a defense to a prosecution under this section that the person sought to be influenced was not qualified to act in the desired way, whether because the person had not yet assumed his or her position, lacked authority, or for any other reason.

(4) Commercial bribery is a class B felony.

Sec. 30. RCW 9A.72.010 and 1981 c 187 s 1 are each amended to read as follows:

The following definitions are applicable in this chapter unless the context otherwise requires:

(1) "Materially false statement" means any false statement oral or written, regardless of its admissibility under the rules of evidence, which could have affected the course or outcome of the proceeding; whether a false statement is material shall be determined by the court as a matter of law;

(2) "Oath" includes an affirmation and every other mode authorized by law of attesting to the truth of that which is stated; in this chapter, written statements shall be treated as if made under oath if:

(a) The statement was made on or pursuant to instructions on an official form bearing notice, authorized by law, to the effect that false statements made therein are punishable;

(b) The statement recites that it was made under oath, the declarant was aware of such recitation at the time he or she made the statement, intended that the statement should be represented as a sworn statement, and the statement was in fact so represented by its delivery or utterance with the signed jurat of an officer authorized to administer oaths appended thereto; or

(c) It is a statement, declaration, verification, or certificate, made within or outside the state of Washington, which is certified or declared to be true under penalty of perjury as provided in RCW 9A.72.085.

(3) An oath is "required or authorized by law" when the use of the oath is specifically provided for by statute or regulatory provision or when the oath is administered by a person authorized by state or federal law to administer oaths;

(4) "Official proceeding" means a proceeding heard before any legislative, judicial, administrative, or other government agency or official authorized to hear evidence under oath, including any referee, hearing examiner, commissioner, notary, or other person taking testimony or depositions;

(5) "Juror" means any person who is a member of any jury, including a grand jury, impaneled by any court of this state or by any public servant authorized by law to impanel a jury; the term juror also includes any person who has been drawn or summoned to attend as a prospective juror;

(6) "Testimony" includes oral or written statements, documents, or any other material that may be offered by a witness in an official proceeding.

Sec. 31. RCW 9A.72.030 and 1975 1st ex.s. c 260 s 9A.72.030 are each amended to read as follows:

(1) A person is guilty of perjury in the second degree if, in an examination under oath under the terms of a contract of insurance, or with intent to mislead a public servant in the performance of his or her duty, he or she makes a materially false statement, which he or she knows to be false under an oath required or authorized by law.

(2) Perjury in the second degree is a class C felony.

NEW SECTION. Sec. 32. A new section is added to chapter 9A.76 RCW to read as follows:

A person who knowingly makes a false or misleading material statement to a public servant is guilty of a gross misdemeanor. "Material statement" means a written or oral statement reasonably likely to be relied upon by a public servant in the discharge of his or her official powers or duties.

Sec. 33. RCW 9A.76.020 and 1994 c 196 s 1 are each amended to read as follows:

(1) A person is guilty of obstructing a law enforcement officer if the person((:

~~(a) Willfully makes a false or misleading statement to a law enforcement officer who has detained the person during the course of a lawful investigation or lawful arrest; or~~

~~(b)~~)) willfully hinders, delays, or obstructs any law enforcement officer in the discharge of his or her official powers or duties.

(2) "Law enforcement officer" means any general authority, limited authority, or specially commissioned Washington peace officer or federal peace officer as those terms are defined in RCW 10.93.020, and other public officers who are responsible for enforcement of fire, building, zoning, and life and safety codes.

(3) Obstructing a law enforcement officer is a gross misdemeanor.

Sec. 34. RCW 9A.82.010 and 1994 c 218 s 17 are each amended to read as follows:

Unless the context requires the contrary, the definitions in this section apply throughout this chapter.

(1) "Creditor" means a person making an extension of credit or a person claiming by, under, or through a person making an extension of credit.

(2) "Debtor" means a person to whom an extension of credit is made or a person who guarantees the repayment of an extension of credit or in any manner undertakes to indemnify the creditor against loss resulting from the failure of a person to whom an extension is made to repay the same.

(3) "Extortionate extension of credit" means an extension of credit with respect to which it is the understanding of the creditor and the debtor at the time the extension is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person.

(4) "Extortionate means" means the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person.

(5) "To collect an extension of credit" means to induce in any way a person to make repayment thereof.

(6) "To extend credit" means to make or renew a loan or to enter into an agreement, tacit or express, whereby the repayment or satisfaction of a debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or shall be deferred.

(7) "Repayment of an extension of credit" means the repayment, satisfaction, or discharge in whole or in part of a debt or claim, acknowledged or disputed, valid or invalid, resulting from or in connection with that extension of credit.

(8) "Dealer in property" means a person who buys and sells property as a business.

(9) "Stolen property" means property that has been obtained by theft, robbery, or extortion.

(10) "Traffic" means to sell, transfer, distribute, dispense, or otherwise dispose of stolen property to another person, or to buy, receive, possess, or obtain control of stolen property, with intent to sell, transfer, distribute, dispense, or otherwise dispose of the property to another person.

(11) "Control" means the possession of a sufficient interest to permit substantial direction over the affairs of an enterprise.

(12) "Enterprise" includes any individual, sole proprietorship, partnership, corporation, business trust, or other profit or nonprofit legal entity, and includes any union, association, or group of individuals associated in fact although not a legal entity, and both illicit and licit enterprises and governmental and nongovernmental entities.

(13) "Financial institution" means any bank, trust company, savings and loan association, savings bank, mutual savings bank, credit union, or loan company under the jurisdiction of the state or an agency of the United States.

(14) "Criminal profiteering" means any act, including any anticipatory or completed offense, committed for financial gain, that is chargeable or indictable under the laws of the state in which the act occurred and, if the act occurred in a state other than this state, would be chargeable or indictable under the laws of this state had the act occurred in this state and punishable as a felony and by imprisonment for more than one year, regardless of whether the act is charged or indicted, as any of the following:

(a) Murder, as defined in RCW 9A.32.030 and 9A.32.050;

(b) Robbery, as defined in RCW 9A.56.200 and 9A.56.210;

(d) Forgery, as defined in RCW 9A.60.020 and 9A.60.030;

(e) Theft, as defined in RCW 9A.56.030, 9A.56.040, 9A.56.060, and 9A.56.080;

(f) Child selling or child buying, as defined in RCW 9A.64.030;

(g) Bribery, as defined in RCW 9A.68.010, 9A.68.020, 9A.68.040, and 9A.68.050;

(h) Gambling, as defined in RCW 9.46.220 and 9.46.215 and 9.46.217;

(i) Extortion, as defined in RCW 9A.56.120 and 9A.56.130;

(j) Extortionate extension of credit, as defined in RCW 9A.82.020;

(k) Advancing money for use in an extortionate extension of credit, as defined in RCW 9A.82.030;

(l) Collection of an extortionate extension of credit, as defined in RCW 9A.82.040;

(m) Collection of an unlawful debt, as defined in RCW 9A.82.045;

(n) Delivery or manufacture of controlled substances or possession with intent to deliver or manufacture controlled substances under chapter 69.50 RCW;

(o) Trafficking in stolen property, as defined in RCW 9A.82.050;

(p) Leading organized crime, as defined in RCW 9A.82.060;

(q) Money laundering, as defined in RCW 9A.83.020;

(r) Obstructing criminal investigations or prosecutions in violation of RCW 9A.72.090, 9A.72.100, 9A.72.110, 9A.72.120, 9A.72.130, 9A.76.070, or 9A.76.180;

(s) Fraud in the purchase or sale of securities, as defined in RCW 21.20.010;

(t) Promoting pornography, as defined in RCW 9.68.140;

(u) Sexual exploitation of children, as defined in RCW 9.68A.040, 9.68A.050, and 9.68A.060;

(v) Promoting prostitution, as defined in RCW 9A.88.070 and 9A.88.080;

(w) Arson, as defined in RCW 9A.48.020 and 9A.48.030;

(x) Assault, as defined in RCW 9A.36.011 and 9A.36.021;

(y) Assault of a child, as defined in RCW 9A.36.120 and 9A.36.130;

(z) A pattern of equity skimming, as defined in RCW 61.34.020; ((or))

(aa) Commercial telephone solicitation in violation of RCW 19.158.040(1);

(bb) Trafficking in insurance claims, as defined in section 3 of this act;

(cc) Unlawful practice of law, as defined in RCW 2.48.180;

(dd) Commercial bribery, as defined in section 29 of this act;

(ee) Health care false claims, as defined in RCW 48.80.030; or

(ff) Unlicensed practice of a profession or business, as defined in RCW 18.130.190(7).

(15) "Pattern of criminal profiteering activity" means engaging in at least three acts of criminal profiteering, one of which occurred after July 1, 1985, and the last of which occurred within five years, excluding any period of imprisonment, after the commission of the earliest act of criminal profiteering. In order to constitute a pattern, the three acts must have the same or similar intent, results, accomplices, principals, victims, or methods of commission, or be otherwise interrelated by distinguishing characteristics including a nexus to the same enterprise, and must not be isolated events. However, in any civil proceedings brought pursuant to RCW 9A.82.100 by any person other than the attorney general or county prosecuting attorney in which one or more acts of fraud in the purchase or sale of securities are asserted as acts of criminal profiteering activity, it is a condition to civil liability under RCW 9A.82.100 that the defendant has been convicted in a criminal proceeding of fraud in the purchase or sale of securities under RCW 21.20.400 or under the laws of another state or of the United States requiring the same elements of proof, but such conviction need not relate to any act or acts asserted as acts of criminal profiteering activity in such civil action under RCW 9A.82.100.

(16) "Records" means any book, paper, writing, record, computer program, or other material.

(17) "Documentary material" means any book, paper, document, writing, drawing, graph, chart, photograph, phonograph record, magnetic tape, computer printout, other data compilation from which information can be obtained or from which information can be translated into usable form, or other tangible item.

(18) "Unlawful debt" means any money or other thing of value constituting principal or interest of a debt that is legally unenforceable in the state in full or in part because the debt was incurred or contracted:

(a) In violation of any one of the following:

(i) Chapter 67.16 RCW relating to horse racing;

(ii) Chapter 9.46 RCW relating to gambling;

(b) In a gambling activity in violation of federal law; or

(c) In connection with the business of lending money or a thing of value at a rate that is at least twice the permitted rate under the applicable state or federal law relating to usury.

(19)(a) "Beneficial interest" means:

(i) The interest of a person as a beneficiary under a trust established under Title 11 RCW in which the trustee for the trust holds legal or record title to real property;

(ii) The interest of a person as a beneficiary under any other trust arrangement under which a trustee holds legal or record title to real property for the benefit of the beneficiary; or

(iii) The interest of a person under any other form of express fiduciary arrangement under which one person holds legal or record title to real property for the benefit of the other person.

(b) "Beneficial interest" does not include the interest of a stockholder in a corporation or the interest of a partner in a general partnership or limited partnership.

(20) "Real property" means any real property or interest in real property, including but not limited to a land sale contract, lease, or mortgage of real property.

(21)(a) "Trustee" means:

(i) A person acting as a trustee under a trust established under Title 11 RCW in which the trustee holds legal or record title to real property;

(ii) A person who holds legal or record title to real property in which another person has a beneficial interest; or

(iii) A successor trustee to a person who is a trustee under subsection (21)(a) (i) or (ii) of this section.

(b) "Trustee" does not mean a person appointed or acting as:

(i) A personal representative under Title 11 RCW;

(ii) A trustee of any testamentary trust;

(iii) A trustee of any indenture of trust under which a bond is issued; or

(iv) A trustee under a deed of trust.

Sec. 35. RCW 18.130.190 and 1993 c 367 s 19 are each amended to read as follows:

(1) The secretary shall investigate complaints concerning practice by unlicensed persons of a profession or business for which a license is required by the chapters specified in RCW 18.130.040. In the investigation of the complaints, the secretary shall have the same authority as provided the secretary under RCW 18.130.050.

(2) The secretary may issue a notice of intention to issue a cease and desist order to any person whom the secretary has reason to believe is engaged in the unlicensed practice of a profession or business for which a license is required by the chapters specified in RCW 18.130.040. The person to whom such notice is issued may request an adjudicative proceeding to contest the charges. The request for hearing must be filed within twenty days after service of the notice of intention to issue a cease and desist order. The failure to request a hearing constitutes a default, whereupon the secretary may enter a permanent cease and desist order, which may include a civil fine. All proceedings shall be conducted in accordance with chapter 34.05 RCW.

(3) If the secretary makes a final determination that a person has engaged or is engaging in unlicensed practice, the secretary may issue a cease and desist order. In addition, the secretary may impose a civil fine in an amount not exceeding one thousand dollars for each day upon which the person engaged in unlicensed practice of a business or profession for which a license is required by one or more of the chapters specified in RCW 18.130.040. The proceeds of such fines shall be deposited to the health professions account.

(4) If the secretary makes a written finding of fact that the public interest will be irreparably harmed by delay in issuing an order, the secretary may issue a temporary cease and desist order. The person receiving a temporary cease and desist order shall be provided an opportunity for a prompt hearing. The temporary cease and desist order shall remain in effect until further order of the secretary. The failure to request a prompt or regularly scheduled hearing constitutes a default, whereupon the secretary may enter a permanent cease and desist order, which may include a civil fine.

(5) Neither the issuance of a cease and desist order nor payment of a civil fine shall relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy of a cease and desist order or civil fine shall be in addition to any criminal liability. The cease and desist order is conclusive proof of unlicensed practice and may be enforced under RCW 7.21.060. This method of enforcement of the cease and desist order or civil fine may be used in addition to, or as an alternative to, any provisions for enforcement of agency orders set out in chapter 34.05 RCW.

(6) The attorney general, a county prosecuting attorney, the secretary, a board, or any person may in accordance with the laws of this state governing injunctions, maintain an action in the name of this state to enjoin any person practicing a profession or business for which a license is required by the chapters specified in RCW 18.130.040 without a license from engaging in such practice or operating such business until the required license is secured. However, the injunction shall not relieve the person so practicing or operating a business without a license from criminal prosecution therefor, but the remedy by injunction shall be in addition to any criminal liability.

(7) Unlicensed practice of a profession or operating a business for which a license is required by the chapters specified in RCW 18.130.040, unless otherwise exempted by law, constitutes a gross misdemeanor for a single violation. Each subsequent violation, whether alleged in the same or in subsequent prosecutions, is a class C felony. All fees, fines, forfeitures, and penalties collected or assessed by a court because of a violation of this section shall be remitted to the health professions account.

NEW SECTION. Sec. 36. The Washington State Bar Association is requested to submit to the appropriate committees of the state senate and house of representatives by November 1995, a report on the recommendations of its task force on nonlawyer practice, including any recommendations for legislation or proposed court rules.

NEW SECTION. Sec. 37. The following acts or parts of acts are each repealed:

(1) RCW 9.91.090 and 1992 c 7 s 17, 1981 c 203 s 4, & 1909 c 249 s 384;

(2) RCW 9A.82.903 and 1985 c 455 s 22;

(3) RCW 48.50.060 and 1979 ex.s. c 80 s 6;

(4) RCW 48.50.080 and 1979 ex.s. c 80 s 8; and

(5) RCW 49.44.070 and 1909 c 249 s 427.

NEW SECTION. Sec. 38. Sections 1 through 14 of this act constitute a new chapter in Title 48 RCW.

NEW SECTION. Sec. 39. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995."

E2SHB 1557 - S COMM AMD

By Committee on Financial Institutions & Housing

ADOPTED 4/10/95

In line 1 of the title, after "fraud;" strike the remainder of the title and insert "amending RCW 48.01.030, 48.18.460, 48.30.210, 48.30.220, 48.50.010, 48.50.020, 48.50.030, 48.50.040, 48.50.075, 48.80.020, 2.48.180, 9.12.010, 9A.72.010, 9A.72.030, 9A.76.020, 9A.82.010, and 18.130.190; reenacting and amending RCW 9.94A.320; adding a new section to chapter 42.17 RCW; adding a new section to chapter 9A.68 RCW; adding a new section to chapter 9A.76 RCW; adding a new chapter to Title 48 RCW; creating a new section; repealing RCW 9.91.090, 9A.82.903, 48.50.060, 48.50.080, and 49.44.070; prescribing penalties; providing an effective date; and declaring an emergency."