senate Bill S5562

Signed By Governor
2011-2012 Legislative Session

Amends the definition of insurance fraud

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jul 20, 2011 signed chap.211
Jul 08, 2011 delivered to governor
Jun 20, 2011 returned to senate
passed assembly
ordered to third reading rules cal.507
substituted for a8365
Jun 15, 2011 referred to insurance
delivered to assembly
passed senate
Jun 13, 2011 advanced to third reading
Jun 07, 2011 2nd report cal.
Jun 06, 2011 1st report cal.1026
Jun 02, 2011 referred to insurance

Votes

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S5562 - Bill Details

See Assembly Version of this Bill:
A8365
Law Section:
Insurance Law
Laws Affected:
Amd §403, Ins L; amd §176.05, Pen L

S5562 - Bill Texts

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Amends the definition of insurance fraud.

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BILL NUMBER:S5562

TITLE OF BILL:
An act
to amend the insurance law and the penal law, in relation to the
definition of insurance fraud

PURPOSE OF BILL:
The purpose of this bill is to include the activities that currently
constitute a "fraudulent health care insurance act" within the
definition of "fraudulent insurance act."

SUMMARY OF PROVISIONS:

Section 1 of the bill amends Insurance Law § 403(a) to make a
technical amendment by deleting "an" in the phrase "an insurance
fraud."

Section 2 of the bill amends Penal Law § 176.05 to include the
activities that currently constitute a "fraudulent health care
insurance act" within the definition of "fraudulent insurance act. "

Section 3 states that this bill takes effect immediately.

EXISTING LAW:

Currently, Insurance Law § 403 states that it is a violation of the
Insurance Law for any individual, firm, association, or corporation
subject to the Insurance Law to commit a fraudulent insurance act,
and for the purposes of Article 4 of the Insurance Law, defines a
"fraudulent insurance act" as "an insurance fraud as defined in
section 176.05 of the penal law."

Penal Law § 176.05 is titled "Insurance fraud; defined," and sets
forth when a "fraudulent insurance act" is committed and when a
"fraudulent health care insurance act" is committed.

PRIOR LEGISLATIVE HISTORY:

This is a new bill.

STATEMENT IN SUPPORT:

In 1998, the Legislature amended a number of state laws to expand
health coverage for children through the Child Health Plus program
and Medicaid and concomitantly amended the
Penal Law to strengthen New York's ability to deter Medicaid fraud and
abuse. As part of these amendments, the Legislature added a new
subdivision to Penal Law § 176.05, which defines a "fraudulent health
care insurance act." However, the Legislature failed to amend Penal
Law §§ 176.10 through 176.30, which prescribe penalties for five
different degrees of insurance fraud and permit penalties only for a
person who commits a "fraudulent insurance act."

In 2003, a chief operating officer and executive vice president of a
managed health care provider was indicted on charges that included


two counts of insurance fraud in the first degree.
The indictment charged that the defendant committed fraudulent
insurance acts in 2003 when he submitted marketing plans to Medicaid
that he knew contained materially false information. The State
asserted that marketing plans allegedly submitted by the defendant
were fraudulent health care insurance acts, which are a species of
fraudulent insurance acts. The defendant moved to dismiss the
insurance fraud counts, asserting that he did not commit a
"fraudulent insurance act" as defined in the Penal Law. The New York
Supreme Court granted defendant's motion and the Appellate Division
and Court of Appeals affirmed. The New York State Court of Appeals
held in People v. Boothe, 16 N.Y.3d 195 (2011), that "a 'fraudulent
health care insurance act' is not included within the definition of
'fraudulent insurance act'" and that "the Legislature plainly failed
to criminalize the conduct at issue." The Court of Appeals further
stated that "if this deficiency is to be corrected, it must be done
through legislative action."

The Legislature's failure to criminalize activities that currently
constitute a "fraudulent health care insurance act" was not
intentional, and as a result, this deficiency in the law should be
remedied so that the Legislature may achieve its original goal of
strengthening New York's ability to deter Medicaid fraud and abuse.
Thus, this bill fixes the foregoing deficiency by amending Penal Law
§ 176.05 to include the activities that currently constitute a
"fraudulent health care insurance act" within the definition of
"fraudulent insurance act."

BUDGET IMPLICATIONS:

There are no budget implications from this bill.

EFFECTIVE DATE:

This bill takes effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5562

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              June 2, 2011
                               ___________

Introduced by Sen. SEWARD -- (at request of the New York State Insurance
  Department)  -- read twice and ordered printed, and when printed to be
  committed to the Committee on Insurance

AN ACT to amend the insurance law and the penal law, in relation to  the
  definition of insurance fraud

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subsection (a) of section  403  of  the  insurance  law  is
amended to read as follows:
  (a)  In  this article, "fraudulent insurance act" means [an] insurance
fraud as defined in section 176.05 of  the  penal  law;  and  the  terms
"personal  insurance"  and  "commercial  insurance"  shall have the same
meaning ascribed to them by section 176.00 of such law.
  S 2. Section 176.05 of the penal law, as amended by chapter 635 of the
laws of 1996, subdivision 1 as designated and subdivision 2 as added  by
chapter 2 of the laws of 1998, is amended to read as follows:
S 176.05 Insurance fraud; defined.
  [1.]  A fraudulent insurance act is committed by any person who, know-
ingly and with intent to defraud presents, causes to  be  presented,  or
prepares with knowledge  or belief that it will be presented to or by an
insurer,  self insurer, or purported insurer, or purported self insurer,
or any agent thereof[,]:
  1. any written statement as part of, or in support of, an  application
for  the issuance of, or the rating of a commercial insurance policy, or
certificate or evidence of self insurance for  commercial  insurance  or
commercial  self  insurance,  or  a  claim  for payment or other benefit
pursuant to an insurance policy or self insurance program for commercial
or personal insurance [which] THAT he OR SHE knows to:
  [(i)] (A) contain materially false  information  concerning  any  fact
material thereto; or

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10648-02-1

S. 5562                             2

  [(ii)]  (B)  conceal,  for  the  purpose  of  misleading,  information
concerning any fact material thereto[.]; OR
  2.  [A fraudulent health care insurance act is committed by any person
who, knowingly and with  intent  to  defraud,  presents,  causes  to  be
presented,  or  prepares  with  knowledge  or  belief  that  it  will be
presented to, or by, an insurer or purported insurer or self-insurer, or
any agent thereof,] any written statement or other physical evidence  as
part  of,  or in support of, an application for the issuance of a health
insurance policy, or a policy or contract or  other  authorization  that
provides  or  allows coverage for, membership or enrollment in, or other
services of a public or private health plan, or  a  claim  for  payment,
services  or  other  benefit pursuant to such policy, contract or plan[,
which] THAT he OR SHE knows to:
  (a) contain materially false information concerning any material  fact
thereto; or
  (b) conceal, for the purpose of misleading, information concerning any
fact material thereto.
  Such  policy  or  contract or plan or authorization shall include, but
not be limited to, those issued or operating pursuant to any  public  or
governmentally-sponsored  or  supported plan for health care coverage or
services or those otherwise issued or operated  by  entities  authorized
pursuant  to  the public health law. For purposes of this subdivision an
"application for the issuance of a health insurance  policy"  shall  not
include  [(a)]  (I)  any  application  for  a health insurance policy or
contract approved by the superintendent of  insurance  pursuant  to  the
provisions of sections three thousand two hundred sixteen, four thousand
three hundred four, four thousand three hundred twenty-one or four thou-
sand three hundred twenty-two of the insurance law or any other applica-
tion  for  a  health insurance policy or contract approved by the super-
intendent of insurance in the individual or direct payment market;  [and
(b)] OR (II) any application for a certificate evidencing coverage under
a  self-insured  plan  or  under a group contract approved by the super-
intendent of insurance.
  S 3. This act shall take effect immediately.

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