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F I S C A L I M P A C T R E P O R T

SPONSOR SJC

ORIGINAL DATE

LAST UPDATED

03/05/07

HB

SHORT TITLE 6 Month Insurance Fraud Aggregation

SB 6/SJCS

ANALYST Hanika Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Awaiting a Response on the Substitute From

Attorney General’s Office (AGO)

Administrative Office of the Courts (AOC)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

Senate Judiciary Committee substitute for Senate Bill 6 amends penalties contained in Section

59A-16-23 of the Trade Practices and Frauds Article of the Insurance code to amend the

sentencing provisions for ten or more violations of loss occurring within any consecutive six-

month period to a victim insurer by an agent, broker, solicitor, physician, applicant or other

person for certain false or fraudulent claims and documents. The substitute does not amend

sentencing provisions as defined in the bill for certain false or fraudulent statements or

misrepresentations. Current statute provides that a person making certain false insurance

statements, claims or documents be punishable as a felony, and there is no clear time limit on the

loss.

Such loss will hold the following criminal consequences:

1)

involving amounts $250 or less, be punishable as a petty misdemeanor;

2)

over $250 but not more than $500, be punishable as a misdemeanor;

3)

over $500 but not more than $2,500, be punishable as a fourth degree felony;

4)

over $2,500 but not more than $20,000, be punishable as a third degree felony;

Senate Bill 6/SJCS – Page

2

5)

over $20,000, be punishable as a second degree felony.

FISCAL IMPLICATIONS

Any additional fiscal impact on the departments will be proportional to enforcement and

commenced prosecutions. As penalties increase, potential imprisonment may inspire defendants

to retain attorneys and demand jury trials and fewer plea bargains. The total increase or decrease

in convictions is likely to be minimal and should not effect the operations of prison and

probation/parole services.

SIGNIFICANT ISSUES

SB 6 attempts to create a more equitable application for criminal punishment administered.

OTHER SUBSTANTIVE ISSUES

The AGO reports in the original bill that Section 59A-1-18, is related in that it sets out the

general criminal penalties for violations of the Insurance Code and states that its penalties “shall

be in addition to any other penalty provided by law."

AHO/nt