CHAPTER 701. INSURANCE FRAUD INVESTIGATIONS - Texas Statutes

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE F. INSURANCE FRAUD AND IDENTITY THEFT

CHAPTER 701. INSURANCE FRAUD INVESTIGATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 701.001. DEFINITIONS. In this chapter:

(1) "Authorized governmental agency" means:

(A) a municipal, county, or state law enforcement agency of this

state or another state or a law enforcement agency of the United

States; or

(B) the prosecuting attorney of a municipality, county, or

judicial district of this state or another state or the

prosecuting attorney of the United States.

(2) "Fraudulent insurance act" means an act that is a violation

of a penal law and is:

(A) committed or attempted while engaging in the business of

insurance;

(B) committed or attempted as part of or in support of an

insurance transaction; or

(C) part of an attempt to defraud an insurer.

(3) "Insurer" means a person who is engaged in the business of

insurance as a principal or agent. The term includes:

(A) an unauthorized insurer; and

(B) an entity that is self-insured and provides health care

benefits to the entity's employees.

(4) "Person" means an individual, corporation, organization,

governmental entity, business trust or another trust, estate,

partnership, joint venture, association, or any other legal

entity.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.002. BUSINESS OF INSURANCE. A person is engaged in the

business of insurance for purposes of this chapter if the person

performs any act described by Subchapter B, Chapter 101.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.003. EFFECT OF CHAPTER. This chapter does not:

(1) preempt the authority or relieve the duty of an authorized

governmental agency to investigate and prosecute suspected

criminal acts;

(2) prevent or prohibit a person from voluntarily disclosing

information to an authorized governmental agency;

(3) limit powers or duties granted to the commissioner by any

other law; or

(4) prohibit or limit the authority of an insurer to conduct an

independent investigation of suspected insurance claim fraud.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER B. REPORTING FRAUDULENT INSURANCE ACTS

Sec. 701.051. DUTY TO REPORT. (a) Not later than the 30th day

after the date the person makes the determination or reasonably

suspects that a fraudulent insurance act has been or is about to

be committed in this state, the person:

(1) shall report the information in writing to the insurance

fraud unit of the department, in the format prescribed by the

fraud unit or by the National Association of Insurance

Commissioners; and

(2) may also report the information to another authorized

governmental agency.

(b) A report made to the insurance fraud unit constitutes notice

to each other authorized governmental agency.

(c) A person who is a member of an organization primarily

dedicated to the detection, investigation, and prosecution of

insurance fraud fully complies with the person's obligations

under Subsection (a) by authorizing the organization to report on

the person's behalf information required to be reported under

Subsection (a). The person retains any liability resulting from

the failure of the organization to report in a manner that

complies with Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2005, 79th Leg., Ch.

1282, Sec. 1, eff. September 1, 2005.

Sec. 701.052. IMMUNITY FOR FURNISHING INFORMATION RELATING TO A

FRAUDULENT INSURANCE ACT. (a) A person is not liable in a civil

action, including an action for libel or slander, and a civil

action may not be brought against the person, for furnishing

information relating to a suspected, anticipated, or completed

fraudulent insurance act if the information is provided to:

(1) an authorized governmental agency or the department;

(2) a law enforcement officer or an agent or employee of the

officer;

(3) the National Association of Insurance Commissioners or an

employee of the association;

(4) a state or federal governmental agency established to detect

and prevent fraudulent insurance acts or to regulate the business

of insurance or an employee of the agency; or

(5) a special investigative unit of an insurer, including a

person who contracts to provide special investigative unit

services to the insurer or an employee of the insurer who is

responsible for the investigation of suspected fraudulent

insurance acts.

(b) A person may furnish information as described in Subsection

(a) orally or in writing, including through publishing,

disseminating, or filing a bulletin or report.

(c) Subsection (a) does not apply to a person who acts with

malice, fraudulent intent, or bad faith.

(d) A person to whom Subsection (a) applies who prevails in a

civil action arising from furnishing information as described in

Subsection (a) is entitled to attorney's fees and costs.

(e) This section does not affect any common law or statutory

privilege or immunity.

(f) Repealed by Acts 2005, 79th Leg., Ch. 1282, Sec. 3, eff.

September 1, 2005.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2005, 79th Leg., Ch.

1282, Sec. 3, eff. September 1, 2005.

SUBCHAPTER C. INVESTIGATIONS

Sec. 701.101. INSURANCE FRAUD UNIT. (a) The purpose of the

department's insurance fraud unit is to enforce laws relating to

fraudulent insurance acts.

(b) The insurance fraud unit may receive, review, and

investigate in a timely manner insurer antifraud reports

submitted under Chapter 704.

(c) The insurance fraud unit shall report annually to the

commissioner in writing regarding:

(1) the number of cases completed by the insurance fraud unit;

and

(2) recommendations for regulatory and statutory responses to

the types of fraudulent activities encountered by the insurance

fraud unit.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.102. INVESTIGATION OF CERTAIN ACTS OF FRAUD. If the

commissioner has reason to believe a person has engaged in, is

engaging in, has committed, or is about to commit a fraudulent

insurance act or the offense of insurance fraud under Section

35.02(a), Penal Code, the commissioner may conduct any

investigation necessary inside or outside this state to:

(1) determine whether the act or offense occurred; or

(2) aid in enforcing laws relating to fraudulent insurance acts

or insurance fraud.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.103. DISCIPLINARY ACTION; REPORT TO OTHER AGENCIES.

(a) The commissioner shall take appropriate disciplinary action

as provided by this code if the commissioner believes a

fraudulent insurance act has occurred. The commissioner shall

report information concerning the commissioner's belief that a

person has committed a fraudulent insurance act to an authorized

governmental agency.

(b) The commissioner shall:

(1) provide all material, documents, reports, complaints, or

other evidence to an authorized governmental agency on request;

and

(2) assist the authorized governmental agency as requested.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.104. DEPARTMENT INVESTIGATORS. (a) The commissioner

may:

(1) employ investigators as necessary to enforce this chapter;

and

(2) commission those investigators as peace officers.

(b) If the commissioner commissions investigators as peace

officers, the commissioner shall appoint a chief investigator

who:

(1) is commissioned as a peace officer; and

(2) is qualified by training and experience in law enforcement

to supervise, direct, and administer the activities of the

commissioned investigators.

(c) An investigator employed by the department as a peace

officer must meet the requirements for a peace officer under

Chapter 1701, Occupations Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.105. ASSISTANCE FROM LAW ENFORCEMENT. An investigator

employed by the department may request assistance from local law

enforcement officers in conducting an investigation authorized by

this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.106. SUBPOENA AUTHORITY. (a) The commissioner may

issue a subpoena to compel the attendance and testimony of a

witness or, except as provided by Subsection (b), the production

of materials relevant to an investigation under this chapter.

(b) A person is not required to produce an item subpoenaed under

Subsection (a) if the item can only be identified by writing and

executing a special computer program for that purpose.

(c) A person possessing materials located outside this state

that are requested by the commissioner may make the materials

available to the commissioner or a representative of the

commissioner for examination at the place where the materials are

located. The commissioner may designate a representative,

including an official of the state in which the materials are

located, to examine the materials. The commissioner may respond

to a similar request from an official of another state or the

United States.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.107. CERTAIN AGENCIES' DUTY TO PROVIDE INFORMATION.

(a) On the insurance fraud unit's request, an authorized

governmental agency or a state licensing agency shall provide

material, documents, reports, complaints, or other evidence to

the insurance fraud unit.

(b) Compliance with Subsection (a) by an authorized governmental

agency or a state licensing agency does not constitute waiver of

any otherwise applicable privilege or confidentiality

requirement.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.108. INSURER'S DUTY TO PROVIDE INFORMATION. On the

written request of an authorized governmental agency, an insurer

shall provide to the agency any relevant information or material

relating to a matter under investigation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.109. REQUEST FOR INVESTIGATION BY INSURER. (a) An

insurer who conducts an independent investigation of suspected

insurance fraud is not required to complete that investigation

before requesting that the commissioner conduct an investigation.

(b) When requesting the commissioner to conduct an

investigation, the insurer shall draft a report of the insurer's

findings and submit the report and any related investigation file

to the commissioner as soon as practicable on the conclusion of

the insurer's independent investigation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2005, 79th Leg., Ch.

1282, Sec. 2, eff. September 1, 2005.

SUBCHAPTER D. INSURANCE FRAUD INFORMATION; CONFIDENTIALITY

Sec. 701.151. CONFIDENTIALITY OF DEPARTMENT INFORMATION. (a)

Information or material acquired by the department that is

relevant to an investigation by the insurance fraud unit is not a

public record for the period the commissioner considers

reasonably necessary to:

(1) complete the investigation;

(2) protect the person under investigation from unwarranted

injury; or

(3) serve the public interest.

(b) The information or material is not subject to a subpoena by

another governmental entity, other than a grand jury subpoena,

until:

(1) the information or material is released for public

inspection by the commissioner; or

(2) after notice and a hearing a district court determines that

obeying the subpoena would not jeopardize the public interest and

any investigation by the commissioner.

(c) This section does not affect the conduct of a contested case

under Chapter 2001, Government Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.152. CONFIDENTIALITY OF AUTHORIZED GOVERNMENTAL AGENCY

INFORMATION. Information or material acquired under this chapter

by an authorized governmental agency is privileged and is not a

public record. The information or material is not subject to a

subpoena, other than a grand jury subpoena, unless, after

reasonable notice to the insurer and agency and a hearing, a

district court determines that obeying the subpoena would not

jeopardize the public interest and any investigation by the

agency.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.153. DISCLOSURE OF INFORMATION TO CERTAIN AGENCIES. An

authorized governmental agency may release to another authorized

governmental agency or the department and the department may

release to an authorized governmental agency information or

material provided under this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 701.154. DISCLOSURE OF INFORMATION TO PUBLIC. (a) Except

as otherwise provided by law, an authorized governmental agency

or an insurer that possesses or receives information or material

under this chapter may not release that information or material

to the public.

(b) Information provided under this chapter by an insurer to the

insurance fraud unit or an authorized governmental agency is not

subject to public disclosure. The information may be used by the

insurance fraud unit or authorized governmental agency only in

performing duties described by this chapter.

(c) Notwithstanding Section 701.151, the commissioner may not

release evidence obtained under Section 701.107 for public

inspection if releasing the evidence would violate a privilege

held by or a confidentiality requirement imposed on the agency

from which the evidence was obtained.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.