GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

S	3 

SENATE BILL 498
Judiciary I Committee Substitute Adopted 5/9/89
House Committee Substitute Favorable 7/19/90

Short Title:  Insurance Crimes.	(Public)
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Sponsors:
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Referred to:  
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March 20, 1989

A BILL TO BE ENTITLED
AN ACT TO IMPROVE THE LAWS RELATING TO THE REPORTING AND INVESTIGATION OF INSURANCE FRAUD AND THE FINANCIAL CONDITION OF INSURANCE LICENSEES, THE LAWS RELATING TO FRAUDULENT INSURANCE CLAIMS, THE LAWS RELATING TO EMBEZZLEMENT AND THE REPORTING THEREOF, AND THE LAWS RELATING TO FALSE STATEMENTS BY PERSONS IN THE BUSINESS OF INSURANCE; AND TO PROVIDE FOR THE COMPLETION OF FIRE INCIDENT REPORTS BY FIRE DEPARTMENTS AND THE AVAILABILITY OF SUCH REPORTS TO INSURANCE COMPANIES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-2-160 reads as rewritten:
"§ 58üfraud
	”						"§ 58-2-160.  Reporting and investigation of insurance and reinsurance fraud and the financial condition of licensees; immunity from liability.
(a)	As used in this section, ‘Commissioner' includes an employee, agent, or designee of the Commissioner.  A person, or an employee or agent of that person, acting without actual malice, is not subject to civil liability for libel, slander, or any other cause of action by virtue of furnishing to the Commissioner under the requirements of law or at the direction of the Commissioner reports or other information relating to (i) any known or suspected fraudulent insurance or reinsurance claim, transaction, or act or (ii) the financial condition of any licensee.  In the absence of actual malice, members of the NAIC, their duly authorized committees, subcommittees, task forces, delegates, and employees, and all other persons charged with the responsibility of collecting, reviewing, analyzing, or disseminating the information developed from filings of financial statements or examinations of licensees are not subject to civil liability for libel, slander, or any other cause of action by virtue of their collection, review, analysis, or dissemination of the data and information collected from such filings or examinations.
(b)	The Commissioner, acting without actual malice, is not subject to civil liability for libel or slander by virtue of an investigation of (i) any known or suspected fraudulent insurance or reinsurance claim, transaction, or act or (ii) the financial condition of any licensee; or by virtue of the publication or dissemination of any official report related to any such investigation, which report is published or disseminated in the absence of fraud, bad faith, or actual malice on the part of the Commissioner.  The Commissioner is not subject to civil liability in relation to the collecting, reviewing, analyzing, or dissemination of information that is developed by the NAIC from the filing of financial statements with the NAIC or from the examination of insurers by the NAIC and that is communicated to the Commissioner, including any investigation or publication or dissemination of any report or other information in relation thereto, which report is published or disseminated in the absence of fraud, bad faith, negligence, or actual malice on the part of the Commissioner.
(c)	During the course of an investigation of (i) a known or suspected fraudulent insurance or reinsurance claim, transaction, or act or (ii) the financial condition of any licensee, the Commissioner may request any person to furnish copies of any information relative to the (i) known or suspected claim, transaction, or act or (ii) financial condition of the licensee.  The person shall release the information requested and cooperate with the Commissioner pursuant to this section.”
Sec. 2. Article 2 of Chapter 58 of the General Statutes is amended by adding the following new sections to read:
"§ 58-2-161.  False statement to procure benefit of insurance policy or certificate.
(a)	For the purposes of this section ‘insurer' includes an entity under Articles 65 through 67 of this Chapter and includes the Teachers' and State Employees' Comprehensive Major Medical Plan under Chapter 135 of the General Statutes.
(b)	Any person who willfully and knowingly presents or causes to be presented a false or fraudulent claim, or any proof in support of such claim, to an insurer for the payment of a loss or other benefits under any insurance policy, certificate, or coverage; or prepares, makes, or subscribes to a false or fraudulent account, certificate, affidavit, proof of loss, or other documents or writing, to an insurer, with the intent that the same may be presented or used in support of such claim, shall be guilty of a felony and, upon conviction, shall be punished as a Class I felon.
"§ 58-2-162.  Embezzlement by insurance agents, brokers, or administrators.  
If any insurance agent, broker, or administrator embezzles or fraudulently converts to his own use, or, with intent to use or embezzle, takes, secretes, or otherwise disposes of, or fraudulently withholds, appropriates, lends, invests, or otherwise uses or applies any money, negotiable instrument, or other consideration received by him in his performance as an agent, broker, or administrator, he shall be punished as a Class H felon.
"§ 58-2-163.  Report to Commissioner.
Whenever any insurance company, or employee or representative of such company, or any other person licensed or registered under Articles 1 through 67 of this Chapter knows or has reasonable cause to believe that any other person has violated G.S. 58-2-161, 58-2-162, 58-2-180, 58-8-1, or 58-24-180(e), or whenever any insurance company, or employee or representative of such company, or any other person licensed or registered under Articles 1 through 67 of this Chapter knows or has reasonable cause to believe that any entity licensed by the Commissioner is financially impaired, it is the duty of such person, upon acquiring such knowledge, to notify the Commissioner and provide the Commissioner with a complete statement of all of the relevant facts and circumstances.  Such report is a privileged communication, and when made without actual malice does not subject the person making the same to any liability whatsoever.  The Commissioner may suspend, revoke, or refuse to renew the license of any licensee who willfully fails to comply with this section."
Sec. 3.  G.S. 58-24-180 is amended by adding a new subsection to read:
"( e)	Any person who willfully makes any false statement in any verified report or declaration under oath that is required by law from fraternal benefit societies, is guilty of perjury under G.S. 14-209."
Sec. 4.  G.S. 58-8-1 reads as rewritten:
"§ 58-8-1. Mutual insurance companies organized; requisites for doing business. 
No policy may be issued by a mutual company until the president and the secretary of the company have certified under oath that every subscription for insurance in the list presented to the Commissioner for approval is genuine, and made with an agreement with every subscriber for insurance that he will take the policies subscribed for by him within 30 days after the granting of a license to the company by the Commissioner to issue policies.  Any person making a false oath in respect to the certificate is guilty of perjury under G.S. 14-209."
Sec. 5.  G.S. 58-2-180 reads as rewritten:
"§ 58-2-180.  Punishment for making false statement.
If any person in any financial or other statement required by law willfully misstates information, that person making oath to or subscribing the statement is guilty of perjury under G.S. 14-209; and the entity on whose behalf the person made the oath or subscribed the statement is subject to a fine imposed by the court of not less than two thousand dollars ($2,000) nor more than ten thousand dollars ($10,000)."
Sec. 6.  G.S. 14-96, 14-96.1, 14-213, 14-214, 14-215, and 14-216 are repealed.
Sec. 7.  Article 79 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58-79-45.  Fire incident reports.
(a)	Whenever a fire department responds to a fire, the chief of that department shall complete or cause to be completed a fire incident report, which report shall be on a form prescribed by the Department of Insurance.
(b)	The fire department shall forward a copy of the completed form to the fire marshal of the county in which the fire occurred.  If there is no fire marshal in that county, the fire department shall forward a copy of the report to the county commissioners.  The fire department shall retain the original of the report.  The fire department and the fire marshal or county commissioners to whom reports are sent shall retain the reports for a period of five years.
(c)	At the request of any person, the county fire marshal or county commissioners shall provide such person, for a reasonable copying charge, a certified copy of the report."
Sec. 8.  In the event any provision of this act is held to be invalid by any court of competent jurisdiction, the court's holding as to that provision shall not affect the validity or operation of other provisions of this act; and to that end the provisions of this act are severable.
Sec. 9.  This act is effective upon ratification except for Sections 2 through 6 of this act which shall become effective October 1, 1990, and except for Section 7 of this act, which shall become effective September 1, 1990.  Prosecutions for offenses occurring before October 1, 1990, are not abated or affected by this act, and the statutes that would be applicable but for this act remain applicable to those prosecutions.