Union Calendar No. 260

103D CONGRESS

2D SESSION H. R. 665

[Report No. 103–468]

A BILL

To amend title 18, United States Code, to provide

alties.subject to strong Federal criminal and civil penthat fraud against insurance companies will be

MARCH 25, 1994

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 260

103D CONGRESS

2D SESSION H. R. 665

[Report No. 103–468]

To amend title 18, United States Code, to provide that fraud against insurance companies will be subject to strong Federal criminal and civil

penalties.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 27, 1993

Mr. DINGELL (for himself and Mr. BROOKS) introduced the following bill;

which was referred to the Committee on the Judiciary

MARCH 25, 1994

Additional sponsors: Mr. BONIOR and Mr. POMEROY

MARCH 25, 1994

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Omit the part struck through and insert the part printed in italic]

A BILL

To amend title 18, United States Code, to provide that

fraud against insurance companies will be subject to

strong Federal criminal and civil penalties.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Insurance Fraud Pre3 vention Act of 1993 1994’’.

4 SEC. 2. CRIMES BY OR AFFECTING PERSONS ENGAGED IN

5 THE BUSINESS OF INSURANCE WHOSE AC6 TIVITIES AFFECT INTERSTATE COMMERCE.

7 (a) IN GENERAL.—Chapter 47 of title 18, United

8 States Code, is amended by adding at the end thereof the

9 following new sections:

10 ‘‘§ 1033. Crimes by or affecting persons engaged in

11 the business of insurance whose activi12 ties affect interstate commerce

13 ‘‘(a)(1) Whoever is engaged in the business of insur14 ance whose activities affect interstate commerce and

15 knowingly, with the intent to deceive, makes any false ma16 terial statement or report or willfully and materially

17 overvalues any land, property or security—

18 ‘‘(A) in connection with any financial reports or

19 documents presented to any insurance regulatory of20 ficial or agency or an agent or examiner appointed

21 by such official or agency to examine the affairs of

22 such person, and

23 ‘‘(B) for the purpose of influencing the actions

24 of such official or agency or such an appointed agent

25 or examiner,

26 shall be punished as provided in paragraph (2).
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1 ‘‘(2) The punishment for an offense under paragraph

2 (1) is a fine as established under this title or imprison3 ment for not more than 10 years, or both, except that

4 the term of imprisonment shall be not more than 15 years

5 if the statement or report or overvaluing of land, property,

6 or security jeopardized the safety and soundness of an in7 surer and was a significant cause of such insurer being

8 placed in conservation, rehabilitation, or liquidation by an

9 appropriate court.

10 ‘‘(b)(1) Whoever—

11 ‘‘(A) acting as, or being an officer, director,

12 agent, or employee of, any person engaged in the

13 business of insurance whose activities affect inter14 state commerce, or

15 ‘‘(B) is engaged in the business of insurance

16 whose activities affect interstate commerce or is in17 volved (other than as an insured or beneficiary

18 under a policy of insurance) in a transaction relating

19 to the conduct of affairs of such a business,

20 willfully embezzles, abstracts, purloins, or misappropriates

21 any of the moneys, funds, premiums, credits, or other

22 property of such person so engaged shall be punished as

23 provided in paragraph (2).

24 ‘‘(2) The punishment for an offense under paragraph

25 (1) is a fine as provided under this title or imprisonment
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1 for not more than 10 years, or both, except that if such

2 embezzlement, abstraction, purloining, or misappropria3 tion described in paragraph (1) jeopardized the safety and

4 soundness of an insurer and was a significant cause of

5 such insurer being placed in conservation, rehabilitation,

6 or liquidation by an appropriate court, such imprisonment

7 shall be not more than 15 years. If the amount or value

8 so embezzled, abstracted, purloined, or misappropriated

9 does not exceed $5,000, whoever violates paragraph (1)

10 shall be fined as provided in this title or imprisoned not

11 more than one year, or both.

12 ‘‘(c)(1) Whoever is engaged in the business of insur13 ance and whose activities affect interstate commerce or is

14 involved (other than as an insured or beneficiary under

15 a policy of insurance) in a transaction relating to the con16 duct of affairs of such a business, knowingly makes any

17 false entry of material fact in any book, report, or state18 ment of such person engaged in the business of insurance

19 with intent to deceive any person, including any officer,

20 employee, or agent of such person engaged in the business

21 of insurance, any insurance regulatory official or agency,

22 or any agent or examiner appointed by such official or

23 agency to examine the affairs of such person, about the

24 financial condition or solvency of such business shall be

25 punished as provided in paragraph (2).
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1 ‘‘(2) The punishment for an offense under paragraph

2 (1) is a fine as provided under this title or imprisonment

3 for not more than 10 years, or both, except that if the

4 false entry in any book, report, or statement of such per5 son jeopardized the safety and soundness of an insurer

6 and was a significant cause of such insurer being placed

7 in conservation, rehabilitation, or liquidation by an appro8 priate court, such imprisonment shall be not more than

9 15 years.

10 ‘‘(d) Whoever, by threats or force or by any threaten11 ing letter or communication, corruptly influences, ob12 structs, or impedes or endeavors corruptly to influence, ob13 struct, or impede the due and proper administration of

14 the law under which any proceeding involving the business

15 of insurance whose activities affect interstate commerce

16 is pending before any insurance regulatory official or

17 agency or any agent or examiner appointed by such official

18 or agency to examine the affairs of a person engaged in

19 the business of insurance whose activities affect interstate

20 commerce, shall be fined as provided in this title or impris21 oned not more than 10 years, or both.

22 ‘‘(e)(1)(A) Any individual who has been convicted of

23 any criminal felony involving dishonesty or a breach of

24 trust, or who has been convicted of an offense under this

25 section, and who willfully engages in the business of insur-
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1 ance whose activities affect interstate commerce or partici2 pates in such business, shall be fined as provided in this

3 title or imprisoned not more than 5 years, or both.

4 ‘‘(B) Any individual who is engaged in the business

5 of insurance whose activities affect interstate commerce

6 and who willfully permits the participation described in

7 subparagraph (A) shall be fined as provided in this title

8 or imprisoned not more than 5 years, or both.

9 ‘‘(2) A person described in paragraph (1)(A) may en10 gage in the business of insurance or participate in such

11 business if such person has the written consent of any in12 surance regulatory official authorized to regulate the in13 surer, which consent specifically refers to this subsection.

14 ‘‘(f) As used in this section—

15 ‘‘(1) the term ‘business of insurance’ means—

16 ‘‘(A) the writing of insurance, or

17 ‘‘(B) the reinsuring of risks,

18 by an insurer, including all acts necessary or inci19 dental to such writing or reinsuring and the activi20 ties of persons who act as, or are, officers, directors,

21 agents, or employees of insurers or who are other

22 persons authorized to act on behalf of such persons;

23 ‘‘(2) the term ‘insurer’ means any entity the

24 business activity of which is the writing of insurance

25 or the reinsuring of risks, and includes any person
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1 who acts as, or is, an officer, director, agent, or em2 ployee of that business;

3 ‘‘(3) the term ‘interstate commerce’ means—

4 ‘‘(A) commerce within the District of Co5 lumbia, or any territory or possession of the

6 United States;

7 ‘‘(B) all commerce between any point in

8 the State, territory, possession, or the District

9 of Columbia and any point outside thereof;

10 ‘‘(C) all commerce between points within

11 the same State through any place outside such

12 State; or

13 ‘‘(D) all other commerce over which the

14 United States has jurisdiction; and

15 ‘‘(4) the term ‘State’ includes any State, the

16 District of Columbia, the Commonwealth of Puerto

17 Rico, the Northern Mariana Islands, the Virgin Is18 lands, American Samoa, and the Trust Territory of

19 the Pacific Islands.

20 ‘‘§ 1034. Civil penalties and injunctions for violations

21 of section 1033

22 ‘‘(a) The Attorney General may bring a civil action

23 in the appropriate United States district court against any

24 person who engages in conduct constituting an offense

25 under section 1033 and, upon proof of such conduct by
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1 a preponderance of the evidence, such person shall be sub2 ject to a civil penalty of not more than $50,000 for each

3 violation or the amount of compensation which the person

4 received or offered for the prohibited conduct, whichever

5 amount is greater. If the offense has contributed to the

6 decision of a court of appropriate jurisdiction to issue an

7 order directing the conservation, rehabilitation, or liquida8 tion of an insurer, such penalty shall be remitted to the

9 appropriate regulatory official for the benefit of the policy10 holders, claimants, and creditors of such insurer. The im11 position of a civil penalty under this subsection does not

12 preclude any other criminal or civil statutory, common

13 law, or administrative remedy, which is available by law

14 to the United States or any other person.

15 ‘‘(b) If the Attorney General has reason to believe

16 that a person is engaged in conduct constituting an of17 fense under section 1033, the Attorney General may peti18 tion an appropriate United States district court for an

19 order prohibiting that person from engaging in such con20 duct. The court may issue an order prohibiting that person

21 from engaging in such conduct if the court finds that the

22 conduct constitutes such an offense. The filing of a peti23 tion under this section does not preclude any other remedy

24 which is available by law to the United States or any other

25 person.’’.
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 47 of such title is amended by adding at the

3 end the following new items:

‘‘1033. Crimes by or affecting persons engaged in the business of insurance

whose activities affect interstate commerce.

‘‘1034. Civil penalties and injunctions for violations of section 1033.’’.

4 SEC. 3. MISCELLANEOUS AMENDMENTS TO TITLE 18,

5 UNITED STATES CODE.

6 (a) TAMPERING WITH INSURANCE REGULATORY

7 PROCEEDINGS.—Section 1515(a)(1) of title 18, United

8 States Code, is amended—

9 (1) by striking ‘‘or’’ at the end of subparagraph

10 (B);

11 (2) by inserting ‘‘or’’ at the end of subpara12 graph (C); and

13 (3) by adding at the end thereof the following

14 new subparagraph:

15 ‘‘(D) a proceeding involving the business of

16 insurance whose activities affect interstate com17 merce before any insurance regulatory official

18 or agency or any agent or examiner appointed

19 by such official or agency to examine the affairs

20 of any person engaged in the business of insur21 ance whose activities affect interstate com22 merce; or’’.

23 (b) LIMITATIONS.—Section 3293 of such title is

24 amended by inserting ‘‘1033,’’ after ‘‘1014,’’.
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1 (c) OBSTRUCTION OF CRIMINAL INVESTIGATIONS.—

2 Section 1510 of title 18, United States Code, is amended

3 by adding at the end the following new subsection:

4 ‘‘(d)(1) Whoever—

5 ‘‘(A) acting as, or being, an officer, director,

6 agent or employee of a person engaged in the busi7 ness of insurance whose activities affect interstate

8 commerce, or

9 ‘‘(B) is engaged in the business of insurance

10 whose activities affect interstate commerce or is in11 volved (other than as an insured or beneficiary

12 under a policy of insurance) in a transaction relating

13 to the conduct of affairs of such a business,

14 with intent to obstruct a judicial proceeding, directly or

15 indirectly notifies any other person about the existence or

16 contents of a subpoena for records of that person engaged

17 in such business or information that has been furnished

18 to a Federal grand jury in response to that subpoena, shall

19 be fined as provided by this title or imprisoned not more

20 than 5 years, or both.

21 ‘‘(2) As used in paragraph (1), the term ‘subpoena

22 for records’ means a Federal grand jury subpoena for

23 records that has been served relating to a violation of, or

24 a conspiracy to violate, section 1033 of this title.’’.

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