I

104TH CONGRESS

2D SESSION H. R. 3930

To protect the personal privacy rights of insurance customers and claimants,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 31, 1996

Mr. TOWNS introduced the following bill; which was referred to the Committee

on Commerce, and in addition to the Committee on the Judiciary, for a

period to be subsequently determined by the Speaker, in each case for

consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To protect the personal privacy rights of insurance customers

and claimants, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Insurance Claims Privacy Protection Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.
2

•HR 3930 IH

Sec. 5. Limitations on disclosure of claims information to law enforcement

agencies.

Sec. 6. Separation of the functions of a crime bureau from the functions of an

insurance data support organization.

Sec. 7. Coordination with State law.

Sec. 8. Enforcement.

1 SEC. 2. FINDINGS.

2 The Congress finds that—

3 (1) property and casualty insurers annually col4 lect information pertaining to the claims filed by

5 millions of policyholders and other individuals;

6 (2) this information is generally provided to in7 dustry organizations for the purpose of assisting in8 surers to quickly pay a claim or, alternatively, to de9 termine whether a pattern of claim filings exists that

10 warrants further investigation;

11 (3) there is a legitimate need for insurers to

12 pool claims information among themselves and to

13 work with law enforcement agencies in order to as14 sure the integrity of the claims decisionmaking proc15 ess;

16 (4) while the insurance industry has historically

17 taken strong and effective measures to prevent the

18 improper disclosure of personal claims information

19 to law enforcement agencies, it is now preparing to

20 eliminate those protections and provide individual

21 claims information on innocent individuals, as well
3

•HR 3930 IH

1 as their doctors and lawyers, to law enforcement

2 agencies;

3 (5) although insurance is generally regulated by

4 the individual States pursuant to the Act of March

5 9, 1945 (referred to as the ‘‘McCarran-Ferguson

6 Act’’), and despite the fact that the National Asso7 ciation of Insurance Commissioners has proposed

8 model privacy legislation which has been adopted in

9 certain States and addresses the provision of individ10 ual information to law enforcement agencies, the As11 sociation’s model legislation has not been enacted in

12 most of the States and has not prevented the insur13 ance industry from proceeding with its current

14 plans;

15 (6) the unfettered disclosure of personal claims

16 information by insurers to law enforcement agencies

17 on innocent individuals violates fundamental prin18 ciples of individual privacy and may result in intimi19 dating individuals in exercising their rights to file

20 claims; and

21 (7) in the absence of effective State regulation,

22 a uniform rule, established through congressional en23 actment, is the only method for assuring the protec24 tion of personal privacy rights.
4

•HR 3930 IH

1 SEC. 3. PURPOSES.

2 The purposes of this Act are—

3 (1) to protect the personal privacy rights of in4 surance customers and claimants by making certain

5 that property and casualty insurers do not improp6 erly provide personal information about innocent in7 surance claimants to law enforcement agencies;

8 (2) to establish clear rules for separating the

9 operation of an insurance crime bureau from the op10 eration of an insurance data support organization in

11 order to prevent the inappropriate use of insurance

12 claims information; and

13 (3) to establish strong and effective remedies

14 for violations of this Act.

15 SEC. 4. DEFINITIONS.

16 As used in this Act:

17 (1) ALL CLAIMS DATABASE.—The term ‘‘all

18 claims database’’ means any data collection system,

19 electronic or manual, which obtains information

20 about property and casualty insurance claims with21 out regard to whether there is a reasonable belief

22 that any specific claimant has engaged in any illegal

23 or fraudulent act.

24 (2) CRIME BUREAU.—The term ‘‘crime bureau’’

25 means any nongovernmental organization which, in

26 whole or in part, (A) investigates potentially illegal
5

•HR 3930 IH

1 or fraudulent acts with regard to property and cas2 ualty insurance claims, or (B) shares information

3 about such claims with any law enforcement agency,

4 absent a subpoena or court order; except that the

5 term does not include the activities of a property

6 and casualty insurer.

7 (3) INSURANCE CLAIMS DATA SUPPORT ORGANI8 ZATION.—The term ‘‘insurance claims data support

9 organization’’ means any nongovernmental organiza10 tion which regularly engages, in whole or in part, in

11 the practice of assembling or collecting claims infor12 mation about persons for the primary purpose of

13 providing information to property and casualty in14 surers, self-insurers, or the administrators of an in15 surance program; except that the term does not

16 include the activities of a property and casualty in17 surer.

18 (4) PROPERTY AND CASUALTY INSURANCE.—

19 The term ‘‘property and casualty insurance’’ means

20 every line of insurance, except life insurance and

21 health insurance, and includes, but is not limited to,

22 automobile insurance, homeowners insurance, and

23 workers’ compensation insurance.

24 (5) PROPERTY AND CASUALTY INSURER.—The

25 term ‘‘property and casualty insurer’’ means any
6

•HR 3930 IH

1 person engaged in the business of insurance who

2 provides property and casualty insurance, either di3 rectly or through agents or brokers.

4 SEC. 5. LIMITATIONS ON DISCLOSURE OF CLAIMS INFOR5 MATION TO LAW ENFORCEMENT AGENCIES.

6 (a) DISCLOSURE BY PROPERTY AND CASUALTY IN7 SURER AND CRIME BUREAU.—No property and casualty

8 insurer or crime bureau may disclose to a law enforcement

9 agency any information pertaining to a claim unless it is

10 doing so—

11 (1) to protect the interests of the insurer or

12 crime bureau in preventing or prosecuting the per13 petuation of fraud upon it; or

14 (2) if the insurer or crime bureau reasonably

15 believes that illegal activities have been conducted by

16 the individual.

17 (b) DISCLOSURE BY DATA SUPPORT ORGANIZA18 TION.—No insurance data support organization may dis19 close to a law enforcement agency any information per20 taining to a claim unless it is doing so—

21 (1) to protect the interests of the organization

22 in preventing or prosecuting the perpetuation of

23 fraud upon it; or

24 (2) to respond to a subpoena or court order.
7

•HR 3930 IH

1 SEC. 6. SEPARATION OF THE FUNCTIONS OF A CRIME BU2 REAU FROM THE FUNCTIONS OF AN INSUR3 ANCE DATA SUPPORT ORGANIZATION.

4 (a) IN GENERAL.—An insurance data support orga5 nization may establish and operate an all claims data base

6 and may establish a system for providing claims informa7 tion to a crime bureau for the purpose of detecting fraudu8 lent or other illegal activities pertaining to specific claims

9 or to specific categories of claims where fraudulent or

10 other illegal activities are reasonably believed to have oc11 curred; but an insurance data support organization may

12 not engage in the activities of a crime bureau.

13 (b) CRIME BUREAU.—A crime bureau may engage in

14 activities designed to prevent, suppress, and prosecute

15 fraud, including, when otherwise authorized by law, the

16 conduct of appropriate investigations of claimants and col17 laborative activities with law enforcement agencies; but a

18 crime bureau may not operate an all claims data base or

19 collect claims information, either directly or indirectly,

20 that may result in the establishment or operation of such

21 a data base.

22 SEC. 7. COORDINATION WITH STATE LAW.

23 (a) IN GENERAL.—Nothing in this Act shall be read

24 as prohibiting any State from enacting legislation estab25 lishing more stringent protections than are provided in
8

•HR 3930 IH

1 this Act for the privacy of information contained in prop2 erty and casualty insurance claims.

3 (b) STATE CERTIFICATION.—Without regard to the

4 provisions of section 8, any State may certify to the Attor5 ney General of the United States that it has established,

6 through law or regulation, the same protections and en7 forcement procedures that are incorporated in this Act.

8 Upon approval of that certification by the Attorney Gen9 eral, and publication of that certification in the Federal

10 Register, enforcement of this Act shall be solely pursuant

11 to that certification. The Attorney General may revoke a

12 certification for any material breach of its provisions.

13 SEC. 8. ENFORCEMENT.

14 (a) INJUNCTION.—Any violation of this Act may be

15 enjoined in any Federal district court without regard to

16 any jurisdictional amount otherwise required. Such an in17 junctive action may be brought by the Attorney General

18 or by any private party.

19 (b) CIVIL PENALTY.—Any violation of this Act may

20 also be subject to a civil penalty of not more than $10,000.

Æ