II 

111TH CONGRESS 

2D SESSION S. 3546 

To create a penalty for automobile insurance fraud, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 29, 2010 

Mr. SCHUMER introduced the following bill; which was read twice and referred 

to the Committee on the Judiciary 

A BILL 

To create a penalty for automobile insurance fraud, 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. 

4 This Act may be cited as the ‘‘Cheaper Car Insurance 

5 Act of 2010’’. 

6 SEC. 2. AUTOMOBILE INSURANCE FRAUD. 

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

8 States Code, is amended by inserting at the end the fol9 lowing: 

10 ‘‘SEC. 1041. AUTOMOBILE INSURANCE FRAUD. 

11 ‘‘(a) IN GENERAL.— 


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1 ‘‘(1) Whoever knowingly commits automobile 

2 insurance fraud shall be punished as provided in 

3 subsection (b). 

4 ‘‘(2) Whoever knowingly acts as a runner, cap5 per, or steerer shall be punished as provided in sub6 section (b). 

7 ‘‘(3) Whoever knowingly acts as an organizer of 

8 an auto insurance fraud operation shall be punished 

9 as provided in subsection (b). 

10 ‘‘(4) Whoever knowingly acts as a mastermind 

11 or leader of an auto insurance fraud operation shall 

12 be punished as provided in subsection (b). 

13 ‘‘(b) PENALTIES.—The punishment for an offense 

14 under subsection (a) shall be as follows: 

15 ‘‘(1) For any violation of subsection (a)(1) in 

16 which the defendant is not also convicted of being a 

17 runner, capper, or steerer under subsection (a)(2), 

18 an organizer under subsection (a)(3), or a leader or 

19 master mind under subsection (a)(4), such person 

20 shall be fined not more than $100,000, imprisoned 

21 not more than 5 years, or both. If the defendant has 

22 a prior conviction under subsection (a)(1), such per23 son shall be fined not more than $100,000, impris24 oned not more than 10 years, or both. 


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1 ‘‘(2) For any violation of subsection (a)(2), 

2 such person shall be fined not more than $100,000, 

3 imprisoned not more than 5 years, or both. 

4 ‘‘(3) For any violation of subsection (a)(3), 

5 such person shall be fined not more than $100,000, 

6 imprisoned not more than 10 years, or both. 

7 ‘‘(4) For any violation of subsection (a)(4), 

8 such person shall be fined not more than $100,000, 

9 imprisoned not more than 15 years, or both. 

10 ‘‘(c) INCREASED FINE.—If a violation of subsection 

11 (a) results in costs that exceed $100,000, the fine imposed 

12 under subsection (b) may be in an amount greater than 

13 $100,000 in order to cover the resulting cost. 

14 ‘‘(d) DEFINITIONS.—In this section— 

15 ‘‘(1) the term ‘automobile insurance fraud’ 

16 means fraud committed by any person who know17 ingly and intentionally presents a written statement 

18 or claim, causes a written statement or claim to be 

19 presented, or prepares a written statement or claim 

20 with knowledge or belief that it will be presented to 

21 or by an insurer, self-insurer, or any agent thereof, 

22 that such person knows— 

23 ‘‘(A) contains materially false information 

24 concerning any fact material to an application, 


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1 certificate, evidence, or claim referred to in 

2 paragraph (2); or 

3 ‘‘(B) conceals, for the purpose of mis4 leading, information concerning any fact mate5 rial to an application, certificate, evidence, or 

6 claim referred to in paragraph (2); 

7 ‘‘(2) the term ‘mastermind’ or ‘leader’ means 

8 any individual who knowingly solicits or employs 2 

9 or more people, or conspires with 2 or more people, 

10 to engage in automobile insurance fraud, and who is 

11 not also a runner, capper, steerer, or an organizer; 

12 ‘‘(3) the term ‘organizer’ means any individual 

13 who knowingly solicits or employs a runner, capper, 

14 or steerer, or acts as a runner, capper, or steerer, 

15 with the intent of seeking to falsely or fraudulently 

16 obtain benefits under a contract of insurance, or to 

17 falsely or fraudulently assert a claim against an in18 sured or an insurer for providing services to a client, 

19 patient, or customer; 

20 ‘‘(4) the term ‘runner, capper, or steerer’ 

21 means any person who, for either direct or indirect 

22 pecuniary benefit, knowingly procures or attempts to 

23 procure a client, patient, or customer at the direc24 tion of, or in cooperation with, a person committing 

25 automobile insurance fraud under subsection (a), reVerDate Mar 15 2010 04:17 Jun 30, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3546.IS S3546

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1 gardless of whether or not the person otherwise par2 ticipates in the fraud; and 

3 ‘‘(5) the term ‘written statement or claim’ 

4 means a written statement or submission by tele5 phone, computer, or in any other electronic or digital 

6 form, that is part of, or in support of— 

7 ‘‘(A) an application for the issuance of or 

8 the rating of a commercial insurance policy; 

9 ‘‘(B) a certificate or evidence of self-insur10 ance for commercial insurance or commercial 

11 self-insurance; or 

12 ‘‘(C) a claim for payment or other benefit 

13 pursuant to an insurance policy or self-insur14 ance program for commercial or personal insur15 ance.’’. 

16 (b) CONFORMING AMENDMENT.—The chapter anal17 ysis for chapter 47 of title 18, United States Code, is 

18 amended by adding at the end the following: 

‘‘1041. Automobile insurance fraud’’. 

19 SEC. 3. BEST PRACTICES. 

20 (a) IN GENERAL.—The Department of Justice shall 

21 publish best practices for the States to use— 

22 (1) in licensing auto body shops that perform 

23 work paid for by insurers; and 

24 (2) in licensing medical treatment provided to 

25 people who are injured in automobile accidents. 


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1 (b) GOAL.—The goal of publishing best practices as 

2 required under subsection (a) is to encourage the States 

3 to adopt such practices to limit the feasibility of commit4 ting insurance fraud. 

5 SEC. 4. INVESTIGATION OF FRAUDULENT PRACTICES. 

6 (a) IN GENERAL.—The Attorney General shall co7 operate with the offices of the United States Attorneys 

8 to— 

9 (1) aggressively investigate fraudulent chop 

10 shops and salvage yards; 

11 (2) aggressively prosecute automobile insurance 

12 fraud (as defined in section 1041 of title 18, United 

13 States Code, as added by section 2); and 

14 (3) report statistics on investigations, prosecu15 tions, and convictions of automobile insurance fraud. 

16 (b) REPORTING.—Statistics referred to in subsection 

17 (a)(3) shall be reported to the Committee on the Judiciary 

18 of the Senate and the appropriate Committee of the House 

19 of Representatives. 

20 SEC. 5. FEDERAL-STATE-LOCAL ANTI-AUTO INSURANCE 

21 TASK FORCE. 

22 (a) ESTABLISHMENT OF UNITS.—The Attorney Gen23 eral shall establish Federal-State-Local Anti-Auto Insur24 ance Fraud Task Forces in the offices of the United 

25 States Attorneys in the 10 cities in the United States that 


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1 are most severely affected, as determined by the Attorney 

2 General, by automobile insurance fraud (as defined in sec3 tion 1041 of title 18, United States Code, as added by 

4 section 2). 

5 (b) PURPOSE.—The special units established under 

6 subsection (a) shall investigate and prosecute automobile 

7 insurance fraud. 

8 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

9 are authorized to be appropriated to carry out this section 

10 for fiscal year 2011, and each fiscal year thereafter, such 

11 sums as are necessary to carry out the provisions of this 

12 Act. 

13 SEC. 6. INSURANCE COMPANY RIGHT TO MANDATORY IN14 SPECTION BEFORE INSURING. 

15 (a) RIGHT OF INSPECTION.—An insurance company 

16 shall have the right to require a mandatory inspection by 

17 an insurance company representative or agent of any 

18 motor vehicle prior to agreeing to provide insurance cov19 erage, except as provided under subsection (b). 

20 (b) EXEMPTION FROM PRE-INSURANCE INSPEC21 TION.—The right to inspect under subsection (a) may be 

22 waived by an insurance company under the following cir23 cumstances: 


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1 (1) The motor vehicle is already insured under 

2 the policy for either comprehensive or collision cov3 erage. 

4 (2) The motor vehicle is a new vehicle pur5 chased from a retail dealership, and the insurer is 

6 provided with— 

7 (A) a copy of the bill of sale containing a 

8 full description of the motor vehicle, including 

9 options and accessories, and a statement from 

10 the seller that the motor vehicle has no damage; 

11 or 

12 (B) a copy of the Manufacturer Statement 

13 of Origin, a statement from the seller that the 

14 motor vehicle has no damage, and a copy of the 

15 window sticker or dealer invoice containing a 

16 full description of the motor vehicle, including 

17 options or accessories. 

18 (3) An insured named in the policy has been in19 sured by the same insurer for 1 or more policy years 

20 under a policy that has continuously provided phys21 ical damage coverage. 

22 (4) The motor vehicle is rented or leased for 

23 less than 6 months, provided that the insurer is 

24 given a copy of the lease or rental agreement, and 

25 that the document contains a complete description of 


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1 the rented or leased motor vehicle, including its con2 dition at the time of lease or rental. 

3 (5) The motor vehicle is rated or insured under 

4 a commercial automobile insurance policy. 

5 (6) When pre-insurance inspection would cause 

6 serious hardship to the insured or applicant for in7 surance, and the hardship is documented in records 

8 maintained by the insurer. 

9 (c) NON-DISCRIMINATION OF PRE-INSURANCE IN10 SPECTIONS.—An insurer may require a pre-insurance in11 spection of an otherwise exempt motor vehicle. The deci12 sion to require a pre-insurance inspection of an exempt 

13 vehicle shall not be based on the age, race, sex, religion, 

14 or marital status of the applicant or insured, or the fact 

15 that the motor vehicle has been insured through a residual 

16 or non-voluntary insurance market. 

Æ 


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