I
103D CONGRESS
1ST SESSION
H. R. 665
To amend title 18, United States Code, to provide that fraud against insur-
ance 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
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Insurance Fraud Pre-
vention Act of 1993’’.
SEC. 2. CRIMES BY OR AFFECTING PERSONS ENGAGED IN
THE BUSINESS OF INSURANCE WHOSE AC-
TIVITIES AFFECT INTERSTATE COMMERCE.
(a) IN GENERAL.—Chapter 47 of title 18, United
States Code, is amended by adding at the end thereof the
following new sections:
‘‘§1033. Crimes by or affecting persons engaged in
the business of insurance whose activi-
ties affect interstate commerce
‘‘(a)(1) Whoever is engaged in the business of insur-
ance whose activities affect interstate commerce and
knowingly, with the intent to deceive, makes any false ma-
terial statement or report or willfully and materially
overvalues any land, property or security—
‘‘(A) in connection with any financial reports or
documents presented to any insurance regulatory of-
ficial or agency or an agent or examiner appointed
by such official or agency to examine the affairs of
such person, and
‘‘(B) for the purpose of influencing the actions
of such official or agency or such an appointed agent
or examiner,
shall be punished as provided in paragraph (2).
‘‘(2) The punishment for an offense under paragraph
(1) is a fine as established under this title or imprison-
ment for not more than 10 years, or both, except that
the term of imprisonment shall be not more than 15 years
if the statement or report or overvaluing of land, property,
or security jeopardized the safety and soundness of an in-
surer and was a significant cause of such insurer being
placed in conservation, rehabilitation, or liquidation by an
appropriate court.
‘‘(b)(1) Whoever—
‘‘(A) acting as, or being an officer, director,
agent, or employee of, any person engaged in the
business of insurance whose activities affect inter-
state commerce, or
‘‘(B) is engaged in the business of insurance
whose activities affect interstate commerce or is in-
volved (other than as an insured or beneficiary
under a policy of insurance) in a transaction relating
to the conduct of affairs of such a business,
willfully embezzles, abstracts, purloins, or misappropriates
any of the moneys, funds, premiums, credits, or other
property of such person so engaged shall be punished as
provided in paragraph (2).
‘‘(2) The punishment for an offense under paragraph
(1) is a fine as provided under this title or imprisonment
for not more than 10 years, or both, except that if such
embezzlement, abstraction, purloining, or misappropria-
tion described in paragraph (1) jeopardized the safety and
soundness of an insurer and was a significant cause of
such insurer being placed in conservation, rehabilitation,
or liquidation by an appropriate court, such imprisonment
shall be not more than 15 years. If the amount or value
so embezzled, abstracted, purloined, or misappropriated
does not exceed $5,000, whoever violates paragraph (1)
shall be fined as provided in this title or imprisoned not
more than one year, or both.
‘‘(c)(1) Whoever is engaged in the business of insur-
ance and whose activities affect interstate commerce or is
involved (other than as an insured or beneficiary under
a policy of insurance) in a transaction relating to the con-
duct of affairs of such a business, knowingly makes any
false entry of material fact in any book, report, or state-
ment of such person engaged in the business of insurance
with intent to deceive any person, including any officer,
employee, or agent of such person engaged in the business
of insurance, any insurance regulatory official or agency,
or any agent or examiner appointed by such official or
agency to examine the affairs of such person, about the
financial condition or solvency of such business shall be
punished as provided in paragraph (2).
‘‘(2) The punishment for an offense under paragraph
(1) is a fine as provided under this title or imprisonment
for not more than 10 years, or both, except that if the
false entry in any book, report, or statement of such per-
son jeopardized the safety and soundness of an insurer
and was a significant cause of such insurer being placed
in conservation, rehabilitation, or liquidation by an appro-
priate court, such imprisonment shall be not more than
15 years.
‘‘(d) Whoever, by threats or force or by any threaten-
ing letter or communication, corruptly influences, ob-
structs, or impedes or endeavors corruptly to influence, ob-
struct, or impede the due and proper administration of
the law under which any proceeding involving the business
of insurance whose activities affect interstate commerce
is pending before any insurance regulatory official or
agency or any agent or examiner appointed by such official
or agency to examine the affairs of a person engaged in
the business of insurance whose activities affect interstate
commerce, shall be fined as provided in this title or impris-
oned not more than 10 years, or both.
‘‘(e)(1)(A) Any individual who has been convicted of
any criminal felony involving dishonesty or a breach of
trust, or who has been convicted of an offense under this
section, and who willfully engages in the business of insur-
ance whose activities affect interstate commerce or partici-
pates in such business, shall be fined as provided in this
title or imprisoned not more than 5 years, or both.
‘‘(B) Any individual who is engaged in the business
of insurance whose activities affect interstate commerce
and who willfully permits the participation described in
subparagraph (A) shall be fined as provided in this title
or imprisoned not more than 5 years, or both.
‘‘(2) A person described in paragraph (1)(A) may en-
gage in the business of insurance or participate in such
business if such person has the written consent of any in-
surance regulatory official authorized to regulate the in-
surer, which consent specifically refers to this subsection.
‘‘(f) As used in this section—
‘‘(1) the term ‘business of insurance’ means—
‘‘(A) the writing of insurance, or
‘‘(B) the reinsuring of risks,
by an insurer, including all acts necessary or inci-
dental to such writing or reinsuring and the activi-
ties of persons who act as, or are, officers, directors,
agents, or employees of insurers or who are other
persons authorized to act on behalf of such persons;
‘‘(2) the term ‘insurer’ means any entity the
business activity of which is the writing of insurance
or the reinsuring of risks, and includes any person
who acts as, or is, an officer, director, agent, or em-
ployee of that business;
‘‘(3) the term ‘interstate commerce’ means—
‘‘(A) commerce within the District of Co-
lumbia, or any territory or possession of the
United States;
‘‘(B) all commerce between any point in
the State, territory, possession, or the District
of Columbia and any point outside thereof;
‘‘(C) all commerce between points within
the same State through any place outside such
State; or
‘‘(D) all other commerce over which the
United States has jurisdiction; and
‘‘(4) the term ‘State’ includes any State, the
District of Columbia, the Commonwealth of Puerto
Rico, the Northern Mariana Islands, the Virgin Is-
lands, American Samoa, and the Trust Territory of
the Pacific Islands.
‘‘§1034. Civil penalties and injunctions for violations
of section 1033
‘‘(a) The Attorney General may bring a civil action
in the appropriate United States district court against any
person who engages in conduct constituting an offense
under section 1033 and, upon proof of such conduct by
a preponderance of the evidence, such person shall be sub-
ject to a civil penalty of not more than $50,000 for each
violation or the amount of compensation which the person
received or offered for the prohibited conduct, whichever
amount is greater. If the offense has contributed to the
decision of a court of appropriate jurisdiction to issue an
order directing the conservation, rehabilitation, or liquida-
tion of an insurer, such penalty shall be remitted to the
appropriate regulatory official for the benefit of the policy-
holders, claimants, and creditors of such insurer. The im-
position of a civil penalty under this subsection does not
preclude any other criminal or civil statutory, common
law, or administrative remedy, which is available by law
to the United States or any other person.
‘‘(b) If the Attorney General has reason to believe
that a person is engaged in conduct constituting an of-
fense under section 1033, the Attorney General may peti-
tion an appropriate United States district court for an
order prohibiting that person from engaging in such con-
duct. The court may issue an order prohibiting that person
from engaging in such conduct if the court finds that the
conduct constitutes such an offense. The filing of a peti-
tion under this section does not preclude any other remedy
which is available by law to the United States or any other
person.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 47 of such title is amended by adding at the
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.’’.
SEC. 3. MISCELLANEOUS AMENDMENTS TO TITLE 18, UNIT-
ED STATES CODE.
(a) TAMPERING WITH INSURANCE REGULATORY
PROCEEDINGS.—Section 1515(a)(1) of title 18, United
States Code, is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(B);
(2) by inserting ‘‘or’’ at the end of subpara-
graph (C); and
(3) by adding at the end thereof the following
new subparagraph:
‘‘(D) a proceeding involving the business of
insurance whose activities affect interstate com-
merce before any insurance regulatory official
or agency or any agent or examiner appointed
by such official or agency to examine the affairs
of any person engaged in the business of insur-
ance whose activities affect interstate com-
merce; or’’.
(b) LIMITATIONS.—Section 3293 of such title is
amended by inserting ‘‘1033,’’ after ‘‘1014,’’.
(c) OBSTRUCTION OF CRIMINAL INVESTIGATIONS.—
Section 1510 of title 18, United States Code, is amended
by adding at the end the following new subsection:
‘‘(d)(1) Whoever—
‘‘(A) acting as, or being, an officer, director,
agent or employee of a person engaged in the busi-
ness of insurance whose activities affect interstate
commerce, or
‘‘(B) is engaged in the business of insurance
whose activities affect interstate commerce or is in-
volved (other than as an insured or beneficiary
under a policy of insurance) in a transaction relating
to the conduct of affairs of such a business,
with intent to obstruct a judicial proceeding, directly or
indirectly notifies any other person about the existence or
contents of a subpoena for records of that person engaged
in such business or information that has been furnished
to a Federal grand jury in response to that subpoena, shall
be fined as provided by this title or imprisoned not more
than 5 years, or both.
‘‘(2) As used in paragraph (1), the term ‘subpoena
for records’ means a Federal grand jury subpoena for
records that has been served relating to a violation of, or
a conspiracy to violate, section 1033 of this title.’’.
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