Subchapter III-A. Insurance Fraud.

§ 22–3225.01. Definitions.

For the purposes of this subchapter, the term:

(1) “Business of insurance” means the writing of insurance or reinsuring the risks by an insurer, including acts necessary or incidental to writing insurance or reinsuring risks and the activities of persons who act as or are officers, directors, agents, or employees of insurers, or who are other persons authorized to act on their behalf.

(2) “Commissioner” means the Commissioner of the Department of Insurance, Securities, and Banking, the Commissioner’s designee, or the Department of Insurance, Securities, and Banking.

(3) “District” means the District of Columbia.

(4) “Insurance” means a contract or arrangement in which one undertakes to:

(A) Pay or indemnify another as to loss from certain contingencies called “risks,” including through reinsurance;

(B) Pay or grant a specified amount or determinable benefit to another in connection with ascertainable risk contingencies;

(D) Act as a surety.

(5) “Insurance professional” means insurance sales agents or managing general agents, insurance brokers, insurance producers, insurance adjusters, and insurance third party administrators.

(6) “Insurer” includes any company defined by § 31-4202 and § 31-2501.03, authorized to do the business of insurance in the District, a hospital and medical services corporation, a fraternal benefit society, or a health maintenance organization. The term “insurer” shall not apply to a Medicaid health maintenance organization.

(7) “Malice” means an intentional or deliberate infliction of injury, by furnishing or disclosing information with knowledge that the information is false, or furnishing or disclosing information with reckless disregard for a strong likelihood that the information is false and that injury will occur as a result.

(8) “Person” means a natural person, company, corporation, joint stock company, unincorporated association, partnership, professional corporation, trust, or any other entity or combination of the foregoing.

(9) “Practitioner” means a person, licensed to practice a profession or trade in the District, whose services are compensated either in whole or in part, directly or indirectly, by insurance proceeds.

(10) “Premium” means the money paid or payable as the consideration for coverage under an insurance policy.

(Dec. 1, 1982, D.C. Law 4-164, § 125a; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; Mar. 27, 2003, D.C. Law 14-254, § 2(a), 50 DCR 233; June 18, 2003, D.C. Law 14-312, § 201, 50 DCR 306; June 11, 2004, D.C. Law 15-166, § 4(b)(1), 51 DCR 2817.)

Prior Codifications

1981 Ed., § 22-3825.1.

Effect of Amendments

D.C. Law 14-254, in par. (6), inserted the second sentence.

D.C. Law 14-312 rewrote par. (6) which had read as follows: “(6) ‘Insurer’ means any person who engages in the business of insurance for a fee or indemnifies another against loss, damage, or liability arising from a contingent or unknown event. The term ‘insurer’ shall include health maintenance organizations.”

D.C. Law 15-166 rewrote par. (2) which had read as follows: “(2) ’Commissioner’ means the Commissioner of Insurance and Securities Regulation, the Commissioner’s designee, or the Department of Insurance and Securities Regulation.”

Emergency Legislation

For temporary (90 day) amendment of section, see § 4(b)(1) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).

§ 22–3225.02. Insurance fraud in the first degree.

A person commits the offense of insurance fraud in the first degree if that person knowingly engages in the following conduct with the intent to defraud or to fraudulently obtain property of another and thereby obtains property of another or causes another to lose property and the value of the property obtained or lost is $1,000 or more:

(1) Presenting false information or knowingly conceals information regarding a material fact in any of the following transactions:

(A) Application for, rating of, or renewal of an insurance policy or reinsurance contract;

(B) Claim for payment or benefit pursuant to an insurance policy or reinsurance contract;

(D) Payment made in accordance with the terms of an insurance policy or reinsurance contract;

(E) Application used in a premium finance transaction;

(F) Solicitation for sale of an insurance policy;

(G) Application for a license or certificate of authority filed with the Commissioner or the chief insurance regulatory official of another jurisdiction;

(H) Financial statement or condition of any insurer or reinsurer;

(I) Acquisition, formation, merger, affiliation, reconsolidation, dissolution, or withdrawal from one or more lines of insurance or reinsurance in the District by an insurer or reinsurer;

(J) Issuance of written evidence of insurance; or

(K) Application for reinstatement of an insurance policy;

(2) Soliciting or accepting insurance or renewal of insurance by or for an insurer which the person knows is insolvent or has a strong likelihood of insolvency;

(3) Removal or tampering with the records of transaction, documentation, and other material assets of an insurer from the insurer or from the Department of Insurance and Securities Regulation;

(4) Diversion, misappropriation, conversion, or embezzlement of funds of an insurer, an insured, claimant or applicant regarding any of the following:

(A) Insurance transaction;

(B) Other insurance business activities by an insurer or insurance professional; or

(5) Transaction of the business of insurance in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of insurance; or

(6) Employing or using any other person or acting as the agent of any other person to procure a client, patient, or customer for the purpose of falsely or fraudulently obtaining benefits under a contract of insurance or asserting a false or fraudulent claim against an insured or insurer.

(Dec. 1, 1982, D.C. Law 4-164, § 125b; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; July 25, 2006, D.C. Law 16-144, § 2(a), 53 DCR 2838; June 3, 2011, D.C. Law 18-377, § 12(b), 58 DCR 1174.)

Prior Codifications

1981 Ed., § 22-3825.2.

Section References

This section is referenced in § 16-801, § 22-3225.03, § 22-3225.03a, and § 22-3225.04.

Effect of Amendments

D.C. Law 16-144 rewrote the lead-in language and par. (6), which had read as follows: “A person commits the offense of insurance fraud in the first degree if, knowingly and with intent to defraud, that person makes an act or omission concerning any of the following:” “(6) Attempt to commit, aiding and abetting in the commission of, or conspiracy to commit the acts or omissions specified in this section.”

D.C. Law 18-377 substituted “$1,000” for “$250”.

Emergency Legislation

For temporary (90 day) amendment of section, see § 512(b) of Public Safety Legislation Sixty-Day Layover Emergency Amendment Act of 2010 (D.C. Act 18-693, January 18, 2011, 58 DCR 640).

For temporary (90 day) amendment of section, see § 512(b) of Public Safety Legislation Sixty-Day Layover Congressional Review Emergency Amendment Act of 2011 (D.C. Act 19-45, April 20, 2011, 58 DCR 3701).

§ 22–3225.03. Insurance fraud in the second degree.

A person commits the offense of insurance fraud in the second degree if that person knowingly engages in conduct specified in § 22-3225.02 with the intent to defraud or to fraudulently obtain property of another and the value of the property which is sought to be obtained is $1,000 or more.

(Dec. 1, 1982, D.C. Law 4-164, § 125c; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; July 25, 2006, D.C. Law 16-144, § 2(b), 53 DCR 2838; June 3, 2011, D.C. Law 18-377, § 12(c), 58 DCR 1174.)

Prior Codifications

1981 Ed., § 22-3825.3.

Section References

This section is referenced in § 16-801 and § 22-3225.04.

Effect of Amendments

D.C. Law 16-144 rewrote the section.

D.C. Law 18-377 substituted “$1,000” for “$250”.

Emergency Legislation

For temporary (90 day) amendment of section, see § 512(c) of Public Safety Legislation Sixty-Day Layover Emergency Amendment Act of 2010 (D.C. Act 18-693, January 18, 2011, 58 DCR 640).

For temporary (90 day) amendment of section, see § 512(c) of Public Safety Legislation Sixty-Day Layover Congressional Review Emergency Amendment Act of 2011 (D.C. Act 19-45, April 20, 2011, 58 DCR 3701).

§ 22–3225.03a. Misdemeanor insurance fraud.

A person commits the offense of misdemeanor insurance fraud if that person knowingly engages in conduct specified in § 22-3225.02 with the intent to defraud or to fraudulently obtain property of another.

§ 22–3225.04. Penalties.

(a) Any person convicted of insurance fraud in the first degree shall be fined not more than the amount set forth in § 22-3571.01 or imprisoned for not more than 15 years, or both.

(b)(1) Except as provided in paragraph (2) of this subsection, any person convicted of insurance fraud in the second degree shall be fined not more than the amount set forth in § 22-3571.01 or imprisoned for not more than 5 years, or both.

(2) Any person convicted of insurance fraud in the second degree who has been convicted previously of insurance fraud pursuant to § 22-3225.02 or § 22-3225.03, or a felony conviction based on similar grounds in any other jurisdiction, shall be fined not more than the amount set forth in § 22-3571.01 or imprisoned for not more than 10 years, or both.

(c) Any person convicted of misdemeanor insurance fraud shall be fined not more than the amount set forth in § 22-3571.01 or imprisoned for not more than 180 days, or both.

(d) A person convicted of a felony violation of this subchapter shall be disqualified from engaging in the business of insurance, subject to 18 U.S.C. § 1033(e)(2).

(Dec. 1, 1982, D.C. Law 4-164, § 125d; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; June 19, 2001, D.C. Law 13-313, § 12(a), 48 DCR 1873; July 25, 2006, D.C. Law 16-144, § 2(d), 53 DCR 2838; June 11, 2013, D.C. Law 19-317, § 205(l), 60 DCR 2064.)

Prior Codifications

1981 Ed., § 22-3825.4.

Section References

This section is referenced in § 22-3225.05.

Effect of Amendments

D.C. Law 13-313, in subsec. (b)(2), validated a previously made technical correction.

D.C. Law 16-144 rewrote the section.

The 2013 amendment by D.C. Law 19-317 substituted “not more than the amount set forth in § 22-3571.01” for “not more than $50,000” in (a), for “not more than $10,000” in (b)(1), for “not more than $20,000” in (b)(2), and for “not more than $1,000” in (c).

Emergency Legislation

For temporary (90 days) amendment of this section, see § 205(l) of the Criminal Fine Proportionality Emergency Act of 2013 (D.C. Act 20-45, April 1, 2013, 60 DCR 5400, 20 DCSTAT 1300).

Editor's Notes

Applicability of D.C. Law 19-317: Section 401 of D.C. Law 19-317 provided that the act shall apply only to offenses committed on or after June 11, 2013.

§ 22–3225.05. Restitution.

(a) In addition to the penalties provided under § 22-3225.04, a person convicted under this subchapter shall make monetary restitution for any loss caused by the offense. The court shall determine the form and method of payment which, if by installment, shall not exceed 5 years.

(b) Any person, including the District, injured as the result of an insurance fraud in the first degree may bring suit in the appropriate court to recover ordinary damages including attorney’s fees and other costs and punitive damages which shall not be less than $500 nor more than $50,000. Except where punitive damages are sought, the court shall award treble damages where the offense is proven by clear and convincing evidence to be in accordance with an established pattern or practice.

(c) Notwithstanding any action that may be brought by the United States Attorney’s office to recoup its costs in prosecuting these cases, the Corporation Counsel may bring a civil suit against any person convicted under this subchapter in order to recover investigation and prosecution-related costs incurred by the District.

(d) A suit under subsection (b) of this section must be filed within 3 years of the act constituting the offense or within 3 years of the time the plaintiff discovered or with reasonable diligence could have discovered the act, whichever is later. This 3 year statute of limitations shall not apply to the District.

(e) Remedies provided in this section shall be exclusive and may not be claimed in conjunction with any other remedies available under the law.

§ 22–3225.06. Indemnity.

An insurer shall not be liable for the following:

(1) Damages or restitution provided by this subchapter, either jointly, severably, or as a third party, for insurance fraud offense committed by an insured; or

(2) The defense of an insured or other person who is charged with insurance fraud.

§ 22–3225.07. Practitioners.

(a) Notwithstanding any other provisions of law, the offenses of insurance fraud in the first degree or the second degree shall be deemed a crime of moral turpitude for the purposes of professional or trade license.

(b) The Commissioner, court, or prosecutor shall notify the appropriate licensing authority, and the person who is injured by the offense may notify the appropriate licensing authority of any conviction.

(Dec. 1, 1982, D.C. Law 4-164, § 125g; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; Mar. 27, 2003, D.C. Law 14-254, § 2(b), 50 DCR 233; July 25, 2006, D.C. Law 16-144, § 2(e), 53 DCR 2838.)

Prior Codifications

1981 Ed., § 22-3825.7.

Effect of Amendments

D.C. Law 14-254, in subsec. (b), struck “The court or prosecutor” and inserted “ The Commissioner, court, or prosecutor”, and deleted the second sentence which had read: “The Commissioner shall hold a disciplinary hearing to determine whether the license or certificate of authority of the convicted practitioner should be suspended or revoked.”

D.C. Law 16-144, in subsec. (a), substituted “offenses of insurance fraud in the first degree or the second degree” for “offense of insurance fraud in the first degree”.

§ 22–3225.08. Investigation and report of insurance fraud.

(a) Based upon a reasonable belief, an insurer, insurance professional, and any other pertinent person, shall report to the Metropolitan Police Department or the Department of Insurance, Securities, and Banking, actions that may constitute the commission of insurance fraud, and assist in the investigation of insurance fraud by reasonably providing information when required by an investigating authority.

(b) The Commissioner may investigate suspected fraudulent insurance acts and persons engaged in the business of insurance. Nothing in this subchapter shall preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law.

(c) An insurer, insurance professional, or any other pertinent person who fails to reasonably assist the investigation of an insurance fraud or fails to report an insurance fraud, and who is injured by that insurance fraud, shall be estopped from receiving restitution as provided in § 22-3225.05.

(d) Any information, documentation, or other evidence provided under this section by an insurer, its employees, producers, or agents, or by any other person, to the Department of Insurance, Securities, and Banking, the Metropolitan Police Department, or any other law enforcement agency in connection with any investigation of suspected fraud is not subject to public inspection as long as the Commissioner or law enforcement agency deems the withholding to be necessary to complete an investigation of the suspected fraud or to protect the person or entity investigated from unwarranted injury.

(e) Repealed.

(Dec. 1, 1982, D.C. Law 4-164, § 125h; as added Apr. 27, 1999, D.C. Law 12-273, § 2, 46 DCR 1132; Mar. 27, 2003, D.C. Law 14-254, § 2(c), 50 DCR 233; June 11, 2004, D.C. Law 15-166, § 4(b)(2), 51 DCR 2817; Mar. 2, 2007, D.C. Law 16-191, § 44(a), 53 DCR 6794.)

Prior Codifications

1981 Ed., § 22-3825.8.

Effect of Amendments

D.C. Law 14-254 repealed subsec. (e) which had read:

“(e) No person shall be subject to civil liability for any cause of action, or subject to criminal prosecution, for reporting any suspected insurance fraud if:

“(1) The report was made to the Department of Insurance and Securities Regulation, the Metropolitan Police Department, or any other law enforcement authority, or to any insurer, insurance agent, or other person who collects, reviews, or analyzes information concerning insurance fraud, by any individual or entity suspecting insurance fraud; and

“(2) The person or entity reporting the suspected fraud acted without malice when making the report.”

D.C. Law 15-166, in subsecs. (a) and (d), substituted “Department of Insurance, Securities, and Banking” for “Department of Insurance and Securities Regulation”.

D.C. Law 16-191 validated a previously made technical correction in the directory language of D.C. Law 15-166 which required no change in text.

Emergency Legislation

For temporary (90 day) amendment of section, see § 4(b)(2) of Consolidation of Financial Services Emergency Amendment Act of 2004 (D.C. Act 15-381, February 27, 2004, 51 DCR 2653).

§ 22–3225.09. Insurance fraud prevention and detection.

(a) Within 6 months of April 27, 1999, every insurer licensed in the District shall submit to the Department of Insurance and Securities Regulation, an insurance fraud prevention and detection plan (“plan”). The plan shall indicate specific procedures for the accomplishment of the following:

(1) Prevention, detection, and investigation of insurance fraud;

(2) Orientation of employees on insurance fraud prevention and detection;

(3) Employment of fraud investigators;

(4) Reporting of insurance fraud to the appropriate authorities; and

(5) Collection of restitution for financial loss caused by insurance fraud.

(b) The Commissioner may review the plan for compliance with this section and may order reasonable modification or request a summary of the plan. The Commissioner may establish by regulation a fine for an insurer failing to comply with the plan. The plan shall not be deemed a public record for the purposes of any public records or subchapter II of Chapter 5 of Title 2.

(c) Notwithstanding any other provisions of law, an insurer who fails to submit an insurance prevention and detection plan, or the warning provision required by subsection (d) of this section shall be subject to a fine of $500 per day, not to exceed $25,000.

(d) No later than 6 months after April 27, 1999, all insurance application forms and all claim forms shall contain a conspicuous warning in language the same or substantially similar to the following:

“WARNING: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant.”.

(e) None of the requirements of this section shall be deemed to apply to reinsurers, reinsurance contracts, reinsurance agreements, or reinsurance claims transactions.

§ 22–3225.10. Regulations.

The Commissioner may promulgate regulations deemed necessary by the Commissioner for the administration of this subchapter.

§ 22–3225.11. Limited law enforcement authority.

(a) The Commissioner shall have the power to issue and serve subpoenas, to compel witnesses to appear and testify, and to produce all books, records, papers, or documents in any insurance investigation or examination.

(b) Any willful false testimony by a witness before the Commissioner as to any material fact shall constitute perjury and shall be punished in the manner prescribed by law for such offense.

(c) If any witness having been personally summoned shall neglect or refuse to obey the subpoena issued pursuant to subsection (a) of this section, the Commissioner may, through the Corporation Counsel, report that fact to the Superior Court of the District of Columbia or one of the judges thereof and the Court, or any judge thereof, may compel obedience to the subpoena to the same extent as witnesses may be compelled to obey the subpoenas of the Court.

(d) The Commissioner may administer oaths to witnesses summoned in any investigation or examination as set forth in subsection (a) of this section.

§ 22–3225.12. Annual anti-fraud activity reporting requirement.

Each insurer and health maintenance organization licensed in the District shall file an annual anti-fraud activity report on March 31st of each year with the Commissioner, which shall contain information about the special investigation unit’s insurance fraud activities during the preceding calendar year. Annual anti-fraud activity reports filed with the Commissioner shall be kept confidential and shall not be subject to the disclosure requirements of subchapter II of Chapter 5 of Title 2.

§ 22–3225.13. Immunity.

No person shall be subject to civil liability or criminal prosecution for reporting any suspected insurance fraud if:

(1) The report was made to:

(A) The Department of Insurance, Securities, and Banking, the Metropolitan Police Department, or any other law enforcement authority; or

(B) Any insurer, insurance agent, or other person who collects, reviews, or analyzes information concerning insurance fraud; and

(2) The person or entity reporting the suspected fraud acted without malice when making the report.

§ 22–3225.14. Prohibition of solicitation.

(a)(1) Except as provided in paragraph (2) of this subsection, it is unlawful for a practitioner, whether directly or through a paid intermediary, to solicit for financial gain a client, patient, or customer within 21 days of a motor vehicle accident with the intent to seek benefits under a contract of insurance or to assert a claim against an insured, a governmental entity, or an insurer on behalf of any person arising out of the accident.

(2) The prohibition in paragraph (1) of this subsection does not prohibit:

(A) A practitioner from soliciting a client, patient, or customer by regular mail through the U.S. Postal Service or through the use of general advertising directed to the public;

(B) A practitioner or his agents from contacting a potential client, patient, or customer, or a family member, friend, or coworker of the potential client, patient, or customer, where the practitioner has a preexisting business or personal relationship with the potential client, patient, or customer;

(C) A practitioner or his agents from contacting a potential client, patient, or customer where the contact was initiated by the potential client, patient, or customer, or by a family member, friend, or coworker of the potential client, patient or customer; or

(D) Providing advice and assistance to incarcerated persons in pursuing administrative remedies that may be a prerequisite to suit or in seeking appropriate medical care and treatment.

(b) Except as provided in subsection (a)(2) of this section, it is unlawful for a person to solicit for financial gain a client, patient, or customer within 21 days of a motor vehicle accident for the purpose of directing the client, patient, or customer to a practitioner.

(c) A person or practitioner found by clear and convincing evidence to have violated the provisions of this section shall be subject to a civil penalty of $1,000. The Mayor may increase this penalty by rulemaking.

(d)(1) If a person involved in an automobile accident, or his parent or guardian, executes, within 21 days of a motor vehicle accident, a release of liability, without the assistance or guidance of legal counsel, pursuant to the settlement of a claim for personal injury, that person or his parent or guardian may void the release; provided, that the insurance carrier or other settling party receives written notice of the intent to void the release within 14 days of the date that the release was executed, and the written notice is accompanied by any check or settlement proceeds related to the claim for personal injury that had been delivered to the claimant.

(2) A release of liability executed within 21 days of the accident giving rise to the claim of personal injury by a person who is not represented by counsel shall contain a notice of the claimant’s right to rescind conspicuously and separately stated on the release.

(e) The provisions of this section are not severable.

§ 22–3225.15. Jurisdiction.

An offense under this subchapter shall be deemed to be committed in the District of Columbia, regardless of whether the offender is physically present in the District of Columbia, if:

(1) The insured, insurer, claimant, or applicant is a resident of, or located in, the District of Columbia;

(2) A District of Columbia address is used on an application, policy, or claim for payment or benefit;

(3) The services for which a claim is made were provided or alleged to have been provided in the District of Columbia;

(4) Payment of a claim or benefit was made or was to be made to an address in the District of Columbia;

(5) The loss occurred or is alleged to have occurred in the District of Columbia; or

(6) Any part of the offense takes place in the District of Columbia.