Nebraska Department of Insurance

The Nebraska Department of Insurance will be establishing a new division within the Department to investigate insurance fraud. It is the goal of the Insurance Fraud Division to engage in those efforts that will have a positive impact on reducing the amount of premium dollars used to pay fraudulent claims. The Fraud Division will assist the insurance industry and law enforcement with facilitating the detection of insurance fraud and eliminating the occurrence of insurance fraud through development of fraud prevention programs.

The Fraud Division will conduct investigations pursuant to the Nebraska Insurance Fraud Act, a new law providing penalties for specific acts of insurance fraud. The Insurance Fraud Act also modifies provisions relating to insurance fraud as previously defined in the Insurance Code. The Insurance Fraud Act will be codified at Neb.Rev.Stat. §44-6601 et seq.

The Insurance Fraud Act applies to all insurers transacting insurance within the State of Nebraska including health maintenance organizations, legal service insurance corporations, prepaid limited health service organizations, dental and other similar health service plans, as well as entities licensed pursuant to the Intergovernmental Risk Management Act and Comprehensive Health Insurance Pool Act.

The Department has prepared a referral form for insurers to report suspected acts of insurance fraud and/or obtain assistance with handling such matters.

The following acts constitute insurance fraud as defined in the Insurance Fraud Act:

1. Presenting any statement or evidence in support of a denial of a claim for payment, or other benefit, pursuant to an insurance policy, knowing it contains false, incomplete, or misleading information concerning a material fact;
   
   
2. Assisting, abetting, soliciting or otherwise conspiring with another to engage in the fraudulent conduct described in paragraph #1;
   
   
3. Making any false or fraudulent representation as to death or disability of a policy or certificate holder in any statement or certificate, in order to obtain money or benefit from an insurer;
   
   
4. Transacting any contract which violates the Insurance Fraud Act;
   
   
5. Receiving money for the purpose of purchasing insurance and converting it to one's own benefit;
   
   
6. Willfully embezzling or converting money, funds, premiums, credits, or other property of an insurer or person engaged in the business of insurance;
   
   
7. Issuing fake or counterfeit insurance policies, certificates of insurance, insurance identification cards, or insurance binders;
   
   
8. Making any false or untrue statement of material fact in any document or statement filed with the Department of Insurance; or
   
   
9. Removing, concealing, altering, diverting, or destroying assets or records of an insurer or person engaged in the business of insurance, or attempting to do the same.
   
   

Insurers acting without malice, fraudulent intent, or bad faith shall be immune from civil liability for furnishing insurance fraud reports to the Director of Insurance. The Insurance Fraud Act further allows for restitution of fraudulently obtained benefits and for civil penalties not to exceed $5,000 for a first violation, $10,000 for a second violation, and $15,000 for a subsequent violation. Insurance fraud may alternatively result in criminal prosecutions.

Under the new law, evidence of insurance fraud may include, but is not limited to, any notice, statement, proof of loss, bill of lading, receipt for payment, invoice, account, estimate of property damage, bill for services, diagnosis, prescription, hospital or medical records, x-rays, test results or other evidence of loss, injury, or expense whether oral, written, or computer generated.

In view of the Department's responsibilities under the insurance fraud statutes coupled with the fact that fraudulent insurance activity is often discovered by agents, we are requesting that all companies notify their claim personnel and agents of this bulletin.

ROBERT G. LANGE

Director of Insurance