HOUSE BILL No. 4149

 

February 2, 2005, Introduced by Reps. Condino, Tobocman, Kathleen Law, Plakas, Bieda, Lipsey, Vagnozzi, Gleason, Sak, Clack, Wojno and Accavitti and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending section 4507 (MCL 500.4507), as added by 1995 PA 276,

 

and by adding section 2006a; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2006a. (1) An insurer that falsely accuses an insured of

 

arson or a fraudulent insurance act engages in an unfair or

 

deceptive act or practice in the business of insurance.

 

     (2) An insurer that knowingly offers an amount less than a

 

reasonable person would believe the insured is entitled to receive

 

to resolve a claim engages in an unfair or deceptive act or

 

practice in the business of insurance. This conduct may be


 

determined by a court to constitute bad faith by the insurer.

 

     (3) If an insurer engages in conduct described in subsection

 

(1) or (2), all of the following apply:

 

     (a) The insured may bring an action against the insurer and

 

may recover all of the following:

 

     (i) Actual damages, including economic and noneconomic damages.

 

     (ii) Punitive and exemplary damages.

 

     (iii) Actual attorney fees and costs.

 

     (b) The commissioner may suspend, limit, or revoke the

 

insurer's authority.

 

     (c) The commissioner or the attorney general may bring an

 

action on behalf of 1 or more insureds to enforce the rights of the

 

insureds under this section.

 

     (4) As used in this section:

 

     (a) "Economic damages" means medical expenses, the cost of

 

rehabilitation services and custodial care, loss of wages, loss of

 

future earnings, loss of use of property, cost of repair or

 

replacement of property, loss of employment, or other pecuniary

 

damages.

 

     (b) "Fraudulent insurance act" means conduct described in

 

section 4503.

 

     (c) "Noneconomic damages" means pain, suffering,

 

inconvenience, physical impairment, disfigurement, mental anguish,

 

emotional distress, loss of society and companionship, loss of

 

consortium, injury to reputation, humiliation, or other

 

nonpecuniary damages.

 

     Sec. 4507. (1) Upon written request by an authorized agency to


 

an insurer, the insurer or an agent authorized by the insurer to

 

act on its behalf may release to the authorized agency, at the

 

authorized agency's expense,  any or  all information that is

 

considered important relating to  any  suspected insurance fraud.

 

An authorized agency may release information on suspected insurance

 

fraud to an insurer or an agent authorized by an insurer to act on

 

its behalf upon a showing of good cause by the insurer or the

 

insurer's authorized agent. This information may include, but is

 

not limited to, the following:

 

     (a) Insurance policy information relevant to an investigation,

 

including  any  an application for a policy.

 

     (b) Policy premium payment records that are available.

 

     (c) History of previous claims made by the insured.

 

     (d) Information relating to the investigation of the suspected

 

insurance fraud, including statements of any person, proofs of

 

loss, and notice of loss.

 

     (2) If an insurer knows or reasonably believes it knows the

 

identity of a person who it has reason to believe committed a

 

fraudulent insurance act or has knowledge of a suspected fraudulent

 

insurance act that is reasonably believed not to have been reported

 

to an authorized agency, then for the purpose of notification and

 

investigation, the insurer or an agent authorized by an insurer to

 

act on its behalf may notify an authorized agency of the knowledge

 

or belief and provide any additional information in accordance with

 

subsection (1).

 

     (3) An insurer providing information to an authorized agency

 

pursuant to subsection (2) has the right to request in writing


 

information in the possession or control of the authorized agency

 

relating to the same suspected fraudulent insurance act of which

 

the insurer notifies the authorized agency under subsection (2).

 

Upon a showing of good cause by the insurer, the authorized agency

 

may provide the requested information at the insurer's expense

 

within 30 days of the request.

 

     (4) In addition to providing information to an insurer under

 

subsection (3), the authorized agency provided with information

 

pursuant to subsection (1) or (2) may release or provide the

 

information to any other authorized agency.

 

     (5) Nothing in this chapter impairs a person's right, as of  

 

the effective date of this chapter  March 28, 1996, to submit to

 

the insurer or the insurer's representative a statement fully

 

explaining the basis of the claim and to have that statement placed

 

in the claim file.

 

     (6) An authorized agency, insurer, or an agent authorized by

 

an insurer to act on its behalf shall not request or release

 

information under subsection (1) for any purpose other than for the

 

investigation of suspected insurance fraud.

 

     (7) An insurer shall remove all documents relating to

 

allegations of fraudulent insurance acts that have been determined

 

to be unfounded from the claim file of a person who makes a request

 

for removal.

 

     Enacting section 1.  Section 4509 of the insurance code of

 

1956, 1956 PA 218, MCL 500.4509, is repealed.