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.