To create a penalty for automobile insurance fraud, and for other purposes.

July 22, 2004

Mr. SCHUMER introduced the following bill; which was read twice and referred to the Committee on the Judiciary

To create a penalty for automobile insurance fraud, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Cheaper Car Insurance Act of 2004'.

SEC. 2. AUTOMOBILE INSURANCE FRAUD.

(a) IN GENERAL- Chapter 47 of title 18, United States Code, is amended by inserting at the end the following:

`SEC. 1038. AUTOMOBILE INSURANCE FRAUD.

`(a) Whoever knowingly commits automobile insurance fraud shall be punished as provided in subsection (e).

`(b) Whoever knowingly acts as a runner, capper, or steerer shall be punished as provided in subsection (e).

`(c) Whoever knowingly acts as an organizer of an auto insurance fraud operation shall be punished as provided in subsection (e).

`(d) Whoever knowingly acts as a mastermind or leader of an auto insurance fraud operation shall be punished as provided in subsection (e).

`(e) The punishment for an offense under subsections (a), (b), (c), or (d) shall be as follows:

`(1) For any violation of subsection (a) in which the defendant is not also convicted of being a runner, capper, or steerer under subsection (b), an organizer under subsection (c), or a leader or master mind under subsection (d), such person shall be fined not more than $100,000, imprisoned not more than 5 years, or both. If the defendant has a prior conviction under subsection (a), such person shall be fined not more than $100,000, imprisoned not more than 10 years, or both.

`(2) For any violation of subsection (b), such person shall be fined not more than $100,000, imprisoned not more than 5 years, or both.

`(3) For any violation of subsection (c), such person shall be fined not more than $100,000, imprisoned not more than 10 years, or both.

`(4) For any violation of subsection (d), such person shall be fined not more than $100,000, imprisoned not more than 15 years, or both.

`(f) If a violation of subsection (a), (b), (c), or (d) results in costs that exceed $100,000, the fine imposed under subsection (b) may be in an amount greater than $100,000 in order to cover the resulting cost.

`(g) In this section--

`(1) the term `automobile insurance fraud' means fraud committed by any person who knowingly and intentionally presents a written statement or claim, causes a written statement or claim to be presented, or prepares a written statement or claim with knowledge or belief that it will be presented to or by an insurer, self-insurer, or any agent thereof, that such person knows--

`(A) contains materially false information concerning any fact material to an application, certificate, evidence, or claim referred to in paragraph (2); or

`(B) conceals, for the purpose of misleading, information concerning any fact material to an application, certificate, evidence, or claim referred to in paragraph (2);

`(2) the term `mastermind' or `leader' means any individual who knowingly solicits or employs 2 or more people, or conspires with 2 or more people, to engage in automobile insurance fraud, and who is not also a runner, capper, steerer, or an organizer;

`(3) the term `organizer' means any individual who knowingly solicits or employs a runner, capper, or steerer, or acts as a runner, capper, or steerer, with the intent of seeking to falsely or fraudulently obtain benefits under a contract of insurance, or to falsely or fraudulently assert a claim against an insured or an insurer for providing services to a client, patient, or customer;

`(4) the term `runner, capper, or steerer' means any person who, for either direct or indirect pecuniary benefit, knowingly procures or attempts to procure a client, patient, or customer at the direction of, or in cooperation with, a person committing automobile insurance fraud under subsection (b), regardless of whether or not the person otherwise participates in the fraud; and

`(5) the term `written statement or claim' means a written statement or submission by telephone, computer, or in any other electronic or digital form, that is part of, or in support of--

`(A) an application for the issuance of or the rating of a commercial insurance policy;

`(B) a certificate or evidence of self-insurance for commercial insurance or commercial self-insurance; or

`(C) a claim for payment or other benefit pursuant to an insurance policy or self-insurance program for commercial or personal insurance.'.

(b) CONFORMING AMENDMENT- The chapter analysis for chapter 47 of title 18, United States Code, is amended by adding at the end the following:

SEC. 3. BEST PRACTICES.

(a) IN GENERAL- The Department of Justice shall publish best practices for the States to use--

(1) in licensing auto body shops that perform work paid for by insurers; and

(2) in licensing medical treatment provided to people who are injured in automobile accidents.

(b) GOAL- The goal of publishing best practices as required under subsection (a) is to encourage the States to adopt such practices to limit the feasibility of committing insurance fraud.

SEC. 4. INVESTIGATION OF FRAUDULENT PRACTICES.

(a) IN GENERAL- The Attorney General shall cooperate with the offices of the United States Attorneys to--

(1) aggressively investigate fraudulent chop shops and salvage yards;

(2) aggressively prosecute automobile insurance fraud (as defined in section 1037 of title 18, United States Code); and

(3) report statistics on investigations, prosecutions, and convictions of automobile insurance fraud.

(b) REPORTING- Statistics referred to in subsection (a)(3) shall be reported to the Subcommittee on Administrative Oversight and the Courts of the Committee on the Judiciary of the Senate and the appropriate Committee of the House of Representatives.

SEC. 5. FEDERAL-STATE-LOCAL ANTI-AUTO INSURANCE TASK FORCE.

(a) ESTABLISHMENT OF UNITS- The Attorney General shall establish Federal-State-Local Anti-Auto Insurance Fraud Task Forces in the offices of the United States Attorneys in the 10 cities in the United States that are most severely affected, as determined by the Attorney General, by automobile insurance fraud (as defined in section 1037 of title 18, United States Code).

(b) PURPOSE- The special units established under subsection (a) shall investigate and prosecute automobile insurance fraud.

(c) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section $25,000,000 in fiscal year 2005, and such sums or fiscal years thereafter as determined by Congress.

SEC. 6. INSURANCE COMPANY RIGHT TO MANDATORY INSPECTION BEFORE INSURING.

(a) RIGHT OF INSPECTION- An insurance company shall have the right to require a mandatory inspection by an insurance company representative or agent of any motor vehicle prior to agreeing to provide insurance coverage, except as provided under subsection (b).

(b) EXEMPTION FROM PRE-INSURANCE INSPECTION- The right to inspect under subsection (a) may be waived by an insurance company under the following circumstances:

(1) The motor vehicle is already insured under the policy for either comprehensive or collision coverage.

(2) The motor vehicle is a new vehicle purchased from a retail dealership, and the insurer is provided with--

(A) a copy of the bill of sale containing a full description of the motor vehicle, including options and accessories, and a statement from the seller that the motor vehicle has no damage; or

(B) a copy of the Manufacturer Statement of Origin, a statement from the seller that the motor vehicle has no damage, and a copy of the window sticker or dealer invoice containing a full description of the motor vehicle, including options or accessories.

(3) An insured named in the policy has been insured by the same insurer for 1 or more policy years under a policy that has continuously provided physical damage coverage.

(4) The motor vehicle is rented or leased for less than 6 months, provided that the insurer is given a copy of the lease or rental agreement, and that the document contains a complete description of the rented or leased motor vehicle, including its condition at the time of lease or rental.

(5) The motor vehicle is rated or insured under a commercial automobile insurance policy.

(6) When pre-insurance inspection would cause serious hardship to the insured or applicant for insurance, and the hardship is documented in records maintained by the insurer.

(c) NON-DISCRIMINATION OF PRE-INSURANCE INSPECTIONS- An insurer may require a pre-insurance inspection of an otherwise exempt motor vehicle. The decision to require a pre-insurance inspection of an exempt vehicle shall not be based on the age, race, sex, religion, or marital status of the applicant or insured, or the fact that the motor vehicle has been insured through a residual or non-voluntary insurance market.

END