Kentucky Statutes 304.47-020 – Fraudulent insurance acts — Penalties — Compensatory damages — Application of section
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(1) For the purposes of this subtitle, a person or entity commits a “fraudulent insurance act” if he or she engages in any of the following, including but not limited to matters relating to workers’ compensation:
(a) Knowingly and with intent to defraud or deceive presents, causes to be presented, or prepares with knowledge or belief that it will be presented to an insurer, Board of Claims, Special Fund, or any agent thereof:
For details, see § 532.060 and § 532.090
1. Any written or oral statement as part of, or in support of, a claim for payment or other benefit pursuant to an insurance policy or from a “self- insurer” as defined by KRS Chapter 342, knowing that the statement contains any false, incomplete, or misleading information concerning any fact or thing material to a claim; or
2. Any statement as part of, or in support of, an application for an insurance policy, for renewal, reinstatement, or replacement of insurance, or in support of an application to a lender for money to pay a premium, knowing that the statement contains any false, incomplete, or misleading information concerning any fact or thing material to the application;
(b) Knowingly and willfully transacts any contract, agreement, or instrument which violates this title;
(c) Knowingly and with intent to defraud or deceive:
1. Receives money for the purpose of purchasing insurance, and fails to obtain insurance;
2. Fails to make payment or disposition of money or voucher as defined in KRS § 304.17A-750, as required by agreement or legal obligation, that comes into his or her possession while acting as a licensee under this chapter;
3. Presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, or to the commissioner, any statement, knowing that the statement contains any false, incomplete, or misleading information concerning any material fact or thing, as part of, or in support of one (1) or more of the following:
a. The rating of an insurance policy;
b. The financial condition of an insurer;
c. The formation, acquisition, merger, reconsolidation, dissolution, or withdrawal from one (1) or more lines of insurance in all or part of this Commonwealth by an insurer; or
d. A document filed with the commissioner; or
4. Engages in any of the following:
a. Solicitation or acceptance of new or renewal insurance risks on behalf of an insolvent insurer; or
b. Removal, concealment, alteration, tampering, or destruction of money, records, or any other property or assets of an insurer;
(d) Issues or knowingly presents fake or counterfeit insurance policies, certificates of insurance, insurance identification cards, insurance binders, or any other documents that purport to evidence insurance;
(e) Makes any false or fraudulent representation as to the death or disability of a policy or certificate holder in any written statement or certificate for the purpose of fraudulently obtaining money or benefit from an insurer;
(f) Engages in unauthorized insurance, as set forth in KRS § 304.11-030; or
(g) Assists, abets, solicits, or conspires with another to commit a fraudulent insurance act in violation of this subtitle.
(2) A person convicted of a violation of subsection (1) of this section shall be guilty of a Class A misdemeanor, unless the aggregate of the claim, benefit, or money referred to in subsection (1) of this section is:
(a) Five hundred dollars ($500) or more but less than ten thousand dollars
($10,000), in which case it is a Class D felony;
(b) Ten thousand dollars ($10,000) or more but less than one million dollars
($1,000,000), in which case it is a Class C felony; or
(c) One million dollars ($1,000,000) or more, in which case it is a Class B felony. (3) A person, with the purpose to establish or maintain a criminal syndicate or to
facilitate any of its activities, shall be guilty of engaging in organized crime, a Class
B felony, if he or she engages in any of the activities set forth in KRS § 506.120(1). (4) A person convicted of a crime established in this section shall be punished by:
(a) Imprisonment for a term:
1. Not to exceed the period set forth in KRS § 532.090 if the crime is a Class
A misdemeanor; or
2. Within the periods set forth in KRS § 532.060 if the crime is a Class D, C, or B felony;
(b) A fine, per occurrence, of:
1. For a misdemeanor, not more than one thousand dollars ($1,000) per individual nor five thousand dollars ($5,000) per corporation or twice the amount of gain received as a result of the violation, whichever is greater; or
2. For a felony, not more than ten thousand dollars ($10,000) per individual nor one hundred thousand dollars ($100,000) per corporation, or twice the amount of gain received as a result of the violation; whichever is greater; or
(c) Both imprisonment and a fine, as set forth in paragraphs (a) and (b) of this subsection.
(5) In addition to imprisonment, the assessment of a fine, or both, a person convicted of a crime established in this section may be ordered to make restitution to any victim
who suffered a monetary loss due to any actions by that person which resulted in the adjudication of guilt, and to the division for the cost of any investigation. The amount of restitution shall equal the monetary value of the actual loss or twice the amount of gain received as a result of the violation, whichever is greater.
(6) Any person damaged as a result of a violation of any provision of this section shall have a cause of action to recover compensatory damages, plus all reasonable investigation and litigation expenses, including attorneys’ fees, at the trial and appellate courts.
(7) The provisions of this section shall also apply to any agent, unauthorized insurer or its agents or representatives, or surplus lines carrier who, with intent, injures, defrauds, or deceives any claimant with regard to any claim. The claimant shall have the right to recover the damages provided in subsection (6) of this section.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 185, sec. 87, effective June 29, 2021. — Amended
2019 Ky. Acts ch. 143, sec. 1, effective June 27, 2019. — Amended 2018 Ky. Acts ch. 178, sec. 1, effective July 14, 2018. — Amended 2017 Ky. Acts ch. 74, sec. 99, effective June 29, 2017. — Amended 2010 Ky. Acts ch. 24, sec. 1582, effective July
15, 2010; and ch. 166, sec. 14, effective July 15, 2010. — Amended 2002 Ky. Acts ch. 207, sec. 11, effective July 15, 2002. — Amended 2000 Ky. Acts ch. 253, sec. 4, effective July 14, 2000. — Amended 1998 Ky. Acts ch. 213, sec. 7, effective July 15,
1998. — Amended 1996 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 87, effective December
12, 1996. — Created 1994 Ky. Acts ch. 496, sec. 18, effective July 15, 1994.
(a) Knowingly and with intent to defraud or deceive presents, causes to be presented, or prepares with knowledge or belief that it will be presented to an insurer, Board of Claims, Special Fund, or any agent thereof:
Attorney's Note
Under the Kentucky Statutes, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| Class B felony | between 10 and 20 years | between $1,000 and $10,000 |
| Class D felony | between 1 and 5 years | between $1,000 and $10,000 |
| Class A misdemeanor | up to 12 months | up to $500 |
Terms Used In Kentucky Statutes 304.47-020
- Action: includes all proceedings in any court of this state. See Kentucky Statutes 446.010
- agent: includes managing general agent unless the context requires otherwise. See Kentucky Statutes 304.9-085
- Appellate: About appeals; an appellate court has the power to review the judgement of another lower court or tribunal.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: may extend and be applied to any corporation, company, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
- Trial: A hearing that takes place when the defendant pleads "not guilty" and witnesses are required to come to court to give evidence.
1. Any written or oral statement as part of, or in support of, a claim for payment or other benefit pursuant to an insurance policy or from a “self- insurer” as defined by KRS Chapter 342, knowing that the statement contains any false, incomplete, or misleading information concerning any fact or thing material to a claim; or
2. Any statement as part of, or in support of, an application for an insurance policy, for renewal, reinstatement, or replacement of insurance, or in support of an application to a lender for money to pay a premium, knowing that the statement contains any false, incomplete, or misleading information concerning any fact or thing material to the application;
(b) Knowingly and willfully transacts any contract, agreement, or instrument which violates this title;
(c) Knowingly and with intent to defraud or deceive:
1. Receives money for the purpose of purchasing insurance, and fails to obtain insurance;
2. Fails to make payment or disposition of money or voucher as defined in KRS § 304.17A-750, as required by agreement or legal obligation, that comes into his or her possession while acting as a licensee under this chapter;
3. Presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, or to the commissioner, any statement, knowing that the statement contains any false, incomplete, or misleading information concerning any material fact or thing, as part of, or in support of one (1) or more of the following:
a. The rating of an insurance policy;
b. The financial condition of an insurer;
c. The formation, acquisition, merger, reconsolidation, dissolution, or withdrawal from one (1) or more lines of insurance in all or part of this Commonwealth by an insurer; or
d. A document filed with the commissioner; or
4. Engages in any of the following:
a. Solicitation or acceptance of new or renewal insurance risks on behalf of an insolvent insurer; or
b. Removal, concealment, alteration, tampering, or destruction of money, records, or any other property or assets of an insurer;
(d) Issues or knowingly presents fake or counterfeit insurance policies, certificates of insurance, insurance identification cards, insurance binders, or any other documents that purport to evidence insurance;
(e) Makes any false or fraudulent representation as to the death or disability of a policy or certificate holder in any written statement or certificate for the purpose of fraudulently obtaining money or benefit from an insurer;
(f) Engages in unauthorized insurance, as set forth in KRS § 304.11-030; or
(g) Assists, abets, solicits, or conspires with another to commit a fraudulent insurance act in violation of this subtitle.
(2) A person convicted of a violation of subsection (1) of this section shall be guilty of a Class A misdemeanor, unless the aggregate of the claim, benefit, or money referred to in subsection (1) of this section is:
(a) Five hundred dollars ($500) or more but less than ten thousand dollars
($10,000), in which case it is a Class D felony;
(b) Ten thousand dollars ($10,000) or more but less than one million dollars
($1,000,000), in which case it is a Class C felony; or
(c) One million dollars ($1,000,000) or more, in which case it is a Class B felony. (3) A person, with the purpose to establish or maintain a criminal syndicate or to
facilitate any of its activities, shall be guilty of engaging in organized crime, a Class
B felony, if he or she engages in any of the activities set forth in KRS § 506.120(1). (4) A person convicted of a crime established in this section shall be punished by:
(a) Imprisonment for a term:
1. Not to exceed the period set forth in KRS § 532.090 if the crime is a Class
A misdemeanor; or
2. Within the periods set forth in KRS § 532.060 if the crime is a Class D, C, or B felony;
(b) A fine, per occurrence, of:
1. For a misdemeanor, not more than one thousand dollars ($1,000) per individual nor five thousand dollars ($5,000) per corporation or twice the amount of gain received as a result of the violation, whichever is greater; or
2. For a felony, not more than ten thousand dollars ($10,000) per individual nor one hundred thousand dollars ($100,000) per corporation, or twice the amount of gain received as a result of the violation; whichever is greater; or
(c) Both imprisonment and a fine, as set forth in paragraphs (a) and (b) of this subsection.
(5) In addition to imprisonment, the assessment of a fine, or both, a person convicted of a crime established in this section may be ordered to make restitution to any victim
who suffered a monetary loss due to any actions by that person which resulted in the adjudication of guilt, and to the division for the cost of any investigation. The amount of restitution shall equal the monetary value of the actual loss or twice the amount of gain received as a result of the violation, whichever is greater.
(6) Any person damaged as a result of a violation of any provision of this section shall have a cause of action to recover compensatory damages, plus all reasonable investigation and litigation expenses, including attorneys’ fees, at the trial and appellate courts.
(7) The provisions of this section shall also apply to any agent, unauthorized insurer or its agents or representatives, or surplus lines carrier who, with intent, injures, defrauds, or deceives any claimant with regard to any claim. The claimant shall have the right to recover the damages provided in subsection (6) of this section.
Effective: June 29, 2021
History: Amended 2021 Ky. Acts ch. 185, sec. 87, effective June 29, 2021. — Amended
2019 Ky. Acts ch. 143, sec. 1, effective June 27, 2019. — Amended 2018 Ky. Acts ch. 178, sec. 1, effective July 14, 2018. — Amended 2017 Ky. Acts ch. 74, sec. 99, effective June 29, 2017. — Amended 2010 Ky. Acts ch. 24, sec. 1582, effective July
15, 2010; and ch. 166, sec. 14, effective July 15, 2010. — Amended 2002 Ky. Acts ch. 207, sec. 11, effective July 15, 2002. — Amended 2000 Ky. Acts ch. 253, sec. 4, effective July 14, 2000. — Amended 1998 Ky. Acts ch. 213, sec. 7, effective July 15,
1998. — Amended 1996 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 87, effective December
12, 1996. — Created 1994 Ky. Acts ch. 496, sec. 18, effective July 15, 1994.