§ 4750. Insurer anti-fraud plans

(a) Every insurer with direct written premiums shall prepare, implement, and maintain an insurance anti-fraud plan. Each insurer’s anti-fraud plan shall outline specific procedures, appropriate to the type of insurance the insurer writes in this State, to:

(1) Prevent, detect, and investigate all forms of insurance fraud, including fraud involving the insurer’s employees or agents; fraud resulting from misrepresentations in the application, renewal, or rating of insurance policies; claims fraud; and security of the insurer’s data processing systems.

(2) Educate appropriate employees on fraud detection and the insurer’s anti-fraud plan.

(3) Provide for the hiring of or contracting for fraud investigators.

(4) Report insurance fraud to appropriate law enforcement and regulatory authorities in the investigation and prosecution of insurance fraud.

(5) Where appropriate, pursue restitution for financial loss caused by insurance fraud.

(6) Ensure that applicable State and federal privacy laws are complied with and that the confidential personal and financial information of consumers and insureds is protected.

(7) Comply with such other procedures as the Commissioner may require by rule.

(b) The Commissioner may require an insurer to file annually its anti-fraud plan with the Department and an annual summary of the insurer’s anti-fraud activities and results, including misclassification and miscoding. A workers’ compensation insurer shall file an anti-fraud plan with the Department of Labor, including information about fraud investigations, referrals, or prosecutions involving Vermont workers’ compensation claims, misclassifications, and miscoding, if requested by the Commissioner of Labor. Information regarding fraud investigations and referrals shall not be public unless the Commissioner of Labor or the Attorney General commences administrative or criminal proceedings. As used in this subsection:

(1) “Misclassification” means improperly classifying employees as independent contractors for the purposes of workers’ compensation insurance or unemployment insurance, as the context dictates.

(2) “Miscoding” means the improper categorization of employees under the National Council on Compensation Insurance (NCCI) worker classification codes, which account for varying levels of risk attributable to different job types for the purposes of determining workers’ compensation insurance premiums.

(c) This section confers no private rights of action. This section does not affect private rights of action conferred under other laws or court decisions.

(d) Enforcement. Notwithstanding any other provision of this title, the following are the exclusive monetary penalties for violation of this section. Insurers that fail to prepare, implement, maintain, or submit to the Department of Financial Regulation an insurance anti-fraud plan are subject to a penalty of $500.00 per day, not to exceed $10,000.00. (Added 2005, No. 179 (Adj. Sess.), § 2, eff. Jan. 1, 2007; amended 2007, No. 208 (Adj. Sess.), § 3; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)