Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
304.2-140,
304.47-010,
304.47-020,
304.47-040,
304.47-050
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110(1) authorizes the
Commissioner of Insurance to promulgate administrative regulations necessary
for or as an aid to the effectuation of any provision of the Kentucky Insurance
Code as established in
KRS
304.1-010. This administrative regulation
establishes insurer requirements and a comprehensive process for reporting and
investigating fraudulent insurance acts.
Section
1. Definitions.
(1) "Division"
is defined by
KRS
304.47-010(6).
(2) "Special investigative unit" or "SIU"
means a unit to investigate fraudulent insurance acts as established by
KRS
304.47-080.
Section 2. Scope. This administrative
regulation shall apply to all insurers authorized to do business in the
Commonwealth that are not otherwise exempted by
KRS
304.47-080(1).
Section 3. Primary Anti-fraud Contacts. To
facilitate communication with the division, an insurer shall designate two (2)
primary contact persons, one (1) of whom shall be the head of the SIU, who
shall communicate with the division on matters relating to the reporting,
investigation, and prosecution of suspected fraudulent insurance acts, as
established in
KRS
304.47-020.
Section 4. Special Investigative Units and
Anti-fraud Plans.
(1) An insurer shall
maintain an SIU to fulfill the requirements of
KRS
304.47-080.
(2) In conjunction with its SIU, an insurer
shall:
(a) Implement systematic and effective
methods to detect and investigate suspected fraudulent insurance
claims;
(b) Educate and train all
claims handlers to identify possible insurance fraud;
(c) Develop policies for the SIU to
cooperate, coordinate, and communicate with:
1. The insurer's claims handlers, legal
personnel, technical support personnel, and database support personnel;
and
2. The division and other
relevant law enforcement agencies; and
(d) Develop and submit to the division a
written anti-fraud plan, which shall include:
1. Acknowledgment of duty to report to the
division, including mandatory reporting of the determination that a suspected
fraudulent act has been committed within fourteen (14) days;
2. SIU contact information;
3. SIU investigative ethics;
4. Procedures to detect and deter fraud;
and
5. Continuing education plans
for SIU staff.
Section 5. Compliance Report.
(1) Within ninety (90) days of admission, and
at least once every two (2) years, an insurer shall submit to the division a
written report stating how the insurer is complying with Section 4 of this
administrative regulation. The report shall also include:
(a) The total number of SIU investigative
staff responsible for cases in Kentucky, and whether or not any staff member
also investigate cases in other jurisdictions; and
(b)
1. If
the insurer formed the SIU in house and solely governs it, the year that the
SIU was formed; or
2. If the
insurer has contracted SIU services through another company, the identity of
the company providing SIU services and the initial year of the contract between
the insurer and the company.
(2) Within thirty (30) days of a material
change of the information provided in the compliance report, the insurer shall
amend the compliance report and resubmit it to the division.
Section 6. Reporting Fraudulent
Insurance Acts.
(1) All persons identified in
KRS
304.47-050(2) shall report
suspected fraudulent insurance acts to the division within fourteen (14) days
of determination that a suspected fraudulent act has been committed. Reports
submitted to a person or entity other than the division shall not satisfy the
reporting duty of
KRS
304.47-050(2). Reports shall
be submitted by:
(a) Completing a report on
the department's electronic services portal at
https://insurance.ky.gov/eservices/default.aspx;
or
(b) Submitting a completed
Uniform Suspected Insurance Fraud Reporting Form.
(c)
1. To
supplement the report required by this subsection and in addition to the
reports required by paragraph (a) or (b) of this subsection, persons identified
in
KRS
304.47-050(2) may also
report suspected fraudulent insurance acts through intermediaries including:
a. the National Association of Insurance
Commissioners' Online Fraud Reporting System;
b. The National Health care Anti-Fraud
Association; or
c. The National
Insurance Crime Bureau.
2. A report submitted through an intermediary
shall be subject to the confidentiality provisions in
KRS
304.47-055.
(2) All persons identified in
KRS
304.47-050(1) shall report
suspected fraudulent insurance acts to the division by:
(a) Completing a report on the department's
electronic services portal at
https://insurance.ky.gov/eservices/default.aspx;
or
(b) Submitting a completed
Uniform Suspected Insurance Fraud Reporting Form.
Section 7. Incorporation by
Reference.
(1) The "Uniform Suspected
Insurance Fraud Reporting Form," 7/2019, is incorporated by
reference.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Department of Insurance, Mayo-Underwood Building, 500 Mero Street, Frankfort,
Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
304.2-110,
304.47-055,
304.47-080