[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2728 Introduced in Senate (IS)]
2d Session
S. 2728
To create a penalty for automobile insurance fraud, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 22, 2004
Mr. Schumer introduced the following bill; which was read twice and
referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
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:
``1038. Automobile insurance fraud''.
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.
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