AN ACT relating to insurance.

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AN ACT relating to insurance. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 304.39-020 is amended to read as follows: 3
As used in this subtitle: 4
(1) "Added reparation benefits" mean benefits provided by optional added reparation 5
insurance;[.] 6
(2) "Basic reparation benefits" mean benefits providing reimburse ment for net loss 7
suffered through injury arising out of the operation, maintenance, or use of a motor 8
vehicle, subject, where applicable, to the limits, deductibles, exclusions, 9
disqualifications, and other conditions provided in this subtitle. The maximu m 10
amount of basic reparation benefits payable for all economic loss resulting from 11
injury to any one (1) person as the result of one (1) accident shall be ten thousand 12
dollars ($10,000), regardless of the number of persons entitled to such benefits or 13
the number of providers of security obligated to pay such benefits. Basic reparation 14
benefits consist of one (1) or more of the elements defined as "loss[.]"; 15
(3) "Basic reparation insured" means: 16
(a) A person identif ied by name as an insured in a contract of basic reparation 17
insurance complying with this subtitle; and 18
(b) While residing in the same household with a named insured, the following 19
persons not identified by name as an insured in any other contract of basic 20
reparation insurance complying with this subtitle: 21
1. A spouse or other relative of a named insured; and 22
2. A minor in the custody of a named insured or of a relative residing in 23
the same household with the named insured if he usually makes his 24
home in the same family unit, even though he temporarily lives 25
elsewhere;[.] 26
(4) "Injury" and "injury to person" mean bodily harm, sickness, disease, or death;[.] 27
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(5) "Loss" means accrued economic loss consisting only of medical expense, work 1
loss, replacement services loss, and, if injury causes death, survivor's economic loss 2
and survivor's replacement services loss. Noneconomic detriment is not loss. 3
However, economic loss is loss although caused by pain and suffering or physical 4
impairment. 5
(a) 1. "Medical expe nse" means reasonable charges incurred for reasonably 6
needed products, services, and accommodations, including those for 7
medical care, physical rehabilitation, rehabilitative occupational 8
training, licensed ambulance services, and other remedial treatment and 9
care. "Medical expense" may include non -medical remedial treatment 10
rendered in accordance with a recognized religious method of healing. 11
The term includes a total charge not in excess of five thousand dollars 12
($5,000)[one thousand dollars ($1,000)] per person for expenses in any 13
way related to funeral, cremation, and burial. It does not include that 14
portion of a charge for a room in a hospital, clinic, convalescent or 15
nursing home, or any other institution engaged in providing nursing care 16
and related services, in excess of a reasonable and customary charge for 17
semi-private accommodations, unless intensive care is medically 18
required. "Medical expense " shall include all healing arts professions 19
licensed by the Commonwealth of Kentucky. 20
2. a. A medical expense paid by a reparation obligor or its third -party 21
administrator pursuant to this subtitle shall not: 22
i. Except as provided in subpart ii. of this subdivision, exceed 23
the maximum fee allowed or listed for that expense on the 24
relevant schedule of fees est ablished pursuant to KRS 25
342.035 that is in effect at the time the medical expense is 26
incurred; or 27
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ii. Be less than the maximum fee allowed or listed for that 1
expense on the relevant schedule of fees established 2
pursuant to KRS 342.035 that is in effect on the effective 3
date of this Act. 4
Other requirements, terms, or conditions imposed under or 5
associated with the relevant schedule of fees established 6
pursuant to KRS 342.035 shall not apply to this subtitle. 7
b. Subdivision a. of this subparagraph shall not be construed as 8
making basic reparation benefits or added reparation benefits 9
primary. 10
3. Solely for the purpose of basic reparation benefits and added 11
reparation benefits, there shall be a presumption that any medical 12
expense[bill] submitted in accordanc e with this paragraph is 13
reasonable. 14
(b) "Work loss" means loss of income from work the injured person would 15
probably have performed if he had not been injured, and expenses reasonably 16
incurred by him in obtaining services in lieu of those he would have 17
performed for income, reduced by any income from substitute work actually 18
performed by him. 19
(c) "Replacement services loss" means expenses reasonably incurred in obtaining 20
ordinary and necessary services in lieu of those the injured person would have 21
performed, not for income but for the benefit of himself or his family, if he 22
had not been injured. 23
(d) "Survivor's economic loss" means loss after decedent's death of contributions 24
of things of economic value to his survivors, not including services they 25
would have received from the decedent if he had not suffered the fatal injury, 26
less expenses of the survivors avoided by reason of decedent's death. 27
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(e) "Survivor's replacement services loss" means expenses reasonably incurred by 1
survivors after decedent's death in obtaining ordinary and necessary services 2
in lieu of those the decedent would have performed for their benefit if he had 3
not suffered the fatal injury, less expenses of the survivors avoided by reason 4
of the decedent's death and not subtracted in calcul ating survivor's economic 5
loss;[.] 6
(6) "Use of a motor vehicle" means any utilization of the motor vehicle as a vehicle 7
including occupying, entering into, and alighting from it. It does not include: 8
(a) Conduct within the course of a business of repairing , servicing, or otherwise 9
maintaining motor vehicles unless the conduct occurs off the business 10
premises; or 11
(b) Conduct in the course of loading and unloading the vehicle unless the conduct 12
occurs while occupying, entering into, or alighting from it;[.] 13
(7) "Motor vehicle" means any vehicle which transports persons or property upon the 14
public highways of the Commonwealth, propelled by other than muscular power 15
except road rollers, road graders, farm tractors, vehicles on which power shovels 16
are mounted, su ch other construction equipment customarily used only on the site 17
of construction and which is not practical for the transportation of persons or 18
property upon the highways, such vehicles as travel exclusively upon rails, and such 19
vehicles as are propelled by electrical power obtained from overhead wires while 20
being operated within any municipality or where said vehicles do not travel more 21
than five (5) miles beyond the said limits of any municipality. "Motor vehicle " 22
shall not mean moped as defined in this section or an electric low -speed scooter as 23
defined in KRS 189.010;[.] 24
(8) "Moped" means either a motorized bicycle whose frame design may include one (1) 25
or more horizontal crossbars supporting a fuel tank so long as it also has pedals, or 26
a motorized bi cycle with a step -through type frame which may or may not have 27
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pedals rated no more than two (2) brake horsepower, a cylinder capacity not 1
exceeding fifty (50) cubic centimeters, an automatic transmission not requiring 2
clutching or shifting by the operator after the drive system is engaged, and capable 3
of a maximum speed of not more than thirty (30) miles per hour;[.] 4
(9) "Public roadway" means a way open to the use of the public for purposes of motor 5
vehicle travel;[.] 6
(10) "Net loss" means loss less benefits or advantages, from sources other than basic and 7
added reparation insurance, required to be subtracted from loss in calculating net 8
loss;[.] 9
(11) "Noneconomic detriment" means pain, suffering, inconvenience, physical 10
impairment, and other nonpecuniary damages recoverable under the tort law of this 11
Commonwealth. The term does not include punitive or exemplary damages;[.] 12
(12) "Owner" means a person, other than a lienholder or secured party, who owns or has 13
title to a motor vehicle or is entitled to the use and possession of a motor vehicle 14
subject to a security interest held by another person. The term does not include a 15
lessee under a lease not intended as security;[.] 16
(13) "Reparation obligor" means an insurer, self -insurer, or obligated government 17
providing basic or added reparation benefits under this subtitle;[.] 18
(14) "Survivor" means a person identified in KRS 411.130 as one entitled to receive 19
benefits by reason of the death of another person;[.] 20
(15) A "user" means a person who resides in a household in which any person owns or 21
maintains a motor vehicle;[.] 22
(16) "Maintaining a motor vehicle" means having legal custody, possession or 23
responsibility for a motor vehicle by one other than an owner or operator; and[.] 24
(17) "Security" means any continuing undertaking complying with this subtitle, for 25
payment of tort liabili ties, basic reparation benefits, and all other obligations 26
imposed by this subtitle. 27
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Section 2. KRS 304.39-130 is amended to read as follows: 1
Basic reparation benefits payable for work loss, survivor's economic loss, rep lacement 2
services loss, and survivor's replacement services loss arising from injury to one (1) 3
person and attributable to the calendar week during which the accident causing injury 4
occurs and to each calendar week thereafter may not exceed five hundred do llars 5
($500)[two hundred dollars ($200)], prorated for any lesser period. If the injured person's 6
earnings or work are seasonal or irregular, the weekly limit shall be equitably adjusted or 7
apportioned on an annual basis. 8
Section 3. KRS 304.39-210 is amended to read as follows: 9
(1) (a) Basic and added reparation benefits are payable monthly as loss accrues. 10
(b) Loss accrues not when injury occurs, but as work loss, replacement services 11
loss, or medical expense is incurred. 12
(c) Benefits are overdue if not paid within thirty (30) days after the reparation 13
obligor receives reasonable proof of the fact and amount of loss realized, 14
unless the reparation obligor elects to accumulate claims for periods not 15
exceeding thirty-one (31) days after the reparation obligor receives reasonable 16
proof of the fact and amount of loss realized, and pays them within fifteen 17
(15) days after the period of accumulation. 18
(d) Notwithstanding any provision of this chapter to the contrary, benefits are not 19
overdue if a reparation obligor has not made payment to a provider of services 20
due to the request of a secured person when the secured person is directing the 21
payment of benefits among the different elements of loss. 22
(e) If reasonable proof is supplie d as to only part of a claim, and the part totals 23
one hundred dollars ($100) or more, the part is overdue if not paid within the 24
time provided by this section. 25
(f) Medical expense benefits may be paid by the reparation obligor directly to 26
persons supplying products, services, or accommodations to the claimant, if 27
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the claimant so designates. 1
(g) A reparation obligor shall not, in any event, pay a charge for a medical 2
expense that exceeds the maximum fee permitted under subsection (5)(a)2. 3
of Section 1 of this Act. 4
(h) 1. Except as provided in subparagraph 2. of this paragraph, a person 5
providing a product, service, or accommodation shall submit a 6
statement of the charge for the medical expense within one hundred 7
eighty (180) days of the date the product, serv ice, or accommodation is 8
rendered. 9
2. Subparagraph 1. of this paragraph shall not apply to charges 10
submitted pursuant to KRS 304.39-241. 11
(i) A person providing a product, service, or accommodation shall not: 12
1. Knowingly collect, attempt to collect, coerce , or attempt to coerce, 13
directly or indirectly, the payment of any charge for a medical expense 14
covered by a reparation obligor that exceeds the maximum fee 15
permitted under subsection (5)(a)2. of Section 1 of this Act; or 16
2. Cause the credit of any basic o r added reparation insured to be 17
impaired by reason of the insured's failure or refusal to pay the 18
balance of any charge for a medical expense covered by a reparation 19
obligor that exceeds the maximum fee permitted under subsection 20
(5)(a)2. of Section 1 of this Act. 21
(2) Overdue payments bear interest at the rate of twelve percent (12%) per annum, 22
except that if delay was without reasonable foundation , the rate of interest shall be 23
eighteen percent (18%) per annum. 24
(3) (a) A claim for basic or added reparation benefits shall be paid without deduction 25
for the benefits which are to be subtracted pursuant to the provisions on 26
calculation of net loss if these benefits have not been paid to the claimant 27
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before the reparation benefits are overdue or the claim is paid. 1
(b) The reparation obligor is entitled to reimbursement from the person obligated 2
to make the payments or from the claimant who actually receives the 3
payments. 4
(4) (a) A reparation obligor may bring an action to recov er benefits which are not 5
payable, but are in fact paid, because of an intentional misrepresentation of a 6
material fact, upon which the reparation obligor relies, by the insured or by a 7
person providing an item of medical expense. 8
(b) The action may be bro ught only against the person providing the item of 9
medical expense, unless the insured has intentionally misrepresented the facts 10
or knows of the misrepresentation. 11
(c) An insurer may offset amounts he is entitled to recover from the insured under 12
this subsection against any basic or added reparation benefits otherwise due. 13
(5) (a) A reparation obligor who rejects a claim for basic reparation benefits shall 14
give to the claimant prompt written notice of the rejection, specifying the 15
reason. 16
(b) If a claim is rejected for a reason other than that the person is not entitled to 17
the basic reparation benefits claimed, the written notice shall inform the 18
claimant that he may file his claim with the assigned claims bureau and shall 19
give the name and address of the bureau. 20
SECTION 4. A NEW SECTION OF KRS CHAPTER 15 IS CREATED TO 21
READ AS FOLLOWS: 22
The Attorney General shall have concurrent jurisdiction with Commonwealth's 23
attorneys and county attorneys in the investigation and prosecu tion of offenses under 24
Section 5 of this Act. 25
Section 5. KRS 304.47-020 is amended to read as follows: 26
(1) For the purposes of this subtitle, a person or entity commits a "fraudulent insurance 27
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act" if he or she engages in any of the following, including but not limited to 1
matters relating to workers' compensation: 2
(a) Knowingly and with intent to defraud or deceive p resents, causes to be 3
presented, or prepares with knowledge or belief that it will be presented to an 4
insurer, Board of Claims, Special Fund, or any agent thereof: 5
1. Any written or oral statement as part of, or in support of, a claim for 6
payment or other benefit pursuant to an insurance policy or from a "self -7
insurer" as defined by KRS Chapter 342, knowing that the statement 8
contains any false, incomplete, or misleading information concerning 9
any fact or thing material to a claim; 10
2. To the extent not othe rwise included under subparagraph 1. of this 11
paragraph, any statement that misrepresents the scope of damages, 12
including repair costs and other expenses, associated with a property, 13
casualty, or property and casualty insurance claim, including any claim 14
for towing or storage benefits under a property, casualty, or property and 15
casualty insurance policy, except this subparagraph shall not apply to 16
offers or counteroffers by legal counsel representing a plaintiff or 17
defendant in a disputed claim involving bodily injury; or 18
3. Any statement as part of, or in support of, an application for an 19
insurance policy, for renewal, reinstatement, or replacement of 20
insurance, or in support of an application to a lender for money to pay a 21
premium, knowing that the statemen t contains any false, incomplete, or 22
misleading information concerning any fact or thing material to the 23
application; 24
(b) Knowingly and willfully transacts any contract, agreement, or instrument 25
which violates this title; 26
(c) Knowingly and with intent to defraud or deceive: 27
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1. Receives money for the purpose of purchasing insurance, and fails to 1
obtain insurance; 2
2. Fails to make payment or disposition of money or voucher as defined in 3
KRS 304.17A -750, as required by agreement or legal obligation, that 4
comes into his or her possession while acting as a licensee under this 5
chapter; 6
3. Presents, causes to be presented, or prepares with knowledge or belief 7
that it will be presented to or by an insurer, or to the commissioner, any 8
statement, knowing that the stat ement contains any false, incomplete, or 9
misleading information concerning any material fact or thing, as part of, 10
or in support of one (1) or more of the following: 11
a. The rating of an insurance policy; 12
b. The financial condition of an insurer; 13
c. The formation, acquisition, merger, reconsolidation, dissolution, or 14
withdrawal from one (1) or more lines of insurance in all or part of 15
this Commonwealth by an insurer; or 16
d. A document filed with the commissioner; or 17
4. Engages in any of the following: 18
a. Solicitation or acceptance of new or renewal insurance risks on 19
behalf of an insolvent insurer; or 20
b. Removal, concealment, alteration, tampering, or destruction of 21
money, records, or any other property or assets of an insurer; 22
(d) Issues or knowingly presents fake or counterfeit insurance policies, 23
certificates of insurance, insurance identification cards, insurance binders, or 24
any other documents that purport to evidence insurance; 25
(e) Makes any false or fraudulent repr esentation as to the death or disability of a 26
policy or certificate holder in any written statement or certificate for the 27
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purpose of fraudulently obtaining money or benefit from an insurer; 1
(f) Engages in unauthorized insurance, as set forth in KRS 304.11-030; or 2
(g) Assists, abets, solicits, or conspires with another to commit a fraudulent 3
insurance act in violation of this subtitle. 4
(2) A person convicted of a violation of subsection (1) of this section shall be guilty of 5
a Class A misdemeanor, unless th e aggregate of the claim, benefit, or money 6
referred to in subsection (1) of this section is: 7
(a) Five hundred dollars ($500) or more but less than ten thousand dollars 8
($10,000), in which case it is a Class D felony; 9
(b) Ten thousand dollars ($10,000) or more but less than one million dollars 10
($1,000,000), in which case it is a Class C felony; or 11
(c) One million dollars ($1,000,000) or more, in which case it is a Class B felony. 12
(3) A person, with the purpose to establish or maintain a criminal syndicate o r to 13
facilitate any of its activities, shall be guilty of engaging in organized crime, a Class 14
B felony, if he or she engages in any of the activities set forth in KRS 506.120(1). 15
(4) A person convicted of a crime established in this section shall be punished by: 16
(a) Imprisonment for a term: 17
1. Not to exceed the period set forth in KRS 532.090 if the crime is a Class 18
A misdemeanor; or 19
2. Within the periods set forth in KRS 532.060 if the crime is a Class D, C, 20
or B felony; 21
(b) A fine, per occurrence, of: 22
1. For a misdemeanor, not more than one thousand dollars ($1,000) per 23
individual nor five thousand dollars ($5,000) per corporation or twice 24
the amount of gain received as a result of the violation, whichever is 25
greater; or 26
2. For a felony, not more than ten thousand dollars ($10,000) per 27
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individual nor one hundred thousand dollars ($100,000) per corporation, 1
or twice the amount of gain received as a result of the violation; 2
whichever is greater; or 3
(c) Both imprisonment and a fine, as set forth in paragraphs (a) and (b) of this 4
subsection. 5
(5) (a) In addition to imprisonment, the assessment of a fine, or both, a person 6
convicted of a crime established in this section may be ordered to make 7
restitution to any victim who suffered a monetary loss due to any acti ons by 8
that person which resulted in the adjudication of guilt, and to the division for 9
the cost of any investigation. 10
(b) The amount of restitution shall equal the monetary value of the actual loss or 11
twice the amount of gain received as a result of the v iolation, whichever is 12
greater. 13
(6) Any person damaged as a result of a violation of any provision of this section shall 14
have a cause of action in a court of competent jurisdiction to recover 15
compensatory damages, plus all reasonable investigation and liti gation expenses, 16
including attorney's[attorneys'] fees[, at the trial and appellate courts]. 17
(7) (a) The Attorney General shall have concurrent jurisdiction to investigate and 18
prosecute violations of this section in accordance with Section 4 of this Act. 19
(b) The Attorney General, a Commonwealth's attorney, or a county attorney 20
shall refer to the commissioner any report, investigation, or discovery of a 21
fraudulent insurance act that is received, initiated, or discovered by the 22
Attorney General, Commonwealth' s attorney, or county attorney unless the 23
fraudulent insurance act has been previously reported to the commissioner. 24
(8) (a) The provisions of this section shall also apply to any agent, unauthorized 25
insurer or its agents or representatives, or surplus lines carrier who, with 26
intent, injures, defrauds, or deceives any claimant with regard to any claim. 27
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(b) The claimant shall hav e the right to recover the damages provided in 1
subsection (6) of this section. 2
SECTION 6. A NEW SECTION OF SUBTITLE 47 OF KRS CHAPTER 304 3
IS CREATED TO READ AS FOLLOWS: 4
Notwithstanding KRS 304.47 -055, the commissioner sh all publish for public 5
distribution on the department's website an annual insurance fraud report that 6
includes but is not limited to the following for the previous calendar year: 7
(1) The number of insurance fraud reports made to the division; 8
(2) The number and total dollar amount of cases or claims reported by the division 9
under KRS 304.47-050 for prosecution; and 10
(3) The number of cases or claims reported by the division under KRS 304.47 -050 11
that were prosecuted and the outcome of the prosecutions. 12
Section 7. Sections 1 to 3 of this Act apply to basic and added reparation 13
benefits that are issued or renewed on or after the effective date of this Act. 14