ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature First Regular Session
	Senate: COM DPA 4-3-0-0 | 3^rd Read 16-14-0-0 House: COM DPA 6-2-2-0

---

SB 1164: workers' compensation; fraud investigations; adjudications

Sponsor: Senator Kaiser, LD 2

House Engrossed

Overview

Requires the Industrial Commission of Arizona (ICA) to create a fraud unit to investigate workers' compensation fraud.

History

The ICA is the state regulatory agency responsible for processing and adjudicating a workers' compensation claim (Title 23, Chapter 6, A.R.S.). The ICA has exclusive jurisdiction over complaints involving alleged unfair claim processing practices or bad faith by an employer, self-insured employer, insurance carrier or claims processing representative relating to workers' compensation. The ICA investigates allegations of unfair claim processing or bad faith either on receiving a complaint or on its own motion (A.R.S. § 23-930).

Any person who knowingly makes a false statement or representation for a workers' compensation claim in order to obtain any compensation, benefit or payment for themself or another person is guilty of a class 6 felony, subject to a maximum of one and one-half years in prison, a $50,000 fine. If the person is a claimant for compensation, the claimant must also forfeit all rights to any further temporary or permanent disability compensation for the claim on which the false statement or representation was made after conviction of the offense (A.R.S. § 23-1028).

An insurer that believes a fraudulent claim has been made must send information relative to the claim to the director of the Department of Insurance and Financial Institutions (DIFI), including the identity of parties claiming loss or damage as a result of an accident and any other information DIFI's fraud unit may require. If the director determines, after an investigation, that fraud, deceit or intentional misrepresentation in the submission of the claim exits, the director may report the violations of the law to the reporting insurer, the appropriate licensing agency and to the appropriate county attorney or the attorney general for prosecution (A.R.S. § 20-466).

Provisions

1. Directs the ICA to establish a fraud unit to investigate fraudulent activities, statements or representations in connection with worker's compensation claims. (Sec. 1)

2. Allows the fraud unit to investigate fraud allegations on either the receival of a complaint or on the fraud unit's own motion. (Sec. 1)

3. Stipulates any allegation involving an unfair claim processing practice or bad faith by an employer, self-insured employer, insurance carrier or claims processing representative must be addressed in accordance with the unfair claim processing practice statutes. (Sec. 1)

4. Requires the ICA to adopt rules to establish a process for receiving complaints and conducting investigations and delineates requirements for such rules. (Sec. 1)

5. Permits the fraud unit to report violations of law to specified entities, if satisfied upon investigation that the fraudulent activities, statements or representations were made in connection with a workers' compensation benefits or payments claim, including the appropriate county attorney or the Attorney General for prosecution. (Sec. 1)

6. Specifies that the requirement for the fraud unit to investigate workers' compensation fraud does not limit:

a) the authority of the ICA, DIFI or any other entity to pursue any remedy in accordance with the unfair claim processing practice statutes or statutorily prescribed legal remedies; or

b) the obligation of an insurer to report a workers' compensation fraud claim in accordance with statutory requirements. (Sec. 1)

7. Amends House Bill 2431, as transmitted to the Governor, to clarify that the maximum amount of the additional premium a commercial workers' compensation insurer may charge and collect is the total aggregate from all the fire districts that the insurer insurers. (Sec. 2)

8. Contains a conditional enactment clause relating to amending House Bill 2431. (Sec. 3)

---------- DOCUMENT FOOTER ---------

                        SB 1164

Initials PRB/HG          Page 0 House Engrossed

---------- DOCUMENT FOOTER ---------