Bill Summary for Bill Number SB06-038

Date: 03/20/2006

Final
BILL SUMMARY for SB06-038

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View-->	Action Taken:
Moved to amend the reengrossed bill on page 2, lin Moved to refer Senate Bill 06-038, as amended, to	Pass Without Objection PASS

04:17 PM -- Senate Bill 06-038

Representative Knoedler, prime sponsor, presented Senate Bill 06-038, concerning the investigation of insurance fraud. The bill would increase the current annual fee of $120 from every insurance carrier authorized to write insurance in the state to $425. The fee is credited to the Division of Insurance (DOI) Cash Fund, then allocated to the Insurance Fraud Unit in the Department of Law to help pay for investigations and prosecutions of alleged insurance fraud. Representative Knoedler explained that currently the Insurance Fraud Unit has one attorney and one investigator to handle about 700 cases of insurance fraud a year. He stated that due to the lack of resources, the office only ends up investigating about 50 of those cases.

Representative Knoedler responded to questions about whether the Insurance Fraud Unit helps consumers or only goes after the bad actors. Representative Knoedler stated that some of the fraud that is investigated and prosecuted by the Insurance Fraud Unit is within the insurance industry. There was discussion about the fees in the bill and whether those additional expenses will be passed on by the insurance company to the consumer.

04:24 PM -- John Suthers, Colorado Attorney General, testified in support of the bill. He responded to an earlier question and stated that the bill is a consumer protection bill because fraud results in higher premiums for consumers. He gave a history of the Insurance Fraud Unit and talked about the need for more staff to administer insurance fraud cases because the caseload has grown enormously since the unit began in 1997.

Attorney General Suthers stated that currently the Insurance Fraud Unit only investigates about 50 of 700 cases each year, and only prosecutes 20 of those cases due to the lack of resources within the unit. The Attorney General stated that the bill would allow the Insurance Fraud Unit to add an additional prosecutor, administrative staff person, and 3 investigators. Mr. Suthers responded to questions from the committee about how premiums will be affected by the bill. The Attorney General stated that any cost incurred by the insurance industry is passed on through premiums, however enforcement of fraud would reduce premiums. He gave an example of New York's recent reduction in insurance premiums after it increased it's insurance fraud efforts.

04:33 PM

Mr. Suthers was asked whether the state has recovered any money through prosecuting insurance fraud cases through fines, etc. He stated that of the 90 cases that have been prosecuted, $1.4 million dollars in restitution has been collected and either kept by the state or returned to the injured party. There was committee discussion about whether passing tougher insurance laws would be more effective instead of more prosecution as the bill suggests. The Attorney General commented that regardless of how tough the laws are, they would still need to be enforced.

04:47 PM -- Mike Benschneider, representing Farmers Insurance, and speaking on behalf of numerous other insurance companies, testified in support of the bill. He stated that if the bill passes, it would prevent fraud. He responded to committee questions.

04:54 PM -- Vanessa Hannemann, representing the Colorado Association of Health Plans, testified in support of the bill and distributed a handout (Attachment F).


BILL:	SB06-038
TIME:	04:58:12 PM
MOVED:	Coleman
MOTION:	Moved to amend the reengrossed bill on page 2, line 13, strike "committee" and substitute "committee, the senate business, labor and technology committee, and the house business affairs and labor committee, or any such successor committees". The amendment would require the Attorney General's Office to provide annual reports to the above committees in addition to the Joint Budget Committee. The amendment was adopted without objection.
SECONDED:	McCluskey
		VOTE
	Balmer
	Borodkin
	Butcher
	Carroll M.
	Coleman
	Knoedler
	Liston
	McCluskey
	Paccione
	Penry	Excused
	Welker
	Cerbo
	Marshall
Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB06-038
TIME:	05:00:41 PM
MOVED:	Knoedler
MOTION:	Moved to refer Senate Bill 06-038, as amended, to the Committee on Appropriations. The motion passed 10-2.
SECONDED:	McCluskey
		VOTE
	Balmer	Yes
	Borodkin	Yes
	Butcher	No
	Carroll M.	No
	Coleman	Yes
	Knoedler	Yes
	Liston	Yes
	McCluskey	Yes
	Paccione	Yes
	Penry	Excused
	Welker	Yes
	Cerbo	Yes
	Marshall	Yes
Final YES: 10 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

05:10 PM

The committee adjourned.