Chapt 15 (licensing) (state laws)

Penalties (Fraud) (insurance licensing)

A person who commits these fraudulent insurance acts are punishable as follows:

Order Against Producer

If the Commissioner finds that a producer has engaged or is engaging in prohibited acts or practices, the Commissioner will order the person to cease and desist from the act or practice. If the producer continues the practice after the order is issued, he/she may face penalties as prescribed by the Commissioner. Prior to issuing a Cease and Desist order, the Commissioner will hold a hearing. The Commissioner will give the person notice of the hearing and the charges against the person. The cease and desist order is final when the time allowed for taking an appeal expires. If an appeal is taken, the cease and desist order is affirmed or dismissed when the final court decision is made.

Felony (other fraud insurance acts)

If the monetary amount is $300 or more, it is punishable by a fine of up to $10,000, 15 years' imprisonment, or both.

Misdemeanor

If the monetary amount is less than $300, the violator must restore either the property or pay the monetary value of the fraud. The penalties may be imposed separately, consecutively, or concurrently with other violations. A fine imposed under this section is mandatory and not subject to suspension.

Conduct of Hearings

Most hearings are open to the public. Exceptions, as determined by the Commissioner, include hearings not in the public's interest, hearings to determine whether an insurer's operation is hazardous and could result in impairment, and requests by insurers to hold a private hearing. The Commissioner must allow all parties to a hearing to inspect documentary evidence, present evidence, examine witnesses, and have the Commissioner issue subpoenas to compel attendance of witnesses and production of evidence. An order of the Commissioner will include: Statement of facts found by the Commissioner Commissioner's conclusions from the facts The grounds on which it is based; and The provisions of this statute under which action is or proposed to be taken Within 30 days after a hearing, the Commissioner issues an order on the hearing and gives each party a copy of the order that was given a notice of the hearing. The order may affirm, modify, or nullify previous action, or precipitate new action.

Hearings/Notice of Hearings

The Commissioner may hold a hearing for any purpose at any time as allowed under Maryland's insurance laws. In holding a hearing the Commissioner sits in a quasi-judicial capacity.

When Hearing are held

The Commissioner must hold a hearing when required by law, or when demanded in writing, by any person aggrieved by any of the Commissioner's acts, reports, regulations, or orders (other than an order for, or resulting from, a hearing). Such a demand must state the grounds on which relief will be sought at the hearing. If the Commissioner determines that the demand is justified, the hearing must be held within 30 days. If the Commissioner receives such a demand before an order's effective date or within 10 days after its delivery, the demand will stay the order pending the hearing (unless action is ordered, including action about an insurer's financial impairment). The Commissioner must give all interested parties at least 10 days' notice of the time and place of the hearing and the matters to be addressed.

Appeals

The Commissioner's order on the hearing or on a matter on which the Commissioner refused to grant a hearing may be appealed to the appropriate Maryland circuit court within 30 days after the order is served or the refusal is given. Appeals may be taken only from an order resulting from a hearing or the Commissioner's refusal to grant a hearing. Appeals may be made by any party to the hearing or other aggrieved person whose financial interests are directly affected by the Commissioner's order.

Penalties (other Fraud insurance acts)

Violations of these rules are punishable as follows:

Insurance Fraud division

An Insurance Fraud Division is established under the Maryland Insurance Administration having the power and duty to: Investigate each person suspected of engaging in insurance fraud After an investigation, refer suspected cases of fraud to the Office of the Attorney General or local State's Attorney to criminally prosecute the suspected offender Compile and abstract information regarding the confirmed acts of fraud Cooperate with the Department of State Police, Attorney General, and State's Attorney Provide a toll-free hot line to receive and record information about alleged acts of insurance fraud Conduct public outreach and awareness programs on the costs of insurance fraud to the public Investigate allegations of civil fraud, and, if appropriate, impose administrative penalties and order restitution

Order Against Insurer

Without notice and before a hearing, the Commissioner may issue and serve an insurer with an order requiring the insurer immediately cease and desist from writing insurance in Maryland if it appears that: The insurer is conducting business that threatens to cause insolvency or is hazardous to its policyholders, creditors, or the public The insurer is engaged in an act, practice, or transaction that is grounds to cause insurer conservation or liquidation proceedings Irreparable loss and injury to the insurer's property and business or the public may occur unless the Commissioner acts immediately when an order is served on an insurer, the Commissioner will issue and serve the insurer with a notice of a hearing within 5 days of the order. If the order is waived by the insurer, the hearing will be held within 30 days of the order.

Fraud

An authorized insurer and any of its employees, fund producers, or insurance producers must report suspected insurance fraud in writing to the Commissioner, the Fraud Division, or the appropriate federal, state, or local law enforcement authorities. Any evidence persons provide to authorities is not subject to public inspection for as long as authority considers the withholding necessary to complete an investigation or to protect the person being investigated from unwarranted injury. A person is not subject to civil liability for a cause of action by virtue of reporting suspected insurance fraud if the report was made to the Commissioner, the Fraud Division, or an appropriate federal, state, local law enforcement authority, and the person that reported the suspected insurance fraud acted in good faith when making the report. All applications for insurance and all claim forms must contain the following statement or a substantially similar statement: "Any person who knowingly or willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly or willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison

Penalties

Any party who willfully violates any provision of Maryland insurance law or code for which a greater penalty is not specifically provided by other state laws is guilty of a misdemeanor and, upon conviction, may be fined not less than $100, but not exceeding $50,000 for each violation. This fine is in addition to any administrative penalty otherwise applicable such as loss of authority or license to conduct business, orders to pay restitution to injured parties, and administrative fines. Instead of, or in addition to suspending or revoking the license, the Commissioner may impose on a licensee a penalty of $100 to $500 for each violation or require the licensee to pass an examination and file a new application before the suspension is lifted.

Other Fraudulent Insurance Acts

It is also a fraudulent insurance act to: Transact insurance business as an insurer with a person not having required certification Represent their self to the public as a producer/public adjustor without the appropriate license Solicit or take an application, if licensed in one line, for insurance in another line for which the person is not licensed Fail to report the exact amount of premium charged, if different from the policy premium, and failing to maintain records showing that information Make false and fraudulent statements in an application and placing insurance with an unauthorized insurer not regulated by the Commissioner Refuse to obey the Commissioner's order to produce documentation of premiums paid for insurance Make false sworn statements that the person does not believe to be true regarding an examination, investigation, or hearing conducted by the Commissioner Knowingly exhibit a false account, document, or advertisement about an insurer's affairs

Fraud under unfair trade practices law

It is fraud under the Unfair Trade Practices law for a person to: Knowingly fail to refund premiums to the insured if the policy paid for is not ultimately provided Present information in support of a claim with knowledge that it contains false or misleading information with respect to the claim (including a claim that a car has been stolen) Except for the prepayment of premiums or excess contributions allowed under the policy, to willfully collect a premium in excess of those approved by the Commissioner or set by the insurer Misappropriate benefits under a policy

Felony (insurance fraud)

If the monetary value involved is $300 or more, it is punishable by a fine of $10,000 or 3 times the fraudulent amount, whichever is greater (but must be at least $500), or up to 15 years imprisonment, or both. The person may also be required to restore the property or pay the monetary value.

Misdemeanor (insurance fraud)

If the monetary value involved is less than $300, the violator must restore either the property or pay the monetary value of the fraud.