A 7305: Relates to increasing penalties for insurance fraud, mandating investigations, and enhancing accountability for state agencies and offices responsible for insurance fraud prevention.

  
  STATE OF NEW YORK ________________________________________________________________________ 7305 2025-2026 Regular Sessions  IN ASSEMBLY March 25, 2025 ___________ Introduced by M. of A. BLUMENCRANZ -- read once and referred to the Committee on Insurance AN ACT to amend the insurance law, in relation to mandating investi- gations and enhancing accountability for state agencies and offices responsible for insurance fraud prevention; and to amend the penal law, in relation to increasing penalties for insurance fraud The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "statewide transparency and mandated prosecution for insurance fraud 3 (STAMP) out fraud act". 4 § 2. Section 405 of the insurance law, as amended by section 7 of part 5 A of chapter 62 of the laws of 2011, is amended to read as follows: 6 § 405. Reports. (a) Any person licensed or registered pursuant to the 7 provisions of this chapter, and any person engaged in the business of 8 insurance or life settlement in this state who is exempted from compli- 9 ance with the licensing requirements of this chapter, including the 10 state insurance fund of this state, who has reason to believe that an 11 insurance transaction or life settlement act may be fraudulent, or has 12 knowledge that a fraudulent insurance transaction or fraudulent life 13 settlement act is about to take place, or has taken place shall, within 14 thirty days after determination by such person that the transaction 15 appears to be fraudulent, send to the superintendent on a form 16 prescribed by the superintendent, the information requested by the form 17 and such additional information relative to the factual circumstances of 18 the transaction and the parties involved as the superintendent may 19 require. 20 (b) The superintendent shall accept reports of suspected fraudulent 21 insurance transactions or fraudulent life settlement acts from any [self 22 insurer] self-insurer, including but not limited to [self insurers] 23 self-insurers providing health insurance coverage or those defined in EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11226-01-5 
 A. 7305 2 1 section fifty of the workers' compensation law, and shall treat such 2 reports as any other received pursuant to this section. 3 [(b)] (c) The superintendent shall review each report and undertake 4 such further investigation as [the superintendent deems] deemed neces- 5 sary and proper to determine the validity of the allegations. If a 6 report is found to be credible and valid upon investigation, the super- 7 intendent shall have an affirmative duty to prosecute the matter or 8 refer the case to the office of the attorney general or other appropri- 9 ate prosecutorial agency for further action within sixty days. 10 (d) The superintendent and relevant agencies and offices, including 11 but not limited to the department of financial services, the office of 12 the Medicaid inspector general, the office of temporary and disability 13 assistance, and the office of the attorney general, shall be required to 14 investigate insurance fraud claims involving active litigation to deter- 15 mine if fraudulent acts have occurred. 16 (e) All agencies and offices listed in subsection (d) of this section 17 shall, within sixty days of the effective date of the laws of two thou- 18 sand twenty-five that amended this section, submit a report to the 19 governor, the attorney general, the temporary president of the senate, 20 the speaker of the assembly, and the minority leaders of the senate and 21 assembly. Such report shall include, but not be limited to: 22 (1) the challenges faced in prosecuting fraud; 23 (2) resource needs to enforce anti-fraud initiatives; and 24 (3) compliance with statutory duties to address insurance fraud. 25 (f) The department of financial services shall, in collaboration with 26 other relevant state agencies, establish a public education and outreach 27 campaign to be named the "insurable NY public education campaign" to 28 raise awareness of the economic and societal costs of insurance fraud. 29 Such campaign shall: 30 (1) utilize television, radio, digital media, schools, and community 31 partnerships; 32 (2) include messaging such as: "insurance fraud costs every New York- 33 er" and "insurance fraud costs you - let's stamp it out together"; and 34 (3) leverage existing resources to minimize costs. 35 (g) The superintendent shall submit quarterly reports to the governor, 36 the attorney general, the temporary president of the senate, the speaker 37 of the assembly, and the minority leaders of the senate and assembly 38 detailing: 39 (1) the number of reports received and investigations opened; 40 (2) the status of investigations and their outcomes; and 41 (3) referrals made to other agencies for prosecution. 42 (h) (1) A multi-agency insurance fraud task force to be named the 43 "insurable NY fraud task force" is hereby established to enhance the 44 detection, prevention, and prosecution of insurance fraud. The insurable 45 NY fraud task force shall be composed of representatives from the 46 following: the department of financial services; the office of the 47 attorney general; the office of the Medicaid inspector general; the 48 office of temporary and disability assistance; and local district attor- 49 neys or their designees. 50 (2) The insurable NY fraud task force shall have the following duties: 51 (A) facilitate collaboration and communication between member agencies 52 and offices to ensure effective use of resources; and develop protocols 53 for sharing investigative information to prevent duplicative efforts and 54 overlap across agencies; 
 A. 7305 3 1 (B) identify and promote best practices for detecting, preventing, and 2 prosecuting insurance fraud; and issue internal guidance and recommenda- 3 tions to enhance inter-agency cooperation; and 4 (C) submit an annual report no later than January thirty-first of each 5 year to the governor, the temporary president of the senate, the speaker 6 of the assembly, and the minority leaders of the senate and assembly. 7 Such report shall include: 8 (i) trends and patterns in insurance fraud enforcement; 9 (ii) key challenges encountered by the insurable NY fraud task force 10 and member agencies; and 11 (iii) recommendations for legislative or administrative actions to 12 improve fraud enforcement and prosecution efforts. 13 (3) Member agencies and offices shall fully cooperate with the insura- 14 ble NY fraud task force and provide requested information, subject to 15 confidentiality laws and regulations. Member agencies and offices may 16 assign dedicated personnel or liaisons to ensure seamless coordination 17 and ongoing collaboration with the insurable NY fraud task force. 18 (i) (1) The department of financial services, in collaboration with 19 the insurable NY fraud task force, shall develop and implement best 20 practices for the use of technology, including but not limited to arti- 21 ficial intelligence and data analytics, to detect, prevent, and investi- 22 gate insurance fraud. 23 (2) Such technologies shall: 24 (A) identify patterns, anomalies, and suspicious activities across 25 insurance markets in real time; 26 (B) assist in cross-referencing data with other agencies to enhance 27 fraud detection efforts; and 28 (C) ensure compliance with privacy and data protection laws while 29 improving the efficiency of fraud investigations. 30 (3) The insurable NY fraud task force shall include recommendations on 31 the adoption and impact of such technologies in its annual report to the 32 governor and the legislature. 33 § 3. Section 176.10 of the penal law, as amended by chapter 515 of the 34 laws of 1986, is amended to read as follows: 35 § 176.10 Insurance fraud in the fifth degree. 36 A person is guilty of insurance fraud in the fifth degree when [he] 37 such person commits a fraudulent insurance act. 38 Insurance fraud in the fifth degree is a class [A misdemeanor] E felo- 39 ny. 40 § 4. Section 176.15 of the penal law, as amended by chapter 515 of the 41 laws of 1986, is amended to read as follows: 42 § 176.15 Insurance fraud in the fourth degree. 43 A person is guilty of insurance fraud in the fourth degree when [he] 44 such person commits a fraudulent insurance act and thereby wrongfully 45 takes, obtains or withholds, or attempts to wrongfully take, obtain or 46 withhold property with a value in excess of one thousand dollars. 47 Insurance fraud in the fourth degree is a class [E]D felony. 48 § 5. Section 176.20 of the penal law, as amended by chapter 515 of the 49 laws of 1986, is amended to read as follows: 50 § 176.20 Insurance fraud in the third degree. 51 A person is guilty of insurance fraud in the third degree when [he] 52 such person commits a fraudulent insurance act and thereby wrongfully 53 takes, obtains or withholds, or attempts to wrongfully take, obtain or 54 withhold property with a value in excess of three thousand dollars. 55 Insurance fraud in the third degree is a class [D] C felony. 
 A. 7305 4 1 § 6. Section 176.25 of the penal law, as added by chapter 515 of the 2 laws of 1986, is amended to read as follows: 3 § 176.25 Insurance fraud in the second degree. 4 A person is guilty of insurance fraud in the second degree when [he] 5 such person commits a fraudulent insurance act and thereby wrongfully 6 takes, obtains or withholds, or attempts to wrongfully take, obtain or 7 withhold property with a value in excess of fifty thousand dollars. 8 Insurance fraud in the second degree is a class [C] B felony. 9 § 7. Section 176.30 of the penal law, as added by chapter 515 of the 10 laws of 1986, is amended to read as follows: 11 § 176.30 Insurance fraud in the first degree. 12 A person is guilty of insurance fraud in the first degree when [he] 13 such person commits a fraudulent insurance act and thereby wrongfully 14 takes, obtains or withholds, or attempts to wrongfully take, obtain or 15 withhold property with a value in excess of one million dollars. 16 Insurance fraud in the first degree is a class [B] A felony. 17 § 8. The penal law is amended by adding a new section 176.85 to read 18 as follows: 19 § 176.85 Enhanced penalties for insurance fraud involving ongoing liti- 20 gation. 21 A person who commits insurance fraud in violation of this article 22 involving a claim that is the subject of active litigation shall be 23 subject to an additional penalty of up to five years imprisonment and a 24 fine of no less than fifty thousand dollars, in addition to any other 25 penalties authorized by law. 26 § 9. Within sixty days of the effective date of this act, the depart- 27 ment of financial services, in collaboration with the attorney general 28 and relevant agencies, shall submit an implementation plan to the gover- 29 nor and legislature outlining steps for compliance, resource allocation, 30 and timelines for achieving full operational readiness under this act. 31 § 10. This act shall take effect immediately.