S 6364: Relates to insurance fraud; provides a provision for compensation to a person that reports insurance fraud to the authorities; establishes crimes of unlawful procurement of clients, patients or customers; aggravated insurance fraud in the second degree; and aggravated insurance fraud in the first degree; provides that this act also increases the penalty for insurance fraud; appropriates $3,100,000 therefor.

  
  STATE OF NEW YORK ________________________________________________________________________ 6364 2025-2026 Regular Sessions  IN SENATE March 11, 2025 ___________ Introduced by Sen. HELMING -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the insurance law, the penal law and the executive law, in relation to insurance fraud; and making an appropriation therefor The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The insurance law is amended by adding a new section 405-a 2 to read as follows: 3 § 405-a. Compensation for report of insurance fraud to law enforce- 4 ment authorities. (a) Any person, other than persons described in 5 subsection (a) of section four hundred five of this article, who has 6 reason to believe that a fraudulent insurance act prohibited pursuant to 7 article one hundred seventy-six of the penal law has been committed or 8 that an insurance transaction may be fraudulent, or has knowledge that a 9 fraudulent insurance transaction is about to take place, or has taken 10 place may report such act or transaction and any additional information 11 relative to the factual circumstances of the transaction and the parties 12 involved to the attorney general, district attorney or insurance frauds 13 bureau. 14 (b) If the insurance frauds bureau recommends to the attorney general 15 or district attorney to commence an action or if the attorney general or 16 district attorney commences an action based on information provided by a 17 person pursuant to subsection (a) of this section, then such person 18 shall be entitled to receive an award of at least fifteen percent, but 19 not more than twenty-five percent of the proceeds of the action or 20 settlement of the claim up to a maximum of twenty-five thousand dollars. 21 The attorney general or district attorney shall recommend to the court 22 when a settlement is entered the amount of such award. The court shall 23 base such award decision on the extent to which the person substantially 24 contributed to the prosecution of the action. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10430-01-5 
 S. 6364 2 1 § 2. Section 176.00 of the penal law is amended by adding three new 2 subdivisions 6, 7 and 8 to read as follows: 3 6. "Provider" means an attorney, a health care professional, an owner 4 or operator of a health care practice or facility, any person who 5 creates the impression that they, or their practice can provide legal or 6 health care services, or any person employed or acting on behalf of any 7 such person. 8 7. "Public media" means telephone directories, professional directo- 9 ries, newspapers and other periodicals, radio and television, bill- 10 boards, and mailed or electronically transmitted written communications 11 that do not involve in-person contact with a specific prospective 12 client, patient, or customer. 13 8. "Runner" means a person who, for a pecuniary benefit, procures or 14 attempts to procure a client, patient or customer at the direction of, 15 request of or in cooperation with a provider when such person knows or 16 has reason to know that the purpose of such provider is to seek to 17 falsely or fraudulently: obtain benefits under a contract of insurance; 18 or assert a claim against an insured or an insurance carrier for provid- 19 ing services to the client, patient or customer. Such term shall not 20 include a person who procures or attempts to procure clients, patients 21 or customers for a provider through public media or a person who refers 22 clients, patients or customers as authorized by law. Nothing in this 23 article shall be deemed to prohibit an agent, broker or employee of a 24 health maintenance organization from seeking to sell health maintenance 25 organization coverage or health insurance coverage to an individual or 26 group. 27 § 3. Subdivision 1 of section 176.05 of the penal law, as amended by 28 chapter 211 of the laws of 2011, is amended to read as follows: 29 1. any written statement as part of, or in support of, an application 30 for the issuance of, or the rating of a policy insuring against losses 31 or liabilities arising out of the ownership, operation, or use of a 32 motor vehicle, a commercial insurance policy, or certificate or evidence 33 of self insurance for commercial insurance or commercial self insurance, 34 or a claim for payment or other benefit pursuant to an insurance policy 35 or self insurance program for commercial or personal insurance that [he 36 or she] such person knows to: 37 (a) contain materially false information concerning any fact material 38 thereto; or 39 (b) conceal, for the purpose of misleading, information concerning any 40 fact material thereto; or 41 § 4. The penal law is amended by adding a new section 176.66 to read 42 as follows: 43 § 176.66 Unlawful procurement of clients, patients or customers. 44 A person is guilty of unlawful procurement of clients, patients or 45 customers when, such person knowingly: 46 1. acts as a runner; or 47 2. uses, solicits, directs, hires or employs another person to act as 48 a runner. 49 Unlawful procurement of clients, patients or customers is a class E 50 felony. 51 § 5. Section 176.15 of the penal law, as amended by chapter 515 of the 52 laws of 1986, is amended to read as follows: 53 § 176.15 Insurance fraud in the fourth degree. 54 A person is guilty of insurance fraud in the fourth degree when [he] 55 such person commits a fraudulent insurance act and thereby wrongfully 56 takes, obtains or withholds, or attempts to wrongfully take, obtain or 
 S. 6364 3 1 withhold property with a value in excess of [one thousand] five hundred 2 dollars. 3 Insurance fraud in the fourth degree is a class E felony. 4 § 6. Section 176.20 of the penal law, as amended by chapter 515 of the 5 laws of 1986, is amended to read as follows: 6 § 176.20 Insurance fraud in the third degree. 7 A person is guilty of insurance fraud in the third degree when [he] 8 such person commits a fraudulent insurance act and thereby wrongfully 9 takes, obtains or withholds, or attempts to wrongfully take, obtain or 10 withhold property with a value in excess of [three] one thousand five 11 hundred dollars. 12 Insurance fraud in the third degree is a class D felony. 13 § 7. Section 176.25 of the penal law, as added by chapter 515 of the 14 laws of 1986, is amended to read as follows: 15 § 176.25 Insurance fraud in the second degree. 16 A person is guilty of insurance fraud in the second degree when [he] 17 such person commits a fraudulent insurance act and thereby wrongfully 18 takes, obtains or withholds, or attempts to wrongfully take, obtain or 19 withhold property with a value in excess of [fifty] twenty-five thousand 20 dollars. 21 Insurance fraud in the second degree is a class C felony. 22 § 8. Section 176.30 of the penal law, as added by chapter 515 of the 23 laws of 1986, is amended to read as follows: 24 § 176.30 Insurance fraud in the first degree. 25 A person is guilty of insurance fraud in the first degree when [he] 26 such person commits a fraudulent insurance act and thereby wrongfully 27 takes, obtains or withholds, or attempts to wrongfully take, obtain or 28 withhold property with a value in excess of [one million] five hundred 29 thousand dollars. 30 Insurance fraud in the first degree is a class B felony. 31 § 9. Section 176.35 of the penal law, as added by chapter 635 of the 32 laws of 1996, is amended to read as follows: 33 § 176.35 Aggravated insurance fraud in the third degree. 34 A person is guilty of aggravated insurance fraud in the [fourth] third 35 degree when [he] such person commits [a fraudulent insurance act] the 36 offense of insurance fraud in the fifth degree, and has been previously 37 convicted within the preceding five years of any offense, an essential 38 element of which is the commission of a fraudulent insurance act. 39 Aggravated insurance fraud in the [fourth] third degree is a class D 40 felony. 41 § 10. The penal law is amended by adding two new sections 176.36 and 42 176.37 to read as follows: 43 § 176.36 Aggravated insurance fraud in the second degree. 44 A person is guilty of aggravated insurance fraud in the second degree 45 when such person commits the offense of insurance fraud in the fourth 46 degree, and has been previously convicted within the preceding five 47 years of any offense, an essential element of which is the commission of 48 a fraudulent insurance act. 49 Aggravated insurance fraud in the second degree is a class C felony. 50 § 176.37 Aggravated insurance fraud in the first degree. 51 A person is guilty of aggravated insurance fraud in the first degree 52 when such person commits the offense of insurance fraud in the third 53 degree, and has been previously convicted within the preceding five 54 years of any offense, an essential element of which is the commission of 55 a fraudulent insurance act. 56 Aggravated insurance fraud in the first degree is a class B felony. 
 S. 6364 4 1 § 11. Paragraph (a) of subdivision 2 of section 846-m of the executive 2 law, as amended by section 6 of part T of chapter 57 of the laws of 3 2000, is amended to read as follows: 4 (a) The moneys received by the fund shall be expended in a manner that 5 is consistent with the plan of operation, pursuant to appropriation, 6 only to reimburse costs incurred by provider agencies for pilot program 7 activities relating to the detection, prevention or reduction of motor 8 vehicle theft and motor vehicle insurance fraud, provided, however, that 9 beginning January first, two thousand twenty-six, additional monies 10 received by the fund pursuant to an appropriation made by a chapter of 11 the laws of two thousand twenty-five amending this paragraph shall be 12 used exclusively to support efforts undertaken by district attorneys to 13 detect, identify and prosecute fraud pertaining to article fifty-one of 14 the insurance law. 15 § 12. The sum of three million one hundred thousand dollars 16 ($3,100,000), or so much thereof as may be necessary, is hereby appro- 17 priated to the department of transportation out of any moneys in the 18 state treasury in the general fund to the credit of the motor vehicle 19 theft and insurance fraud prevention fund, not otherwise appropriated, 20 and made immediately available, for the purpose of carrying out the 21 provisions of paragraph (a) of subdivision 2 of section 846-m of the 22 executive law, as amended pursuant to section eighteen of this act. 23 Such moneys shall be payable on the audit and warrant of the comptroller 24 on vouchers certified or approved by the commissioner of transportation 25 in the manner prescribed by law. 26 § 13. Severability clause. If any clause, sentence, paragraph, subdi- 27 vision, section or part contained in any part of this act shall be 28 adjudged by any court of competent jurisdiction to be invalid, such 29 judgment shall not affect, impair, or invalidate the remainder thereof, 30 but shall be confined in its operation to the clause, sentence, para- 31 graph, subdivision, section or part of this act contained in any part 32 thereof directly involved in the controversy in which such judgment 33 shall have been rendered. It is hereby declared to be the intent of the 34 legislature that this act would have been enacted even if such invalid 35 provisions had not been included herein. 36 § 14. This act shall take effect on the ninetieth day after it shall 37 have become a law.