2005 California Insurance Code Sections 1874-1874.81 Fraud Reporting

INSURANCE CODE
SECTION 1874-1874.81

1874.  This article shall be known and may be cited as the Motor
Vehicle Theft and Motor Vehicle Insurance Fraud Reporting Act.
1874.1.  The following definitions govern the construction of this
article, unless the context requires otherwise:
   (a) "Authorized governmental agency" means the Department of the
California Highway Patrol, the Department of Insurance, the
Department of Justice, the Department of Motor Vehicles, the police
department of a city, or a city and county, the sheriff's office or
department of a county, a law enforcement agency of the federal
government, the district attorney of any county, or city and county,
and any licensing agency governed by the Business and Professions
Code or the Chiropractic Initiative Act.
   (b) "Relevant" means having a tendency to make the existence of
any fact that is of consequence to the investigation or determination
of an issue more probable or less probable than it would be without
the information.
   (c) Information shall be deemed important if, within the sole
discretion of the authorized governmental agency, that information is
requested by that authorized governmental agency.
   (d) "Insurer" means the automobile assigned risk plan established
pursuant to Section 11620 of the Insurance Code, as well as any
insurer writing insurance for motor vehicles or otherwise liable for
any loss due to motor vehicle theft or motor vehicle insurance fraud.
   (e) "Motor vehicle" means motor vehicle as defined in Section 415
of the Vehicle Code.
1874.2.  (a) Upon written request to an insurer by an authorized
governmental agency, an insurer, or agent authorized by that insurer
to act on behalf of the  insurer, shall release to the requesting
authorized governmental agency any or all relevant information deemed
important to the authorized governmental agency which the insurer
may possess relating to any specific motor vehicle theft or motor
vehicle insurance fraud.  Relevant information may include, but is
not limited to, all of the following:
   (1) Insurance policy information relevant to the motor vehicle
theft or motor vehicle insurance fraud under investigation,
including, but not limited to, any application for a policy.
   (2) Policy premium payment records which are available.
   (3) History of previous claims made by the insured.
   (4) Information relating to the investigation of the motor vehicle
theft or motor vehicle insurance fraud, including statements of any
person, proof of loss, and notice of loss.
   (b) (1) When an insurer knows or reasonably believes it knows the
identity of a person whom it has reason to believe committed a
criminal or fraudulent act relating to a motor vehicle theft or motor
vehicle insurance claim or has knowledge of such a criminal or
fraudulent act which is reasonably believed not to have been reported
to an authorized governmental agency, then, for the purpose of
notification and investigation, the insurer, or an agent authorized
by an insurer to act on its behalf, shall notify the local police
department, sheriff's office, the Department of the California
Highway Patrol, or district attorney's office, and may notify any
other authorized governmental agency of that knowledge or reasonable
belief and provide any additional information in accordance with
subdivision (a).
   (2) When an insurer provides the local police department, sheriff'
s office, the Department of the California Highway Patrol, or
district attorney's office with notice pursuant to this section, it
shall be deemed sufficient notice to all authorized governmental
agencies for the purpose of this chapter.  Nothing in this section
shall relieve an insurer of its obligations under Section 12992 of
the Insurance Code.
   (3) Nothing in this subdivision shall abrogate or impair the
rights or powers created under subdivision (a).
   (c) The authorized governmental agency provided with information
pursuant to subdivision (a) or (b) may release or provide that
information to any other authorized governmental agency.
   (d) An authorized governmental agency shall notify the affected
insurer in writing when it has reason to believe that a fraudulent
act relating to a motor vehicle theft or motor vehicle insurance
claim has been committed.  The agency shall provide this notice
within a reasonable time, not to exceed 30 days.  The agency may also
release more specific information pursuant to this section when it
determines that an ongoing investigation would not be jeopardized.
The agency may require a fee from the insurer equal to the cost of
providing the notice or the information specified in this section.
   (e) An insurer providing information to an authorized agency
pursuant to this section shall provide the information within a
reasonable time, but not to exceed 30 days from the day on which the
duty arose.
1874.3.  (a) Any information acquired pursuant to this article shall
not be a part of any public record.  Except as otherwise provided by
law, any authorized  governmental agency, an insurer, or an agent
authorized by an insurer to act on its behalf, which receives any
information furnished pursuant to this article shall not release that
information to public inspection.
   (b) The evidence or information described in this section shall be
privileged and shall not be subject to subpoena or subpoena duces
tecum in a civil or criminal proceeding unless, after reasonable
notice to any insurer, agent authorized by an insurer to act on its
behalf, and an authorized governmental agency which has an interest
in the information, and a hearing, the court determines that the
public interest and any ongoing investigation by the authorized
governmental agency, insurer, or an agent authorized by an insurer to
act on its behalf will not be jeopardized by its disclosure, or by
the issuance of and compliance with a subpoena or subpoena duces
tecum.
1874.4.  In the absence of fraud or malice, no insurer, or agent
authorized by an insurer to act on behalf of the insurer, and no
authorized governmental agency or its employees, shall be subject to
any civil liability in a cause of action of any kind for releasing or
receiving any information pursuant to Section 1874.1 or 1874.2.
Nothing in this chapter is intended to, nor does in any way or
manner, abrogate or lessen the existing common law or statutory
privileges and immunities of an insurer, agent authorized by that
insurer to act on behalf of the insurer, or of any authorized
governmental agency or its employees.
1874.6.  Every insurer shall report covered private passenger
automobiles involved in theft and salvage total losses, including the
vehicle identification number and any other information as may be
required, to the National Automobile Theft Bureau or a similar
central organization engaged in automobile loss prevention approved
by the commissioner, in accordance with regulations promulgated by
the commissioner.
   Prior to the payment of total theft losses, insurers shall comply
with verification procedures in accordance with regulations adopted
by the commissioner.
   No insurer, the National Automobile Theft Bureau, or a similar
central organization, engaged in automobile loss prevention approved
by the commissioner, or their employees or agents, shall be liable
for damages in a civil action when the insurer or person acts
pursuant to this section in good faith, without malice, and in
reasonable belief that the action taken is warranted by the known
facts after a reasonable effort to obtain the facts.
   As used in this section "private passenger automobile" a motor
vehicle of the private passenger or station wagon type, any other
four-wheel vehicle with a load capacity of 1,500 pounds or less, or a
motorcycle.
1874.8.  (a) Each insurer doing business in this state shall pay an
annual fee to be determined by the commissioner, but not to exceed
fifty cents ($0.50) annually for each vehicle insured under an
insurance policy it issues in this state, in order to fund the Bureau
of Fraudulent Claims and an Organized Automobile Fraud Activity
Interdiction Program.
   (b) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
1874.8.  (a) Each insurer doing business in this state shall pay an
annual fee to be determined by the commissioner, but not to exceed
fifty cents ($0.50) annually for each vehicle insured under an
insurance policy it issues in this state, in order to fund the Fraud
Division and an Organized Automobile Fraud Activity Interdiction
Program. The commissioner shall award three to 10 grants for a
coordinated program targeted at the successful prosecution and
elimination of organized automobile fraud activity. The grants may
only be awarded to district attorneys.
   (b) In determining whether to award a district attorney a grant,
the commissioner shall consider factors indicating organized
automobile fraud activity in the district attorney's county,
including, but not limited to, the county's level of general criminal
activity, population density, automobile insurance claims frequency,
number of suspected fraudulent claims, and prior and current
evidence of organized automobile fraud activity. Funding priority
shall be given to those grant applications with the potential to have
the greatest impact on organized automobile insurance fraud
activity.
   (c) All participants of a grant referred to in subdivision (a)
shall coordinate their efforts and work in conjunction with the
bureau, other participating agencies, and all interested insurers in
this regard. Of the funds collected pursuant to this section, 42.5
percent shall be distributed to district attorneys, 42.5 percent
shall be distributed to the Fraud Division, and 15 percent shall be
distributed to the Department of the California Highway Patrol. Funds
distributed pursuant to this section to the Fraud Division and to
the Department of the California Highway Patrol shall be used to fund
bureau and Department of the California Highway Patrol investigators
who shall be assigned to work solely in conjunction with district
attorneys who are awarded grants. Each grantee shall be notified by
the Fraud Division of the investigators assigned to work with the
grantee. Nothing shall prohibit the referral of any cases developed
by the Fraud Division to any appropriate prosecutorial entity.
   (d) A grant under this section shall be awarded on the basis of a
single application for a period of three years and shall be subject
where applicable to the requirements of subdivision (b) of Section
1872.8, except for the requirement that grants be awarded according
to population. Continued funding of a grant shall be contingent upon
a grantee's successful performance as determined by an annual review
by the commissioner. Any redirection of grant funds under this
section shall be made only for good cause. The Department of the
California Highway Patrol shall submit to the commissioner, for
informational purposes only, an annual report on its expenditure of
funds under this section in the same format as is required of
grantees under this section.
   (e) There shall be no prohibition against a joint application by
two or more district attorneys for a grant award under this section.
   (f) The Fraud Division shall report, on or before January 1, 2005,
to the committees of the Senate and Assembly having jurisdiction
over insurance on the results of the grant program established by
this section, including funding distributed to the Department of the
California Highway Patrol.
   (g) For purposes of this section "organized automobile fraud
activity" means two or more persons who conspire, aid and abet, or in
any other manner act together, to engage in economic automobile
theft as defined in subdivision (f) of Section 1872.8, or to violate
any of the following provisions in relation to an automobile
insurance claim:
   (1) Section 650 or 6152 of the Business and Professions Code.
   (2) Section 750 of the Insurance Code.
   (3) Section 549, 550, or 551 of the Penal Code.
   (h) This section shall remain in effect only until January 1,
2010, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2010, deletes or extends
that date.
1874.81.  (a) The commissioner shall adopt emergency regulations
establishing the criteria that shall be used to award grants to
district attorneys under Section 1874.8.  In addition to the
requirements of subdivision (b) of Section 1874.8, the criteria shall
include all of the following:
   (1) Suggested ratios of investigators to attorneys that the
commissioner believes would result in an effective use of funds
provided through a grant, taking into consideration the enforcement
plans that the commissioner anticipates will be proposed by grantees.
   (2) Administrative expenses that the commissioner deems allowable,
both as a percentage of a grant and by category of expense.
   (3) Benchmarks suitable for measuring the attainment of the
objectives of a grant.
   (4) Standard data and reporting formats that the commissioner
shall require all grantees to provide when reporting to the
commissioner about grants.
   (5) Any other criteria deemed by the commissioner to be necessary
for the efficient and effective administration of this program,
including a commitment for full coordination and cooperation with all
organizations funded by this chapter.
  (b) The regulations required by subdivision (a) shall be adopted in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code), and the adoption of those regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health, and safety or general welfare.
   (c) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.


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