Fraud violations and penalties
HRS §386-98
in effect386-98. Fraud violations and penalties
(a) A fraudulent insurance act, under this chapter, shall include acts or omissions committed by any person who intentionally or knowingly acts or omits to act so as to obtain benefits, deny benefits, obtain benefits compensation for services provided, or provides legal assistance or counsel to obtain benefits or recovery through fraud or deceit by doing the following:
(1) Presenting, or causing to be presented, any false
information on an application;
(2) Presenting, or causing to be presented, any false
or fraudulent claim for the payment of a loss;
(3) Presenting multiple claims for the same loss or
injury, including presenting multiple claims to more than one insurer except
when these multiple claims are appropriate and each insurer is notified
immediately in writing of all other claims and insurers;
(4) Making, or causing to be made, any false or
fraudulent claim for payment or denial of a health care benefit;
(5) Submitting a claim for a health care benefit that
was not used by, or on behalf of, the claimant;
(6) Presenting multiple claims for payment of the
same health care benefit;
(7) Presenting for payment any undercharges for
health care benefits on behalf of a specific claimant unless any known
overcharges for health care benefits for that claimant are presented for
reconciliation at that same time;
(8) Misrepresenting or concealing a material fact;
(9) Fabricating, altering, concealing, making a false
entry in, or destroying a document;
(10) Making, or causing to be made, any false or
fraudulent statements with regard to entitlements or benefits, with the intent
to discourage an injured employee from claiming benefits or pursuing a workers'
compensation claim; or
(11) Making, or causing to be made, any false or
fraudulent statements or claims by, or on behalf of, a client with regard to
obtaining legal recovery or benefits.
(b) No employer shall wilfully make a false
statement or representation to avoid the impact of past adverse claims
experience through change of ownership, control, management, or operation to
directly obtain any workers' compensation insurance policy.
(c) It shall be inappropriate for any
discussion on benefits, recovery, or settlement to include the threat or
implication of criminal prosecution. Any threat or implication shall be
immediately referred in writing to:
(1) The state bar if attorneys are in violation;
(2) The insurance commissioner if insurance company
personnel are in violation; or
(3) The regulated industries complaints office if
health care providers are in violation,
for investigation and, if appropriate, disciplinary
action.
(d) An offense under subsections (a) and (b)
shall constitute a:
(1) Class C felony if the value of the moneys
obtained or denied is not less than $2,000;
(2) Misdemeanor if the value of the moneys obtained
or denied is less than $2,000; or
(3) Petty misdemeanor if the providing of false
information did not cause any monetary loss.
Any person subject to a criminal penalty under
this section shall be ordered by a court to make restitution to an insurer or
any other person for any financial loss sustained by the insurer or other
person caused by the fraudulent act.
(e) In lieu of the criminal penalties set
forth in subsection (d), any person who violates subsections (a) and (b) may be
subject to the administrative penalties of restitution of benefits or payments
fraudulently received under this chapter, whether received from an employer,
insurer, or the special compensation fund, to be made to the source from which
the compensation was received, and one or more of the following:
(1) A fine of no more than $20,000 for each
violation;
(2) Suspension or termination of benefits in whole or
in part;
(3) Suspension or disqualification from providing
medical care or services, vocational rehabilitation services, and all other
services rendered for payment under this chapter;
(4) Suspension or termination of payments for
medical, vocational rehabilitation and all other services rendered under this
chapter;
(5) Recoupment by the insurer of all payments made
for medical care, medical services, vocational rehabilitation services, and all
other services rendered for payment under this chapter; and
(6) Reimbursement of attorney's fees and costs of the
party or parties defrauded.
(f) With respect to the administrative
penalties set forth in subsection (e), no penalty shall be imposed except upon
consideration of a written complaint that specifically alleges a violation of
this section occurring within two years of the date of said complaint. A copy
of the complaint specifying the alleged violation shall be served promptly upon
the person charged. The director or board shall issue, where a penalty is
ordered, a written decision stating all findings following a hearing held not
fewer than twenty days after written notice to the person charged. Any person
aggrieved by the decision may appeal the decision under sections 386-87 and
386-88.
[L 1963, c 116, pt of §1; Supp, §97-113; HRS §386-98; am L 1982, c 98,
§1; am L 1985, c 296, §7; am L 1995, c 234, §16; am L 1996, c 260, §5; am L Sp
2005, c 11, §11; am L 2020, c 44, §9]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0386/HRS_0386-0098.htmFetched: 11/10/2026