HB 2394
In CommitteeHouse
Insurance crimes
Enhancing public safety and enforcement of crimes that impact insurance.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill expands Washington’s insurance fraud laws to cover more sophisticated and diverse crimes—like false billing, impersonation, and premium misappropriation—that harm insurers, consumers, or beneficiaries. It strengthens enforcement tools, increases penalties, and clarifies victim rights to restitution, while updating definitions and investigative authority for the Insurance Commissioner’s fraud program.
- Expands the definition of 'insurance fraud' to include a broader range of crimes—such as false billing, coding misuse, impersonation, premium misappropriation, and biased appraisal—that impact insurers, consumers, or beneficiaries.
- Creates a new statutory definition of 'insurer' that includes health care service contractors, health maintenance organizations, and disability insurers—not just traditional property/casualty insurers.
- Raises insurance fraud to a class B felony and clarifies that each fraudulent act constitutes a separate offense, with jurisdiction in any county where the crime occurred or victims reside.
- Strengthens the Insurance Fraud Program by authorizing additional staff (including certified investigators with limited peace officer authority), state patrol officers, and assistant attorneys general, and allowing grants to local prosecutors.
- Expands the Insurance Commissioner’s investigative powers—including extraterritorial investigations, subpoenas, data analytics tools, and sharing of intelligence with federal/state/local agencies—while protecting victim/witness confidentiality.
- Extends the statute of limitations for insurance fraud to 10 years from commission or discovery (whichever is later), and adds insurance fraud to the list of offenses with extended or no time limits for prosecution in certain cases.
- Requires premium finance companies to submit executed agreements and policies to the Insurance Commissioner within 30 days, enhancing oversight of premium financing.
Who is affected
- Insurance companies and related entities — Insurers (including health plans, disability insurers, and health maintenance organizations) gain stronger tools to detect, investigate, and prosecute fraud, and can seek restitution for investigation and payout costs related to fraud.
- Insurance consumers and beneficiaries — Policyholders and claimants who are victims of fraud (e.g., impersonation, false billing, or misrepresentation) gain clearer legal recognition as victims entitled to restitution in criminal cases.
- Health care providers and medical billing staff — Health care providers and billing professionals may face increased scrutiny of billing practices, especially around coding accuracy and documentation, to avoid prosecution for insurance fraud.
- State and local law enforcement and prosecutors — Law enforcement and prosecutorial agencies gain expanded authority and support (e.g., state patrol officers, assistant attorneys general) to investigate and prosecute insurance-related crimes.
- Premium finance companies — Premium finance companies must now submit executed agreements and policies to the insurance commissioner within 30 days, increasing transparency and oversight.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
By explicitly recognizing insurance consumers and beneficiaries as victims entitled to restitution in criminal cases, the bill strengthens legal recourse for everyday Washingtonians who are defrauded—e.g., through impersonation, false billing, or misrepresentation—helping recover out-of-pocket losses and reinforcing consumer protection.
Public SafetyPeopleRef: Sec. 2 (purpose clause), Sec. 3(1)(f), Sec. 8Targeting premium misappropriation by finance companies and requiring submission of executed agreements to the Insurance Commissioner within 30 days enhances transparency and reduces the risk that low- and middle-income consumers lose premium payments to fraudsters—protecting vulnerable households from financial harm.
Public SafetyPeopleRef: Sec. 3(1)(g)(i), Sec. 5(4)Elevating insurance fraud to a class B felony and allowing prosecution in any county where victims reside expands deterrence and jurisdictional reach, enabling more effective prosecution of organized fraud rings that target multiple communities—benefiting communities disproportionately affected by fraud (e.g., rural areas with limited law enforcement resources).
Public SafetyPeopleRef: Sec. 3(2), Sec. 4(1), Sec. 5(1)(k)Authorizing dedicated state-funded investigators, state patrol officers, assistant attorneys general, and grants to local prosecutors significantly strengthens enforcement capacity—especially for complex, multi-jurisdictional fraud schemes that local agencies lack resources to investigate alone.
Public SafetyPeopleRef: Sec. 4(2), Sec. 4(3), Sec. 4(4), Sec. 5(1)(a), Sec. 5(1)(h)Extending the statute of limitations to 10 years (or discovery, whichever is later) for insurance fraud enables prosecution of long-running or concealed schemes—protecting consumers who may not discover fraud for years (e.g., hidden premium misappropriation, coding fraud in long-term disability claims).
Public SafetyPeopleRef: Sec. 9 (new statute of limitations for RCW 48.135.010), Sec. 3(2)
Potential Concerns (5)
Expanding the definition of insurance fraud to include billing errors, coding misuse, and impersonation creates a risk of overcriminalization—especially for health care providers who may unintentionally submit incorrect codes due to complex billing systems, administrative errors, or ambiguous documentation, potentially exposing them to felony prosecution for non-criminal conduct.
Public SafetyRef: Sec. 2 (new purpose clause), Sec. 3(1)(a)(vi), Sec. 3(1)(g)(i)The requirement that triers of fact consider the American Medical Association’s CPT code set and CMS’s HCPCS code set may create legal uncertainty for providers—especially small clinics and rural practices—lacking billing specialists or legal counsel to interpret nuanced coding standards, increasing liability risk for routine clinical decisions.
HealthcareRef: Sec. 3(1)(c)(ii), Sec. 3(3)(a)While the bill authorizes state funding for investigators, state patrol officers, and assistant attorneys general, it does not mandate or provide direct funding to local prosecuting attorneys—meaning local governments may bear disproportionate costs in prosecuting cases without guaranteed reimbursement, straining already limited county budgets.
Local GovernmentLean peopleRef: Sec. 4(2), Sec. 4(3), Sec. 4(4), Sec. 5(1)(a), Sec. 5(1)(h)Broad exemptions from public records disclosure (e.g., intelligence, witness identities, investigative records) combined with expanded investigative powers (extraterritorial subpoenas, data analytics, cross-agency sharing) may reduce transparency and accountability, limiting defendants’ ability to mount a full defense and increasing risk of investigative overreach without public oversight.
Rights & LibertiesPeopleRef: Sec. 5(4), Sec. 7(1), Sec. 7(4)The bill allows sharing of confidential investigative information—including victim/witness identities—with federal, state, and international agencies, potentially exposing vulnerable victims (e.g., domestic violence survivors, low-income claimants) to secondary harm if their information is misused or shared without adequate safeguards.
Rights & LibertiesLean peopleRef: Sec. 5(4), Sec. 7(3), Sec. 7(4)
Who Is Most Affected
Insurance consumers and beneficiaries—especially low- and middle-income households—benefit from stronger restitution rights, protection against premium fraud, and expanded enforcement against impersonation and billing fraud. However, they may face indirect costs if insurers pass on enforcement expenses via higher premiums.
Health care providers (especially small clinics, solo practitioners, and rural providers) face increased compliance and legal risks due to stricter billing and coding standards, but benefit from reduced fraud that inflates claims processing delays and underpayments.
State and local law enforcement and prosecutors gain new tools and funding, but local governments may bear unreimbursed costs if prosecutions require local resources without guaranteed state reimbursement.
Premium finance companies face new reporting obligations and oversight, increasing compliance costs but also reducing fraud risk in their sector—potentially stabilizing the market for lower-income consumers who rely on premium financing.
Insurers (including health plans and HMOs) gain stronger investigative and prosecutorial tools, but may pass enforcement costs to consumers via higher premiums—especially if fraud detection leads to broader underwriting changes.