ESSB 6031
In CommitteeSenate
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 strengthens Washington’s ability to detect, investigate, and prosecute insurance-related crimes—including fraud, billing scams, and organized schemes—by expanding definitions, enhancing enforcement tools, and clarifying victim rights. It updates the Insurance Fraud Program to address modern fraud tactics and ensures victims can receive restitution in criminal cases.
- Expands the definition of 'insurance fraud' to include a broader range of criminal acts—such as upcoding, fake billing, impersonation, premium misappropriation, and biased appraisal—now classified as a class B felony.
- Clarifies that insurance fraud can be prosecuted in any county where the crime occurred, where a victim resides, or where the insurer is based, making multi-jurisdictional cases easier to pursue.
- Strengthens the Insurance Fraud Program by authorizing additional staff (including certified peace officers), funding for state patrol officers and assistant attorneys general, and grants to local prosecutors.
- Requires insurers, licensees, CPAs, and other entities with reasonable suspicion of fraud to report it to the Insurance Commissioner or the National Insurance Crime Bureau.
- Grants victims (including insured individuals, insurers, consumers, and beneficiaries) explicit legal standing to be considered victims for restitution purposes in criminal cases involving insurance fraud.
- Extends the statute of limitations for insurance fraud from 6 years to 10 years after commission or discovery (whichever is later), and updates other statutes of limitations for related crimes (e.g., theft by deception, trafficking in stolen property).
Who is affected
- Insurance companies and related entities — Insurers (including health plans, disability insurers, and other entities regulated under Washington insurance laws) gain expanded authority to report suspected crimes, cooperate with investigations, and seek restitution for losses from fraud or related crimes.
- Health care providers and medical billing staff — Health care providers and billing professionals may face increased scrutiny and potential criminal liability for fraudulent billing practices, such as upcoding, using false provider IDs, or billing for services not rendered.
- Insurance consumers and beneficiaries — Insurance consumers and beneficiaries (policyholders, claimants, and insured individuals) benefit from stronger protections, clearer victim status in restitution cases, and reduced risk of premium increases due to fraud.
- Law enforcement and prosecution agencies — Law enforcement and prosecutorial agencies (state patrol, county prosecutors, attorney general’s office) gain new tools and funding to investigate and prosecute insurance-related crimes, including organized schemes.
- Premium finance companies and related businesses — Premium finance companies and businesses that facilitate insurance premium payments must now submit copies of agreements and policies to the insurance commissioner within 30 days.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Expanding the definition of insurance fraud to include impersonation and forged premium finance agreements directly protects consumers from organized schemes that target vulnerable populations—e.g., elderly homeowners after disasters, low-income families seeking auto insurance, or non-English speakers duped by fake ‘insurance agents.’ These provisions strengthen criminal penalties for impersonation, which is a known vector for predatory fraud in rural and underserved communities.
Public SafetyPeopleRef: Sec. 2, 48.135.010(1)(f), (g)(iii)Granting explicit legal standing to insured individuals, consumers, and beneficiaries for restitution in criminal cases ensures that victims (not just insurers) can recover out-of-pocket costs like deductibles, lost wages, or emergency repairs—especially critical for low-income households who cannot absorb unexpected losses from fraud (e.g., staged accidents, fake contractors).
Public SafetyPeopleRef: Sec. 8, 48.135.070Dedicated funding for state patrol officers, assistant attorneys general, and grants to local prosecutors significantly enhances Washington’s capacity to investigate and prosecute complex, multi-jurisdictional fraud schemes (e.g., fake emergency room billing rings, organized staged crashes). This directly benefits communities where under-resourced county prosecutors currently lack capacity to pursue insurance fraud, allowing more cases to be resolved locally and reducing delays in restitution.
Public SafetyPeopleRef: Sec. 4, 48.135.020(2)-(4)Targeting billing for services not rendered and misrepresentation of repair scope directly reduces premium inflation by curbing systemic overbilling in health and property insurance. Health care providers and insurers both benefit from reduced fraud, but the greatest impact is on everyday consumers: the Washington Insurance Commissioner estimates fraud adds $200–$400/year to average household premiums; reducing fraud lowers this burden across income levels.
HealthcarePeopleRef: Sec. 2, 48.135.010(1)(c)(i), (d)Extending the statute of limitations for insurance fraud from 6 to 10 years (or until discovery, whichever is later) enables prosecution of sophisticated, long-running schemes (e.g., fake disability claims, premium misappropriation rings) that often take years to uncover. This is especially beneficial for vulnerable populations—e.g., disabled workers whose benefits are delayed by fraud—who cannot afford prolonged legal uncertainty.
Public SafetyPeopleRef: Sec. 9, 9A.04.080(1)(f)
Potential Concerns (5)
Expanding the definition of insurance fraud to include upcoding (billing for services not rendered or inappropriate CPT/HCPCS codes) increases legal exposure for health care providers, especially those in high-volume billing environments (e.g., urgent care, physical therapy, dental), who may face criminal liability for billing errors that were unintentional or due to ambiguous coding guidance. While the bill includes a scienter requirement (‘knowingly, and with intent to defraud’), prosecutors may still pursue cases where billing practices are technically noncompliant but lack clear evidence of intent, chilling legitimate billing practices.
HealthcareRef: Sec. 2, 48.135.010(1)(c)(ii)Mandating that premium finance companies submit copies of agreements and policies to the commissioner within 30 days adds administrative burden and compliance costs to small- and mid-sized finance companies, especially those operating on thin margins. While the requirement applies to all registered businesses, smaller firms lack the legal/compliance staff of larger financial institutions, increasing per-unit compliance costs.
Business & EmploymentRef: Sec. 5, 48.135.040(1)(g)Mandating that CPAs, state/local law enforcement, and health/financial regulatory entities report suspected fraud to the commissioner expands the scope of mandatory reporting without providing additional funding or safe harbor for good-faith reporting errors. This could deter professionals (especially solo practitioners or small firms) from engaging with insurers or public programs due to fear of liability or misinterpretation of ‘reasonable belief’ thresholds.
Business & EmploymentRef: Sec. 5, 48.135.050(3)The requirement that premium finance companies submit policy and agreement copies to the commissioner adds a new regulatory layer that disproportionately impacts small finance companies and independent agents who rely on manual or paper-based workflows. Compliance may require new software, training, or outsourcing—costs that are passed to consumers in the form of higher fees or reduced service availability in rural areas.
Business & EmploymentRef: Sec. 5, 48.135.050(4)The bill’s expansion of insurance fraud to include biased appraisal (e.g., appraisers on contingency fees or influenced by insurers) could criminalize legitimate negotiation tactics in property claims, especially in disaster-prone areas like the Puget Sound region where demand surges after wildfires or floods. Without clear, objective standards for ‘impartiality,’ this provision may be applied inconsistently, potentially targeting independent adjusters or small appraisal firms.
Public SafetyRef: Sec. 2, 48.135.010(1)(h)
Who Is Most Affected
Health care providers—especially those in high-volume billing specialties (e.g., physical therapy, chiropractic, dental)—face higher scrutiny and potential criminal liability for coding errors or aggressive billing practices. While the bill includes intent requirements, the expanded definition of fraud (e.g., upcoding, false provider IDs) increases legal risk for providers without robust compliance programs.
Insurance consumers, especially low- and middle-income households, benefit from stronger restitution rights, reduced premium inflation, and protection from impersonation fraud. However, if fraud enforcement leads insurers to over-correct by tightening claims approvals, some consumers may face delays in coverage.
Law enforcement and prosecution agencies gain new tools, staffing, and funding to pursue complex fraud cases, but must balance expanded jurisdiction (e.g., prosecuting in any county where a victim resides) with resource constraints in rural counties.
Premium finance companies face new reporting obligations (submitting agreements and policies to the commissioner within 30 days), which may increase compliance costs—particularly for small, regional firms without dedicated legal teams. Larger finance companies are better positioned to absorb these costs.
Insurers gain expanded authority to report fraud and seek restitution, and benefit from reduced fraud-related losses. However, the bill does not significantly change their obligations beyond reporting; the primary cost is increased administrative coordination with law enforcement.