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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY GODSHALL, BEYER, BOBACK, BRENNAN, CLYMER, HARHART, MOUL, PASHINSKI, PICKETT, ROAE, SCHRODER, SWANGER AND J. TAYLOR, JUNE 17, 2009 |
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| REFERRED TO COMMITTEE ON INSURANCE, JUNE 17, 2009 |
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| AN ACT |
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1 | Amending Title 42 (Judiciary and Judicial Procedure) of the |
2 | Pennsylvania Consolidated Statutes, providing for insurance |
3 | fraud forfeiture; and further providing for seized property. |
4 | The General Assembly of the Commonwealth of Pennsylvania |
5 | hereby enacts as follows: |
6 | Section 1. Title 42 of the Pennsylvania Consolidated |
7 | Statutes is amended by adding a section to read: |
8 | § 6801.2. Insurance fraud forfeiture. |
9 | (a) Forfeitures generally.--The following shall be subject |
10 | to forfeitures to the Commonwealth, and no property right shall |
11 | exist in them: |
12 | (1) All assets, foreign or domestic: |
13 | (i) Of an individual, entity or organization engaged |
14 | in planning, perpetrating or engaging in insurance fraud |
15 | as defined by section 2501 of the act of May 17, 1921 |
16 | (P.L.682, No.284), known as The Insurance Company Law of |
17 | 1921, and all assets, foreign or domestic, affording a |
18 | person a source of influence over such an entity or |
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1 | organization. |
2 | (ii) Acquired or maintained by a person with the |
3 | intent and for the purpose of supporting, planning, |
4 | conducting or concealing an act in this Commonwealth |
5 | which violates 18 Pa.C.S. § 4117 (relating to insurance |
6 | fraud). |
7 | (iii) Derived from, involved in or used or intended |
8 | to be used to commit an act in this Commonwealth which |
9 | violates 18 Pa.C.S. § 4117. |
10 | (2) All assets within this Commonwealth: |
11 | (i) Of an individual, entity or organization engaged |
12 | in planning or perpetrating an act which violates 18 |
13 | Pa.C.S. § 4117. |
14 | (ii) Acquired or maintained with the intent and for |
15 | the purpose of supporting, planning, conducting or |
16 | concealing an act which violates 18 Pa.C.S. § 4117. |
17 | (iii) Derived from, involved in or used or intended |
18 | to be used to commit an act which violates 18 Pa.C.S. § |
19 | 4117. |
20 | (b) Process and seizures.--Property subject to forfeiture |
21 | under this section may be seized by the law enforcement |
22 | authority upon process issued by a court of common pleas having |
23 | jurisdiction over the property. Seizure without process may be |
24 | made if any of the following apply: |
25 | (1) The seizure is incident to an arrest, a search under |
26 | a search warrant or an inspection under an administrative |
27 | inspection warrant. |
28 | (2) The property subject to seizure has been the subject |
29 | of a prior judgment in favor of the Commonwealth in a |
30 | criminal injunction or forfeiture proceeding under this |
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1 | chapter. |
2 | (3) There is probable cause to believe that the property |
3 | is dangerous to health or safety. |
4 | (4) There is probable cause to believe that the property |
5 | has been or is intended to be used in the commission of an |
6 | act which violates 18 Pa.C.S. § 4117. |
7 | (c) Seizure without process.--In the event seizure is made |
8 | without process, proceedings for the issuance of process shall |
9 | be instituted forthwith. |
10 | (d) Custody of property.--Property taken or detained under |
11 | this section shall not be subject to replevin but is deemed to |
12 | be in the custody of the law enforcement authority, subject only |
13 | to the orders and decrees of the court of common pleas having |
14 | jurisdiction over the forfeiture proceedings and of the district |
15 | attorney or the Attorney General. When property is seized under |
16 | this section, the law enforcement authority shall place the |
17 | property under seal and either: |
18 | (1) remove the property to a place determined by the law |
19 | enforcement authority; or |
20 | (2) request that the district attorney or Attorney |
21 | General take custody of the property and remove it to an |
22 | appropriate location for disposition in accordance with law. |
23 | (e) Use of property held in custody.--Whenever property is |
24 | forfeited under this section, it shall be transferred to the |
25 | custody of the district attorney if the law enforcement |
26 | authority seizing the property has local or county jurisdiction |
27 | or of the Attorney General if the law enforcement authority |
28 | seizing the property has Statewide jurisdiction. The district |
29 | attorney or the Attorney General, where appropriate, may: |
30 | (1) Retain the property for official use. |
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1 | (2) Sell any forfeited property which is not required to |
2 | be destroyed by law and which is not harmful to the public, |
3 | the proceeds from any such sale to be used to pay all proper |
4 | expenses of the proceedings for forfeiture and sale, |
5 | including expenses of seizure, maintenance of custody, |
6 | advertising and court costs. The balance of the proceeds |
7 | shall be dealt with under subsections (f) and (g). |
8 | (f) Use of cash or proceeds of property.--Cash or proceeds |
9 | of forfeited property shall be placed in the custody of and |
10 | maintained by law enforcement until a court of common pleas |
11 | having jurisdiction over the property equitably distributes the |
12 | property accordingly: |
13 | (1) Any losses suffered by an insurer, as defined by |
14 | section 2501 of The Insurance Company Law of 1921, shall be |
15 | paid in full when possible as restitution with the balance, |
16 | if any, being apportioned equitably among law enforcement |
17 | seizing the property. |
18 | (2) If full restitution cannot be made for lack of |
19 | sufficient cash and proceeds, then the court shall equitably |
20 | distribute the cash and proceeds among the insurers and law |
21 | enforcement. |
22 | (g) Authorization to utilize property.--The district |
23 | attorney and the Attorney General shall utilize forfeited |
24 | property or proceeds thereof for the purpose of enforcing the |
25 | provisions of this act. In appropriate cases, the district |
26 | attorney and the Attorney General may designate proceeds from |
27 | forfeited property to be utilized for fraud prevention programs. |
28 | (h) Annual audit of forfeited property.--It shall be the |
29 | responsibility of every county in this Commonwealth to provide, |
30 | through the controller, board of auditors or other appropriate |
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1 | auditor and the district attorney, an annual audit of all |
2 | forfeited property and proceeds obtained under this section. The |
3 | audit shall not be made public but shall be submitted to the |
4 | Office of Attorney General. The county shall report all |
5 | forfeited property and proceeds obtained under this section and |
6 | the disposition thereof to the Office of Attorney General by |
7 | September 30 of each year. |
8 | (i) Annual report; confidential information regarding |
9 | property.--The Attorney General shall annually submit a report |
10 | to the Appropriations Committee and Judiciary Committee of the |
11 | Senate and the Appropriations Committee and Judiciary Committee |
12 | of the House of Representatives specifying the forfeited |
13 | property or proceeds thereof obtained under this section. The |
14 | report shall give an accounting of all proceeds derived from the |
15 | sale of forfeited property and the use made of unsold forfeited |
16 | property. The Attorney General shall adopt procedures and |
17 | guidelines governing the release of information by the district |
18 | attorney to protect the confidentiality of forfeited property or |
19 | proceeds used in ongoing insurance fraud activities. |
20 | (j) Proceeds and appropriations.--The proceeds or future |
21 | proceeds from property forfeited under this section shall be in |
22 | addition to any appropriation made to the Office of Attorney |
23 | General. |
24 | Section 2. Section 6802(a)(5), (f), (j) and (k) of Title 42 |
25 | are amended to read: |
26 | § 6802. Procedure with respect to seized property subject to |
27 | liens and rights of lienholders. |
28 | (a) General procedure.--The proceedings for the forfeiture |
29 | or condemnation of property, the sale of which is provided for |
30 | in this chapter, shall be in rem, in which the Commonwealth |
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1 | shall be the plaintiff and the property the defendant. A |
2 | petition shall be filed in the court of common pleas of the |
3 | judicial district where the property is located, verified by |
4 | oath or affirmation of an officer or citizen, containing the |
5 | following: |
6 | * * * |
7 | (5) An allegation that the property is subject to |
8 | forfeiture pursuant to section 6801(a) (relating to |
9 | controlled substances forfeiture) [or], 6801.1(a) (relating |
10 | to terrorism forfeiture) or 6801.2(a) (relating to insurance |
11 | fraud forfeiture) and an averment of material facts upon |
12 | which the forfeiture action is based. |
13 | * * * |
14 | (f) Preservation of the property subject for forfeiture.-- |
15 | Upon application of the Commonwealth, the court may enter a |
16 | restraining order or injunction, require the execution of a |
17 | satisfactory performance bond or take any other action to |
18 | preserve the availability of property described in section |
19 | 6801(a) [or], 6801.1(a) or 6801.2(a) for forfeiture under this |
20 | section either: |
21 | (1) upon the filing of an information or an indictment |
22 | charging an offense in this Commonwealth for which criminal |
23 | forfeiture may be ordered under this chapter and alleging |
24 | that the property with respect to which the order is sought |
25 | would be subject to forfeiture; or |
26 | (2) prior to the filing of such an indictment or |
27 | information, if, after notice to persons appearing to have an |
28 | interest in the property and an opportunity for a hearing, |
29 | the court determines that: |
30 | (i) there is a substantial probability that the |
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1 | Commonwealth will prevail on the issue of forfeiture and |
2 | that failure to enter the order will result in the |
3 | property being destroyed, removed from the jurisdiction |
4 | of the court or otherwise made unavailable for |
5 | forfeiture; and |
6 | (ii) the need to preserve the availability of the |
7 | property through the entry of the requested order |
8 | outweighs the hardship on any party against whom the |
9 | order is to be entered. |
10 | However, an order entered pursuant to this paragraph |
11 | shall be effective for not more than 90 days unless |
12 | extended by the court for good cause shown or unless an |
13 | indictment or information described in paragraph (1) has |
14 | been filed. |
15 | * * * |
16 | (j) Owner's burden of proof.--At the time of the hearing, if |
17 | the Commonwealth produces evidence that the property in question |
18 | was unlawfully used, possessed or otherwise subject to |
19 | forfeiture under section 6801(a) [or], 6801.1(a) or 6801.2(a), |
20 | the burden shall be upon the claimant to show: |
21 | (1) That the claimant is the owner of the property or |
22 | the holder of a chattel mortgage or contract of conditional |
23 | sale thereon. |
24 | (2) That the claimant lawfully acquired the property. |
25 | (3) That it was not unlawfully used or possessed by him. |
26 | In the event that it shall appear that the property was |
27 | unlawfully used or possessed by a person other than the |
28 | claimant, then the claimant shall show that the unlawful use |
29 | or possession was without his knowledge or consent. Such |
30 | absence of knowledge or consent must be reasonable under the |
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1 | circumstances presented. |
2 | (k) Court-ordered release of property.--If a person claiming |
3 | the ownership of or right of possession to or claiming to be the |
4 | holder of a chattel mortgage or contract of conditional sale |
5 | upon the property, the disposition of which is provided for in |
6 | this section, prior to the sale presents a petition to the court |
7 | alleging over the property lawful ownership, right of |
8 | possession, a lien or reservation of title and if, upon public |
9 | hearing, due notice of which having been given to the Attorney |
10 | General or the district attorney, the claimant shall prove by |
11 | competent evidence to the satisfaction of the court that the |
12 | property was lawfully acquired, possessed and used by him or, it |
13 | appearing that the property was unlawfully used by a person |
14 | other than the claimant, that the unlawful use was without the |
15 | claimant's knowledge or consent, then the court may order the |
16 | property returned or delivered to the claimant. Such absence of |
17 | knowledge or consent must be reasonable under the circumstances |
18 | presented. Otherwise, it shall be retained for official use or |
19 | sold in accordance with section 6801(e) [or], 6801.1(f) or |
20 | 6801.2(f). |
21 | Section 3. This act shall take effect immediately. |
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