Committee Hears Proposal to Create Standalone Insurance-Fraud Felony; Defenders Warn of Overlap with Existing Statute

The committee heard Engrossed Substitute Senate Bill 6,031, which would create a new standalone crime of insurance fraud punishable as a class B felony, expand the insurance fraud program administered by the insurance commissioner, set new reporting duties for certain financing agreements, and modify restitution provisions.

Peter Clodfelter (committee staff) summarized the companion-to-House bill and said the measure turns the definition of insurance fraud used in the insurance-fraud program into a standalone criminal offense and adds activities to the crime. The bill would also extend the statute of limitations for some offenses and modify restitution for criminal cases involving insurance victims.

Senator John Lubbock, sponsor, described the bill as an attempt to address organized and large-scale fraud schemes harming insurers and consumers. “We’re living in a time where fraud is just overwhelming us,” he told the committee.

Dory Nick Pond of the Office of the Insurance Commissioner said two committee amendments originally offered have been incorporated; one prohibits criminal-investigations staff from participating in OIC regulatory investigations and the other focuses the investigative team on conclusive and complex schemes. The OIC testified in support and noted the bill passed the Senate 49–0.

Ramona Brandes, representing the Washington Defender Association and the Washington Association of Criminal Defense Attorneys, opposed a portion of the bill in its current form. She told the committee that Section 3 appears to duplicate RCW 48.32.030 — which already criminalizes knowingly presenting a false or fraudulent insurance claim as a gross misdemeanor — and warned that creating a parallel felony without clearly distinct elements risks inconsistent charging, constitutional concerns and rule-of-lenity issues. “Under current law, this offense is a gross misdemeanor,” Brandes said; “creating a parallel felony offense without clearly distinguishing elements undermines the framework.”

Representatives asked Brandes about the 10-year statute of limitations in the bill and whether longer limitations are typical for similar financial crimes; Brandes said some more serious offenses in statute have longer limits, and she submitted a proposed amendment to exclude conduct already targeted by RCW 48.32.030.

The hearing collected views from the OIC, consumer groups and defense counsel; committee members requested a statutory crosswalk and statute-of-limitations examples to resolve overlap concerns before further action.