Insurance Committee
Filed: 3/11/2008
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1 | AMENDMENT TO HOUSE BILL 4941
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2 | AMENDMENT NO. ______. Amend House Bill 4941 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 1. Short title. This Act may be cited as the | ||||||
5 | Viatical Settlements Act of 2008. | ||||||
6 | Section 5. Definitions. | ||||||
7 | "Accredited investor" means an accredited investor as | ||||||
8 | defined in Rule 501(a) promulgated under the Securities Act of | ||||||
9 | 1933 (15 U.S.C. 77 et seq.), as amended, and as that regulation | ||||||
10 | exists on the effective date of this Act. | ||||||
11 | "Advertising" means any written, electronic, or printed | ||||||
12 | communication or any communication by means of recorded | ||||||
13 | telephone messages or transmitted on radio, television, the | ||||||
14 | Internet, or similar communications media, including film | ||||||
15 | strips, digital picture slides, motion pictures, and videos | ||||||
16 | published, disseminated, circulated, or placed directly before |
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1 | the public in this State, for the purpose of creating an | ||||||
2 | interest in or inducing a person to sell, assign, devise, | ||||||
3 | bequest, or transfer the death benefit or ownership of a policy | ||||||
4 | pursuant to a viatical settlement contract. | ||||||
5 | "Alien licensee" means a licensee incorporated or | ||||||
6 | organized under the laws of any country other than the United | ||||||
7 | States. | ||||||
8 | "Business of viatical settlements" means any activity | ||||||
9 | involved in, but not limited to, the offering, solicitation, | ||||||
10 | negotiation, procurement, effectuation, purchasing, investing, | ||||||
11 | financing, monitoring, tracking, underwriting, selling, | ||||||
12 | transferring, assigning, pledging, or hypothecating or in any | ||||||
13 | other manner acquiring an interest in a life insurance policy | ||||||
14 | by means of a viatical settlement contract or other agreement. | ||||||
15 | "Chronically ill" means having been certified within the | ||||||
16 | preceding 12-month period by a licensed health professional as: | ||||||
17 | (1) being unable to perform, without substantial | ||||||
18 | assistance from another individual and for at least 90 days | ||||||
19 | due to a loss of functional capacity, at least 2 activities | ||||||
20 | of daily living, including, but not limited to, eating, | ||||||
21 | toileting, transferring, bathing, dressing, or continence; | ||||||
22 | (2) requiring substantial supervision to protect the | ||||||
23 | individual from threats to health and safety due to severe | ||||||
24 | cognitive impairment; or | ||||||
25 | (3) having a level of disability similar to that | ||||||
26 | described in paragraph (1) as determined by the Secretary |
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1 | of Health and Human Services. | ||||||
2 | "Controlling person" means any person, firm, association, | ||||||
3 | or corporation that directly or indirectly has the power to | ||||||
4 | direct or cause to be directed the management, control, or | ||||||
5 | activities of the viatical settlement provider. | ||||||
6 | "Director" means the Director of the Division of Insurance | ||||||
7 | of the Department of Financial and Professional Regulation. | ||||||
8 | "Division" means the Division of Insurance of the | ||||||
9 | Department of Financial and Professional Regulation. | ||||||
10 | "Escrow agent" means an independent third-party person | ||||||
11 | who, pursuant to a written agreement signed by the viatical | ||||||
12 | settlement provider and viator, provides escrow services | ||||||
13 | related to the acquisition of a life insurance policy pursuant | ||||||
14 | to a viatical settlement contract. | ||||||
15 | "Financial institution" means a financial institution as | ||||||
16 | defined by the Financial Institutions Insurance Sales Law in | ||||||
17 | Article XLIV of the Illinois Insurance Code. | ||||||
18 | "Financing entity" means an underwriter, placement agent, | ||||||
19 | lender, purchaser of securities, purchaser of a policy or | ||||||
20 | certificate from a viatical settlement provider, credit | ||||||
21 | enhancer, or an entity that has a direct ownership in a policy | ||||||
22 | that is the subject of a viatical settlement contract, and to | ||||||
23 | which both of the following apply: | ||||||
24 | (1) its principal activity related to the transaction | ||||||
25 | is providing funds to effect the viatical settlement or | ||||||
26 | purchase of one or more viaticated policies; and |
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1 | (2) it has an agreement in writing with one or more | ||||||
2 | licensed viatical settlement providers to finance the | ||||||
3 | acquisition of viatical settlement contracts. | ||||||
4 | "Financing entity" does not include an investor that is not an | ||||||
5 | accredited investor. | ||||||
6 | "Foreign licensee" means any viatical settlement provider | ||||||
7 | incorporated or organized under the laws of any state of the | ||||||
8 | United States other than this State. | ||||||
9 | "Insurance producer" means an insurance producer as | ||||||
10 | defined by Section 10 of Article XXXI of the Illinois Insurance | ||||||
11 | Code. | ||||||
12 | "Licensee" means a viatical settlement provider or | ||||||
13 | viatical settlement broker. | ||||||
14 | "Life expectancy provider" means a person who determines or | ||||||
15 | holds himself or herself out as determining life expectancies | ||||||
16 | or mortality ratings used to determine life expectancies on | ||||||
17 | behalf of or in connection with any of the following: | ||||||
18 | (1) A viatical settlement provider, viatical | ||||||
19 | settlement broker, or person engaged in the business of | ||||||
20 | viatical settlements. | ||||||
21 | (2) A viatical investment as defined by Section 2.33 of | ||||||
22 | the Illinois Securities Law of 1953 or a viatical | ||||||
23 | settlement contract. | ||||||
24 | "NAIC" means the National Association of Insurance | ||||||
25 | Commissioners. | ||||||
26 | "Person" means an individual or a legal entity, including, |
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1 | without limitation, a partnership, limited liability company, | ||||||
2 | limited liability partnership, association, trust, business | ||||||
3 | trust, or corporation. | ||||||
4 | "Policy" means an individual or group policy, group | ||||||
5 | certificate, contract, or arrangement of insurance of the class | ||||||
6 | defined by subsection (a) of Section 4 of the Illinois | ||||||
7 | Insurance Code owned by or for the benefit of a resident of | ||||||
8 | this State, regardless of whether delivered or issued for | ||||||
9 | delivery in this State. | ||||||
10 | "Qualified institutional buyer" means a qualified | ||||||
11 | institutional buyer as defined in Rule 144 promulgated under | ||||||
12 | the Securities Act of 1933, as amended. | ||||||
13 | "Related provider trust" means a titling trust or other | ||||||
14 | trust established by a licensed viatical settlement provider or | ||||||
15 | a financing entity for the sole purpose of holding the | ||||||
16 | ownership or beneficial interest in purchased policies in | ||||||
17 | connection with a financing transaction. The trust shall have a | ||||||
18 | written agreement with the licensed viatical settlement | ||||||
19 | provider under which the licensed viatical settlement provider | ||||||
20 | is responsible for ensuring compliance with all statutory and | ||||||
21 | regulatory requirements and under which the trust agrees to | ||||||
22 | make all records and files related to viatical settlement | ||||||
23 | transactions available to the Director as if those records and | ||||||
24 | files were maintained directly by the licensed viatical | ||||||
25 | settlement provider. | ||||||
26 | "Special purpose entity" means a corporation, partnership, |
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1 | trust, limited liability company, or other similar entity | ||||||
2 | formed only to provide, directly or indirectly, access to | ||||||
3 | institutional capital markets (i) for a financing entity or | ||||||
4 | licensed viatical settlement provider; or (ii) in connection | ||||||
5 | with a transaction in which the securities in the special | ||||||
6 | purposes entity are acquired by the viator or by qualified | ||||||
7 | institutional buyers or
the securities pay a fixed rate of | ||||||
8 | return commensurate with established asset-backed | ||||||
9 | institutional capital markets. | ||||||
10 | "Terminally ill" means certified by a physician as having | ||||||
11 | an illness or physical condition that reasonably is expected to | ||||||
12 | result in death in 24 months or less. | ||||||
13 | "Viatical settlement broker" means a licensed insurance | ||||||
14 | producer who has been issued a license pursuant to Section | ||||||
15 | 500-35(a)(1) or 500-35(a)(2) of the Insurance Code who, working | ||||||
16 | exclusively on behalf of a viator and for a fee, commission, or | ||||||
17 | other valuable consideration, offers or attempts to negotiate | ||||||
18 | viatical settlement contracts between a viator and one or more | ||||||
19 | viatical settlement providers or one or more viatical | ||||||
20 | settlement brokers. "Viatical settlement broker" does not | ||||||
21 | include an attorney, certified public accountant, or a | ||||||
22 | financial planner accredited by a nationally recognized | ||||||
23 | accreditation agency, who is retained to represent the viator | ||||||
24 | and whose compensation is not paid directly or indirectly by | ||||||
25 | the viatical settlement provider or purchaser. | ||||||
26 | "Viatical settlement contract" means any of the following: |
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1 | (1) A written agreement between a
viator and a viatical | ||||||
2 | settlement provider or any affiliate of the viatical | ||||||
3 | settlement provider establishing the terms under which | ||||||
4 | compensation or anything of value is or will be paid, which | ||||||
5 | compensation or value is less than the expected death | ||||||
6 | benefits of the policy, in return for the viator's present | ||||||
7 | or future assignment, transfer, sale, devise, or bequest of | ||||||
8 | the death benefit or ownership of any portion of the | ||||||
9 | insurance policy or any beneficial interest in the policy | ||||||
10 | or its ownership. | ||||||
11 | (2) A written agreement for a loan or other lending | ||||||
12 | transaction, secured primarily by an individual life | ||||||
13 | insurance policy or an individual certificate of a group | ||||||
14 | life insurance policy. | ||||||
15 | (3) A premium finance loan made for a life insurance | ||||||
16 | policy by a lender to a viator on, before, or after the | ||||||
17 | date of issuance of the policy in either of the following | ||||||
18 | situations: | ||||||
19 | (A) The viator or the insured receives a guarantee | ||||||
20 | of the viatical settlement value of the policy. | ||||||
21 | (B) The viator or the insured agrees to sell the | ||||||
22 | policy or any portion of the policy's death benefit on | ||||||
23 | any date before or after issuance of the policy. | ||||||
24 | "Viatical settlement contract" does not include any of the | ||||||
25 | following unless part of a plan, scheme, device, or artifice to | ||||||
26 | avoid application of this Act:
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1 | (a) A policy loan or accelerated death benefit made by | ||||||
2 | the insurer pursuant to the policy's terms;
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3 | (b) Loan proceeds that are used solely to pay:
(i) | ||||||
4 | premiums for the policy and
(ii) the costs of the loan, | ||||||
5 | including, without limitation interest, arrangement fees, | ||||||
6 | utilization fees and similar fees, closing costs, legal | ||||||
7 | fees and expenses, trustee fees and expenses, and third | ||||||
8 | party collateral provider fees and expenses, including | ||||||
9 | fees payable to letter of credit issuers; | ||||||
10 | (c) A loan made by a bank or other financial | ||||||
11 | institution in which the lender takes an interest in a life | ||||||
12 | insurance policy solely to secure repayment of a loan or, | ||||||
13 | if there is a default on the loan and the policy is | ||||||
14 | transferred, the transfer of such a policy by the lender, | ||||||
15 | provided that the default itself is not pursuant to an | ||||||
16 | agreement or understanding with any other person for the | ||||||
17 | purpose of evading regulation under this Act; | ||||||
18 | (d) A loan made by a lender that does not violate | ||||||
19 | Article XXXIIa of the Illinois Insurance Code, provided | ||||||
20 | that the premium finance loan is not described in this Act; | ||||||
21 | (e) An agreement in which all the parties (i) are | ||||||
22 | closely related to the insured by blood or law or (ii) have | ||||||
23 | a lawful substantial economic interest in the continued | ||||||
24 | life, health, and bodily safety of the person insured, or | ||||||
25 | trusts established primarily for the benefit of such | ||||||
26 | parties;
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1 | (f) Any designation, consent, or agreement by an | ||||||
2 | insured who is an employee of an employer in connection | ||||||
3 | with the purchase by the employer, or trust established by | ||||||
4 | the employer, of life insurance on the life of the | ||||||
5 | employee;
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6 | (g) A bona fide business succession planning | ||||||
7 | arrangement:
(i) between one or more shareholders in a | ||||||
8 | corporation or between a corporation and one or more of its | ||||||
9 | shareholders or one or more trust established by its | ||||||
10 | shareholders;
(ii) between one or more partners in a | ||||||
11 | partnership or between a partnership and one or more of its | ||||||
12 | partners or one or more trust established by its partners; | ||||||
13 | or
(iii) between one or more members in a limited liability | ||||||
14 | company or between a limited liability company and one or | ||||||
15 | more of its members or one or more trust established by its | ||||||
16 | members; | ||||||
17 | (h) An agreement entered into by a service recipient, | ||||||
18 | or a trust established by the service recipient, and a | ||||||
19 | service provider, or a trust established by the service | ||||||
20 | provider, who performs significant services for the | ||||||
21 | service recipient's trade or business;
or | ||||||
22 | (i) Any other contract, transaction, or arrangement | ||||||
23 | exempted from the definition of viatical settlement | ||||||
24 | contract by the Director based on the Director's | ||||||
25 | determination that the contract, transaction, or | ||||||
26 | arrangement is not of the type intended to be regulated by |
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1 | this Act.
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2 | "Viatical settlement investment agent" means a person who | ||||||
3 | is an appointed or contracted agent of a licensed viatical | ||||||
4 | settlement provider who solicits or arranges the funding for | ||||||
5 | the purchase of a viatical settlement by a viatical settlement | ||||||
6 | purchaser and who is acting on behalf of a viatical settlement | ||||||
7 | provider.
A viatical settlement investment agent is deemed to | ||||||
8 | represent the viatical settlement provider of whom the viatical | ||||||
9 | settlement investment agent is an appointed or contracted | ||||||
10 | agent. | ||||||
11 | "Viatical settlement provider" means a person, other than a | ||||||
12 | viator, who enters into or effectuates a viatical settlement | ||||||
13 | contract with a viator. "Viatical settlement provider" does not | ||||||
14 | include: | ||||||
15 | (1) a bank, savings bank, savings and loan association, | ||||||
16 | credit union, or other financial institution that takes an | ||||||
17 | assignment of a policy as collateral for a loan; | ||||||
18 | (2) a financial institution or premium finance company | ||||||
19 | making premium finance loans and exempted by the Director | ||||||
20 | from the licensing requirement under the premium finance | ||||||
21 | laws where the institution or company takes an assignment | ||||||
22 | of a life insurance policy solely as collateral for a | ||||||
23 | premium finance loan; | ||||||
24 | (3) the issuer of the life insurance policy; | ||||||
25 | (4) an authorized or eligible insurer that provides | ||||||
26 | stop loss coverage or financial guaranty insurance to a |
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1 | viatical settlement provider, purchaser, financing entity, | ||||||
2 | special purpose entity, or related provider trust; | ||||||
3 | (5) An individual person who enters into or effectuates | ||||||
4 | no more than one viatical settlement contract in a calendar | ||||||
5 | year for the transfer of policies for any value less than | ||||||
6 | the expected death benefit; | ||||||
7 | (6) a financing entity; | ||||||
8 | (7) a special purpose entity; | ||||||
9 | (8) a related provider trust; | ||||||
10 | (9) a viatical settlement purchaser; or | ||||||
11 | (10) any other person that the Director determines is | ||||||
12 | consistent with the definition of viatical settlement | ||||||
13 | provider. | ||||||
14 | "Viatical settlement purchaser" means a person who | ||||||
15 | provides a sum of money as consideration for a life insurance | ||||||
16 | policy or an interest in the death benefits of a life insurance | ||||||
17 | policy, or a person who owns or acquires or is entitled to a | ||||||
18 | beneficial interest in a trust that owns a viatical settlement | ||||||
19 | contract or is the beneficiary of a life insurance policy that | ||||||
20 | has been or will be the subject of a viatical settlement | ||||||
21 | contract, for the purpose of deriving an economic benefit. | ||||||
22 | "Viatical settlement purchaser" does not include:
(i) a | ||||||
23 | licensee under this Act;
(ii) an accredited investor or | ||||||
24 | qualified institutional buyer;
(iii) a financing entity;
(iv) a | ||||||
25 | special purpose entity; or
(v) a related provider trust.
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26 | "Viaticated policy" means a life insurance policy that has |
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1 | been acquired by a viatical settlement provider pursuant to a | ||||||
2 | viatical settlement contract. | ||||||
3 | "Viator" means the owner, including without limitation a | ||||||
4 | trust or other business entity, of a life insurance policy or a | ||||||
5 | certificate holder under a group policy who resides in this | ||||||
6 | State and enters or seeks to enter into a viatical settlement | ||||||
7 | contract. For the purposes of this Act, a viator is not limited | ||||||
8 | to an owner of a life insurance policy or a certificate holder | ||||||
9 | under a group policy insuring the life of an individual with a | ||||||
10 | terminal or chronic illness or condition, except where | ||||||
11 | specifically addressed. "Viator" does not include: | ||||||
12 | (1) a licensee; | ||||||
13 | (2) a qualified institutional buyer; | ||||||
14 | (3) a financing entity; | ||||||
15 | (4) a special purpose entity; or | ||||||
16 | (5) a related provider trust.
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17 | Section 10. License and bond requirements. | ||||||
18 | (a) A person shall not operate as a viatical settlement | ||||||
19 | provider or viatical settlement broker without first obtaining | ||||||
20 | a license from the chief insurance regulatory official of the | ||||||
21 | state of residence of the viator. | ||||||
22 | (b) A person shall not operate as a viatical settlement | ||||||
23 | broker without first obtaining an insurance producer license | ||||||
24 | from the Director. The Director may require proof of | ||||||
25 | understanding of viatical settlement requirements as |
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1 | established by this Act through questions asked on the | ||||||
2 | licensing exam for insurance producers as established by the | ||||||
3 | Application for Examination contained in Article XXXI of the | ||||||
4 | Illinois Insurance Code. The Director may by rule require | ||||||
5 | training or education for viatical settlement brokers in | ||||||
6 | addition to any continuing education requirements provided by | ||||||
7 | Article XXXI of the Illinois Insurance Code.
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8 | (c) An insurance producer shall not operate as a viatical | ||||||
9 | settlement broker unless the producer has been duly licensed as | ||||||
10 | a resident insurance producer with a life line of authority in | ||||||
11 | this state or the insurance producer's home state for at least | ||||||
12 | one year. | ||||||
13 | (d) Before operating as a viatical settlement broker the | ||||||
14 | insurance producer, including a business entity licensed in | ||||||
15 | this State as an insurance producer, shall notify the Director | ||||||
16 | that the insurance producer is acting as a viatical settlement | ||||||
17 | broker on a form prescribed by the Director, and shall pay a | ||||||
18 | $500 registration fee which shall be deposited into the | ||||||
19 | Insurance Producer Administration Fund. Notification shall | ||||||
20 | include an acknowledgement by the insurance producer that he or | ||||||
21 | she will operate as a viatical settlement broker in accordance | ||||||
22 | with this Act.
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23 | If a business entity with an insurance producer license | ||||||
24 | registers as a viatical settlement broker, then that | ||||||
25 | registration authorizes all partners, officers, members, and | ||||||
26 | designated employees to act as viatical settlement brokers. All |
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1 | persons acting as viatical settlement brokers pursuant to such | ||||||
2 | a registration shall be named in the application and any | ||||||
3 | supplements to the application. | ||||||
4 | (e) A person licensed as an attorney, certified public | ||||||
5 | accountant, or financial planner accredited by a nationally | ||||||
6 | recognized accreditation agency, who is retained to represent | ||||||
7 | the viator, whose compensation is not paid directly or | ||||||
8 | indirectly by the viatical settlement provider, may negotiate | ||||||
9 | viatical settlement contracts on behalf of the viator without | ||||||
10 | having to obtain a license as a viatical settlement broker. | ||||||
11 | (f) A person shall not operate as a viatical settlement | ||||||
12 | provider without first obtaining a license from the Director. | ||||||
13 | (g) Application for a viatical settlement provider license | ||||||
14 | shall be made to the Director by the applicant on a form | ||||||
15 | prescribed by the Director. The applications shall be | ||||||
16 | accompanied by a $3,000 fee, which shall be deposited into the | ||||||
17 | Insurance Producer Administration Fund.
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18 | (h) Viatical settlement provider licenses may be renewed | ||||||
19 | from year to year on the anniversary date upon payment of the | ||||||
20 | annual renewal fee of $1,500. Failure to pay the fees by the | ||||||
21 | renewal date results in expiration of the license. | ||||||
22 | (i) The applicant for a viatical settlement provider | ||||||
23 | license shall provide information on forms required by the | ||||||
24 | Director. The Director shall have authority, at any time, to | ||||||
25 | require the applicant to fully disclose the identity of all | ||||||
26 | stockholders, partners, officers, members, and employees, and |
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1 | the Director may, in the exercise of the Director's discretion, | ||||||
2 | refuse to issue a license in the name of a legal entity if not | ||||||
3 | satisfied that any officer, employee, stockholder, partner, or | ||||||
4 | member thereof who may materially influence the applicant's | ||||||
5 | conduct meets the standards of this Act. | ||||||
6 | A viatical settlement provider license issued to a legal | ||||||
7 | entity authorizes all partners, officers, members, and | ||||||
8 | designated employees to act as viatical settlement providers, | ||||||
9 | as applicable, under the license, and all those persons shall | ||||||
10 | be named in the application and any supplements to the | ||||||
11 | application. | ||||||
12 | (j) Upon the filing of a viatical settlement provider | ||||||
13 | license application and the payment of the license fee, the | ||||||
14 | Director shall make an investigation of each applicant and | ||||||
15 | issue a license if the Director finds that the applicant: | ||||||
16 | (1) has provided a detailed plan of operation; | ||||||
17 | (2) is competent and trustworthy and intends to act in | ||||||
18 | good faith in the capacity involved by the license applied | ||||||
19 | for; | ||||||
20 | (3) has a good business reputation and has had | ||||||
21 | experience, training, or education so as to be qualified in | ||||||
22 | the business for which the license is applied for; | ||||||
23 | (4) (A) has demonstrated evidence of financial | ||||||
24 | responsibility in a format prescribed by the Director | ||||||
25 | through either a surety bond executed and issued by an | ||||||
26 | insurer authorized to issue surety bonds in this State or a |
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1 | deposit of cash, certificates of deposit or securities or | ||||||
2 | any combination thereof in the amount of $250,000; | ||||||
3 | (B) the Director may ask for evidence of financial | ||||||
4 | responsibility at any time the Director deems | ||||||
5 | necessary; | ||||||
6 | (C) any surety bond issued pursuant to this | ||||||
7 | subsection (j) shall be in the favor of this State and | ||||||
8 | shall specifically authorize recovery by the Director | ||||||
9 | on behalf of any person in this State who sustained | ||||||
10 | damages as the result of erroneous acts, failure to | ||||||
11 | act, conviction of fraud or conviction of unfair | ||||||
12 | practices by the viatical settlement provider; | ||||||
13 | (D) notwithstanding any other provision of this | ||||||
14 | Section to the contrary, the Director shall accept, as | ||||||
15 | evidence of financial responsibility, proof that | ||||||
16 | financial instruments in accordance with the | ||||||
17 | requirements in this subsection (j) have been filed | ||||||
18 | with one or more states where the applicant is licensed | ||||||
19 | as a viatical settlement provider; | ||||||
20 | (5) if a legal entity, provides a certificate of good | ||||||
21 | standing from the state of its domicile; and | ||||||
22 | (6) has provided an anti-fraud plan that meets the | ||||||
23 | requirements of Section 65 of this Act. | ||||||
24 | (k) The Director shall not issue a viatical settlement | ||||||
25 | provider license to a nonresident applicant unless a written | ||||||
26 | designation of an agent for service of process is filed and |
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1 | maintained with the Director or the applicant has filed with | ||||||
2 | the Director the applicant's written irrevocable consent that | ||||||
3 | any action against the applicant may be commenced against the | ||||||
4 | applicant by service of process on the Director. | ||||||
5 | (l) An applicant for a viatical settlement provider license | ||||||
6 | shall provide all information requested by the Director. The | ||||||
7 | Director may, at any time, require the applicant to fully | ||||||
8 | disclose the identity of all stockholders, partners, officers, | ||||||
9 | members, and employees of the viatical settlement provider, and | ||||||
10 | the Director may refuse to issue a license to an applicant that | ||||||
11 | is not an individual if the Director is not satisfied that each | ||||||
12 | stockholder, partner, officer, member, and employee who may | ||||||
13 | materially influence the applicant's conduct meets the | ||||||
14 | standards set forth in this Act. The Director may also require | ||||||
15 | the applicant to disclose the method the applicant will use to | ||||||
16 | determine and receive life expectancies, the applicant's | ||||||
17 | intended use of life expectancies, and a written plan | ||||||
18 | containing policies and procedures to use when determining life | ||||||
19 | expectancies. | ||||||
20 | (m) A viatical settlement provider shall provide to the | ||||||
21 | Director new or revised information about officers, 10% or more | ||||||
22 | stockholders, partners, directors, members, or designated | ||||||
23 | employees within 30 days after the change. | ||||||
24 | (n) Viatical settlement providers licensed under the | ||||||
25 | Viatical Settlements Act shall be subject to the license | ||||||
26 | requirements of this Act upon renewal and after the effective |
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1 | date of this Act.
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2 | Section 15. License revocation for viatical settlement | ||||||
3 | providers. | ||||||
4 | (a) The Director may refuse to issue or renew or may | ||||||
5 | suspend or revoke the license of any viatical settlement | ||||||
6 | provider if the Director finds any of the following: | ||||||
7 | (1) there was any material misrepresentation in the | ||||||
8 | application for the license; | ||||||
9 | (2) the viatical settlement provider or any officer, | ||||||
10 | partner, member, or controlling person uses fraudulent or | ||||||
11 | dishonest practices or is otherwise shown to be | ||||||
12 | untrustworthy, incompetent, or financially irresponsible | ||||||
13 | in this State or elsewhere; | ||||||
14 | (3) the viatical settlement provider demonstrates a | ||||||
15 | pattern of unreasonable payments to viators; | ||||||
16 | (4) the viatical settlement provider or any officer, | ||||||
17 | partner, member, or controlling person has violated any | ||||||
18 | insurance laws or any rule, subpoena, or order of the | ||||||
19 | Director or of another state's chief insurance regulatory | ||||||
20 | official or is subject to a final administrative action | ||||||
21 | brought by the Director or by the Illinois Secretary of | ||||||
22 | State or by another state's chief
insurance regulatory | ||||||
23 | official or chief securities regulatory official; | ||||||
24 | (5) the viatical settlement provider has used a | ||||||
25 | viatical settlement contract that has not been approved |
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1 | pursuant to this Act; | ||||||
2 | (6) the viatical settlement provider has failed to | ||||||
3 | honor contractual obligations set out in a viatical | ||||||
4 | settlement contract; | ||||||
5 | (7) the viatical settlement provider no longer meets | ||||||
6 | the requirements for initial licensure; | ||||||
7 | (8) the viatical settlement provider has assigned, | ||||||
8 | transferred, or pledged a purchased policy to a person | ||||||
9 | other than a viatical settlement provider licensed in this | ||||||
10 | State, a viatical settlement purchaser, a financing | ||||||
11 | entity, a special purpose entity, or a related provider | ||||||
12 | trust; or | ||||||
13 | (9) the viatical settlement provider or any officer, | ||||||
14 | partner, member, or controlling person of the viatical | ||||||
15 | settlement provider has violated any of the provisions of | ||||||
16 | this Act. | ||||||
17 | (b) If the Director denies a viatical settlement provider | ||||||
18 | license application or suspends, revokes, or refuses to renew | ||||||
19 | the license of a viatical settlement provider, the Director | ||||||
20 | shall notify the applicant or viatical settlement provider and | ||||||
21 | advise, in writing, the applicant or viatical settlement | ||||||
22 | provider of the reason for the suspension, revocation, denial, | ||||||
23 | or nonrenewal of the applicant's or licensee's license. The | ||||||
24 | applicant or viatical settlement provider may make a written | ||||||
25 | demand upon the Director within 30 days after the date of | ||||||
26 | mailing for a hearing before the Director to determine the |
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1 | reasonableness of the Director's action. The hearing must be | ||||||
2 | held within not fewer than 20 days nor more than 30 days after | ||||||
3 | the mailing of the notice of hearing and shall be held in | ||||||
4 | accordance with the Illinois Administrative Procedure Act and | ||||||
5 | Section 2402 of Chapter 50 of the Illinois Administrative Code. | ||||||
6 | Section 17. License revocation and denial for viatical | ||||||
7 | settlement brokers. Insurance producers operating as viatical | ||||||
8 | settlement brokers shall be subject to the license denial, | ||||||
9 | nonrenewal, and revocation provisions established by Section | ||||||
10 | 500-70 of the Illinois Insurance Code. | ||||||
11 | Section 20. Approval of viatical settlement contracts and | ||||||
12 | disclosure statements. A person shall not use a viatical | ||||||
13 | settlement contract form or provide to a viator a disclosure | ||||||
14 | statement form in this State unless first filed with and | ||||||
15 | approved by the Director. The Director shall disapprove a | ||||||
16 | viatical settlement contract form or disclosure statement form | ||||||
17 | if, in the Director's opinion, the contract or provisions | ||||||
18 | contained therein fail to meet the requirements of this Act or | ||||||
19 | are unreasonable, contrary to the interests of the public, or | ||||||
20 | otherwise misleading or unfair to the viator. At the Director's | ||||||
21 | discretion, the Director may require the submission of | ||||||
22 | advertising material. If the Director disapproves a viatical | ||||||
23 | settlement contract form or disclosure statement form, then the | ||||||
24 | Director shall notify the viatical settlement provider and |
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1 | advise the viatical settlement provider, in writing, of the | ||||||
2 | reason for the disapproval. The viatical settlement provider | ||||||
3 | may make written demand upon the Director within 30 days after | ||||||
4 | the date of mailing for a hearing before the Director to | ||||||
5 | determine the reasonableness of the Director's action. The | ||||||
6 | hearing must be held within not fewer than 20 days nor more | ||||||
7 | than 30 days after the mailing of the notice of hearing and | ||||||
8 | shall be held in accordance with the Illinois Administrative | ||||||
9 | Procedure Act and 50 Ill. Admin. Code 2402. | ||||||
10 | Section 25. Reporting requirements. | ||||||
11 | (a) Each viatical settlement provider shall file with the | ||||||
12 | Director on or before March 1 of each year 2 copies of its | ||||||
13 | annual statement verified by 2 officers in the form prescribed | ||||||
14 | by the Director. The approved
statement for a viatical | ||||||
15 | settlement provider shall include all of the following
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16 | information about the viatical settlement provider's | ||||||
17 | transactions during the
preceding calendar year, unless newly | ||||||
18 | licensed, in which case the Director may
require additional | ||||||
19 | years: | ||||||
20 | (1) A list of each life insurance policy, including | ||||||
21 | policy number, date of issue, viator, insured, insurance | ||||||
22 | company, issuing policy, date the viatical settlement | ||||||
23 | contract is signed by viator, viatical settlement broker, | ||||||
24 | agent of record on the policy, and any life insurance | ||||||
25 | agents receiving compensation, regardless of the form, and |
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1 | any premium finance companies. | ||||||
2 | (2) Addresses and contact information for those | ||||||
3 | persons listed in item (1) of this subsection (a). | ||||||
4 | (3) A list of all life expectancy providers who have | ||||||
5 | directly or indirectly provided life expectancies to the | ||||||
6 | viatical settlement provider for use in connection with a | ||||||
7 | viatical settlement contract. | ||||||
8 | (4) Any other information required by the Director. | ||||||
9 | (b) On or before the first day of May of each year, a | ||||||
10 | viatical settlement provider licensed in this State shall file | ||||||
11 | with the Director its financial statement, audited by an | ||||||
12 | independent certified public accountant along with a letter | ||||||
13 | stating whether any significant deficiencies or material | ||||||
14 | weaknesses were detected during the audit pursuant to the | ||||||
15 | Auditing Standard Board's Statement on Auditing Standards | ||||||
16 | Number 112, as amended or superseded. | ||||||
17 | (c) Each viatical settlement provider shall file with the | ||||||
18 | Director interim unaudited financial statements, including | ||||||
19 | comparative results and footnotes to the financial statements, | ||||||
20 | on a quarterly basis within 45 days after the end of each | ||||||
21 | quarter. The interim financial statements shall meet both of | ||||||
22 | the following requirements: | ||||||
23 | (1) Be certified by the chief executive officer and | ||||||
24 | chief financial officer as to the accuracy and fair | ||||||
25 | presentation. | ||||||
26 | (2) Include disclosures either on the face of the |
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1 | financial statements or in accompanying footnotes | ||||||
2 | sufficient so as to make the interim information not | ||||||
3 | misleading. | ||||||
4 | Viatical settlement providers may assume that the users of | ||||||
5 | the interim financial statements have access to the prior | ||||||
6 | fiscal year-end audited financial statements and that the | ||||||
7 | adequacy of additional disclosure needed for a fair | ||||||
8 | presentation, except in regard to material contingencies, may | ||||||
9 | be determined in that context. A footnote disclosure that would | ||||||
10 | substantially duplicate the disclosure contained in the | ||||||
11 | audited financial statements for the preceding fiscal year may | ||||||
12 | be omitted. A footnote disclosure shall be provided if events | ||||||
13 | subsequent to the fiscal year end have a material impact on the | ||||||
14 | viatical settlement provider. | ||||||
15 | (d) A viatical settlement provider that willfully fails to | ||||||
16 | file the annual statements required by this Section, or | ||||||
17 | willfully fails to reply within 30 calendar days to a written | ||||||
18 | inquiry from the Director or Director's designee, shall, in | ||||||
19 | addition to other penalties provided by this Act, be subject to | ||||||
20 | a penalty of up to $250 per day, not to exceed $25,000 in the | ||||||
21 | aggregate for each such failure. | ||||||
22 | (e) The Director shall keep confidential and not a matter | ||||||
23 | of public record all individual transaction data regarding the | ||||||
24 | business of viatical settlements and data that could compromise | ||||||
25 | the privacy of personal, financial, and health information of | ||||||
26 | the viator or the insured. |
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1 | (f) Except as otherwise allowed or required by law, a | ||||||
2 | viatical settlement provider, viatical settlement broker, | ||||||
3 | insurance company, insurance producer, information bureau, | ||||||
4 | rating agency or company, or any other person with actual | ||||||
5 | knowledge of an insured's identity, shall not disclose that | ||||||
6 | identity as an insured, or the insured's financial or medical | ||||||
7 | information to any other person unless the disclosure is: | ||||||
8 | (1) necessary to effect a viatical settlement contract | ||||||
9 | between the viator and a viatical settlement provider and | ||||||
10 | the viator or insured have provided prior written consent | ||||||
11 | to the disclosure; | ||||||
12 | (2) provided in response to an investigation or | ||||||
13 | examination by the Director or another governmental | ||||||
14 | officer or agency or pursuant to the requirements of | ||||||
15 | Section 65 of this Act; | ||||||
16 | (3) a term of or condition to the transfer of a policy | ||||||
17 | by one viatical settlement provider to another viatical | ||||||
18 | settlement provider; | ||||||
19 | (4) necessary to permit a financing entity, related | ||||||
20 | provider trust, or special purpose entity to finance the | ||||||
21 | purchase of policies by a viatical settlement provider and | ||||||
22 | the viator and insured have provided prior written consent | ||||||
23 | to the disclosure; | ||||||
24 | (5) necessary to allow the viatical settlement | ||||||
25 | provider or viatical settlement broker or their authorized | ||||||
26 | representatives to make contacts for the purpose of |
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1 | determining health status; or | ||||||
2 | (6) required to purchase stop loss coverage or | ||||||
3 | financial guaranty insurance.
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4 | (g) A viatical settlement investment agent shall not have | ||||||
5 | any contact directly or indirectly with the viator or the | ||||||
6 | insured or have knowledge of the identity of the viator or the | ||||||
7 | insured. | ||||||
8 | Section 30. Examination or investigation. | ||||||
9 | (a) The Director may when and as often as the Director | ||||||
10 | deems it reasonably necessary to protect the interests of the | ||||||
11 | public, examine the business affairs of any licensee.
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12 | In scheduling and determining the nature, scope, and | ||||||
13 | frequency of the examinations, the Director shall consider such | ||||||
14 | matters as consumer complaints, results of financial statement | ||||||
15 | analyses and ratios, changes in management or ownership, | ||||||
16 | actuarial opinions, report of independent certified public | ||||||
17 | accountants, and other relevant criteria as determined by the | ||||||
18 | Director. | ||||||
19 | (b) For purposes of completing an examination of a licensee | ||||||
20 | under this Act, the Director may examine or investigate any | ||||||
21 | person, or the business of any person, in so far as the | ||||||
22 | examination or investigation is, in the sole discretion of the | ||||||
23 | Director, necessary or material to the examination. | ||||||
24 | (c) In lieu of an examination under this Act of any foreign | ||||||
25 | licensee or alien licensee licensed in this State, the Director |
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1 | may, at the Director's discretion, accept an examination report | ||||||
2 | on the licensee as prepared by the chief insurance regulatory | ||||||
3 | official for the licensee's state of domicile or port-of-entry | ||||||
4 | state. | ||||||
5 | (d) As far as practical, the examination of a foreign | ||||||
6 | licensee or alien licensee shall be made in cooperation with | ||||||
7 | the insurance supervisory officials of other states in which | ||||||
8 | the licensee transacts business. | ||||||
9 | (e) Licensees shall for 5 years retain copies of: | ||||||
10 | (1) all proposed, offered, or executed contracts, | ||||||
11 | purchase agreements, underwriting documents, policy forms, | ||||||
12 | and applications from the date of the proposal, offer, or | ||||||
13 | execution of the contract or purchase agreement, whichever | ||||||
14 | is later; | ||||||
15 | (2) all checks, drafts, or other evidence and | ||||||
16 | documentation related to the payment, transfer, deposit, | ||||||
17 | or release of funds from the date of the transaction; | ||||||
18 | (3) all other records and documents in any format | ||||||
19 | related to the requirements of this Act, including a record | ||||||
20 | of complaints received against the licensee and agents | ||||||
21 | representing the licensee and a list of all life expectancy | ||||||
22 | providers that have provider services to the licensee. | ||||||
23 | This subsection (e) does not relieve a person of the | ||||||
24 | obligation to produce records required by this subsection to | ||||||
25 | the Director after the retention period has expired if the | ||||||
26 | person has retained the documents. |
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1 | Records required to be retained by this subsection (e) must | ||||||
2 | be legible and complete and may be retained in paper, | ||||||
3 | photograph, microprocesser, magnetic, mechanical, or | ||||||
4 | electronic media, or by any process that accurately reproduces | ||||||
5 | or forms a durable medium for the reproduction of a record. | ||||||
6 | (f) Upon determining that an examination should be | ||||||
7 | conducted, the Director shall appoint one or more examiners to | ||||||
8 | perform the examination and instruct them as to the scope of | ||||||
9 | the examination. The Director may employ any guidelines or | ||||||
10 | procedures for purposes of this subsection (f) that the | ||||||
11 | Director deems appropriate. | ||||||
12 | Every licensee or person, including all officers, | ||||||
13 | partners, members, directors, employees, controlling persons, | ||||||
14 | and agents of any licensee or person, from whom information is | ||||||
15 | sought shall provide to the examiners timely, convenient, and | ||||||
16 | free access at all reasonable hours at the licensee's or | ||||||
17 | person's offices to all books, records, accounts, papers, | ||||||
18 | documents, assets, and computer or other recordings relating to | ||||||
19 | the property, assets, business, and affairs of the licensee | ||||||
20 | being examined. The officers, directors, employees, and agents | ||||||
21 | of the licensee or person shall facilitate the examination and | ||||||
22 | aid in the examination so far as it is in their power to do so. | ||||||
23 | The refusal of a licensee by its officers, directors, | ||||||
24 | employees, or agents to submit to examination or to comply with | ||||||
25 | any reasonable written request of the Director shall be grounds | ||||||
26 | for revocation, denial of issuance, or non-renewal of any |
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1 | license or authority held by the licensee to engage in the | ||||||
2 | viatical settlement business or other business subject to the | ||||||
3 | Director's jurisdiction. | ||||||
4 | The Director shall have the power to issue subpoenas, to | ||||||
5 | administer oaths, and to examine under oath any person as to | ||||||
6 | any matter pertinent to the examination. Upon the failure or | ||||||
7 | refusal of a person to obey a subpoena, the Director may | ||||||
8 | petition a court of competent jurisdiction, and upon proper | ||||||
9 | showing, the court may enter an order compelling the witness to | ||||||
10 | appear and testify or produce documentary evidence. Failure to | ||||||
11 | obey the court order shall be punishable as contempt of court. | ||||||
12 | Subpoenas may be enforced pursuant to Section 403 of the | ||||||
13 | Illinois Insurance Code. | ||||||
14 | When making an examination under this Act, the Director may | ||||||
15 | retain attorneys, appraisers, independent actuaries, | ||||||
16 | independent certified public accountants, or other | ||||||
17 | professionals and specialists as examiners, the reasonable | ||||||
18 | cost of which shall be borne by the licensee that is the | ||||||
19 | subject of the examination. | ||||||
20 | (g) Nothing contained in this Act limits the Director's | ||||||
21 | authority to terminate or suspend an examination in order to | ||||||
22 | pursue other legal or regulatory action pursuant to the | ||||||
23 | insurance laws of this State. Findings of fact and conclusions | ||||||
24 | made pursuant to any examination shall be prima facie evidence | ||||||
25 | in any legal or regulatory action. | ||||||
26 | (h) Nothing contained in this Act shall be construed to |
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1 | limit the Director's authority to use and, if appropriate, to | ||||||
2 | make public any final or preliminary examination report, any | ||||||
3 | examiner or licensee workpapers or other documents, or any | ||||||
4 | other information discovered or developed during the course of | ||||||
5 | any examination in the furtherance of any legal or regulatory | ||||||
6 | action that the Director may, in the Director's discretion, | ||||||
7 | deem appropriate. | ||||||
8 | (i) No later than 60 days following completion of the | ||||||
9 | examination, the examiner in charge shall file with the | ||||||
10 | Director a verified written report of examination under oath. | ||||||
11 | Upon receipt of the verified report, the Director shall | ||||||
12 | transmit the report to the licensee examined. | ||||||
13 | (j) Examination reports shall be comprised only of facts | ||||||
14 | appearing upon the books, records, or other documents of the | ||||||
15 | licensee, its agents, or other persons examined, or as | ||||||
16 | ascertained from the testimony of its officers or agents or | ||||||
17 | other persons examined concerning its affairs and the | ||||||
18 | conclusions and recommendations that the examiners find | ||||||
19 | reasonably warranted from the facts. | ||||||
20 | (k) The licensee may request a hearing within 10 days after | ||||||
21 | receipt of the examination report by giving the Director | ||||||
22 | written notice of that request, together with a statement of | ||||||
23 | its objections. The Director then must conduct a hearing in | ||||||
24 | conjunction with Sections 402 and 403 of the Illinois Insurance | ||||||
25 | Code. The Director must issue a written order based upon the | ||||||
26 | examination report and upon the hearing within 90 days after |
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1 | the report is filed or within 90 days after the hearing. After | ||||||
2 | the hearing, the Director may make such order or orders as may | ||||||
3 | be reasonably necessary to correct, eliminate, or remedy | ||||||
4 | unlawful conduct. | ||||||
5 | (l) If the Director determines that regulatory action is | ||||||
6 | appropriate as a result of an examination, the Director may | ||||||
7 | initiate any proceedings or actions provided by law. | ||||||
8 | (m) Names and individual identification data for all | ||||||
9 | viators shall be considered private and confidential | ||||||
10 | information and shall not be disclosed by the Director unless | ||||||
11 | required by law.
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12 | Except as otherwise provided in this Act, all examination | ||||||
13 | reports, working papers, recorded information, documents, and | ||||||
14 | copies thereof produced by, obtained by or disclosed to the | ||||||
15 | Director or any other person in the course of an examination | ||||||
16 | made under this Act or the law of another state or jurisdiction | ||||||
17 | that is substantially similar to this Act, or in the course of | ||||||
18 | analysis or investigation by the Director of the financial | ||||||
19 | condition or market conduct of a licensee are
(i) confidential | ||||||
20 | by law and privileged,
(ii) not subject to the Freedom of | ||||||
21 | Information Act,
(iii) not subject to subpoena, and
(iv) not | ||||||
22 | subject to discovery or admissible in evidence in any private | ||||||
23 | civil action. | ||||||
24 | The Director is authorized to use the documents, materials, | ||||||
25 | or other information in the furtherance of any regulatory or | ||||||
26 | legal action brought as part of the Director's official duties. |
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1 | Documents, materials, or other information, including, but | ||||||
2 | not limited to, all working papers and copies thereof, in the | ||||||
3 | possession or control of the NAIC and its affiliates and | ||||||
4 | subsidiaries are: | ||||||
5 | (1) confidential by law and privileged; | ||||||
6 | (2) not subject to subpoena; and | ||||||
7 | (3) not subject to discovery or admissible in evidence | ||||||
8 | in any private civil action if they are: | ||||||
9 | (A) created, produced or obtained by, or disclosed | ||||||
10 | to the NAIC and its affiliates and subsidiaries in the | ||||||
11 | course of assisting an examination made under this Act | ||||||
12 | or assisting the Director or the chief insurance | ||||||
13 | regulatory official in another state in the analysis or | ||||||
14 | investigation of the financial condition or market | ||||||
15 | conduct of a licensee; or | ||||||
16 | (B) disclosed under this subsection (m) by the | ||||||
17 | Director or another state's chief insurance regulatory | ||||||
18 | official to the NAIC and its affiliates and | ||||||
19 | subsidiaries. | ||||||
20 | Neither the Director nor any person that received the | ||||||
21 | documents, material, or other information while acting under | ||||||
22 | the authority of the Director, including the NAIC and its | ||||||
23 | affiliates and subsidiaries, shall be permitted to testify in | ||||||
24 | any private civil action concerning any confidential | ||||||
25 | documents, materials, or information subject to this | ||||||
26 | subsection (m). |
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1 | (n) In order to assist in the performance of the Director's | ||||||
2 | duties, the Director may: | ||||||
3 | (1) share documents, materials, or other information, | ||||||
4 | including the confidential and privileged documents, | ||||||
5 | materials, or information subject to subsection (m) of this | ||||||
6 | Section, with other state, federal, and international | ||||||
7 | regulatory agencies, with the NAIC and its affiliates and | ||||||
8 | subsidiaries, and with state, federal, and international | ||||||
9 | law enforcement authorities, provided that the recipient | ||||||
10 | agrees to maintain the confidentiality and privileged | ||||||
11 | status of the document, material, communication, or other | ||||||
12 | information; | ||||||
13 | (2) receive documents, materials, communications, or | ||||||
14 | information, including otherwise confidential and | ||||||
15 | privileged documents, materials, or information, from the | ||||||
16 | NAIC and its affiliates and subsidiaries and from | ||||||
17 | regulatory and law enforcement officials of other foreign | ||||||
18 | or domestic jurisdictions, and shall maintain as | ||||||
19 | confidential or privileged any document, material, or | ||||||
20 | information received with notice or the understanding that | ||||||
21 | it is confidential or privileged under the laws of the | ||||||
22 | jurisdiction that is the source of the document, material, | ||||||
23 | or information; and | ||||||
24 | (3) enter into agreements governing sharing and use of | ||||||
25 | information consistent with this Section. | ||||||
26 | (o) No waiver of any applicable privilege or claim of |
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1 | confidentiality in the documents, materials, or information | ||||||
2 | shall occur as a result of disclosure to the Director under | ||||||
3 | this Section or as a result of sharing as authorized in | ||||||
4 | subsection (n) of this Section. | ||||||
5 | (p) A privilege established under the law of any state or | ||||||
6 | jurisdiction that is substantially similar to the privilege | ||||||
7 | established under this Section shall be available and enforced | ||||||
8 | in any proceeding in, and in any court of, this State. | ||||||
9 | (q) Nothing contained in this Act prevents or prohibits the | ||||||
10 | Director from disclosing the content of an examination report, | ||||||
11 | preliminary examination report or results, or any matter | ||||||
12 | relating to those reports or results, to the chief insurance | ||||||
13 | regulatory official of any other state or country, or to law | ||||||
14 | enforcement officials of this or any other state or agency of | ||||||
15 | the federal government at any time or to the NAIC, if the | ||||||
16 | agency or office receiving the report or matters relating to it | ||||||
17 | agrees in writing to hold it confidential and in a manner | ||||||
18 | consistent with this Act. | ||||||
19 | (r) The expenses incurred in conducting an examination | ||||||
20 | shall be paid by the licensee. | ||||||
21 | (s) No cause of action shall arise nor shall any liability | ||||||
22 | be imposed against the Director, the Director's authorized | ||||||
23 | representatives, or any examiner appointed by the Director for | ||||||
24 | any statements made or conduct performed in good faith while | ||||||
25 | carrying out the provisions of this Act. | ||||||
26 | No cause of action shall arise, nor shall any liability be |
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1 | imposed against any person for the act of communicating or | ||||||
2 | delivering information or data to the Director or the | ||||||
3 | Director's authorized representative or examiner pursuant to | ||||||
4 | an examination made under this Section, if the act of | ||||||
5 | communication or delivery was performed in good faith and | ||||||
6 | without fraudulent intent or the intent to deceive. This | ||||||
7 | subsection (s) does not abrogate or modify in any way any | ||||||
8 | common law or statutory privilege or immunity heretofore | ||||||
9 | enjoyed by any person identified in this subsection (s). | ||||||
10 | A person identified in this subsection (s) shall be | ||||||
11 | entitled to an award of attorney's fees and costs if he or she | ||||||
12 | is the prevailing party in a civil cause of action for libel, | ||||||
13 | slander, or any other relevant tort arising out of activities | ||||||
14 | in carrying out the provisions of this Section and the party | ||||||
15 | bringing the action was not substantially justified in doing | ||||||
16 | so. For purposes of this Section, a proceeding is | ||||||
17 | "substantially justified" if it had a reasonable basis in law | ||||||
18 | or fact at the time that it was initiated. | ||||||
19 | (t)
The Director may investigate suspected viatical | ||||||
20 | settlement fraud and persons engaged in the business of | ||||||
21 | viatical settlements.
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22 | Section 35. Disclosure to viator. | ||||||
23 | (a) With each application for a viatical settlement | ||||||
24 | contract, a viatical settlement provider or viatical | ||||||
25 | settlement broker shall provide the viator with at least the |
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1 | following disclosures no later than the time the viatical | ||||||
2 | settlement contract is signed by all parties. The disclosures | ||||||
3 | shall include distribution of a brochure describing the process | ||||||
4 | of viatical settlements. The NAIC form for the brochure shall | ||||||
5 | be used unless another form is developed or approved by the | ||||||
6 | Director. Other disclosures required by this subsection (a) | ||||||
7 | shall be provided in a separate document that is signed by the | ||||||
8 | viator and the viatical settlement provider or viatical | ||||||
9 | settlement broker and shall provide the following information: | ||||||
10 | (1) If a viator enters into a viatical settlement | ||||||
11 | contract, then the beneficiaries of the life insurance | ||||||
12 | policy lose the life insurance policy's benefits, equity, | ||||||
13 | and protection. In addition, by entering into this viatical | ||||||
14 | settlement contract, the insured may not qualify for | ||||||
15 | another life insurance policy or may be required to pay | ||||||
16 | substantially higher premiums. | ||||||
17 | (2) That there are possible alternatives to viatical | ||||||
18 | settlement contracts including any accelerated death | ||||||
19 | benefits or policy loans offered under the viator's life | ||||||
20 | insurance policy. | ||||||
21 | (3) That a viatical settlement broker represents only | ||||||
22 | the viator and not the insurer or the viatical settlement | ||||||
23 | provider and owes a fiduciary duty to the viator, including | ||||||
24 | a duty to act according to the viator's instructions and in | ||||||
25 | the best interest of the viator. | ||||||
26 | (4) That some or all of the proceeds of the viatical |
| |||||||
| |||||||
1 | settlement may be taxable under federal income tax and | ||||||
2 | state franchise and income taxes, and assistance may be | ||||||
3 | sought from a professional tax advisor. | ||||||
4 | (5) That proceeds of the viatical settlement contract | ||||||
5 | may be subject to the claims of creditors. | ||||||
6 | (6) That receipt of the proceeds of a viatical | ||||||
7 | settlement may adversely affect the viator's eligibility | ||||||
8 | for Medicaid or other government benefits or entitlements | ||||||
9 | and advice should be obtained from the appropriate | ||||||
10 | government agencies. | ||||||
11 | (7) That the viator has the right to rescind a viatical | ||||||
12 | settlement contract before the earlier of 60 calendar days | ||||||
13 | after the date upon which the viatical settlement contract | ||||||
14 | is executed by all parties or 30 calendar days after the | ||||||
15 | viatical settlement proceeds have been paid to the viator. | ||||||
16 | Rescission, if exercised by the viator, is effective only | ||||||
17 | if both notice of the rescission is given and the viator | ||||||
18 | repays all proceeds and any premiums, loans, and loan | ||||||
19 | interest paid on the account of the viatical settlement | ||||||
20 | within the rescission period. If the insured dies during | ||||||
21 | the rescission period, the viatical settlement contract is | ||||||
22 | deemed to have been rescinded, subject to repayment by the | ||||||
23 | viator or the viator's estate to the viatical settlement | ||||||
24 | provider of all viatical settlement proceeds and any | ||||||
25 | premiums, loans, and loan interest paid on the account of | ||||||
26 | the viatical settlement within 60 days after the insured's |
| |||||||
| |||||||
1 | death. | ||||||
2 | (8) That funds must be sent to the viator within 3 | ||||||
3 | business days after the viatical settlement provider has | ||||||
4 | received the insurer or group administrator's written | ||||||
5 | acknowledgment that ownership of the policy has been | ||||||
6 | transferred and the beneficiary has been designated. | ||||||
7 | (9) That entering into a viatical settlement contract | ||||||
8 | may cause other rights or benefits, including conversion | ||||||
9 | rights and waiver of premium benefits that may exist under | ||||||
10 | the policy, to be forfeited by the viator. Assistance | ||||||
11 | should be sought from a financial adviser. | ||||||
12 | (10) That the disclosure document must contain the | ||||||
13 | following language: "A viatical settlement provider or | ||||||
14 | viatical settlement broker may ask the insured for medical, | ||||||
15 | financial, and personal information. All medical, | ||||||
16 | financial, or personal information solicited or obtained | ||||||
17 | by a viatical settlement provider or viatical settlement | ||||||
18 | broker about an insured, including the insured's identity | ||||||
19 | or the identity of the insured's family members, the | ||||||
20 | insured's spouse or the insured's significant other, may be | ||||||
21 | disclosed as necessary to effect the viatical settlement | ||||||
22 | between the viator and the viatical settlement provider. If | ||||||
23 | you are asked to provide this information, you will be | ||||||
24 | asked to consent to the disclosure. The information may be | ||||||
25 | provided to someone who buys the policy or provides funds | ||||||
26 | for the purchase. You may be asked to renew your permission |
| |||||||
| |||||||
1 | to share information every 2 years. | ||||||
2 | (11) That, following execution of a viatical | ||||||
3 | settlement contract, the insured may be contacted for the | ||||||
4 | purpose of determining the insured's health status and to | ||||||
5 | confirm the insured's residential or business street | ||||||
6 | address and telephone number, or for other purposes | ||||||
7 | permitted by law. This contact is limited to once every 3 | ||||||
8 | months if the insured has a life expectancy of more than | ||||||
9 | one year, and no more than once each month if the insured | ||||||
10 | has a life expectancy of one year or less. All such | ||||||
11 | contracts shall be made only by a viatical settlement | ||||||
12 | provider licensed in the state in which the viator resided | ||||||
13 | at the time of the viatical settlement, or by the | ||||||
14 | authorized representative of a duly licensed viatical | ||||||
15 | settlement provider. | ||||||
16 | (12) If the policy to be viaticated is group coverage, | ||||||
17 | the insured is advised to check with the manager of the | ||||||
18 | group about whether permission is required to sell the | ||||||
19 | policy or other conditions.
| ||||||
20 | (13) Entering into a viatical settlement contract will | ||||||
21 | result in investors having a financial interest in the | ||||||
22 | insured's death.
| ||||||
23 | (b) With each application for a viatical settlement, a | ||||||
24 | viatical settlement provider or viatical settlement broker | ||||||
25 | shall provide the prospective viator with a document titled | ||||||
26 | "Important Consumer Notices". The document must be provided to |
| |||||||
| |||||||
1 | the prospective viator and contain, in conspicuous type size | ||||||
2 | and format, the following: | ||||||
3 | "By entering into a viatical settlement contract:
| ||||||
4 | (a) You are making a complex financial decision that | ||||||
5 | may or may not be in your or your family's financial best | ||||||
6 | interest. Seek independent advice from financial planning | ||||||
7 | experts and responsible government agencies.
| ||||||
8 | (b) You may not be able to purchase another life | ||||||
9 | insurance policy. | ||||||
10 | (c) You could lose Medicaid and other valuable | ||||||
11 | government benefits. | ||||||
12 | (d) You will receive proceeds that may be subject | ||||||
13 | federal and state taxes and to the claims of creditors. | ||||||
14 | (e) You have sold your life insurance policy to | ||||||
15 | investors who profit if you die before your policy term | ||||||
16 | expires.
| ||||||
17 | (f) You or your residence may be contacted on a regular | ||||||
18 | basis to determine if you have died or if your health | ||||||
19 | status has deteriorated.".
| ||||||
20 | The disclosure document required by this subsection (b) | ||||||
21 | shall be the cover page of the viatical settlement contract and | ||||||
22 | shall be signed by the viator and the viatical settlement | ||||||
23 | provider or viatical settlement broker. The viator and viatical | ||||||
24 | settlement provider or viatical settlement broker shall sign | ||||||
25 | the disclosure prior to signing the viatical settlement | ||||||
26 | contract. A copy of the signed document must be provided to the |
| |||||||
| |||||||
1 | viator. | ||||||
2 | (c) A viatical settlement provider shall provide the viator | ||||||
3 | with at least the following disclosures no later than the date | ||||||
4 | the viatical settlement contract is signed by all parties. The | ||||||
5 | disclosures must be displayed conspicuously in the viatical | ||||||
6 | settlement contract or in a separate document signed by the | ||||||
7 | viator and the viatical settlement provider, and provide the | ||||||
8 | following information: | ||||||
9 | (1) The affiliation, if any, between the viatical | ||||||
10 | settlement provider and the issuer of the policy to be | ||||||
11 | acquired pursuant to a viatical settlement contract. | ||||||
12 | (2) The name, business address, and telephone number of | ||||||
13 | the viatical settlement provider. | ||||||
14 | (3) Any affiliations or contractual arrangements | ||||||
15 | between the viatical settlement provider and the viatical | ||||||
16 | settlement purchaser. | ||||||
17 | (4) If a policy to be acquired pursuant to a viatical | ||||||
18 | settlement contract has been issued as a joint policy or | ||||||
19 | involves family riders or any coverage of a life other than | ||||||
20 | the insured under the policy to be acquired pursuant to a | ||||||
21 | viatical settlement contract, the viator must be informed | ||||||
22 | of the possible loss of coverage on the other lives under | ||||||
23 | the policy and must be advised to consult with the viator's | ||||||
24 | insurance producer or the company issuing the policy for | ||||||
25 | advice on the proposed viatical settlement contract. | ||||||
26 | (5) The dollar amount of the current death benefit |
| |||||||
| |||||||
1 | payable to the viatical settlement provider under the | ||||||
2 | policy. If known, the viatical settlement provider also | ||||||
3 | shall disclose the availability of additional guaranteed | ||||||
4 | insurance benefits, the dollar amount of accidental death | ||||||
5 | and dismemberment benefits under the policy or | ||||||
6 | certificate, and the extent to which the viator's interest | ||||||
7 | in those benefits will be transferred as a result of the | ||||||
8 | viator's settlement contract. | ||||||
9 | (6) The name, business address, and telephone number of | ||||||
10 | the escrow agent, and that the viator may inspect or | ||||||
11 | receive copies of the relevant escrow or trust agreements | ||||||
12 | or documents. Also, that an escrow agent shall provide | ||||||
13 | escrow services to the parties pursuant to a written | ||||||
14 | agreement signed by the viatical settlement provider, the | ||||||
15 | viatical settlement broker, and the viator. At the close of | ||||||
16 | escrow, the escrow agent must distribute the proceeds of | ||||||
17 | the sale to the viator, minus any compensation to be paid | ||||||
18 | to any other persons who provided services and to whom the | ||||||
19 | viator has agreed to compensate out of the gross amount | ||||||
20 | offered by the viatical settlement purchaser. All persons | ||||||
21 | receiving any form of compensation under the escrow | ||||||
22 | agreement shall be clearly identified, including name, | ||||||
23 | business address, telephone number, and tax identification | ||||||
24 | number. | ||||||
25 | (7) The amount of compensation received by the escrow | ||||||
26 | agent. |
| |||||||
| |||||||
1 | (8) The following details of any compensation paid to | ||||||
2 | viatical settlement brokers:
| ||||||
3 | (A) The name of each viatical settlement broker who | ||||||
4 | has received or will receive compensation and the | ||||||
5 | amount of compensation received by each. For the | ||||||
6 | purposes of this Section, compensation means anything | ||||||
7 | of value paid or given by or at the direction of a | ||||||
8 | viatical settlement provider or person acquiring an | ||||||
9 | interest in the life insurance policy to the viatical | ||||||
10 | settlement broker in connection with the proposed | ||||||
11 | viatical settlement contract;
| ||||||
12 | (B) A complete reconciliation of the gross offer or | ||||||
13 | bid by the viatical settlement provider to the net | ||||||
14 | amount of proceeds or value to be received by the | ||||||
15 | viator. For the purposes of this Section, gross offer | ||||||
16 | or bid shall mean the total amount or value offered by | ||||||
17 | the viatical settlement provider for the purchase of | ||||||
18 | one or more life insurance policies, inclusive of | ||||||
19 | commissions, compensation, fees or other expenditures | ||||||
20 | related to the transaction.
| ||||||
21 | (C) If a viatical settlement contract has been | ||||||
22 | entered into and the contract is subsequently amended | ||||||
23 | or if there is any change in the viatical settlement | ||||||
24 | provider's gross offer or bid amount or change in the | ||||||
25 | information provided in the disclosure statement to | ||||||
26 | the viator, the viatical settlement provider shall |
| |||||||
| |||||||
1 | provide an amended disclosure statement to the viator, | ||||||
2 | containing the information in subparagraphs (A) and | ||||||
3 | (B) of this paragraph (8). The amended disclosure | ||||||
4 | statement shall be signed and dated by the viator.
| ||||||
5 | (D) The viatical settlement provider shall, on the | ||||||
6 | disclosure document and for the compensation | ||||||
7 | disclosures required by this paragraph (8), obtain the | ||||||
8 | signature of each viatical settlement broker receiving | ||||||
9 | compensation.
| ||||||
10 | (c) A viatical settlement broker shall provide the viator | ||||||
11 | with at least the following disclosures no later than the date | ||||||
12 | the viatical settlement contract is signed by all parties. The | ||||||
13 | disclosures shall be conspicuously displayed in the viatical | ||||||
14 | settlement contract or in a separate document signed by the | ||||||
15 | viator and provide the following information: | ||||||
16 | (1) the name, business address, and telephone number of | ||||||
17 | the viatical settlement broker; | ||||||
18 | (2) a full, complete, and accurate description of all | ||||||
19 | offers, counteroffers, acceptances, and rejections | ||||||
20 | relating to the proposed viatical settlement contract; | ||||||
21 | (3) any affiliations or contractual arrangements | ||||||
22 | between the viatical settlement broker and any person | ||||||
23 | making an offer in connection with the proposed viatical | ||||||
24 | settlement contracts; | ||||||
25 | (4) the amount and method of calculating the broker's | ||||||
26 | compensation, which term "compensation" includes anything |
| |||||||
| |||||||
1 | of value paid or given to a proposed settlement broker in | ||||||
2 | connection with the proposed viatical settlement contract; | ||||||
3 | (5) if any portion of the viatical settlement broker's | ||||||
4 | compensation, as defined in paragraph (3) of this | ||||||
5 | subsection (c), is taken from a proposed viatical | ||||||
6 | settlement offer, the broker shall disclose the total | ||||||
7 | amount of the viatical settlement offer and the percentage | ||||||
8 | of the viatical settlement offer comprised by the viatical | ||||||
9 | settlement broker's compensation; and | ||||||
10 | (6) the name of the legal owner and beneficiary of the | ||||||
11 | insurance policy after the policy is sold pursuant to the | ||||||
12 | viatical settlement contract and whether legal ownership | ||||||
13 | of the policy and the beneficiary's right to collect | ||||||
14 | benefits upon the viator's death can be sold. | ||||||
15 | (d) The viatical settlement provider shall communicate in | ||||||
16 | writing any change in ownership or beneficiary to the insured | ||||||
17 | within 20 days of any change. | ||||||
18 | Section 40. Disclosure to insurer. Prior to the initiation | ||||||
19 | of a plan, transaction, or series of transactions, a broker or | ||||||
20 | viatical settlement provider shall fully disclose to an insurer | ||||||
21 | a plan, transaction, or series of transactions to which the | ||||||
22 | viatical settlement broker or viatical settlement provider is a | ||||||
23 | party to originate, renew, continue, or finance a life | ||||||
24 | insurance policy with the insurer for the purpose of engaging | ||||||
25 | in the business of viatical settlements at anytime prior to or |
| |||||||
| |||||||
1 | during the first 5 years after issuance of the policy. Any | ||||||
2 | disclosure required under this Section must be made in writing. | ||||||
3 | Section 45. General rules. | ||||||
4 | (a) A viatical settlement provider entering into a viatical | ||||||
5 | settlement contract shall first obtain: | ||||||
6 | (1) if the viator is the insured, a written statement | ||||||
7 | from a licensed attending physician that the viator is of | ||||||
8 | sound mind and under no constraint or undue influence to | ||||||
9 | enter into a viatical settlement contract; as used in this | ||||||
10 | item (1), "physician" means a person licensed under the | ||||||
11 | Medical Practice Act of 1987 to practice medicine in all | ||||||
12 | its branches; and | ||||||
13 | (2) a document in which the insured consents in writing | ||||||
14 | to the release of his or her medical records to a licensed | ||||||
15 | viatical settlement provider, viatical settlement broker, | ||||||
16 | and the insurance company that issued the life insurance | ||||||
17 | policy covering the life of the insured. | ||||||
18 | (b) Within 20 days after a viator executes documents | ||||||
19 | necessary to transfer any rights under an insurance policy or | ||||||
20 | within 20 days after entering any agreement, option, promise, | ||||||
21 | or any other form of understanding, expressed or implied, to | ||||||
22 | viaticate the policy, the viatical settlement provider shall | ||||||
23 | give written notice to the insurer that issued that insurance | ||||||
24 | policy that the policy has or will become a viaticated policy. | ||||||
25 | The notice shall be accompanied by the documents required by |
| |||||||
| |||||||
1 | subsection (c) of this Section. | ||||||
2 | (c) The viatical provider shall deliver a copy of the | ||||||
3 | medical release required under paragraph (2) of subsection (a) | ||||||
4 | of this Section, a copy of the viator's application for the | ||||||
5 | viatical settlement contract, the notice required under | ||||||
6 | subsection (b) of this Section and a request for verification | ||||||
7 | of coverage to the insurer that issued the life insurance | ||||||
8 | policy that is the subject of the viatical settlement | ||||||
9 | transaction. The viatical settlement provider shall use the | ||||||
10 | NAIC's form for verification of coverage unless another form is | ||||||
11 | developed and approved by the Director. | ||||||
12 | (d) Prior to or at the time of execution of the viatical | ||||||
13 | settlement contract, the viatical settlement provider shall | ||||||
14 | obtain a witnessed document in which the viator consents to the | ||||||
15 | viatical settlement contract, represents that the viator has a | ||||||
16 | full and complete understanding of the viatical settlement | ||||||
17 | contract, that he or she has a full and complete understanding | ||||||
18 | of the benefits of the life insurance policy, acknowledges that | ||||||
19 | he or she is entering into the viatical settlement contract | ||||||
20 | freely and voluntarily and, for persons with a terminal or | ||||||
21 | chronic illness or condition, acknowledges that the insured has | ||||||
22 | a terminal or chronic illness and that the terminal or chronic | ||||||
23 | illness or condition was diagnosed after the life insurance | ||||||
24 | policy was issued. | ||||||
25 | (e) If a viatical settlement broker performs any of the | ||||||
26 | activities required of a viatical settlement provider as |
| |||||||
| |||||||
1 | described by subsection (a) thru (d) of this Section, then the | ||||||
2 | viatical settlement provider is deemed to have fulfilled that | ||||||
3 | requirement. | ||||||
4 | (f) The insurer shall respond to a request for verification | ||||||
5 | of coverage submitted on an approved form by a viatical | ||||||
6 | settlement provider or viatical settlement broker within 30 | ||||||
7 | calendar days after the date the request is received and shall | ||||||
8 | indicate whether, based on the medical evidence and documents | ||||||
9 | provided, the insurer intends to pursue an investigation at | ||||||
10 | this time regarding the validity of the insurance contract or | ||||||
11 | possible fraud. The insurer shall accept a request for | ||||||
12 | verification of coverage made on an NAIC form or any other form | ||||||
13 | approved by the Director. The insurer shall accept an original | ||||||
14 | or facsimile or electronic copy of such request and any | ||||||
15 | accompanying authorization signed by the viator. Failure by the | ||||||
16 | insurer to meet its obligations under this subsection shall be | ||||||
17 | a violation of subsection (c) of Section 50 and Section 75 of | ||||||
18 | this Act. | ||||||
19 | (g) All medical information solicited or obtained by any | ||||||
20 | licensee shall be subject to the applicable provisions of state | ||||||
21 | law relating to confidentiality of medical information. | ||||||
22 | (h) All viatical settlement contracts entered into in this | ||||||
23 | State shall provide the viator with an absolute right to | ||||||
24 | rescind the contract before the earlier of 60 calendar days | ||||||
25 | after the date upon which the viatical settlement contract is | ||||||
26 | executed by all parties or 30 calendar days after the viatical |
| |||||||
| |||||||
1 | settlement proceeds have been sent to the viator as provided in | ||||||
2 | Section 45. Rescission by the viator may be conditioned upon | ||||||
3 | the viator both giving notice and repaying to the viatical | ||||||
4 | settlement provider within the rescission period all proceeds | ||||||
5 | of the settlement and any premiums, loans and loan interest | ||||||
6 | paid by or on behalf of the viatical settlement provider in | ||||||
7 | connection with or as a consequence of the viatical settlement. | ||||||
8 | If the insured dies during the rescission period, the viatical | ||||||
9 | settlement contract shall be deemed to have been rescinded, | ||||||
10 | subject to repayment to the viatical settlement provider or | ||||||
11 | purchaser of all viatical settlement proceeds, and any | ||||||
12 | premiums, loans, and loan interest that have been paid by the | ||||||
13 | viatical settlement provider or purchaser, which shall be paid | ||||||
14 | within 60 calendar days of the death of the insured. In the | ||||||
15 | event of any rescission, if the viatical settlement provider | ||||||
16 | has paid commissions or other compensation to a viatical | ||||||
17 | settlement broker in connection with the rescinded | ||||||
18 | transaction, the viatical settlement broker shall refund all | ||||||
19 | such commissions and compensation to the viatical settlement | ||||||
20 | provider within 5 business days following receipt of written | ||||||
21 | demand from the viatical settlement provider, which demand | ||||||
22 | shall be accompanied by either the viator's notice of | ||||||
23 | rescission if rescinded at the election of the viator, or | ||||||
24 | notice of the death of the insured if rescinded by reason of | ||||||
25 | the death of the insured within the applicable rescission | ||||||
26 | period. |
| |||||||
| |||||||
1 | (i) If a viatical settlement contract is rescinded by the | ||||||
2 | viator pursuant to this Section, then ownership of the | ||||||
3 | insurance policy reverts to the viator or to the viator's | ||||||
4 | estate. | ||||||
5 | (j) The viatical settlement provider shall instruct the | ||||||
6 | viator to send the executed documents required to effect the | ||||||
7 | change in ownership, assignment, or change in beneficiary | ||||||
8 | directly to the escrow agent. Within 3 business days after the | ||||||
9 | date the escrow agent receives the document (or from the date | ||||||
10 | the viatical settlement provider receives the documents, if the | ||||||
11 | viator erroneously provides the documents directly to the | ||||||
12 | viatical settlement provider), the viatical settlement | ||||||
13 | provider shall pay or transfer the gross amount paid by the | ||||||
14 | viatical settlement purchaser to the escrow agent for deposit | ||||||
15 | in a trust account and set up for that purpose by the escrow | ||||||
16 | agent in a state or federally-chartered financial institution | ||||||
17 | whose deposits are insured by the Federal Deposit Insurance | ||||||
18 | Corporation (FDIC). Upon payment of the settlement proceeds | ||||||
19 | into the escrow or trust account, the escrow agent or trustee | ||||||
20 | shall deliver the original change in ownership, assignment, or | ||||||
21 | change in beneficiary forms to the viatical settlement | ||||||
22 | provider, a representative of the viatical settlement | ||||||
23 | provider, or related provider trust. Upon the escrow agent's | ||||||
24 | receipt of the acknowledgment of the properly completed | ||||||
25 | transfer of ownership, assignment, or designation of | ||||||
26 | beneficiary from the insurance company, the escrow agent shall |
| |||||||
| |||||||
1 | pay the settlement proceeds to the viator. Funds shall be | ||||||
2 | deemed sent by a viatical settlement provider to a viator as of | ||||||
3 | the date that the escrow agent either releases the funds for | ||||||
4 | wire transfer to the viator or places a check for delivery to | ||||||
5 | the viator via United States Postal Service or other nationally | ||||||
6 | recognized delivery service. | ||||||
7 | (k) Failure to transfer the proceeds to the viator for the | ||||||
8 | viatical settlement contract within the time set forth in the | ||||||
9 | disclosure pursuant to item (7) of subsection (a) of Section 35 | ||||||
10 | of this Act renders the viatical settlement contract voidable | ||||||
11 | by the viator for lack of consideration until the time | ||||||
12 | consideration is tendered to and accepted by the viator. If a | ||||||
13 | viatical settlement contract is voided by the viator pursuant | ||||||
14 | to this subsection (k), then ownership of the policy reverts to | ||||||
15 | the viator or to the viator's estate. | ||||||
16 | (l) After the viatical settlement has occurred, no person | ||||||
17 | engaged in the business of viatical
settlements or any agent of | ||||||
18 | a person engaged in the business of viatical settlements shall | ||||||
19 | contact the insured for the purpose of determining the health | ||||||
20 | status of the insured. | ||||||
21 | (m) The insurer that issued the policy being settled | ||||||
22 | pursuant to a viatical settlement contract shall not be | ||||||
23 | responsible for any act or omission of a viatical settlement | ||||||
24 | broker or viatical settlement provider arising out of or in | ||||||
25 | connection with the viatical settlement transaction, unless | ||||||
26 | the insurer receives compensation for the placement of a |
| |||||||
| |||||||
1 | viatical settlement contract from the viatical settlement | ||||||
2 | provider or viatical settlement broker in connection with the | ||||||
3 | viatical settlement contract. | ||||||
4 | (n) If there is more than one viator on a single policy and | ||||||
5 | the viators are residents of different states, then the | ||||||
6 | transaction shall be governed by the law of the state in which | ||||||
7 | the viator having the largest percentage ownership resides or, | ||||||
8 | if the viators hold equal ownership, the state of residence of | ||||||
9 | one viator agreed upon in writing by all the viators. | ||||||
10 | If the viator is a resident of this State, then all | ||||||
11 | agreements to be signed by the viator shall provide exclusive | ||||||
12 | jurisdiction to courts of this State and the laws of this State | ||||||
13 | shall govern the agreements. Nothing in the agreements shall | ||||||
14 | abrogate the viator's right to a trial by jury. | ||||||
15 | (o) Notwithstanding the manner in which the viatical | ||||||
16 | settlement broker is compensated, a viatical settlement broker | ||||||
17 | is deemed to represent only the viator and not the insurer or | ||||||
18 | the viatical settlement provider and owes a fiduciary duty to | ||||||
19 | the viator to act according to the viator's instructions and in | ||||||
20 | the best interest of the viator. | ||||||
21 | Section 50. Prohibited practices. | ||||||
22 | (a) It is a violation of this Act for any person to enter | ||||||
23 | into a viatical settlement contract prior to the application of | ||||||
24 | or issuance of a policy that is the subject of the viatical | ||||||
25 | settlement contract. |
| |||||||
| |||||||
1 | (b) It is a violation of this Act for any person to issue, | ||||||
2 | solicit, market, or
otherwise promote the purchase of a life | ||||||
3 | insurance policy for the purpose
of or with emphasis on selling | ||||||
4 | the policy. | ||||||
5 | (c) It is a violation of this Act for any person to enter | ||||||
6 | into a viatical
settlement contract within a 5-year period | ||||||
7 | commencing with the date of issuance of the insurance policy | ||||||
8 | unless the viator certifies to the viatical settlement provider | ||||||
9 | that one or more of the following conditions have been met | ||||||
10 | within the 5-year period: | ||||||
11 | (1) The policy was issued upon the viator's exercise of | ||||||
12 | conversion rights arising out of a group or individual | ||||||
13 | policy, provided the total of the time covered under the | ||||||
14 | conversion policy plus the time covered under the prior | ||||||
15 | policy is at least 60 months. The time covered under a | ||||||
16 | group policy shall be calculated without regard to any | ||||||
17 | change in insurance carriers, provided the coverage has | ||||||
18 | been continuous and under the same group sponsorship. | ||||||
19 | (2) The viator certifies and submits independent | ||||||
20 | evidence to the viatical settlement provider that one or | ||||||
21 | more of the following conditions have been met within the | ||||||
22 | 5-year period: | ||||||
23 | (A) the viator or insured is terminally or | ||||||
24 | chronically ill; | ||||||
25 | (B) the viator's spouse dies; | ||||||
26 | (C) the viator divorces his or her spouse; |
| |||||||
| |||||||
1 | (D) the viator retires from full-time employment; | ||||||
2 | (E) the viator becomes physically or mentally | ||||||
3 | disabled and a physician determines that the | ||||||
4 | disability prevents the viator from maintaining | ||||||
5 | full-time employment; | ||||||
6 | (F) a court of competent jurisdiction enters a | ||||||
7 | final order, judgment, or decree on the application of | ||||||
8 | a creditor of the viator, adjudicating the viator | ||||||
9 | bankrupt or insolvent, or approving a petition seeking | ||||||
10 | reorganization of the viator or appointing a receiver, | ||||||
11 | trustee, or liquidator to all or a substantial part of | ||||||
12 | the viator's assets; or | ||||||
13 | (G) the sole beneficiary of the policy is a family | ||||||
14 | member of the viator and the beneficiary dies. | ||||||
15 | (3) The viator enters into a viatical settlement | ||||||
16 | contract more than 2 years after the date of issuance of a | ||||||
17 | policy and, with respect to the policy, at all times prior | ||||||
18 | to the date that is 2 years after policy issuance, the | ||||||
19 | following conditions are met: | ||||||
20 | (A) policy premiums have been funded exclusively | ||||||
21 | with unencumbered assets, including an interest in the | ||||||
22 | life insurance policy being financed only to the extent | ||||||
23 | of its net cash surrender value, provided by, or fully | ||||||
24 | recourse liability incurred by the insured or person | ||||||
25 | described in subsection (e) of the definition of | ||||||
26 | "viatical settlement contract" found in Section 5 of |
| |||||||
| |||||||
1 | this Act; | ||||||
2 | (B) there is no agreement or understanding with any | ||||||
3 | other person to guarantee any such liability or to | ||||||
4 | purchase or stand ready to purchase the policy, | ||||||
5 | including, through an assumption or forgiveness of the | ||||||
6 | loan; and | ||||||
7 | (C) neither the insured nor the policy has been | ||||||
8 | evaluated for settlement. | ||||||
9 | (d) Copies of the independent evidence described in | ||||||
10 | paragraph (2) of subsection (c) of this Section and documents | ||||||
11 | required by Section 45 shall be submitted to the insurer when | ||||||
12 | the viatical settlement provider or any other party entering | ||||||
13 | into a viatical settlement contract with a viator submits a | ||||||
14 | request to the insurer for verification of coverage. The copies | ||||||
15 | shall be accompanied by a letter of attestation from the | ||||||
16 | viatical settlement provider that the copies are true and | ||||||
17 | correct copies of the documents received by the viatical | ||||||
18 | settlement provider. | ||||||
19 | (e) If the viatical settlement provider submits to the | ||||||
20 | insurer a copy of the owner or insured's certification | ||||||
21 | described in and the independent evidence required by paragraph | ||||||
22 | (2) of subsection (c) of this Section when the provider submits | ||||||
23 | a request to the insurer to effect the transfer of the policy | ||||||
24 | to the viatical settlement provider, then the copy shall be | ||||||
25 | deemed to conclusively establish that the viatical settlement | ||||||
26 | contract satisfies the requirements of this Section, and the |
| |||||||
| |||||||
1 | insurer shall timely respond to the request. | ||||||
2 | (f) No insurer may, as a condition of responding to a | ||||||
3 | request for verification of coverage or effecting the transfer | ||||||
4 | of a policy pursuant to a viatical settlement contract, require | ||||||
5 | that the viator, insured, viatical settlement provider, or | ||||||
6 | viatical settlement broker sign any forms, disclosures, | ||||||
7 | consent, or waiver form that has not been expressly approved by | ||||||
8 | the Director for use in connection with viatical settlement | ||||||
9 | contracts in this State. | ||||||
10 | (g) Upon receipt of a properly completed request for change | ||||||
11 | of ownership or beneficiary of a policy, the insurer shall | ||||||
12 | respond in writing within 30 calendar days to confirm that the | ||||||
13 | change has been effected or specifying the reasons why the | ||||||
14 | requested change cannot be processed. No insurer shall | ||||||
15 | unreasonably delay effecting change of ownership or | ||||||
16 | beneficiary or seek to interfere with any viatical settlement | ||||||
17 | contract lawfully entered into in this State. | ||||||
18 | Section 55. Prohibited practices and conflicts of | ||||||
19 | interest. | ||||||
20 | (a) With respect to any viatical settlement contract or | ||||||
21 | insurance policy, no viatical settlement broker knowingly | ||||||
22 | shall solicit an offer from, effectuate a viatical settlement | ||||||
23 | with, or make a sale to any viatical settlement provider, | ||||||
24 | viatical settlement purchaser, financing entity, or related | ||||||
25 | provider that is controlling, controlled by, or under common |
| |||||||
| |||||||
1 | control with such viatical settlement broker. | ||||||
2 | (b) With respect to any viatical settlement contract or | ||||||
3 | insurance policy, no viatical settlement provider knowingly | ||||||
4 | may enter into a viatical settlement contract with a viator, | ||||||
5 | if, in connection with such viatical settlement contract, | ||||||
6 | anything of value will be paid to a viatical settlement broker | ||||||
7 | that is controlling, controlled by, or under common control | ||||||
8 | with such viatical settlement provider or the viatical | ||||||
9 | settlement purchaser, financing entity, or related provider | ||||||
10 | trust that is involved in such viatical settlement contract. | ||||||
11 | (c) A violation of subsection (a) or subsection (b) shall | ||||||
12 | be deemed viatical settlement fraud. | ||||||
13 | (d) A viatical settlement provider shall return all copies | ||||||
14 | of a viatical settlement promotional, advertising, and | ||||||
15 | marketing materials and shall make these material available to | ||||||
16 | the Director on request. In no event shall any marketing | ||||||
17 | materials expressly reference that the insurance is "free" for | ||||||
18 | any period of time. The inclusion of any reference in the | ||||||
19 | marketing materials that would cause a viator to reasonably | ||||||
20 | believe that the insurance is free for any period of time shall | ||||||
21 | be considered a violation of this Act. | ||||||
22 | (e) No insurance producer, insurance company, viatical | ||||||
23 | settlement broker, or viatical settlement provider shall make | ||||||
24 | any statement or representation to a potential or actual | ||||||
25 | insured or potential or actual viator in connection with the | ||||||
26 | sale or financing of a life insurance policy to the effect that |
| |||||||
| |||||||
1 | the insurance is free or without cost to the policyholder for | ||||||
2 | any period of time unless provided in the policy.
| ||||||
3 | Section 60. Advertising for viatical settlements. | ||||||
4 | (a) The purpose of this Section is to provide prospective | ||||||
5 | viators with clear and unambiguous statements in the | ||||||
6 | advertisement of viatical settlements and to assure the clear, | ||||||
7 | truthful, and adequate disclosure of the benefits, risks, | ||||||
8 | limitations, and exclusions of any viatical settlement | ||||||
9 | contract. All product descriptions must be presented in a | ||||||
10 | manner that prevents unfair, deceptive, or misleading | ||||||
11 | advertising and conducive to accurate presentation and | ||||||
12 | description of viatical settlements through the advertising | ||||||
13 | media and material used by licensees. | ||||||
14 | (b) This Section applies to any advertising of viatical | ||||||
15 | settlement contracts or related products or services | ||||||
16 | circulated or placed directly before the public, including | ||||||
17 | Internet advertising. Where disclosure requirements are | ||||||
18 | established pursuant to federal regulation, this Section shall | ||||||
19 | be interpreted so as to minimize or eliminate conflict with | ||||||
20 | federal regulation wherever possible.
| ||||||
21 | (c) Every licensee shall establish and at all times | ||||||
22 | maintain a system of control over the content, form, and method | ||||||
23 | of dissemination of all advertisements of its contracts, | ||||||
24 | products, and services. All advertisements, regardless of by | ||||||
25 | whom written, created, designed, or presented, shall be the |
| |||||||
| |||||||
1 | responsibility of the licensees, as well as the individual who | ||||||
2 | created or presented the advertisement. A system of control | ||||||
3 | shall include regular routine notification, at least once a | ||||||
4 | year, to agents and others authorized by the licensee who | ||||||
5 | disseminate advertisements of the requirements and procedures | ||||||
6 | for approval prior to the use of any advertisements not | ||||||
7 | furnished by the licensee. | ||||||
8 | (d) Advertisements shall be truthful and not misleading in | ||||||
9 | fact or by implication. The form and content of an | ||||||
10 | advertisement of a viatical settlement contract product or | ||||||
11 | service shall be sufficiently complete and clear so as to avoid | ||||||
12 | deception. It shall not have the capacity or tendency to | ||||||
13 | mislead or deceive. Whether an advertisement has the capacity | ||||||
14 | or tendency to mislead or deceive shall be determined by the | ||||||
15 | Director from the overall impression that the advertisement may | ||||||
16 | be reasonably expected to create upon a person of average | ||||||
17 | education or intelligence within the segment of the public to | ||||||
18 | which it is directed. | ||||||
19 | (e) The information required to be disclosed under this | ||||||
20 | Section shall not be minimized, rendered obscure, or presented | ||||||
21 | in an ambiguous fashion or intermingled with the text of the | ||||||
22 | advertisement so as to be confusing or misleading. | ||||||
23 | An advertisement shall not omit material information or use | ||||||
24 | words, phrases, statements, references, or illustrations if | ||||||
25 | the omission or use has the capacity, tendency, or effect of | ||||||
26 | misleading or deceiving viators as to the nature or extent of |
| |||||||
| |||||||
1 | any benefit, loss covered, premium payable, or state or federal | ||||||
2 | tax consequence. The fact that the viatical settlement contract | ||||||
3 | offered is made available for inspection prior to consummation | ||||||
4 | of the sale, or an offer is made to refund the payment if the | ||||||
5 | viator is not satisfied or that the viatical settlement | ||||||
6 | contract includes a "free look" period that satisfies or | ||||||
7 | exceeds legal requirements, does not remedy misleading | ||||||
8 | statements. | ||||||
9 | An advertisement shall not use the name or title of an | ||||||
10 | insurance company or an insurance policy unless the | ||||||
11 | advertisement has been approved by the insurer. | ||||||
12 | An advertisement shall not state or imply that interest | ||||||
13 | charged on an accelerated death benefit or a policy loan is | ||||||
14 | unfair, inequitable, or in any manner an incorrect or improper | ||||||
15 | practice. | ||||||
16 | The words "free", "no cost", "without cost", "no additional | ||||||
17 | cost", "at no extra cost", or words of similar import shall not | ||||||
18 | be used with respect to any life insurance policy or to any | ||||||
19 | benefit or service unless true. An advertisement may specify | ||||||
20 | the charge for a benefit or a service or may state that a | ||||||
21 | charge is included in the payment or use other appropriate | ||||||
22 | language. | ||||||
23 | Testimonials, appraisals, or analysis used in | ||||||
24 | advertisements must be genuine; represent the current opinion | ||||||
25 | of the author; be applicable to the viatical settlement | ||||||
26 | contract, product, or service advertised, if any; and be |
| |||||||
| |||||||
1 | accurately reproduced with sufficient completeness to avoid | ||||||
2 | misleading or deceiving prospective viators as to the nature or | ||||||
3 | scope of the testimonials, appraisal, analysis, or | ||||||
4 | endorsement. In using testimonials, appraisals, or analyses, a | ||||||
5 | licensee under this Act makes as its own all the statements | ||||||
6 | contained therein, and the statements are subject to all the | ||||||
7 | provisions of this Section. | ||||||
8 | If the individual making a testimonial, appraisal, | ||||||
9 | analysis, or endorsement has a financial interest in the | ||||||
10 | subject of the testimonial, appraisal, analysis, or | ||||||
11 | endorsement, either directly or indirectly as a stockholder, | ||||||
12 | director, officer, employee, or otherwise, or receives any | ||||||
13 | benefit directly or indirectly other than required union scale | ||||||
14 | wages, that fact shall be prominently disclosed in the | ||||||
15 | advertisement. | ||||||
16 | An advertisement shall not state or imply that a viatical | ||||||
17 | settlement contract, benefit, or service has been approved or | ||||||
18 | endorsed by a group of individuals, society, association, or | ||||||
19 | other organization unless that is the fact and unless any | ||||||
20 | relationship between the group of individuals, society, | ||||||
21 | association, or organization and the licensee is disclosed. If | ||||||
22 | the entity making the endorsement or testimonial is owned, | ||||||
23 | controlled, or managed by the licensee, or receives any payment | ||||||
24 | or other consideration from the viatical settlement licensee | ||||||
25 | for making an endorsement or testimonial, that fact shall be | ||||||
26 | prominently disclosed in the advertisement. |
| |||||||
| |||||||
1 | When an endorsement refers to benefits received under a | ||||||
2 | viatical settlement contract all pertinent information shall | ||||||
3 | be retained for a period of 5 years after its use. | ||||||
4 | (f) An advertisement shall not contain statistical | ||||||
5 | information unless the information accurately reflects recent | ||||||
6 | and relevant facts. The source of all statistics used in an | ||||||
7 | advertisement shall be identified. | ||||||
8 | (g) An advertisement shall not disparage insurers, | ||||||
9 | viatical settlement providers, viatical settlement brokers, | ||||||
10 | insurance producers, policies, services, or methods of | ||||||
11 | marketing. | ||||||
12 | (h) The name of the licensee shall be clearly identified in | ||||||
13 | all advertisements about the licensee or its viatical | ||||||
14 | settlement contract, products, or services, and if any specific | ||||||
15 | viatical settlement contract is advertised, the viatical | ||||||
16 | settlement contract shall be identified either by form number | ||||||
17 | or some other appropriate description. If an application is | ||||||
18 | part of the advertisement, the name of the viatical settlement | ||||||
19 | provider or providers shall be shown on the application. | ||||||
20 | (i) An advertisement shall not use a trade name, group | ||||||
21 | designation, name of the parent company of a licensee, name of | ||||||
22 | a particular division of the licensee, service mark, slogan, | ||||||
23 | symbol, or other device or reference without disclosing the | ||||||
24 | name of the licensee, if the advertisement would have the | ||||||
25 | capacity or tendency to mislead or deceive as to the true | ||||||
26 | identity of the licensee, or to create the impression that a |
| |||||||
| |||||||
1 | company other than the licensee would have any responsibility | ||||||
2 | for the financial obligation under a viatical settlement | ||||||
3 | contract. | ||||||
4 | (j) An advertisement shall not use any combination of | ||||||
5 | words, symbols, or physical materials that by their content, | ||||||
6 | phraseology, shape, color, or other characteristics are so | ||||||
7 | similar to a combination of words, symbols, or physical | ||||||
8 | materials used by a government program or agency or otherwise | ||||||
9 | appear to be of such a nature that they tend to mislead | ||||||
10 | prospective viators into believing that the solicitation is in | ||||||
11 | some manner connected with a government program or agency. | ||||||
12 | (k) An advertisement may state that a licensee is licensed | ||||||
13 | in the state where the advertisement appears, provided it does | ||||||
14 | not exaggerate that fact or suggest or imply that competing | ||||||
15 | licensees may not be so licensed. The advertisement may ask the | ||||||
16 | audience to consult the licensee's Internet website or contact | ||||||
17 | the Division to find out if the state requires licensing and, | ||||||
18 | if so, whether the viatical settlement provider, or viatical | ||||||
19 | settlement broker, is licensed. | ||||||
20 | (l) An advertisement shall not create the impression that | ||||||
21 | the viatical settlement provider, its financial condition or | ||||||
22 | status, the payment of its claims or the merits, desirability, | ||||||
23 | or advisability of its viatical settlement contracts are | ||||||
24 | recommended or endorsed by any government entity. | ||||||
25 | (m) The name of the actual licensee shall be stated in all | ||||||
26 | of a licensee's advertisements. An advertisement shall not use |
| |||||||
| |||||||
1 | a trade name, any group designation, name of any affiliate or | ||||||
2 | controlling entity of the licensee, service mark, slogan, | ||||||
3 | symbol, or other device in a manner that would have the | ||||||
4 | capacity or tendency to mislead or deceive as to the true | ||||||
5 | identity of the actual licensee or create the false impression | ||||||
6 | that an affiliate or controlling entity would have any | ||||||
7 | responsibility for the financial obligation of the licensee. | ||||||
8 | (n) An advertisement shall not directly or indirectly | ||||||
9 | create the impression that any division or agency of the State | ||||||
10 | or of the U. S. government endorses, approves, or favors: | ||||||
11 | (1) any licensee or its business practices or methods | ||||||
12 | of operation; | ||||||
13 | (2) any viatical settlement contract; or
| ||||||
14 | (3) any life insurance policy or life insurance | ||||||
15 | company. | ||||||
16 | (o) If the advertiser emphasizes the speed with which the | ||||||
17 | viatication will occur, the advertising must disclose the | ||||||
18 | average time frame from completed application to the date of | ||||||
19 | offer and from acceptance of the offer to receipt of the funds | ||||||
20 | by the viator. | ||||||
21 | (p) If the advertising emphasizes the dollar amounts | ||||||
22 | available to viators, the advertising shall disclose, using the | ||||||
23 | same type and font size as the dollar amount available to the | ||||||
24 | viator, the average purchase price as a percent of face value | ||||||
25 | obtained by viators contracting with the licensee during the | ||||||
26 | past 6 months.
|
| |||||||
| |||||||
1 | Section 65. Fraud prevention and control. | ||||||
2 | (a) A person shall not commit the offense of viatical | ||||||
3 | settlement fraud. | ||||||
4 | A person shall not knowingly or intentionally interfere | ||||||
5 | with the enforcement of the provisions of this Act or | ||||||
6 | investigations of suspected or actual violations of this Act. | ||||||
7 | A person in the business of viatical settlements shall not | ||||||
8 | knowingly or intentionally permit any person convicted of a | ||||||
9 | felony involving dishonesty or breach of trust to participate | ||||||
10 | in the business of viatical settlements. | ||||||
11 | (b) Viatical settlements contracts and applications for | ||||||
12 | viatical settlements, regardless of the form of transmission, | ||||||
13 | shall contain the following statement:
"Any person who | ||||||
14 | knowingly presents false information in an application for | ||||||
15 | insurance or a viatical settlement contract is guilty of a | ||||||
16 | crime and may be subject to fines and confinement in prison.".
| ||||||
17 | The lack of a statement as required in this subsection (b) | ||||||
18 | does not constitute a defense in any prosecution for the | ||||||
19 | offense of viatical settlement fraud. | ||||||
20 | (c) Any person engaged in the business of viatical | ||||||
21 | settlements having knowledge or a reasonable suspicion that a | ||||||
22 | viatical settlement fraud is being, will be, or has been | ||||||
23 | committed shall provide to the Director such information as | ||||||
24 | required by, and in a manner prescribed by, the Director. | ||||||
25 | Any other person having knowledge or a reasonable belief |
| |||||||
| |||||||
1 | that viatical settlement fraud is being, will be, or has been | ||||||
2 | committed may provide to the Director the information required | ||||||
3 | by, and in a manner prescribed by, the Director. | ||||||
4 | (d) No civil liability shall be imposed on and no cause of | ||||||
5 | action shall arise from a person's furnishing information | ||||||
6 | concerning suspected, anticipated, or completed viatical | ||||||
7 | settlement fraud or suspected or completed fraudulent | ||||||
8 | insurance acts, if the information is provided to or received | ||||||
9 | from: | ||||||
10 | (1) the Director or the Director's employees, agents, | ||||||
11 | or representatives; | ||||||
12 | (2) federal, State, or local law enforcement or | ||||||
13 | regulatory officials or their employees, agents, or | ||||||
14 | representatives; | ||||||
15 | (3) a person involved in the prevention and detection | ||||||
16 | of viatical settlement fraud or that person's agents, | ||||||
17 | employees, or representatives; | ||||||
18 | (4) the NAIC, the National Association of Securities | ||||||
19 | Dealers (NASD), the North American Securities | ||||||
20 | Administrators Association (NASAA), or their employees, | ||||||
21 | agents, or representatives, or other regulatory body | ||||||
22 | overseeing life insurance, viatical settlements, | ||||||
23 | securities, or investment fraud; or | ||||||
24 | (5) the life insurer that issued the life insurance | ||||||
25 | policy covering the life of the insured. | ||||||
26 | (e) The immunity provided by subsection (d) of this Section |
| |||||||
| |||||||
1 | shall not apply to statements made with actual malice. In an | ||||||
2 | action brought against a person for filing a report or | ||||||
3 | furnishing other information concerning viatical settlement | ||||||
4 | fraud, the party bringing the action shall plead specifically | ||||||
5 | any allegation that subsection (d) does not apply because the | ||||||
6 | person filing the report or furnishing the information did so | ||||||
7 | with actual malice. | ||||||
8 | (f) A person furnishing information as identified in | ||||||
9 | subsection (d) shall be entitled to an award of attorney's fees | ||||||
10 | and costs if the person is the prevailing party in a civil | ||||||
11 | cause of action for libel, slander, or any other relevant tort | ||||||
12 | arising out of activities in carrying out the provisions of | ||||||
13 | this Act and the party bringing the action was not | ||||||
14 | substantially justified in doing so. For purposes of this | ||||||
15 | Section a proceeding is substantially justified if it had a | ||||||
16 | reasonable basis in law or fact at the time that it was | ||||||
17 | initiated. However, such an award does not apply to any person | ||||||
18 | furnishing information concerning the person's own fraudulent | ||||||
19 | viatical settlement acts. | ||||||
20 | (g) This Section does not abrogate or modify common law or | ||||||
21 | statutory privileges or immunities enjoyed by a person | ||||||
22 | described in subsection (d) of this Section. | ||||||
23 | Subsection (d) of this Section does not apply to a person | ||||||
24 | furnishing information concerning that person's own suspected, | ||||||
25 | anticipated, or completed viatical settlement fraud or | ||||||
26 | suspected, anticipated, or completed fraudulent insurance |
| |||||||
| |||||||
1 | acts. | ||||||
2 | (h) The documents and evidence provided pursuant to | ||||||
3 | subsection (d) of this Section or obtained by the Director in | ||||||
4 | an investigation of suspected or actual viatical settlement | ||||||
5 | fraud shall be privileged and confidential and shall not be a | ||||||
6 | public record and shall not be subject to discovery or subpoena | ||||||
7 | in a civil or criminal action. This subsection (h) does not | ||||||
8 | prohibit release by the Director of documents and evidence | ||||||
9 | obtained in an investigation of suspected or actual viatical | ||||||
10 | settlement fraud: (1) in administrative or judicial | ||||||
11 | proceedings to enforce laws administered by the Director;
(2) | ||||||
12 | to federal, State, or local law enforcement or regulatory | ||||||
13 | agencies, to an organization established for the purpose of | ||||||
14 | detecting and preventing viatical settlement fraud or to the | ||||||
15 | NAIC; or
(3) at the discretion of the Director, to a person in | ||||||
16 | the business of viatical settlements that is aggrieved by a | ||||||
17 | viatical settlement fraud. Release of documents and evidence | ||||||
18 | under this subsection (h) does not abrogate or modify the | ||||||
19 | privilege granted in this subsection. | ||||||
20 | (i) This Act shall not do any of the following: | ||||||
21 | (1) Preempt the authority or relieve the duty of other | ||||||
22 | law enforcement or regulatory agencies to investigate, | ||||||
23 | examine and prosecute suspected violations of law. | ||||||
24 | (2) Prevent or prohibit a person from disclosing | ||||||
25 | voluntarily information concerning viatical settlement | ||||||
26 | fraud to a law enforcement or regulatory agency other than |
| |||||||
| |||||||
1 | the Division. | ||||||
2 | (3) Limit the powers granted elsewhere by the laws of | ||||||
3 | this State to the Director or an insurance fraud unit to | ||||||
4 | investigate and examine possible violations of law and to | ||||||
5 | take appropriate action against wrongdoers. | ||||||
6 | (i) Viatical settlement providers and viatical settlement | ||||||
7 | brokers shall have in place antifraud initiatives reasonably | ||||||
8 | calculated to detect, prosecute, and prevent viatical | ||||||
9 | settlement fraud. At the discretion of the Director, the | ||||||
10 | Director may order, or a licensee may request and the Director | ||||||
11 | may grant, such modifications of the following required | ||||||
12 | initiatives as necessary to ensure an effective antifraud | ||||||
13 | program. The modifications may be more or less restrictive than | ||||||
14 | the required initiatives so long as the modifications may | ||||||
15 | reasonably be expected to accomplish the purpose of this | ||||||
16 | Section. | ||||||
17 | Antifraud initiatives shall include the following: | ||||||
18 | (1) fraud investigators, who may be viatical | ||||||
19 | settlement providers or viatical settlement broker | ||||||
20 | employees or independent contractors; and | ||||||
21 | (2) an antifraud plan, which shall be submitted to the | ||||||
22 | Director. The antifraud plan shall include, but not be | ||||||
23 | limited to: | ||||||
24 | (A) a description of the procedures for detecting | ||||||
25 | and investigating possible viatical settlement fraud | ||||||
26 | and procedures for resolving material inconsistencies |
| |||||||
| |||||||
1 | between medical records and insurance applications; | ||||||
2 | (B) a description of the procedures for reporting | ||||||
3 | possible viatical settlement fraud to the Director; | ||||||
4 | (C) a description of the plan for antifraud | ||||||
5 | education and training of underwriters and other | ||||||
6 | personnel; | ||||||
7 | (D) a description or chart outlining the | ||||||
8 | organizational arrangement of the antifraud personnel | ||||||
9 | who are responsible for the investigation and | ||||||
10 | reporting of possible viatical settlement fraud and | ||||||
11 | investigating unresolved material inconsistencies | ||||||
12 | between medical records and insurance applications; | ||||||
13 | and | ||||||
14 | (E) a description of the procedures used to perform | ||||||
15 | initial and continuing review of the accuracy of life | ||||||
16 | expectancies used in connection with a viatical | ||||||
17 | settlement contract. | ||||||
18 | Antifraud plans submitted to the Director shall be | ||||||
19 | privileged and confidential and are not public record and are | ||||||
20 | not subject to discovery or subpoena in a civil or criminal | ||||||
21 | action.
| ||||||
22 | Section 70. Injunctions; civil remedies; cease and desist. | ||||||
23 | (a) In addition to the penalties and other enforcement | ||||||
24 | provisions of this Act, if any person violates this Act or any | ||||||
25 | rules implementing this Act, the Director may seek an |
| |||||||
| |||||||
1 | injunction in a court of competent jurisdiction and may apply | ||||||
2 | for temporary and permanent orders that the Director determines | ||||||
3 | are necessary to restrain the person from committing the | ||||||
4 | violation. | ||||||
5 | (b) Any person damaged by the acts of a person in violation | ||||||
6 | of this Act may bring a civil action against the person | ||||||
7 | committing the violation in a court of competent jurisdiction. | ||||||
8 | (c) The Director may issue, in accordance with Section | ||||||
9 | 401.1 of the Illinois Insurance Code and the Illinois | ||||||
10 | Administrative Procedure Act, a cease and desist order upon a | ||||||
11 | person that violates any provision of this Act, any regulation | ||||||
12 | or order adopted by the Director, or any written agreement | ||||||
13 | entered into with the Director. | ||||||
14 | (d) In addition to the penalties and other enforcement | ||||||
15 | provisions of this Act, any person who violates this Act is | ||||||
16 | subject to civil penalties of up to $50,000 per violation. Each | ||||||
17 | separate violation of this Act shall be a separate offense. If | ||||||
18 | a person is subject to an order of the Director for violations | ||||||
19 | of this Act and continually fails to obey or neglects to obey | ||||||
20 | the order, then each day of such failure or neglect shall be | ||||||
21 | deemed a separate offense. Imposition of civil penalties shall | ||||||
22 | be pursuant to an order of the Director. The Director's order | ||||||
23 | may require a person found to be in violation of this Act to | ||||||
24 | make restitution to persons aggrieved by violations of this | ||||||
25 | Act. |
| |||||||
| |||||||
1 | Section 72. Crimes and offenses. | ||||||
2 | (a) Any person who is convicted of viatical settlement | ||||||
3 | fraud shall in addition to other penalties, be sentenced | ||||||
4 | pursuant to items (1), (2), (3), (4), or (5) of this subsection | ||||||
5 | (a). The value of the viatical settlement contract shall be | ||||||
6 | based on the greater of (i) the value of property, services, or | ||||||
7 | other benefit wrongfully obtained or attempted to obtain, or | ||||||
8 | (ii) the aggregate economic loss suffered by any person as a | ||||||
9 | result of the violation. Viatical settlement fraud is: | ||||||
10 | (1) a Class 1 non-probationable felony and may be | ||||||
11 | subject to a fine of not more than $150,000 if the value of | ||||||
12 | the viatical settlement contract exceeds $500,000;
| ||||||
13 | (2) a Class 1 felony and may be subject to a fine of | ||||||
14 | not more than $100,000 if the value of viatical settlement | ||||||
15 | contract exceeds $100,000 and does not exceed $500,000;
| ||||||
16 | (3) a Class 2 felony and may be subject to a fine of | ||||||
17 | not more than $20,000 if the value of viatical settlement | ||||||
18 | contract exceeds $10,000 and does not exceed $100,000; | ||||||
19 | (4) a Class 3 felony and may be subject to a fine of | ||||||
20 | not more than $10,000 if the value of viatical settlement | ||||||
21 | contract exceeds $300 and does not exceed $10,000; or
| ||||||
22 | (5) a Class A misdemeanor and may be subject to a fine | ||||||
23 | of not more than $3,000 if the value of viatical settlement | ||||||
24 | contract does not exceed $300.
| ||||||
25 | In any prosecution under this Section, the value of the | ||||||
26 | viatical settlement contracts within any 6-month period may be |
| |||||||
| |||||||
1 | aggregated and the defendant charged accordingly in applying | ||||||
2 | the provisions of this Section; provided that when 2 or more | ||||||
3 | offenses are committed by the same person in 2 or more | ||||||
4 | counties, the accused may be prosecuted in any county in which | ||||||
5 | one of the offenses was committed for all of the offenses | ||||||
6 | aggregated under this Section. The statute of limitations | ||||||
7 | provision shall not begin to run until the insurance company or | ||||||
8 | law enforcement agency is aware of the fraud, but in no event | ||||||
9 | may the prosecution be commenced later than 7 years after the | ||||||
10 | act has occurred. | ||||||
11 | (b) A person commits the offense of viatical settlement | ||||||
12 | fraud when: | ||||||
13 | (1) For the purpose of depriving another of property or | ||||||
14 | for pecuniary gain any person knowingly:
| ||||||
15 | (A) presents, causes to be presented or prepares | ||||||
16 | with knowledge or belief that it will be presented to | ||||||
17 | or by a viatical settlement provider, viatical | ||||||
18 | settlement broker, life expectancy provider, viatical | ||||||
19 | settlement purchaser, financing entity, insurer, | ||||||
20 | insurance producer, or any other person, false | ||||||
21 | material information, or concealing material | ||||||
22 | information, as part of, in support of or concerning a | ||||||
23 | fact material to one or more of the following:
| ||||||
24 | (i) an application for the issuance of a | ||||||
25 | viatical settlement contract or insurance policy;
| ||||||
26 | (ii) the underwriting of a viatical settlement |
| |||||||
| |||||||
1 | contract or insurance policy;
| ||||||
2 | (iii) a claim for payment or benefit pursuant | ||||||
3 | to a viatical settlement contract or insurance | ||||||
4 | policy;
| ||||||
5 | (iv) premiums paid on an insurance policy;
| ||||||
6 | (v) payments and changes in ownership or | ||||||
7 | beneficiary made in accordance with the terms of a | ||||||
8 | viatical settlement contract, or insurance policy;
| ||||||
9 | (vi) the reinstatement or conversion of an | ||||||
10 | insurance policy;
| ||||||
11 | (vii) in the solicitation, offer, effectuation | ||||||
12 | or sale of a viatical settlement contract, | ||||||
13 | insurance policy;
| ||||||
14 | (viii) the issuance of written evidence of | ||||||
15 | viatical settlement contract, or insurance; or
| ||||||
16 | (ix) a financing transaction; or
| ||||||
17 | (B) employs any plan, financial structure, device, | ||||||
18 | scheme, or artifice to defraud related to viaticated | ||||||
19 | policies.
| ||||||
20 | (2) In furtherance of a scheme to defraud, to further a | ||||||
21 | fraud, or to prevent or hinder the detection of a scheme to | ||||||
22 | defraud any person knowingly does or permits his employees | ||||||
23 | or agents to do any of the following: | ||||||
24 | (A) remove, conceal, alter, destroy, or sequester | ||||||
25 | from the Director the assets or records of a licensee | ||||||
26 | or other person engaged in the business of viatical |
| |||||||
| |||||||
1 | settlements;
| ||||||
2 | (B) misrepresent or conceal the financial | ||||||
3 | condition of a licensee, financing entity, insurer, or | ||||||
4 | other person; | ||||||
5 | (C) transact the business of viatical settlements | ||||||
6 | in violation of laws requiring a license, certificate | ||||||
7 | of authority, or other legal authority for the | ||||||
8 | transaction of the business of viatical settlements; | ||||||
9 | or
| ||||||
10 | (D) file with the Director or the equivalent chief | ||||||
11 | insurance regulatory official of another jurisdiction | ||||||
12 | a document containing false information or otherwise | ||||||
13 | conceals information about a material fact from the | ||||||
14 | Director; | ||||||
15 | (3) Any person knowingly steals, misappropriates, or | ||||||
16 | converts monies, funds, premiums, credits, or other | ||||||
17 | property of a viatical settlement provider, insurer, | ||||||
18 | insured, viator, insurance policyowner, or any other | ||||||
19 | person engaged in the business of viatical settlements or | ||||||
20 | insurance;
| ||||||
21 | (4) Any person recklessly enters into, negotiates, | ||||||
22 | brokers, or otherwise deals in a viatical settlement | ||||||
23 | contract, the subject of which is a life insurance policy | ||||||
24 | that was obtained by presenting false information | ||||||
25 | concerning any fact material to the policy or by | ||||||
26 | concealing, for the purpose of misleading another, |
| |||||||
| |||||||
1 | information concerning any fact material to the policy, | ||||||
2 | where the person or the persons intended to defraud the | ||||||
3 | policy's issuer, the viatical settlement provider or the | ||||||
4 | viator; or
| ||||||
5 | (5) Any person facilitates the change of state of | ||||||
6 | ownership of a policy or the state of residency of a viator | ||||||
7 | to a state or jurisdiction that does not have a law similar | ||||||
8 | to this Act for the express purposes of evading or avoiding | ||||||
9 | the provisions of this Act. | ||||||
10 | (c) For purposes of this Section, "person" means (i) an | ||||||
11 | individual, (ii) a corporation, (iii) an officer, agent, or | ||||||
12 | employee of a corporation, (iv) a member, agent, or employee of | ||||||
13 | a partnership, or (v) a member, manager, employee, officer, | ||||||
14 | director, or agent of a limited liability company who, in any | ||||||
15 | such capacity described by this subsection (c), commits | ||||||
16 | viatical settlement fraud. | ||||||
17 | Section 75. Unfair trade practices. A violation of this | ||||||
18 | Act, including the commission of viatical settlement fraud, | ||||||
19 | shall be considered an unfair trade practice under Article XXVI | ||||||
20 | of the Illinois Insurance Code.
| ||||||
21 | Section 85. Additional powers. In addition to any other | ||||||
22 | hearing, examination, or investigation specifically provided | ||||||
23 | for by this Act, the Director may conduct such hearings, | ||||||
24 | examinations, and investigations as are provided for by |
| |||||||
| |||||||
1 | Sections 402 and 403 of the Illinois Insurance Code. | ||||||
2 | Section 90. Insurance Code Provisions.
Insurance | ||||||
3 | producers operating as viatical settlement brokers shall be | ||||||
4 | subject to Article XXXI of the Illinois Insurance Code. | ||||||
5 | Section 95. Applicability of securities laws. Nothing in | ||||||
6 | this Act shall preempt or otherwise limit the provisions of the | ||||||
7 | Illinois Securities Law of 1953 or any regulations, bulletins, | ||||||
8 | or other interpretations issued by or through the Division | ||||||
9 | acting pursuant to the Illinois Securities Law of 1953. | ||||||
10 | Compliance with the provisions of this Act shall not constitute | ||||||
11 | compliance with any applicable provision of the Illinois | ||||||
12 | Securities Law of 1953 and any amendments thereto or any | ||||||
13 | regulations, notices, bulletins, or other interpretations | ||||||
14 | issued by or through the Division acting pursuant to the | ||||||
15 | Illinois Securities Law of 1953. | ||||||
16 | Section 100. Viatical settlement provider application. A | ||||||
17 | viatical settlement provider lawfully transacting business in | ||||||
18 | this State may continue to do so pending approval or | ||||||
19 | disapproval of the provider's application for a license as long | ||||||
20 | as the application is filed with the Director not later than 30 | ||||||
21 | days after the effective date of this Act. | ||||||
22 | Section 900. The Freedom of Information Act is amended by |
| |||||||
| |||||||
1 | changing Section 7 as follows: | ||||||
2 | (5 ILCS 140/7) (from Ch. 116, par. 207) | ||||||
3 | Sec. 7. Exemptions.
| ||||||
4 | (1) The following shall be exempt from inspection and | ||||||
5 | copying:
| ||||||
6 | (a) Information specifically prohibited from | ||||||
7 | disclosure by federal or
State law or rules and regulations | ||||||
8 | adopted under federal or State law.
| ||||||
9 | (b) Information that, if disclosed, would constitute a | ||||||
10 | clearly
unwarranted invasion of personal privacy, unless | ||||||
11 | the disclosure is
consented to in writing by the individual | ||||||
12 | subjects of the information. The
disclosure of information | ||||||
13 | that bears on the public duties of public
employees and | ||||||
14 | officials shall not be considered an invasion of personal
| ||||||
15 | privacy. Information exempted under this subsection (b) | ||||||
16 | shall include but
is not limited to:
| ||||||
17 | (i) files and personal information maintained with | ||||||
18 | respect to
clients, patients, residents, students or | ||||||
19 | other individuals receiving
social, medical, | ||||||
20 | educational, vocational, financial, supervisory or
| ||||||
21 | custodial care or services directly or indirectly from | ||||||
22 | federal agencies
or public bodies;
| ||||||
23 | (ii) personnel files and personal information | ||||||
24 | maintained with
respect to employees, appointees or | ||||||
25 | elected officials of any public body or
applicants for |
| |||||||
| |||||||
1 | those positions;
| ||||||
2 | (iii) files and personal information maintained | ||||||
3 | with respect to any
applicant, registrant or licensee | ||||||
4 | by any public body cooperating with or
engaged in | ||||||
5 | professional or occupational registration, licensure | ||||||
6 | or discipline;
| ||||||
7 | (iv) information required of any taxpayer in | ||||||
8 | connection with the
assessment or collection of any tax | ||||||
9 | unless disclosure is otherwise required
by State | ||||||
10 | statute;
| ||||||
11 | (v) information revealing the identity of persons | ||||||
12 | who file complaints
with or provide information to | ||||||
13 | administrative, investigative, law enforcement
or | ||||||
14 | penal agencies; provided, however, that identification | ||||||
15 | of witnesses to
traffic accidents, traffic accident | ||||||
16 | reports, and rescue reports may be provided
by agencies | ||||||
17 | of local government, except in a case for which a | ||||||
18 | criminal
investigation is ongoing, without | ||||||
19 | constituting a clearly unwarranted per se
invasion of | ||||||
20 | personal privacy under this subsection; and
| ||||||
21 | (vi) the names, addresses, or other personal | ||||||
22 | information of
participants and registrants in park | ||||||
23 | district, forest preserve district, and
conservation | ||||||
24 | district programs.
| ||||||
25 | (c) Records compiled by any public body for | ||||||
26 | administrative enforcement
proceedings and any law |
| |||||||
| |||||||
1 | enforcement or correctional agency for
law enforcement | ||||||
2 | purposes or for internal matters of a public body,
but only | ||||||
3 | to the extent that disclosure would:
| ||||||
4 | (i) interfere with pending or actually and | ||||||
5 | reasonably contemplated
law enforcement proceedings | ||||||
6 | conducted by any law enforcement or correctional
| ||||||
7 | agency;
| ||||||
8 | (ii) interfere with pending administrative | ||||||
9 | enforcement proceedings
conducted by any public body;
| ||||||
10 | (iii) deprive a person of a fair trial or an | ||||||
11 | impartial hearing;
| ||||||
12 | (iv) unavoidably disclose the identity of a | ||||||
13 | confidential source or
confidential information | ||||||
14 | furnished only by the confidential source;
| ||||||
15 | (v) disclose unique or specialized investigative | ||||||
16 | techniques other than
those generally used and known or | ||||||
17 | disclose internal documents of
correctional agencies | ||||||
18 | related to detection, observation or investigation of
| ||||||
19 | incidents of crime or misconduct;
| ||||||
20 | (vi) constitute an invasion of personal privacy | ||||||
21 | under subsection (b) of
this Section;
| ||||||
22 | (vii) endanger the life or physical safety of law | ||||||
23 | enforcement personnel
or any other person; or
| ||||||
24 | (viii) obstruct an ongoing criminal investigation.
| ||||||
25 | (d) Criminal history record information maintained by | ||||||
26 | State or local
criminal justice agencies, except the |
| |||||||
| |||||||
1 | following which shall be open for
public inspection and | ||||||
2 | copying:
| ||||||
3 | (i) chronologically maintained arrest information, | ||||||
4 | such as traditional
arrest logs or blotters;
| ||||||
5 | (ii) the name of a person in the custody of a law | ||||||
6 | enforcement agency and
the charges for which that | ||||||
7 | person is being held;
| ||||||
8 | (iii) court records that are public;
| ||||||
9 | (iv) records that are otherwise available under | ||||||
10 | State or local law; or
| ||||||
11 | (v) records in which the requesting party is the | ||||||
12 | individual
identified, except as provided under part | ||||||
13 | (vii) of
paragraph (c) of subsection (1) of this | ||||||
14 | Section.
| ||||||
15 | "Criminal history record information" means data | ||||||
16 | identifiable to an
individual and consisting of | ||||||
17 | descriptions or notations of arrests,
detentions, | ||||||
18 | indictments, informations, pre-trial proceedings, trials, | ||||||
19 | or
other formal events in the criminal justice system or | ||||||
20 | descriptions or
notations of criminal charges (including | ||||||
21 | criminal violations of local
municipal ordinances) and the | ||||||
22 | nature of any disposition arising therefrom,
including | ||||||
23 | sentencing, court or correctional supervision, | ||||||
24 | rehabilitation and
release. The term does not apply to | ||||||
25 | statistical records and reports in
which individuals are | ||||||
26 | not identified and from which
their identities are not |
| |||||||
| |||||||
1 | ascertainable, or to information that is for
criminal | ||||||
2 | investigative or intelligence purposes.
| ||||||
3 | (e) Records that relate to or affect the security of | ||||||
4 | correctional
institutions and detention facilities.
| ||||||
5 | (f) Preliminary drafts, notes, recommendations, | ||||||
6 | memoranda and other
records in which opinions are | ||||||
7 | expressed, or policies or actions are
formulated, except | ||||||
8 | that a specific record or relevant portion of a
record | ||||||
9 | shall not be exempt when the record is publicly cited
and | ||||||
10 | identified by the head of the public body. The exemption | ||||||
11 | provided in
this paragraph (f) extends to all those records | ||||||
12 | of officers and agencies
of the General Assembly that | ||||||
13 | pertain to the preparation of legislative
documents.
| ||||||
14 | (g) Trade secrets and commercial or financial | ||||||
15 | information obtained from
a person or business where the | ||||||
16 | trade secrets or information are
proprietary, privileged | ||||||
17 | or confidential, or where disclosure of the trade
secrets | ||||||
18 | or information may cause competitive harm, including: | ||||||
19 | (i) All
information determined to be confidential | ||||||
20 | under Section 4002 of the
Technology Advancement and | ||||||
21 | Development Act. | ||||||
22 | (ii) All trade secrets and commercial or financial | ||||||
23 | information obtained by a public body, including a | ||||||
24 | public pension fund, from a private equity fund or a | ||||||
25 | privately held company within the investment portfolio | ||||||
26 | of a private equity fund as a result of either |
| |||||||
| |||||||
1 | investing or evaluating a potential investment of | ||||||
2 | public funds in a private equity fund. The exemption | ||||||
3 | contained in this item does not apply to the aggregate | ||||||
4 | financial performance information of a private equity | ||||||
5 | fund, nor to the identity of the fund's managers or | ||||||
6 | general partners. The exemption contained in this item | ||||||
7 | does not apply to the identity of a privately held | ||||||
8 | company within the investment portfolio of a private | ||||||
9 | equity fund, unless the disclosure of the identity of a | ||||||
10 | privately held company may cause competitive harm.
| ||||||
11 | Nothing contained in this
paragraph (g) shall be construed | ||||||
12 | to prevent a person or business from
consenting to disclosure.
| ||||||
13 | (h) Proposals and bids for any contract, grant, or | ||||||
14 | agreement, including
information which if it were | ||||||
15 | disclosed would frustrate procurement or give
an advantage | ||||||
16 | to any person proposing to enter into a contractor | ||||||
17 | agreement
with the body, until an award or final selection | ||||||
18 | is made. Information
prepared by or for the body in | ||||||
19 | preparation of a bid solicitation shall be
exempt until an | ||||||
20 | award or final selection is made.
| ||||||
21 | (i) Valuable formulae,
computer geographic systems,
| ||||||
22 | designs, drawings and research data obtained or
produced by | ||||||
23 | any public body when disclosure could reasonably be | ||||||
24 | expected to
produce private gain or public loss.
The | ||||||
25 | exemption for "computer geographic systems" provided in | ||||||
26 | this paragraph
(i) does not extend to requests made by news |
| |||||||
| |||||||
1 | media as defined in Section 2 of
this Act when the | ||||||
2 | requested information is not otherwise exempt and the only
| ||||||
3 | purpose of the request is to access and disseminate | ||||||
4 | information regarding the
health, safety, welfare, or | ||||||
5 | legal rights of the general public.
| ||||||
6 | (j) Test questions, scoring keys and other examination | ||||||
7 | data used to
administer an academic examination or | ||||||
8 | determined the qualifications of an
applicant for a license | ||||||
9 | or employment.
| ||||||
10 | (k) Architects' plans, engineers' technical | ||||||
11 | submissions, and
other
construction related technical | ||||||
12 | documents for
projects not constructed or developed in | ||||||
13 | whole or in part with public funds
and the same for | ||||||
14 | projects constructed or developed with public funds, but
| ||||||
15 | only to the extent
that disclosure would compromise | ||||||
16 | security, including but not limited to water
treatment | ||||||
17 | facilities, airport facilities, sport stadiums, convention | ||||||
18 | centers,
and all government owned, operated, or occupied | ||||||
19 | buildings.
| ||||||
20 | (l) Library circulation and order records identifying | ||||||
21 | library users with
specific materials.
| ||||||
22 | (m) Minutes of meetings of public bodies closed to the
| ||||||
23 | public as provided in the Open Meetings Act until the | ||||||
24 | public body
makes the minutes available to the public under | ||||||
25 | Section 2.06 of the Open
Meetings Act.
| ||||||
26 | (n) Communications between a public body and an |
| |||||||
| |||||||
1 | attorney or auditor
representing the public body that would | ||||||
2 | not be subject to discovery in
litigation, and materials | ||||||
3 | prepared or compiled by or for a public body in
| ||||||
4 | anticipation of a criminal, civil or administrative | ||||||
5 | proceeding upon the
request of an attorney advising the | ||||||
6 | public body, and materials prepared or
compiled with | ||||||
7 | respect to internal audits of public bodies.
| ||||||
8 | (o) Information received by a primary or secondary | ||||||
9 | school, college or
university under its procedures for the | ||||||
10 | evaluation of faculty members by
their academic peers.
| ||||||
11 | (p) Administrative or technical information associated | ||||||
12 | with automated
data processing operations, including but | ||||||
13 | not limited to software,
operating protocols, computer | ||||||
14 | program abstracts, file layouts, source
listings, object | ||||||
15 | modules, load modules, user guides, documentation
| ||||||
16 | pertaining to all logical and physical design of | ||||||
17 | computerized systems,
employee manuals, and any other | ||||||
18 | information that, if disclosed, would
jeopardize the | ||||||
19 | security of the system or its data or the security of
| ||||||
20 | materials exempt under this Section.
| ||||||
21 | (q) Documents or materials relating to collective | ||||||
22 | negotiating matters
between public bodies and their | ||||||
23 | employees or representatives, except that
any final | ||||||
24 | contract or agreement shall be subject to inspection and | ||||||
25 | copying.
| ||||||
26 | (r) Drafts, notes, recommendations and memoranda |
| |||||||
| |||||||
1 | pertaining to the
financing and marketing transactions of | ||||||
2 | the public body. The records of
ownership, registration, | ||||||
3 | transfer, and exchange of municipal debt
obligations, and | ||||||
4 | of persons to whom payment with respect to these | ||||||
5 | obligations
is made.
| ||||||
6 | (s) The records, documents and information relating to | ||||||
7 | real estate
purchase negotiations until those negotiations | ||||||
8 | have been completed or
otherwise terminated. With regard to | ||||||
9 | a parcel involved in a pending or
actually and reasonably | ||||||
10 | contemplated eminent domain proceeding under the Eminent | ||||||
11 | Domain Act, records, documents and
information relating to | ||||||
12 | that parcel shall be exempt except as may be
allowed under | ||||||
13 | discovery rules adopted by the Illinois Supreme Court. The
| ||||||
14 | records, documents and information relating to a real | ||||||
15 | estate sale shall be
exempt until a sale is consummated.
| ||||||
16 | (t) Any and all proprietary information and records | ||||||
17 | related to the
operation of an intergovernmental risk | ||||||
18 | management association or
self-insurance pool or jointly | ||||||
19 | self-administered health and accident
cooperative or pool.
| ||||||
20 | (u) Information concerning a university's adjudication | ||||||
21 | of student or
employee grievance or disciplinary cases, to | ||||||
22 | the extent that disclosure
would reveal the identity of the | ||||||
23 | student or employee and information
concerning any public | ||||||
24 | body's adjudication of student or employee grievances
or | ||||||
25 | disciplinary cases, except for the final outcome of the | ||||||
26 | cases.
|
| |||||||
| |||||||
1 | (v) Course materials or research materials used by | ||||||
2 | faculty members.
| ||||||
3 | (w) Information related solely to the internal | ||||||
4 | personnel rules and
practices of a public body.
| ||||||
5 | (x) Information contained in or related to | ||||||
6 | examination, operating, or
condition reports prepared by, | ||||||
7 | on behalf of, or for the use of a public
body responsible | ||||||
8 | for the regulation or supervision of financial
| ||||||
9 | institutions or insurance companies, unless disclosure is | ||||||
10 | otherwise
required by State law.
| ||||||
11 | (y) Information the disclosure of which is restricted | ||||||
12 | under Section
5-108 of the Public Utilities Act.
| ||||||
13 | (z) Manuals or instruction to staff that relate to | ||||||
14 | establishment or
collection of liability for any State tax | ||||||
15 | or that relate to investigations
by a public body to | ||||||
16 | determine violation of any criminal law.
| ||||||
17 | (aa) Applications, related documents, and medical | ||||||
18 | records received by
the Experimental Organ Transplantation | ||||||
19 | Procedures Board and any and all
documents or other records | ||||||
20 | prepared by the Experimental Organ
Transplantation | ||||||
21 | Procedures Board or its staff relating to applications
it | ||||||
22 | has received.
| ||||||
23 | (bb) Insurance or self insurance (including any | ||||||
24 | intergovernmental risk
management association or self | ||||||
25 | insurance pool) claims, loss or risk
management | ||||||
26 | information, records, data, advice or communications.
|
| |||||||
| |||||||
1 | (cc) Information and records held by the Department of | ||||||
2 | Public Health and
its authorized representatives relating | ||||||
3 | to known or suspected cases of
sexually transmissible | ||||||
4 | disease or any information the disclosure of which
is | ||||||
5 | restricted under the Illinois Sexually Transmissible | ||||||
6 | Disease Control Act.
| ||||||
7 | (dd) Information the disclosure of which is exempted | ||||||
8 | under Section 30
of the Radon Industry Licensing Act.
| ||||||
9 | (ee) Firm performance evaluations under Section 55 of | ||||||
10 | the
Architectural, Engineering, and Land Surveying | ||||||
11 | Qualifications Based
Selection Act.
| ||||||
12 | (ff) Security portions of system safety program plans, | ||||||
13 | investigation
reports, surveys, schedules, lists, data, or | ||||||
14 | information compiled, collected,
or prepared by or for the | ||||||
15 | Regional Transportation Authority under Section 2.11
of | ||||||
16 | the Regional Transportation Authority Act or the St. Clair | ||||||
17 | County Transit
District under the
Bi-State Transit Safety | ||||||
18 | Act.
| ||||||
19 | (gg) Information the disclosure of which is restricted | ||||||
20 | and
exempted under Section 50 of the Illinois Prepaid | ||||||
21 | Tuition Act.
| ||||||
22 | (hh) Information the disclosure of which is
exempted | ||||||
23 | under the State Officials and Employees Ethics Act.
| ||||||
24 | (ii) Beginning July 1, 1999, information that would | ||||||
25 | disclose
or might lead to the disclosure of
secret or | ||||||
26 | confidential information, codes, algorithms, programs, or |
| |||||||
| |||||||
1 | private
keys intended to be used to create electronic or | ||||||
2 | digital signatures under the
Electronic Commerce Security | ||||||
3 | Act.
| ||||||
4 | (jj) Information contained in a local emergency energy | ||||||
5 | plan submitted to
a municipality in accordance with a local | ||||||
6 | emergency energy plan ordinance that
is adopted under | ||||||
7 | Section 11-21.5-5 of the Illinois Municipal Code.
| ||||||
8 | (kk) Information and data concerning the distribution | ||||||
9 | of
surcharge moneys collected and remitted by wireless | ||||||
10 | carriers under the Wireless
Emergency Telephone Safety | ||||||
11 | Act.
| ||||||
12 | (ll) Vulnerability assessments, security measures, and | ||||||
13 | response policies
or plans that are designed to identify, | ||||||
14 | prevent, or respond to potential
attacks upon a community's | ||||||
15 | population or systems, facilities, or installations,
the | ||||||
16 | destruction or contamination of which would constitute a | ||||||
17 | clear and present
danger to the health or safety of the | ||||||
18 | community, but only to the extent that
disclosure could | ||||||
19 | reasonably be expected to jeopardize the effectiveness of | ||||||
20 | the
measures or the safety of the personnel who implement | ||||||
21 | them or the public.
Information exempt under this item may | ||||||
22 | include such things as details
pertaining to the | ||||||
23 | mobilization or deployment of personnel or equipment, to | ||||||
24 | the
operation of communication systems or protocols, or to | ||||||
25 | tactical operations.
| ||||||
26 | (mm) Maps and other records regarding the location or |
| |||||||
| |||||||
1 | security of generation, transmission, distribution, | ||||||
2 | storage, gathering,
treatment, or switching facilities | ||||||
3 | owned by a utility or by the Illinois Power Agency.
| ||||||
4 | (nn) Law enforcement officer identification | ||||||
5 | information or
driver
identification
information compiled | ||||||
6 | by a law enforcement agency or the Department of
| ||||||
7 | Transportation
under Section 11-212 of the Illinois | ||||||
8 | Vehicle Code.
| ||||||
9 | (oo) Records and information provided to a residential
| ||||||
10 | health care
facility resident sexual assault
and death | ||||||
11 | review team or the Executive Council under the Abuse | ||||||
12 | Prevention Review Team Act.
| ||||||
13 | (pp) Information provided to the predatory lending | ||||||
14 | database created pursuant to Article 3 of the Residential | ||||||
15 | Real Property Disclosure Act, except to the extent | ||||||
16 | authorized under that Article.
| ||||||
17 | (qq) Defense budgets and petitions for certification | ||||||
18 | of compensation and expenses for court appointed trial | ||||||
19 | counsel as provided under Sections 10 and 15 of the Capital | ||||||
20 | Crimes Litigation Act. This subsection (qq) shall apply | ||||||
21 | until the conclusion of the trial of the case, even if the | ||||||
22 | prosecution chooses not to pursue the death penalty prior | ||||||
23 | to trial or sentencing.
| ||||||
24 | (rr) Information contained in or related to proposals, | ||||||
25 | bids, or negotiations related to electric power | ||||||
26 | procurement under Section 1-75 of the Illinois Power Agency |
| |||||||
| |||||||
1 | Act and Section 16-111.5 of the Public Utilities Act that | ||||||
2 | is determined to be confidential and proprietary by the | ||||||
3 | Illinois Power Agency or by the Illinois Commerce | ||||||
4 | Commission.
| ||||||
5 | (ss) Information the disclosure of which is
exempted | ||||||
6 | under the Viatical Settlements Act of 2008.
| ||||||
7 | (2) This Section does not authorize withholding of | ||||||
8 | information or limit the
availability of records to the public, | ||||||
9 | except as stated in this Section or
otherwise provided in this | ||||||
10 | Act.
| ||||||
11 | (Source: P.A. 94-280, eff. 1-1-06; 94-508, eff. 1-1-06; 94-664, | ||||||
12 | eff. 1-1-06; 94-931, eff. 6-26-06; 94-953, eff. 6-27-06; | ||||||
13 | 94-1055, eff. 1-1-07; 95-331, eff. 8-21-07; 95-481, eff. | ||||||
14 | 8-28-07.)
| ||||||
15 | Section 905. The Illinois Insurance Code is amended by | ||||||
16 | changing Section 500-70 as follows:
| ||||||
17 | (215 ILCS 5/500-70)
| ||||||
18 | Sec. 500-70. License denial, nonrenewal, or revocation.
| ||||||
19 | (a) The Director may place on probation, suspend, revoke, | ||||||
20 | or refuse to issue
or renew
an insurance producer's license or | ||||||
21 | may levy a civil penalty in accordance with
this Section or
| ||||||
22 | take any combination of actions, for any one or more of the | ||||||
23 | following causes:
| ||||||
24 | (1) providing incorrect, misleading, incomplete, or |
| |||||||
| |||||||
1 | materially untrue
information in the license application;
| ||||||
2 | (2) violating any insurance laws, or violating any | ||||||
3 | rule, subpoena, or
order of
the Director or of another | ||||||
4 | state's insurance commissioner;
| ||||||
5 | (3) obtaining or attempting to obtain a license through | ||||||
6 | misrepresentation
or
fraud;
| ||||||
7 | (4) improperly withholding, misappropriating or | ||||||
8 | converting any moneys or
properties received in the course | ||||||
9 | of doing insurance business;
| ||||||
10 | (5) intentionally misrepresenting the terms of an | ||||||
11 | actual or proposed
insurance
contract or application for | ||||||
12 | insurance;
| ||||||
13 | (6) having been convicted of a felony;
| ||||||
14 | (7) having admitted or been found to have committed any | ||||||
15 | insurance unfair
trade practice or fraud;
| ||||||
16 | (8) using fraudulent, coercive, or dishonest | ||||||
17 | practices, or demonstrating
incompetence, | ||||||
18 | untrustworthiness or financial irresponsibility in the | ||||||
19 | conduct of
business in
this State or elsewhere;
| ||||||
20 | (9) having an insurance producer license,
or its | ||||||
21 | equivalent, denied, suspended,
or revoked in any other | ||||||
22 | state, province, district or territory;
| ||||||
23 | (10) forging a name to an application for insurance or | ||||||
24 | to a document
related
to
an insurance transaction;
| ||||||
25 | (11) improperly using notes or any other reference | ||||||
26 | material to complete an
examination for an insurance |
| |||||||
| |||||||
1 | license;
| ||||||
2 | (12) knowingly accepting insurance business from an | ||||||
3 | individual who is not
licensed;
| ||||||
4 | (13) failing to comply with an administrative or court | ||||||
5 | order imposing a
child
support obligation;
| ||||||
6 | (14) failing to pay state income tax or penalty or | ||||||
7 | interest or comply with
any
administrative or court order | ||||||
8 | directing payment of state income tax or failed
to file a
| ||||||
9 | return or to pay any final assessment of any tax due to the | ||||||
10 | Department of
Revenue; or
| ||||||
11 | (15) failing to make satisfactory repayment to the | ||||||
12 | Illinois Student
Assistance
Commission for a delinquent or | ||||||
13 | defaulted student loan ; or .
| ||||||
14 | (16) failing to comply with any provision of the | ||||||
15 | Viatical Settlements Act of 2008. | ||||||
16 | (b) If the action by the Director is to nonrenew, suspend, | ||||||
17 | or revoke a
license or to
deny an application for a license, | ||||||
18 | the Director shall notify the applicant or
licensee and advise, | ||||||
19 | in
writing, the applicant or licensee of the reason for the | ||||||
20 | suspension,
revocation, denial or
nonrenewal of the | ||||||
21 | applicant's or licensee's license. The applicant or licensee
| ||||||
22 | may make written
demand upon the Director within 30 days after | ||||||
23 | the date of mailing for a hearing
before the
Director to | ||||||
24 | determine the reasonableness of the Director's action. The | ||||||
25 | hearing
must be held
within not fewer than 20 days nor more | ||||||
26 | than 30 days after the mailing of the
notice of hearing
and |
| |||||||
| |||||||
1 | shall be held pursuant to 50 Ill. Adm. Code 2402.
| ||||||
2 | (c) The license of a business entity may be suspended, | ||||||
3 | revoked, or refused
if the
Director finds, after hearing, that | ||||||
4 | an individual licensee's violation was
known or should have
| ||||||
5 | been known by one or more of the partners, officers, or | ||||||
6 | managers acting on
behalf of the
partnership, corporation, | ||||||
7 | limited liability company, or limited liability
partnership | ||||||
8 | and the
violation was neither reported to the Director nor | ||||||
9 | corrective action taken.
| ||||||
10 | (d) In addition to or instead of any applicable denial, | ||||||
11 | suspension, or
revocation of a
license, a person may, after | ||||||
12 | hearing, be subject to a civil penalty of up to
$10,000 for | ||||||
13 | each cause for
denial, suspension, or revocation, however, the | ||||||
14 | civil penalty may total no more
than $100,000.
| ||||||
15 | (e) The Director has the authority to enforce the | ||||||
16 | provisions of and impose
any penalty
or remedy authorized by | ||||||
17 | this Article against any person who is under
investigation for | ||||||
18 | or charged
with a violation of this Code or rules even if the | ||||||
19 | person's license or
registration has been
surrendered or has | ||||||
20 | lapsed by operation of law.
| ||||||
21 | (f) Upon the suspension, denial, or revocation of a | ||||||
22 | license, the licensee or
other
person having possession or | ||||||
23 | custody of the license shall promptly deliver it to
the | ||||||
24 | Director in
person or by mail. The Director shall publish all | ||||||
25 | suspensions, denials, or
revocations after the
suspensions, | ||||||
26 | denials, or revocations become final in a manner designed to
|
| |||||||
| |||||||
1 | notify interested
insurance companies and other persons.
| ||||||
2 | (g) A person whose license is revoked or whose application | ||||||
3 | is denied
pursuant to this
Section is ineligible to apply for | ||||||
4 | any license for 3 years after the revocation
or denial. A | ||||||
5 | person
whose license as an insurance producer has been revoked, | ||||||
6 | suspended, or denied
may not be
employed, contracted, or | ||||||
7 | engaged in any insurance related capacity during the
time the
| ||||||
8 | revocation, suspension, or denial is in effect.
| ||||||
9 | (Source: P.A. 92-386, eff. 1-1-02; 93-32, eff. 7-1-03.)
| ||||||
10 | Section 910. The Illinois Securities Law of 1953 is amended | ||||||
11 | by changing Section 2.1 and by adding Section 2.33 as follows:
| ||||||
12 | (815 ILCS 5/2.1) (from Ch. 121 1/2, par. 137.2-1)
| ||||||
13 | Sec. 2.1. Security. "Security" means any note, stock, | ||||||
14 | treasury stock,
bond, debenture, evidence of indebtedness, | ||||||
15 | certificate of interest or
participation in any profit-sharing | ||||||
16 | agreement, collateral-trust
certificate, preorganization | ||||||
17 | certificate or subscription, transferable
share, investment | ||||||
18 | contract, viatical investment, investment fund share, | ||||||
19 | face-amount certificate,
voting-trust certificate, certificate | ||||||
20 | of deposit
for a security, fractional
undivided interest in | ||||||
21 | oil, gas or other mineral lease, right or royalty,
any put, | ||||||
22 | call, straddle, option, or privilege on any security, | ||||||
23 | certificate
of deposit, or group or index of securities | ||||||
24 | (including any interest therein
or based on the value thereof), |
| |||||||
| |||||||
1 | or any put, call, straddle, option, or
privilege entered into, | ||||||
2 | relating to
foreign currency, or, in general, any interest or | ||||||
3 | instrument commonly known
as a "security", or any certificate | ||||||
4 | of interest or participation in,
temporary or interim | ||||||
5 | certificate for, receipt for, guarantee of, or warrant
or right | ||||||
6 | to subscribe to or purchase, any of the foregoing.
"Security" | ||||||
7 | does not mean a mineral investment contract or a mineral
| ||||||
8 | deferred delivery contract; provided, however, the Department | ||||||
9 | shall have
the authority to regulate these contracts as | ||||||
10 | hereinafter provided.
| ||||||
11 | (Source: P.A. 92-308, eff. 1-1-02; 93-927, eff. 8-12-04.)
| ||||||
12 | (815 ILCS 5/2.33 new)
| ||||||
13 | Sec. 2.33. Viatical investment. "Viatical investment"
| ||||||
14 | means the contractual right to receive any portion of the death
| ||||||
15 | benefit or ownership of a life insurance policy or certificate
| ||||||
16 | for consideration that is less than the expected death benefit
| ||||||
17 | of the life insurance policy or certificate. "Viatical
| ||||||
18 | investment" does not include: | ||||||
19 | (1) any transaction between a viator and a viatical
| ||||||
20 | settlement provider, as defined in the Viatical | ||||||
21 | Settlements Act of 2008; | ||||||
22 | (2) any transfer of ownership or beneficial interest in
| ||||||
23 | a life insurance policy from a viatical settlement provider
| ||||||
24 | to another viatical settlement provider, as defined in the
| ||||||
25 | Viatical Settlements Act of 2008, or to any legal
entity |
| |||||||
| |||||||
1 | formed solely for the purpose of holding ownership
or | ||||||
2 | beneficial interest in a life insurance policy or
policies; | ||||||
3 | (3) the bona fide assignment of a life insurance policy | ||||||
4 | to a bank, savings bank, savings and loan association,
| ||||||
5 | credit union, or financial institution as
collateral for a | ||||||
6 | loan; for the purposes of this item (3), "financial | ||||||
7 | institution" means financial institution as defined by | ||||||
8 | Viatical Settlements Act of 2008; or | ||||||
9 | (4) a policy loan by a life insurance company or the
| ||||||
10 | exercise of accelerated benefits pursuant to the terms of a
| ||||||
11 | life insurance policy issued in accordance with the
| ||||||
12 | Illinois Insurance Code.
| ||||||
13 | Section 999. Effective date. This Act takes effect July 1, | ||||||
14 | 2009.".
|