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H. B. No. 404 As IntroducedAs Introduced
127th General Assembly | Regular Session | 2007-2008 |
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Representatives Hottinger, Barrett
A BILL
To amend sections 3916.01 to 3916.20 and to enact
sections 3916.031 and 3916.161 of the Revised Code
to make changes to the law governing viatical
settlements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3916.01, 3916.02, 3916.03, 3916.04,
3916.05, 3916.06, 3916.07, 3916.08, 3916.09, 3916.10, 3916.11,
3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17, 3916.18,
3916.19, and 3916.20 be amended and sections 3916.031 and 3916.161
of the Revised Code be enacted to read as follows:
Sec. 3916.01. As used in this chapter:
(A)
"Advertising" means any
written, electronic, or printed
communication or any communication by means of
recorded telephone
messages or
transmitted on radio, television, the internet, or
similar
communications media, including, but not limited to, film
strips,
motion pictures, and videos, that is directly or
indirectly
published, disseminated, circulated, or placed directly
before
the public
for the purpose of creating an interest in or
inducing
a person to
sell, assign, devise, bequest, or transfer
the death benefit or ownership of a life insurance policy pursuant
to a viatical
settlement
contract.
(B)
"Business of viatical settlements" means an activity
involved
in the offering, solicitation, negotiation, procurement,
effectuation, purchasing, investing, financing, monitoring,
tracking,
underwriting, selling, transferring, assigning,
pledging, or
hypothecating or in any other manner acquiring an
interest in a life insurance policy by means of viatical
settlement contracts or
purchase
agreements or any similar
activity related to viatical
settlement
contracts or purchase
agreements.
(C)
"Chronically ill" means certified, at least annually, by
a licensed health professional as having any of the following
conditions:
(1) Being unable to perform, for at least ninety days without
substantial assistance from another individual due to a loss of
functional capacity, at least two
activities of daily
living,
including, but not limited to, eating,
toileting,
transferring,
bathing, dressing, or continence;
(2) Requiring substantial supervision to protect the
individual
from threats to health and safety due to severe
cognitive
impairment;
(3) Having a level of disability similar to that described
in
division (C)(1) of this section, as determined by the United
States secretary of health and human
services;
(D) "Escrow agent" means an independent third-party person
who, pursuant to a written agreement, controls and effects, in an
escrow transaction, the delivery of the escrow transaction related
to the acquisition of a life insurance policy pursuant to a
viatical settlement contract. "Escrow agent" does not include any
person associated, affiliated with, or under the control of a
person licensed under this chapter.
(E)(1)
"Financing entity" means an underwriter, placement
agent,
lender, purchaser of securities, purchaser of a policy or
certificate from a
viatical settlement provider, credit enhancer,
or any other person that
has a direct ownership interest in a
policy or certificate
that is the subject of a viatical settlement
contract and to which both of the
following apply:
(a) Its principal activity related to the transaction is
providing funds to effect the viatical
settlement or the purchase
of one
or more viaticated policies.
(b) It has an agreement in writing with one or more licensed
viatical settlement providers to finance the acquisition of
viatical
settlement contracts.
(2)
"Financing entity" does not include a non-accredited
investor
or viatical settlement purchaser.
(E)(F)
"Fraudulent viatical settlement act" means an act or
omission
committed by any person who, knowingly or with intent to
defraud
and for the purpose of depriving another of property or
for
pecuniary gain, commits, or permits any of its employees or
agents
to commit, any of the following acts:
(1) Presenting, causing to be presented, or preparing with
knowledge or belief that it will be presented to or by a viatical
settlement provider, viatical settlement broker, life expectancy
provider, viatical
settlement
purchaser, financing entity,
insurer, insurance broker,
insurance
agent, or any other person,
any false material
information, or
concealing any material
information, as part of,
in support of, or
concerning a fact
material to, one or more of
the following:
(a) An application for the issuance of a viatical
settlement
contract or insurance policy or certificate;
(b) The underwriting of a viatical settlement contract or
insurnace
insurance policy or certificate;
(c) A claim for payment or benefit pursuant to a viatical
settlement contract or
insurnace
insurance policy or certificate;
(d) Any premiums paid on an insurance policy or certificate;
(e) Any payments
and changes in ownership or beneficiary
made
in
accordance with the terms
in
of a viatical settlement
contract
or
insurance
policy or certificate;
(f) The reinstatement or conversion of an insurance policy
or
certificate;
(g) The solicitation, offer, effectuation, or sale of a
viatical
settlement contract or insurance policy or certificate;
(h) The issuance of written evidence of a viatical
settlement
contract or insurance policy or certificate;
(i) A financing transaction.
(2) In the furtherance of a fraud or to prevent the
detection
of
a fraud, doing any of the following:
(a) Removing, concealing, altering, destroying, or
sequestering
from the superintendent of insurance the assets or
records of a
licensee or another person engaged in the business of
viatical
settlements;
(b) Misrepresenting or concealing the financial condition
of
a
licensee, financing entity, insurer, or any other person;
(c) Transacting the business of viatical settlements in
violation
of any law of this state requiring a license,
certificate of
authority, or other legal authority for the
transaction of the
business of viatical settlements;
(d) Filing with the superintendent of insurance or the
chief
insurance regulatory official of another jurisdiction a document
containing false information or otherwise
concealing from the
superintendent any information about a material
fact.
(3) Presenting, causing to be presented, or preparing with
knowledge or reason to believe that it will be presented, to or by
a
viatical settlement provider, viatical settlement broker,
insurer,
insurance agent, financing entity, viatical settlement
purchaser,
or any other person, in connection with a viatical
settlement
transaction or insurance transaction, an insurance
policy or
certificate that the actor knows was fraudulently
obtained by the
insured, the owner, or any agent of the insured or
owner Recklessly entering into, negotiating, brokering, or
otherwise dealing in a viatical settlement contract involving a
life insurance policy that was obtained by presenting false
information of any fact material to the policy, or by concealing
information concerning any fact material to the policy for the
purpose of misleading and with the intent to defraud the insurer
of
the policy, the viatical settlement provider, or the viator;
(4) Committing any embezzlement, theft, misappropriation, or
conversion of moneys, funds, premiums, credits or other property
of a
viatical settlement provider, insurer, insured, viator,
insurance
policyowner, or any other person engaged in the business
of
viatical settlements or insurance;
(5) Employing any plan, financial structure, device, scheme,
or artifice to defraud in relation to a viaticated policy;
(6) Facilitating the change of the state in which a person
owns a policy or the state of residency of a viator to a state or
jurisdiction that does not have laws similar to this chapter for
the express purposes of evading or avoiding the provisions of this
chapter;
(7) Attempting to commit, assisting, aiding or abetting in
the
commission of, or conspiracy to commit any act or omission
specified in
divisions (E)(1) to (4)(6) of this section.
(F)(G) "Recklessly" has the same meaning as in section
2901.22 of the Revised Code.
(H) "Defraud" has the same meaning as in section 2913.01 of
the Revised Code.
(I) "Life expectancy" means an opinion or evaluation as to
how long a particular person is going to live.
(J) "Life expectancy provider" means a person who determines,
or claims to have the necessary education, training, and expertise
to determine life expectancies or mortality ratings used to
determine life expectancies on behalf of or in connection with any
of the following:
(1) A viatical settlement provider, viatical settlement
broker, or person engaged in the business of viatical settlements;
(2) A viatical settlement investment as defined by section
1707.01 of the Revised Code;
(3) A viatical settlement contract or viatical settlement
investment.
(K) Notwithstanding section 1.59 of the Revised Code,
"person"
means a natural person or a legal entity, including, but
not limited to,
an individual, partnership, limited liability
company, association,
trust, or corporation.
(G)(L)
"Policy" means an individual or group policy, group
certificate, contract, or arrangement of insurance affecting the
rights of a resident of this state or bearing a
reasonable
relation to this state, regardless of whether delivered
or issued
for delivery in this state.
(H)(M)
"Related provider trust" means a titling trust or any
other
trust established by a licensed viatical settlement provider
or a financing entity for the sole purpose of holding ownership or
beneficial interest in purchased policies in connection with a
financing transaction, provided that the trust has a written
agreement with the licensed viatical settlement provider under
which the licensed viatical settlement provider is responsible for
ensuring compliance with all statutory and regulatory requirements
and under which the trust agrees to make all records and files
related to viatical settlement transactions available to the
superintendent as if those records and files were maintained
directly by the licensed viatical settlement provider.
(I)(N)
"Special purpose entity" means a corporation,
partnership,
trust, limited liability company or other similar
entity formed solely to
provide access, either directly or
indirectly, to
institutional capital markets for a financing
entity or licensed
viatical settlement provider or in connection
with a transaction in which the securities in the special purpose
entity meet either of the following standards:
(1) The securities are acquired by the viator or by qualified
institutional buyers as defined in 17 C.F.R. 230.144A, as amended.
(2) The securities pay a fixed rate of return commensurate
with established asset-backed institutional capital markets.
(J)(O)
"Terminally ill" means certified by a physician as
having an illness or sickness physical condition
that
can
reasonably be expected to
result in death in twenty-four
months
or
less.
(K)(P)
"Viatical settlement broker" means a
person that, on
behalf
of a viator and for a fee, commission, or
other valuable
consideration, offers
or attempts to negotiate
viatical
settlements between a viator and one or more
viatical
settlement
providers or viatical settlement brokers.
"Viatical settlement
broker" does
not include
an
attorney, a certified public
accountant, or a
financial planner
accredited
by a nationally
recognized
accreditation agency, who is
retained to
represent the
viator and,
whose compensation is not
paid directly or indirectly
by the
viatical settlement provider or
purchaser, and whose
viatical
settlement activities are incidental to the practice of
the
person's profession.
(L)(Q)(1)
"Viatical settlement contract" means any of the
following:
(1)(a) A written agreement establishing between a viator and
a viatical settlement provider or any affiliate of the viatical
settlement provider that establishes the terms under which
compensation or any thing of value, that is less than the expected
death
benefit of the insurance policy or certificate will be paid
in return
for the viator's present or future assignment, transfer,
sale, devise, or
bequest of
the death benefit or ownership of any
portion of the
insurance policy or
certificate of insurance;
(2) A contract for a loan or any other financing
transaction
secured primarily by an individual or group life insurance policy
or certificate,
other than a loan by a life insurance company
pursuant to the terms of the
life insurance contract or a loan
secured by the cash value of a policy or
certificate;
(3) An agreement to transfer ownership or change the
beneficiary
designation of the policy or certificate at a later
date, regardless of
the date that compensation is paid to the
viator (b) A premium finance loan made for a life insurance policy
by a lender to a viator on, before, or after the date of issuance
of the policy in either of the following situations:
(i) The viator or the insured receives on the date of the
premium finance
loan a guarantee of a future viatical settlement
value of the
policy.
(ii) The viator or the insured agrees on the date of the
premium finance loan to sell the policy or any portion of the
policy's death benefit on any date following the issuance of the
policy.
(2) "Viatical settlement contract" does not include any of
the following:
(a) A policy loan or accelerated death benefit made by the
insurer pursuant to the policy's terms;
(b) Loan proceeds that are used solely to pay premiums for
the policy and the costs of the loan including interest,
arrangement fees, utilization fees and similar fees, closing
costs, legal fees and expenses, trustee fees and expenses, and
third-party collateral provider fees and expenses, including fees
payable to letter of credit issuers.
(c) A loan made by a regulated financial institution in which
the lender takes an interest in a life insurance policy solely to
secure repayment of a loan or, if there is a default on the loan
and the policy is transferred, the transfer of such a policy by
the lender, provided that neither the default itself nor the
transfer is pursuant to an agreement or understanding with any
other person for the purpose of evading regulation under this
chapter;
(d) A premium finance loan made by a lender that does not
violate sections 1321.71 to 1321.83 of the Revised Code, if the
premium finance loan is not described in division (Q)(1)(b) of
this
section;
(e) An agreement where all parties are closely related to the
insured by blood or law or have a lawfully substantial economic
interest in the continued life, health, and bodily safety of the
person insured, or are trusts established primarily for the
benefit of such parties;
(f) Any designation, consent, or agreement by an insured who
is an employee of an employer in connection with the purchase by
the employer, or trust established by the employer, of life
insurance on the life of the employee;
(g) Any of the following bona fide business succession
planning arrangements:
(i) An arrangement between one or more shareholders in a
corporation or between a corporation and one or more of its
shareholders or one or more trusts established by its
shareholders;
(ii) An arrangement between one or more partners in a
partnership or between a partnership and one or more of its
partners or one or more trusts established by its partners;
(iii) An arrangement between one or more members in a limited
liability company or between a limited liability company and one
or more of its members or one or more trusts established by its
members.
(h) An agreement entered into by a service recipient, a trust
established by the service recipient and a service provider, or a
trust established by the service provider who performs significant
services for the service recipient's trade or business;
(i) Any other contract, transaction, or arrangement exempted
from the definition of viatical settlement contract by rule
adopted by the superintendent of insurance based on the
superintendent's determination that the contract, transaction, or
arrangement is not of the type regulated by this chapter.
(M)(R)(1)
"Viatical settlement provider" means
a person,
other
than a viator, that enters into or effectuates a
viatical
settlement contract.
(2)
"Viatical settlement provider" does not include any of
the following:
(a) A bank, savings bank, savings and loan association,
credit
union, or other regulated financial institution;
(b) A premium finance company exempted under section 1321.72
of the Revised Code from the licensure requirements of section
3921.73 of the Revised Code that takes an
assignment of a life
insurance policy or certificate solely as collateral
for a premium
finance loan;
(b)(c) The issuer of a life insurance policy or certificate
providing accelerated
benefits as defined in section 3915.21 of
the Revised Code and pursuant to the contract;
(c)(d) An individual who enters into or effectuates not more
than
one agreement in
any calendar year for the transfer of life
insurance policies or certificates
for any value
less than the
expected death benefit;
(d)(e) An authorized or eligible insurer that provides stop
loss
coverage or financial guarantee insurance to a viatical
settlement provider, purchaser,
financing entity,
special purpose
entity, or related
provider
trust;
(e)(f) A financing entity;
(f)(g) A special purpose entity;
(g)(h) A related provider trust;
(h)(i) A viatical settlement purchaser;
(j) Any other person the superintendent determines is not
consistent with the definition of viatical settlement provider.
(N)(S)
"Viaticated policy" means a life insurance policy or
certificate that has been acquired by a viatical settlement
provider pursuant
to a viatical settlement contract.
(O)(T)
"Viator" means the owner of a life insurance policy or
a
certificate holder under a group policy
that has not previously
been viaticated who resides in this state and who, in return for
compensation or any thing of value that is less than the expected
death
benefit of the policy or certificate, assigns, transfers,
sells,
devises, or bequests the death benefit or ownership of any
portion of
the insurance policy or certificate of insurance. For
the
purposes of this chapter, a
"viator" is not limited to an
owner of
a life insurance policy or a certificate holder under a
group
policy insuring the life of an individual with a terminal or
chronic illness or condition except where specifically addressed.
"Viator" does not include any of the following:
(1) A licensee viatical settlement provider or viatical
settlement broker licensed under this chapter;
(2) An accredited investor or A qualified institutional buyer
as
defined respectively in
Regulation
D,
Rule 501 or
Rule 144A of
the
Securities Act of 1933 17 C.F.R. 230.144A, as
amended;
(4) A special purpose entity;
(5) A related provider trust.
(P)(U)
"Viatical settlement purchaser" means a person who
gives
provides a
sum of money as consideration for a life
insurance policy or an
interest in the death benefits of a life
insurance policy that has been or will be the subject of a
viatical settlement contract, or a
person who owns, acquires, or
is entitled to a beneficial interest
in a trust that owns a
viatical settlement contract or is the
beneficiary of a life
insurance policy that has been or will be
the subject of a
viatical settlement contract, for the purpose of
deriving an
economic benefit.
"Viatical settlement purchaser"
does
not include
any of the following:
(1) A licensee viatical settlement provider or viatical
settlement broker licensed under this chapter;
(2) An accredited investor or qualified institutional buyer
as
defined respectively in
Regulation
D,
Rule 501 or
Rule 144A of
17 C.F.R. 230.501 adopted under the
"Securities Act of 1933," 48
Stat. 77, 15 U.S.C. 77a et seq. as
amended;
(3) A qualified institutional buyer as defined in 17
C.F.R.
230.144A;
(4)(5) A special purpose entity;
(5)(6) A related provider trust.
(Q)(V)
"Licensee" means a person licensed as a viatical
settlement provider, viatical settlement broker, or life
expectancy provider under this chapter.
(R)(W)
"NAIC" means the national association of insurance
commissioners.
(S)
"Securities Act of 1933" has the same
meaning as in
section
1707.01 of the Revised Code (X) "Regulated financial
institution" means a bank, a savings association, or credit union
operating under authority granted by the superintendent of
financial institutions, the regulatory authority of any other
state of the United States, the office of thrift supervision, the
national credit union administration, or the office of the
comptroller of the currency.
Sec. 3916.02. No (A) Notwithstanding division (C) of this
section, no person shall operate in this state as a
viatical
settlement provider or, viatical settlement broker, or life
expectancy provider without
first
having obtained a license from
the superintendent of
insurance
and, if different from
the owner
of the insurance policy to be viaticated is not a resident of this
state, from the comparable
official of the state of residence
of
the viator owner. If
(B) If there is
more than one viator owner on a single policy
or
certificate and the
viators owners are residents of different
states, the
viatical settlement
shall be governed by the law of
the state in
which the viator
owner having the largest percentage
ownership of the
policy or
certificate resides or, if the viators
owners hold equal
ownership, the
state of residence of one viator
owner agreed upon in
writing by all
viators owners.
(C) A person who represents the viator and is not compensated
directly or indirectly by the viatical settlement provider, who is
licensed as an attorney, certified public accountant, or financial
planner accredited by a nationally recognized accreditation agency
may negotiate viatical settlement contracts on behalf of a viator
without obtaining a license pursuant to division (A) of this
section.
Sec. 3916.03. (A) An applicant for a license as a viatical
settlement provider or, viatical
settlement
broker, or life
expectancy provider shall submit an
application for the license in
a manner prescribed by
the
superintendent of insurance. The
application shall be accompanied
by a
fee
established by the
superintendent by rule adopted in
accordance with
chapter
Chapter
119. of the Revised Code.
(B) A license issued under
this
chapter to a person other
than an individual authorizes all
partners, officers, members, or
designated employees of the person
to act as viatical settlement
providers or viatical settlement
brokers, as applicable, and all
those partners, officers, members,
or designated employees shall
be named in the application and any
supplements to the
application.
(C) Upon the filing of an application under this section and
the
payment of the license fee,
the superintendent shall make an
investigation of the applicant and issue to
the applicant a
license that
states in substance that the person is authorized to
act as a viatical
settlement provider or, viatical settlement
broker, or life expectancy provider, as applicable, if all of the
following apply:
(1) Regarding an application for a license as a viatical
settlement
provider, the applicant provides a detailed plan of
operation.
(2) The superintendent finds all of the following:
(a) The applicant is competent and trustworthy and intends
to
act
in good faith in the capacity of a viatical settlement
provider
or, viatical settlement broker, or life expectancy
provider, as applicable.
(b) The applicant has a good business reputation and has had
experience, training, or education so as to be qualified to act in
the
capacity of a viatical settlement provider
or, viatical
settlement broker, or life expectancy provider, as applicable.
(3) If the applicant is a person other than an individual,
the
applicant provides a certificate of good standing from the
state of its
domicile.
(4) The applicant provides an antifraud plan that
meets the
requirements of division (G) of section 3916.18 of the Revised
Code.
(5) Regarding an application for a license as a viatical
settlement provider or a viatical settlement broker, the applicant
has demonstrated financial responsibility pursuant to division (D)
of this section.
(D)(1) An applicant for license as a viatical settlement
provider or viatical settlement broker shall provide proof of
financial responsibility in a format prescribed by the
superintendent in the amount of two hundred fifty thousand dollars
through either of the following means:
(a) A surety bond executed and issued by an insurer
authorized to issue surety bonds in this state. The bond shall be
in favor of this state and shall authorize recovery by the
superintendent on behalf of any person in this state who sustains
damages as a result of an erroneous act, failure to act,
conviction of fraud or conviction of unfair practices committed by
a licensed viatical settlement provider or licensed viatical
settlement broker.
(b) A deposit of cash, certificates of deposit, or securities
in any combination.
(2) If an applicant is licensed as a viatical settlement
provider or viatical settlement broker in another state, the
superintendent shall accept as valid any similar proof of
financial responsibility the applicant filed in that state.
(3) The superintendent may request proof of financial
responsibility at any time the superintendent considers necessary.
(E) An applicant shall provide all information requested by
the
superintendent. The superintendent may, at any time, require
an applicant to
fully disclose the identity of all stockholders,
partners, officers, members,
and employees, and may, in the
exercise of the superintendent's discretion,
refuse to issue a
license to an applicant that is not an individual if the
superintendent is not
satisfied that each officer, employee,
stockholder, partner, or member who may
materially influence the
applicant's conduct meets the standards set forth in
this chapter.
(E)(F) Except as otherwise provided in this division, a
license
as a
viatical settlement provider or, viatical settlement
broker, or life expectancy provider
expires on the last
day of
March next after its issuance or
continuance. A license as a
viatical settlement provider
or,
viatical settlement broker, or
life expectancy provider may, in the
discretion of the
superintendent and the payment of an annual renewal fee
established
by the superintendent by rule adopted in accordance
with
chapter
Chapter 119.
of the Revised Code, be continued past
the last
day of March next after its issue
and after the last day
of March
in each succeeding year. Failure
to pay the renewal fee
by the
required date results in the expiration of the
license
without a hearing under Chapter 119. of the Revised Code.
(F)(G) Any individual licensed as a viatical settlement
broker shall complete not less than fifteen hours of continuing
education biennially. The superintendent shall approve continuing
education courses that shall be related to viatical settlements
and viatical settlement transactions. The superintendent shall
adopt rules for the
enforcement of this division.
(H) The superintendent shall not issue a license to a
nonresident
applicant, unless either of the following applies:
(1) The applicant files and maintains a written designation
of an agent
for service of process with the superintendent.
(2) The applicant has filed with the superintendent the
applicant's written irrevocable consent that any action against
the
applicant may be commenced against the applicant by service of
process
on the superintendent.
(G)(I) A viatical settlement
provider
or, viatical settlement
broker, or life expectancy provider shall provide to the
superintendent new or
revised
information regarding any change
in
its officers, any stockholder owning ten per cent or
more of its
stockholders stock, or its partners,
directors, members, or
designated
employees within thirty days of the change.
(H)(J) Any fee collected under this section shall be paid
into
the
state treasury to the credit of the department of
insurance
operating fund
created by section 3901.021 of the
Revised Code.
Sec. 3916.031. (A) Any corporation, partnership, or other
business that is licensed as a viatical settlement broker shall
maintain at least one designated individual who is individually
licensed as a viatical settlement broker to be responsible for the
business's compliance with this chapter.
(B) Notwithstanding division (B) of section 3916.15 of the
Revised Code, the superintendent of insurance may revoke without a
hearing under Chapter 119. of the Revised Code the license of any
business that does
not meet the requirement of this section.
Sec. 3916.04. Irrespective of the manner in which the
licensed viatical settlement
broker is compensated, a licensed
viatical
settlement
broker is deemed to represent
only the viator
and owes a fiduciary
duty to the viator to act according to
the
viator's instructions
and in the best interest of the viator.
Sec. 3916.05. (A) A person shall not use a viatical
settlement
contract form or provide a disclosure statement form to
a viator in this state
unless the viatical settlement contract
form or the disclosure statement form
is filed with and approved
by the superintendent of
insurance. The superintendent shall
disapprove a viatical settlement contract
form or a disclosure
statement form if, in the superintendent's opinion, the
viatical
settlement contract
form, the disclosure statement form, or any
provision contained therein fails to meet the requirements of
section 3916.06 of the Revised Code, is
unreasonable, is contrary
to the
interests of the public, or is otherwise misleading or
unfair to the
viator.
At the superintendent's
discretion, the
superintendent
may require the submission of advertising
material
to which
section 3916.17 of the Revised Code applies.
(B) The superintendent may adopt rules in accordance with
Chapter 119. of the Revised Code to establish reasonable fees for
any service or
transaction performed by the department of
insurance pursuant to division
(A) of this section. Any fee
collected pursuant to those rules shall
be paid into the state
treasury to the credit of the department of insurance
operating
fund created by section 3901.021 of the Revised Code.
Sec. 3916.06. (A)(1) With each application for a viatical
settlement, a licensed viatical settlement provider or licensed
viatical settlement
broker shall
disclose at least the following
to a viator no later
than the time all parties
sign the
application for the viatical
settlement contract:
(a) That there are possible alternatives to viatical
settlement
contracts, including any
accelerated death benefits
offered under the viator's life insurance policy or
certificate;
(b) That some or all of the proceeds of the viatical
settlement
may be
subject to federal income taxation and state
franchise and income taxation,
and that assistance should be
sought from a professional tax advisor;
(c) That the proceeds of the viatical settlement could be
subject
to the
claims of creditors;
(d) That receipt of the proceeds of the viatical settlement
may
adversely
affect the viator's eligibility for medical
assistance under Chapter
5111. of the Revised Code or other
government benefits or entitlements, and that advice
should be
obtained from the appropriate government agencies;
(e) That the viator has a right to rescind the viatical
settlement
contract for at least fifteen by providing notice of
rescission and repaying all proceeds and any premiums, loans, and
loan interest paid as a result of the viatical settlement within
sixty calendar days after all parties sign the viatical settlement
contract or thirty calendar days after the
viator receives the
viatical
settlement proceeds, as provided in
section 3916.08 of
the Revised Code, whichever is sooner. If the insured dies during
the rescission period, the viatical settlement contract shall be
deemed to
have been
rescinded, subject to repayment by the viator
or the viator's estate of all viatical
settlement proceeds and any
premiums, loans, and loan interest to the
viatical settlement
company licensed viatical settlement provider within sixty days of
the death of the
insured.
(f) That funds will be sent to the viator within three
business
days after
the licensed viatical settlement provider has
received
written acknowledgment from the insurer
or group
administrator that
ownership of the policy or interest in the
certificate has been
transferred and that the beneficiary has been
designated
pursuant
to the viatical settlement contract;
(g) That entering into a viatical settlement contract may
cause
other
rights or benefits, including conversion rights and
waiver of premium benefits
that may exist under the policy or
certificate, to be forfeited by the viator
and that assistance
should be sought from a financial advisor.
(h) That following execution of the viatical settlement
contract, the licensed viatical settlement provider, or the
licensed viatical settlement provider's
authorized representative
may contact the insured for the purpose
of determining the
insured's health status and to confirm the
insured's residential
or business address and telephone number or
for other purposes
permitted by law. Any such contact shall be
limited to once in
any three-month period if the insured has a
life expectancy of
more than one year or to once per month if the
insured has a life
expectancy of one year or less.
(2) The licensed viatical settlement provider or licensed
viatical
settlement
broker shall provide the disclosures under
division (A)(1) of this
section in a separate document that is
signed by the viator and
the licensed viatical
settlement provider
or licensed viatical settlement
broker.
(3) Disclosure to a viator under division (A)(1) of this
section shall include distribution of a brochure describing the
process of
viatical settlements. The licensed viatical settlement
provider
or licensed viatical
settlement broker shall use the
NAIC's form for the
brochure
unless another one is developed or
approved by the superintendent.
(4) The disclosure document under division (A)(1) of this
section
shall contain the following language:
"All medical, financial, or personal information solicited or
obtained by a viatical settlement provider or viatical settlement
broker
about an insured, including the insured's identity or the
identity
of family members, a spouse, or a significant other may
be disclosed as
necessary to effect the viatical settlement
between the viator and
the viatical settlement provider. If you
are asked to provide
this information, you will be asked to
consent to the disclosure.
The information may be provided to
someone who buys the policy or
provides funds for the purchase.
You may be asked to renew your
permission to share information
every two years."
(B)(1) A licensed viatical settlement provider shall disclose
at
least the
following
to a viator prior to the date the viatical
settlement contract is signed by
all the necessary parties:
(a) The affiliation, if any, between the licensed viatical
settlement
provider and
the issuer of the insurance policy or
certificate to
be viaticated;
(b) The name, business address, and telephone number of the
licensed
viatical
settlement provider;
(c) Regarding a viatical settlement broker, the amount and
method
of calculating the broker's compensation. As used in this
division,
"compensation" includes anything of value paid or given
to a viatical settlement broker for the placement of a policy or
certificate. Any affiliations or contractual arrangements between
the licensed viatical settlement provider and the viatical
settlement purchaser;
(d) If an insurance policy or certificate to be viaticated
has
been issued
as a joint
policy or certificate or involves
family riders or any coverage of a life
other than the
insured
under the policy or certificate to be viaticated, the possible
loss of
coverage on the other lives under the policy or
certificate and that advice
should be sought from the viator's
insurance producer agent or the company issuing
the policy or
certificate;
(e) The dollar amount of the current death benefit payable
to
the licensed
viatical
settlement provider under the policy or
certificate, and, if known, the
availability of any additional
guaranteed insurance benefits, the dollar
amount of any accidental
death and dismemberment benefits under the policy or
certificate,
and the viatical settlement provider's extent to which the
viator's interest in those
benefits will be transferred as a
result to the viatical settlement contract.
(f) The Whether the funds will be in escrow with an escrow
agent during the transfer process and, if so, the name, business
address, and telephone number of the
independent third-party
escrow agent, and the fact that the viator
or owner
may inspect or
receive
copies of the relevant escrow or
trust agreements or
documents.
(2) The licensed viatical settlement broker shall disclose at
least the following
to a viator prior to the date the viatical
settlement contract is
signed by all the necessary parties:
(a) The name, business address, and telephone number of the
licensed viatical settlement broker;
(b) A full, complete, and accurate description of all offers,
counter-offers, acceptances, and rejections relating to the
proposed viatical settlement contract;
(c) Any affiliations or contractual agreements between the
licensed viatical settlement broker and any person making an offer
in connection with
the proposed viatical settlement contract;
(d) The amount and method of calculating the licensed
viatical settlement
broker's compensation and, if any portion of
the licensed viatical settlement broker's
compensation is taken
from the viatical settlement offer, the
total amount of the
viatical settlement offer and the licensed viatical settlement
broker's compensation as a percentage of that total. As used in
this division, "compensation" includes anything of value paid or
given to a licensed viatical settlement broker for the placement
of a policy.
(3) The licensed viatical settlement provider or licensed
viatical
settlement
broker
shall conspicuously display the
disclosures required under division
divisions (B)(1)
and (2) of
this section in the viatical settlement contract or in a separate
document signed by the viator
and the licensed viatical
settlement
provider or licensed viatical settlement
broker, as appropriate.
(C) If the licensed viatical settlement provider transfers
ownership or changes
the
beneficiary of the insurance policy or
certificate, the
licensed viatical settlement provider
shall
communicate in writing the change in
ownership or beneficiary to
the
insured within twenty days after
the change.
(D) If, for the purpose of engaging in the business of
viatical settlements, a licensed viatical settlement broker or
licensed viatical settlement provider is
party to a plan,
transaction, or series of transactions to
originate, renew,
continue, or finance a life insurance policy
with the insurer
that issued the policy within the first five
years of the
issuance of that policy the licensed viatical settlement broker or
licensed viatical settlement provider shall fully disclose the
plan, transaction, or
series of transactions to that insurer
prior to the initiation of
the plan, transaction, or series of
transactions.
Sec. 3916.07. (A) A licensed viatical settlement provider
entering
into a
viatical
settlement contract shall first obtain
all of the
following:
(1) If the viator is the insured, a written statement from
an
attending physician that the viator is of sound mind and under
no
constraint
or undue influence to enter into a viatical
settlement
contract. As used in
this division,
"physician" means
a person
authorized under Chapter
4731. of the Revised Code to
practice
medicine and surgery or osteopathic medicine and
surgery.
(2) A document in which the insured consents in writing, as
required by
division (E) of section 3916.13 of the Revised Code,
to the
release of the insured's medical records to a licensed
viatical
settlement provider or licensed
viatical settlement
broker and to the
insurance company that issued the life
insurance
policy or
certificate covering the life of the insured.
(B) Within twenty days after a viator executes
documents
necessary to transfer any rights under an insurance
policy or
certificate or within twenty days of entering any
expressed or
implied
agreement, option,
promise, or other form of
understanding
to viaticate the policy,
the licensed viatical settlement
provider
shall
give written notice to the
insurer that issued that
insurance
policy or certificate that the
policy or certificate has
or will
become a viaticated policy or
certificate. The notice
shall be
accompanied by the documents
required by division (C) of
this
section.
(C) The licensed viatical settlement provider shall deliver a
copy of
the
medical
release required under division (A)(2) of
this
section, a
copy of
the viator's application for the viatical
settlement
contract, the
notice required under division (B) of
this section,
and a request
for verification of coverage to the
insurer that
issued the life
insurance policy or certificate that
is the
subject of the
viatical transaction. The licensed viatical
settlement
provider shall
use the NAIC's
form for verification of
coverage
unless standards for
verification are another form is
developed or
approved by
the superintendent of insurance.
(D) The insurer shall respond to a request for verification
of
coverage submitted on an approved form by a licensed viatical
settlement provider or licensed viatical settlement broker
within
thirty calendar days
after the date the request
is
received and
shall indicate whether,
based on the medical
evidence
and
documents provided, the insurer
intends to pursue an
investigation at that time regarding possible
fraud or the
validity of the life
insurance contract or
certificate that is
the subject of the
request.
The insurer shall
accept an original
or facsimile or electronic copy of such request
and any
accompanying authorization signed by the viator. Failure
by the
insurer to meet its obligations under this division is a
violation of division (D) of section 3916.16 and section 3916.21
of the Revised Code.
(E) Prior to or at the time of execution of the viatical
settlement contract, the licensed viatical settlement provider
shall obtain
a witnessed
document in which the viator consents to
the
viatical
settlement contract, represents that the viator has a
full and
complete understanding of the viatical settlement
contract and a
full and complete understanding of the benefits of
the life
insurance policy or certificate, and acknowledges that
the viator
is entering into the viatical settlement contract
freely and
voluntarily and, for persons with a terminal or chronic
illness or
condition, acknowledges that the insured has a terminal
or chronic
illness and that the terminal or chronic illness or
condition was
diagnosed after the life insurance policy or
certificate was
issued.
(F) If a licensed viatical settlement broker performs any of
the
activities specified in this section on behalf of the licensed
viatical
settlement provider, the licensed viatical settlement
provider is deemed to
have fulfilled the
requirements of this
section.
(G) All medical information solicited or obtained by any
licensee
shall be subject to the applicable provisions of state
law relating to
confidentiality of medical information.
Sec. 3916.08. (A) Each viatical settlement contract entered
into
in this state
shall provide the viator with an unconditional
absolute right
to rescind the contract
for at least fifteen by
providing notice of rescission and repaying all proceeds and any
premiums, loans, and loan interest paid as a result of the
viatical settlement within sixty calendar days after all parties
sign the viatical settlement contract or thirty calendar days
after
the receipt of the viatical
settlement
proceeds pursuant to
division (A) of section 3916.09 of the Revised Code. If the
insured
dies during the rescission period, the viatical
settlement
contract is deemed to have been rescinded, subject to repayment of
all viatical settlement proceeds and any premiums, loans, and loan
interest to the licensed viatical settlement
provider within sixty
days of the death of the insured.
If
(B) If a licensed viatical settlement provider has paid
commissions or other
compensation to a licensed viatical
settlement broker and the viator rescinds the
viatical settlement
contract, the licensed viatical settlement broker shall refund all
such commissions and compensation to the licensed viatical
settlement provider, within
five business days following receipt
of written notice from the
licensed viatical settlement provider.
The notice shall include a copy of the viator's
notice of
recession or the notice of the death of the viator.
(C) If a viatical settlement
contract is rescinded by the
viator pursuant to this section,
ownership of the insurance policy
or certificate reverts to the
viator or to the viator's estate if
the viator is deceased,
irrespective of any transfer of ownership
of the policy or
certificate by the viator, licensed viatical
settlement
provider, or any
other person.
Sec. 3916.09. (A) The licensed viatical settlement provider
shall
instruct
the viator to send the executed documents required
to
effect the change in
ownership, assignment, or
change in
beneficiary directly to the independent escrow agent. Within
three
business days after the
date the escrow agent receives the
documents, or from the date the licensed
viatical settlement
provider
receives the documents if the viator
erroneously provides
the
documents directly to the licensed viatical settlement
provider, the licensed viatical settlement
provider shall pay or
transfer
the proceeds of the viatical
settlement to an escrow or
trust
account in a state or federally
chartered regulated
financial
institution whose deposits
are
insured by the federal
deposit
insurance corporation.
Upon
payment of the
settlement
proceeds
into the escrow or trust
account, the escrow agent
or
trustee
shall deliver the original
change in ownership,
assignment,
or
change in beneficiary forms to
the licensed
viatical settlement provider, a representative of the
licensed
viatical settlement provider, or
related provider trust. Upon the
licensed
provider's escrow agent's receipt of
the acknowledgment
of the
properly completed transfer of
ownership,
assignment, or
designation of beneficiary from the
insurance
company, the
licensed provider escrow agent shall instruct the escrow
agent to
pay the settlement proceeds to the viator. The escrow
agent shall
make payment within three business days of the date
the provider
received the acknowledged forms from the insurance
company Funds
are considered sent by a licensed viatical settlement provider to
a viator as of the
date that the escrow agent either releases the
funds for wire
transfer to the viator or places a check for
delivery to the
viator via United States postal service or other
nationally
recognized delivery service.
(B) Failure to transfer the proceeds to the viator within
the
period of time disclosed pursuant to division (A)(1)(f)
of
section
3916.06 of the Revised Code renders the viatical
settlement
contract voidable by the viator for lack of
consideration until
the time
consideration is tendered to and
accepted by the viator.
If a viatical settlement
contract is
voided by the viator pursuant
to this division, ownership of
the
insurance policy or certificate
reverts to the viator or to
the
viator's estate if the viator is
deceased, irrespective of any
transfer of ownership of the policy
or certificate by the viator, licensed
viatical settlement
provider, or any other person.
Sec. 3916.10. After a viatical settlement has occurred,
contact with the insured for the purpose of
determining the health
status of the insured by the licensed viatical settlement
provider
or licensed
viatical settlement broker shall be made only by the
licensed
viatical
settlement provider or, licensed viatical
settlement broker licensed
in this state, or the authorized
representative of the licensed viatical settlement
provider or
licensed viatical settlement broker.
The licensed
viatical
settlement
provider or, licensed viatical
settlement broker, or
authorized
representative shall
not contact the insured for the
purpose of
determining
the
insured's health status more than once
every three
months if the
insured
has a life expectancy of more
than one year,
or more than
once per month if
the insured has a
life expectancy
of one year or
less. The licensed viatical
settlement provider or licensed
viatical settlement
broker shall
explain the procedure
for making these contacts at
the time the
viatical settlement
contract is
entered into.
The limitations set forth in this section do not apply to
contacts made
with an insured under a viaticated policy for
purposes other than to determine
the insured's health status.
Viatical Licensed viatical settlement providers and licensed
viatical
settlement brokers
are
responsible for the actions of
their authorized
representatives, for the
purposes of this
section.
Sec. 3916.11. (A)(1) A licensee under this chapter licensed
viatical settlement provider and licensed viatical settlement
broker shall,
for
five years, retain copies of all of the
following:
(a) All proposed, offered, or executed contracts,
purchase
agreements, underwriting documents, policy forms, and applications
from the
date of the proposal, offer, or
execution of the contract
or purchase agreement, whichever is
later;
(b) All checks, drafts, or other evidence and
documentation
related to the payment, transfer, deposit, or release of funds
from the
date of the transaction;
(c) All other records and documents related to the
requirements
of this chapter.
(2) This section does not relieve a person of the obligation
to
produce the documents described in division (A)(1) of this
section
to the superintendent of insurance after the retention
period specified
in that division has expired if the person has
retained the
documents.
(3) Records required to be retained by this section must be
legible and complete and may be retained in paper, photograph,
microprocess, magnetic, mechanical, or electronic media, or by any
process that accurately reproduces or forms a durable medium for
the
reproduction of a record.
(B)(1) Upon determining that an examination should be
conducted,
subject to division (E) of this section, the
superintendent shall
appoint one or more examiners to perform the
examination and instruct them as to the scope of the
examination.
The superintendent may employ any guidelines or
procedures for
purposes of this division that the superintendent
considers
appropriate.
(2) Every licensee licensed viatical settlement provider,
licensed viatical settlement broker, or
person from whom
information is
sought, and
all officers,
directors, employees,
and agents of any
licensee licensed viatical settlement
provider,
licensed viatical settlement broker, or person
from whom
information is
sought, shall provide
to the examiners timely,
convenient, and
free access at all
reasonable hours at the
licensee's licensed viatical settlement
provider, licensed
viatical settlement broker, or person's offices to all
books,
records, accounts,
papers, documents, assets, and computer
or
other recordings
relating to the property, assets, business,
and
affairs of the
licensee licensed viatical settlement provider or
licensed viatical settlement broker being
examined. The officers,
directors, employees, and
agents of the
licensee licensed
viatical settlement provider, licensed viatical settlement broker,
or person shall
facilitate the examination
and aid in the
examination so far as it
is in their power to do
so.
The refusal of a licensee licensed viatical settlement
provider or licensed viatical settlement
broker, by its officers,
directors,
employees,
or agents, to
submit to examination or to
comply with
any reasonable
written
request of the superintendent
shall be
grounds for suspension,
revocation, denial of issuance,
or
nonrenewal of any license or
authority held by the licensee
viatical settlement provider or viatical settlement broker to
engage in the
viatical
settlement business or other business
subject to the
superintendent's jurisdiction. Any proceedings for
suspension,
revocation, or denial, or nonrenewal of any license or
authority
is subject
to chapter Chapter 119. of the Revised Code.
(3) The superintendent has the power to issue subpoenas, to
administer oaths, and to examine under oath any person as to any
matter
pertinent to the examination. Upon the failure or refusal
of a
person to obey a subpoena, the superintendent may petition a
court
of competent jurisdiction, and, upon proper showing, the
court may
enter an order compelling the witness to appear and
testify or
produce documentary evidence. Failure to obey the court
order
shall be punishable as contempt of court.
(4) When making an examination under this chapter, the
superintendent may retain attorneys, appraisers, independent
actuaries,
independent certified public accountants, or other
professionals and
specialists as examiners, and the licensee
licensed viatical settlement provider or licensed viatical
settlement broker that
is the subject of
the
examination shall
bear the cost of those
examiners. Examiners
who
are appointed by
the superintendent, but
who are not employees
of
the department
of insurance, shall be
compensated for their
work,
travel, and
living expenses at
reasonable and customary
rates.
(5) Nothing contained in this chapter limits the
superintendent's
authority to terminate or suspend an examination
in order to pursue other
legal or regulatory action pursuant to
the insurance laws of this
state. Findings of fact and conclusions
made pursuant to any
examination shall be prima-facie evidence in
any legal or
regulatory action.
(6) Nothing contained in this chapter limits the
superintendent's
authority to use and, if appropriate, to make
public any final or preliminary
examination report, any examiner
or licensee licensed viatical settlement provider or licensed
viatical settlement broker working papers or
other
documents, or
any other
information discovered or developed
during
the course
of any
examination in the furtherance of any
legal or
regulatory
action
that the superintendent, in the
superintendent's
sole
discretion,
considers appropriate.
(C)(1) Examination reports shall be comprised of only facts
appearing upon the books, records, or other documents of the
licensee, its
agents, or other persons examined, or as ascertained
from the testimony of its officers, agents, or other persons
examined concerning its affairs, and the conclusions and
recommendations that the examiners find reasonably warranted from
the facts.
(2) Upon completion of the examination, the examiner in
charge
shall file with the superintendent a verified written
report of
examination. Upon receipt of the verified report, the
superintendent
shall transmit the report to the licensee licensed
viatical settlement
provider or licensed viatical settlement
broker examined,
together with a
notice that
shall afford the
licensee licensed viatical settlement provider or licensed
viatical settlement broker
examined a
reasonable
opportunity of
not more than thirty days
from receipt
of the
report to make a
written submission or
rebuttal with
respect to
any matters
contained in the examination
report.
(3) If the superintendent determines that regulatory action
is
appropriate as a result of an examination, the superintendent
may
initiate any proceedings or actions provided by law.
(D)(1) Names and individual identification data for all
viators
shall be considered private and confidential information
and shall not be disclosed by the superintendent, unless required
by
law.
(2) Except as otherwise provided in this chapter or in the
law of
another state or jurisdiction that is substantially similar
to this
chapter, all examination reports, working papers, recorded
information, documents, and copies of those reports, papers,
information, documents, and copies produced by, obtained by, or
disclosed to the superintendent or to any other person in the
course of an examination made under this chapter or under the law
of another state or jurisdiction that is substantially similar to
this chapter, or in the course of the superintendent's analysis or
investigation of the financial condition or market conduct of a
licensee are confidential by law and privileged, are not a public
record open for inspection under section 149.43 of the Revised
Code, are not subject to subpoena, and are not subject to
discovery or admissible in evidence in any private civil action.
The superintendent may use the documents, materials, or other
information in the furtherance of any regulatory or legal action
brought as part of the superintendent's official duties.
(3) Documents, materials, or other information, including,
but
not limited to, all working papers, and copies of working
papers, in the
possession or control of the NAIC and its
affiliates and
subsidiaries are confidential by law and
privileged, are not subject to subpoena, and are not subject to
discovery or
admissible in evidence in any private civil action,
if either of the
following applies:
(a) They are created, produced, or obtained by or disclosed
to
the NAIC and its affiliates and subsidiaries in the course of
assisting an examination made under this chapter or assisting the
superintendent or the comparable official in another state in the
analysis or
investigation of the financial condition or market
conduct of a
licensee.
(b) The superintendent or the comparable official in
another
state discloses them to the NAIC and its affiliates
and
subsidiaries under division (D)(5) of this section or under a
comparable provision in the law of the other state.
(4) Neither the superintendent nor any person that received
the
documents, material, or other information while acting under
the
authority of the superintendent, including the NAIC and its
affiliates and subsidiaries, shall be permitted to testify in any
private
civil action concerning any confidential
documents,
materials, or information subject to division (D)(1) of
this
section.
(5)(a) In order to assist in the performance of the
superintendent's duties, the superintendent may do any of the
following:
(i) Share documents, materials, or other information,
including
the confidential and privileged documents, materials, or
information
subject to division (D)(1) of this section, with other
state, federal, and international regulatory agencies, with the
NAIC and its affiliates and subsidiaries, and with
state, federal,
and international law enforcement authorities, if
the recipient
agrees to maintain the confidentiality and
privileged status of
the document, material, communication, or
other information;
(ii) Receive documents, materials, communications, or
information, including otherwise confidential and privileged
documents,
materials, or information, from the NAIC and its
affiliates
and subsidiaries, and from regulatory and law
enforcement officials of other foreign or
domestic jurisdictions;
(iii) Enter into agreements governing sharing and use of
information consistent with this section.
(b) The superintendent shall maintain as confidential or
privileged any document, material, or information received under
division
(D)(5)(a)(ii) of this section with notice or the
understanding that it is confidential or privileged under the laws
of the jurisdiction that is the source of the
document, material,
or information.
(6) No waiver of any applicable privilege or claim of
confidentiality in the documents, materials, or information shall
occur
as a result of disclosure to the superintendent under this
section or as
a result of sharing as authorized in division (D)(5)
of this
section.
(7) A privilege established under the law of any state or
jurisdiction that is substantially similar to the privilege
established
under division (D) of this section shall be available
and enforced
in any proceeding in, and in any court of, this
state.
(8) Nothing contained in this chapter prevents or prohibits
the
superintendent from disclosing the content of an examination
report, preliminary examination report or results, or any matter
relating to those reports or results, to the official of any other
state or country that is comparable to the superintendent, or to
law enforcement officials of this or any other state or agency of
the federal government at any time, or to the NAIC, if the agency
or office receiving the report or matters relating to it agrees in
writing to hold it confidential and in a manner
consistent with
this chapter.
(E)(1) The superintendent may not appoint an examiner if the
examiner, either directly or indirectly, has a conflict of
interest or is affiliated with the management of, or owns a
pecuniary
interest in, any person subject to examination under
this chapter.
This division does not automatically preclude any
of
the
following from being an examiner:
(b) An insured in a viaticated insurance policy or
cetificate;
(c) A beneficiary in an insurance policy or certificate that
is
proposed to be viaticated.
(2) Notwithstanding the requirements of division (E) of this
section, the superintendent may retain from time to time, on an
individual basis, qualified actuaries, certified public
accountants, or other similar individuals who are independently
practicing their professions, even though these persons may from
time to time be similarly employed or retained by persons subject
to examination under this chapter.
(F)(1) As used in division (F) of this section,
"expenses"
include all of the following:
(a) Compensation of examiners for each day or portion of a
day
worked;
(b) Travel and living expenses of examiners;
(c) All other incidental expenses incurred by or on behalf
of
examiners;
(d) An allocated share of all expenses not described in
division
(F)(1), (2), or (3) of this section that are necessarily
incurred
in the performance of a market conduct examination,
including the expenses of direct overhead and
support staff for
examiners.
(2) When a market conduct examination is made of an insurer a
licensed viatical settlement provider or licensed viatical
settlement broker,
the
insurer licensed viatical settlement
provider or licensed viatical settlement broker shall pay the
expenses of the
examination. The
expenses of an
examination
include those incurred
on or after the
date on which the
superintendent notifies the
insurer licensed viatical settlement
provider or licensed viatical settlement broker of the
examination
through the
issuance of the final examination report.
(3) Upon an insurer's a licensed viatical settlement provider
or licensed viatical settlement
broker's failure to comply with
division (A) of
this
section, the
superintendent may initiate
proceedings in
accordance with
Chapter
119. of the Revised Code
to revoke,
suspend, or
refuse to renew
the certificate of
authority or
license of the insurer viatical settlement provider
or viatical settlement
broker. Additionally, the superintendent
may
request the attorney
general to initiate a civil
action in
the
court of common pleas of
Franklin county to obtain
and
enforce a
judgment for expenses
incurred in the performance of a
market
conduct examination.
(G)(1) No cause of action shall arise nor shall any
liability
be
imposed against the superintendent, any authorized
representative of the superintendent, or any examiner appointed by
the
superintendent for any statements made or conduct performed in
good faith while carrying out the provisions of this chapter.
(2) No cause of action shall arise nor shall any liability
be
imposed against any person for the act of communicating or
delivering
information or data to the superintendent, any
authorized representative
of the superintendent, or any examiner
appointed by the
superintendent pursuant to an examination made
under this chapter,
if the act of communication or delivery was
performed in good
faith and without fraudulent intent or the
intent to deceive.
Division (G)(2) of this section This division
does not
abrogate or modify in any
way any common law or statutory
privilege or immunity previously enjoyed
by any person identified
in division (G)(1) of this
section.
(3) A person identified in division (G)(1) or (2) of this
section
shall be entitled to an award of attorney's fees and costs
if the
person is the prevailing party in a civil action for libel,
slander, or
any other relevant tort arising out of activities in
carrying out the
provisions of this chapter and the party bringing
the action was
not substantially justified in bringing the action.
For purposes
of this division (G)(3) of this section, a proceeding
is
"substantially
justified" if it had a reasonable basis in law
or
fact at the time that
it was initiated.
(H) The superintendent may investigate suspected fraudulent
viatical settlement acts and persons engaged in the business of
viatical
settlements.
Sec. 3916.12. Each viatical settlement provider
and viatical
settlement broker licensed under this chapter
shall file with the
superintendent of insurance, on or before the first day of
March
of each year, an annual statement containing the information
required by the
superintendent by rule adopted in accordance with
chapter
Chapter 119. of the Revised Code. The superintendent may
require information concerning transactions involving a viator who
is a resident of this state only. The superintendent shall keep
confidential and not a matter of public record all individual
transaction data
regarding the business of viatical settlements
and data that could
compromise the privacy of personal,
financial, and health
information of the viator or insured.
Sec. 3916.13. Except as otherwise permitted or required by
law, a licensed viatical
settlement provider, licensed viatical
settlement
broker,
insurance company, insurance agent, insurance
broker, information
bureau, rating agency or company, or any other
person with actual
knowledge of
an insured's identity, shall not
disclose that
identity as an insured,
including
the insured's name
and
individual identification data, or the insured's
financial or
medical information, unless
any of the following apply:
(A) The disclosure is necessary to effect a viatical
settlement
between the viator and a licensed viatical settlement
provider,
and the viator
and insured have provided prior written
consent to
the disclosure.
(B) The disclosure is provided in response to an
investigation or
examination by the superintendent of insurance or
by any other governmental
officer or agency or pursuant to the
requirements of division (C) of
section 3916.18 of the Revised
Code.
(C) The disclosure is a term of, or condition to, the
transfer of
a viaticated policy by one licensed viatical
settlement
provider to another licensed viatical
settlement
provider.
(D) The disclosure is necessary to permit a financing
entity,
related provider trust, or special purpose entity to
finance the
purchase
of policies or certificates by a licensed viatical
settlement
provider, and the viator and insured have provided
prior
written consent to
the
disclosure.
(E) The disclosure is necessary to allow the licensed
viatical
settlement provider or licensed viatical settlement
broker or their
authorized representatives to
make contacts for
the purpose of
determining
health status.
(F) The disclosure is required to purchase stop-loss
coverage
or financial guaranty insurance.
Sec. 3916.14. (A)(1) The superintendent of insurance
may
conduct an
examination under this chapter of a licensee as often
as the
superintendent in the superintendent's sole discretion
considers
appropriate. The superintendent shall consider all of
the following to determine the nature, scope, and frequency of
examinations:
(b) The results of financial statement analyses and ratios;
(c) Any changes in ownership, officers, or directors;
(e) Any report of independent certified public accountants;
(f) Any other criteria the superintendent determines to be
appropriate.
(2) For the purposes of completing an examination of a
licensee
under this chapter, the superintendent may examine or
investigate any
person, or the business of any person, insofar as
the examination or
investigation, in the sole discretion of the
superintendent, is
necessary or material to the examination of the
licensee.
(3) In lieu of an examination under this chapter of any
foreign
or alien licensee licensed under this chapter, the
superintendent,
at the superintendent's discretion, may accept an
examination
report on the licensee as prepared by the official of
the
licensee's state of domicile or port-of-entry state who is
comparable to the superintendent. As far as is practical, the
superintendent shall cooperate with that official for any
examination of a foreign or alien licensee.
(B) The licensee or applicant shall pay to the
superintendent
all
costs, assessments, forfeitures, or fines
incurred in
conducting an
examination under this section. The
superintendent
shall deposit the money into the state treasury
to
the credit of
the department of insurance operating fund created
by section
3901.021 of the Revised Code.
Sec. 3916.15. (A) The superintendent of insurance may
refuse
to
issue or may suspend,
revoke, or refuse to renew the
license of
a viatical settlement provider or,
viatical settlement
broker, or
life expectancy provider, if the
superintendent finds that any of
the following
apply:
(1) There was a material misrepresentation in the
application
for the
license.
(2) The applicant or licensee or any officer, partner,
member, key
management
personnel, or designee of the applicant or
licensee has been convicted of
fraudulent or
dishonest practices,
is subject
to a final administrative action in another state, or
is otherwise shown to be
untrustworthy or incompetent.
(3) The licensee is a viatical settlement provider that
demonstrates a
pattern of unreasonable payments to viators.
(4) The licensee or any officer, partner, member, key
management
personnel, or designee of the licensee has been
convicted of or has pleaded
guilty or no
contest
to a felony or to
a misdemeanor involving fraud, moral turpitude, dishonesty,
or
breach of trust, regardless of whether a judgment of conviction
has been
entered by the court.
(5) The licensee is a viatical settlement provider that has
used a
viatical
settlement contract form that has not been
approved under this chapter.
(6) The licensee is a viatical settlement provider that has
failed to
honor contractual
obligations set out in a viatical
settlement contract.
(7) The licensee no longer meets the requirements for
initial
licensure.
(8) The licensee is a viatical settlement provider that has
assigned,
transferred, or pledged
a viaticated policy to a person
that is not a one of the following:
(a) A viatical settlement provider
licensed in this state,
a;
(b) A viatical settlement purchaser;
(c) An accredited investor as defined in Regulation D, 17
C.F.R. 230.501 adopted under the "Securities Act of 1933," 48
Stat. 77, 15 U.S.C. 77a, et seq., as amended;
(d) A qualified institutional buyer as defined in 17 C.F.R.
230.144A, as amended;
(e) A financing entity, a;
(f) A special purpose entity, or a;
(g) A
related
provider trust.
(9) The licensee or any officer, partner, member, key
management
personnel, or designee of the licensee has violated any
provision of this
chapter or any rule
adopted under this chapter.
(10) The licensee or any officer, partner, member, key
management
personnel, or designee of the licensee has committed
any coercive, fraudulent,
or dishonest
act, or made any untrue,
deceptive, or misleading statement, in connection
with a viatical
transaction or a proposed viatical transaction.
(B) Before the superintendent refuses to issue a license
under
this chapter, or suspends, or revokes, or refuses to renew
the
license of a
viatical settlement provider or, viatical
settlement
broker, or life expectancy provider, the superintendent
shall provide the licensee or applicant
with notice and an
opportunity for hearing as provided in
chapter
Chapter
119. of the
Revised Code, except as follows:
(1)(a) Any notice of opportunity for hearing, the hearing
officer's findings and recommendations, or the superintendent's
order shall be
served by certified mail at the last known address
of the licensee or
applicant. Service shall be evidenced by
return
receipt signed by any person.
For purposes of this section, the
"last known address" is the
address that
appears in the licensing records of the department of
insurance.
(b) If the certified mail envelope is returned with an
endorsement showing that service was refused, or that the envelope
was
unclaimed, the notice and all subsequent notices required by
Chapter
119. of the Revised Code may be served by ordinary mail to
the last known address of the
licensee or applicant. The mailing
shall be evidenced by a certificate of
mailing. Service is deemed
complete as of the date of such certificate
provided that the
ordinary mail envelope is not returned by the postal
authorities
with an endorsement showing failure of delivery. The time period
in which to request a hearing, as provided in Chapter 119. of the
Revised Code,
begins to run on the date of mailing.
(c) If service by ordinary mail fails, the superintendent
may
cause a summary of the substantive provisions of the notice to
be
published
once a week for three consecutive weeks in a
newspaper
of general circulation
in the county where the last
known place of
residence or business of the
licensee or applicant
is located. The
notice is considered served on the date of the
third
publication.
(d) Any notice required to be served under Chapter 119.
of
the Revised Code shall also be served upon the attorney of the
licensee or applicant by
ordinary mail if the
attorney has entered
an appearance in the matter.
(e) The superintendent may, at any time, perfect service on
a
licensee or applicant by personal delivery of the notice by an
employee of the
department.
(f) Notices regarding the scheduling of hearings and all
other
matters not described in division (B)(1)(a) of this
section
shall be sent by ordinary mail to the licensee or applicant and to
the
attorney of the licensee or applicant.
(2) Any subpoena for the appearance of a witness or the
production of
documents or other evidence at a hearing, or for the
purpose of taking
testimony for use at a hearing, shall be served
by certified mail, return
receipt requested, by an attorney or by
an employee of the department
designated by the superintendent.
Such subpoenas shall be enforced in the
manner provided in section
119.09 of the Revised Code. Nothing in this section shall be
construed as limiting the superintendent's other statutory powers
to issue
subpoenas.
Sec. 3916.16. (A) It is a violation of this chapter for
any
person to enter into a viatical settlement contract prior to the
application for or
issuance of a policy that is the subject of
the viatical
settlement contract or within a
two-year five-year
period
commencing with the date of issuance of the
insurance
policy or
certificate unless the viator certifies to the licensed
viatical
settlement provider that one or more of the following
conditions
have been met within that two-year period five years
after the
issuance of the policy:
(1) The policy or certificate was issued upon the viator's
exercise of conversion rights arising out of a group
policy or
certificate,
provided the total of the time covered
under the
conversion policy or
certificate plus the time covered
under the
group prior policy or
certificate is at least
twenty-four sixty
months. The
time covered
under the a group
policy or certificate
shall be
calculated without
regard to any
change in insurance
carriers,
provided the coverage
has been
continuous and under the
same group
sponsorship.
(2) The viator is a charitable organization exempt from
taxation
under 26 U.S.C. section 501(c)(3).
(3) The viator is not an individual.
(4) The viator certifies and submits independent evidence to
the licensed viatical
settlement provider that one or more of the
following
conditions
have
been met within that two-year five-year
period:
(a) The viator or insured is terminally or chronically ill.
(b) The viator's spouse dies.
(c) The viator divorces the viator's spouse.
(d) The viator retires from
fulll-time
full-time employment.
(e) The viator becomes physically or mentally disabled, and
a
physician determines that the disability prevents the viator
from
maintaining full-time employment.
(f) The viator was the insured's employer at the time the
policy
or certificate was issued and the employment relationship
terminated.
(g) A court of competent jurisdiction enters a final order,
judgement
judgment, or decree on the application of a creditor of
the viator
and adjudicates the viator bankrupt or insolvent
or
approves a
petition seeking reorganization of the viator or
appointing a
receiver, trustee, or liquidator to all or a
substantial part of
the viator's assets.
(h) The viator experiences a significant decrease in income
that
is unexpected and that impairs the viator's reasonable
ability to
pay the policy premium.
(i) The viator or insured disposes of the viator's or
insured's
ownership interests in a closely held corporation.
(3) The viator enters into a viatical settlement contract two
years after the date of issuance of a policy, and all of the
following are true with respect to that policy:
(a) The viator has funded policy premiums using one or more
of the following methods:
(i) Unencumbered assets provided by the insured which may
include an interest in the life insurance policy being viaticated
up to the amount of the policy's net cash surrender value;
(ii) Full recourse liability financing incurred by the
insured;
(iii) An agreement described in division (Q)(3)(e) of section
3916.01 of the Revised Code.
(b) The viator does not have an agreement or understanding
with any other person to guarantee any such liability, to
purchase, or to stand ready to purchase the policy, including
through an assumption or forgiveness of the loan;
(c) Neither the insured nor the policy has been evaluated for
settlement.
(B) Copies of the independent evidence described in division
(A)(4)(2) of this section and documents
required by section
3916.07
of the Revised Code shall be
submitted to the insurer when
the licensed
viatical settlement provider or any other party
entering into a viatical settlement contract with a viator submits
a request to the insurer for
verification of coverage.
The copies
shall be accompanied by a
letter of attestation from
the licensed
viatical
settlement provider that
the copies are true and
correct
copies of the documents received
by the licensed viatical
settlement
provider.
(C) If the licensed viatical settlement provider submits to
the
insurer a
copy of the owner or insured's certification and
independent
evidence described
in division
(A)(4)(2) of this
section when the
licensed viatical settlement provider submits a
request to the
insurer to effect the
transfer of the policy or
certificate to the licensed viatical settlement
provider,
the
copy
conclusively establishes that the
viatical settlement
contract
satisfies the requirements of this
section, and the
insurer shall
timely respond to the request.
(D) No insurer, as a condition of responding to a request for
verification of coverage or effecting the transfer of a policy
pursuant to a viatical settlement contract, may require the
viator, insured, licensed viatical settlement provider, or
licensed viatical settlement broker to sign any
form, disclosure,
consent, or waiver form that has not been
approved by the
superintendent of insurance for use in connection
with viatical
settlement contracts.
(E) Upon receipt of a properly completed request for change
of ownership or beneficiary of a policy, the insurer shall respond
in writing within thirty calendar days to confirm that the insurer
has made the change or specify reasons that the change cannot be
processed. No insurer shall unreasonably delay effecting change in
ownership or beneficiary or seek to interfere with any viatical
settlement contract lawfully entered into in this state.
(F) A licensed viatical settlement provider or licensed
viatical settlement broker that is party to a
plan, transaction,
or series of transactions to originate, renew,
continue, or
finance a life insurance policy with the insurer for
the purpose
of engaging in the business of viatical settlements at
any time
prior to or during the first five years after the insurer
issues
the policy shall fully disclose the plan, transaction, or
series
of transactions to the insurer that issued that policy.
Sec. 3916.161. (A) No licensed viatical settlement broker
knowingly shall solicit an offer from, effectuate a viatical
settlement with, or make a sale to any licensed viatical
settlement provider, viatical settlement purchaser, financing
entity, or related provider trust that is controlling, controlled
by,
or under common control with the licensed viatical settlement
broker.
(B) No licensed viatical settlement provider knowingly shall
enter into a
viatical settlement contract with a viator, if, in
connection with
that contract, anything of value will be paid to
a licensed viatical settlement
broker that is controlling,
controlled by, or under common control
with that licensed
viatical settlement provider or the viatical settlement purchaser,
financing entity or related provider trust that is involved in the
contract.
(C) A violation of this section is a fraudulent viatical
settlement act pursuant to section 3916.18 of the Revised Code.
Sec. 3916.17. (A) The general assembly hereby declares
that
the
purpose of this section is to provide prospective viators
with
clear and unambiguous statements in the advertisement of
viatical
settlements and to assure the clear, truthful, and
adequate
disclosure of the benefits, risks, limitations, and
exclusions of
any viatical settlement contract. This purpose is
intended to be
accomplished by the establishment of guidelines and
standards of
permissible and impermissible conduct in the
advertising of
viatical settlements to assure that product
descriptions are
presented in a manner that prevents unfair,
deceptive, or
misleading advertising and is conducive to accurate
presentation
and description of viatical settlements through the
advertising
media and material used by viatical settlement
licensees.
Divisions (B) to (P)(Q) of this section apply to any
advertising
of
viatical settlement contracts, or any related
products or
services
intended for dissemination in this state,
including, but
not
limited to, internet advertising viewed by
persons located in
this
state. In cases in which disclosure
requirements are
established
pursuant to federal regulation, this
section shall be
interpreted
so as to minimize or eliminate
conflict with federal
regulation
wherever possible.
(B)(1) Every licensed viatical settlement provider and
licensed viatical settlement broker shall file with the
superintendent of insurance all advertisements of its contract,
products, and services.
(2) No licensed viatical settlement provider shall enter into
a viatical
settlement contract unless the materials promoting,
advertising,
and marketing the viatical settlement contract have
been filed
with the superintendent.
(C) Every licensed viatical settlement licensee provider and
licensed viatical settlement broker shall establish and
at all
times shall maintain a
system of control over the content,
form,
and method of
dissemination of all advertisements of its
contracts, products,
and services. All advertisements, regardless
of by whom they are
written, created, designed, or presented,
shall be the
responsibility of the licensed viatical settlement
licensee provider or licensed viatical settlement broker
and of
the individual who created or
presented the advertisement.
A
system of control shall include
regular routine notification, at
least once a year, to agents and
others authorized by the
licensed viatical
settlement licensee provider or licensed
viatical settlement broker who disseminate advertisements of the
requirements and procedures for approval prior to the use of any
advertisements not furnished by the licensed viatical settlement
licensee
provider or licensed viatical settlement broker.
(C)(D) All advertisements that are subject to this section
shall be
truthful and not misleading in fact or by implication.
The form and content of an advertisement of a viatical settlement
contract shall be sufficiently complete and clear so as to avoid
deception and shall not have the capacity or tendency to mislead
or deceive. The determination of whether an advertisement has the
capacity or tendency to mislead or deceive shall be made by the
superintendent of insurance, from the overall impression that the
advertisement may be reasonably expected to create upon a person
of average education or intelligence within the segment of the
public to which it is directed.
(D)(E) Viatical settlement advertisements containing any
representation set forth in this division are deemed false and
misleading on their face and are prohibited. False and
misleading
viatical settlement advertisements include, but are not
limited
to, those including any of the following representations:
(1)
"Guaranteed,"
"fully secured,"
"100 percent secured,"
"fully
insured,"
"secure,"
"safe,"
"backed by rated insurance
companies,"
"backed by federal law,"
"backed by state law," or
"state guaranty
funds," or similar representations;
(2)
"No risk,"
"minimal risk,"
"low risk,"
"no speculation,"
"no
fluctuation," or similar representations;
(3)
"Qualified or approved for individual retirement
accounts
(IRAs), Roth IRAs, 401(k)
plans, simplified employee
pensions
(SEPs), 403(b), Keogh plans,
TSA, or other retirement
account
rollovers,"
"tax
deferred," or similar representations;
(4) Utilization of the word
"guaranteed" to describe the
fixed
return, annual return, principal, earnings, profits,
investment, or
similar representations;
(5)
"No sales charges or fees" or similar representations;
(6)
"High yield,"
"superior return,"
"excellent return,"
"high
return,"
"quick profit," or similar representations;
(7) Purported favorable representations or testimonials
about
the
benefits of viatical settlement contracts or viatical
settlement
purchase agreements as an investment, taken out of
context from
any newspaper, trade paper, journal, radio or
television program,
or any other form of print and electronic
media.
(E)(F)(1) The information required to be disclosed under this
section shall not be minimized, rendered obscure, or presented in
an ambiguous fashion or intermingled with the text of the
advertisement so as to be confusing or misleading.
An advertisement shall not omit material information or use
any
words, phrases, statements, references, or illustrations if
the omission
or use has the capacity, tendency, or effect of
misleading or deceiving
viators, as to the nature or extent of any
benefit, loss covered,
premium payable, or state or federal tax
consequence. The fact
that the viatical settlement contract
offered is made available
for inspection prior to consummation of
the sale, that an offer is
made to refund the payment if the
viator is not satisfied, or that
the viatical settlement contract
includes a
"free look" period
that satisfies or exceeds legal
requirements, does not remedy any
misleading statements.
(2) An advertisement shall not use the name or title of a
life
insurance company or a life insurance policy unless the
advertisement
has been approved by the insurer that company.
(3) An advertisement shall not represent that any premium
payments will not be required to be paid on the life insurance
policy
that is the subject of a viatical settlement contract or
viatical
settlement purchase agreement in order to maintain that
policy,
unless that is the fact.
(4) An advertisement shall not state or imply that interest
charged on an accelerated death benefit or a policy loan is
unfair,
inequitable, or in any manner an incorrect or improper
practice.
(5) The words
"free,"
"no cost,"
"without cost,"
"no
additional
cost,"
"at no extra cost," or words of similar import
shall not be used
with respect to any life insurance policy or to
any benefit or service unless
true. An advertisement may
specify
the charge for a benefit or a
service or may state that a
charge
is included in the payment or
use other appropriate
language.
(6)(a)
Terstimonials
Testimonials, appraisals, analyses,
or
endorsements
used
in advertisements must satisfy all of the
following:
(i) They must be genuine.
(ii) They must represent the current opinion of the author.
(iii) They must be applicable to the viatical settlement
contrct
contract
product or service advertised, if any.
(iv) They must be accurately reproduced with sufficient
completeness to avoid misleading or deceiving prospective viators
as to the nature or scope of the testimonials,
appraisals,
analyses, or endorsements.
(b) In using testimonials, appraisals, analyses, or
endorsements,
the licensed viatical settlement licensee provider
or licensed viatical settlement broker makes as its own
all the
statements contained
in the testimonials, appraisals,
analyses,
or endorsements, and
the statements are subject to all
the
provisions of this section.
(c) If the individual making a testimonial, appaisal
appraisal,
analysis,
or endorsement has a
funancial
financial
interest in the
viatical
settlement
provider or related entity
subject of that testimonial, appraisal, analysis, or endorsement
directly or indirectly as a stockholder,
director,
officer,
employee, or otherwise, or receives any benefit
directly
or
indirectly other than required union scale wages, that
fact
shall
be prominently disclosed in the advertisement.
(d) An advertisement shall not state or
im-ply
imply that a
viatical
settlement contract benefit or service has been approved
or endorsed by a group of individuals, society,
association, or
other organization unless that is the fact and
unless any
relationship between the individual group of individuals, society,
association, or
organization and the licensed viatical settlement
provider
is disclosed.
If
the entity making the endorsement or
testimonial
is owned,
controlled, or managed by the licensed
viatical
settlement provider, or
receives any payment or other
consideration from the licensed
viatical
settlement provider for
making an endorsement or
testimonial, that
fact shall be disclosed
in the advertisement.
(e) When an endorsement refers to benefits received under a
viatical settlement contract, all pertinent information shall be
retained for a period of at least five years after
its use.
(F)(G) An advertisement shall not contain statistical
information
unless the information accurately reflects recent and
relevant facts. The source of all statistics used in an
advertisement
shall be identified.
(G)(H) An advertisement shall not disparage any insurer,
viatical
settlement provider, viatical settlement broker, viatical
settlement investment agent, insurance producer, policy, service,
or
method of marketing.
(H)(I) All advertisements about a licensed viatical
settlement
provider
or
its viatical settlement contract,
products,
or services shall
clearly identify the licensed
viatical settlement
provider's name. If any
specific viatical
settlement
contract is advertised, the viatical
settlement
contract shall be
identified either by form number or
some other
appropriate
description. If an application is part of
the
advertisement, the
name of the licensed viatical settlement
provider
shall be shown on the
application.
(I)(J) An advertisement shall not use a trade name, group
designation, name of the parent company of a licensed viatical
settlement
licensee provider or licensed viatical settlement
broker, name of a
particular division of the licensed viatical
settlement
licensee provider or licensed viatical
settlement
broker, service mark, slogan, symbol, or
other device
or
reference without disclosing the name of the licensed
viatical
settlement
licensee provider or licensed viatical
settlement
broker,
if either of the following applies regarding
the
advertisement:
(1) It would have the capacity or tendency to mislead or
deceive
as to the true identity of the licensed viatical
settlement
licensee provider or licensed viatical settlement
broker.
(2) It would have the capacity or tendency to create the
impression that a company other than the licensed viatical
settlement
licensee provider or licensed viatical settlement
broker
would have any
responsibility for the financial
obligation
under a
viatical
settlement contract.
(J)(K) An advertisement shall not use any combination of
words,
symbols, or physical materials that, by their content,
phraseology, shape, color, or other characteristics, are so
similar to a
combination of words, symbols, or physical materials
used by a
government program or agency or otherwise appear to be
of such a
nature that they tend to mislead prospective viators
into
believing that the solicitation is in some manner connected
with a
government program or agency.
(K)(L) An advertisement may state that a licensed viatical
settlement
provider is licensed in the state in which the
advertisement
appears, provided it does not exaggerate that fact
or suggest or
imply that competing viatical settlement providers
may not be so
licensed. The advertisement may ask the audience to
consult the
licensee's licensed provider's web site or contact the
department of insurance to find
out if the state in which the
advertisement appears requires
licensing
and, if it does, whether
the viatical settlement
provider or viatical
settlement broker is
licensed.
(L)(M) An advertisement shall not create the impression that
the licensed
viatical settlement provider, its financial condition
or
status, the payment of its claims, or the merits, desirability,
or
advisability of its viatical settlement contracts are
recommended
or endorsed by any government entity.
(M)(N) All advertisements of an actual licensee licensed
viatical settlement
provider or licensed viatical settlement
broker shall state the
name
of the actual
licensee licensed
viatical settlement provider or licensed viatical settlement
broker. An advertisement
shall not use a
trade name, any group
designation, name of any
affiliate or
controlling entity of the
licensee licensed viatical settlement provider
or licensed
viatical settlement broker, service mark, slogan, symbol,
or other
device
in a manner that would have the capacity or
tendency to
mislead or
deceive as to the true identity of the
actual licensee
licensed viatical settlement
provider or licensed viatical
settlement broker or create the false impression that an
affiliate
or controlling entity would have any responsibility for
the
financial obligation of the licensee licensed viatical
settlement provider or
licensed viatical settlement broker.
(N)(O) An advertisement shall not directly or indirectly
create
the
impression that any division or agency of this state,
any
other state, or
the United States government endorses,
approves,
or favors
any of the following:
(1) Any licensed viatical settlement licensee provider or
licensed viatical settlement broker or its business
practices or
methods of operation;
(2) The merits, desirability, or advisability of any
viatical
settlement contract, or viatical settlement program;
(3) Any viatical settlement contract, or viatical settlement
program;
(4) Any life insurance policy or certificate or life
insurance
company.
(O)(P) If the advertiser emphasizes the speed with which the
viatication will occur, the advertising must disclose the average
time frame, from completed application to the date of offer
and
from acceptance of the offer to receipt of the funds by the
viator.
(P)(Q) If the advertising emphasizes the dollar amounts
available to
viators, the advertising shall disclose the average
purchase price
as a per cent of face value obtained by viators
contracting with
the licensee during the past six months.
Sec. 3916.18. (A)(1) No person shall commit a fraudulent
viatical settlement act.
(2) No person shall knowingly or intentionally interfere
with
the
enforcement of the provisions of this chapter or
investigations of suspected
or actual violations of this chapter.
(3) No person in the business of viatical settlements shall
knowingly or intentionally permit any person convicted of a felony
involving dishonesty or breach of trust to participate in the
business
of viatical settlements.
(B)(1) Each viatical settlement contract and each
application
for
a viatical settlement, regardless of the form of
transmission,
shall contain
the following statement or a
substantially similar
statement:
"Any person who knowingly presents false information in an
application for insurance or viatical settlement contract is
guilty of a
crime and may be subject to fines and imprisonment."
(2) The lack of a statement as required in division (B)(1)
of
this section does not constitute a defense in any prosecution
for
a
fraudulent viatical settlement act.
(C)(1) Every person engaged in the business of viatical
settlements having knowledge or a reasonable belief that a
fraudulent viatical settlement act is being, will be, or has been
committed shall provide to the superintendent of insurance the
information required by the superintendent. The person shall
provide the information in a manner prescribed by the
superintendent.
(2) Every person having knowledge or a reasonable belief
suspicion
that a
fraudulent viatical settlement act is being, will
be, or
has been
committed may provide to the superintendent the
information required by
the superintendent. The person shall
provide the information under this
division in a manner prescribed
by the superintendent.
(D)(1) No civil liability shall be imposed on, and no cause
of
action shall arise from, a person's furnishing information
concerning suspected, anticipated, or completed fraudulent
viatical
settlement acts or suspected or completed fraudulent
insurance acts, if
the information is provided to or received from
any of the
following:
(a) The superintendent, or the superintendent's employees,
agents, or representatives;
(b) Law enforcement or regulatory officials of this state,
another state, the
united states
United States, or a political
subdivision of
this state or another state, or any employee,
agent, or
representative of
any of those officials:;
(c) A person involved in the prevention and detection of
fraudulent viatical settlement acts or any agent, employee, or
representative of any person so involved;
(d) The NAIC, national association of securities dealers
(NASD) financial industry regulatory authority (FINRA),
the north
american American securities
amdiministrators
administrators
association
(NASAA),
any employee, agent, or
representative of
any of those
associations., or other regulatory
body overseeing
life insurance,
viatical settlements, securities,
or
investment
fraud;
(e) The life insurer that issued the life insurance policy
or
certificate covering the life of the insured.
(2) The immunity provided in division (D)(1) of this section
shall not apply to any statement made with actual malice. In an
action brought against a person for filing a report or
furnishing
other information concerning a fraudulent viatical
settlement act
or a fraudulent insurance act, the party bringing
the action shall
plead specifically any allegation that the
immunity provided in
division (D)(1) of this section does not
apply because the person
filing the report or furnishing the information
did so with actual
malice.
(3) If a person is the prevailing party in a civil action
for
libel, slander, or any other relevant tort arising out of
activities in
carrying out the provisions of this chapter, if the
prevailing party is
a person identified in division (D)(1) of this
section and the
immunity described in that division applies to the
person, and if the party who brought the action was not
substantially
justified in doing so, the person who is the
prevailing party is
entitled to an award of attorney's fees and
costs arising out of
the action. However, the person is not
entitled to an award of attorney's fees if the person provided
information about the person's own fraudulent viatical settlement
acts. For purposes of this division,
an action is
"substantially
justified" if it had a reasonable
basis in law or fact at the time
that
it was initiated.
(4) This section does not abrogate or modify any common law
or
statutory privilege or immunity enjoyed by a person described
in
division (D)(1) of this section.
(E)(1) The documents and evidence provided pursuant to
division
(D) of this section or obtained by the
superintendent in
an investigation of any suspected or actual
fraudulent viatical
settlement act is privileged and confidential,
is not a public
record open for inspection under section 149.43 of the Revised
Code, and is not subject to discovery or subpoena in a
civil or
criminal action.
(2) Division (E)(1) of this section does not prohibit
release
by
the superintendent of any document or evidence obtained
in an
investigation of suspected or actual fraudulent viatical
settlement acts, in any of the following manners or circumstances:
(a) In any administrative or judicial proceeding to enforce
any
laws
administer
administered by the superintendent;
(b) To any law enforcement or regulatory agency of this
state,
another state, the
united states
United States, or a
politcal
political
subdivision of
this state or another state, to
an organization
established for the purpose of detecting and
preventing fraudulent
viatical
settlement
act
acts, or to the
NACI
NAIC;
(c) At the discretion of the superintendent, to a person in
the
business of viatical settlements that is aggrieved by a
fraudulent
viatical settlement act.
(3) Release of documents and evidence under division (E)(2)
of
this section does not abrogate or modify the privilege granted
in
division (E)(1) of this section.
(F) The provisions of this chapter do not do any of the
following:
(1) Preempt the authority or relieve the duty of any other
law
enforcement or regulatory agencies to investigate, examine, or
prosecute
suspected violations of law;
(2) Prevent or prohibit a person from disclosing voluntarily
any
information concerning viatical settlement fraud to a law
enforcement or
regulatory agency other than the department of
insurance;
(3) Limit any power granted elsewhere by the law of this
state to
the superintendent or an insurance fraud unit to
investigate and examine
possible violations of law and to take
appropriate action against
wrongdoers.
(G)(1) Viatical Licensed viatical settlement providers and
licensed viatical settlement
brokers shall adopt and have in place
antifraud initiatives
reasonably calculated to detect, prosecute,
and prevent fraudulent
viatical settlement acts. At the discretion
of the
superintendent, the superintendent may order, or a licensee
licensed viatical settlement provider or licensed viatical
settlement broker may
request and the
superintendent may grant,
any modifications of the
following
required initiatives described
in divisions (G)(1)(a)
and (b) of
this section that are necessary
to ensure an effective
antifraud
program. The modifications may
be more or less
restrictive than
the
required initiatives so long
as the
modifications may
reasonably be expected to
accomplish the
purpose
of this section.
Antifraud initiatives
under this
division shall
include all of the
following:
(a) Fraud investigators, who may be licensed viatical
settlement
provider
or licensed viatical settlement broker
employees
or independent
contractors;
(b) An antifraud plan that includes, but
not is not limited
to,
all of the following:
(i) A description of the procedures for detecting and
investigating possible fraudulent viatical settlement acts and
procedures for resolving material inconsistencies
between medical
records and insurance applications;
(ii) A description of the procedures for reporting possible
fraudulent viatical settlement acts to the superintendent;
(iii) A description of the plan for
atifraud
antifraud
education and
training of underwriters and other personnel;
(iv) A description or
charp
chart outlining the
organizational
arrangement of the antifraud personnel who are
responsible for the
investigation and reporting of possible
fraudulent viatical
settlement acts and investigating unresolved
material
inconsistencies between medical records and insurance
applications.
(2) The superintendent, by rule adopted in accordance with
Chapter 119. of the Revised Code, may require that antifraud plans
required
under division (G)(1) of this section be submitted to the
superintendent. If the superintendent requires that antifraud
plans be submitted to the superintendent, the plans so submitted
are privileged and confidential, are not a public record
open for
inspection under section 149.43 of the
revised code
Revised Code,
and
are not
subject to discovery or subpoena in a civil or
criminal
action.
(H) No insurer that issued a policy being viaticated shall be
responsible, under this chapter, for any act or omission of a
licensed viatical settlement broker or licensed viatical
settlement provider arising out of or in
connection with the
viatical settlement transaction unless the
insurer receives
compensation for the placement of a viatical
settlement contract
from the licensed viatical settlement provider or licensed
viatical settlement broker
in connection with the viatical
settlement contract.
Sec. 3916.19. (A) In addition to the penalties and other
enforcement provisions contained in this chapter, if any person
violates any provision of this chapter or any rule or regulation
implementing any provision of this chapter that constitutes a
fraudulent viatical settlement act, the superintendent of
insurance may seek an injunction in a court of competent
jurisdiction and may apply for any temporary or permanent order
that the superintendent determines is necessary to restrain the
person from committing the violation.
(B) Any person damaged by any act of a person in violation
of
any
provision of this chapter may bring a civil action against
the
person
committing the violation in a court of competent
jurisdiction. A civil action brought under this division does not
preclude the superintendent from exercising any regulatory,
enforcement, or other authority available to the superintendent
under this chapter.
(C) In addition to the penalties and other enforcement
provisions
contained in this chapter, any person who violates any
provision
of this chapter that constitutes a fraudulent viatical
settlement act is subject to a civil penalty of up to
ten
thousand
dollars per violation. Imposition of civil penalties
described in
this division shall be pursuant to an order of the
superintendent
issued under Chapter 119. of the Revised Code. The
superintendent's order may require a person found to be in
violation of this chapter to make restitution to persons aggrieved
by
violations of this chapter.
Sec. 3916.20. The superintendent of insurance may adopt
rules
in accordance with Chapter 119. of the Revised Code
for
purposes of implementing this chapter, including, but not limited
to,
rules that do the following:
(A) Govern the
relationship and responsibilities of both
insurers and, licensed viatical settlement
providers, and licensed
viatical settlement
brokers
during the viatication of a life
insurance policy or
certificate.
(B) Establish standards for evaluating the reasonableness of
payments
under
viatical settlement contracts for persons with a
terminal or chronic illness
or condition. This authority
includes,
but is not limited
to,
the regulation of discount rates
used to
determine the amount paid in exchange
for the assignment,
transfer, sale, devise, or bequest of a benefit under a
life
insurance policy or certificate insuring persons with a terminal
or chronic illness or condition.
(C) Establish appropriate licensing requirements, fees, and
standards for
continued licensure for viatical settlement
providers and, viatical settlement
brokers, and life expectancy
providers;
(D) Require a bond or other mechanism for ensuring the
financial
accountability of licensed viatical settlement providers
and licensed
viatical settlement brokers.
Section 2. That existing sections 3916.01, 3916.02, 3916.03,
3916.04, 3916.05, 3916.06, 3916.07, 3916.08, 3916.09, 3916.10,
3916.11, 3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17,
3916.18, 3916.19, and 3916.20 of the Revised Code are hereby
repealed.
Section 3. Division (A) of section 3916.02 as amended by this
act shall take effect 90 days after the effective date of this
act.
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