H 3410 Session 112 (1997-1998)
H 3410 General Bill, By Cato
Similar(S 380)
A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
38-25-315 SO AS TO PROVIDE FOR EMERGENCY CEASE AND DESIST ORDERS TO PREVENT
THE UNAUTHORIZED TRANSACTION OF INSURANCE BUSINESS WITHIN THIS STATE AND
PROVIDE FOR RELATED MATTERS; TO AMEND SECTION 38-2-10, AS AMENDED, RELATING TO
INSURANCE AND ADMINISTRATIVE PENALTIES, SO AS TO PROVIDE THAT TEN PERCENT OF
THE AMOUNT COLLECTED AS PENALTIES MUST BE RETAINED BY THE DEPARTMENT OF
INSURANCE AND CONSIDERED "OTHER FUNDS", REQUIRE THE DEPARTMENT TO SUBMIT AN
ANNUAL REPORT FOR CERTAIN PURPOSES, AND ALLOW THESE COLLECTED FUNDS TO BE
CARRIED FORWARD INTO SUCCEEDING FISCAL YEARS; AND TO AMEND SECTION 38-25-330,
AS AMENDED, RELATING TO THE PENALTY FOR VIOLATING CHAPTER 25, TITLE 38, ON THE
UNAUTHORIZED TRANSACTION OF INSURANCE BUSINESS, SO AS TO REQUIRE A WILFUL
VIOLATION BEFORE A CONVICTION MAY BE HAD OR A PENALTY IMPOSED, AND CHANGE THE
OFFENSE FROM A MISDEMEANOR TO A FELONY.
02/06/97 House Introduced and read first time HJ-3
02/06/97 House Referred to Committee on Labor, Commerce and
Industry HJ-3
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
1976, BY ADDING SECTION 38-25-315 SO AS TO PROVIDE
FOR EMERGENCY CEASE AND DESIST ORDERS TO
PREVENT THE UNAUTHORIZED TRANSACTION OF
INSURANCE BUSINESS WITHIN THIS STATE AND PROVIDE
FOR RELATED MATTERS; TO AMEND SECTION 38-2-10, AS
AMENDED, RELATING TO INSURANCE AND
ADMINISTRATIVE PENALTIES, SO AS TO PROVIDE THAT
TEN PERCENT OF THE AMOUNT COLLECTED AS
PENALTIES MUST BE RETAINED BY THE DEPARTMENT OF
INSURANCE AND CONSIDERED "OTHER FUNDS", REQUIRE
THE DEPARTMENT TO SUBMIT AN ANNUAL REPORT FOR
CERTAIN PURPOSES, AND ALLOW THESE COLLECTED
FUNDS TO BE CARRIED FORWARD INTO SUCCEEDING
FISCAL YEARS; AND TO AMEND SECTION 38-25-330, AS
AMENDED, RELATING TO THE PENALTY FOR VIOLATING
CHAPTER 25, TITLE 38, ON THE UNAUTHORIZED
TRANSACTION OF INSURANCE BUSINESS, SO AS TO
REQUIRE A WILFUL VIOLATION BEFORE A CONVICTION
MAY BE HAD OR A PENALTY IMPOSED, AND CHANGE THE
OFFENSE FROM A MISDEMEANOR TO A FELONY.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-25-315. (A) As an alternative to the procedural
remedy detailed within Section 38-25-310, whenever the director,
from evidence which is satisfactory to him, has reasonable grounds
to believe that a person has engaged in, or is about to engage in, the
transaction of insurance business in violation of this chapter and that
that transaction will adversely impact upon public health, public
safety, or public welfare, he may reduce his findings of fact and his
conclusions of law to writing and he may issue an emergency cease
and desist order. That order must be served upon the person either by
certified mail, return receipt requested, at that person's last known
address, or in any other manner permitted by law.
(B) An emergency cease and desist order issued by the director
must, within its provisions, give notice that the person may contest
that order by petitioning for an immediate public hearing before an
administrative law judge. The filing of the petition does not itself
stay enforcement of the director's decision. The administrative law
judge may order a stay upon appropriate terms, and if a stay is
granted, the administrative law judge must specifically consider in his
order the appropriateness of the posting of a bond by the petitioner.
At the public hearing the person must be given the opportunity to be
heard upon the findings and conclusions within the emergency cease
and desist order. If no request for a public hearing is received within
ten days from the person's receipt of service of the emergency cease
and desist order then, upon application by the director and without a
public hearing, the administrative law judge must make that
emergency order a permanent cease and desist order.
(C) If an administrative law judge determines that the person
charged with transacting insurance business in violation of this
chapter knew or should have known that his actions were in violation
of this chapter, then in addition to declaring the cease and desist order
to be permanent the administrative law judge may impose a penalty
of up to fifty thousand dollars for each violation. The penalty may
be imposed following a public hearing requested by the person
pursuant to subsection (B) or following a public hearing requested by
the director following an administrative law judge's default
permanent cease and desist order.
(D) In addition to any other penalties or remedies available,
including Sections 38-25-320, 38-25-330, and 38-25-360, if the
director believes that a person has violated a permanent cease and
desist order issued by an administrative law judge, then the director
may certify the relevant facts to the circuit court in any county of this
State where that person has transacted business in violation of the
permanent cease and desist order. The circuit court, upon its finding
that the permanent cease and desist order has been violated, may
order the violator to pay an additional penalty of up to twenty-five
thousand dollars for each violation.
(E) Any penalties ordered pursuant either to subsection (C) or (D)
may be entered immediately by the director upon the judgment rolls
in any county where that person resides or where that person has
transacted business. Collection proceedings may be initiated
immediately by the director. Any funds collected by the director
must be retained for use by the Department of Insurance and
considered 'other funds' for the purpose of providing consumer
education and assistance programs. The department must submit an
annual report not later than the end of the first quarter of each fiscal
year to the Governor, the Speaker of the House of Representatives,
and the President of the Senate accounting for the expenditure of the
funds retained under this section during the preceding year. These
collected funds may be carried forward into succeeding fiscal years."
SECTION 2. Section 38-2-10 of the 1976 Code, as amended by
Section 531 of Act 181 of 1993, is further amended by adding:
"Ten percent of the amount collected as penalties must be retained
by the department and considered 'other funds' for the purpose of
providing consumer education and assistance programs. The
department must submit an annual report no later than the end of the
first quarter of each fiscal year to the Governor, the Speaker of the
House of Representatives, and the President of the Senate accounting
for the expenditure of the funds retained under this section during the
preceding year. These collected funds may be carried forward into
succeeding fiscal years."
SECTION 3. Section 38-25-330 of the 1976 Code, as amended by
Section 211 of Act 184 of 1993, is further amended to read:
"Section 38-25-330. A person wilfully violating any
provisions of this chapter is guilty of a misdemeanor
felony and, upon conviction, must be fined in the discretion
of the court or imprisoned not more than three years, or both."
SECTION 4. This act takes effect upon approval by the Governor.
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