Download This Bill in Microsoft Word format
Indicates Matter Stricken
Indicates New Matter
S. 201
STATUS INFORMATION
General Bill
Sponsors: Senator Alexander
Document Path: l:\council\bills\dka\3063dw05.doc
Companion/Similar bill(s): 3309
Introduced in the Senate on January 12, 2005
Currently residing in the Senate Committee on Banking and Insurance
Summary: Viatical and Life Settlements Act
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 1/12/2005 Senate Introduced and read first time SJ-13 1/12/2005 Senate Referred to Committee on Banking and Insurance SJ-13
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 64 TO TITLE 38 SO AS TO ENACT THE VIATICAL SETTLEMENTS ACT, TO PROVIDE FOR THE PROTECTION OF CONTRACTUAL AND PROPERTY RIGHTS OF A LIFE INSURANCE POLICY OWNER TO SEEK A VIATICAL SETTLEMENT, TO ESTABLISH CONSUMER PROTECTIONS BY PROVIDING FOR THE REGULATION OF A VIATICAL SETTLEMENT TRANSACTION, TO PROVIDE FOR THE LICENSING AND REGULATION OF A VIATICAL SETTLEMENT PROVIDER AND OTHERS INVOLVED IN A VIATICAL SETTLEMENT TRANSACTION, TO PROVIDE FOR ANTI-FRAUD MEASURES, AND TO PROVIDE PENALTIES FOR VIOLATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 38 of the 1976 Code is amended by adding:
Section 38-64-10. This chapter may be cited as the Viatical Settlements Act.
Section 38-64-20. As used in this chapter:
(1) '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 film strips, motion pictures, and videos, published, disseminated, circulated, or placed directly before the public in this State, for the purpose of creating an interest in or inducing a person to sell a policy pursuant to a viatical settlement contract.
(2) 'Business of viatical settlements' means an activity involved in, but not limited to, the offering, solicitation, negotiation, procurement, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating, or in any other manner of viatical settlement contracts.
(3) 'Chronically ill' means:
(a) being unable to perform at least two activities of daily living including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;
(b) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or
(c) having a level of disability similar to that described in subitem (a) as determined by the Director of Health and Human Services.
(4)(a) '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 an entity that has a direct ownership in a policy that is the subject of a viatical settlement contract, but:
(i) whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more purchased policies; and
(ii) who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
(b) 'Financing entity' does not include a nonaccredited investor.
(5) 'Fraudulent viatical settlement act' includes:
(a) acts or omissions committed by a person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including:
(i) presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, financing entity, insurer, insurance producer, or another person, false material information, or concealing 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 policy;
(B) the underwriting of a viatical settlement contract or policy;
(C) a claim for payment or benefit pursuant to a viatical settlement contract or policy;
(D) premiums paid on a policy;
(E) payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or policy;
(F) the reinstatement or conversion of a policy;
(G) in the solicitation, offer, effectuation, or sale of a viatical settlement contract or policy;
(H) the issuance of written evidence of viatical settlement contract or insurance; or
(I) a financing transaction;
(ii) employing any device, scheme, or artifice to defraud related to purchased policies;
(b) in the furtherance of a fraud or to prevent the detection of a fraud a person commits or permits its employees or its agents to:
(i) remove, conceal, alter, destroy, or sequester from the director the assets or records of a licensee or other person engaged in the business of viatical settlements;
(ii) misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person;
(iii) transact the business of viatical settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of viatical settlements; or
(iv) file with the director or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise conceals information about a material fact from the director;
(c) embezzlement, theft, misappropriation, or conversion of monies, funds, premiums, credits, or other property of a viatical settlement provider, insurer, insured, seller, policyowner, or another person engaged in the business of viatical settlements or insurance;
(d) recklessly entering into, negotiating, otherwise dealing in a viatical settlement contract, the subject of which is a policy that was obtained by presenting false information concerning a fact material to the policy, or by concealing, for the purpose of misleading another, information concerning a fact material to the policy, where the seller or the seller's agent intended to defraud the insurance company that issued the policy. 'Recklessly' means engaging in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, this disregard involving a gross deviation from acceptable standards of conduct; or
(e) attempting to commit, assist, aid, or abet in the commission of, or conspiracy to commit the acts or omissions specified in this subsection.
(6) 'Life insurance producer' means a person licensed as a resident or nonresident insurance producer pursuant to Section 38-43-10 who has received qualification for life insurance coverage pursuant to Section 38-43-75(1).
(7) 'Person' means a natural person or a legal entity including, but not limited to, an individual, partnership, limited liability company, association, trust, or corporation.
(8) 'Policy' means an individual or group policy, group certificate, contract, or arrangement of life 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.
(9) 'Purchased policy' means a policy that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.
(10) 'Related provider trust' means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have 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 director as if those records and files were maintained directly by the licensed viatical settlement provider.
(11) 'Seller' means the owner of a policy, who is a resident of this State, who enters or seeks to enter into a viatical settlement contract. For the purposes of this chapter, a seller is not limited to an owner of a policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. Seller does not include:
(a) a licensee as provided by this chapter, including a life insurance producer;
(b) an accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501 or Rule 144A of the Federal Securities Act of 1933, as amended;
(c) a financing entity;
(d) a special purpose entity; or
(e) a related provider trust.
(12) 'Viatical settlement contract' means a written agreement establishing the terms under which compensation or anything of value is paid, which compensation or value is less than the expected death benefit of the policy, in return for the seller's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the policy. A viatical settlement contract also includes a contract for a loan or other financing transaction with a seller secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the policy, or a loan secured by the cash value of a policy. A viatical settlement contract includes an agreement with a seller to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the seller. A viatical settlement contract does not mean a written agreement entered into between a seller and a person having an insurable interest in the insured's life.
(13) 'Viatical settlement provider' means a person, other than a seller, who enters into or effectuates a viatical settlement contract. Viatical settlement provider does not include:
(a) a bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a policy as collateral for a loan;
(b) the issuer of a policy providing accelerated benefits pursuant to the policy;
(c) an authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, financing entity, special purpose entity, or related provider trust;
(d) a natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of policies for any value less than the expected death benefit;
(e) a financing entity;
(f) a special purpose entity;
(g) a related provider trust; or
(h) an accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501 or Rule 144A of the Federal Securities Act of 1933, as amended, and who purchases a purchased policy from a viatical settlement provider.
(14) 'Special purpose entity' means a corporation, partnership, trust, limited liability company, or other similar entity formed only to provide either, directly or indirectly, access to institutional capital markets for a financing entity or licensed viatical settlement provider.
(15) 'Terminally ill' means having an illness or sickness that reasonably is expected to result in death in twenty-four months or less.
Section 38-64-30. (A)(1) A person shall not act on behalf of a viator or otherwise negotiate viatical settlement contracts between a viator and one or more viatical settlement providers without first having been licensed as a life insurance producer for at least one year. For purposes of this section, the one year requirement is deemed to be satisfied if such person has been licensed as a resident life insurance producer in his or her home state for at least one year.
(2) A life insurance producer, as defined in Section 38-64-20(6), and who meets the requirements of this subsection (A) must be permitted to negotiate, as defined in Section 38-1-20(28.3), viatical settlement contracts between a seller and one or more viatical settlement providers. Not later than thirty days from the first day of negotiating a viatical settlement on behalf of a seller, the producer shall notify the director of the activity on a form prescribed by the director, and shall pay any applicable fees to be determined by the director. Notification must include an acknowledgment by the producer that he operates in accordance with this chapter.
(3) Notwithstanding item (1) of this subsection, a person licensed as an attorney, 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 may negotiate viatical settlement contracts without having to obtain a license as a life insurance producer.
(B)(1) A person may not operate as a viatical settlement provider without first obtaining a viatical settlement provider license from the director of the state of residence of the seller.
(2) Application for a viatical settlement provider license must be made to the director by the applicant on a form prescribed by the director, and an application must be accompanied by the fees to be determined by the director. An application for a viatical settlement provider license pursuant to the provisions of this section must be approved or denied by the director within sixty calendar days following receipt of a completed application by the director. The director shall notify applicants that the application is complete. An application for license is considered approved after that time.
(3) A license may be renewed from year to year on the anniversary date upon payment of the annual renewal fees to be determined by the director. Failure to pay the fees by the renewal date results in expiration of the license.
(4) Notwithstanding items (2) and (3) of this subsection, the license and renewal fees for a viatical settlement provider license may not exceed that established for an insurer as provided in Section 38-7-10.
(5) The applicant for a viatical settlement provider license shall provide information on forms prescribed by the director. The director has authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees, except stockholders owning fewer than five percent of the shares of an applicant whose shares are publicly traded, and the director may refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member of it who may materially influence the applicant's conduct meets the standards of this chapter.
(6) A license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as viatical settlement providers, as applicable, under the license, and all those persons must be named in the application and any supplements to the application.
(7) Upon the filing of an application and the payment of the license fee, the director shall make an investigation of each applicant for a license as a viatical settlement provider and issue a license if the director finds that the applicant:
(a) has provided a detailed plan of operation;
(b) is competent and trustworthy and intends to act in good faith in the capacity involved by the license for which he has applied;
(c) has a good business reputation and has had experience, training, or education so as to be qualified in the business for the license in which he has applied;
(d) if a legal entity, provides a certificate of good standing from the state of its domicile; and
(e) has provided an anti-fraud plan that meets the requirements of Section 38-64-120(G).
(8) The director may not issue a license to a nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the director or the applicant has filed with the director, the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the director.
(9) A viatical settlement provider shall provide to the director new or revised information about officers, ten percent or more stockholders, partners, directors, members, or designated employees within thirty days of the change.
Section 38-64-40. (A) The director may refuse to issue, suspend, revoke, or refuse to renew the license of a viatical settlement provider if the director finds that:
(1) there was any material misrepresentation in the application for the license;
(2) the licensee or any officer, partner, member, or key management personnel has been convicted of fraudulent or dishonest practices, is subject to a final administrative action, or is otherwise shown to be untrustworthy or incompetent;
(3) demonstrates a pattern of unreasonable payments to sellers;
(4) the licensee or any officer, partner, member, or key management personnel has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of conviction has been entered by the court;
(5) has entered into any viatical settlement contract that has not been approved pursuant to this chapter;
(6) 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) has assigned, transferred, or pledged a purchased policy to a person other than a viatical settlement provider licensed in this State, an accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501 or Rule 144A of the Federal Securities Act of 1933, as amended, financing entity, special purpose entity, or related provider trust; or
(9) the viatical settlement provider licensee or any officer, partner, member, or key management personnel has violated a provision of this chapter.
(B) If the director denies a license application or suspends, revokes, or refuses to renew the license of a viatical settlement provider, the director shall conduct a hearing in accordance with Article 3, Chapter 23, Title 1.
Section 38-64-50. A person may not use a viatical settlement contract or provide to a seller a disclosure statement form in this State unless filed with and approved by the director. The director shall disapprove a viatical settlement contract form or disclosure statement form if, in the director's opinion, the contract or provisions contained in it are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair to the seller.
Section 38-64-60. (A) Each viatical settlement provider shall file with the director by March first of each year an annual statement containing information as the director prescribes by regulation. This information is limited to only those transactions where the seller is a resident of this State and does not include individual transaction data regarding the business of viatical settlements or data which compromises the privacy of personal, financial, and health information of the seller or insured.
(B) Except as otherwise allowed or required by law, a viatical settlement provider, life insurance producer, information bureau, rating agency or company, or another person with actual knowledge of a seller or insured's identity, may not disclose that identity as a seller or insured, or the seller's or insured's financial or medical information to another person unless the disclosure is:
(1) necessary to effect a viatical settlement contract between the seller and a viatical settlement provider and the seller or insured or both, as may be required, have provided prior written consent to the disclosure;
(2) provided in response to an investigation or examination by the director or another governmental officer or agency or pursuant to the requirements of Section 38-64-120;
(3) a term of or condition to the transfer of a policy by one viatical settlement provider to another viatical settlement provider;
(4) necessary to permit a financing entity, related provider trust, or special purpose entity to finance the purchase of policies by a viatical settlement provider and the seller and insured have provided prior written consent to the disclosure;
(5) necessary to allow the viatical settlement provider or their authorized representatives to make contacts for the purpose of determining health status; or
(6) required to purchase stop loss coverage.
Section 38-64-70. (A)(1) The director may conduct an examination pursuant to the provisions of this chapter of a licensee as often as he considers appropriate.
(2) For purposes of completing an examination of a licensee pursuant to the provisions of this chapter, the director may examine or investigate a person, or the business of a person, in so far as the examination or investigation is necessary or material to the examination of the licensee.
(3) Instead of an examination pursuant to the provisions of this chapter of any foreign or alien licensee licensed in this State, the director may accept an examination report on the licensee as prepared by the director for the licensee's state of domicile or port-of-entry state.
(B)(1) A person required to be licensed by this chapter shall retain for five years copies of:
(a) proposed, offered, or executed contracts, underwriting documents, policy forms, and applications from the date of the execution of the contract;
(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; and
(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 these documents to the director after the retention period has expired if the person has retained the documents.
(3) A record 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.
(C)(1) Upon determining that an examination must be conducted, the director shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners (NAIC). The director also may employ other guidelines or procedures as the director considers appropriate.
(2) Each licensee or person from whom information is sought, its officers, directors, and agents shall provide to the examiners timely, convenient, and free access at all reasonable hours at its 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 being examined. The officers, directors, employees, and agents of the licensee 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, by its officers, directors, employees, or agents, to submit to examination or to comply with any reasonable written request of the director is grounds for suspension or refusal of, or nonrenewal of a license or an authority held by the licensee to engage in the business of viatical settlements or other business subject to the director's jurisdiction. Any proceedings for suspension, revocation, or refusal of a license or an authority must be conducted pursuant to Article 3 of Chapter 23 of Title 1.
(3) The director shall have the power to issue subpoenas, to administer oaths, and to examine under oath a person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the director 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 is punishable as contempt of court.
(4) When making an examination pursuant to the provisions of this chapter, the director may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost must be borne by the licensee that is the subject of the examination.
(5) Nothing contained in this chapter may be construed to limit the director'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 is prima facie evidence in any legal or regulatory action.
(6) Nothing contained in this chapter may be construed to limit the director's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee work papers or other documents, or any other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action which the director, in his discretion, considers appropriate.
(7) The licensee shall pay the charges incurred in the examination, including the expenses of the director or his designee and the expenses and compensation of the director's examiners and assistants. If a licensee feels the fees assessed are unreasonable in relation to the examination performed, the licensee may appeal the assessments to the Administrative Law Judge Division. The director or his designee promptly shall institute a civil action to recover the expenses of examination against a licensee which refuses or fails to pay. Examination fees must be retained by the department and are considered 'other funds'.
(D)(1) Examination reports must 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 or agents or other persons examined concerning its affairs, and those conclusions and recommendations as the examiners find reasonably warranted from the facts.
(2) No later than sixty days following completion of the examination, the examiner in charge shall file with the director a verified written report of examination under oath. Upon receipt of the verified report, the director shall transmit the report to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than thirty days to make a written submission or rebuttal with respect to any matters contained in the examination report.
(3) If the director determines that regulatory action is appropriate as a result of an examination, the director may initiate any proceedings or actions provided by law.
(E)(1) Names and individual identification data for all sellers are considered private and confidential information and must not be disclosed by the director, unless required by law.
(2)(a) Except as otherwise provided in this chapter, all examination reports, working papers, recorded information, documents, and copies of them produced by, obtained by, or disclosed to the director or another person in the course of an examination made under this chapter, or in the course of analysis or investigation by the director of the financial condition or market conduct of a licensee are:
(i) confidential by law and privileged;
(ii) not subject to the provisions of Chapter 4, Title 30, the Freedom of Information Act;
(iii) not subject to subpoena; and
(iv) not subject to discovery or admissible in evidence in any private civil action.
(b) The director is authorized to use the documents, materials, or other information in the furtherance of a regulatory or legal action brought as part of the director's official duties.
(3) Documents, materials, or other information including, but not limited to, all working papers and copies of them, in the possession or control of the NAIC and its affiliates and subsidiaries are:
(a) confidential by law and privileged;
(b) not subject to subpoena; and
(c) not subject to discovery or admissible in evidence in any private civil action if they are:
(i) 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 a director in the analysis or investigation of the financial condition or market conduct of a licensee; or
(ii) disclosed to the NAIC and its affiliates and subsidiaries pursuant to the provisions of item (4) by a director.
(4) For the purposes of item (2), 'act' includes the law of another state or jurisdiction that is substantially similar to this chapter.
(5) The director or a person that received the documents, material, or other information while acting under the authority of the director, including the NAIC and its affiliates and subsidiaries, is not permitted to testify in any private civil action concerning any confidential documents, materials, or information subject to item (1).
(6) In order to assist in the performance of the director's duties, the director:
(a) may share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to item (1), 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, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information;
(b) may receive documents, materials, 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, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of those documents, materials, or information.
(7) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information may occur as a result of disclosure to the director pursuant to the provisions of this section or as a result of the sharing of those documents, materials, or information as authorized in item (5).
(8) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established pursuant to the provisions of this subsection is available and enforced in any proceeding in, and in any court of, this State.
(9) Nothing contained in this chapter prevents or may be construed as prohibiting the director from disclosing the content of an examination report, preliminary examination report or results, or any matter relating to it, to the director of another state or country, or to law enforcement officials of this or another state or agency of the federal government at any time or to the NAIC, so long as that 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.
(F)(1) An examiner may not be appointed by the director 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 a person subject to examination pursuant to the provisions of this chapter. This section may not be construed to automatically preclude an examiner from being:
(a) a seller;
(b) an insured in a purchased policy; or
(c) a beneficiary in an policy that is proposed to the subject of a viatical settlement contract.
(2) Notwithstanding the requirements of this subsection, the director 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 at some time be similarly employed or retained by persons subject to examination pursuant to the provisions of this chapter.
(G)(1) A cause of action may not arise or a liability may not be imposed against the director, the director's authorized representatives, or an examiner appointed by the director for a statement made or conduct performed in good faith while carrying out the provisions of this chapter.
(2) A cause of action may not arise or a liability may not be imposed against a person for the act of communicating or delivering information or data to the director, the director's authorized representative, or examiner pursuant to an examination made pursuant to the provisions of this chapter, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This item does not abrogate or modify in any way any common law or statutory privilege or immunity before enjoyed by a person identified in item (1) of this subsection.
(3) A person identified in item (1) or (2) is entitled to an award of attorney's fees and costs if he is the prevailing party in a civil cause of action for libel, slander, or another relevant tort arising out of activities in carrying out the provisions of this chapter. For purposes 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 director may investigate suspected fraudulent viatical settlement acts and persons engaged in the business of viatical settlements.
Section 38-64-80. (A) With each application for a viatical settlement contract, a viatical settlement provider or life insurance producer shall provide the seller with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures must be provided in a separate document that is signed by the seller and the viatical settlement provider or life insurance producer, and shall provide the following information:
(1) that there exist possible alternatives to a viatical settlement contract including any accelerated death benefits or policy loans offered under the seller's life insurance policy;
(2) that some or all of the proceeds of the viatical settlement contract may be taxable under federal income tax and state franchise and income taxes, and assistance may be sought from a professional tax advisor;
(3) those proceeds of the viatical settlement contract that may be subject to the claims of creditors;
(4) receipt of the proceeds of a viatical settlement contract that adversely may affect the seller's eligibility for Medicaid or other government benefits or entitlements, and advice may be obtained from the appropriate government agencies;
(5) that the seller has the right to rescind a viatical settlement contract before the earlier of thirty calendar days after the date upon which the viatical settlement contract is executed by all parties or for fifteen calendar days after the receipt of the viatical settlement proceeds by the seller, as provided in Section 38-64-90(C). Rescission, if exercised by the seller, is effective only if both notice of the rescission is given and repayment of all proceeds and any premiums, loans, and loan interest to the viatical settlement provider is made within the rescission period. 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 viatical settlement provider is made within the rescission period;
(6) funds that must be sent to the seller within three business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the purchased policy has been transferred and the beneficiary has been designated;
(7) 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, to be forfeited by the seller. Assistance may be sought from a financial adviser;
(8) that the disclosure to a seller must include distribution of a brochure, approved by the director, describing the process of viatical settlements;
(9) that the disclosure document must contain the following language: 'All medical, financial, or personal information solicited or obtained by a viatical settlement provider or life insurance producer 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 contract between the seller 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;
(10) that the insured may be contacted by either the viatical settlement provider or its authorized representative for the purpose of determining the insured's health status. This contact is limited to once every three months if the insured has a life expectancy of more than one year, and no more than once each month if the insured has a life expectancy of one year or less.
(B) A viatical settlement provider shall provide the seller with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures must be displayed conspicuously in the viatical settlement contract or in a separate document signed by the seller and the viatical settlement provider, and provide the following information:
(1) the affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be acquired pursuant to a viatical settlement contract;
(2) the name, address, and telephone number of the viatical settlement provider;
(3) if a policy to be acquired pursuant to a viatical settlement contract has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be acquired pursuant to a viatical settlement contract, the seller must be informed of the possible loss of coverage on the other lives under the policy and must be advised to consult with his insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement contract;
(4) the dollar amount of the current death benefit payable to the viatical settlement provider under the policy. If known, the viatical settlement provider also shall disclose the availability of additional guaranteed insurance benefits, the dollar amount of accidental death and dismemberment benefits under the policy or certificate, and the viatical settlement provider's interest in those benefits;
(5) the name, business address, and telephone number of the independent third party escrow agent, and the fact that the seller may inspect or receive copies of the relevant escrow or trust agreements or documents.
(C) If the viatical settlement provider transfers ownership or changes the beneficiary of the policy, the viatical settlement provider shall communicate the change in ownership or beneficiary to the insured within twenty days after the change.
Section 38-64-90. (A)(1) A viatical settlement provider entering into a viatical settlement contract first shall obtain:
(a) if the seller is the insured, a written statement from a licensed attending physician that the seller is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract; and
(b) a document in which the insured consents to the release of his medical records to a viatical settlement provider or insurance producer and, if the policy was issued less than two years from the date of application for a viatical settlement contract, to the insurance company that issued the policy.
(2) The insurer shall respond to a request for verification of coverage submitted by a viatical settlement provider or life insurance producer not later than thirty calendar days of the date the request is received. The request for verification of coverage must be made on a form approved by the director. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract, possible fraud, and shall provide sufficient detail of all reasons for the investigation to the viatical settlement provider or life insurance producer.
(3) Before or at the time of execution of the viatical settlement contract, the viatical settlement provider shall obtain a witnessed document in which the seller consents to the viatical settlement contract, represents that the seller has a full and complete understanding of the viatical settlement contract, that the seller has a full and complete understanding of the benefits of the policy, acknowledges that the seller 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 policy was issued.
(4) If a life insurance producer performs any of these activities required of the viatical settlement provider, the viatical settlement provider is deemed to have fulfilled the requirements of this section.
(B) Medical information solicited or obtained by a licensee is subject to the applicable provisions of state law relating to confidentiality of medical information.
(C) A viatical settlement contract entered into in this State shall provide the seller with an unconditional right to rescind the contract before the earlier of thirty calendar days after the date upon which the viatical settlement contract is executed by all parties or fifteen calendar days after the receipt of the viatical settlement proceeds by the seller. Rescission, if exercised by the seller, is effective only if both notice of the rescission is given and repayment of all proceeds and any premiums, loans, and loan interest to the viatical settlement provider is made within the rescission period. If the insured dies during the rescission period, the viatical settlement contract must be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and any premiums, loans, and loan interest to the viatical settlement provider is made within the rescission period.
(D) The viatical settlement provider shall instruct the seller 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 viatical settlement provider receives the documents, if the seller erroneously provides the documents directly to the viatical settlement provider, the viatical settlement provider shall pay or transfer the proceeds of the viatical settlement contract into an escrow or trust account maintained in a state or federally-chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Upon payment of the viatical settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary forms to the viatical settlement provider or related provider trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurance company, the escrow agent shall pay the viatical settlement proceeds to the seller.
(E) Failure to tender consideration to the seller for the viatical settlement contract within the time disclosed pursuant to Section 38-64-80(A)(6) renders the viatical settlement contract voidable by the seller for lack of consideration until the time consideration is tendered to and accepted by the seller.
(F) A contact with the insured, for the purpose of determining the health status of the insured by the viatical settlement provider after the viatical settlement contract has been executed, only may be made by the licensed viatical settlement provider or its authorized representatives and is limited to once every three months for insureds with a life expectancy of more than one year, and not more than once each month for insureds with a life expectancy of one year or less. The viatical settlement provider shall explain the procedure for these contacts at the time the viatical settlement contract is entered into. The limitations provided for in this subsection do not apply to a contact with an insured for reasons other than determining the insured's health status. A viatical settlement provider is responsible for the actions of his authorized representatives.
Section 38-64-100. (A) It is a violation of this chapter for a person to enter into a viatical settlement contract within a two-year period commencing with the date of issuance of the policy unless the seller certifies to the viatical settlement provider that one or more of the following conditions have been met within the two-year period:
(1) the policy was issued upon the seller's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least twenty-four months. The time covered under a group policy must be calculated without regard to a change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship; or
(2)(a) the seller submits independent evidence to the viatical settlement provider that one or more of the following conditions have been met within the two-year period:
(i) the seller or insured is terminally or chronically ill; or
(ii) the seller or insured disposes of his ownership interests in a closely held corporation, pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued.
(b) copies of the independent evidence described in item (2) and documents required by Section 38-64-90(A) must be submitted to the insurer when the viatical settlement provider submits a request to the insurer for verification of coverage. The copies must be accompanied by a letter of attestation from the viatical settlement provider that the copies are true and correct copies of the documents received by the viatical settlement provider;
(c) if the viatical settlement provider submits to the insurer a copy of independent evidence provided for in item (2)(a) when the viatical settlement provider submits a request to the insurer to effect the transfer of the policy to the viatical settlement provider, the copy is deemed to conclusively establish that the viatical settlement contract satisfies the requirements of this section and the insurer shall respond timely to the request.
(B) It is unlawful for an insurance company to prohibit, restrict, limit, or impair a life insurance producer from lawfully negotiating a viatical settlement on behalf of a seller, aiding and assisting a seller with a viatical settlement, or otherwise participating in a viatical settlement transaction provided for in this chapter or to engage in any transaction, act, practice, or course of business or dealing which restricts, limits, or impairs in any way the lawful transfer of ownership, change of beneficiary, or assignment of a policy to effectuate a viatical settlement contract.
Section 38-64-110. (A) The purpose of this section is to provide a prospective seller with clear and unambiguous statements in the advertisement of a viatical settlement contract and to assure the clear, truthful, and adequate disclosure of the benefits, risks, limitations, and exclusions of a viatical settlement contract. This purpose is to be accomplished by the establishment of guidelines and standards of permissible and impermissible conduct in the advertising of a viatical settlement contract to assure that a product description is presented in a manner that prevents unfair, deceptive, or misleading advertising and is conducive to accurate presentation and description of a viatical settlement contract through the advertising media and material used by a licensee.
(B) This section applies to an advertising of a viatical settlement contract or a related product or service intended for dissemination in this State, including Internet advertising viewed by a person located in this State. Where disclosure requirements are established pursuant to federal regulation, this section must be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible.
(C) Each viatical settlement licensee shall establish and at all times maintain a system of control over the content, form, and method of dissemination of an advertisement of its contracts, products, and services. An advertisement, regardless of by whom written, created, designed, or presented, is the responsibility of the licensee, as well as the individual who created or presented the advertisement. A system of control by the licensee must include regular routine notification, at least once a year, to agents and others authorized to disseminate advertisements, of the requirements and procedures for approval before the use of an advertisement not furnished by the licensee.
(D) An advertisement must be truthful and not misleading in fact or by implication. The form and content of an advertisement of a viatical settlement contract must be sufficiently complete and clear so as to avoid deception. It may not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive must be determined by the director 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.
(E) The information required to be disclosed pursuant to the provisions of this section may 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.
(1) An advertisement may not omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving the public as to the nature or extent of any benefit, loss covered, or state or federal tax consequence. The fact that the viatical settlement contract offered is made available for inspection before consummation of the sale, or an offer is made to refund the payment if the seller is not satisfied, or that the viatical settlement contract includes a 'free look' period that satisfies or exceeds legal requirements, does not remedy misleading statements.
(2) An advertisement may 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.
(3) An advertisement may 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.
(4) The words 'free', 'no cost', 'without cost', 'no additional cost', at no extra cost', or words of similar import may not be used with respect to a benefit or service unless true. An advertisement may specify the charge for a benefit or service or may state that a charge is included in the payment or use other appropriate language.
(5)(a) Any testimonial, appraisal, or analysis used in an advertisement must:
(i) be genuine;
(ii) represent the current opinion of the author;
(iii) be applicable to the viatical settlement contract, product, or service advertised, if any; and
(iv) be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective sellers as to the nature or scope of any testimonial, appraisal, analysis, or endorsement.
(b) In using any testimonial, appraisal, or analysis, the viatical settlement licensee makes as its own all the statements contained in them, and the statements are subject to all the provisions of this section.
(c) If the individual making a testimonial, appraisal, analysis, or an endorsement has a financial interest in the viatical settlement provider or related entity as a stockholder, director, officer, employee, or otherwise, or receives a benefit, directly or indirectly, other than required union scale wages, that fact must be disclosed prominently in the advertisement.
(d) An advertisement may not state or 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 an organization and the licensee is disclosed. If the entity making the endorsement or testimonial is owned, controlled, or managed by the licensee or receives payment or other consideration from the licensee for making an endorsement or testimonial, that fact must be disclosed in the advertisement.
(e) If an endorsement refers to benefits received under a viatical settlement contract, all pertinent information must be retained for a period of five years after its use.
(F) An advertisement may not contain statistical information unless it accurately reflects recent and relevant facts. The source of all statistics used in an advertisement must be identified.
(G) An advertisement may not disparage insurers, viatical settlement providers, insurance producers, policies, services, or methods of marketing.
(H) The name of the viatical settlement licensee must be identified clearly in all advertisements about the licensee or its viatical settlement contract, products, or services, and if any specific viatical settlement contract is advertised, the viatical settlement contract must be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the viatical settlement provider must be shown on the application.
(I) An advertisement may not use a trade name, group designation, name of the parent company of a licensee, name of a particular division of the licensee, service mark, slogan, symbol, or other device or reference without disclosing the name of the licensee, if the advertisement has the capacity or tendency to mislead or deceive as to the true identity of the licensee, or to create the impression that a company other than the licensee has any responsibility for the financial obligation under a viatical settlement contract.
(J) An advertisement may 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 sellers into believing that the solicitation is in some manner connected with a government program or agency.
(K) An advertisement may state that a licensee is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that the competing licensee may not be so licensed. The advertisement may ask the audience to consult the licensee's web site or contact that state's department of insurance to find out if that state requires licensing and, if so, whether the licensee or any other company is licensed.
(L) An advertisement may not create the impression that the 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) The name of the actual licensee must be stated in all of its advertisements. An advertisement may not use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol, or other device in a manner that has the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity has any responsibility for the financial obligation of the licensee.
(N) An advertisement may not, directly or indirectly, create the impression that any division or agency of the state or of the United States government endorses, approves, or favors:
(1) a licensee or its business practices or methods of operation;
(2) the merits, desirability, or advisability of a viatical settlement contract;
(3) any viatical settlement contract; or
(4) any policy or life insurance company.
(O) If the advertiser emphasizes the speed with which the viatical settlement contract occurs, 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 seller.
(P) If the advertising emphasizes the dollar amounts available to sellers, the advertising shall disclose the average purchase price as a percent of face value obtained by sellers contracting with the licensee during the past six months.
Section 38-64-120. (A)(1) A person may not commit a fraudulent viatical settlement act.
(2) A person, knowingly or intentionally, may not interfere with the enforcement of the provisions of this chapter or investigations of suspected or actual violations of this chapter.
(3) A person in the business of viatical settlements, knowingly or intentionally, may not permit a person convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements.
(B)(1) A viatical settlement contract and an application for a viatical settlement contract, regardless of the form of transmission, must 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, upon conviction, may be subject to fines or confinement in prison, or both.'
(2) The lack of a statement as provided for in item (1) does not constitute a defense in any prosecution for a fraudulent viatical settlement act.
(C)(1) A 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 director the information required by, and in a manner prescribed by, the director.
(2) Another person having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be, or has been committed may provide to the director the information required by, and in a manner prescribed by, the director.
(D)(1) A civil liability may not be imposed on and a cause of action may not 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:
(a) the director or the director's employees, agents, or representatives;
(b) federal, state, or local law enforcement or regulatory officials or their employees, agents, or representatives;
(c) a person involved in the prevention and detection of fraudulent viatical settlement acts or that person's agents, employees, or representatives;
(d) the National Association of Insurance Commissioners (NAIC), National Association of Securities Dealers (NASD), the North American Securities Administrators Association (NASAA), or their employees, agents, or representatives, or other regulatory body overseeing life insurance or viatical settlement contracts; or
(e) the insurer that issued the policy covering the life of the insured.
(2) Item (1) does not apply to a 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 item (1) does not apply because the person filing the report or furnishing the information did so with actual malice.
(3) A person identified in item (1) is entitled to an award of attorney's fees and costs if he is the prevailing party in a civil cause of action for libel, slander, or another 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 doing so. For purposes 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.
(4) This section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in item (1).
(5) Item (1) does not apply to a person's furnishing information concerning his own suspected, anticipated, or completed fraudulent viatical settlement acts or suspected, anticipated, or completed fraudulent insurance acts.
(E)(1) The documents and evidence provided pursuant to subsection (D) or obtained by the director in an investigation of suspected or actual fraudulent viatical settlement acts are privileged and confidential and are not a public record and are not subject to discovery or subpoena in a civil or criminal action.
(2) Item (1) does not prohibit release by the director of documents and evidence obtained in an investigation of suspected or actual fraudulent viatical settlement acts:
(a) in administrative or judicial proceedings to enforce laws administered by the director;
(b) to federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent viatical settlement acts, or to the NAIC; or
(c) at the discretion of the director, to a person in the business of viatical settlements that is aggrieved by a fraudulent viatical settlement act.
(3) Release of documents and evidence provided by item (2) does not abrogate or modify the privilege granted in item (1).
(F) This chapter does not:
(1) preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law;
(2) prevent or prohibit a person from disclosing voluntarily information concerning fraudulent viatical settlement acts to a law enforcement or regulatory agency other than the insurance department; or
(3) limit the powers granted elsewhere by the laws of this State to the director or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.
(G) A viatical settlement provider shall adopt anti-fraud initiatives reasonably calculated to detect, prosecute, and prevent fraudulent viatical settlement acts. The director may order or, if a licensee requests, may grant these modifications of the following required initiatives as necessary to ensure an effective anti-fraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications reasonably may be expected to accomplish the purpose of this section. Anti-fraud initiatives includes:
(1) fraud investigators, who may be a viatical settlement provider or employees or independent contractors of those viatical settlement providers; and
(2) an anti-fraud plan that be submitted to the director. The anti-fraud plan must include, but not be limited to a description:
(a) of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;
(b) of the procedures for reporting possible fraudulent viatical settlement acts to the director;
(c) of the plan for anti-fraud education and training of underwriters and other personnel; and
(d) or chart outlining the organizational arrangement of the anti-fraud 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.
(3) Anti-fraud plans submitted to the director are privileged and confidential and are not a public record pursuant to the provisions of Chapter 4, Title 30, and are not subject to discovery or subpoena in a civil or criminal action.
Section 38-64-130. (A) In addition to the penalties and other enforcement provisions of this chapter, if a person violates the provisions of this chapter or any regulation implementing this chapter, the director may seek an injunction in a court of competent jurisdiction and may apply for temporary and permanent orders as the director determines are necessary to restrain the person from committing the violation.
(B) A person damaged by the acts of a person in violation of this chapter may bring a civil action against the person committing the violation in a court of competent jurisdiction.
(C) The director may issue, in accordance with Article 3, Chapter 23, Title 1, a cease and desist order upon a person that violates any provision of this chapter, any regulation, or order adopted by the director, or any written agreement entered into with the director.
(D) When the director finds that an activity in violation of this chapter presents an immediate danger to the public that requires an immediate final order, the director may issue an emergency cease and desist order reciting with particularity the facts underlying the findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for ninety days. If the director begins nonemergency cease and desist proceedings, the emergency cease and desist order remains effective, absent an order by a court of competent jurisdiction pursuant to Article 3, Chapter 23, Title 1.
(E) In addition to the penalties and other enforcement provisions of this chapter, a person who violates this chapter is subject to civil penalties of up to ten thousand dollars for each violation. Imposition of civil penalties is pursuant to an order of the director issued under Article 3, Chapter 23, Title 1. The director's order may require a person found to be in violation of this chapter to make restitution to a person aggrieved by violations of this chapter.
(F)(1) A person who violates a provision of this chapter, upon conviction, must be ordered to pay restitution to a person aggrieved by the violation of this chapter. Restitution must be ordered in addition to a fine or imprisonment, but not instead of a fine or imprisonment.
(2) A person who violates a provision of this chapter, upon conviction, must be sentenced based on the greater of the value of property, services, or other benefits wrongfully obtained or attempted to obtain, or the aggregate economic loss suffered by any person as a result of the violation. A person may be fined not more than:
(a) one hundred thousand dollars or imprisoned not more than twenty years, or both, if the value of viatical settlement contract is more than thirty-five thousand dollars;
(b) twenty thousand dollars or imprisoned not more than ten years, or both, if the value of viatical settlement contract is more than twenty-five hundred dollars but not more than thirty-five thousand dollars;
(c) ten thousand dollars or imprisoned not more than five years, or both, if the value of viatical settlement contract is more than five hundred dollars but not more than two thousand five hundred dollars; or
(d) three thousand dollars or imprisoned not more than one year, or both, if the value of viatical settlement contract is five hundred dollars or less.
(3) A person convicted of a fraudulent viatical settlement act must be ordered to pay restitution to a person aggrieved by the fraudulent viatical settlement act. Restitution must be ordered in addition to a fine or imprisonment but not instead of a fine or imprisonment.
(4) In a prosecution provided by this section under item (3) of this subsection, the value of the a viatical settlement contract within a six-month period may be aggregated and the defendant charged accordingly in applying the provisions of this section. If two or more offenses are committed by the same person in two or more counties, the accused may be prosecuted in a county in which one of the offenses was committed for all of the offenses aggregated as provided by this section. The statute of limitations does not begin to run until the insurance company or law enforcement agency is aware of the fraud, but the prosecution may not be commenced later than seven years after the act has occurred.
Section 38-64-140. A violation of this chapter is considered an unfair trade practice pursuant to the provisions of Chapter 5, Title 39, and subject to the penalties contained in that chapter.
Section 38-64-150. The director has the authority to:
(1) promulgate regulations implementing this chapter;
(2) establish standards for evaluating reasonableness of payments under a viatical settlement contract for a person who is terminally or chronically ill. This authority includes, but is not limited to, regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise, or bequest of a benefit under a policy. A viatical settlement provider, where the insured is not terminally or chronically ill, shall pay an amount greater than the cash surrender value or accelerated death benefit then available;
(3) establish appropriate licensing requirements, fees, and standards for continued licensure for a viatical settlement provider and a fee for life insurance producers as provided for in Section 38-64-30;
(4) require a bond or other mechanism for financial accountability for a viatical settlement provider; and
(5) adopt rules governing the relationship and responsibilities of an insurer and a viatical settlement provider, life insurance producer, and others in the business of viatical settlements during the period of consideration or effectuation of a viatical settlement contract.
Section 38-64-160. Nothing in this chapter preempts or otherwise limits the provisions of the South Carolina Uniform Securities Act (Chapter 1, Title 35) or any regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the Attorney General or his designee acting pursuant to the South Carolina Uniform Securities Act. Compliance with the provisions of this chapter does not constitute compliance with any applicable provision of the South Carolina Uniform Securities Act and any amendments to it or any regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the Attorney General or his designee acting pursuant to the South Carolina Uniform Securities Act."
SECTION 2. A viatical settlement provider lawfully transacting business in this State may continue to do so pending approval or disapproval of the person's application for a license as long as the application is filed with the director not later than thirty days after publication by the director of an application form for licensure of these viatical settlement providers.
SECTION 3. Notwithstanding the provisions of Chapter 64, Title 38 of the 1976 Code, a person who has lawfully negotiated viatical settlement contracts between a seller and one or more viatical settlement providers for at least one year immediately before the effective date of this act may continue to negotiate viatical settlements in this State for a period of one year from the effective date of this act, provided that the person registers with the director on a form that may be prescribed by the director. This registration form must be published by the director not later than thirty days from the effective date of this act and shall require a person registering to evidence that he has lawfully negotiated viatical settlement contracts and include an acknowledgment by the person that he will operate in accordance with and comply with Chapter 64.
SECTION 4. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 5. This act takes effect one hundred eighty days after approval by the Governor.
This web page was last updated on Friday, December 4, 2009 at 3:27 P.M.