Sec. 38a-465j. Fraudulent life settlement acts prohibited. Confidentiality of documents and evidence. Antifraud plans.
Sec. 38a-465j. Fraudulent life settlement acts prohibited. Confidentiality of
documents and evidence. Antifraud plans. (a)(1) A person shall not commit a fraudulent life settlement act.
(2) "Fraudulent life settlement act" includes, but is not limited to:
(A) Acts or omissions committed by any person who, knowingly and 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, but not limited to:
(i) Presenting, causing to be presented or preparing with knowledge and belief that it
will be presented to or by a provider, premium finance lender, broker, insurer, insurance
producer or any other 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:
(I) An application for the issuance of a life settlement contract or insurance policy; (II) the
underwriting of a life settlement contract or insurance policy; (III) a claim for payment or
benefit pursuant to a life settlement contract or insurance policy; (IV) premiums paid
on an insurance policy; (V) payments and changes in ownership or beneficiary made
in accordance with the terms of a life settlement contract or insurance policy; (VI) the
reinstatement or conversion of an insurance policy; (VII) in the solicitation, offer to
enter into, or effectuation of a life settlement contract or insurance policy; (VIII) the
issuance of written evidence of a life settlement contract or insurance policy; (IX) any
application for or the existence of or any payments related to a loan secured directly or
indirectly by any interest in a life insurance policy; or (X) enter into any practice or plan
that involves stranger-originated life insurance;
(ii) Where the request for disclosure has been asked for by the insurer, failing to
disclose to the insurer that the prospective insured has undergone a life expectancy
evaluation by any person or entity other than the insurer or its authorized representative
in connection with the issuance of the policy;
(iii) Employing any device, scheme or artifice to defraud in the business of life
settlements; or
(iv) In the solicitation, application or issuance of a policy, employing any device,
scheme or artifice in violation of state insurable interest laws;
(B) In the furtherance of a fraud or to prevent the detection of a fraud any person
commits or permits its employees or its agents to:
(i) Remove, conceal, alter, destroy or sequester from the commissioner the assets
or records of a licensee or other person engaged in the business of life settlements;
(ii) Misrepresent or conceal the financial condition of a licensee, financing entity,
insurer or other person;
(iii) Transact the business of life settlements in violation of laws requiring a license,
certificate of authority or other legal authority for the transaction of the business of life
settlements;
(iv) File with the commissioner a document containing false information or otherwise concealing information about a material fact from the commissioner;
(v) Engage in embezzlement, theft, misappropriation or conversion of moneys,
funds, premiums, credits or other property of a provider, insurer, insured, owner, insurance, policy owner or any other person engaged in the business of life settlements or
insurance;
(vi) Knowingly and with intent to defraud, enter into, broker or otherwise deal in
a life settlement contract, the subject of which is a life insurance policy that was obtained
by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to
the policy, where the owner or the owner's agent intended to defraud the policy's issuer;
(vii) Attempt to commit, assist, aid or abet in the commission of, or conspiracy to
commit the acts or omissions specified in this subsection; or
(viii) Misrepresent the state of residence of an owner to be a state or jurisdiction
that does not have a law substantially similar to this part for the purpose of evading or
avoiding the provisions of this part.
(b) A person shall not knowingly or intentionally interfere with the enforcement of
the provisions of this part or investigations or suspected or actual violations of this part.
(c) A person in the business of life settlements shall not knowingly or intentionally
permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.
(d) (1) Life settlement contracts and applications for life settlement contracts shall
contain the following statement or a substantially similar statement, regardless of the
form of transmission: "Any person who knowingly presents false information in an
application for insurance or life settlement contract is guilty of a crime and may be
subject to fines and confinement in prison."
(2) The lack of a statement as required in subdivision (1) of this subsection shall
not constitute a defense in any prosecution for a fraudulent life settlement act.
(e) (1) Any person engaged in the business of life settlements having knowledge
or a reasonable belief that a fraudulent life settlement act is being, will be or has been
committed shall provide to the commissioner the information required by, and in a
manner prescribed by, the commissioner.
(2) Any other person having knowledge or a reasonable belief that a fraudulent life
settlement act is being, will be or has been committed shall provide to the commissioner
the information required by, and in a manner prescribed by, the commissioner.
(f) (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 life settlement acts or suspected or completed fraudulent insurance acts, if
the information is provided to or received from: (A) The commissioner or the commissioner'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 life settlement acts or that person's
agents, employees or representatives; (D) any regulatory body or their employees, agents
or representatives, overseeing life insurance, life settlements, securities or investment
fraud; (E) the life insurer that issued the life insurance policy covering the life of the
insured; or (F) the licensee or its agents, employees or representatives.
(2) Subdivision (1) of this subsection shall not apply to statements made with actual
malice. In an action brought against a person for filing a report or furnishing other
information concerning a fraudulent life settlement act or a fraudulent insurance act,
the party bringing the action shall plead specifically any allegation that subdivision (1)
of this subsection does not apply because the person filing the report or furnishing the
information did so with actual malice.
(3) A person identified in subdivision (1) of this subsection shall be entitled to an
award of attorney's fees and costs if such person is the prevailing party in a civil cause
of action for libel, slander or any other relevant tort arising out of activities in carrying
out the provisions of this part and the party bringing the action was not substantially
justified in doing so. For the purpose 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 subdivision (1) of this subsection.
(g) (1) The documents and evidence provided pursuant to subsection (f) of this
section or obtained by the commissioner in an investigation of suspected or actual fraudulent life settlement acts shall be privileged and confidential and shall not be a public
record or subject to discovery or subpoena in a civil or criminal action.
(2) Subdivision (1) of this subsection does not prohibit release by the commissioner
of documents and evidence obtained in an investigation of suspected or actual fraudulent
life settlement acts: (A) In administrative or judicial proceedings to enforce laws administered by the commissioner; (B) to federal, state or local law enforcement or regulatory
agencies, to an organization established for the purpose of detecting and preventing
fraudulent life settlement acts or to the National Association of Insurance Commissioners; or (C) at the discretion of the commissioner, to a person in the business of life
settlements that is aggrieved by a fraudulent life settlement act.
(3) Release of documents and evidence under subdivision (2) of this subsection
does not abrogate or modify the privilege granted in subdivision (1) of this subsection.
(h) Nothing in this part shall be construed to:
(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) Preempt, supersede, or limit any provision of any state securities law or any
rule, order or notice issued thereunder;
(3) Prevent or prohibit a person from voluntarily disclosing information concerning
life settlement fraud to a law enforcement or regulatory agency other than the Insurance
Department; or
(4) Limit the powers granted elsewhere by the laws of this state to the commissioner
or an insurance fraud unit to investigate and examine possible violations of law and to
take appropriate action against wrongdoers.
(i) (1) Providers and brokers shall have in place antifraud initiatives reasonably
calculated to detect, prosecute and prevent fraudulent life settlement acts. The commissioner may order, or a licensee may request and the commissioner may grant, such
modifications of the following required initiatives as necessary to ensure an effective
antifraud program. The modifications may be more or less restrictive than the required
initiatives as long as the modifications may reasonably be expected to accomplish the
purpose of this section. Antifraud initiatives shall include: (A) Fraud investigators, who
may be provider or broker employees or independent contractors; and (B) an antifraud
plan that shall be submitted to the commissioner.
(2) The antifraud plan specified in subparagraph (B) of subdivision (1) of this subsection shall include, but not be limited to:
(A) A description of the procedures for detecting and investigating possible fraudulent life settlement acts and procedures for resolving material inconsistencies between
medical records and insurance applications;
(B) A description of the procedures for reporting possible fraudulent life settlement
acts to the commissioner;
(C) A description of the plan for antifraud education and training of underwriters
and other personnel; and
(D) A description or chart outlining the organizational arrangement of the antifraud
personnel responsible for the investigation and reporting of possible fraudulent life settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.
(3) Antifraud plans submitted to the commissioner shall be privileged and confidential and shall not be a public record or subject to discovery or subpoena in a civil or
criminal action.
(P.A. 97-202, S. 12, 18; P.A. 99-145, S. 11, 23; P.A. 08-175, S. 11.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 deleted references to Secs. 38a-11(a) and 38a-816(19),
effective June 8, 1999; P.A. 08-175 replaced former Subsecs. (a) to (c) with new Subsecs. (a) to (h) re fraudulent life
settlement acts and new Subsec. (i) re antifraud initiatives and plans.