40-5012a. Same; violations; required notice provisions; notification of commissioner; availability of records to commissioner; sharing of records; conditions.
40-5012a
40-5012a. Same; violations; required noticeprovisions; notification of commissioner; availability of records tocommissioner; sharing of records; conditions.(a) No person shall:
(1) Commit a fraudulent viatical settlement act.
(2) Knowingly or intentionally interfere with the enforcement of anyprovision of this act or any investigation of suspected or actual violations ofthis act.
(3) Knowingly or intentionally permit any person, employed by a person inthe businessof viatical settlements, convicted of a felony involving dishonesty or breachof trust toparticipate in the business of viatical settlements. No person in the businessof viaticalsettlements shall knowingly or intentionally permit any person convicted of afelonyinvolving dishonesty or breach of trust to participate in the business ofviaticalsettlements.
(4) Issue, solicit, market or otherwise promote the purchase of an insurancepolicy for the solepurpose of or with the primary emphasis on settling the policy.
(5) Employ any device, scheme or artifice in violation of K.S.A. 40-450,andamendments thereto, in the solicitation, application or issuance of a lifeinsurance policy.
(6) Receive, when providing premium financing, any proceeds, fees or otherconsideration from the policy or owner of the policy that are in addition tothe amountsrequired to pay the principal, interest and costs or expenses incurred by thelender orborrower related to policy premiums paid under the premium financing agreement,exceptfor the event of a default unless either the default on such loan or thetransfer of the policyin connection with such default occurs pursuant to an agreement orunderstanding withany other person for the purpose of evading regulation under this act.
(b) (1) Viatical settlements, contracts and applications for viaticalsettlements, regardless of theform of transmission, shall contain the following statement or a substantiallysimilar statement:
"Any person who knowingly presents false information in an application forinsurance or viaticalsettlement contract is guilty of a crime and may be subject to fines andconfinement in prison."
(2) The lack of a statement as required in paragraph (1) shall notconstitute a defense inany prosecution for a fraudulent viatical settlement act.
(c) (1) Any person engaged in the business of viatical settlements havingknowledge or areasonable belief that a fraudulent viatical settlement act is being, will beor has been committedshall provide to the commissioner the information required by, and in a mannerprescribed by,the commissioner.
(2) Any other person having knowledge or a reasonable belief that afraudulent viaticalsettlement act is being, will be or has been committed may provide to thecommissionerthe information required by, and in a manner prescribed by, the commissioner.
(d) (1) No civil liability shall be imposed on and no cause of action shallarise from aperson's furnishing information concerning suspected, anticipated or completedfraudulent viatical settlement acts or suspected or completed fraudulentinsurance acts, if the information isprovided to or received from:
(A) The commissioner or the commissioner's employees, agents orrepresentatives;
(B) federal, state or local law enforcement or regulatory officials ortheir employees,agents or representatives;
(C) any person involved in the prevention and detection of fraudulentviatical settlementacts or that person's agents, employees or representatives;
(D) the NAIC, national association of securities dealers, the North Americansecuritiesadministrators association, or their employees, agents or representatives, orotherregulatory body overseeing life insurance, viatical settlements, securities orinvestmentfraud; or
(E) the life insurer that issued the life insurance policy covering the lifeof the insured.
(2) Paragraph (1) shall not apply to statements made with actual malice. Inan actionbrought against a person for filing a report or furnishing other informationconcerning afraudulent viatical settlement act or a fraudulent insurance act, the partybringing theaction shall plead specifically any allegation that paragraph (1) does notapply because theperson filing the report or furnishing the information did so with actualmalice.
(3) A person identified in paragraph (1) shall be entitled to an award ofattorney fees andcosts if such person is the prevailing party in a civil cause of action forlibel, slander orany other relevant tort arising out of activities in carrying out theprovisions of this actand the party bringing the action was not substantially justified in doing so.For purposesof this section a proceeding is substantially justified if it had a reasonablebasis in law orfact at the time that it was initiated.
(4) This section does not abrogate or modify common law or statutoryprivileges orimmunities enjoyed by a person described in paragraph (1).
(e) (1) The documents and evidence provided pursuant to subsection (d) ofthis section orobtained by the commissioner in an investigation of suspected or actualfraudulent viaticalsettlement acts shall be privileged and confidential and shall not be a publicrecord and shall notbe subject to discovery or subpoena in a civil or criminal action.
(2) Paragraph (1) of this subsection shall not prohibit release by thecommissioner ofdocuments and evidence obtained in an investigation of suspected or actualfraudulentviatical settlement acts:
(A) In administrative or judicial proceedings to enforce laws administered bythecommissioner;
(B) to federal, state or local law enforcement or regulatory agencies, to anorganizationestablished for the purpose of detecting and preventing fraudulent viaticalsettlement actsor to the NAIC;
(C) at the discretion of the commissioner or pursuant to a court order, to aperson in thebusiness of viatical settlements that is aggrieved by a fraudulent viaticalsettlement act; or
(D) at the discretion of the commissioner or pursuant to a court order, to a person that isaggrieved by a fraudulent viatical settlement act.
(3) Release of documents and evidence under subparagraphs (A) and (B) ofparagraph (2)of this subsection does not abrogate or modify the privilege granted inparagraph (1).
(4) The provisions of this subsection shall expire July 1, 2013, unless thelegislature actsto reenact such provisions. The provisions of this section shall be reviewed bythe legislature prior to July 1, 2013.
(f) This act shall not:
(1) Preempt the authority or relieve the duty of other law enforcement orregulatoryagencies to investigate, examine and prosecute suspected violations of law;
(2) preempt, supersede or limit any provision of any state securities lawor any rule, order or notice issued thereunder;
(3) prevent or prohibit a person from disclosingvoluntarily informationconcerningviatical settlement fraud to a law enforcement or regulatory agency other thantheinsurance department; or
(4) limit the powers granted elsewhere by the laws of thisstate to thecommissioner or aninsurance fraud unit to investigate and examine possible violations of lawand to takeappropriate action against wrongdoers.
(g) Viatical settlement providers and viatical settlement brokers shall havein place antifraudinitiatives reasonably calculated to detect, prosecute and prevent fraudulentviatical settlementacts. At the discretion of the commissioner, the commissioner may order, or alicensee mayrequest and the commissioner may grant, such modifications of the followingrequired initiativesas necessary to ensure an effective antifraud program. The modifications may bemore or lessrestrictive than the required initiatives so long as the modificationsreasonably may be expectedto accomplish the purpose of this section. Antifraud initiatives shall include:
(1) Fraud investigators, who may be viatical settlement providers or viaticalsettlementbroker employees or independent contractors; and
(2) an antifraud plan, which shall be submitted to the commissioner. Theantifraud planshall include, but not be limited to:
(A) A description of the procedures for detecting and investigating possiblefraudulentviatical settlement acts and procedures for resolving material inconsistenciesbetweenmedical records and insurance applications;
(B) a description of the procedures for reporting possible fraudulentviatical settlementacts to the commissioner;
(C) a description of the plan for antifraud education and training ofunderwriters andother personnel; and
(D) a description or chart outlining the organizational arrangement of theantifraudpersonnel who are responsible for the investigation and reporting of possiblefraudulentviatical settlement acts and investigating unresolved material inconsistenciesbetweenmedical records and insurance applications; and
(3) antifraud plans submitted to the commissioner shall be privileged andconfidential andshall not be a public record and shall not be subject to discovery or subpoenain a civil or criminal action.
History: L. 2008, ch. 96, § 3;L. 2009, ch. 21, § 1; July 1.