Chapter 13 - Trade Practices And Frauds
CHAPTER 13 - TRADE PRACTICES AND FRAUDS
ARTICLE 1 - UNFAIR TRADE PRACTICES ACT
26-13-101. Short title.
Thisarticle constitutes and may be cited as the "Unfair Trade PracticesAct".
26-13-102. Unfair methods and deceptive acts prohibited.
Noperson shall engage in this state in any trade practice which is defined inthis article as or is determined pursuant to this article to be an unfairmethod of competition or an unfair or deceptive act or practice in the businessof insurance.
26-13-103. Misrepresentations and false advertising prohibited.
(a) No person shall:
(i) Make, issue, circulate, or cause to be made, issued orcirculated, any estimate, circular or statement misrepresenting the terms ofany policy issued or to be issued or the benefits or advantages promisedthereby or the dividends or share of the surplus to be received thereon;
(ii) Make any false or misleading statement as to the dividendsor share of surplus previously paid on similar policies;
(iii) Make any misleading representation or any misrepresentationas to the financial condition of any insurer or as to the legal reserve systemupon which any life insurer operates; or
(iv) Use any name or title of any policy or class of policiesmisrepresenting the true nature thereof.
26-13-104. Home office false advertising prohibited.
Noperson shall make in any manner in any advertising or other communicationmedium any advertisement, announcement or statement containing any assertion,representation or statement with respect to the business of insurance or withrespect to any person in the conduct of his insurance business, which isuntrue, deceptive or misleading.
26-13-105. "Twisting" prohibited.
Noperson shall make or issue, nor cause to be made or issued, any written or oralstatement misrepresenting or making incomplete comparisons as to the terms,conditions or benefits contained in any policy for the purpose of inducing orattempting to induce the policyholder to lapse, forfeit, surrender, retain,exchange or convert any insurance policy.
26-13-106. False or misleading financial statements prohibited.
(a) No person shall:
(i) File with any supervisory or other public official or inany manner place or cause to be placed before any other person, any falsestatement of financial condition of an insurer with intent to deceive;
(ii) Make any false entry in any book, report or statement ofany insurer with intent to deceive:
(A) Any agent or examiner lawfully appointed to examine intoits condition or into any of its affairs; or
(B) Any public official to whom the insurer is required by lawto report, or who has authority by law to examine into its condition or intoany of its affairs.
(iii) With intent to deceive, willfully omit a true entry of anymaterial fact pertaining to the insurer's business in any book, report orstatement of the insurer; or
(iv) Advertise the capital or assets of an insurer without inthe same advertisement setting forth the amount of the insurer's liabilities inequal prominence to the statement of capital and assets.
26-13-107. Defamation prohibited.
Noperson shall make or aid, abet or encourage the making in any manner in anycommunication medium of any oral or written statement which is false ormaliciously critical of or derogatory to an insurer's financial condition, orof an organization proposing to become an insurer, and which is made to injureany person engaged or proposing to engage in the insurance business.
26-13-108. Boycott, coercion and intimidation prohibited; exception.
Noperson shall enter into any agreement to commit, or by any concerted actioncommit, any act of boycott, coercion or intimidation resulting in unreasonablerestraint of or any monopoly in any business of insurance, except that aninsurer owned or controlled by an association or organization may refuse torenew a casualty or liability policy because of nonpayment of dues to theassociation or organization if payment of dues is a prerequisite to obtainingor continuing the insurance.
26-13-109. Unfair discrimination prohibited in regard to lifeinsurance, annuities and disability insurance.
(a) No person shall make or permit any unfair discriminationbetween individuals:
(i) Of the same class and equal expectation of life in therates charged for any contract of life insurance or of life annuity or in thedividends or other benefits payable thereon, or in any other of the terms andconditions of that contract;
(ii) Of the same class and of essentially the same hazard in:
(A) The amount of premium, policy fees or rates charged for anypolicy or contract of disability insurance;
(B) The benefits payable thereunder;
(C) Any of the terms or conditions of the contract; or
(D) Any other manner.
(b) If a disability insurance contract provides for payment orreimbursement for services which may be legally performed by a person licensedin this state for the practice of dentistry, payment or reimbursement shall notbe denied or refused solely for the reason that the services are rendered by aperson licensed to practice dentistry.
26-13-110. Rebates and favors as to life, disability and annuitycontracts prohibited.
(a) Except as otherwise provided by law, no person shall:
(i) Knowingly permit or offer to make or make any contract oflife insurance, life annuity or disability insurance, or agreement as to thatcontract other than as expressed in the contract issued thereon;
(ii) Pay, allow or give or offer to pay, allow or give in anymanner as inducement to the insurance or annuity:
(A) Any rebate of premiums payable on the contract;
(B) Any special favor or advantage in the dividends or otherbenefits thereon;
(C) Any paid employment or contract for services of any kind;or
(D) Any valuable consideration or inducement not specified inthe contract.
(iii) In any manner give, sell or purchase or offer or agree togive, sell, purchase or allow as inducement to the insurance or annuity or inconnection therewith, and whether or not to be specified in the policy orcontract, any agreement of any form or nature promising:
(A) Returns and profits;
(B) Any stocks, bonds or other securities, or interest presentor contingent therein or as measured thereby, of any insurer or othercorporation, association or partnership; or
(C) Any dividends or profits accrued or to accrue thereon.
26-13-111. Exceptions to provisions on discrimination, rebates andstock inducements.
(a) Nothing in W.S. 26-13-109 and 26-13-110 includes within thedefinition of discrimination or rebates any of the following practices:
(i) In the case of any contract of life insurance or lifeannuity, paying bonuses to policyholders or otherwise abating their premiums inwhole or in part out of surplus accumulated from nonparticipating insurance,provided that any such bonuses or abatement of premiums shall be fair andequitable to policyholders and for the insurer and its policyholders' bestinterests;
(ii) In the case of life insurance policies issued on theindustrial debit plan, making allowance to policyholders who have continuouslyfor a specified period made premium payments directly to an office of theinsurer in an amount which fairly represents the saving in collection expense;
(iii) Readjustment of the rate of premium for a group insurancepolicy based on the loss or expense experience thereunder, at the end of thefirst or any subsequent policy year of insurance thereunder, which may be maderetroactive only for that policy year;
(iv) Reduction of premium rate for policies of large amount, butnot exceeding savings in issuance and administration expenses reasonablyattributable to those policies as compared with policies of a similar planissued in smaller amounts;
(v) Reduction in premium rates for life or disability insurancepolicies on annuity contracts on salary savings, payroll deduction,preauthorized check, bank draft or similar plans in amounts reasonablycommensurate with the savings made by the use of those plans.
(b) Nothing in W.S. 26-13-109, 26-13-110 and 26-13-114 includeswithin the definition of securities as inducements to purchase insurance, theselling or offering for sale, contemporaneously with life insurance, of mutualfund shares or face amount certificates of regulated investment companies underofferings registered with the securities and exchange commission if the sharesor the face amount certificates or the insurance may be purchased independentlyof and not contingent upon purchase of the other, at the same price and uponthe same terms and conditions as if purchased independently.
26-13-112. Unfair discrimination, rebates and favors prohibited forproperty, casualty and surety insurers.
(a) No property, casualty or surety insurer or any employee orrepresentative thereof, and no broker or agent shall pay, allow or give, oroffer to pay, allow or give, in any manner, as an inducement to insurance, orafter insurance has been effected, any valuable consideration or inducement ofany kind not specified or provided for in the policy, except to the extentprovided for in an applicable filing with the commissioner as provided by law.
(b) No insured named in a policy, nor any employee of theinsured shall knowingly receive or accept in any manner any rebate, discount,abatement credit or reduction of premium, or any special favor, advantage,valuable consideration or inducement.
(c) No insurer shall make or permit any unfair discriminationbetween insureds or property having like insuring or risk characteristics, inthe premium or rates charged for insurance, in the dividends or other benefitspayable on the insurance or in any other of the terms and conditions of theinsurance.
(d) Nothing in this section prohibits:
(i) The payment of commissions or other compensation tolicensed agents or brokers; or
(ii) Any insurer from allowing or returning to its participatingpolicyholders, members or subscribers, dividends, savings or unabsorbed premiumdeposits.
(e) As used in this section:
(i) "Insurance" includes suretyship;
(ii) "Policy" includes bond.
26-13-113. Deductible amount of collision coverage; subrogation; rightto deductible.
(a) If an insurer pays a loss claim to its insured and theinsurer decides to subrogate to the insured's loss claim, the deductible amountshall be included in the subrogated loss claim and the insurance carrier shallpay the deductible amount to its insured, without any deduction for expenses ofcollection, out of any recovery on the subrogated claim, before any part of therecovery is applied to any other use. If the amount of the deductible exceedsthe recovery, the insurer shall pay only the amount of the recovery to theinsured.
(b) If in any arbitration of the subrogated claim two (2) ormore insurers agree to offset the claims of their insureds, the right of anyinsured to the return of his full deductible amount shall not be abridged.
26-13-114. Securities operations and advisory board contracts asinsurance inducement prohibited.
Noinsurer or other person shall offer, issue or deliver or permit its agents,officers or employees to offer, issue or deliver, in this or any other state,agency company stock or other capital stock, benefit certificates, shares inany common-law corporation or any advisory board contract promising returns andprofits as an inducement to insurance.
26-13-115. Desist orders by commissioner; appeal; violation of order.
(a) If the commissioner finds that any person in this state,after a hearing in which the person is notified of the hearing and the chargesagainst him, has engaged or is engaging in any act or practice defined in orprohibited under this chapter, the commissioner shall order the person todesist from the acts or practices.
(b) The desist order is final upon expiration of the timeallowed for appeals from the commissioner's orders, if no appeal is taken, or,if there is an appeal, upon final decision of the court if the court affirmsthe commissioner's order or dismisses the appeal. An intervenor in the hearingmay appeal as provided in W.S. 26-2-129.
(c) If there is an appeal, to the extent that thecommissioner's order is affirmed, the court shall issue its own ordercommanding obedience to the terms of the commissioner's order.
(d) No order of the commissioner pursuant to this section ororder of the court to enforce it in any way relieves or absolves any personaffected by the order from any other liability, penalty or forfeiture underlaw.
(e) Violation of any desist order is punishable as a violationof this code.
(f) This section does not affect or prevent the imposition ofany penalty provided by this code or by other law for violation of any otherprovision of this chapter, whether or not any hearing is called or held or anydesist order issued.
26-13-116. Procedures for undefined deceptive practices.
(a) If the commissioner believes that any person in conductingan insurance business in this state is engaging in any method of competition orin any act or practice, not defined in this chapter, which is unfair or deceptiveand that a proceeding by him in respect thereto would be in the publicinterest, after a hearing in which the person charged receives a notice of thehearing and of the charges against him, the commissioner shall make a writtenreport of his findings of fact relative to the charges and serve a copy thereofupon the person and any intervenor at the hearing.
(b) If the commissioner's report charges a violation of thischapter and if the method of competition, act or practice is not discontinued,the commissioner, through the attorney general, at any time after service ofthe report, may cause an action to be instituted to enjoin and restrain theperson from engaging in the method, act or practice. In the action the courtmay grant a restraining order or injunction upon any just terms, but the peopleof this state are not required to give security before the issuance of theorder or injunction. If a stenographic record of the proceedings in the hearingbefore the commissioner is made, a certified transcript thereof including allevidence taken and the report and findings shall be received in evidence in theaction.
(c) If the commissioner's report made under subsection (a) ofthis section or order on hearing made under W.S. 26-2-128 does not charge a violationof this chapter, then any intervenor in the proceedings may appeal within thetime and in the manner provided in W.S. 26-2-129(b).
26-13-117. Service of process upon unauthorized insurers.
(a) Service of all process, statements of charges and noticesunder this chapter upon unauthorized insurers shall be made in accordance withW.S. 26-3-122.
(b) The commissioner shall forward all process, statements ofcharges and notices to the insurer in the manner provided in W.S. 26-3-122.
(c) No default shall be taken against any unauthorized insureruntil expiration of thirty (30) days after the date of forwarding by thecommissioner under subsection (b) of this section, or date of service ofprocess if under W.S. 26-12-203(b).
(d) W.S. 26-12-203(d) applies to all process, statements ofcharges and notices under this section.
26-13-118. Favored agent or insurer.
(a) No person shall require as a condition to loaning moneyupon the security of any real or personal property, or to the selling of thatproperty under contract, that the owner of the property to whom the money is tobe loaned or the vendee of the property being sold, shall place, continue orrenew any policy of insurance covering the property, or covering any liabilityrelated to the property or the use thereof, through a particular insuranceagent or broker or in a particular insurer. This does not prevent the lender orvendor, upon a reasonable basis, from approving or disapproving of the insurerand representative selected to underwrite the insurance, but the basis forapproval or disapproval shall relate only to:
(i) The adequacy and terms of the coverage with respect to theinterest of the vendor or lender to be insured thereunder;
(ii) The financial standards to be met by the insurer; and
(iii) The ability of the insurer or representative to service thepolicy.
26-13-119. Interlocking ownership and management.
(a) Any insurer may retain, invest in or acquire the whole orany part of the capital stock of any other insurer, or have a common managementwith any other insurer, unless the retention, investment, acquisition or commonmanagement is inconsistent with any other provision of this code, or unless byreason thereof the insurers' business with the public is conducted in a mannerwhich substantially lessens competition generally in the insurance business ortends to create any monopoly therein.
(b) Any person otherwise qualified may be a director of two (2)or more insurers which are competitors, unless the effect thereof is to lessensubstantially competition between insurers or tends materially to create amonopoly.
26-13-120. Political contributions prohibited; penalty.
(a) No insurer shall in any manner pay or use, or offer,consent or agree to pay or use, any money or property:
(i) For or in aid of any:
(A) Political party, committee or organization;
(B) Corporation or other body organized or maintained forpolitical purposes;
(C) Candidate for political office;
(D) Nomination for office; or
(E) Other political purpose; or
(ii) For the reimbursement or indemnification of any person formoney or property so used.
(b) Any officer, director, stockholder, attorney or agent ofany insurer which violates this section, who participates in, aids, abets,advises or consents to any such violation, and any person who solicits orknowingly receives any money or property in violation of this section, isguilty of a misdemeanor and shall be punished by imprisonment for not more thanone (1) year and a fine of not more than one thousand dollars ($1,000.00). Anyofficer or director abetting in any contribution made in violation of thissection is liable to the insurer for the amount so contributed.
(c) This section does not prohibit an insurer from otherwiselawful expenditures for presentation of information to legislators relative toproposed legislation affecting the insurer.
26-13-121. Illegal dealing in premiums; excess charges for insurance.
(a) No person shall willfully collect any sum as premium orcharge for insurance:
(i) If the insurance is not then provided or is not in duecourse to be provided, subject to the insurer's acceptance of the risk, by aninsurance policy issued by the insurer as authorized by this code;
(ii) In excess of the premium or charge applicable to theinsurance, and as specified in the policy, in accordance with the applicableclassifications and rates as filed with and approved by the commissioner; or
(iii) In cases where classifications, premiums or rates are notrequired by this code to be filed and approved, in excess of those specified inthe policy and as fixed by the insurer.
(b) Subsection (a) of this section does not prohibit thecharging and collection by surplus lines brokers licensed under chapter 11 ofthis code of the amount of applicable state and federal taxes, examination feeand nominal service charge to cover communication expenses, in addition to thepremium required by the insurer. Nor does it prohibit the charging andcollection by a life insurer of amounts actually to be expended for medicalexamination of an applicant for life insurance or for reinstatement of a lifeinsurance policy.
(c) Each violation of this section is punishable under W.S.26-1-107.
26-13-122. Fictitious groups prohibited.
(a) No authorized or unauthorized insurer shall make available,through any rating plan or form, property, casualty or surety insurance to anyfirm, corporation or association of individuals at any preferred rate orpremium based upon any fictitious grouping of the firm, corporation orassociation.
(b) No form or plan of insurance covering any group orcombination of persons or risks shall be written or delivered within or outsidethis state to cover persons or risks in this state at any preferred rate or onany form other than as offered to persons not in the group or combination andto the public generally, unless the form, plan of insurance and the rates orpremiums to be charged therefor have been submitted to and approved by thecommissioner as being not unfairly discriminatory, and as not otherwise beingin conflict with subsection (a) of this section or with chapter 14 of this codeto the extent that chapter 14 is applicable thereto.
(c) This section does not apply to life insurance, disabilityinsurance or annuity contracts.
26-13-123. Repealed by Laws 1995, ch. 175, 2.
26-13-124. Unfair claims settlement practices.
(a) A person is considered to be engaging in an unfair methodof competition and unfair and deceptive act or practice in the business ofinsurance if that person commits or performs with such frequency as to indicatea general business practice any of the following unfair claims settlementpractices:
(i) Misrepresenting pertinent facts or insurance policyprovisions relating to coverages at issue;
(ii) Failing to acknowledge and act reasonably promptly uponcommunications with respect to claims arising under insurance policies;
(iii) Failing to adopt and implement reasonable standards for theprompt investigation of claims arising under insurance policies;
(iv) Refusing to pay claims without conducting a reasonableinvestigation based upon all available information;
(v) Failing to affirm or deny coverage of claims within areasonable time after proof of loss statements have been completed;
(vi) Not attempting in good faith to effectuate prompt, fair andequitable settlements of claims in which liability has become reasonably clear;
(vii) Compelling insureds to institute litigation to recoveramounts due under an insurance policy by offering substantially less than theamounts ultimately recovered in actions brought by such insureds;
(viii) Attempting to settle a claim for less than the amount towhich a reasonable person would have believed he was entitled by reference towritten or printed advertising material accompanying or made part of anapplication;
(ix) Attempting to settle claims on the basis of an applicationwhich was altered without notice to, or knowledge or consent of, the insured;
(x) Making claims payments to insureds or beneficiaries notaccompanied by a statement setting forth the coverage under which the paymentsare being made;
(xi) Making known to insureds or claimants a policy of appealingfrom arbitration awards in favor of insureds or claimants for the purpose ofcompelling them to accept settlements or compromises less than the amountawarded in arbitration;
(xii) Delaying the investigation or payment of claims byrequiring an insured, claimant or the physician of either to submit apreliminary claim report and then requiring the subsequent submission of formalproof of loss forms, both of which submissions contain substantially the sameinformation;
(xiii) Failing to promptly settle claims, where liability hasbecome reasonably clear, under one (1) portion of the insurance policy coveragein order to influence settlements under other portions of the insurance policycoverage;
(xiv) Failing to promptly provide a reasonable explanation of thebasis in the insurance policy in relation to the facts or applicable law fordenial of a claim or for the offer of a compromise settlement;
(xv) Denying or failing to timely pay disability insuranceclaims for medically necessary services, procedures or supplies as required byW.S. 26-40-201;
(xvi) Failing to comply with the external review proceduresrequired by W.S. 26-40-201; or
(xvii) Failing to pay a claim after an external revieworganization has declared such claim to be a benefit covered under the terms ofthe insurance policy.
ARTICLE 2 - FALSE APPLICATIONS, CLAIMS AND PROOF OF LOSS
26-13-201. False applications, claims and proofs of loss prohibited.
(a) No person shall knowingly or willfully:
(i) Make any false or fraudulent statement or representation inor with reference to any application for insurance or for the purpose ofobtaining any money or benefit;
(ii) Present or cause to be presented a false or fraudulentclaim or any proof in support of a claim for the payment of the loss upon acontract of insurance;
(iii) Prepare, make or subscribe a false or fraudulentcertificate, or other document with intent that the certificate or otherdocument may be presented or used in support of the claim.
26-13-202. Penalties.
Anyperson who violates this article is subject to the penalty provided in W.S.26-1-107, or as provided by any other applicable law which provides a greaterpenalty.
ARTICLE 3 - DISCRETIONARY CLAUSE PROHIBITION ACT
26-13-301. Short title.
This act shall be known and may be cited as the"Discretionary Clause Prohibition Act."
26-13-302. Purpose and intent.
The purpose of this act is to assure that health insurancebenefits not subject to the federal Employee Retirement Income Security Act arecontractually guaranteed, and to avoid the conflict of interest that occurswhen the carrier responsible for providing benefits has discretionary authorityto decide what benefits are due. This act is also intended to assure thathealth insurance benefits contracts subject to the federal Employee RetirementIncome Security Act which contain a discretionary clause provide appropriatedisclosure of the clause and additional provisions to assure a fairdetermination of contract benefits. Nothing in this act shall be construed as imposingany requirement or duty on any person other than a health carrier.
26-13-303. Definitions.
(a) As used in this act:
(i) "Commissioner" means as defined in W.S.26-1-102(a)(viii);
(ii) "Health care services" means services for thediagnosis, prevention, treatment, cure or relief of a health condition,illness, injury or disease;
(iii) "Health carrier" means an entity subject to theinsurance laws and regulations of this state, or subject to the jurisdiction ofthe commissioner, that contracts or offers to contract to provide, deliver,arrange for, pay for or reimburse any of the costs of health care services,including a sickness and accident insurance company, a health maintenanceorganization, a nonprofit hospital and health service corporation, or any otherentity providing a plan of health insurance, health benefits or healthservices;
(iv) "Person" means as defined in W.S. 8-1-102(a)(vi);
(v) "This act" means W.S. 26-13-301 through26-13-305.
26-13-304. Discretionary clause prohibited.
(a) No policy, contract, certificate or agreement offered orissued in this state by a health carrier to provide, deliver, arrange for, payfor or reimburse any of the costs of health care services may contain aprovision purporting to reserve discretion to the health carrier to interpretthe terms of the contract, or to provide standards of interpretation or reviewthat are inconsistent with the laws of this state. This subsection shall notapply to a policy, contract, certificate or agreement subject to and meetingthe requirements of subsections (b) and (c) of this section.
(b) Any group policy, contract, certificate or agreementsubject to the federal Employee Retirement Income Security Act and offered orissued in this state by a health carrier to provide, deliver, arrange for, payfor or reimburse any of the costs of health care services and which contains aprovision purporting to reserve discretion to the health carrier to interpretthe terms of the contract or to provide standards of interpretation or reviewshall contain the following language highlighted in bold in not less thantwelve (12) point type:
This benefit plancontains a discretionary clause. Determinations made by (insurer name)pursuant to the discretionary clause do not prohibit or prevent a claimant fromseeking judicial review in court of (insurer name's) decisions. By includingthis discretionary clause (insurer's name) agrees to allow a court to reviewits determinations anew when a claimant seeks judicial review of (insurername's) determinations of eligibility of benefits, the payment of benefits orinterpretations of the terms and conditions applicable to the benefit plan.
(c) Any group policy, contract, certificate or agreementcontaining a discretionary clause as authorized in subsection (b) of thissection shall contain a provision entitling any person denied benefits in wholeor in part to have the determination reviewed de novo in any court withjurisdiction.
26-13-305. Penalties.
Any person who violates this act is subject to the penaltyprovided in W.S. 26-1-107, or as provided by any other applicable law whichprovides a greater penalty.