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House File 2317

Partial Bill History

Bill Text

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  1  1                                           HOUSE FILE 2317     
  1  2                                    
  1  3                             AN ACT
  1  4 RELATING TO ENTITIES AND SUBJECT MATTER UNDER THE REGULATORY 
  1  5    AUTHORITY OF THE INSURANCE DIVISION, INCLUDING MOTOR VEHICLE 
  1  6    SERVICE CONTRACTS, SECURITIES, BUSINESS OPPORTUNITIES, 
  1  7    RESIDENTIAL SERVICE CONTRACTS, RETIREMENT CARE CONTRACTS, 
  1  8    TRANSFER ON DEATH PROBATE PROVISIONS, VIATICAL SETTLEMENT 
  1  9    CONTRACTS; AND ESTABLISHING PENALTIES AND MAKING PENALTIES 
  1 10    APPLICABLE.  
  1 11 
  1 12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1 13 
  1 14                           DIVISION I 
  1 15                 MOTOR VEHICLE SERVICE CONTRACTS 
  1 16    Section 1.  Section 321I.1, subsection 1, Code 1999, is
  1 17 amended to read as follows:
  1 18    1.  "Commissioner" means the commissioner of insurance as
  1 19 provided in section 505.1 or the deputy administrator
  1 20 appointed under section 502.601.
  1 21    Sec. 2.  Section 321I.1, Code 1999, is amended by adding
  1 22 the following new subsection:
  1 23    NEW SUBSECTION.  6A.  "Record" means information stored or
  1 24 preserved in any medium, including in an electronic or paper
  1 25 format.  A record includes but is not limited to documents,
  1 26 books, publications, accounts, correspondence, memoranda,
  1 27 agreements, computer files, film, microfilm, photographs, and
  1 28 audio or visual tapes.
  1 29    Sec. 3.  Section 321I.2, subsection 2, Code 1999, is
  1 30 amended to read as follows:.
  1 31    2.  The issuer of a reimbursement insurance policy shall
  1 32 not cancel a reimbursement insurance policy unless a written
  1 33 notice has been received by the insurance division
  1 34 commissioner and by each applicable provider, including
  1 35 automobile dealers and third-party administrators, which.  The
  2  1 notice shall fix the date of cancellation at a date no earlier
  2  2 than ten days after receipt of the notice by the insurance
  2  3 division commissioner and by the applicable provider.  The
  2  4 notice may be made in person or by mail and a post office
  2  5 department receipt of certified or registered mailing shall be
  2  6 deemed proof of receipt of the notice.
  2  7    Sec. 4.  Section 321I.3, subsection 2, Code 1999, is
  2  8 amended to read as follows:
  2  9    2.  In addition to any other required filings, a true and
  2 10 correct an accurate copy of the service contract and the
  2 11 provider's reimbursement insurance policy, the consent to
  2 12 service of process on the commissioner, and such other
  2 13 information as the commissioner requires, shall be filed
  2 14 annually with the commissioner no later than the first day of
  2 15 August.  If the first day of August falls on a weekend or a
  2 16 holiday, the date for filing shall be the next business day.
  2 17 In addition to the annual filing, the provider shall promptly
  2 18 file copies of any amended documents if material amendments
  2 19 have been made in the materials on file with the division
  2 20 commissioner.  If an annual filing is made after the first of
  2 21 August and sales have occurred during the period when the
  2 22 provider was in noncompliance with this section, the division
  2 23 commissioner shall assess an additional filing fee that is two
  2 24 times the amount normally required for an annual filing.  A
  2 25 fee shall not be charged for interim filings made to keep the
  2 26 materials filed with the division current and accurate.  The
  2 27 annual filing shall be accompanied by a filing fee determined
  2 28 by the commissioner which shall be sufficient to defray the
  2 29 costs of administering this chapter.
  2 30    Sec. 5.  Section 321I.3, Code 1999, is amended by adding
  2 31 the following new subsection:
  2 32    NEW SUBSECTION.  3.  a.  A motor vehicle service contract
  2 33 provider shall promptly file the following information with
  2 34 the insurance commissioner:
  2 35    (1)  A change in the name or ownership of the provider.
  3  1    (2)  The termination of the provider's business.
  3  2    b.  The provider is not required to submit a fee as part of
  3  3 this filing.
  3  4    Sec. 6.  Section 321I.10, Code 1999, is amended to read as
  3  5 follows:
  3  6    321I.10  MISREPRESENTATIONS OF STATE APPROVAL.
  3  7    It is unlawful for a A motor vehicle service contract
  3  8 provider to shall not represent or imply in any manner that
  3  9 the provider has been sponsored, recommended, or approved or
  3 10 that the provider's abilities or qualifications have in any
  3 11 respect been passed upon by the securities bureau, the
  3 12 insurance division, or the state of Iowa, including the
  3 13 commissioner, the insurance division, or the division's
  3 14 securities bureau.
  3 15    Sec. 7.  Section 321I.11, Code 1999, is amended by adding
  3 16 the following new subsection:
  3 17    NEW SUBSECTION.  5A.  A motor vehicle service contract
  3 18 provider shall not repair a motor vehicle covered by a motor
  3 19 vehicle service contract with any of the following:
  3 20    a.  Used parts, unless the provider receives prior written
  3 21 authorization by the vehicle owner.
  3 22    b.  Rebuilt parts, unless the parts are rebuilt according
  3 23 to national standards recognized by the insurance division.
  3 24    Sec. 8.  Section 321I.12, subsection 1, unnumbered
  3 25 paragraph 1, Code 1999, is amended to read as follows:
  3 26    A motor vehicle service contract provider shall keep
  3 27 accurate accounts, books, and records concerning transactions
  3 28 regulated under this chapter.
  3 29    Sec. 9.  Section 321I.12, subsection 1, paragraph a,
  3 30 unnumbered paragraph 1, Code 1999, is amended to read as
  3 31 follows:
  3 32    A motor vehicle service contract provider's accounts,
  3 33 books, and records shall include all of the following:
  3 34    Sec. 10.  Section 321I.12, subsection 1, paragraphs b and
  3 35 c, Code 1999, are amended to read as follows:
  4  1    b.  A motor vehicle service contract provider shall retain
  4  2 all required accounts, books, and records pertaining to a
  4  3 service contract holder for at least two years after the
  4  4 specified period of coverage has expired.  A provider
  4  5 discontinuing business in this state shall maintain its
  4  6 records until the provider furnishes the commissioner
  4  7 satisfactory proof that the provider has discharged all
  4  8 obligations to contract holders in this state.
  4  9    c.  Motor vehicle service contract providers shall make all
  4 10 accounts, books, and records concerning transactions regulated
  4 11 under the chapter available to the commissioner for the
  4 12 purpose of examination.
  4 13    Sec. 11.  Section 321I.14, subsections 1, 2, and 4, Code
  4 14 1999, are amended to read as follows:
  4 15    1.  The administrator of this chapter commissioner may take
  4 16 actions which are necessary or appropriate for the protection
  4 17 of service contract holders or to administer for the effective
  4 18 administration of this chapter.  The administrator
  4 19 commissioner may make private and public investigations and
  4 20 examinations as the administrator commissioner deems necessary
  4 21 to determine whether any person has violated or is about to
  4 22 violate this chapter or a rule or order adopted or issued
  4 23 pursuant to this chapter.
  4 24    2.  For the purpose of In an investigation or proceeding
  4 25 under this chapter, the administrator commissioner or any
  4 26 officer designated by the administrator commissioner may
  4 27 administer oaths and affirmations, subpoena witnesses and
  4 28 compel their attendance, take evidence, and require the
  4 29 production of books, papers, correspondence, memoranda,
  4 30 agreements, or other documents or records which the
  4 31 administrator commissioner deems relevant or material to an
  4 32 inquiry, all of which may be enforced in accordance with
  4 33 chapter 17A.
  4 34    4.  If an investigation provides reasonable evidence Upon
  4 35 the commissioner's determination that a person violated
  5  1 provider has engaged, is engaging, or is about to engage in
  5  2 any act or practice constituting a violation of this chapter
  5  3 or a rule adopted pursuant to this chapter, the commissioner
  5  4 may issue an a summary order directed at directing the person
  5  5 to cease and desist from engaging in the act or practice
  5  6 resulting in the violation or to take other affirmative action
  5  7 as in the judgment of the commissioner is necessary to comply
  5  8 with the requirements of this chapter.
  5  9    a.  If a hearing is not timely requested, the summary order
  5 10 becomes final by operation of law.  The order shall remain
  5 11 effective from the date of issuance until the date the order
  5 12 becomes final by operation of law or is overturned by a
  5 13 presiding officer or court following a request for hearing.  A
  5 14 person who has been issued a summary order under this
  5 15 subsection may contest the order by filing a request for a
  5 16 contested case proceeding as provided in chapter 17A and in
  5 17 accordance with rules adopted by the commissioner.  However,
  5 18 the person shall have at least thirty days from the date that
  5 19 the order is issued in order to file the request.  Section
  5 20 17A.18A is inapplicable to a summary order issued under this
  5 21 subsection.
  5 22    b.  A person violating a summary order issued under this
  5 23 subsection shall be deemed in contempt of that order.  The
  5 24 commissioner may petition the district court to enforce the
  5 25 order as certified by the commissioner.  The district court
  5 26 shall adjudge the person in contempt of the order if the court
  5 27 finds after hearing that the person is not in compliance with
  5 28 the order.  The court shall assess a civil penalty against the
  5 29 person in an amount not less than three thousand dollars but
  5 30 not greater than ten thousand dollars per violation, and may
  5 31 issue further orders as it deems appropriate.
  5 32    Sec. 12.  Section 321I.15, Code 1999, is amended to read as
  5 33 follows:
  5 34    321I.15  AUDITS.
  5 35    The commissioner may examine or cause to be examined the
  6  1 books, papers, records, memoranda, or documents of a motor
  6  2 vehicle service contract provider for the purpose of verifying
  6  3 compliance with this chapter.  The commissioner may require,
  6  4 by a subpoena, the attendance of the provider, or the
  6  5 provider's representative, and any other witness whom the
  6  6 commissioner deems necessary or expedient, and the production
  6  7 of books, papers, records, memoranda, or documents relating in
  6  8 any manner to compliance with this chapter if a provider or
  6  9 witness fails or refuses to produce the documents for
  6 10 examination when requested by the commissioner.
  6 11    Sec. 13.  Section 321I.16, Code 1999, is amended to read as
  6 12 follows:
  6 13    321I.16  VIOLATIONS – PENALTIES.
  6 14    1.  a.  Except as provided in paragraph "b", all of the
  6 15 following shall apply:
  6 16    (1)  A violation of this chapter or a rule adopted pursuant
  6 17 to this chapter is a violation of section 714.16, subsection
  6 18 2, paragraph "a".  The remedies and penalties provided by
  6 19 section 714.16, including but not limited to injunctive relief
  6 20 and civil penalties, apply to violations of this chapter.
  6 21    (2)  A person who willfully and knowingly violates this
  6 22 chapter or a rule adopted pursuant to this chapter is, upon
  6 23 conviction, guilty of a class "D" felony.
  6 24    b.  A motor vehicle service contract provider who fails to
  6 25 file documents and information with the commissioner as
  6 26 required pursuant to section 321I.3 may be subject to a civil
  6 27 penalty.  The amount of the civil penalty shall not be more
  6 28 than four hundred dollars plus two dollars for each motor
  6 29 vehicle service contract that the person executed prior to
  6 30 satisfying the filing requirement.  However, a person who
  6 31 fails to file information regarding a change in the provider's
  6 32 name or the termination of the provider's business as required
  6 33 pursuant to section 321I.3 is subject to a civil penalty of
  6 34 not more than five hundred dollars.
  6 35    2.  If the commissioner believes that grounds exist for the
  7  1 criminal prosecution of persons subject to this chapter a
  7  2 motor vehicle service contract provider for violations of
  7  3 violating this chapter or any other law of this state, the
  7  4 commissioner may forward to the attorney general or the county
  7  5 attorney the grounds for the belief, including all evidence in
  7  6 the commissioner's possession, in order that the attorney
  7  7 general or the county attorney may proceed with the matter as
  7  8 for action deemed appropriate by the attorney general or
  7  9 county attorney.  At the request of the attorney general, the
  7 10 county attorney shall appear and prosecute the action when
  7 11 brought in the county served by the county attorney.
  7 12    3.  A person who willfully and knowingly violates this
  7 13 chapter or a rule adopted pursuant to this chapter is, upon
  7 14 conviction, guilty of a class "D" felony.
  7 15    Sec. 14.  Section 321I.9, Code 1999, is repealed.
  7 16    Sec. 15.  DIRECTIONS TO THE CODE EDITOR.  The Code editor
  7 17 is directed to transfer chapter 321I to or near chapter 523J,
  7 18 and correct internal references as necessary.  
  7 19                           DIVISION II
  7 20                   IOWA UNIFORM SECURITIES ACT
  7 21    Sec. 16.  Section 502.304, subsection 1, unnumbered
  7 22 paragraph 1, Code Supplement 1999, is amended to read as
  7 23 follows:
  7 24    The administrator may by order deny, suspend, or revoke a
  7 25 registration or may censure, impose a civil penalty upon, or
  7 26 bar an applicant, registrant, branch manager, assistant branch
  7 27 manager, supervisor, or any officer, director, partner, or
  7 28 person occupying a similar status or performing similar
  7 29 functions for a registrant.  A person barred under this
  7 30 subsection may be prohibited by the administrator from
  7 31 employment with a registered broker-dealer or investment
  7 32 adviser.  The administrator may restrict the person barred
  7 33 from engaging in any activity for which registration is
  7 34 required.  Any action by the administrator under this
  7 35 subsection may be taken if the order is found to be in the
  8  1 public interest and it is found that the applicant or
  8  2 registrant or, in the case of a broker-dealer or investment
  8  3 adviser, a partner, an officer, or a director, a person
  8  4 occupying a similar status or performing similar functions, or
  8  5 a person directly or indirectly controlling the broker-dealer
  8  6 or investment adviser, or a branch manager, assistant branch
  8  7 manager, or supervisor:
  8  8    Sec. 17.  Section 502.604, subsection 1, Code Supplement
  8  9 1999, is amended to read as follows:
  8 10    1.  Issue an a summary order directed at the person
  8 11 requiring the person to cease and desist from engaging in such
  8 12 act or practice or to take other affirmative action as in the
  8 13 judgment of the administrator is necessary to comply with the
  8 14 requirements of this chapter.
  8 15    a.  If a hearing is not timely requested, the summary order
  8 16 becomes final by operation of law.  The order shall remain
  8 17 effective from the date of issuance until the date the order
  8 18 becomes final by operation of law or is overturned by a
  8 19 presiding officer or court following a request for hearing.  A
  8 20 person who has been issued a summary order under this
  8 21 subsection may contest the order by filing a request for a
  8 22 contested case proceeding as provided in chapter 17A and in
  8 23 accordance with rules adopted by the administrator.  However,
  8 24 the person shall have at least thirty days from the date that
  8 25 the order is issued in order to file the request.  Section
  8 26 17A.18A is inapplicable to a summary order issued under this
  8 27 subsection.
  8 28    b.  A person violating a summary order issued under this
  8 29 subsection shall be deemed in contempt of that order.  The
  8 30 administrator may petition the district court to enforce the
  8 31 order as certified by the administrator.  The district court
  8 32 shall adjudge the person in contempt of the order, if the
  8 33 court finds after hearing that the person is not in compliance
  8 34 with the order.  The court shall assess a civil penalty
  8 35 against the person in an amount not less than three thousand
  9  1 dollars but not greater than ten thousand dollars per
  9  2 violation, and may issue further orders as it deems
  9  3 appropriate.
  9  4    Sec. 18.  Section 502.605, subsection 1, Code 1999, is
  9  5 amended to read as follows:
  9  6    1.  a.  Any Except as provided in paragraph "b", a person
  9  7 who willfully and knowingly violates any provision of this
  9  8 chapter, or any rule or order under this chapter, shall be is
  9  9 guilty of a class "D" felony.
  9 10    b.  A person who willfully and knowingly violates section
  9 11 502.401, 502.402, or 502.403, or section 502.408, subsection 1
  9 12 or 2, resulting in a loss of more than ten thousand dollars is
  9 13 guilty of a class "C" felony.
  9 14    Sec. 19.  Section 502.609, subsection 1, unnumbered
  9 15 paragraph 1, Code 1999, is amended to read as follows:
  9 16    Every applicant for registration under this chapter, and
  9 17 every issuer which proposes to offer a security in this state,
  9 18 unless exempt under section 502.202 or 502.203 and the
  9 19 administrator by rule or order waives the filing, shall file
  9 20 with the administrator, in such form as the administrator by
  9 21 rule prescribes, an irrevocable consent appointing the
  9 22 administrator or the administrator's successor in office to be
  9 23 such person's attorney to receive service of any lawful
  9 24 process in any noncriminal suit, action or proceeding against
  9 25 such person or the successor, executor or administrator of
  9 26 such person which arises under this chapter or any rule or
  9 27 order hereunder after the consent has been filed, with the
  9 28 same validity as if served personally on the person filing the
  9 29 consent.  The consent need not be filed by a person who has
  9 30 filed a consent in connection with a previous registration or
  9 31 notice filing which is then in effect.  Service may be made by
  9 32 leaving a copy of the process in the office of the
  9 33 administrator, but it is not effective unless the plaintiff,
  9 34 including the administrator when acting as such, does the
  9 35 following:  
 10  1                          DIVISION III
 10  2                 BUSINESS OPPORTUNITY PROMOTIONS
 10  3    Sec. 20.  Section 523B.1, Code Supplement 1999, is amended
 10  4 by adding the following new subsection:
 10  5    NEW SUBSECTION.  10A.  "Record" means the same as defined
 10  6 in section 321I.1.
 10  7    Sec. 21.  Section 523B.2, subsection 2, paragraph b,
 10  8 subparagraph (2), Code Supplement 1999, is amended to read as
 10  9 follows:
 10 10    (2)  A disclosure document prepared pursuant to the federal
 10 11 trade commission rule entitled "Disclosure relating to
 10 12 disclosure requirements and prohibitions concerning
 10 13 franchising and business opportunity ventures", as adopted by
 10 14 rule of the administrator in accordance with 16 C.F.R. } 436
 10 15 (1979).  The administrator may by rule adopt any amendment to
 10 16 the disclosure document prepared pursuant to 16 C.F.R. } 436
 10 17 (1979) that has been adopted by the federal trade commission.
 10 18    Sec. 22.  Section 523B.2, subsection 2, Code Supplement
 10 19 1999, is amended by adding the following new paragraph:
 10 20    NEW PARAGRAPH.  c.  The seller shall disclose to the
 10 21 administrator in the disclosure document or otherwise any
 10 22 sales or offers made in this state prior to registration.
 10 23    Sec. 23.  Section 523B.2, subsection 4, Code Supplement
 10 24 1999, is amended to read as follows:
 10 25    4.  EFFECTIVE DATE.  A registration automatically becomes
 10 26 effective upon the expiration of the fifteenth thirtieth full
 10 27 business day after the complete filing is received by the
 10 28 administrator, provided that no an order has not been issued
 10 29 or a proceeding is not pending under subsection 10.  The
 10 30 administrator may by order waive or reduce the time period
 10 31 prior to effectiveness, provided that a complete filing has
 10 32 been made.  The administrator may by order defer the effective
 10 33 date until the expiration of the fifteenth thirtieth full
 10 34 business day after the filing of an amendment with the
 10 35 administrator.
 11  1    Sec. 24.  Section 523B.2, subsection 9, paragraph c, Code
 11  2 Supplement 1999, is amended by adding the following new
 11  3 subparagraph:
 11  4    NEW SUBPARAGRAPH.  (8)  The rights and responsibilities of
 11  5 the parties regarding the marketing of a business opportunity,
 11  6 including but not limited to all of the following:
 11  7    (a)  Whether the seller assigns the purchaser a territory
 11  8 in which to sell a business opportunity.
 11  9    (b)  Whether the seller assists the purchaser in finding
 11 10 locations in which to sell a business opportunity.
 11 11    (c)  Whether the purchaser is solely responsible for
 11 12 marketing a business opportunity.
 11 13    Sec. 25.  Section 523B.8, subsection 1, Code 1999, is
 11 14 amended to read as follows:
 11 15    1.  a.  If it appears to the administrator Upon the
 11 16 administrator's determination that a person has engaged, is
 11 17 engaging, or is about to engage in any act or practice
 11 18 constituting a violation of this chapter or a rule or order
 11 19 adopted or issued under this chapter, the administrator may
 11 20 issue an a summary order directed at directing the person
 11 21 requiring the person to cease and desist from engaging in the
 11 22 act or practice or to take other affirmative action as in the
 11 23 judgment of the administrator is necessary to comply with the
 11 24 requirements of this chapter.
 11 25    b.  The If a hearing is not timely requested, the summary
 11 26 order becomes final by operation of law.  The order shall
 11 27 remain effective from the date of issuance until the date the
 11 28 order becomes final by operation of law or is overturned by a
 11 29 presiding officer or court following a request for hearing.  A
 11 30 person named in the order may, within fourteen days of the
 11 31 date of the order, file a written who has been issued a
 11 32 summary order under this subsection may contest it by filing a
 11 33 request for a hearing.  The hearing shall be held in
 11 34 accordance with contested case proceeding as provided in
 11 35 chapter 17A and in accordance with the rules adopted by the
 12  1 administrator.  However, the person shall have at least thirty
 12  2 days from the date that the order is issued in order to file
 12  3 the request.  Section 17A.18A is inapplicable to a summary
 12  4 order issued under this subsection.
 12  5    c.  A person violating a summary order issued under this
 12  6 subsection shall be deemed in contempt of that order.  The
 12  7 administrator may petition the district court to enforce the
 12  8 order as certified by the administrator.  The district court
 12  9 shall adjudge the person in contempt of the order if the court
 12 10 finds after hearing that the person is not in compliance with
 12 11 the order.  The court shall assess a civil penalty against the
 12 12 person in an amount not less than three thousand dollars but
 12 13 not greater than ten thousand dollars per violation, and may
 12 14 issue further orders as it deems appropriate.
 12 15    Any A consent agreement between the administrator and the
 12 16 seller may be filed in the miscellaneous docket of the clerk
 12 17 of the district court.
 12 18    Sec. 26.  Section 523B.8, subsection 2, paragraph b, Code
 12 19 1999, is amended to read as follows:
 12 20    b.  For the purpose of an investigation or proceeding under
 12 21 this chapter, the administrator or an officer designated by
 12 22 the administrator may administer oaths and affirmations,
 12 23 subpoena witnesses, compel the attendance of witnesses, take
 12 24 evidence and require the production of books, papers,
 12 25 correspondence, memoranda, agreements, or other documents or
 12 26 records which the administrator deems relevant or material to
 12 27 the inquiry.  
 12 28                           DIVISION IV
 12 29                  RESIDENTIAL SERVICE CONTRACTS
 12 30    Sec. 27.  Section 22.7, Code Supplement 1999, is amended by
 12 31 adding the following new subsection:
 12 32    NEW SUBSECTION.  39.  Information obtained by the
 12 33 commissioner of insurance in the course of an investigation as
 12 34 provided in section 502.603, 523B.8, or 523C.23.
 12 35    Sec. 28.  Section 523C.1, Code 1999, is amended by adding
 13  1 the following new subsection:
 13  2    NEW SUBSECTION.  6A.  "Record" means the same as defined in
 13  3 section 321I.1.
 13  4    Sec. 29.  Section 523C.7, subsection 4, Code 1999, is
 13  5 amended to read as follows:
 13  6    4.  To the extent necessary to administer the provisions of
 13  7 this chapter, the commissioner may, after notice and hearing,
 13  8 institute a residential service contract form approval or form
 13  9 review fee as the commissioner shall by.  If the commissioner
 13 10 establishes a fee, the amount of the fee shall be set by rule
 13 11 set adopted pursuant to chapter 17A.  The fee, if imposed, may
 13 12 be by dollar amount or based upon a percentage of the sale
 13 13 value of the contract.  However, the fee shall not exceed
 13 14 fifty thousand dollars.
 13 15    Sec. 30.  Section 523C.19, Code 1999, is amended to read as
 13 16 follows:
 13 17    523C.19  CEASE AND DESIST ORDERS.
 13 18    1.  If an investigation provides reasonable evidence Upon
 13 19 the commissioner's determination that a person violated any
 13 20 provision has engaged, is engaging, or is about to engage in
 13 21 any act or practice constituting a violation of this chapter
 13 22 or any rule adopted pursuant to this chapter, the commissioner
 13 23 may issue an order directed at directing the person to cease
 13 24 and desist from engaging in the act or practice resulting in
 13 25 the violation or to take other affirmative action as in the
 13 26 judgment of the commissioner is necessary to comply with the
 13 27 requirements of this chapter.
 13 28    2.  If a hearing is not timely requested, the summary order
 13 29 becomes final by operation of law.  The order shall remain
 13 30 effective from the date of issuance until the date the order
 13 31 becomes final by operation of law or is overturned by a
 13 32 presiding officer or court following a request for hearing.  A
 13 33 person who has been issued a summary order under this section
 13 34 may contest it by filing a request for a contested case
 13 35 proceeding as provided in chapter 17A and in accordance with
 14  1 rules adopted by the commissioner.  However, the person shall
 14  2 have at least thirty days from the date that the order is
 14  3 issued in order to file the request.  Section 17A.18A is
 14  4 inapplicable to a summary order issued under this subsection.
 14  5    3.  A person violating a summary order issued under this
 14  6 subsection shall be deemed in contempt of that order.  The
 14  7 commissioner may petition the district court to enforce the
 14  8 order as certified by the commissioner.  The district court
 14  9 shall adjudge the person in contempt of the order if the court
 14 10 finds after hearing that the person is not in compliance with
 14 11 the order.  The court shall assess a civil penalty against the
 14 12 person in an amount not less than three thousand dollars but
 14 13 not greater than ten thousand dollars per violation, and may
 14 14 issue further orders as it deems appropriate.
 14 15    Sec. 31.  NEW SECTION.  523C.23  INVESTIGATIONS AND
 14 16 SUBPOENAS.
 14 17    1.  a.  In enforcing this chapter, the commissioner may
 14 18 conduct a public or private investigation in order to do any
 14 19 of the following:
 14 20    (1)  Determine whether a person has violated or is about to
 14 21 violate a provision of this chapter or a rule or order under
 14 22 this chapter.
 14 23    (2)  Aid in the enforcement of this chapter or in the
 14 24 prescribing of rules and forms under this chapter.
 14 25    b.  In carrying out this subsection, the commissioner may
 14 26 do all of the following:
 14 27    (1)  Conduct the investigation within or outside of this
 14 28 state.
 14 29    (2)  Require or allow a person to file a statement in
 14 30 writing regarding the facts or circumstances concerning a
 14 31 matter to be investigated.  The commissioner may require that
 14 32 the statement be made under oath.
 14 33    (3)  Apply to the district court for the issuance of an
 14 34 order requiring a person's appearance before the commissioner
 14 35 or the attorney general.  The person may also be required to
 15  1 produce documentary evidence germane to the subject of the
 15  2 investigation.  The failure to obey an order under this
 15  3 subsection constitutes contempt of court.
 15  4    c.  Information obtained in the course of an investigation
 15  5 is confidential as provided in section 22.7.  However, upon a
 15  6 determination that disclosure of the information is necessary
 15  7 or appropriate in the public interest or for the protection of
 15  8 consumers, the commissioner may do any of the following:
 15  9    (1)  Share information obtained during the course of the
 15 10 investigation with another regulatory authority or government
 15 11 agency.
 15 12    (2)  Publish information obtained during the course of the
 15 13 investigation which concerns a violation of this chapter or a
 15 14 rule or order under this chapter.
 15 15    2.  Except as provided in section 523C.19, a proceeding
 15 16 instituted under this chapter shall be conducted pursuant to
 15 17 chapter 17A and rules adopted by the commissioner pursuant to
 15 18 chapter 17A.
 15 19    3.  In an investigation or proceeding conducted under this
 15 20 chapter, the commissioner or any designee of the commissioner
 15 21 may administer oaths and affirmations, subpoena witnesses,
 15 22 compel their attendance, take evidence, and require the
 15 23 production of any records which the commissioner deems
 15 24 relevant or material to the inquiry.
 15 25    4.  A person is not excused from attending and testifying
 15 26 or from producing a document or record before the commissioner
 15 27 or in obedience to a subpoena of the commissioner or an
 15 28 officer designated by the commissioner, or in a proceeding
 15 29 instituted by the commissioner, on the grounds that the
 15 30 testimony or evidence, documentary or otherwise, required of
 15 31 the person may tend to incriminate or subject the person to a
 15 32 penalty or forfeiture.  However, a person shall not be
 15 33 prosecuted or subjected to any penalty or forfeiture due to a
 15 34 transaction or matter about which the person is compelled,
 15 35 after claiming privilege against self-incrimination, to
 16  1 testify or produce evidence, documentary or otherwise.  The
 16  2 person testifying, however, is not exempt from prosecution and
 16  3 punishment for perjury or contempt committed while testifying.  
 16  4                           DIVISION V
 16  5                    RETIREMENT CARE CONTRACTS
 16  6    Sec. 32.  Section 523D.13, Code 1999, is amended to read as
 16  7 follows:
 16  8    523D.13  COMPLIANCE ORDERS.
 16  9    1.  Upon the commissioner's determination that a provider
 16 10 has violated a provision has engaged, is engaging, or is about
 16 11 to engage in any act or practice constituting a violation of
 16 12 this chapter or a rule adopted pursuant to this chapter, the
 16 13 commissioner may issue an a summary order requiring a
 16 14 directing the provider to cease and desist from an unlawful
 16 15 engaging in the act or practice resulting in the violation or
 16 16 to take other affirmative action as in the judgment of the
 16 17 commissioner is necessary to comply with the requirements of
 16 18 this chapter.
 16 19    2.  The person named in the order may, within fourteen days
 16 20 after receipt of the order, file a written request for a
 16 21 hearing.  The hearing shall be held in accordance with chapter
 16 22 17A.  If a hearing is not requested, the order shall become
 16 23 permanent.  If a hearing is not timely requested, the summary
 16 24 order becomes final by operation of law.  The order shall
 16 25 remain effective from the date of issuance until the date the
 16 26 order becomes final by operation of law or is overturned by a
 16 27 presiding officer or court following a request for hearing.  A
 16 28 person who has been issued a summary order under this section
 16 29 may contest it by filing a request for a contested case
 16 30 proceeding as provided in chapter 17A and in accordance with
 16 31 rules adopted by the commissioner.  However, the person shall
 16 32 have at least thirty days from the date that the order is
 16 33 issued in order to file the request.  Section 17A.18A is
 16 34 inapplicable to a summary order issued under this section.
 16 35    3.  A person violating a summary order issued under this
 17  1 section shall be deemed in contempt of that order.  The
 17  2 commissioner may petition the district court to enforce the
 17  3 order as certified by the commissioner.  The district court
 17  4 shall adjudge the person in contempt of the order if the court
 17  5 finds after hearing that the person is not in compliance with
 17  6 the order.  The court shall assess a civil penalty against the
 17  7 person in an amount not less than three thousand dollars but
 17  8 not greater than ten thousand dollars per violation, and may
 17  9 issue further orders as it deems appropriate.  
 17 10                           DIVISION VI
 17 11                    PROBATE TRANSFER ON DEATH
 17 12    Sec. 33.  Section 633.801, subsection 6, Code 1999, is
 17 13 amended to read as follows:
 17 14    6.  "Security" means a security as defined in section
 17 15 502.102.  For purposes of this chapter, "security" includes,
 17 16 but is not limited to, a certificated security, an
 17 17 uncertificated security, and a security account.  
 17 18                          DIVISION VII
 17 19                  VIATICAL SETTLEMENT CONTRACTS
 17 20    Sec. 34.  Section 502.202, subsection 19, Code Supplement
 17 21 1999, is amended by adding the following new paragraph:
 17 22    NEW PARAGRAPH.  e.  The assignment, transfer, sale, devise,
 17 23 or bequest of the death benefit or ownership of a life
 17 24 insurance policy or contract made by the policyholder or
 17 25 contract owner to a viatical settlement provider, if the
 17 26 viatical settlement transaction complies with chapter 508E,
 17 27 including rules adopted pursuant to that chapter.
 17 28    Sec. 35.  NEW SECTION.  508E.1  AUTHORITY OF THE
 17 29 COMMISSIONER.
 17 30    The commissioner shall regulate, but not prohibit, the sale
 17 31 of viatical settlements as provided in this chapter.
 17 32    Sec. 36.  NEW SECTION.  508E.2  DEFINITIONS.
 17 33    As used in this chapter, unless the context otherwise
 17 34 requires:
 17 35    1.  "Chronically ill" means any of the following:
 18  1    a.  Being unable to perform or maintain at least two
 18  2 activities of daily living, including but not limited to
 18  3 eating, toileting, transferring, bathing, dressing, or
 18  4 continence.
 18  5    b.  Requiring substantial supervision to protect the
 18  6 individual from threats to health and safety due to severe
 18  7 cognitive impairment.
 18  8    c.  Having a level of disability similar to that described
 18  9 in paragraph "a" as determined by the United States secretary
 18 10 of health and human services.
 18 11    2.  "Commissioner" means the commissioner of insurance.
 18 12    3.  "Terminally ill" means having an illness or sickness
 18 13 that can reasonably be expected to result in death in twenty-
 18 14 four months or less.
 18 15    4.  "Viatical settlement contract" means a written
 18 16 agreement entered into between a viatical settlement provider
 18 17 and a person who owns or is insured under a life insurance
 18 18 policy or certificate, or who owns or is covered under a group
 18 19 life insurance policy.  "Viatical settlement contract" does
 18 20 not mean a written agreement entered into between a viator and
 18 21 a person having an insurable interest in the viator's life.
 18 22    5.  "Viator" means a person selling a life insurance policy
 18 23 or certificate.
 18 24    Sec. 37.  NEW SECTION.  508E.3  VIATICAL SETTLEMENT
 18 25 CONTRACT LIMITATIONS.
 18 26    1.  a.  Subject to paragraph "b", a viatical settlement
 18 27 contract shall not be entered into until after the contestable
 18 28 period of the life insurance policy or certificate has
 18 29 expired.
 18 30    b.  If a viatical settlement contract is entered into
 18 31 during the contestable period of the life insurance policy or
 18 32 certificate, a rebuttable presumption arises that it was the
 18 33 intent of the person entering into such contract with a
 18 34 viatical settlement provider to enter into such contract at
 18 35 the time the life insurance policy or certificate was
 19  1 originally purchased.  If such person fails to rebut the
 19  2 presumption, the viatical settlement contract is void.
 19  3    2.  A viatical settlement contract shall only be entered
 19  4 into with an individual who owns a life insurance policy or
 19  5 certificate which covers the life of an individual who is
 19  6 either terminally ill or chronically ill, or as otherwise
 19  7 provided pursuant to rules adopted by the commissioner.
 19  8    Sec. 38.  NEW SECTION.  508E.4  RULEMAKING AUTHORITY.
 19  9    The commissioner shall adopt rules as necessary to
 19 10 administer this chapter.  Rules shall be adopted relating to
 19 11 all of the following:
 19 12    1.  Advertising standards.
 19 13    2.  Disclosure.
 19 14    3.  Examinations.
 19 15    4.  Insurance company practices.
 19 16    5.  License requirements.
 19 17    6.  Prohibited practices.
 19 18    7.  Refund provisions.
 19 19    8.  Reporting.
 19 20    9.  Standards for reasonableness of payment.
 19 21    10.  Unfair trade practices.
 19 22    11.  Viatical settlement contracts.  
 19 23 
 19 24 
 19 25                                                             
 19 26                               BRENT SIEGRIST
 19 27                               Speaker of the House
 19 28 
 19 29 
 19 30                                                             
 19 31                               MARY E. KRAMER
 19 32                               President of the Senate
 19 33 
 19 34    I hereby certify that this bill originated in the House and
 19 35 is known as House File 2317, Seventy-eighth General Assembly.
 20  1 
 20  2 
 20  3                                                             
 20  4                               ELIZABETH ISAACSON
 20  5                               Chief Clerk of the House
 20  6 Approved                , 2000
 20  7 
 20  8 
 20  9                            
 20 10 THOMAS J. VILSACK
 20 11 Governor
     
Text: HF02316                           Text: HF02318
Text: HF02300 - HF02399                 Text: HF Index
Bills and Amendments: General Index     Bill History: General Index

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