COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 284
(By Senators Minard and Kessler)
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[Originating in the Committee on the Judiciary;
reported March 4, 2009.]
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A BILL to amend and reenact §33-13C-3 and §33-13C-16 of the Code of
West Virginia, 1931, as amended, all relating to viatical
settlements; adding alternative means for satisfying financial
requirements for the licensing of viatical settlement brokers;
and making criminal provisions applicable to any person
violating the Viatical Settlements Act.
Be it enacted by the Legislature of West Virginia:
That §33-13C-3 and §33-13C-16 of the Code of West Virginia,
1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 13C. VIATICAL SETTLEMENTS ACT.
§33-13C-3. License and bond requirements.
(a) (1) A person
shall may not operate as a viatical
settlement provider or viatical settlement broker without first
obtaining a license from the commissioner.
(2) (A) An insurance producer who is authorized to sell life
insurance in this state pursuant to a resident or nonresident license issued in accordance with the provisions of article twelve
of this chapter may operate as a viatical settlement broker without
obtaining a license pursuant to this section if the viatical
settlement activities of the producer are incidental to the
producer's insurance business activities.
(B) The insurer that issued the policy being viaticated
shall
is not
be responsible for any act or omission of a viatical
settlement broker or viatical settlement provider arising out of or
in connection with the viatical settlement transaction, unless the
insurer receives compensation for the placement of a viatical
settlement contract from the viatical settlement provider or
viatical settlement broker in connection with the viatical
settlement contract.
(3) A person licensed as an attorney, certified public
accountant or financial planner accredited by a nationally
recognized accreditation agency who is retained to represent the
viator, whose compensation is not paid directly or indirectly by
the viatical settlement provider, may negotiate viatical settlement
contracts on behalf of the viator without having to obtain a
license as a viatical settlement broker.
(b) Application for a viatical settlement provider or viatical
settlement broker license and for renewals of
such the licenses
shall be made in the manner prescribed by the commissioner and
shall be accompanied by fees established in legislative rules,
including emergency rules, promulgated by the commissioner.
(c) The commissioner
shall have has the authority, at any time, to require the applicant to fully disclose the identity of
all stockholders, partners, officers, members and employees and the
commissioner may, in the exercise of the commissioner's discretion,
refuse to issue a license in the name of a legal entity if not
satisfied that any officer, employee, stockholder, partner or
member
thereof of the entity who may materially influence the
applicant's conduct meets the standards of this article.
(d) The commissioner shall make an investigation of each
applicant and issue a license if the commissioner finds that the
applicant:
(1) If a viatical settlement provider, has provided a detailed
plan of operation;
(2) Is competent and trustworthy and
intends to act acts in
good faith in the capacity
of a licensee involved by the license
applied for;
(3) Has a good business reputation and
has had is qualified by
experience, training or education
so as to be qualified in the
business for which the license is applied for as a viatical
settlement provider or broker;
(4) Has demonstrated evidence of financial responsibility
, in
a format prescribed by the commissioner
, by possessing a minimum
equity of not less than $250,000 in cash or cash equivalents
reflected in the applicant's audited financial statements or
through a surety bond executed and issued by an insurer authorized
to issue surety bonds in this state in the amount of $250,000:
Provided, That the commissioner
shall accept, as evidence of financial responsibility, proof that financial instruments in
accordance with the requirements in this paragraph have been filed
with a state in which the applicant is licensed as a viatical
settlement provider or viatical settlement broker may permit an
applicant for a broker's license to demonstrate evidence of
financial responsibility through a policy of insurance covering
legal liability resulting from erroneous acts or failure to act in
their capacity as a viatical settlement broker and inuring to the
benefit of any aggrieved party as the result of any single
occurrence in the sum of not less than $20,000 and $100,000 in the
aggregate for all occurrences within one year. Any surety bond
issued pursuant to this subdivision shall be in the favor of this
state and shall specifically authorize recovery by the commissioner
on behalf of any person in this state who sustained damages as the
result of erroneous acts, failure to act, conviction of fraud or
conviction of unfair practices by the viatical settlement provider
or viatical settlement broker.
The commissioner shall accept, as
evidence of financial responsibility, proof that financial
instruments in accordance with the requirements in this paragraph
have been filed with a state in which the applicant is licensed as
a viatical settlement provider or viatical settlement broker. The
commissioner may ask for evidence of financial responsibility at
any time he or she
deems considers it necessary.
(5) If a legal entity has provided a certificate of good
standing from the state of its domicile; and
(6) Has provided an antifraud plan that meets the requirements of subsection (g), section fourteen of this article.
(e) The commissioner
shall may not issue a license to a
nonresident applicant unless the applicant files with the
commissioner either a written designation of an agent for service
of process or the applicant's written irrevocable consent that any
action against the applicant may be commenced against the applicant
by service of process on the commissioner.
(f) A viatical settlement provider or viatical settlement
broker shall provide to the commissioner new or revised information
about officers, ten percent or more stockholders, partners,
directors, members or designated employees within thirty days of
the change.
(g) An individual licensed as a viatical settlement broker
shall complete on a biennial basis fifteen hours of training
related to viatical settlements and viatical settlement
transactions as required by the commissioner. A life insurance
producer operating as a viatical settlement broker pursuant to
subdivision (2), subsection (a) of this section
shall is not
be
subject to the requirements of this subsection. Any person failing
to meet the requirements of this subsection
shall be is subject to
the penalties imposed by the commissioner.
§33-13C-16. Criminal penalties.
(a) A
viator person convicted of a fraudulent viatical
settlement act is guilty of a felony and, upon conviction thereof,
shall be sentenced as follows:
(1) Imprisonment in a state correctional facility for not more than twenty years or payment of a fine of not more than $100,000,
or both, if the value of the viatical settlement contract is more
than $35,000;
(2) Imprisonment in a state correctional facility for not more
than ten years or to payment of a fine of not more than $20,000, or
both, if the value of the viatical settlement contract is more than
$2,500, but not more than $35,000;
(3) Imprisonment in a state correctional facility for not more
than five years or payment of a fine of not more than $10,000, or
both, if the value of the viatical settlement contract is more than
$500, but not more than $2,500.
(b) Any person who violates any other provision of this
article is guilty of a misdemeanor and, upon conviction thereof,
shall be fined not more than $1,000 or confined in jail not more
than one year, or both fined and
imprisoned confined.
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(NOTE: The purpose of this bill is to provide an alternative
means for viatical settlement brokers to provide evidence of
financial security and to expand the criminal provisions to all
persons convicted of a violation of the Viatical Settlements Act.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)