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ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 418
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
____________
[Passed April 9, 2005; in effect ninety days from passage.]
____________
AN ACT to
amend and reenact §33-2-9, §33-2-16 and §33-2-17 of the
Code of West Virginia, 1931, as amended; to amend said code by
adding thereto a new section, designated §33-2-15d; to amend
and reenact §33-3-33 of said code; to amend said code by
adding thereto a new section, designated §33-6-15a; to amend
said code by adding thereto two new sections, designated §33-
11-4a and §33-11-4b; to amend and reenact §33-11-6 of said
code; and to amend said code by adding thereto a new section,
designated §33-20-4a, all relating generally to the regulation
of insurance; increasing certain fees for property and
casualty insurers; limiting these certain fees upon meeting
special fund funding threshold; providing that Insurance
Commissioner shall conduct a study and promulgate rules
relating thereto; providing that the Director of Consumer Advocacy be appointed by the Governor; requiring that the
Director of Consumer Advocacy be a licensed lawyer; expanding
the authority of the Office of Consumer Advocacy; reducing a
surcharge on fire and casualty insurance polices; modifying
distribution of surcharge; providing for notice of savings in
certain insurance policies; eliminating a cause of action for
unfair claims settlement practices by third parties;
establishing procedures for the filing, investigation and
processing of administrative complaints by third-party
claimants; defining certain terms; establishing special
account to award restitution; providing for limited
administrative restitution to third-party claimants in certain
circumstances; providing for penalties for engaging in unfair
claims settlement practices or general business practices;
providing an internal contingent voiding provision; providing
for judicial review of administrative process; limiting
applicability of Act; and establishing that certain insurers
shall submit rate filings biannually.
Be it enacted by the Legislature of West Virginia:
That §33-2-9, §33-2-16 and §33-2-17 of the Code of West
Virginia, 1931, as amended, be amended and reenacted; that said
code be amended by adding thereto a new section, designated §33-2-
15d; that §33-3-33 of said code be amended and reenacted; that said
code be amended by adding thereto a new section, designated §33-6-15a; that said code be amended by adding thereto two new sections,
designated §33-11-4a and §33-11-4b; that §33-11-6 of said code be
amended and reenacted; and that said code be amended by adding
thereto a new section, designated §33-20-4a, all to read as
follows:
ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-9. Examination of insurers, agents, brokers and solicitors;
access to books, records, etc.
(a) The purpose of this section is to provide an effective and
efficient system for examining the activities, operations,
financial condition and affairs of all persons transacting the
business of insurance in this state and all persons otherwise
subject to the jurisdiction of the Commissioner. The provisions of
this section are intended to enable the Commissioner to adopt a
flexible system of examinations which directs resources as may be
considered appropriate and necessary for the administration of the
insurance and insurance-related laws of this state.
(b) For purposes of this section, the following definitions
shall apply:
(1) "Commissioner" means the Commissioner of Insurance of this
state;
(2) "Company" or "insurance company" means any person engaging
in or proposing or attempting to engage in any transaction or kind
of insurance or surety business and any person or group of persons
who may otherwise be subject to the administrative, regulatory or taxing authority of the Commissioner, including, but not limited
to, any domestic or foreign stock company, mutual company, mutual
protective association, farmers mutual fire companies, fraternal
benefit society, reciprocal or interinsurance exchange, nonprofit
medical care corporation, nonprofit health care corporation,
nonprofit hospital service association, nonprofit dental care
corporation, health maintenance organization, captive insurance
company, risk retention group or other insurer regardless of the
type of coverage written, benefits provided or guarantees made by
each;
(3) "Department" means the Department of Insurance of this
state; and
(4) "Examiners" means the Commissioner of Insurance or any
individual or firm having been authorized by the Commissioner to
conduct an examination pursuant to this section, including, but not
limited to, the Commissioner's deputies, other employees, appointed
examiners or other appointed individuals or firms who are not
employees of the Department of Insurance.
(c) The Commissioner or his or her examiners may conduct an
examination under this section of any company as often as the
Commissioner in his or her discretion considers appropriate. The
Commissioner or his or her examiners shall at least once every five
years visit each domestic insurer and thoroughly examine its
financial condition and methods of doing business and ascertain
whether it has complied with all the laws and regulations of this
state. The Commissioner may also examine the affairs of any insurer applying for a license to transact any insurance business
in this state.
(d) The Commissioner or his or her examiners shall, at a
minimum, conduct an examination of every foreign or alien insurer
licensed in this state not less frequently than once every five
years. The examination of an alien insurer may be limited to its
United States business: Provided, That in lieu of an examination
under this section of any foreign or alien insurer licensed in this
state, the Commissioner may accept an examination report on the
company as prepared by the insurance department for the company's
state of domicile or port-of-entry state until the first day of
January, one thousand nine hundred ninety-four. Thereafter, the
reports may only be accepted if:
(1) The insurance department was at the time of the
examination accredited under the National Association of Insurance
Commissioners' Financial Regulation Standards and Accreditation
Program; or
(2) The examination is performed under the supervision of an
accredited insurance department or with the participation of one or
more examiners who are employed by an accredited state insurance
department and who, after a review of the examination work papers
and report, state under oath that the examination was performed in
a manner consistent with the standards and procedures required by
their insurance department.
(e) In scheduling and determining the nature, scope and
frequency of examinations conducted pursuant to this section, the Commissioner may consider such matters as the results of financial
statement analyses and ratios, changes in management or ownership,
actuarial opinions, reports of independent certified public
accountants and other criteria as set forth in the examiners'
handbook adopted by the National Association of Insurance
Commissioners and in effect when the Commissioner exercises
discretion under this section.
(f) For purposes of completing an examination of any company
under this section, the Commissioner may examine or investigate any
person, or the business of any person, insofar as the examination
or investigation is, in the sole discretion of the Commissioner,
necessary or material to the examination of the company.
(g) The Commissioner may also cause to be examined, at the
times as he or she considers necessary, the books, records, papers,
documents, correspondence and methods of doing business of any
agent, broker, excess lines broker or solicitor licensed by this
state. For these purposes, the Commissioner or his or her
examiners shall have free access to all books, records, papers,
documents and correspondence of all the agents, brokers, excess
lines brokers and solicitors wherever the books, records, papers,
documents and records are situate. The Commissioner may revoke the
license of any agent, broker, excess lines broker or solicitor who
refuses to submit to the examination.
(h) In addition to conducting an examination, the Commissioner
or his or her examiners may, as the Commissioner considers
necessary, analyze or review any phase of the operations or methods of doing business of an insurer, agent, broker, excess lines
broker, solicitor or other individual or corporation transacting or
attempting to transact an insurance business in the State of West
Virginia. The Commissioner may use the full resources provided by
this section in carrying out these responsibilities, including any
personnel and equipment provided by this section as the
Commissioner considers necessary.
(i) Examinations made pursuant to this section shall be
conducted in the following manner:
(1) Upon determining that an examination should be conducted,
the Commissioner or his or her designee shall issue an examination
warrant appointing one or more examiners to perform the examination
and instructing them as to the scope of the examination. The
appointment of any examiners pursuant to this section by the
Commissioner shall not be subject to the requirements of article
three, chapter five-a of this code, except that the contracts and
agreements shall be approved as to form and conformity with
applicable law by the Attorney General. In conducting the
examination, the examiner shall observe those guidelines and
procedures set forth in the examiners' handbook adopted by the
National Association of Insurance Commissioners. The Commissioner
may also employ any other guidelines or procedures as the
Commissioner may consider appropriate;
(2) Every company or person from whom information is sought,
its officers, directors and agents shall provide to the examiners
appointed under subdivision (1) of this subsection timely, convenient and free access at all reasonable hours at its offices
to all books, records, accounts, papers, documents and any or all
computer or other recordings relating to the property, assets,
business and affairs of the company being examined. The officers,
directors, employees and agents of the company or person shall
facilitate the examination and aid in the examination so far as it
is in their power to do so;
(3) The refusal of any company, by its officers, directors,
employees or agents, to submit to examination or to comply with any
reasonable written request of the examiners shall be grounds for
suspension, revocation, refusal or nonrenewal of any license or
authority held by the company to engage in an insurance or other
business subject to the Commissioner's jurisdiction. Any
proceedings for suspension, revocation, refusal or nonrenewal of
any license or authority shall be conducted pursuant to section
eleven of this article;
(4) The Commissioner or his or her examiners shall have the
power to issue subpoenas, to administer oaths and to examine under
oath any person as to any matter pertinent to the examination,
analysis or review. The subpoenas shall be enforced pursuant to
the provisions of section six of this article;
(5) When making an examination, analysis or review under this
section, the Commissioner may retain attorneys, appraisers,
independent actuaries, independent certified public accountants,
professionals or specialists with training or experience in
reinsurance, investments or information systems or other professionals and specialists as examiners, the cost of which shall
be borne by the company which is the subject of the examination,
analysis or review or, in the Commissioner's discretion, paid from
the Commissioner's Examination Revolving Fund. The Commissioner
may recover costs paid from the Commissioner's Examination
Revolving Fund pursuant to this subdivision from the company upon
which the examination, analysis or review is conducted unless the
subject of the examination, analysis or review is an individual
described in subdivision (2), subsection (q) of this section;
(6) Nothing contained in this section may be construed to
limit the Commissioner's authority to terminate or suspend any
examination, analysis or review in order to pursue other legal or
regulatory action pursuant to the insurance laws of this state.
The Commissioner or his or her examiners may at any time testify
and offer other proper evidence as to information secured during
the course of an examination, analysis or review whether or not a
written report of the examination has at that time either been
made, served or filed in the Commissioner's Office;
(7) Nothing contained in this section may be construed to
limit the Commissioner's authority to use and, if appropriate, to
make public any final or preliminary examination report, any
examiner or company workpapers or other documents or any other
information discovered or developed during the course of any
examination, analysis or review in the furtherance of any legal or
regulatory action which the Commissioner may, in his or her sole
discretion, consider appropriate. An examination report, when filed, shall be admissible in evidence in any action or proceeding
brought by the Commissioner against an insurance company, its
officers or agents and shall be prima facie evidence of the facts
stated therein.
(j) Examination reports prepared pursuant to the provisions of
this section shall comply with the following requirements:
(1) All examination reports shall be comprised of only facts
appearing upon the books, records or other documents of the
company, its agents or other persons examined or as ascertained
from the testimony of its officers or agents or other persons
examined concerning its affairs and any conclusions and
recommendations the examiners find reasonably warranted from the
facts;
(2) No later than sixty days following completion of the
examination the examiner in charge shall file with the Commissioner
a verified written report of examination under oath. Upon receipt
of the verified report, the Commissioner shall transmit the report
to the company examined, together with a notice which shall afford
the company examined a reasonable opportunity of not more than ten
days to make a written submission or rebuttal with respect to any
matters contained in the examination report;
(3) Within thirty days of the end of the period allowed for
the receipt of written submissions or rebuttals the Commissioner
shall fully consider and review the report, together with any
written submissions or rebuttals and any relevant portions of the
examiner's workpapers and enter an order:
(A) Adopting the examination report as filed or with
modification or corrections. If the examination report reveals
that the company is operating in violation of any law, rule or
prior order of the Commissioner, the Commissioner may order the
company to take any action the Commissioner considers necessary and
appropriate to cure the violation; or
(B) Rejecting the examination report with directions to the
examiners to reopen the examination for purposes of obtaining
additional data, documentation or information and refiling pursuant
to subdivision (2) of this subsection; or
(C) Calling for an investigatory hearing with no less than
twenty days' notice to the company for purposes of obtaining
additional documentation, data, information and testimony;
(4) All orders entered pursuant to this subsection shall be
accompanied by findings and conclusions resulting from the
Commissioner's consideration and review of the examination report,
relevant examiner workpapers and any written submissions or
rebuttals. Any order issued pursuant to paragraph (A), subdivision
(3) of this subsection shall be considered a final administrative
decision and may be appealed pursuant to section fourteen of this
article and shall be served upon the company by certified mail,
together with a copy of the adopted examination report. Within
thirty days of the issuance of the adopted report the company shall
file affidavits executed by each of its directors stating under
oath that they have received a copy of the adopted report and
related orders.
(k) Hearings conducted pursuant to this section shall be
subject to the following requirements:
(1) Any hearing conducted pursuant to this section by the
Commissioner or the Commissioner's authorized representative shall
be conducted as a nonadversarial confidential investigatory
proceeding as necessary for the resolution of any inconsistencies,
discrepancies or disputed issues apparent upon the face of the
filed examination report or raised by or as a result of the
Commissioner's review of relevant workpapers or by the written
submission or rebuttal of the company. Within twenty days of the
conclusion of any hearing, the Commissioner shall enter an order
pursuant to paragraph (A), subdivision (3), subsection (j) of this
section;
(2) The Commissioner may not appoint an examiner as an
authorized representative to conduct the hearing. The hearing
shall proceed expeditiously with discovery by the company limited
to the examiner's workpapers which tend to substantiate any
assertions set forth in any written submission or rebuttal. The
Commissioner or the Commissioner's representative may issue
subpoenas for the attendance of any witnesses or the production of
any documents considered relevant to the investigation whether
under the control of the Commissioner, the company or other
persons. The documents produced shall be included in the record
and testimony taken by the Commissioner or the Commissioner's
representative shall be under oath and preserved for the record.
Nothing contained in this section shall require the Commissioner to disclose any information or records which would indicate or show
the existence or content of any investigation or activity of a
criminal justice agency;
(3) The hearing shall proceed with the Commissioner or the
Commissioner's representative posing questions to the persons
subpoenaed. Thereafter, the company and the department may present
testimony relevant to the investigation. Cross-examination may be
conducted only by the Commissioner or the Commissioner's
representative. The company and the Commissioner shall be
permitted to make closing statements and may be represented by
counsel of their choice.
(l) Adoption of the examination report shall be subject to the
following requirements:
(1) Upon the adoption of the examination report under
paragraph (A), subdivision (3), subsection (j) of this section, the
Commissioner may continue to hold the content of the examination
report as private and confidential information for a period of
ninety days except to the extent provided in subdivision (6),
subsection (i) of this section. Thereafter, the Commissioner may
open the report for public inspection so long as no court of
competent jurisdiction has stayed its publication;
(2) Nothing contained in this section may prevent or be
construed as prohibiting the Commissioner from disclosing the
content of an examination report, preliminary examination report or
results or any matter relating thereto or the results of any
analysis or review to the insurance department of this or any other state or country or to law-enforcement officials of this or any
other state or agency of the federal government at any time, so
long as the agency or office receiving the report or matters
relating thereto agrees in writing to hold it confidential and in
a manner consistent with this section;
(3) In the event the Commissioner determines that regulatory
action is appropriate as a result of any examination, analysis or
review, he or she may initiate any proceedings or actions as
provided by law;
(4) All working papers, recorded information, documents and
copies thereof produced by, obtained by or disclosed to the
Commissioner or any other person in the course of an examination,
analysis or review made under this section must be given
confidential treatment and are not subject to subpoena and may not
be made public by the Commissioner or any other person, except to
the extent provided in subdivision (5), subsection (i) of this
section. Access may also be granted in accordance with section
nineteen of this article. The parties must agree in writing prior
to receiving the information to provide to it the same confidential
treatment as required by this section unless the prior written
consent of the company to which it pertains has been obtained.
(m) The Commissioner may require any examiner to furnish a
bond in such amount as Commissioner may determine to be appropriate
and the bond shall be approved, filed and premium paid, with
suitable proof submitted to the Commissioner, prior to commencement
of employment by the Commissioner. No examiner may be appointed by the Commissioner if the examiner, either directly or indirectly,
has a conflict of interest or is affiliated with the management of
or owns a pecuniary interest in any person subject to examination
under this section. This section shall not be construed to
automatically preclude an examiner from being:
(1) A policyholder or claimant under an insurance policy;
(2) A grantor of a mortgage or similar instrument on the
examiner's residence to a regulated entity if done under customary
terms and in the ordinary course of business;
(3) An investment owner in shares of regulated diversified
investment companies; or
(4) A settlor or beneficiary of a "blind trust" into which any
otherwise impermissible holdings have been placed;
(5) Notwithstanding the requirements of this subsection, the
Commissioner may retain, from time to time, on an individual basis
qualified actuaries, certified public accountants or other similar
individuals who are independently practicing their professions even
though these persons may, from time to time, be similarly employed
or retained by persons subject to examination under this section.
(n) Personnel conducting examinations, analyses or reviews of
either a domestic, foreign or alien insurer shall be compensated
for each day worked at a rate set by the Commissioner. The
personnel shall also be reimbursed for their travel and living
expenses at the rate set by the Commissioner. Other individuals
who are not employees of the Department of Insurance shall all be
compensated for their work, travel and living expenses at rates approved by the Commissioner or as otherwise provided by law. As
used in this section, the costs of an examination, analysis or
review means:
(1) The entire compensation for each day worked by all
personnel, including those who are not employees of the Department
of Insurance, the conduct of the examination, analysis or review
calculated as hereinbefore provided;
(2) Travel and living expenses of all personnel, including
those who are not employees of the Department of Insurance,
directly engaged in the conduct of the examination, analysis or
review calculated at the rates as hereinbefore provided for;
(3) All other incidental expenses incurred by or on behalf of
the personnel in the conduct of any authorized examination,
analysis or review.
(o) (1) All property and casualty insurers subject to the
provisions of this section shall annually pay to the Commissioner
on or before the first day of July, one thousand nine hundred
ninety-one, and every first day of July thereafter an examination
assessment fee of up to five thousand dollars. Four hundred fifty
dollars of this fee shall be paid to the Treasurer of the state to
the credit of a special revolving fund to be known as the
Commissioner's Examination Revolving Fund which is hereby
established; up to four thousand two hundred dollars shall be paid
to the Treasurer of the state to the credit of the Unfair Claims
Settlement Practice Trust Fund established in section four-b,
article eleven of this chapter and three hundred fifty dollars shall be paid to the Treasurer of the state. If the Trust Fund has
moneys in excess of one million dollars, the examination assessment
fee shall be eight hundred dollars and the five thousand-dollar fee
shall only be reinstated at whatever amount the Commissioner deems
necessary to maintain the Fund, if the Fund value goes below one
million dollars. The Commissioner may at his or her discretion,
upon notice to the insurers subject to this subsection, increase
this examination assessment fee or levy an additional examination
assessment fee of two hundred fifty dollars. In no event may the
total examination assessment fee, including any additional
examination assessment fee levied, exceed five thousand two hundred
fifty dollars per insurer in any calendar year.
(2) All insurers other than property and casualty insurers
subject to the provisions of this section shall annually pay to the
Commissioner on or before the first day of July, one thousand nine
hundred ninety-one, and every first day of July thereafter an
examination assessment fee of eight hundred dollars. Four hundred
fifty dollars of this fee shall be paid to the Treasurer of the
state to the credit the Commissioner's Examination Revolving Fund
and three hundred fifty dollars shall be paid to the treasurer of
the state. The Commissioner may at his or her discretion, upon
notice to the insurers subject to this subsection, increase this
examination assessment fee or levy an additional examination
assessment fee of two hundred fifty dollars. In no event may the
total examination assessment fee, including any additional
examination assessment fee levied, exceed one thousand five hundred dollars per insurer in any calendar year.
(p) The moneys collected by the Commissioner from an increase
or additional examination assessment fee shall be paid to the
Treasurer of the State to be credited to the Commissioner's
Examination Revolving Fund. Any funds expended or obligated by the
Commissioner from the Commissioner's Examination Revolving Fund may
be expended or obligated solely for defrayment of the costs of
examinations, analyses or reviews of the financial affairs and
business practices of insurance companies, agents, brokers, excess
lines brokers, solicitors or other individuals or corporations
transacting or attempting to transact an insurance business in this
state made by the Commissioner pursuant to this section or for the
purchase of equipment and supplies, travel, education and training
for the Commissioner's deputies, other employees and appointed
examiners necessary for the Commissioner to fulfill the statutory
obligations created by this section.
(q) The Commissioner may require other individuals who are not
employees of the Department of Insurance who have been appointed by
the Commissioner to conduct or participate in the examination,
analysis or review of insurers, agents, brokers, excess lines
brokers, solicitors or other individuals or corporations
transacting or attempting to transact an insurance business in this
state to:
(1) Bill and receive payments directly from the insurance
company being examined, analyzed or reviewed for their work, travel
and living expenses as previously provided in this section; or
(2) If an individual agent, broker or solicitor is being
examined, analyzed or reviewed, bill and receive payments directly
from the Commissioner's Examination Revolving Fund for their work,
travel and living expenses as previously provided in this section.
The Commissioner may recover costs paid from the Commissioner's
Examination Revolving Fund pursuant to this subdivision from the
person upon whom the examination, analysis or review is conducted.
(r) The Commissioner and his or her examiners shall be
entitled to immunity to the following extent:
(1) No cause of action shall arise nor shall any liability be
imposed against the Commissioner or his or her examiners for any
statements made or conduct performed in good faith while carrying
out the provisions of this section;
(2) No cause of action shall arise, nor shall any liability be
imposed, against any person for the act of communicating or
delivering information or data to the Commissioner or his or her
examiners pursuant to an examination, analysis or review made under
this section if the act of communication or delivery was performed
in good faith and without fraudulent intent or the intent to
deceive;
(3) The Commissioner or any examiner shall be entitled to an
award of attorney's fees and costs if he or she 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 section and the party bringing the action was
not substantially justified in doing so. For purposes 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 subsection does not abrogate or modify in any way any
constitutional immunity or common law or statutory privilege or
immunity heretofore enjoyed by any person identified in subdivision
(1) of this subsection.
§33-2-15d. Report to the Legislature.
(a) By the first day of January, two thousand seven, the
Commissioner shall submit a report to the Legislature. The report
shall contain analysis of the impact of legislation enacted during
the two thousand five regular legislative session upon rates and
insurance availability in the state.
(b) The Insurance Commissioner shall by proposal of
legislative or procedural rules, pursuant to article three, chapter
twenty-nine-a of this code, put forth analytical criteria and
methodology of all factors to be considered in the report. This
purpose of this section is to assure that all relevant factors of
concern to the Legislature regarding the effect of the reforms
enacted in this article, any savings to consumers, the promotion of
insurance availability and impacts on insurance industry services
and performance are fully reviewed and addressed.
§33-2-16. Office of Consumer Advocacy established; Director of
Consumer Advocacy; promulgation of rules.
(a) There is hereby created within the agency of the Insurance
Commissioner the Office of Consumer Advocacy. The position of Director of the Office of Consumer Advocacy is a full-time
position. The Director shall be an attorney licensed in the State
of West Virginia. The Director shall be appointed by the Governor
for a term of four years to coincide with the term of the Governor
and may be discharged only for failure to carry out the duties of
the office or for other good and sufficient cause: Provided, That
the current Director of the Office of Consumer Advocacy or other
appointee of the Commissioner shall continue in the position until
the Governor appoints a new Director.
(b) The Insurance Commissioner shall provide office space,
equipment and supplies for the office.
(c) The Director may promulgate rules pursuant to article
three, chapter twenty-nine-a of this code in order to effect the
purposes of this section and sections seventeen and eighteen of
this article.
(d) On or before the first day of each regular session of the
Legislature, the Director shall file with the Governor, the Clerk
of the Senate and the Clerk of the House of Delegates a report
detailing the actions taken by the division in the preceding
calendar year.
§33-2-17. Office of Consumer Advocacy.
(a) In addition to the authority established under the rules
promulgated by the Director, the Office of Consumer Advocacy is
authorized to:
(1) Institute, intervene in, or otherwise participate in, as
an advocate for the public interest and the interests of insurance consumers, proceedings in state and federal courts, before
administrative agencies or before the Health Care Authority,
concerning applications or proceedings before the Health Care
Authority or the review of any act, failure to act or order of the
Health Care Authority;
(2) At the request of one or more policyholders, or whenever
the public interest is served, to advocate the interests of those
policyholders in proceedings arising out of any filing made with
the Insurance Commissioner by any insurance company or relating to
any complaint alleging an unfair or deceptive act or practice in
the business of insurance;
(3)
At the request of one or more third-party claimant who
does not have legal representation at a hearing on his or her
claim, or whenever the public interest is served, to advocate the
interests of those third-party claimants in proceedings arising out
of any filing made with the Insurance Commissioner by any insurance
company or relating to any third-party complaint alleging an unfair
claims settlement practice
;
(4) Institute, intervene in or otherwise participate in, as an
advocate for the public interest and the interests of insurance
consumers, proceedings in state and federal courts, before
administrative agencies, or before the Insurance Commissioner,
concerning applications or proceedings before the Commissioner or
the review of any act, failure to act or order of the Insurance
Commissioner;
(5) Review and compile information, data and studies of the reasonable and customary rate schedules of health care providers
and health insurers for the purposes of reviewing, establishing,
investigating, or supporting any policy regarding health care
insurance rates;
(6) Exercise all the same rights and powers regarding
examination and cross-examination of witnesses, presentation of
evidence, rights of appeal and other matters as any party in
interest appearing before the Insurance Commissioner or the Health
Care Authority;
(7) Hire consultants, experts, lawyers, actuaries, economists,
statisticians, accountants, clerks, stenographers, support staff,
assistants and other personnel necessary to carry out the
provisions of this section and sections sixteen and eighteen of
this article, which personnel shall be paid from special revenue
funds appropriated for the use of the office;
(8) Contract for the services of technically qualified persons
in the area of insurance matters to assist in the preparation and
presentation of matters before the courts, the Insurance
Commissioner, administrative agencies or the Health Care Authority,
which persons shall be paid from special revenue funds appropriated
for the use of the office;
(9) Make recommendations to the Legislature concerning
legislation to assist the Office in the performance of its duties;
(10) Communicate and exchange data and information with other
federal or state agencies, divisions, departments or officers and
with other interested parties, including, but not limited to, health care providers, insurance companies, consumers or other
interested parties; and
(11) Perform other duties to effect the purposes of the
Office.
(b) The provisions of this section do not apply to any filing
made by an insurance company, or act or order performed or issued
by the Commissioner, or complaint filed by a policyholder with the
Commissioner prior to the thirtieth day of June, one thousand nine
hundred ninety-one. All proceedings and orders in connection with
these prior matters shall be governed by the law in effect at the
time of the filing, or performance or issuance of the act or order.
(c) Nothing in this section may be construed to authorize the
Director to participate in the review and consideration of any rate
filing made pursuant to this chapter.
ARTICLE 3. LICENSING, FEES & TAXATION OF INSURERS.
§33-3-33. Surcharge on fire and casualty insurance policies to
benefit volunteer and part-volunteer fire departments; public
employees insurance agency and municipal pension plans;
special fund created; allocation of proceeds; effective date.
(a)(1) For the purpose of providing additional revenue for
volunteer fire departments, part-volunteer fire departments and
certain retired teachers and the teachers retirement reserve fund,
there is hereby authorized and imposed on and after the first day
of July, one thousand nine hundred ninety-two, on the policyholder
of any fire insurance policy or casualty insurance policy issued by any insurer, authorized or unauthorized, or by any risk retention
group, a policy surcharge equal to one percent of the taxable
premium for each such policy. After the thirtieth day of June, two
thousand five, the surcharge shall be imposed as specified in
subdivisions (2) and (3) of this subsection.
(2) After the thirtieth day of June, two thousand five,
through the thirty-first day of December, two thousand five, for
the purpose of providing additional revenue for volunteer fire
departments, part-volunteer fire departments and to provide
additional revenue to the Public Employees Insurance Agency and
municipal pension plans, there is hereby authorized and imposed on
and after the first day of July, two thousand five, on the
policyholder of any fire insurance policy or casualty insurance
policy issued by any insurer, authorized or unauthorized, or by any
risk retention group, a policy surcharge equal to one percent of
the taxable premium for each such policy.
(3) After the thirty-first day of December, two thousand five,
for the purpose of providing additional revenue for volunteer fire
departments and part-volunteer fire departments, there is hereby
authorized and imposed on the policyholder of any fire insurance
policy or casualty insurance policy issued by any insurer,
authorized or unauthorized, or by any risk retention group, a
policy surcharge equal to fifty-five one hundredths of one percent
of the taxable premium for each such policy.
(4) For purposes of this section, casualty insurance may not include insurance on the life of a debtor pursuant to or in
connection with a specific loan or other credit transaction or
insurance on a debtor to provide indemnity for payments becoming
due on a specific loan or other credit transaction while the debtor
is disabled as defined in the policy. The policy surcharge may not
be subject to premium taxes, agent commissions or any other
assessment against premiums.
(b) The policy surcharge shall be collected and remitted to
the Commissioner by the insurer, or in the case of surplus lines
coverage, by the surplus lines licensee, or if the policy is issued
by a risk retention group, by the risk retention group. The amount
required to be collected under this section shall be remitted to
the Commissioner on a quarterly basis on or before the twenty-fifth
day of the month succeeding the end of the quarter in which they
are collected, except for the fourth quarter for which the
surcharge shall be remitted on or before the first day of March of
the succeeding year.
(c) Any person failing or refusing to collect and remit to the
Commissioner any policy surcharge and whose surcharge payments are
not postmarked by the due dates for quarterly filing is liable for
a civil penalty of up to one hundred dollars for each day of
delinquency, to be assessed by the Commissioner. The Commissioner
may suspend the insurer, broker or risk retention group until all
surcharge payments and penalties are remitted in full to the
Commissioner.
(d)(1) All money from the policy surcharge shall be collected
by the Commissioner who shall disburse the money received from the
surcharge into a special account in the State Treasury, designated
the Fire Protection Fund. The net proceeds of this portion of the
tax and the interest thereon, after appropriation by the
Legislature, shall be distributed quarterly on the first day of the
months of January, April, July and October to each volunteer fire
company or department on an equal share basis by the State
Treasurer. After the thirtieth day of June, two thousand five, the
money received from the surcharge shall be distributed as specified
in subdivisions (2) and (3) of this subsection.
(2)(A) After the thirtieth day of June, two thousand five,
through the thirty-first day of December, two thousand five, all
money from the policy surcharge shall be collected by the
Commissioner who shall disburse one half of the money received from
the surcharge into the Fire Protection Fund for distribution as
provided in subdivision (1) of this subsection.
(B) The remaining portion of moneys collected shall be
transferred into the fund in the State Treasury of the Public
Employees Insurance Agency into which are deposited the
proportionate shares made by agencies of this state of the Public
Employees Insurance Agency costs of those agencies, until the first
day of November, two thousand five. After the thirty-first day of
October, two thousand five, through the thirty-first day of
December, two thousand five, the remain portion shall be transferred to the special account in the State Treasury, known as
the Municipal Pensions and Protection Fund.
(3) After the thirty-first day of December, two thousand five,
all money from the policy surcharge shall be collected by the
Commissioner who shall disburse all of the money received from the
surcharge into the Fire Protection Fund for distribution as
provided in subdivision (1) of this subsection.
(4) Before each distribution date to volunteer fire companies
or departments, the State Fire Marshal shall report to the State
Treasurer the names and addresses of all volunteer and
part-volunteer fire companies and departments within the state
which meet the eligibility requirements established in section
eight-a, article fifteen, chapter eight of this code.
(e) The allocation, distribution and use of revenues provided
in the Fire Protection Fund are subject to the provisions of
sections eight-a and eight-b, article fifteen, chapter eight of
this code.
ARTICLE 6. THE INSURANCE POLICY.
§33-6-15a. Notation of consumer cost savings.
Each policy issued following enactment of this provision
during the two thousand five regular session, during the year
following the effective date, shall display in a prominent location
on the policy itself or on an insert included with each policy and
provided to each policyholder, statements as following:
(1) "YOUR COSTS FOR THIS POLICY (HAVE/HAVE NOT) BEEN REDUCED BY (insert savings amount here) BECAUSE OF CIVIL JUSTICE REFORMS
ENACTED BY THE WEST VIRGINIA LEGISLATURE IN 2005 AND SIGNED INTO
LAW BY THE GOVERNOR; and
(2) "YOUR COST FOR THIS POLICY HAS BEEN REDUCED BY (insert
savings amount here) BECAUSE OF PREMIUM SURCHARGE REDUCTIONS
ENACTED BY THE WEST VIRGINIA LEGISLATURE IN 2005 AND SIGNED INTO
LAW BY THE GOVERNOR".
If the insurer did not offer the type of insurance provided
by the policy in two thousand four, the requirement for these
statements do not apply.
ARTICLE 11. UNFAIR TRADE PRACTICES.
§33-11-4a. Complaints by third-party claimants; elimination of
private cause of action.
(a) A third-party claimant may not bring a private cause of
action or any other action against any person for an unfair claims
settlement practice. A third-party claimant's sole remedy against
a person for an unfair claims settlement practice or the bad faith
settlement of a claim is the filing of an administrative complaint
with the Commissioner in accordance with subsection (b) of this
section. A third-party claimant may not include allegations of
unfair claims settlement practices in any underlying litigation
against an insured.
(b) A third-party claimant may file an administrative
complaint against a person for an alleged unfair claims settlement practice with the Commissioner. The administrative complaint shall
be filed as soon as practicable but in no event later than one year
following the actual or implied discovery of the alleged unfair
claims settlement practice.
(1) The administrative complaint shall be on a form provided
by the Commissioner and shall state with specificity the following
information and such other information as the Commissioner may
require:
(A) The statutory provision, if known, which the person
allegedly violated;
(B) The facts and circumstances giving rise to the violation;
(C) The name of any individual or other entity involved in the
violation; and
(D) Reference to specific policy language that is relevant to
the violation, if known.
(2) If the administrative complaint is deficient, the
Commissioner shall contact the third-party claimant within fifteen
days of receipt of the complaint to obtain the necessary
information.
(3) Upon receipt of a sufficiently complete administrative
complaint, the Commissioner must provide the person against whom
the administrative complaint is filed written notice of the alleged
violation.
(4) If the person against whom the administrative complaint
was filed substantially corrects the circumstances that gave rise to the violation or offers to resolve the complaint in a manner
found reasonable by the Commissioner within sixty days after
receiving the notice from the Commissioner pursuant to subdivision
(3) of this subsection, the Commissioner shall close the complaint
and no further action shall lie on the matter, either by the
Commissioner or by the third party.
(5) The person that is the recipient of a notice from the
Commissioner pursuant to subdivision (3) of this subsection shall
report to the Commissioner on the disposition of the alleged
violation within fifteen days of the disposition but no later than
sixty days from receipt of notice of the complaint from the
Commissioner.
(c) If the third-party claim is not resolved within the sixty-
day period described in subdivision (4), subsection (b) of this
section through either the person's substantial correction of the
circumstances giving rise to the alleged violation or an offer from
the person to resolve the administrative complaint that is found to
be reasonable by the Commissioner, the Commissioner shall conduct
any investigation he or she considers necessary to determine
whether the allegations contained in the administrative complaint
are meritorious.
(d) Following the time period and investigation provided in
subsection (c) of this section, if the Commissioner finds that
merit exists for a complaint and the complaint has not been
resolved, the Commissioner shall forward a complete copy of the complaint to the Office of Consumer Advocacy and, if at his or her
discretion, may order further investigation and hearing to
determine if the person has committed an unfair claims settlement
practice with such frequency as to constitute a general business
practice. Notice of any hearing shall be provided to all parties.
The Commissioner shall assign a time and place for a hearing and
shall notify the parties of the hearing by written notice at least
ten days in advance thereof. The hearing shall be held within
ninety days from the date of filing the complaint unless the
complaint has been successfully resolved pursuant to subdivision
(4), subsection (b) of this section or continued by agreement of
all parties or by the Commissioner for good cause. The
Commissioner shall cause hearings to be conducted in the
geographical region of the state where the complainant resides.
The Commissioner may promulgate rules pursuant to article three,
chapter twenty-nine-a of this code necessary, pursuant to the
authority of this chapter, to establish procedures to conduct
hearings pursuant to this section and chapter.
(e) If the Commissioner finds that the person has committed
the unfair claim settlement practice with such frequency as to
constitute a general business practice, the Commissioner may
proceed to take administrative action he or she considers
appropriate in accordance with section six of this article or as
otherwise provided in this chapter. If the Commissioner finds that
the person engaged in any method of competition, act or practice that involves an intentional violation of subdivision (9), section
four of this article, and even though it has not been established
that the person engaged in a general business practice, the
Commissioner may proceed to take administrative action he or she
considers appropriate in accordance with subsection (b), section
six of this article. The person is entitled to notice and hearing
in connection with the administrative proceeding.
(f) A finding by the Commissioner that the actions of a person
constitute a general business practice may only be based on the
existence of substantially similar violations in a number of
separate claims or causes of action.
(g) A good faith disagreement over the value of an action or
claim or the liability of any party to any action or claim is not
an unfair claims settlement practice.
(h) The Commissioner, pursuant to article three, chapter
twenty-nine-a of this code, may promulgate by emergency rule
standards for subsection (9), section four of this article.
(i) Nothing in this section in any way limits the rights of
the Commissioner to investigate and take action against a person
which the Commissioner has reason to believe has committed an
unfair claims settlement practice or has consistently resolved
administrative complaints by third-party claimants within the
sixty-day period set forth in subdivision (4), subsection (b) of
this section.
(j) Definitions:
(1) "Third-party claimant" means any individual, corporation,
association, partnership or any other legal entity asserting a
claim against any individual, corporation, association, partnership
or other legal entity insured under an insurance policy or
insurance contract for the claim in question.
(2) "Unfair claims settlement practice" means a violation of
subsection (9), section four of this article.
(3) "Underlying litigation" means a third-party claimant's
lawsuit involving a claim against an insured.
(4) "Underlying claim" means the claim by a third-party
claimant against an insured.
§33-11-4b. Unfair Claims Settlement Practice Trust Fund.
(a) There is hereby created a special account in the State
Treasury designated the Unfair Claims Settlement Practice Trust
Fund, which shall be an interest-bearing account and may be
invested in the manner permitted by section nine, article six,
chapter twelve of this code, with the interest income or other
refund earned thereon a proper credit to the fund. Funds paid into
the account may also be derived from the following sources:
(1) Payments received pursuant to section nine, article two of
this chapter; and
(2) Any appropriations by the Legislature which may be made
for this purpose.
(b) The moneys from the principal in the fund shall be
expended by the Commissioner to compensate claimants as provided in sections four-a and six of this article.
§33-11-6. Violations, cease and desist and penalty orders and
modifications thereof.
If, after notice and hearing, the Commissioner determines that
any person has engaged in or is engaging in any method of
competition, act or practice in violation of the provisions of this
article or any rules or regulations promulgated by the Commissioner
thereunder, the Commissioner shall issue an order directing the
person to cease and desist from engaging in the method of
competition, act or practice and, in addition thereto, the
Commissioner may at his or her discretion order any one or more of
the following:
(a) Require the payment to the State of West Virginia of a
penalty in a sum not exceeding one thousand dollars for each and
every act or violation, but not to exceed an aggregate penalty of
ten thousand dollars, unless the person knew or reasonably should
have known he or she was in violation of this article, in which
case the penalty shall not exceed five thousand dollars for each
and every act or violation, but not to exceed an aggregate penalty
of one hundred thousand dollars in any six-month period.
(b) In the event the act involves an intentional violation of
subdivision (9), section four of this article, and even though it
has not been established that the person engaged in a general
business practice, require the payment to the State of West
Virginia of a penalty in a sum not to exceed ten thousand dollars.
(c) Require the payment to the State of West Virginia of a
penalty in a sum not exceeding two hundred fifty thousand dollars
if the Commissioner finds that the insurer committed or performed
unfair claims settlement practices with such frequency as to
indicate a general business practice.
(d) Revoke or suspend the license of any person if he or she
knew, or reasonably should have known, that he or she was in
violation of this article.
(e)(1) Provide restitution from the Unfair Claims Settlement
Practice Trust Fund to a claimant who has suffered damages as a
result of a general business practice or from an egregious act by
a person whether or not the act constituted a pattern corresponding
to an unfair claim settlement practice committed with such
frequency as to constitute a general business practice.
(2) Restitution provided herein may include: (A) Actual
economic damages; and (B) noneconomic damages not to exceed ten
thousand dollars. Restitution may not be given for attorney fees
and punitive damages.
(f) It is expressly understood and intended that the
provisions of paragraph (1), subdivision (e) of this section do not
create a private cause of action against the person that has
committed an unfair claims settlement practice. In the event that
any provision of said paragraph is found to be unconstitutional or
is deemed by any court of competent jurisdiction to create a
private cause of action, then subdivision (e) shall be void.
(g) Any person aggrieved by an order of the Commissioner under
this article may seek judicial review of the order as provided in
section fourteen, article two of this chapter.
(h) No order of the Commissioner pursuant to this article or
order of any court to enforce it, or holding of a hearing, shall in
any manner relieve or absolve any person affected by the order or
hearing from any other liability, penalty or forfeiture under law.
(i) The provisions of section four-a of this article and
subdivision (e) of this section do not apply to medical
professional liability insurance claims pursuant to article seven-
b, chapter fifty-five of this code and workers compensation
insurance policies governed by article two-c, chapter twenty-three
of this code.
ARTICLE 20. RATES AND RATING ORGANIZATIONS.
§33-20-4a. Biannual rate filings for certain insurance lines.
On or before the first day of July, two thousand five, the
Commissioner shall promulgate legislative rules pursuant to article
three, chapter twenty-nine-a of this code establishing procedures
whereby each insurer providing five percent or more of insurance
coverage in this state for private passenger automobile insurance
and property insurance obtained for personal or family needs shall
biannually submit rate filings required under this section:
Provided, That the requirements under this subsection shall
terminate on the first day of July, two thousand nine.