PRINTER'S NO. 483
No. 462 Session of 2001
INTRODUCED BY MOWERY, COSTA, M. WHITE, EARLL, BELL AND SCHWARTZ,
FEBRUARY 15, 2001
REFERRED TO BANKING AND INSURANCE, FEBRUARY 15, 2001
AN ACT
1 Providing for the regulation of viatical settlements and for
2 powers and duties of the Insurance Department.
3 TABLE OF CONTENTS
4 Section 1. Short title.
5 Section 2. Definitions.
6 Section 3. License requirements.
7 Section 4. License suspension, revocation and denial.
8 Section 5. Approval of viatical settlement contracts and
9 disclosure statements.
10 Section 6. Reporting requirements and confidentiality.
11 Section 7. Disclosure.
12 Section 8. General rules.
13 Section 9. Prohibited practices.
14 Section 10. Fraud prevention and control.
15 Section 11. Responsibility of department.
16 Section 12. Injunctions; civil remedies; cease and desist.
17 Section 13. Miscellaneous provisions.
1 Section 14. Unfair trade practices.
2 Section 15. Severability.
3 Section 16. Applicability of securities laws.
4 Section 17. Examination and investigation of books and
5 records.
6 Section 18. Transition provision.
7 Section 19. Effective date.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title.
11 This act shall be known and may be cited as the Viatical
12 Settlements Act.
13 Section 2. Definitions.
14 The following words and phrases when used in this act shall
15 have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Advertising." Any written, electronic or printed
18 communication or any communication by means of recorded
19 telephone messages or transmitted on radio, television, the
20 Internet or similar communications media, including film strips,
21 motion pictures and videos, published, disseminated, circulated
22 or placed before the public, directly or indirectly, for the
23 purpose of creating an interest in or inducing a person to sell
24 a life insurance policy pursuant to a viatical settlement
25 contract.
26 "Business of viatical settlements." An activity involved in,
27 but not limited to, the offering, solicitation, negotiation,
28 procurement, effectuation, purchasing, investing, financing,
29 monitoring, tracking, underwriting, selling, transferring,
30 assigning, pledging or hypothecating in any other manner of
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1 viatical settlement contracts in this Commonwealth.
2 "Chronically ill." A condition which means a person:
3 (1) is unable to perform at least two activities of
4 daily living including, but not limited to, eating,
5 toileting, transferring, bathing, dressing or continence;
6 (2) requires substantial supervision to protect the
7 individual from threats to health and safety due to severe
8 cognitive impairment; or
9 (3) has a level of disability similar to that described
10 in paragraph (1) as determined by the Secretary of Health and
11 Human Services.
12 "Commissioner." The Insurance Commissioner of the
13 Commonwealth.
14 "Department." The Insurance Department of the Commonwealth.
15 "Financing entity." An underwriter, placement agent, lender,
16 purchaser of securities, purchaser of a policy or certificate
17 from a viatical settlement provider, credit enhancer or any
18 entity that has a direct ownership in a policy or certificate
19 that is the subject of a viatical settlement contract, but:
20 (1) whose principal activity related to the transaction
21 is providing funds to effect the viatical settlement or
22 purchase of one or more viaticated policies;
23 (2) who has an agreement in writing with one or more
24 licensed viatical settlement providers to finance the
25 acquisition of viatical settlement contracts; and
26 (3) who is not a nonaccredited investor or viatical
27 settlement purchaser.
28 "Fraudulent viatical settlement act." An act or omission
29 committed by any person who, knowingly or with intent to
30 defraud, for the purpose of depriving another of property or for
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1 pecuniary gain, commits or permits its employees or its agents
2 to commit any of the following acts:
3 (1) Presenting, causing to be presented or preparing
4 with knowledge or belief that it will be presented to or by a
5 viatical settlement provider, viatical settlement broker,
6 viatical settlement purchaser, financing entity, insurer,
7 insurance broker, insurance agent or any other person false
8 material information or concealing material information as
9 part of, in support of or concerning a fact material to one
10 or more of the following:
11 (i) An application for the issuance of a viatical
12 settlement contract or insurance policy.
13 (ii) The underwriting of a viatical settlement
14 contract or insurance policy.
15 (iii) A claim for payment or benefit pursuant to a
16 viatical settlement contract or insurance policy.
17 (iv) Premiums paid on an insurance policy.
18 (v) Payments and changes in ownership or beneficiary
19 made in accordance with the terms of a viatical
20 settlement contract or insurance policy.
21 (vi) The reinstatement or conversion of an insurance
22 policy.
23 (vii) The solicitation, offer, effectuation or sale
24 of a viatical settlement contract or insurance policy.
25 (viii) The issuance of written evidence of a
26 viatical settlement contract or insurance.
27 (ix) A financing transaction.
28 (2) In the furtherance of a fraud or to prevent the
29 detection of a fraud:
30 (i) removes, conceals, alters, destroys or
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1 sequesters from the Insurance Commissioner or the
2 Insurance Department the assets or records of a licensee
3 or other person engaged in the business of viatical
4 settlements;
5 (ii) misrepresents or conceals the financial
6 condition of a licensee, insurer or other person;
7 (iii) transacts the business of viatical settlements
8 in violation of laws requiring a license, certificate of
9 authority or other legal authority for the transaction of
10 the business of viatical settlements; or
11 (iv) files with the Insurance Commissioner, the
12 Insurance Department or the chief insurance regulatory
13 official or agency of another jurisdiction a document
14 containing false information or otherwise conceals
15 information about a material fact.
16 (3) Presenting, causing to be presented or preparing
17 with knowledge or reason to believe that it will be presented
18 to or by a viatical settlement provider, viatical settlement
19 broker, insurer, insurance agent, financing entity, viatical
20 settlement purchaser or any other person, in connection with
21 a viatical settlement transaction or insurance transaction,
22 an insurance policy, knowing the policy was fraudulently
23 obtained by the insured, owner or any agent thereof.
24 (4) Embezzlement, theft, misappropriation or conversion
25 of moneys, funds, premiums, credits or other property of a
26 viatical settlement provider, insurer, insured, viator,
27 insurance policy owner or any other person engaged in the
28 business of viatical settlements or insurance.
29 (5) Attempting to commit, assisting, aiding or abetting
30 in the commission of or the conspiracy to commit the acts or
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1 omissions specified in this subsection.
2 "Insurer." Any life insurance company, association or
3 exchange.
4 "Licensee." A viatical settlement provider or viatical
5 settlement broker.
6 "Person." A natural person or a legal entity, including, but
7 not limited to, an individual, joint stock company,
8 unincorporated organization, partnership, limited liability
9 company, association, trust, corporation, or any other similar
10 legal entity or any of the foregoing acting in concert.
11 "Policy." An individual or group policy, group certificate,
12 contract or arrangement of life insurance affecting the rights
13 of a resident of this Commonwealth or bearing a reasonable
14 relation to this Commonwealth, regardless of whether delivered
15 or issued for delivery in this Commonwealth.
16 "Related provider trust." A titling trust or other trust
17 established by a licensed viatical settlement provider for the
18 sole purpose of holding the ownership or beneficial interest in
19 purchased policies in connection with a financing transaction,
20 which trust:
21 (1) has a written agreement with the licensed viatical
22 settlement provider under which the licensed viatical
23 settlement provider is responsible for ensuring compliance
24 with all statutory and regulatory requirements; and
25 (2) has a written agreement with the licensed viatical
26 settlement provider under which the trust agrees to make all
27 records and files related to viatical settlement transactions
28 available to the Insurance Department as if those records and
29 files were maintained directly by the licensed viatical
30 settlement provider.
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1 "Special purpose entity." A corporation, partnership, trust,
2 limited liability company or other similar entity, other than a
3 natural person, formed solely to provide either directly or
4 indirectly access to institutional capital markets for a
5 financing entity or licensed viatical settlement provider.
6 "Terminally ill." Having an illness or sickness that can
7 reasonably be expected to result in death in 24 months or less.
8 "Viatical settlement broker." A person that on behalf of a
9 viator and for a fee, commission or other valuable consideration
10 offers or attempts to negotiate viatical settlements between a
11 viator and one or more viatical settlement provider. The term
12 does not include an attorney or certified public accountant who
13 is retained to represent the viator and whose compensation is
14 not paid directly or indirectly by the viatical settlement
15 provider or purchaser. The term also does not include an
16 investment advisor registered under the Investment Advisers Act
17 of 1940 (15 U.S.C. § 80b-1 et seq.) or the act of December 5,
18 1972 (P.L.1280, No.284), known as the Pennsylvania Securities
19 Act of 1972, possessing a designation recognized by the
20 Pennsylvania Securities Commission for the purposes of waiving
21 any examination requirement under the Pennsylvania Securities
22 Act of 1972, who is retained to represent the viator and whose
23 compensation is not paid directly or indirectly by the viatical
24 settlement provider or purchaser.
25 "Viatical settlement contract." A written agreement
26 establishing the terms under which compensation or anything of
27 value will be paid, which compensation or value is less than the
28 expected death benefit of the insurance policy or certificate,
29 in return for the viator's assignment, transfer, sale, devise or
30 bequest of the death benefit or ownership of any portion of the
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1 insurance policy or certificate of insurance. The term also
2 includes a contract for a loan or other financing transaction
3 secured primarily by an individual or group life insurance
4 policy, other than a loan by a life insurance company pursuant
5 to the terms of the life insurance contract, or a loan secured
6 by the cash value of a policy. A viatical settlement contract
7 includes an agreement to transfer ownership or change the
8 beneficiary designation at a later date regardless of the date
9 that compensation is paid to the viator.
10 "Viatical settlement provider." A person, other than a
11 viator, that enters into or effectuates a viatical settlement
12 contract. The term does not include:
13 (1) a bank, bank and trust, savings bank, savings and
14 loan association, credit union or other licensed lending
15 institution that takes an assignment of a life insurance
16 policy as collateral for a loan;
17 (2) the issuer of a life insurance policy providing
18 accelerated benefits pursuant to the contract;
19 (3) an authorized or eligible insurer that provides stop
20 loss coverage to a viatical settlement provider, purchaser,
21 financing entity, special purpose entity or related provider
22 trust;
23 (4) a natural person who enters into or effectuates no
24 more than one agreement in a calendar year for the transfer
25 of life insurance policies for any value less than the
26 expected death benefit;
27 (5) a financing entity;
28 (6) a special purpose entity;
29 (7) a related provider trust; or
30 (8) a viatical settlement purchaser.
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1 "Viatical settlement purchaser." A person who gives a sum of
2 money as consideration for a life insurance policy or an
3 interest in the death benefits of a life insurance policy or a
4 person who owns, acquires or is entitled to a beneficial
5 interest in a trust that owns a viatical settlement contract or
6 is the beneficiary of a life insurance policy, which has been or
7 will be the subject of a viatical settlement contract, for the
8 purpose of driving an economic benefit. A viatical settlement
9 purchaser does not include:
10 (1) a licensee under this act;
11 (2) a accredited investor or qualified institutional
12 buyer, as defined respectively in State law or Regulation D,
13 Rule 501 or Rule 144A of the Federal Securities Act of 1933
14 (48 Stat. 74, 15 U.S.C. § 77c et seq.), as amended;
15 (3) a financing entity;
16 (4) a special purpose entity; or
17 (5) a related provider trust.
18 "Viaticated policy." A life insurance policy or certificate
19 that has been acquired by a viatical settlement provider
20 pursuant to a viatical settlement contract.
21 "Viator." The owner of a life insurance policy or a
22 certificate holder under a group policy who enters or seeks to
23 enter into a viatical settlement contract. For the purposes of
24 this act, a viator shall not be limited to an owner of a life
25 insurance policy or a certificate holder under a group policy
26 insuring the life of an individual with a terminal or chronic
27 illness or condition except where specifically addressed in this
28 act. The term does not include:
29 (1) a licensee under this act;
30 (2) an accredited investor or qualified institutional
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1 buyer, as defined respectively in Regulation D, Rule 501 or
2 Rule 144A of the Federal Securities Act of 1933 (48 Stat. 74,
3 15 U.S.C. § 77c et seq.), as amended;
4 (3) a financing entity;
5 (4) a special purpose entity; or
6 (5) a related provider trust.
7 Section 3. License requirements.
8 (a) General rule.--No person shall engage in the business of
9 viatical settlements or otherwise operate as a viatical
10 settlement provider or viatical settlement broker in this
11 Commonwealth without first obtaining an appropriate license from
12 the department and being considered by the department to be
13 worthy of such licensure.
14 (b) Application.--Application for a viatical settlement
15 provider or viatical settlement broker license shall be made to
16 the department by the applicant on a form required by the
17 department. An application for initial licensure as a viatical
18 settlement provider shall include the following information in
19 addition to any other information required by the department:
20 (1) an audited financial statement no more than one year
21 and 120 days prepared under the generally accepted accounting
22 principles; and
23 (2) an unaudited financial statement as of the end of
24 the most recent quarter.
25 (c) Fees.--The following licensing fees shall be due at the
26 time of initial and renewal application:
27 (1) For licensure as a viatical settlement provider,
28 $300.
29 (2) For licensure as a viatical settlement broker, $100.
30 (3) Fees for initial and renewal licensure as a viatical
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1 settlement provider and viatical settlement broker may be
2 adjusted no more than annually at the discretion of the
3 commissioner by publishing a notice in the Pennsylvania
4 Bulletin.
5 (d) Reciprocity.--
6 (1) The department shall not assess a greater fee for a
7 viatical settlement provider license or viatical settlement
8 broker license or related service to a person not residing in
9 this State based solely on the fact that the person does not
10 reside in this State.
11 (2) The department shall waive any license application
12 requirements for a nonresident license applicant with a valid
13 viatical settlement provider or viatical settlement broker
14 license from the applicant's home state, if:
15 (i) the viatical settlement provider or viatical
16 settlement broker has submitted the proper request for
17 licensure and has paid the appropriate licensure fees;
18 (ii) the viatical settlement provider or viatical
19 settlement broker has submitted or transmitted to the
20 department the application for licensure that the person
21 submitted to his or her home state; and
22 (iii) the viatical settlement provider's or the
23 viatical settlement broker's home state awards
24 nonresident viatical settlement provider and viatical
25 settlement broker licenses to residents of this State on
26 the same basis.
27 (e) Renewal.--A license issued under this section shall
28 expire and may be renewed on the anniversary month of the
29 initial date of licensure upon payment of the appropriate
30 renewal fee and application with the department on a form
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1 required by the department. Failure to pay the fee or submit the
2 renewal form within the terms required by the department shall
3 be deemed voluntary termination of the license. The issuance of
4 a renewal license to a viatical settlement provider shall be
5 subject to approval of the appropriate application and financial
6 information filed with the department.
7 (f) Bond.--In order to be eligible for licensure or renewal
8 as a viatical settlement provider, an applicant must be bonded
9 or otherwise provide for its financial accountability in an
10 amount required by the department.
11 (g) Full disclosure.--The applicant shall provide
12 information on forms required by the department. The department
13 may, at any time, require the applicant to fully disclose the
14 identity of all stockholders, partners, officers, members and
15 employees, and the department may, in its discretion, refuse to
16 issue a license in the name of a legal entity if not satisfied
17 that any officer, employee, stockholder, partner or member
18 thereof who may materially influence the applicant's conduct
19 meets the standards set forth in this act.
20 (h) Authorization.--A viatical settlement provider license
21 issued to a legal entity authorizes all partners, officers,
22 members and designated employees to act as a viatical settlement
23 provider under the legal entity's viatical settlement provider
24 license, and all such persons shall be named in the application
25 and any supplements to the application. A viatical settlement
26 broker license issued to a legal entity authorizes only that
27 entity to act as a viatical settlement broker and such license
28 does not authorize partners, officers, members and designated
29 employees of the legal entity to act as viatical settlement
30 brokers under the legal entity's license.
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1 (i) Investigation.--Upon the filing of an application and
2 the payment of the license fee, the department shall make an
3 investigation of each applicant and issue a license if the
4 department finds that the applicant:
5 (1) if a viatical settlement provider, has provided a
6 detailed plan of operation;
7 (2) is competent and trustworthy and intends to act in
8 good faith in the capacity involved by the license applied
9 for;
10 (3) has a good business reputation and has had
11 experience, training or education so as to be qualified in
12 the business for which the license is applied for;
13 (4) if a legal entity, provides a certificate of good
14 standing from the state of its domicile; and
15 (5) has provided an antifraud plan that meets the
16 requirements of section 10(g).
17 (j) Report.--A viatical settlement provider or viatical
18 settlement broker shall provide to the department new or revised
19 information about officers, 10% or more stockholders, partners,
20 directors, members or designated employees within 30 days of the
21 change.
22 Section 4. License suspension, revocation and denial.
23 (a) Suspension, revocation and denial.--The commissioner may
24 refuse to issue, suspend, revoke or refuse to renew the license
25 of a viatical settlement provider or viatical settlement broker
26 if the commissioner finds that:
27 (1) there was any material misrepresentation in the
28 application for the license;
29 (2) the licensee or any officer, partner, member or key
30 management personnel has been convicted of fraudulent or
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1 dishonest practices, is subject to a final administrative
2 action or is shown to be untrustworthy, incompetent or
3 otherwise unworthy of licensure by the department;
4 (3) the viatical settlement provider demonstrates a
5 pattern of unreasonable payments to viators;
6 (4) the licensee has been found guilty of or has pleaded
7 guilty or nolo contendere to any felony or to a misdemeanor
8 involving fraud or moral turpitude, regardless of whether a
9 judgment of conviction has been entered by the court;
10 (5) the viatical settlement provider has entered into
11 any viatical settlement contract that has not been approved
12 pursuant to this act;
13 (6) the viatical settlement provider has failed to honor
14 contractual obligations set out in a viatical settlement
15 contract;
16 (7) the licensee no longer meets the requirements for
17 initial licensure;
18 (8) the viatical settlement provider has assigned,
19 transferred or pledged a viaticated policy to a person other
20 than a viatical settlement provider or purchaser licensed in
21 this Commonwealth or a financing entity, special purpose
22 entity or related provider trust;
23 (9) the licensee has effectuated the viatication of a
24 life insurance policy that the licensee knew or reasonably
25 should have known was procured through fraudulent means;
26 (10) the licensee has violated any provision of this act
27 or any regulations promulgated by the department; or
28 (11) the licensee's viatical settlement provider,
29 viatical settlement broker or other license related to the
30 sale or effectuation of viatical settlement policies,
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1 insurance or securities has been revoked or suspended in this
2 or another state.
3 (b) Hearing.--An applicant who disputes the department's
4 determination concerning licensure may seek a formal
5 administrative hearing before the commissioner under 2 Pa.C.S.
6 Ch. 5 Subch. A (relating to practice and procedure of
7 Commonwealth agencies).
8 Section 5. Approval of viatical settlement contracts and
9 disclosure statements.
10 (a) General rule.--A person shall not use a viatical
11 settlement contract or provide to a viator a disclosure
12 statement form in this Commonwealth unless the contract or form
13 is filed with and approved by the department. The department
14 shall disapprove a viatical settlement contract form or viatical
15 settlement disclosure statement form if, in the department's
16 opinion, the contract or statement or provisions contained
17 therein are unreasonable, contrary to the interests of the
18 public or otherwise misleading or unfair to the viator. At the
19 department's discretion, the department may also require the
20 submission of advertising material.
21 (b) Deemed effective.--Unless disapproved within 45 days of
22 receipt by the department, a filing of a viatical settlement
23 contract or viatical settlement disclosure form shall be
24 effective for use.
25 (c) Disapproval after use.--Any viatical settlement contract
26 or viatical settlement disclosure form approved or effective for
27 use in accordance with subsections (a) and (b) may be
28 subsequently disapproved by the department. The department shall
29 notify the appropriate person in writing and provide the
30 opportunity for a hearing as provided in 2 Pa.C.S. Ch. 5 Subch.
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1 A (relating to practice and procedure of Commonwealth agencies)
2 and Ch. 7 Subch. A (relating to judicial review of Commonwealth
3 agency action).
4 (d) Discontinuance of contract.--If following a hearing the
5 commissioner finds that a viatical settlement contract or
6 viatical settlement disclosure statement form should be
7 disapproved, the commissioner shall order the use of the
8 contract or disclosure form to be discontinued after a date
9 specified in the order.
10 Section 6. Reporting requirements and confidentiality.
11 (a) General rule.--With each renewal application on the
12 anniversary month of initial licensure by the department, each
13 licensee shall file an annual statement containing such
14 information as required by the department, and if a viatical
15 settlement provider, such information shall include:
16 (1) an audited financial statement no more than one year
17 and 120 days old prepared under the generally accepted
18 accounting principles; and
19 (2) an unaudited financial statement as of the end of
20 the most recent quarter.
21 (b) Confidentiality.--Except as otherwise allowed or
22 required by law, a viatical settlement provider, viatical
23 settlement broker, insurance company, insurance agent, insurance
24 broker, information bureau, rating agency or company or any
25 other person with actual knowledge of an insured's identity,
26 health information or financial information may not disclose
27 that information as an insured to any other person unless the
28 disclosure is:
29 (1) necessary to effect a viatical settlement between
30 the viator and a viatical settlement provider and the viator
20010S0462B0483 - 16 -
1 and insured have provided prior written consent to the
2 disclosure;
3 (2) necessary to effect a viatical settlement purchase
4 agreement between the viatical settlement purchaser and a
5 viatical settlement provider and the viator and insured have
6 provided prior written consent to the disclosure;
7 (3) provided in response to an investigation or
8 examination by the department or any other governmental
9 officer or agency or pursuant to the requirements of section
10 12(c);
11 (4) a term of or condition to the transfer of a policy
12 by one viatical settlement provider to another viatical
13 settlement provider and the viator and insured have provided
14 prior written consent to the disclosure;
15 (5) necessary to permit a financing entity, related
16 provider trust or special purpose entity to finance the
17 purchase of policies by a viatical settlement provider, and
18 the parties to the transaction agree to maintain the
19 confidentiality of such information and the viator and
20 insured have provided written consent to the disclosure;
21 (6) made by an insurance company in the course of its
22 business, including, without being limited to, activities
23 such as reinsurance transactions, sales or mergers of the
24 insurance company or one or more of its books of business,
25 handling and investigation of claims and conduct of all legal
26 proceedings connected with them, underwriting, litigation and
27 market conduct investigations and the viator and insured have
28 provided prior written consent to the disclosure;
29 (7) necessary to allow the viatical settlement provider
30 or viatical settlement broker or their authorized
20010S0462B0483 - 17 -
1 representatives to make contacts for the purpose of
2 determining health status and the viator and insured have
3 provided prior written consent to the disclosure; or
4 (8) required to purchase stop loss coverage and the
5 viator and insured have provided prior written consent to the
6 disclosure.
7 Section 7. Disclosure.
8 (a) General rule.--With each application for a viatical
9 settlement, a viatical settlement provider or viatical
10 settlement broker shall provide the viator with at least the
11 following disclosures no later than the time the application for
12 the viatical settlement contract is signed by all parties. The
13 disclosures shall be provided in a separate document that is
14 signed by the viator and the viatical settlement provider or
15 viatical settlement broker and shall provide the following
16 information:
17 (1) there are possible alternatives to viatical
18 settlement contracts, including any accelerated death
19 benefits or policy loans offered under the viator's life
20 insurance policy;
21 (2) some or all of the proceeds of the viatical
22 settlement may be taxable under Federal income tax and State
23 franchise and income taxes, and assistance should be sought
24 from a professional tax advisor;
25 (3) proceeds of the viatical settlement could be subject
26 to the claims of creditors;
27 (4) receipt of the proceeds of a viatical settlement may
28 adversely affect the viator's eligibility for Medicaid or
29 other government benefits or entitlements, and advice should
30 be obtained from the appropriate government agencies;
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1 (5) the viator has the right to rescind a viatical
2 settlement contract for 15 calendar days from the receipt of
3 the viatical settlement proceeds by the viator, as provided
4 in section 8(g). If the insured dies during the recession
5 period, the settlement contract shall be deemed to have been
6 rescinded, subject to repayment of all viatical settlement
7 proceeds to the viatical settlement company;
8 (6) funds will be sent to the viator within three
9 business days after the viatical settlement provider has
10 received the insurer or group administrator's acknowledgment
11 that ownership of the policy or interest in the certificate
12 has been transferred and the beneficiary has been designated;
13 (7) entering into a viatical settlement contract may
14 cause other rights or benefits, including conversion rights
15 and waiver of premium benefits that may exist under the
16 policy or certificate, to be forfeited by the viator, and
17 that assistance should be sought from a financial adviser;
18 and
19 (8) all medical, financial or personal information
20 solicited or obtained by a viatical settlement provider or
21 viatical settlement broker about an insured, including the
22 insured's identity or the identity of family members, a
23 spouse or a significant other may be disclosed as necessary
24 to effect the viatical settlement between the viator and the
25 viatical settlement provider and/or financing entities. If a
26 viator is asked to provide this information, the viator must
27 consent to the disclosure, and failure to consent may affect
28 the viator's ability to viaticate a life insurance policy.
29 The information may be provided to viatical settlement
30 purchasers, financing entities, special purpose entities or
20010S0462B0483 - 19 -
1 related provider trusts.
2 (b) Viatical settlements brochure.--Prior to the time the
3 application for a viatical settlement contract is signed by all
4 parties, a viatical settlement provider or viatical settlement
5 broker shall provide the viator with a brochure describing the
6 process of viatical settlements. The form for the brochure shall
7 be the National Association of Insurance Commissioners' (NAIC)
8 brochure entitled "Selling Your Life Insurance Policy:
9 Understanding Viatical Settlements" unless one is developed by
10 the department.
11 (c) Disclosures by viatical settlement provider.--A viatical
12 settlement provider shall provide the viator with at least the
13 following disclosures no later than the date the viatical
14 settlement contract is signed by all parties. The disclosures
15 shall be conspicuously displayed in the viatical settlement
16 contract or in a separate document signed by the viator and the
17 viatical settlement provider or viatical settlement broker, and
18 provide the following information:
19 (1) The affiliation, if any, between the viatical
20 settlement provider and the issuer of the insurance policy to
21 be viaticated.
22 (2) The name, address and telephone number of the
23 viatical settlement provider.
24 (3) A viatical settlement broker shall disclose the
25 amount and method of calculating the broker's compensation.
26 The term "compensation" includes anything of value paid or
27 given to a viatical settlement broker for the placement of a
28 policy.
29 (4) If an insurance policy to be viaticated has been
30 issued as a joint policy or involves family riders or any
20010S0462B0483 - 20 -
1 coverage of a life other than the insured under the policy to
2 be viaticated, the possible loss of coverage on the other
3 lives under the policy and shall be advised to consult with
4 his or her insurance producer or the insurer issuing the
5 policy for advice on the proposed viatical settlement.
6 (5) The dollar amount of the current death benefit
7 payable to the viatical settlement provider under the policy
8 or certificate, and, if known, the availability of any
9 additional guaranteed insurance benefits, the dollar amount
10 of any accidental death and dismemberment benefits under the
11 policy or certificate and the viatical settlement provider's
12 interest in those benefits.
13 (6) The name, business address and telephone number of
14 the independent third party escrow agent, and the fact that
15 the viator or owner may inspect or receive copies of the
16 relevant escrow or trust agreements or documents.
17 (d) Disclosure of ownership transfer or beneficiary
18 change.--If the viatical settlement provider transfers ownership
19 or changes the beneficiary of the insurance policy, the provider
20 shall communicate the change in ownership or beneficiary to the
21 insured within 20 days after the change.
22 Section 8. General rules.
23 (a) General rules.--A viatical settlement provider entering
24 into a viatical settlement contract shall first obtain:
25 (1) Prior to or at the time of execution of the viatical
26 settlement contract, a witnessed document:
27 (i) in which the viator consents to the viatical
28 settlement contract;
29 (ii) represents that the viator has a full and
30 complete understanding of the viatical settlement
20010S0462B0483 - 21 -
1 contract, that he or she has a full and complete
2 understanding of the benefits of the life insurance
3 policy;
4 (iii) acknowledges that he or she has entered into
5 the viatical settlement contract freely and voluntarily;
6 and
7 (iv) if applicable for the purposes of determining
8 payments for persons who are terminally ill or
9 chronically ill, acknowledges that the insured is
10 terminally ill or chronically ill and that the terminal
11 or chronic illness or condition was diagnosed after the
12 life insurance policy was issued.
13 (2) A document in which the insured consents to the
14 release of his or her medical records to a viatical
15 settlement provider, viatical settlement broker and the
16 insurance company that issued the life insurance policy
17 covering the life of the insured.
18 (3) Within 20 days after a viator executes documents
19 necessary to transfer any rights under an insurance policy or
20 within 20 days of entering any agreement, option, promise or
21 any other form of understanding, expressed or implied, to
22 viaticate the policy, the viatical settlement provider shall
23 give written notice to the insurer that issued that insurance
24 policy that the policy has or will become a viaticated
25 policy. The notice must be accompanied by the document
26 required by subsection (a)(1).
27 (b) Multiple viators.--If there is more than one viator on a
28 single policy and the viators are residents of different states,
29 the viatical settlement shall be governed by the law of the
30 state in which the viator having the largest percentage
20010S0462B0483 - 22 -
1 ownership resides or, if the viators hold equal ownership, the
2 state of residence of one viator agreed upon in writing by all
3 viators.
4 (c) Fiduciary responsibility of viatical settlement
5 broker.--Notwithstanding the manner in which the viatical
6 settlement broker is compensated, a viatical settlement broker
7 is deemed to represent only the viator and owes a fiduciary duty
8 to the viator to act according to the viator's instructions and
9 in the best interest of the viator.
10 (d) Verification of coverage.--
11 (1) A viatical settlement provider or viatical
12 settlement broker shall deliver a copy of the medical release
13 required by subsection (a)(2), a copy of the viator's
14 application for the viatical settlement contract, a copy of
15 the notice required by subsection (a)(3) and a request for
16 verification of coverage to the insurer that issued the life
17 insurance policy that is the subject of the viatical
18 transaction. The NAIC's form for verification shall be used
19 unless another form is developed by the department.
20 (2) The insurer shall respond to a request for
21 verification of coverage submitted on an approved form within
22 30 calendar days of the date the request is received and
23 shall indicate whether, based on the medical evidence and
24 documents provided, the insurer intends to pursue an
25 investigation at that time regarding the validity of the
26 insurance contract.
27 (3) Nothing in this section shall prohibit an insurer
28 from exercising its right to contest the validity of any
29 policy on the grounds of fraud.
30 (e) Viatical settlement broker's performance acceptable.--If
20010S0462B0483 - 23 -
1 a viatical settlement broker performs any of these activities on
2 behalf of a viatical settlement provider, the viatical
3 settlement provider is deemed to have fulfilled the requirements
4 of this section.
5 (f) Health and financial information.--All health or
6 financial information solicited or obtained by any licensee
7 shall be subject to the applicable provision of Federal and
8 State law relating to confidentiality and disclosure of such
9 information.
10 (g) Recession.--All viatical settlement contracts entered
11 into in this State shall provide the viator with an
12 unconditional right to rescind the contract for at least 15
13 calendar days from the receipt of the viatical settlement
14 proceeds by the viator. If the insured dies during the
15 rescission period, the viatical settlement contract shall be
16 deemed to have been rescinded, subject to repayment to the
17 viatical settlement provider of all viatical settlement
18 proceeds.
19 (h) Transfer of proceeds.--The viatical settlement provider
20 shall instruct the viator to send the executed documents
21 required to effect the change in ownership, assignment or change
22 in beneficiary directly to the independent escrow agent. Within
23 three business days after the date the escrow agent receives the
24 document, or from the date the viatical settlement provider
25 receives the documents if the viator erroneously provides the
26 documents directly to the provider, the provider shall pay or
27 transfer the proceeds of the viatical settlement into an escrow
28 or trust account maintained in a federally or State-chartered
29 financial institution whose deposits are insured by the Federal
30 Deposit Insurance Corporation (FDIC). Upon payment of the
20010S0462B0483 - 24 -
1 settlement proceeds into the escrow account, the escrow agent
2 shall deliver the original change in ownership, assignment or
3 change in beneficiary forms to the viatical settlement provider
4 or related provider trust. Upon the licensed provider's receipt
5 of the properly completed acknowledgment of the transfer of
6 ownership, assignment or designation of beneficiary from the
7 insurance company, the licensed provider shall instruct the
8 escrow agent to pay the settlement proceeds to the viator.
9 Payment shall be made within three business days of the date the
10 provider received the acknowledged forms from the insurance
11 company.
12 (i) Deadline.--Failure to tender consideration to the viator
13 for the viatical settlement contract within the time disclosed
14 pursuant to section 7(a) renders the viatical settlement
15 contract voidable by the viator for lack of consideration until
16 the time consideration is tendered to and accepted by the
17 viator.
18 (j) Health status.--
19 (1) Contacts with the insured for the purpose of
20 determining the health status of the insured by the viatical
21 settlement provider or viatical settlement broker after the
22 viatical settlement has occurred shall only be made by the
23 viatical settlement provider or broker licensed in this
24 Commonwealth or its authorized representative and shall be
25 limited to once every three months for insureds with a life
26 expectancy of more than one year and to no more than once per
27 month for insureds with a life expectancy of one year or
28 less.
29 (2) The viatical settlement provider or viatical
30 settlement broker shall explain the procedure for these
20010S0462B0483 - 25 -
1 contacts at the time the viatical settlement contract is
2 entered into.
3 (3) The limitations set forth in this subsection shall
4 not apply to any contacts with an insured for reasons other
5 than determining the insured's health status.
6 (4) Viatical settlement providers and viatical
7 settlement brokers shall be responsible for the actions of
8 their authorized representatives.
9 (k) Commission.--No viatical settlement broker or viatical
10 settlement representative shall receive from a viatical
11 settlement provider a fee, commission or other valuable
12 consideration for services rendered to or in connection with
13 viators residing in this Commonwealth unless the viatical
14 settlement provider is licensed in this Commonwealth.
15 (l) Prohibition.--No person who invests in a viaticated
16 policy, including, but not limited to, a participant in a
17 financing transaction, may influence the treatment of the
18 insured's illness.
19 Section 9. Prohibited practices.
20 It is a violation of this act for any person to:
21 (1) Knowingly enter into a viatical settlement contract
22 the subject of which is a life insurance policy that was
23 obtained by means of a false, deceptive or misleading
24 application for the life insurance policy.
25 (2) Enter into a viatical settlement contract within a
26 two-year period commencing with the date of issuance of the
27 insurance policy or certificate unless the viator certifies
28 to the viatical settlement provider that one or more of the
29 following conditions have been met within the two-year
30 period:
20010S0462B0483 - 26 -
1 (i) The policy was issued upon the owner's exercise
2 of conversion rights arising out of a group policy,
3 provided the total of the time covered under the
4 conversion policy plus the time covered under the group
5 policy is at least 24 months. The time covered under the
6 group policy shall be calculated without regard to any
7 change in insurance carriers, provided the coverage has
8 been continuous and under the same group sponsorship.
9 (ii) The viator is a charitable organization exempt
10 from taxation under the Internal Revenue Code of 1986
11 (Public Law 99-514, 26 U.S.C. § 501(c)(3)).
12 (iii) The viator is not a natural person (e.g., the
13 viator is a corporation, limited liability company,
14 partnership, etc.).
15 (iv) Independent evidence is submitted as follows:
16 (A) The viator submits independent evidence to
17 the viatical settlement provider that one or more of
18 the following conditions have been met within the
19 two-year period:
20 (I) The viator or insured is terminally or
21 chronically ill.
22 (II) The viator's or insured's spouse dies.
23 (III) The viator or insured divorces his or
24 her spouse.
25 (IV) The viator or insured retires from
26 full-time employment.
27 (V) The viator or insured becomes physically
28 or mentally disabled and a physician determines
29 that the disability prevents the viator or
30 insured from maintaining full-time employment.
20010S0462B0483 - 27 -
1 (VI) The viator was the insured's employer
2 at the time the policy or certificate was issued
3 and the employment relationship has terminated.
4 (VII) A final order, judgment or decree is
5 entered by a court of competent jurisdiction, on
6 the application of a creditor of the viator or
7 insured, adjudicating the viator or insured
8 bankrupt or insolvent, or approving a petition
9 seeking reorganization of the viator or insured
10 or appointing a receiver, trustee or liquidator
11 to all or a substantial part of the viator's or
12 insured's assets.
13 (VIII) The viator experiences a significant
14 decrease in income that is unexpected and that
15 impairs the viator's reasonable ability to pay
16 the policy premium.
17 (IX) The viator or insured disposes of his
18 or her ownership interests in a closely held
19 corporation.
20 (B) The independent evidence shall be submitted
21 to the insurer when the viatical settlement provider
22 submits a request to the insurer for verification of
23 coverage pursuant to section 8(d). The copies shall
24 be accompanied by a letter of attestation from the
25 viatical settlement provider that the copies are true
26 and correct copies of the documents received by the
27 viatical settlement provider.
28 (v) If the viatical settlement provider submits to
29 the insurer a copy of the owner or insured's
30 certification described in paragraph (2)(iv) when the
20010S0462B0483 - 28 -
1 provider submits a request to the insurer to effect the
2 transfer of the policy or certificate to the viatical
3 settlement provider, the copy shall be deemed to
4 conclusively establish that the viatical settlement
5 contract satisfies the requirements of this section and
6 the insurer shall timely respond to the request.
7 (vi) If a financing entity, is a party to a viatical
8 settlement contract to which a licensed viatical
9 settlement provider is not a party or to a viatical
10 settlement purchase agreement.
11 (vii) If a special purpose entity, enter into a
12 viatical settlement contract.
13 Section 10. Fraud prevention and control.
14 (a) Fraudulent viatical settlement acts, interference and
15 participation of convicted felons prohibited.--
16 (1) A person shall not commit a fraudulent viatical
17 settlement act.
18 (2) A person shall not knowingly or intentionally
19 interfere with the enforcement of the provisions of this act
20 or investigations of suspected or actual violations of this
21 act.
22 (3) A person in the business of viatical settlements
23 shall not knowingly or intentionally permit any person
24 convicted of a felony involving dishonesty or breach of trust
25 to participate in the business of viatical settlements.
26 (b) Fraud warning required.--
27 (1) Viatical settlements contracts and applications for
28 viatical settlements, regardless of the form of transmission,
29 shall contain the following statement or a substantially
30 similar statement:
20010S0462B0483 - 29 -
1 "Any person who knowingly presents false information
2 in an application for insurance or viatical
3 settlement contract commits a crime and may be
4 subject to fines and confinement in prison."
5 (2) The lack of a statement as required in paragraph (1)
6 does not constitute a defense in any prosecution for a
7 fraudulent viatical settlement act.
8 (c) Mandatory reporting.--
9 (1) Any person engaged in the business of viatical
10 settlements having knowledge or a reasonable belief that a
11 fraudulent viatical settlement act is being, will be or has
12 been committed shall provide to the commissioner the
13 information required by and in a manner prescribed by the
14 commissioner.
15 (2) Any other person having knowledge or a reasonable
16 belief that a fraudulent viatical settlement act is being,
17 will be or has been committed may provide to the commissioner
18 the information required by and in a manner prescribed by the
19 commissioner.
20 (d) Immunity from liability.--
21 (1) No civil liability shall be imposed on and no cause
22 of action shall arise from a person's furnishing information
23 concerning suspected, anticipated or completed fraudulent
24 viatical settlement acts or suspected or completed fraudulent
25 insurance acts if the information is provided to or received
26 from:
27 (i) the commissioner or the commissioner's
28 employees, agents or representatives;
29 (ii) Federal, State or local law enforcement or
30 regulatory officials or their employees, agents or
20010S0462B0483 - 30 -
1 representatives;
2 (iii) a person involved in the prevention and
3 detection of fraudulent viatical settlement acts or that
4 person's agents, employees or representatives;
5 (iv) the National Association of Insurance
6 Commissioners (NAIC), National Association of Securities
7 Dealers (NASD), the North American Securities
8 Administrators Association (NASAA) or their employees,
9 agents or representatives, or other regulatory body
10 overseeing life insurance, viatical settlements,
11 securities or investment fraud; or
12 (v) the life insurer that issued the life insurance
13 policy covering the life of the insured.
14 (2) Paragraph (1) shall not apply to statements made
15 with actual malice. In an action brought against a person for
16 filing a report or furnishing other information concerning a
17 fraudulent viatical settlement act or a fraudulent insurance
18 act, the party bringing the action shall plead specifically
19 any allegation that paragraph (1) does not apply because the
20 person filing the report or furnishing the information did so
21 with actual malice.
22 (3) A person identified in paragraph (1) shall be
23 entitled to an award of attorney fees and costs if he or she
24 is the prevailing party in a civil cause of action for libel,
25 slander or any other relevant tort arising out of activities
26 in carrying out the provisions of this act and the party
27 bringing the action was not substantially justified in doing
28 so. For the purpose of this section, a proceeding is
29 "substantially justified" if it had a reasonable basis in law
30 or fact at the time that it was initiated.
20010S0462B0483 - 31 -
1 (4) This section does not abrogate or modify common law
2 or statutory privileges or immunities enjoyed by a person
3 described in paragraph (1).
4 (e) Confidentiality.--
5 (1) The documents and evidence provided pursuant to
6 subsection (d) or obtained by the commissioner in an
7 investigation of suspected or actual fraudulent viatical
8 settlement acts shall be privileged and confidential and
9 shall not be a public record and shall not be subject to
10 discovery or subpoena in a civil or criminal action.
11 (2) Paragraph (1) does not prohibit release by the
12 commissioner of documents and evidence obtained in an
13 investigation of suspected or actual fraudulent viatical
14 settlement acts:
15 (i) in administrative or judicial proceedings to
16 enforce laws administered by the commissioner;
17 (ii) to Federal, State or local law enforcement or
18 regulatory agencies, to an organization established for
19 the purpose of detecting and preventing fraudulent
20 viatical settlement acts or to the NAIC;
21 (iii) at the discretion of the commissioner, to a
22 person in the business of viatical settlement that is
23 aggrieved by a fraudulent viatical settlement act.
24 (3) Release of documents and evidence under paragraph
25 (2) does not abrogate or modify the privilege granted in
26 paragraph (1).
27 (f) Other law enforcement or regulatory authority.--This act
28 shall not:
29 (1) preempt the authority or relieve the duty of other
30 law enforcement or regulatory agencies to investigate,
20010S0462B0483 - 32 -
1 examine and prosecute suspected violations of law;
2 (2) prevent or prohibit a person from voluntarily
3 disclosing information concerning viatical settlement fraud
4 to a law enforcement or regulatory agency other than the
5 insurance department; or
6 (3) limit the powers granted elsewhere by the laws of
7 this Commonwealth to the commissioner, the department or an
8 insurance fraud unit to investigate and examine possible
9 violations of law and to take appropriate action against
10 wrongdoers.
11 (g) Viatical settlement antifraud initiatives.--Viatical
12 settlement providers and viatical settlement brokers shall have
13 in place antifraud initiatives reasonably calculated to detect,
14 prosecute and prevent fraudulent viatical settlement acts. At
15 the discretion of the commissioner, the commissioner may order
16 or a licensee may request and the commissioner may grant such
17 modifications of the required initiatives as necessary to ensure
18 an effective antifraud program. The modifications may be more or
19 less restrictive than the required initiatives so long as the
20 modifications may reasonably be expected to accomplish the
21 purpose of this section. Antifraud initiatives shall include:
22 (1) Fraud investigators who may be viatical settlement
23 provider or viatical settlement broker employees or
24 independent contractors.
25 (2) An antifraud plan submitted to the department. The
26 antifraud plan shall include, but not be limited to, the
27 following:
28 (i) A description of the procedures for detecting
29 and investigating possible fraudulent viatical settlement
30 acts and procedures for resolving material
20010S0462B0483 - 33 -
1 inconsistencies between medical records and insurance
2 applications.
3 (ii) A description of the procedures for reporting
4 possible fraudulent viatical settlement acts to the
5 department.
6 (iii) A description of the plan for antifraud
7 education and training of underwriters and other
8 personnel.
9 (iv) A description or chart outlining the
10 organizational arrangement of the antifraud personnel who
11 are responsible for the investigation and reporting of
12 possible fraudulent viatical settlement acts and
13 investigating unresolved material inconsistencies between
14 medical records and insurance applications.
15 (h) Antifraud plan confidential.--Antifraud plans submitted
16 to the department shall be privileged and confidential and shall
17 not be a public record and shall not be subject to discovery or
18 subpoena in a civil or criminal action.
19 Section 11. Responsibility of department.
20 The commissioner may:
21 (1) Promulgate regulations pursuant to this act.
22 (2) Establish standards for evaluating reasonableness of
23 payments under viatical settlement contracts entered into by
24 persons with a terminal or chronic illness or condition. The
25 standards shall include, but not be limited to, regulation of
26 the amount paid in exchange for assignment, transfer, sale,
27 devise or bequest of a benefit under a life insurance policy.
28 (3) Establish appropriate licensing requirements and
29 standards for continued licensure for viatical settlement
30 providers and brokers.
20010S0462B0483 - 34 -
1 (4) Adopt rules governing the relationship and
2 responsibilities of both insurers and viatical settlement
3 providers and brokers during the viatication of a life
4 insurance policy or certificate.
5 (5) Adopt rules governing advertising by viatical
6 settlement providers and viatical settlement brokers.
7 Section 12. Injunctions; civil remedies; cease and desist.
8 (a) Injunctions.--In addition to the penalties and other
9 enforcement provisions of this act, if any person violates this
10 act or any regulation implementing this act, the commissioner
11 may seek an injunction in a court of competent jurisdiction and
12 may apply for temporary and permanent orders that the
13 commissioner determines are necessary to restrain the person
14 from committing the violation.
15 (b) Civil action.--Any person damaged by the acts of a
16 person in violation of this act may bring a civil action against
17 the person committing the violation in a court of competent
18 jurisdiction.
19 (c) Cease and desist order.--The commissioner may issue a
20 cease and desist order upon a person that violates any provision
21 of this act, any regulation or order adopted by the commissioner
22 or any written agreement or consent order entered into with the
23 commissioner.
24 (d) Emergency cease and desist order.--When the commissioner
25 finds that an activity in violation of this act presents an
26 immediate danger to the public that requires an immediate final
27 order, the commissioner may issue an emergency cease and desist
28 order reciting with particularity the facts underlying the
29 findings. The emergency cease and desist order is effective
30 immediately upon service of a copy of the order on the
20010S0462B0483 - 35 -
1 respondent and remains effective for 90 days. If the
2 commissioner begins nonemergency cease and desist proceedings,
3 the emergency cease and desist order remains effective, absent
4 an order by a court of competent jurisdiction.
5 (e) Civil penalties.--In addition to the penalties and other
6 enforcement provisions of this act, any person who violates this
7 act is subject to civil penalties of up to $5,000 per violation.
8 Imposition of civil penalties shall be pursuant to an order of
9 the commissioner, which order may require a person found to be
10 in violation of this act to make restitution to persons
11 aggrieved by violations of this act.
12 (f) Restitution.--A person convicted of a violation of this
13 act shall be ordered to pay restitution to persons aggrieved by
14 the violation of this act. Restitution shall be ordered in
15 addition to a fine or imprisonment, but not in lieu of a fine or
16 imprisonment.
17 (g) Criminal penalties.--
18 (1) A person convicted of a violation of this act by a
19 court of competent jurisdiction may be sentenced in
20 accordance with subclause (A), (B), (C) or (D) based on the
21 greater of:
22 (i) the value of property, services or other benefit
23 wrongfully obtained or attempted to obtain; or
24 (ii) the aggregate economic loss suffered by any
25 person as a result of the violation.
26 A person convicted of a fraudulent viatical settlement act
27 must be ordered to pay restitution to persons aggrieved by
28 the fraudulent viatical settlement act. Restitution must be
29 ordered in addition to a fine or imprisonment but not in lieu
30 of a fine or imprisonment.
20010S0462B0483 - 36 -
1 (A) Imprisonment for not more than 20 years or
2 to payment of a fine of not more than $100,000, or
3 both, if the value of viatical settlement contract is
4 more than $35,000.
5 (B) Imprisonment for not more than ten years or
6 to payment of a fine of not more than $20,000, or
7 both, if the value of viatical settlement contract is
8 more than $2,500, but not more than $35,000.
9 (C) Imprisonment for not more than five years or
10 to payment of a fine of not more than $10,000, or
11 both, if the value of viatical settlement contract is
12 more than $500 but not more than $2,5000.
13 (D) Imprisonment for not more than one year or
14 to payment of a fine of not more than $3,000, or
15 both, if the value of viatical settlement contract is
16 $500 or less.
17 (2) In any prosecution under this section under
18 paragraph (1) the value of the viatical settlement contracts
19 within any six-month period may be aggregated and the
20 defendant charged accordingly in applying the provisions of
21 this section, provided that when two or more offenses are
22 committed by the same person in two or more counties, the
23 accused may be prosecuted in any county in which one of the
24 offenses was committed for all of the offenses aggregated
25 under this section.
26 (3) The applicable statute of limitations shall not
27 begin to run until the insurance company or law enforcement
28 agency is aware of the fraud, but in no event may the
29 prosecution be commenced later than seven years after the
30 action has occurred.
20010S0462B0483 - 37 -
1 Section 13. Miscellaneous provisions.
2 (a) State aid.--A person may not be required as a condition
3 of eligibility for State aid to exercise a viatical settlement
4 or be denied or suffer a reduction in aid as a result of not
5 entering into a viatical settlement.
6 (b) Available resource.--Aid agencies or programs may not
7 consider insurance benefits provided to persons who are
8 terminally ill or chronically ill as an available resource in
9 determining eligibility for public assistance.
10 Section 14. Unfair trade practices.
11 A violation of this act shall be considered an unfair trade
12 practice and shall be subject to all Commonwealth statutes which
13 address unfair trade practices, including the act of July 22,
14 1974 (P.L.589, No.205), known as the Unfair Insurance Practices
15 Act.
16 Section 15. Severability.
17 If any portion of this act or any amendments thereto or its
18 applicability to any person or circumstance is held invalid by a
19 court, the remainder of this act or its applicability to other
20 persons or circumstances shall not be affected.
21 Section 16. Applicability of securities laws.
22 Nothing in this act shall preempt or otherwise limit the
23 provisions of the act of December 5, 1972 (P.L.1280, No.284),
24 known as the Pennsylvania Securities Act of 1972, or any
25 regulations, notices, bulletins or other interpretations issued
26 by the Pennsylvania Securities Commission. Compliance with the
27 provisions of this act shall not constitute compliance with any
28 applicable provision of the Pennsylvania Securities Act of 1972
29 or any regulations, notices, bulletins or other interpretations
30 issued by the Pennsylvania Securities Commission.
20010S0462B0483 - 38 -
1 Section 17. Examination and investigation of books and records.
2 (a) Examination and investigation.--A viatical settlement
3 provider and viatical settlement broker shall be subject to
4 examination and investigation by the department.
5 (b) Maintenance and books and records.--Every viatical
6 settlement provider and viatical settlement broker shall
7 maintain and make available all books, records, accounts and
8 other files relating to its engaging in the business of viatical
9 settlements, and such records shall be made available for
10 examination and inspection by the department in a form usable by
11 the department.
12 (c) Costs of examination.--All the expenses incurred in and
13 about the examination of any viatical settlement provider or
14 viatical settlement broker, including compensation of department
15 employees assisting in said examination and any other
16 professionals or specialists retained in said examination, shall
17 be charged to and paid by the viatical settlement provider or
18 viatical settlement broker.
19 Section 18. Transition provision.
20 A viatical settlement provider or viatical settlement broker
21 transacting business in this Commonwealth may continue to do so
22 pending approval or disapproval of the provider or broker's
23 application for a license as long as the application is filed
24 with the department 90 days before the effective date of this
25 act.
26 Section 19. Effective date.
27 This act shall take effect in 180 days.
B9L40JS/20010S0462B0483 - 39 -