Bill Text: FL S0650 | 2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Viatical Settlements

Spectrum: Bipartisan Bill

Status: (Failed) 2016-03-11 - Died in Appropriations Subcommittee on General Government [S0650 Detail]

Download: Florida-2016-S0650-Introduced.html
       Florida Senate - 2016                                     SB 650
       
       
        
       By Senator Legg
       
       
       
       
       
       17-00027-16                                            2016650__
    1                        A bill to be entitled                      
    2         An act relating to viatical settlements; amending s.
    3         626.9911, F.S.; revising definitions; defining the
    4         terms “business of viatical settlements,” “fraudulent
    5         viatical settlement act,” and “stranger-originated
    6         life insurance practice”; amending s. 626.9913, F.S.;
    7         requiring additional information in an annual
    8         statement filed by viatical settlement provider
    9         licensees; deleting an obsolete provision regarding a
   10         deposit requirement; amending s. 626.9914, F.S.;
   11         adding an act that warrants the imposition of
   12         administrative penalties against viatical settlement
   13         provider licensees; increasing the amount of
   14         administrative fines that may be imposed by the Office
   15         of Insurance Regulation against licensees for certain
   16         violations; amending s. 626.99175, F.S.; deleting an
   17         obsolete provision; deleting an exception from
   18         registration requirements for life expectancy
   19         providers; creating s. 626.99185, F.S.; requiring
   20         viatical settlement providers to provide viators with
   21         a disclosure statement before or concurrently with a
   22         viator’s execution of a viatical settlement contract;
   23         providing requirements and procedures for such
   24         disclosure statements; amending s. 626.9924, F.S.;
   25         deleting a requirement to provide specified documents
   26         with a notice that a policy has or will become a
   27         viaticated policy; amending s. 626.99245, F.S.;
   28         conforming a cross-reference; creating s. 626.99273,
   29         F.S.; prohibiting certain practices and conflicts of
   30         interest relating to viatical settlement contracts or
   31         insurance policies; requiring a viatical settlement
   32         provider to file certain promotional, advertising, and
   33         marketing materials with the office before entering
   34         into viatical settlement contracts; prohibiting
   35         certain references relating to the cost of life
   36         insurance policies in such materials and other
   37         specified statements and representations; amending s.
   38         626.99275, F.S.; prohibiting a person from entering
   39         into a viatical settlement contract before a specified
   40         date except under specified circumstances, from
   41         issuing, soliciting, marketing, or otherwise promoting
   42         the purchase of a policy under certain circumstances,
   43         and from engaging in a fraudulent viatical settlement
   44         act; providing criminal penalties for a violation of
   45         such prohibitions; creating s. 626.99276, F.S.;
   46         requiring specified affidavits and other documentation
   47         to be provided to an insurer for requests to verify
   48         coverage and to transfer a policy or certificate to a
   49         viatical settlement provider; prohibiting insurers
   50         from requiring certain forms that have not been
   51         approved by the office to be signed as a condition of
   52         responding to such requests; requiring insurers to
   53         respond in writing within a specified period to
   54         properly completed requests to change the ownership or
   55         beneficiary of a policy; amending s. 626.99278, F.S.;
   56         providing requirements for licensed viatical
   57         settlement providers to maintain specified
   58         documentation relating to anti-fraud plans and
   59         procedures, material inconsistencies between medical
   60         records and insurance applications, and reporting of
   61         specified fraudulent acts and prohibited practices;
   62         repealing s. 626.99287, F.S., relating to the
   63         contestability of viaticated policies; creating s.
   64         626.99289, F.S.; providing that certain contracts,
   65         agreements, arrangements, and transactions relating to
   66         stranger-originated life insurance practices are void
   67         and unenforceable; providing an effective date.
   68          
   69  Be It Enacted by the Legislature of the State of Florida:
   70  
   71         Section 1. Section 626.9911, Florida Statutes, is amended
   72  to read:
   73         626.9911 Definitions.—As used in this act, the term:
   74         (1) “Business of viatical settlements” means an activity
   75  involved in the offering, soliciting, negotiating, procuring,
   76  effectuating, purchasing, investing, monitoring, tracking,
   77  underwriting, selling, transferring, assigning, pledging, or
   78  hypothecating of, or acquiring in other manner, an interest in a
   79  life insurance policy by means of a viatical settlement
   80  contract.
   81         (2) “Financing entity” means an underwriter, placement
   82  agent, lender, purchaser of securities, or purchaser of a policy
   83  or certificate from a viatical settlement provider, credit
   84  enhancer, or any entity that has direct ownership in a policy or
   85  certificate that is the subject of a viatical settlement
   86  contract, but whose principal activity related to the
   87  transaction is providing funds or credit enhancement to effect
   88  the viatical settlement or the purchase of one or more
   89  viaticated policies and who has an agreement in writing with one
   90  or more licensed viatical settlement providers to finance the
   91  acquisition of viatical settlement contracts. The term does not
   92  include a nonaccredited investor or other natural person. A
   93  financing entity may not enter into a viatical settlement
   94  contract.
   95         (3) “Fraudulent viatical settlement act” means an act or
   96  omission committed by a person who, knowingly or with the intent
   97  to defraud for the purpose of depriving another of property or
   98  for pecuniary gain, commits or allows an employee or agent to
   99  commit an act specified in this subsection.
  100         (a)Presenting, causing to be presented, or preparing with
  101  the knowledge or belief that it will be presented to or by
  102  another person false or concealed material information as part
  103  of, in support of, or concerning a fact material to:
  104         1. An application for the issuance of a viatical settlement
  105  contract or an insurance policy;
  106         2. The underwriting of a viatical settlement contract or an
  107  insurance policy;
  108         3. A claim for payment or benefit pursuant to a viatical
  109  settlement contract or an insurance policy;
  110         4. Premiums paid on an insurance policy;
  111         5. Payments and changes in ownership or beneficiary made in
  112  accordance with the terms of a viatical settlement contract or
  113  an insurance policy;
  114         6. The reinstatement or conversion of an insurance policy;
  115         7. The solicitation, offer, effectuation, or sale of a
  116  viatical settlement contract or an insurance policy;
  117         8. The issuance of written evidence of a viatical
  118  settlement contract or an insurance policy; or
  119         9. A financing transaction.
  120         (b)Employing a plan, financial structure, device, scheme,
  121  or artifice to defraud related to viaticated policies.
  122         (c)Engaging in a stranger-originated life insurance
  123  practice.
  124         (d)Failing to disclose upon request by an insurer that the
  125  prospective insured has undergone a life expectancy evaluation
  126  by a person other than the insurer or its authorized
  127  representatives in connection with the issuance of the policy.
  128         (e) Perpetuating a fraud or preventing the detection of a
  129  fraud by:
  130         1. Removing, concealing, altering, destroying, or
  131  sequestering from the office the assets or records of a licensee
  132  or other person engaged in the business of viatical settlements;
  133         2. Misrepresenting or concealing the financial condition of
  134  a licensee, financing entity, insurer, or other person;
  135         3. Transacting in the business of viatical settlements in
  136  violation of laws requiring a license, certificate of authority,
  137  or other legal authority to transact such business; or
  138         4. Filing with the office or the equivalent chief insurance
  139  regulatory official of another jurisdiction a document that
  140  contains false information or conceals information about a
  141  material fact from the office or other regulatory official.
  142         (f) Embezzlement, theft, misappropriation, or conversion of
  143  moneys, funds, premiums, credits, or other property of a
  144  viatical settlement provider, insurer, insured, viator,
  145  insurance policyowner, or other person engaged in the business
  146  of viatical settlements or insurance.
  147         (g) Recklessly entering into, negotiating, brokering, or
  148  otherwise dealing in a viatical settlement contract, the subject
  149  of which is a life insurance policy that was obtained based on
  150  information that was falsified or concealed for the purpose of
  151  defrauding the policy’s issuer, viatical settlement provider, or
  152  viator. As used in this paragraph, the term “recklessly means
  153  acting or failing to act in conscious disregard for the relevant
  154  facts or risks, and which disregard involves a gross deviation
  155  from acceptable standards of conduct.
  156         (h)Facilitating the viator’s change of residency state to
  157  avoid the provisions of this act.
  158         (i) Facilitating or causing the creation of a trust with a
  159  non-Florida situs or other nonresident entity for the purpose of
  160  owning a life insurance policy covering a Florida resident to
  161  avoid the provisions of this act;
  162         (j) Facilitating or causing the transfer of the ownership
  163  of an insurance policy covering a Florida resident to a trust
  164  with a non-Florida situs or other nonresident entity to avoid
  165  the provisions of this act.
  166         (k) Applying for or obtaining a loan that is secured
  167  directly or indirectly by an interest in a life insurance
  168  policy.
  169         (l)Violating s. 626.99273(1) or (2).
  170         (m) Attempting to commit, assisting, aiding, or abetting in
  171  the commission of or conspiring to commit an act or omission
  172  specified in this subsection.
  173         (4)(2) “Independent third-party trustee or escrow agent”
  174  means an attorney, certified public accountant, financial
  175  institution, or other person providing escrow services under the
  176  authority of a regulatory body. The term does not include any
  177  person associated, affiliated, or under common control with a
  178  viatical settlement provider or viatical settlement broker.
  179         (5)(3) “Life expectancy” means an opinion or evaluation as
  180  to how long a particular person is to live, or relating to such
  181  person’s expected demise.
  182         (6)(4) “Life expectancy provider” means a person who
  183  determines, or holds himself or herself out as determining, life
  184  expectancies or mortality ratings used to determine life
  185  expectancies under any of the following circumstances:
  186         (a) On behalf of a viatical settlement provider, viatical
  187  settlement broker, life agent, or person engaged in the business
  188  of viatical settlements.;
  189         (b) In connection with a viatical settlement investment,
  190  pursuant to s. 517.021(24).; or
  191         (c) On residents of this state in connection with a
  192  viatical settlement contract or viatical settlement investment.
  193         (7)(5) “Person” has the meaning specified in s. 1.01.
  194         (8)(6) “Related form” means any form, created by or on
  195  behalf of a licensee, which a viator or insured is required to
  196  sign or initial. The forms include, but are not limited to, a
  197  power of attorney, a release of medical information form, a
  198  suitability questionnaire, a disclosure document, or any
  199  addendum, schedule, or amendment to a viatical settlement
  200  contract considered necessary by a provider to effectuate a
  201  viatical settlement transaction.
  202         (9)(7) “Related provider trust” means a titling trust or
  203  other trust established by a licensed viatical settlement
  204  provider or financing entity for the sole purpose of holding the
  205  ownership or beneficial interest in purchased policies in
  206  connection with a financing transaction. The trust must have a
  207  written agreement with a licensed viatical settlement provider
  208  or financing entity under which the licensed viatical settlement
  209  provider or financing entity is responsible for insuring
  210  compliance with all statutory and regulatory requirements and
  211  under which the trust agrees to make all records and files
  212  relating to viatical settlement transactions available to the
  213  office as if those records and files were maintained directly by
  214  the licensed viatical settlement provider. This term does not
  215  include an independent third-party trustee or escrow agent or a
  216  trust that does not enter into agreements with a viator. A
  217  related provider trust is shall be subject to all provisions of
  218  this act that apply to the viatical settlement provider who
  219  established the related provider trust, except s. 626.9912,
  220  which does shall not apply be applicable. A viatical settlement
  221  provider may establish up to no more than one related provider
  222  trust, and the sole trustee of such related provider trust shall
  223  be the viatical settlement provider licensed under s. 626.9912.
  224  The name of the licensed viatical settlement provider shall be
  225  included within the name of the related provider trust.
  226         (10)(8) “Special purpose entity” means an entity
  227  established by a licensed viatical settlement provider or by a
  228  financing entity, which may be a corporation, partnership,
  229  trust, limited liability company, or other similar entity formed
  230  solely to provide, either directly or indirectly, access to
  231  institutional capital markets to a viatical settlement provider
  232  or financing entity. A special purpose entity may not obtain
  233  capital from any natural person or entity with less than $50
  234  million in assets and may not enter into a viatical settlement
  235  contract.
  236         (11) “Stranger-originated life insurance practice” means an
  237  act, practice, arrangement, or agreement to initiate a life
  238  insurance policy for the benefit of a third-party investor who,
  239  at the time of policy origination, has no insurable interest in
  240  the insured. Stranger-originated life insurance practices
  241  include, but are not limited to:
  242         (a)The purchase of a life insurance policy with resources
  243  or guarantees from or through a person who, at the time of such
  244  policy’s inception, could not lawfully initiate the policy and
  245  the execution of a verbal or written arrangement or agreement to
  246  directly or indirectly transfer the ownership of such policy or
  247  policy benefits to a third party.
  248         (b)The creation of a trust that has the appearance of an
  249  insurable interest to initiate policies for investors, which
  250  violates insurable interest laws and the prohibition against
  251  wagering on life.
  252         (12)(9) “Viatical settlement broker” means a person who, on
  253  behalf of a viator and for a fee, commission, or other valuable
  254  consideration, offers or attempts to negotiate viatical
  255  settlement contracts between a viator resident in this state and
  256  one or more viatical settlement providers. Notwithstanding the
  257  manner in which the viatical settlement broker is compensated, a
  258  viatical settlement broker is deemed to represent only the
  259  viator and owes a fiduciary duty to the viator to act according
  260  to the viator’s instructions and in the best interest of the
  261  viator. The term does not include an attorney, licensed
  262  Certified Public Accountant, or investment adviser lawfully
  263  registered under chapter 517, who is retained to represent the
  264  viator and whose compensation is paid directly by or at the
  265  direction and on behalf of the viator.
  266         (13)(10) “Viatical settlement contract” means a written
  267  agreement entered into between a viatical settlement provider,
  268  or its related provider trust, and a viator. The viatical
  269  settlement contract includes an agreement to transfer ownership
  270  or change the beneficiary designation of a life insurance policy
  271  at a later date, regardless of the date that compensation is
  272  paid to the viator. The agreement must establish the terms under
  273  which the viatical settlement provider will pay compensation or
  274  anything of value, which compensation or value is less than the
  275  expected death benefit of the insurance policy or certificate,
  276  in return for the viator’s assignment, transfer, sale, devise,
  277  or bequest of the death benefit or ownership of all or a portion
  278  of the insurance policy or certificate of insurance to the
  279  viatical settlement provider. The term also includes the
  280  transfer for compensation or value of an ownership or a
  281  beneficial interest in a trust or other entity that owns such
  282  policy if the trust or other entity was formed or used for the
  283  principal purpose of acquiring one or more life insurance
  284  contracts that insure the life of a person residing in this
  285  state, and A viatical settlement contract also includes a
  286  contract for a loan or other financial transaction secured
  287  primarily by an individual or group life insurance policy. The
  288  term does not include, other than a policy loan by a life
  289  insurance company pursuant to the terms of the life insurance
  290  contract or accelerated death provisions contained in a life
  291  insurance policy, whether issued with the original policy or as
  292  a rider, or a loan secured by the cash surrender value of a
  293  policy as determined by the policy issuer and the life insurance
  294  policy terms, or a loan or advance from the issuer of the policy
  295  to the policyowner.
  296         (14)(11) “Viatical settlement investment” has the same
  297  meaning as specified in s. 517.021.
  298         (15)(12) “Viatical settlement provider” means a person who,
  299  in this state, from this state, or with a resident of this
  300  state, effectuates a viatical settlement contract. The term does
  301  not include:
  302         (a) A Any bank, savings bank, savings and loan association,
  303  or credit union, or other licensed lending institution that
  304  takes an assignment of a life insurance policy as collateral for
  305  a loan.
  306         (b) A life and health insurer that has lawfully issued a
  307  life insurance policy that provides accelerated benefits to
  308  terminally ill policyholders or certificateholders.
  309         (c) A Any natural person who enters into no more than one
  310  viatical settlement contract with a viator in 1 calendar year,
  311  unless such natural person has previously been licensed under
  312  this act or is currently licensed under this act.
  313         (d) A trust that meets the definition of a “related
  314  provider trust.”
  315         (e) A viator in this state.
  316         (f) A financing entity.
  317         (16)(13) “Viaticated policy” means a life insurance policy,
  318  or a certificate under a group policy, which is the subject of a
  319  viatical settlement contract.
  320         (17)(14) “Viator” means the owner of a life insurance
  321  policy or a certificateholder under a group policy, which policy
  322  is not a previously viaticated policy, who enters or seeks to
  323  enter into a viatical settlement contract. This term does not
  324  include a viatical settlement provider, or a any person
  325  acquiring a policy or interest in a policy from a viatical
  326  settlement provider, or nor does it include an independent
  327  third-party trustee or escrow agent.
  328         Section 2. Subsections (2) and (3) of section 626.9913,
  329  Florida Statutes, are amended to read:
  330         626.9913 Viatical settlement provider license continuance;
  331  annual report; fees; deposit.—
  332         (2)(a) Annually, on or before March 1, the viatical
  333  settlement provider licensee shall file a statement containing
  334  information the commission requires and shall pay to the office
  335  a license fee in the amount of $500.
  336         (b) In addition to any other requirements, the annual
  337  statement must specify:
  338         1. The total number of unsettled viatical settlement
  339  contracts and corresponding total amount due to viators under
  340  viatical settlement contracts that have been signed by the
  341  viator but have not been settled as of December 31 of the
  342  preceding calendar year, categorized by the number of days since
  343  the viator signed the contract for transactions regulated by
  344  this state.
  345         2.For the most recent 5 years, the total number of
  346  policies purchased, total gross amount paid for policies
  347  purchased, total commissions or compensation paid for policies
  348  purchased, and total face value of policies purchased, allocated
  349  by state, territory, and jurisdiction.
  350         3. The total amount of proceeds or compensation paid to
  351  policyowners, allocated by state, territory, and jurisdiction.
  352         (c)After December 31, 2007, The annual statement shall
  353  include an annual audited financial statement of the viatical
  354  settlement provider prepared in accordance with generally
  355  accepted accounting principles by an independent certified
  356  public accountant covering a 12-month period ending on a day
  357  occurring within falling during the last 6 months of the
  358  preceding calendar year. If the audited financial statement has
  359  not been completed, however, the licensee shall include in its
  360  annual statement an unaudited financial statement for the
  361  preceding calendar year and an affidavit from an officer of the
  362  licensee stating that the audit has not been completed. In this
  363  event, the licensee shall submit the audited statement on or
  364  before June 1. The annual statement, due on or before March 1
  365  each year, shall also provide the office with a report of all
  366  life expectancy providers who have provided life expectancies
  367  directly or indirectly to the viatical settlement provider for
  368  use in connection with a viatical settlement contract or a
  369  viatical settlement investment. A viatical settlement provider
  370  shall include in all statements filed with the office all
  371  information requested by the office regarding a related provider
  372  trust established by the viatical settlement provider. The
  373  office may require more frequent reporting. Failure to timely
  374  file the annual statement or the audited financial statement or
  375  to timely pay the license fee is grounds for immediate
  376  suspension of the license. The commission may by rule require
  377  all or part of the statements or filings required under this
  378  section to be submitted by electronic means in a computer
  379  readable form compatible with the electronic data format
  380  specified by the commission.
  381         (3) To ensure the faithful performance of its obligations
  382  to its viators in the event of insolvency or the loss of its
  383  license, a viatical settlement provider licensee must deposit
  384  and maintain deposited in trust with the department securities
  385  eligible for deposit under s. 625.52, having at all times a
  386  value of not less than $100,000; however, a viatical settlement
  387  provider licensed in this state prior to June 1, 2004, which has
  388  deposited and maintains continuously deposited in trust with the
  389  department securities in the amount of $25,000 and which posted
  390  and maintains continuously posted a security bond acceptable to
  391  the department in the amount of $75,000, has until June 1, 2005,
  392  to comply with the requirements of this subsection.
  393         Section 3. Subsections (1) and (2) of section 626.9914,
  394  Florida Statutes, are amended to read:
  395         626.9914 Suspension, revocation, denial, or nonrenewal of
  396  viatical settlement provider license; grounds; administrative
  397  fine.—
  398         (1) The office shall suspend, revoke, deny, or refuse to
  399  renew the license of any viatical settlement provider if the
  400  office finds that the licensee has committed any of the
  401  following acts:
  402         (a) Has made a misrepresentation in the application for the
  403  license.;
  404         (b) Has engaged in fraudulent or dishonest practices, or
  405  otherwise has been shown to be untrustworthy or incompetent to
  406  act as a viatical settlement provider.;
  407         (c) Demonstrates a pattern of unreasonable payments to
  408  viators.;
  409         (d) Has been found guilty of, or has pleaded guilty or nolo
  410  contendere to, any felony, or a misdemeanor involving fraud or
  411  moral turpitude, regardless of whether a judgment of conviction
  412  has been entered by the court.;
  413         (e) Has issued viatical settlement contracts that have not
  414  been approved pursuant to this act.;
  415         (f) Has failed to honor contractual obligations related to
  416  the business of viatical settlement contracts.;
  417         (g) Deals in bad faith with viators.;
  418         (h) Has violated any provision of the insurance code or of
  419  this act.;
  420         (i) Employs a any person who materially influences the
  421  licensee’s conduct and who fails to meet the requirements of
  422  this act.;
  423         (j) No longer meets the requirements for initial
  424  licensure.; or
  425         (k) Obtains or utilizes life expectancies from life
  426  expectancy providers who are not registered with the office
  427  pursuant to this act.
  428         (l) Has engaged in a fraudulent viatical settlement act.
  429         (2) The office may, in lieu of or in addition to any
  430  suspension or revocation, assess an administrative fine not to
  431  exceed $10,000 $2,500 for each nonwillful violation or $25,000
  432  $10,000 for each willful violation by a viatical settlement
  433  provider licensee. The office may also place a viatical
  434  settlement provider licensee on probation for a period not to
  435  exceed 2 years.
  436         Section 4. Subsection (1) of section 626.99175, Florida
  437  Statutes, is amended to read:
  438         626.99175 Life expectancy providers; registration required;
  439  denial, suspension, revocation.—
  440         (1) After July 1, 2006, A person may not perform the
  441  functions of a life expectancy provider without first having
  442  registered as a life expectancy provider, except as provided in
  443  subsection (6).
  444         Section 5. Section 626.99185, Florida Statutes, is created
  445  to read:
  446         626.99185 Disclosures to viator of disbursement.—
  447         (1) Before or concurrently with a viator’s execution of a
  448  viatical settlement contract, the viatical settlement provider
  449  shall provide to the viator, in duplicate, a disclosure
  450  statement in legible written form disclosing:
  451         (a) The name of each viatical settlement broker who
  452  receives or will receive compensation and the amount of each
  453  broker’s compensation related to that transaction. For the
  454  purpose of this section, compensation includes anything of value
  455  paid or given by or at the direction of a viatical settlement
  456  provider or person acquiring an interest in one or more life
  457  insurance policies to a viatical settlement broker in connection
  458  with the viatical settlement contract.
  459         (b) A complete reconciliation of the gross offer or bid by
  460  the viatical settlement provider to the net amount of proceeds
  461  or value to be received by the viator related to that
  462  transaction. As used in this section, the term “gross offer” or
  463  “bid” means the total amount or value offered by the viatical
  464  settlement provider for the purchase of an interest in one or
  465  more life insurance policies, including commissions,
  466  compensation, or other proceeds or value being deducted from the
  467  gross offer or bid.
  468         (2) The viator shall sign and date the disclosure statement
  469  before or concurrently with the viator’s execution of a viatical
  470  settlement contract, with the viator retaining the duplicate
  471  copy of the disclosure statement.
  472         (3) If a viatical settlement contract is entered into and
  473  the contract is subsequently amended or if there is a change in
  474  the viatical settlement provider’s gross offer or bid amount, a
  475  change in the net amount of proceeds or value to be received by
  476  the viator, or a change in the information provided in the
  477  disclosure statement to the viator, the viatical settlement
  478  provider shall provide, in duplicate, an amended disclosure
  479  statement to the viator containing the information in subsection
  480  (1). The viator shall sign and date the amended disclosure
  481  statement, with the viator retaining the duplicate copy of the
  482  amended disclosure statement.
  483         (4) Before a viatical settlement provider’s execution of a
  484  viatical settlement contract or an amendment to such contract,
  485  the viatical settlement provider must obtain the signed and
  486  dated disclosure statement and any amended disclosure statement
  487  required by this section. In transactions for which a broker is
  488  not used, the viatical settlement provider must obtain the
  489  signed and dated disclosure statement from the viator.
  490         (5) The viatical settlement provider shall maintain the
  491  documentation required by this section pursuant to s.
  492  626.9922(2) and shall make such documentation available to the
  493  office at any time for copying and inspection upon reasonable
  494  notice by the office to the viatical settlement provider.
  495         Section 6. Subsection (7) of section 626.9924, Florida
  496  Statutes, is amended to read:
  497         626.9924 Viatical settlement contracts; procedures;
  498  rescission.—
  499         (7) At any time during the contestable period, within 20
  500  days after a viator executes documents necessary to transfer
  501  rights under an insurance policy or within 20 days of any
  502  agreement, option, promise, or any other form of understanding,
  503  express or implied, to viaticate the policy, the provider must
  504  give notice to the insurer of the policy that the policy has or
  505  will become a viaticated policy. The notice must be accompanied
  506  by the documents required by s. 626.99287(5)(a) in their
  507  entirety.
  508         Section 7. Subsection (2) of section 626.99245, Florida
  509  Statutes, is amended to read:
  510         626.99245 Conflict of regulation of viaticals.—
  511         (2) This section does not affect the requirement of ss.
  512  626.9911(15)(12) and 626.9912(1) that a viatical settlement
  513  provider doing business from this state must obtain a viatical
  514  settlement license from the office. As used in this subsection,
  515  the term “doing business from this state” includes effectuating
  516  viatical settlement contracts from offices in this state,
  517  regardless of the state of residence of the viator.
  518         Section 8. Section 626.99273, Florida Statutes, is created
  519  to read:
  520         626.99273 Prohibited practices and conflicts of interest.—
  521         (1)With respect to a viatical settlement contract or an
  522  insurance policy, a viatical settlement broker may not knowingly
  523  solicit an offer from, effectuate a viatical settlement with, or
  524  make a sale to any viatical settlement provider, financing
  525  entity, or related provider trust that is controlling,
  526  controlled by, or under common control with such viatical
  527  settlement broker.
  528         (2)With respect to a viatical settlement contract or an
  529  insurance policy, a viatical settlement provider may not
  530  knowingly enter into a viatical settlement contract with a
  531  viator if, in connection with such viatical settlement contract,
  532  anything of value will be paid to a viatical settlement broker
  533  that is controlling, controlled by, or under common control with
  534  such viatical settlement provider, financing entity, or related
  535  provider trust that is involved in such viatical settlement
  536  contract.
  537         (3)A viatical settlement provider may not enter into a
  538  viatical settlement contract unless the viatical settlement
  539  promotional, advertising, and marketing materials, as may be
  540  prescribed by rule, have been filed with the office. Such
  541  materials may not expressly indicate, or include any reference
  542  that would cause a viator to reasonably believe, that the life
  543  insurance is free for any period of time.
  544         (4)A life insurance producer, insurer, viatical settlement
  545  broker, or viatical settlement provider may not make a statement
  546  or representation to an applicant or policyholder in connection
  547  with the sale of a life insurance policy to the effect that the
  548  insurance is free or without cost to the policyholder for any
  549  period of time.
  550         Section 9. Section 626.99275, Florida Statutes, is amended
  551  to read:
  552         626.99275 Prohibited practices; penalties.—
  553         (1) It is unlawful for a any person to:
  554         (a) To Knowingly enter into, broker, or otherwise deal in a
  555  viatical settlement contract the subject of which is a life
  556  insurance policy, knowing that the policy was obtained by
  557  presenting materially false information concerning any fact
  558  material to the policy or by concealing, for the purpose of
  559  misleading another, information concerning any fact material to
  560  the policy, where the viator or the viator’s agent intended to
  561  defraud the policy’s issuer.
  562         (b) To Knowingly or with the intent to defraud, for the
  563  purpose of depriving another of property or for pecuniary gain,
  564  issue or use a pattern of false, misleading, or deceptive life
  565  expectancies.
  566         (c) To Knowingly engage in any transaction, practice, or
  567  course of business intending thereby to avoid the notice
  568  requirements of s. 626.9924(7).
  569         (d) To Knowingly or intentionally facilitate the change of
  570  state of residency of a viator to avoid the provisions of this
  571  chapter.
  572         (e)Knowingly enter into a viatical settlement contract
  573  before the application for or issuance of a life insurance
  574  policy that is the subject of a viatical settlement contract or
  575  within a 5-year period commencing with the date of issuance of
  576  the policy or certificate, unless the viator provides a sworn
  577  affidavit and accompanying documentation that certifies to the
  578  viatical settlement provider that one or more of the following
  579  conditions have been met within the 5-year period:
  580         1.The policy or certificate was issued upon the viator’s
  581  exercise of conversion rights arising out of a group or
  582  individual policy, provided the total of the time covered under
  583  the conversion policy plus the time covered under the prior
  584  policy is at least 60 months. The time covered under a group
  585  policy shall be calculated without regard to any change in
  586  insurance carriers, provided the coverage has been continuous
  587  and under the same group sponsorship.
  588         2.The viator submits independent evidence to the viatical
  589  settlement provider that one or more of the following conditions
  590  have been met within the 5-year period:
  591         a.The viator or insured is terminally or chronically ill;
  592         b.The viator’s spouse dies;
  593         c.The viator divorces his or her spouse;
  594         d.The viator retires from full-time employment;
  595         e.The viator becomes physically or mentally disabled and a
  596  physician determines that the disability prevents the viator
  597  from maintaining full-time employment; or
  598         f.A final order, judgment, or decree is entered by a court
  599  of competent jurisdiction, upon the application by a viator’s
  600  creditor, which adjudicates the viator bankrupt or insolvent or
  601  approves a petition seeking reorganization of the viator or
  602  appointing a receiver, trustee, or liquidator to all or a
  603  substantial part of the viator’s assets.
  604         3.The viator enters into a viatical settlement contract
  605  more than 2 years after a policy’s issuance date and, with
  606  respect to the policy, at all times before such date each of the
  607  following conditions is met:
  608         a.Policy premiums have been funded exclusively with
  609  unencumbered assets, including an interest in the life insurance
  610  policy being financed only to the extent of its net cash
  611  surrender value provided by, or full recourse liability incurred
  612  by, the insured;
  613         b.An agreement or understanding with another person has
  614  not been entered to guarantee any such liability or to purchase,
  615  or be ready to purchase, the policy, including through an
  616  assumption or forgiveness of the loan; and
  617         c.The insured and the policy have not been evaluated for
  618  settlement.
  619         (f)Knowingly issue, solicit, market, or otherwise promote
  620  the purchase of a life insurance policy for the purpose of or
  621  with an emphasis on selling the policy.
  622         (g)Engage in a fraudulent viatical settlement act.
  623         (2) A person who violates any provision of this section
  624  commits:
  625         (a) A felony of the third degree, punishable as provided in
  626  s. 775.082, s. 775.083, or s. 775.084, if the insurance policy
  627  involved is valued at any amount less than $20,000.
  628         (b) A felony of the second degree, punishable as provided
  629  in s. 775.082, s. 775.083, or s. 775.084, if the insurance
  630  policy involved is valued at $20,000 or more, but less than
  631  $100,000.
  632         (c) A felony of the first degree, punishable as provided in
  633  s. 775.082, s. 775.083, or s. 775.084, if the insurance policy
  634  involved is valued at $100,000 or more.
  635  
  636         Section 10. Section 626.99276, Florida Statutes, is created
  637  to read:
  638         626.99276 Notification to insurer required.—
  639         (1) A copy of the sworn affidavit and the documentation
  640  required in s. 626.99275(1)(e) must be submitted to the insurer
  641  if the viatical settlement provider or other party entering into
  642  a viatical settlement contract with a viator submits a request
  643  to the insurer for verification of coverage or if the viatical
  644  settlement provider submits a request to transfer the policy or
  645  certificate to the provider. If the request is made by a
  646  viatical settlement provider, the copy shall be accompanied by a
  647  sworn affidavit from the viatical settlement provider affirming
  648  that the copy is a true and correct copy of the documentation
  649  received by the provider.
  650         (2) An insurer may not require, as a condition of
  651  responding to a request for verification of coverage or
  652  effecting the transfer of a policy pursuant to a viatical
  653  settlement contract, that the viator, insured, viatical
  654  settlement provider, or viatical settlement broker sign any
  655  disclosures, consent form, waiver form, or other form that has
  656  not been approved by the office for use in connection with
  657  viatical settlement contracts in this state.
  658         (3) Upon receipt of a properly completed request for change
  659  of ownership or beneficiary of a policy, the insurer shall
  660  respond in writing within 30 calendar days confirming that the
  661  change has been effectuated or specifying the reasons why the
  662  requested change cannot be processed. The insurer may not
  663  unreasonably delay effectuating a change of ownership or
  664  beneficiary and may not otherwise seek to interfere with any
  665  viatical settlement contract lawfully entered into in this
  666  state.
  667         Section 11. Section 626.99278, Florida Statutes, is amended
  668  to read:
  669         626.99278 Viatical provider anti-fraud plan.—
  670         (1)Each Every licensed viatical settlement provider and
  671  registered life expectancy provider must adopt an anti-fraud
  672  plan and file it with the Division of Insurance Fraud of the
  673  department. Each anti-fraud plan shall include:
  674         (a)(1) A description of the procedures for detecting and
  675  investigating possible fraudulent acts and procedures for
  676  resolving material inconsistencies between medical records and
  677  insurance applications.
  678         (b)(2) A description of the procedures for the mandatory
  679  reporting of possible fraudulent insurance acts and prohibited
  680  practices specified set forth in s. 626.99275 to the Division of
  681  Insurance Fraud of the department.
  682         (c)(3) A description of the plan for anti-fraud education
  683  and training of its underwriters or other personnel.
  684         (d)(4) A written description or chart outlining the
  685  organizational arrangement of the anti-fraud personnel who are
  686  responsible for the investigation and reporting of possible
  687  fraudulent insurance acts and for the investigation of
  688  unresolved material inconsistencies between medical records and
  689  insurance applications.
  690         (e)(5) For viatical settlement providers, a description of
  691  the procedures used to perform initial and continuing review of
  692  the accuracy of life expectancies used in connection with a
  693  viatical settlement contract or viatical settlement investment.
  694         (2) Each licensed viatical settlement provider shall
  695  maintain in accordance with s. 626.9922:
  696         (a) Documentation of compliance with its anti-fraud plan
  697  and procedures filed in accordance with this section.
  698         (b) Documentation pertaining to resolved and unresolved
  699  material inconsistencies between medical records and insurance
  700  applications.
  701         (c) Documentation of its mandatory reporting of the
  702  possible fraudulent acts and prohibited practices specified in
  703  s. 626.99275 to the Division of Insurance Fraud.
  704         Section 12. Section 626.99287, Florida Statutes, is
  705  repealed.
  706         Section 13. Section 626.99289, Florida Statutes, is created
  707  to read:
  708         626.99289 Void and unenforceable contracts, agreements,
  709  arrangements, and transactions.—A contract, agreement,
  710  arrangement, or transaction, including, but not limited to, a
  711  financing agreement or any other arrangement or understanding
  712  entered into, whether written or verbal, for the furtherance or
  713  aid of a stranger-originated life insurance practice is void and
  714  unenforceable.
  715         Section 14. This act shall take effect July 1, 2016.

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