Bill Text: FL S0730 | 2017 | Regular Session | Comm Sub
Bill Title: Insurer Insolvency
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2017-05-02 - Laid on Table, companion bill(s) passed, see CS/CS/HB 837 (Ch. 2017-143) [S0730 Detail]
Download: Florida-2017-S0730-Comm_Sub.html
Florida Senate - 2017 CS for CS for SB 730 By the Committees on Rules; and Banking and Insurance; and Senator Passidomo 595-04128-17 2017730c2 1 A bill to be entitled 2 An act relating to insurer insolvency; amending s. 3 631.015, F.S.; adding the Insurer Receivership Model 4 Act to a list of acts that extend reciprocity in the 5 treatment of policyholders in receivership if such act 6 is enacted in other states; amending s. 631.021, F.S.; 7 adding the Florida Health Maintenance Organization 8 Consumer Assistance Plan to a list of entities that 9 must be given reasonable written notice by the 10 Department of Financial Services of hearings 11 pertaining to certain insurers; revising the exclusive 12 jurisdiction of the Circuit Court of Leon County, upon 13 issuance of specified orders, of an insurer’s assets 14 or property in a delinquency proceeding; providing 15 construction; amending s. 631.031, F.S.; requiring an 16 insurer to file its response and defenses to a certain 17 order within a specified timeframe; requiring that a 18 hearing to determine whether cause exists to appoint 19 the department as receiver must be commenced by a 20 specified time; amending s. 631.041, F.S.; providing 21 an exception for the Office of Insurance Regulation 22 from applicability of a certain application or 23 petition operating as an automatic stay; amending s. 24 631.141, F.S.; authorizing a receiver to assume or 25 reject an insurer’s executory contract or unexpired 26 lease; authorizing the department as domiciliary 27 receiver to pay certain expenses or reject certain 28 contracts; providing that, under certain 29 circumstances, certain persons of an insurer that is 30 under liquidation are permanently discharged and have 31 no further authority over the affairs or assets of the 32 insurer; amending s. 631.152, F.S.; conforming a 33 cross-reference; creating s. 631.1521, F.S.; 34 prohibiting certain defenses in actions by and against 35 a receiver; authorizing certain defenses in actions by 36 and against a receiver; specifying that a principal 37 under a surety bond or surety undertaking, under 38 certain circumstances, is entitled to credit for the 39 value of certain property against a reimbursement 40 obligation to the receiver; limiting admissibility of 41 evidence of fraud in the inducement to evidence 42 contained in insurer records; creating s. 631.1522, 43 F.S.; prohibiting, in a receiver’s proceeding or 44 claim, the assertion of defenses or claims by an 45 affiliate or certain persons of an insurer except 46 under certain circumstances; providing construction; 47 amending s. 631.181, F.S.; authorizing a receivership 48 court to allow alternative procedures and requirements 49 for filing proofs of claim or allowing or proving 50 claims; providing construction; prohibiting a 51 receivership court from waiving certain filing 52 requirements; providing that certain claims against an 53 insurer which do not meet specified filing 54 requirements are deemed late-filed rather than forever 55 barred; authorizing a receiver to petition the 56 receivership court to set certain deadlines; requiring 57 a receiver to provide notice of filing a certain 58 petition to certain claimants; amending s. 631.191, 59 F.S.; defining terms; providing applicability; 60 requiring that specified large deductible claims under 61 certain workers’ compensation policies must be turned 62 over to the applicable responsible guaranty 63 association for handling; providing for construction 64 relating to payment of deductible claims; authorizing 65 receivers to collect reimbursements owed for certain 66 deductible claims; providing requirements for such 67 collections; providing for construction relating to 68 such collections; requiring receivers to use 69 collateral, when available, to secure certain 70 obligations; providing that a guaranty association is 71 entitled to collateral for a certain purpose; 72 providing for construction relating to certain 73 distributions; requiring receivers to draw down 74 collateral under certain circumstances; providing a 75 procedure for payment of claims; authorizing the 76 return of excess collateral under certain 77 circumstances; providing that a receiver is entitled 78 to deduct certain expenses from the collateral or 79 deductible reimbursements; providing for construction; 80 amending s. 631.192, F.S.; prohibiting claims for 81 postjugdment interest accrued after the date the court 82 enters the order of liquidation; amending s. 631.271, 83 F.S.; adding and revising claims to a list that 84 establishes the priority of distribution of claims 85 from an insurer’s estate; specifying when interest on 86 claims accrue and the interest rate calculation; 87 amending s. 631.391, F.S.; specifying that certain 88 persons in relation to an insurer who must cooperate 89 with the department or office in certain proceedings 90 or investigations include present or former roles; 91 defining the term “person”; amending s. 631.395, F.S.; 92 requiring an order of liquidation to authorize the 93 release of certain claims files, records, documents, 94 or claims, rather than only copies of the claims 95 files, records, documents, or claims; amending s. 96 631.397, F.S.; authorizing the department as receiver 97 to apply to the court for approval of a specified 98 proposal, rather than requiring the department to make 99 such application within a specified timeframe; 100 deleting a specified notice requirement of the 101 department; deleting a provision authorizing the court 102 to take action on the application under certain 103 circumstances; providing an effective date. 104 105 Be It Enacted by the Legislature of the State of Florida: 106 107 Section 1. Section 631.015, Florida Statutes, is amended to 108 read: 109 631.015 Reciprocity; treatment of policyholders. 110 Reciprocity in the treatment of policyholders in receivership is 111 extended to those states which, in substance and effect, enact 112 the National Association of Insurance Commissioners 113 Rehabilitation and Liquidation Model Act,orthe Uniform 114 Insurers Liquidation Act, or the Insurer Receivership Model Act. 115 Section 2. Section 631.021, Florida Statutes, is amended to 116 read: 117 631.021 Jurisdiction of delinquency proceeding; venue; 118 change of venue; exclusiveness of remedy; appeal; construction.— 119 (1) The circuit court shall have original jurisdiction of 120 any delinquency proceeding under this chapter, and any court 121 with jurisdiction is authorized to make all necessary or proper 122 orders to carry out the purposes of this chapter. Any 123 delinquency proceeding in this chapter is in equity. 124 (2) The venue of a delinquency proceeding or summary 125 proceeding against a domestic, foreign, or alien insurer shall 126 be in the Circuit Court of Leon County. 127 (3) A delinquency proceeding pursuant to this chapter 128 constitutes the sole and exclusive method of liquidating, 129 rehabilitating, reorganizing, or conserving an insurer. ANo130 court may notshallentertain a petition for the commencement of 131 such a proceeding unless the petition has been filed in the name 132 of the state on the relation of the department. The Florida 133 Insurance Guaranty Association, Incorporated, the Florida 134 Workers’ Compensation Insurance Guaranty Association, 135 Incorporated, the Florida Health Maintenance Organization 136 Consumer Assistance Plan, and the Florida Life and Health 137 Guaranty Association, Incorporated, shall be given reasonable 138 written notice by the department of all hearings thatwhich139 pertain to an adjudication of insolvency of a member insurer. 140 (4) An appeal shall lie to the District Court of Appeal, 141 First District, from an order granting or refusing 142 rehabilitation, liquidation, or conservation and from every 143 order in a delinquency proceeding having the character of a 144 final order as to the particular portion of the proceeding 145 embraced therein. 146 (5) No service of process against the department in its 147 capacity as receiver shall be effective unless served upon a 148 person designated by the receiver and filed with the circuit 149 court having jurisdiction over the delinquency proceeding. The 150 designated person shall refuse to accept service if acceptance 151 would violate a stay against legal proceedings involving an 152 insurer that is the subject of delinquency proceedings or would 153 violate any orders of the circuit court governing a delinquency 154 proceeding. The person denied service may petition the circuit 155 court having jurisdiction over the delinquency proceeding for 156 relief from the receiver’s refusal to accept service. This 157 subsection shall be strictly construed, and any purported 158 service on the receiver or the department that is not in 159 accordance with this subsection shall be null and void. 160 (6) The domiciliary court acquiring jurisdiction over 161 persons subject to this chapter may exercise exclusive 162 jurisdiction to the exclusion of all other courts, except as 163 limited by the provisions of this chapter. Upon the issuance of 164 an order of conservation, rehabilitation, or liquidation, the 165 Circuit Court of Leon County hasshall haveexclusive 166 jurisdiction over allwith respect toassets or property of the 167anyinsurer, wherever located, including property located 168 outside the territorial limits of the statesubject to such169proceedings and claims against said insurer’s assets or170property. 171 (7) This chapter constitutes this state’s insurer 172 receivership laws, and these laws must be construed as 173 consistent with each other. If there is a conflict between this 174 chapter and any other law, this chapter prevails. 175 Section 3. Subsections (3) and (4) are added to section 176 631.031, Florida Statutes, to read: 177 631.031 Initiation and commencement of delinquency 178 proceeding.— 179 (3) An insurer subject to an order to show cause entered 180 pursuant to this chapter must file its written response to the 181 order, together with any defenses it may have to the 182 department’s allegations, no later than 20 days after service of 183 the order to show cause, but no less than 15 days before the 184 date of the hearing set by the order to show cause. 185 (4) A hearing held pursuant to this chapter to determine 186 whether cause exists for the department to be appointed receiver 187 must be commenced within 60 days after an order directing an 188 insurer to show cause. 189 Section 4. Subsection (1) of section 631.041, Florida 190 Statutes, is amended to read: 191 631.041 Automatic stay; relief from stay; injunctions.— 192 (1) An application or petition under s. 631.031 operates as 193 a matter of law as an automatic stay applicable to all persons 194 and entities, other than the receiver and the office, which 195 shall be permanent and survive the entry of an order of 196 conservation, rehabilitation, or liquidation, and which shall 197 prohibit: 198 (a) The commencement or continuation of judicial, 199 administrative, or other action or proceeding against the 200 insurer or against its assets or any part thereof; 201 (b) The enforcement of a judgment against the insurer or an 202 affiliate obtained either before or after the commencement of 203 the delinquency proceeding; 204 (c) Any act to obtain possession of property of the 205 insurer; 206 (d) Any act to create, perfect, or enforce a lien against 207 property of the insurer, except that a secured claim as defined 208 in s. 631.011(21) may proceed under s. 631.191 after the order 209 of liquidation is entered; 210 (e) Any act to collect, assess, or recover a claim against 211 the insurer, except claims as provided for under this chapter; 212 and 213 (f) The setoff or offset of any debt owing to the insurer, 214 except offsets as provided in s. 631.281. 215 Section 5. Present subsections (3) through (5) and (6) 216 through (10) of section 631.141, Florida Statutes, are 217 redesignated as subsections (4) through (6) and (8) through 218 (12), respectively, new subsections (3) and (7) are added to 219 that section, and present subsection (8) is amended, to read: 220 631.141 Conduct of delinquency proceeding; domestic and 221 alien insurers.— 222 (3) The receiver may assume or reject any executory 223 contract or unexpired lease of the insurer. 224 (7) The department as domiciliary receiver may pay any 225 expenses under contracts, leases, employment agreements, or 226 other arrangements entered into by the insurer before 227 receivership as the department deems necessary for the purposes 228 of this chapter. The department is not required to pay any such 229 expenses that it determines are not necessary and may reject any 230 contract pursuant to subsection (3). 231 (10)(8)The department as domiciliary receiver may take 232 such action as it deems necessary or appropriate to reform and 233 revitalize the insurer. The department shall have all the powers 234 of the directors, officers, and managers, whose authority shall 235 be suspended, except as they are redelegated by the receiver. 236 The receiver shall have full power to direct and manage the 237 affairs of the insurer, to hire and discharge employees, and to 238 deal with the property and business of the insurer. In the event 239 of the liquidation of an insurer domiciled in this state, and 240 notwithstanding any provision of chapter 605, chapter 607, 241 chapter 617, chapter 620, or chapter 621, all officers, 242 directors, and managers of the insurer are permanently 243 discharged and have no further authority of any kind over the 244 affairs or assets of the insurer, except as may be redelegated 245 by the department. 246 Section 6. Subsection (4) of section 631.152, Florida 247 Statutes, is amended to read: 248 631.152 Conduct of delinquency proceeding; foreign 249 insurers.— 250 (4) Paragraph 631.141(9)(b)Section 631.141(7)(b)applies 251 to ancillary delinquency proceedings opened for the purpose of 252 obtaining records necessary to adjudicate the covered claims of 253 Florida policyholders. 254 Section 7. Section 631.1521, Florida Statutes, is created 255 to read: 256 631.1521 Actions by and against the receiver.— 257 (1) An allegation by the receiver of improper or fraudulent 258 conduct against any person may not be the basis of a defense by 259 a third party to the enforcement of a contractual obligation 260 owed to the insurer. This section does not bar a third party 261 from the right to raise a defense that the conduct was 262 materially and substantially related to the contractual 263 obligation for which enforcement is sought. 264 (2) A prior wrongful or negligent action of any present or 265 former officer, manager, director, trustee, owner, employee, or 266 agent of the insurer may not be asserted as a defense to a claim 267 by the receiver under a theory of estoppel, comparative fault, 268 intervening cause, proximate cause, reliance, mitigation of 269 damages, or otherwise. However, the affirmative defense of fraud 270 in the inducement may be asserted against the receiver in a 271 claim based on a contract; and a principal under a surety bond 272 or a surety undertaking is entitled to credit for the value of 273 any property pledged to secure the reimbursement obligation 274 against any reimbursement obligation to the receiver, to the 275 extent that the receiver has possession or control of the 276 property, or that the insurer or its agents misappropriated such 277 property, which includes, but is not limited to, the comingling 278 of such property. Evidence of fraud in the inducement is 279 admissible only if it is contained in the records of the 280 insurer. 281 (3) An action or inaction by an insurance regulatory 282 authority may not be asserted as a defense to a claim by the 283 department. 284 Section 8. Section 631.1522, Florida Statutes, is created 285 to read: 286 631.1522 Unrecorded obligations and defenses and claims of 287 affiliates.— 288 (1) In any proceeding or claim by the receiver, an 289 affiliate, a controlled or controlling person, or a present or 290 former officer, manager, director, trustee, or shareholder of 291 the insurer may not assert any defense unless: 292 (a) Evidence of the defense was recorded in the books and 293 records of the insurer at or about the time the events giving 294 rise to the defense occurred; and 295 (b) If required by statutory accounting practices and 296 procedures, such events were timely reported on the insurer’s 297 official financial statements filed with the office. 298 (2) An affiliate, a controlled or controlling person, or a 299 present or former officer, manager, director, trustee, or 300 shareholder of the insurer may not assert any claim unless: 301 (a) The obligations were recorded in the books and records 302 of the insurer at or about the time the obligations were 303 incurred; and 304 (b) If required by statutory accounting practices and 305 procedures, the obligations were timely reported on the 306 insurer’s official financial statements filed with the office. 307 (3) This section does not bar claims based on unrecorded or 308 unreported transactions by the receiver against any affiliate, 309 controlled or controlling person, or present or former officer, 310 manager, director, trustee, or shareholder of the insurer. 311 Section 9. Subsection (3) of section 631.181, Florida 312 Statutes, is amended, and paragraph (g) of subsection (2) and 313 subsections (4) and (5) are added to that section, to read: 314 631.181 Filing and proof of claim.— 315 (2) 316 (g) Upon application of the receiver: 317 1. The receivership court may allow alternative procedures 318 and requirements for the filing of proofs of claim or for 319 allowing or proving claims. 320 2. If the receivership court waives the requirements of 321 filing a proof of claim for a person, class, or group of 322 persons, a timely proof of claim by such person, class, or group 323 is deemed to be filed for all purposes. However, the 324 receivership court may not waive guaranty association or 325 coverage determination proof of claim filing requirements, to 326 the extent that the guaranty fund statute or filing requirements 327 are inconsistent with the receivership court’s waiver of proof. 328 (3) After the entry of the order of liquidation against a 329 Florida-domiciled insurer, regardless of any prior notice that 330 may have been given to creditors, the receiver shall notify all 331 persons who may have claims against the insurer that they must 332 file such claims with it at a place and within the time 333 specified in the notice, or else such claims will be late-filed 334forever barred. The Florida receiver need not give such notice 335 in ancillary proceedings if the receiver obtains an order from 336 the court authorizing the receiver to not send out such notices, 337 which order the court shall issue upon satisfactory evidence 338 that the domiciliary receiver will be sending out similar 339 notices and will accept and evaluate claims from Florida 340 residents, that Florida residents may have objections to 341 evaluations heard in Florida, and that there are reasonable 342 assurances that Florida policyholders and claimants will be 343 treated fairly and equally as compared to residents of the 344 domicile state. The time specified in the notice shall be as 345 fixed by the court for filing of claims and shall be not less 346 than 6 months after the entry of the order of insolvency. The 347 notice shall be given in such manner and for such reasonable 348 period of time as may be ordered by the court. 349 (4) The receiver may petition the receivership court to set 350 a date certain before which all contingent or unliquidated 351 claims are final. In addition to the notice requirements in this 352 section, the receiver shall give notice of filing the petition 353 to all claimants with claims that remain contingent or 354 unliquidated under this section. 355 (5) Notwithstanding any other provision of this chapter, 356 the receiver may petition the receivership court to set a date 357 certain after which no further claims may be filed. 358 Section 10. Section 631.191, Florida Statutes, is amended 359 to read: 360 631.191 Special deposit claims;andsecured claims; 361 administration of workers’ compensation large deductible 362 policies and insured collateral.— 363 (1) SPECIAL DEPOSIT CLAIMS.—The owners of special deposit 364 claims against an insurer against which a liquidation order has 365 been entered in this or any other state shall be given priority 366 against their several special deposits in accordance with the 367 provisions of the statutes governing the creation and 368 maintenance of such deposits. If there is a deficiency in any 369 such deposit so that the claims secured thereby are not fully 370 discharged therefrom, the claimants may share in the general 371 assets, but such sharing shall be deferred until general 372 creditors, and also claimants against other special deposits who 373 have received smaller percentages from their respective special 374 deposits, have been paid percentages of their claims equal to 375 the percentage paid from the special deposit. 376 (2) SECURED CLAIMS.— 377 (a) The owner of a secured claim against an insurer against 378 which a liquidation order has been entered in this or any other 379 state may surrender her or his security and file her or his 380 claim as a general creditor, or the claim may be discharged by 381 resort to the security, in which case the deficiency, if any, 382 shall be treated as a claim against the general assets of the 383 insurer on the same basis as claims of unsecured creditors. If 384 the amount of the deficiency has been adjudicated in ancillary 385 proceedings as provided in this chapter, or if it has been 386 adjudicated by a court of competent jurisdiction in a proceeding 387 in which the domiciliary receiver has had notice and an 388 opportunity to be heard, such amount shall be conclusive; 389 otherwise the amount shall be determined in the delinquency 390 proceeding in the domiciliary state. 391 (b) The value of any security held by a secured creditor 392 shall be determined under supervision of the court by: 393 1. Converting the same into money according to the terms of 394 the agreement pursuant to which the security was delivered to 395 such creditor; or 396 2. If no such agreement exists, the court shall determine 397 the value in the event the creditor and the receiver cannot 398 agree upon same. 399 (3) ADMINISTRATION OF WORKERS’ COMPENSATION LARGE 400 DEDUCTIBLE POLICIES AND INSURED COLLATERAL.— 401 (a) Definitions.—As used in this subsection, the term: 402 1. “Collateral” means cash, a letter of credit, a surety 403 bond, or any other form of security posted by the insured, or by 404 a captive insurer or reinsurer, to secure the insured’s 405 obligation under a large deductible policy to pay deductible 406 claims or to reimburse the insurer for deductible claim 407 payments. “Collateral” may also secure an insured’s obligation 408 to reimburse or pay the insurer as may be required for other 409 secured obligations. 410 2. “Deductible claim” means any claim that is within the 411 deductible under a large deductible policy, including a claim 412 for loss and defense and cost containment expense, unless such 413 expense is excluded by the terms of the policy. 414 3.a. “Large deductible policy” means a combination of one 415 or more workers’ compensation policies and endorsements issued 416 to an insured, and contracts or security agreements entered into 417 between an insured and the insurer, in which the insured has 418 agreed with the insurer to: 419 (I) Pay directly the initial portion of any claim under the 420 policy up to a specified dollar amount or the expenses related 421 to any claim; or 422 (II) Reimburse the insurer for its payment of any claim or 423 related expenses under the policy up to the specified dollar 424 amount of the deductible. 425 b. The term also includes policies that contain an 426 aggregate limit on the insured’s liability for all deductible 427 claims in addition to a per—claim deductible limit. A policy 428 must meet the current guidelines for large deductible workers’ 429 compensation filings as defined by the office, including the 430 eligibility standards regarding the minimum standard premium and 431 the minimum deductible to be deemed a large deductible policy. 432 c. The term does not include policies, endorsements, or 433 agreements providing that the initial portion of any covered 434 claim must be self-insured and that the insurer has no payment 435 obligation within the self-insured retention. 436 d. The term does not include policies that provide for 437 retrospectively rated premium payments by the insured or 438 reinsurance arrangements or agreements, except to the extent 439 such arrangements or agreements assume, secure, or pay the 440 policyholder’s large deductible obligations. 441 4. “Other secured obligations” means obligations of an 442 insured to an insurer other than those under a large deductible 443 policy, such as those under a reinsurance agreement or other 444 agreement involving retrospective premium obligations, the 445 performance of which is secured by collateral that also secures 446 an insured’s obligations under a large deductible policy. 447 (b) Applicability.— 448 1. This subsection applies to workers’ compensation large 449 deductible policies issued by an insurer that is subject to 450 delinquency proceedings under this chapter. This subsection does 451 not apply to first-party claims, or to covered claims funded by 452 a guaranty association above the deductible unless paragraph (c) 453 applies. Large deductible policies must be administered in 454 accordance with the terms of the policy, except to the extent 455 such terms conflict with this subsection. 456 2. This subsection applies to all delinquency proceedings 457 that commence on or after July 1, 2017. 458 (c) Handling of large deductible claims.—Unless otherwise 459 agreed to by the responsible guaranty association, all large 460 deductible claims that are also covered claims as defined by an 461 applicable guaranty association law, including those that may 462 have been funded by an insured before liquidation, must be 463 turned over to the guaranty association for handling. To the 464 extent the insured funds or pays the deductible claim pursuant 465 to an agreement by the guaranty fund or otherwise, the insured’s 466 funding or payment of a deductible claim extinguishes the 467 obligations, if any, of the receiver and any guaranty 468 association to pay such claim. A charge may not be made against 469 the receiver or a guaranty association on the basis of an 470 insured’s funding or payment of a deductible claim. 471 (d) Deductible claims paid by a guaranty association.— 472 1. To the extent a guaranty association pays any deductible 473 claim for which an insurer would have been entitled to 474 reimbursement from an insured, a guaranty association is 475 entitled to the amount of reimbursements received or collateral 476 available, subject to paragraph (g). Reimbursements paid to the 477 guaranty association pursuant to this paragraph may not be 478 treated as distributions under s. 631.271 or as early access 479 payments under s. 631.397(1). 480 2. To the extent that a guaranty association pays a 481 deductible claim that is not reimbursed from collateral or by 482 insured payments, or the guaranty association incurred expenses 483 in connection with large deductible policies that are not 484 reimbursed under this subsection, the guaranty association is 485 entitled to assert a claim for those amounts in the delinquency 486 proceeding. 487 3. This paragraph does not limit any right of the receiver 488 or a guaranty association which may otherwise exist under 489 applicable law to obtain reimbursement from insureds for claims 490 payments made by the guaranty association under policies of the 491 insurer or for the guaranty association’s related expenses. 492 (e) Collections.— 493 1. The receiver may collect reimbursements owed for 494 deductible claims as provided in this paragraph, and must use 495 reasonable efforts to collect such reimbursements from the 496 insured or the party that is obligated to pay the deductible as 497 specified in the large deductible policy or other agreement. The 498 receiver may bill insureds and others for reimbursement of 499 deductible claims that are: 500 a. Paid by the insurer before the commencement of 501 delinquency proceedings; 502 b. Paid by a guaranty association upon receipt by the 503 receiver of notice from a guaranty association of reimbursable 504 payments; or 505 c. Paid or allowed by the receiver. 506 2. If the insured or other party does not make payment 507 within the time specified in the large deductible policy, or, if 508 no time is specified, within a reasonable time after the date of 509 billing, the receiver may take reasonable steps to collect any 510 reimbursements owed. 511 3. The insolvency of the insurer or its inability to 512 perform any of its obligations under the large deductible policy 513 may not be a defense to the insured’s reimbursement obligation 514 under the large deductible policy. 515 4. An allegation of improper handling or payment of a 516 deductible claim by the receiver or a guaranty association may 517 not be a defense to the insured’s reimbursement obligations 518 under the large deductible policy. 519 (f) Collateral.— 520 1. Subject to this paragraph, the receiver shall use 521 collateral, when available, to secure the insured’s obligation 522 to fund or reimburse deductible claims or other secured 523 obligations or payment obligations. A guaranty association is 524 entitled to collateral as provided for in this paragraph to the 525 extent needed to reimburse a guaranty association for the 526 payment of a deductible claim. Any distributions made to a 527 guaranty association pursuant to this paragraph may not be 528 treated as distributions under s. 631.271 or as early access 529 payments under s. 631.397(1). 530 2. The receiver shall draw down collateral to the extent 531 necessary in the event the insured fails to: 532 a. Perform its funding or payment obligations under any 533 large deductible policy; 534 b. Pay deductible claim reimbursements within the time 535 specified in the large deductible policy, or, if no time is 536 specified, within 60 days after the date of the billing; 537 c. Pay amounts due to the estate for preliquidation 538 obligations; 539 d. Timely fund any other secured obligation; or 540 e. Timely pay expenses. 541 3. Claims that are validly asserted against the collateral 542 must be satisfied in the order in which such claims are received 543 by the receiver. However, if more than one creditor has a valid 544 claim against the same collateral and the available collateral, 545 along with billing collection efforts and to the extent that the 546 collateral is subject to other known secured obligations, are 547 together insufficient to pay each creditor in full, the receiver 548 may prorate payments to each creditor based upon the ratio of 549 the amount of claims each creditor has to the total claims paid 550 by all such creditors. 551 4. Excess collateral may be returned to the insured, as 552 determined by the receiver, after a periodic review of claims 553 paid, outstanding case reserves, and a factor for claims that 554 were incurred but not reported. 555 (g) Receiver’s expenses.—The receiver is entitled to deduct 556 from the collateral or from the deductible reimbursements 557 reasonable and actual expenses incurred in connection with the 558 collection of the collateral and deductible reimbursements as 559 provided pursuant to s. 631.271. 560 (h) Construction.—This subsection does not limit or 561 adversely affect any rights or powers a guaranty association may 562 have under applicable state law to obtain reimbursement from 563 certain classes of policyholders for claims payments made by the 564 guaranty association under policies of the insolvent insurer, or 565 for related expenses the guaranty association incurs. 566 Section 11. Subsection (5) is added to section 631.192, 567 Florida Statutes, to read: 568 631.192 Allowance of certain claims.— 569 (5) A claim may not be allowed for postjudgment interest 570 accrued after the date the court enters the order of 571 liquidation. 572 Section 12. Paragraphs (a), (b), and (j) of subsection (1) 573 of section 631.271, Florida Statutes, are amended to read: 574 631.271 Priority of claims.— 575 (1) The priority of distribution of claims from the 576 insurer’s estate shall be in accordance with the order in which 577 each class of claims is set forth in this subsection. Every 578 claim in each class shall be paid in full or adequate funds 579 shall be retained for such payment before the members of the 580 next class may receive any payment. No subclasses may be 581 established within any class. The order of distribution of 582 claims shall be: 583 (a) Class 1.— 584 1. All of the receiver’s costs and expenses of 585 administration. 586 2. All of the expenses of a guaranty association or foreign 587 guaranty association in handling claims. 588 3. All of the deputy supervisor’s costs and expenses of 589 administration incurred as a result of administrative 590 supervision under part VI of chapter 624. 591 (b) Class 2.—All claims under policies for losses incurred, 592 including third-party claims, all claims against the insurer for 593 liability for bodily injury or for injury to or destruction of 594 tangible property which claims are not under policies,andall 595 claims of a guaranty association or foreign guaranty 596 association, and all claims related to a patient’s healthcare 597 coverage by physicians, hospitals, and other providers of a 598 health insurer or health maintenance organization. All claims 599 under life insurance and annuity policies, whether for death 600 proceeds, annuity proceeds, or investment values, shall be 601 treated as loss claims. That portion of any loss, 602 indemnification for which is provided by other benefits or 603 advantages recovered by the claimant, may not be included in 604 this class, other than benefits or advantages recovered or 605 recoverable in discharge of familial obligations of support or 606 by way of succession at death or as proceeds of life insurance, 607 or as gratuities. No payment by an employer to her or his 608 employee may be treated as a gratuity. 609 (j) Class 10.—Interest on allowed claims of Classes 1 610 through 9. The rate of interest payable on an allowed claim must 611 accrue from the date the court enters the order of liquidation 612 until such time as the receivership court approves the 613 distribution. The interest rate must be calculated in accordance 614 with s. 55.03, according to the terms of a plan to pay interest615on allowed claims proposed by the liquidator and approved by the616receivership court. 617 Section 13. Section 631.391, Florida Statutes, is amended 618 to read: 619 631.391 Cooperation of officers and employees.— 620 (1) Any present or former officer, director, manager, 621 trustee, agent, adjuster, employee, or independent contractor of 622 any insurer or affiliate and any other person who possesses any 623 executive authority over, or who exercises any control over, any 624 segment of the affairs of the insurer or affiliate shall fully 625 cooperate with the department and office in any proceeding under 626 this chapter or any investigation preliminary or incidental to 627 the proceeding. An order of rehabilitation or liquidation which 628 results in the discharge or suspension of any of the persons 629 listed above does not operate to release such person from the 630 duty to cooperate with the department and office as set out 631 herein. As used in this section, the term “person” includes any 632 person who directly or indirectly exercises control over 633 activities of the insurer through any holding company or other 634 affiliate of the insurer. The termTo“cooperate” includes, but 635 is not limited to, the following: 636 (a) To reply promptly in writing to any inquiry from the 637 department or office requesting such a reply; 638 (b) Promptly to make available and deliver to the 639 department or office any books, accounts, documents, other 640 records, information, data processing software, or property of 641 or pertaining to the insurer and in her or his possession, 642 custody, or control; or 643 (c) Promptly to provide access to all data processing 644 records in hard copy and in electronic form and to data 645 processing facilities and services. 646 (2) No person shall obstruct or interfere with the 647 department or office in the conduct of any delinquency 648 proceeding or any investigation preliminary or incidental 649 thereto. 650 (3) This section does not prohibit any person from seeking 651 legal relief from a court when aggrieved by the petition for 652 liquidation or other delinquency proceeding or by other orders. 653 (4) Any person referred to in subsection (1) who fails to 654 cooperate with the department or office, or any other person who 655 obstructs or interferes with the department or office, in the 656 conduct of any delinquency proceeding or any investigation 657 preliminary or incidental thereto, is guilty of a misdemeanor of 658 the first degree, punishable as provided in s. 775.082 or by 659 fine of not more than $10,000. 660 (5) Refusal by any person referred to in subsection (1) to 661 provide records upon the request of the department or office is 662 grounds for revocation of any insurance-related license, 663 including, but not limited to, agent and third-party 664 administrator licenses. 665 (6) Any person referred to in subsection (1) who refuses to 666 cooperate in providing records upon the request of the 667 department or office is liable for any penalties, fines, or 668 other costs assessed against the guaranty association or the 669 receiver that result from the refusal or delay to provide 670 records. 671 Section 14. Section 631.395, Florida Statutes, is amended 672 to read: 673 631.395 Guaranty fund; orders of court.—Any order of 674 liquidation issued pursuant to s. 631.111 or s. 631.131 must 675shallauthorize and direct the department as receiver to 676 coordinate the operation of the receivership with the operation 677 of any insurance guaranty fund authorized to operate in this 678 state and may authorize the department to provide data 679 processing services for any appropriate guaranty fund. Such 680 authorization mustshallinclude, but not be limited to, release 681of copiesof any of the following: 682 (1) Claims files, records, or documents pertaining to 683 claims on file with the insolvent insurer; and 684 (2) Insurance claims filed with the receiver. 685 Section 15. Subsections (1), (4), and (5) of section 686 631.397, Florida Statutes, are amended to read: 687 631.397 Use of certain marshaled assets.— 688 (1)Within 120 days of a final determination of insolvency689of an insurer by a court of competent jurisdiction of this690state,The department, as receiver, mayshallapply to the court 691 for approval of a proposal to disburse assets out of such 692 insurer’s marshaled assets, as such assets become available, to 693 each association entitled thereto or, if there are no assets 694 available for such disbursement, then for approval of such 695 proposal as the receiver deems appropriate. For the purposes of 696 this section, the term “association” includes the Florida 697 Insurance Guaranty Association, Incorporated, the Florida 698 Workers’ Compensation Insurance Guaranty Association, and any 699 entity or person performing a function in another state similar 700 to that performed in this state by the Florida Insurance 701 Guaranty Association, Incorporated, or the Florida Workers’ 702 Compensation Insurance Guaranty Association, provided the 703 Florida Insurance Guaranty Association, Incorporated, or the 704 Florida Workers’ Compensation Insurance Guaranty Association, is 705 entitled to like payment under the laws of the association’s 706 state of domicile in respect to insolvent companies doing 707 business in that state. 708(4) Notice of such application shall be given by the709department to the associations in, and to the commissioners of710insurance of, each of the states to which disbursement may be711made. Such notice shall be made by certified mail, first-class712postage prepaid, at least 15 days prior to submission of such713application to the court. Such notice shall be deemed to have714been made when deposited in the mail.715(5) Action on the application may be taken by the court if716notice has been given pursuant to subsection (4) and the717department’s proposal complies with subsection (2).718 Section 16. This act shall take effect July 1, 2017.