Bill Text: OR SB719 | 2011 | Regular Session | Engrossed
Bill Title: Relating to unlawful insurance practices.
Sponsorship: Committee Bill
Status: (Failed) 2011-06-30 - In committee upon adjournment. [SB719 Detail]
Download: Oregon-2011-SB719-Engrossed.html
76th OREGON LEGISLATIVE ASSEMBLY--2011 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2144
A-Engrossed
Senate Bill 719
Ordered by the Senate May 4
Including Senate Amendments dated May 4
Sponsored by COMMITTEE ON GENERAL GOVERNMENT, CONSUMER AND SMALL
BUSINESS PROTECTION
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Includes insurance in definition of 'real estate, goods or
services' for purposes of Unlawful Trade Practices Act.
{ - Makes violation of law prohibiting unfair claim
settlement practices unlawful trade practice. Permits Attorney
General to define by rule additional unfair claim settlement
practices that are also unlawful trade practices. - }
{ + Authorizes Attorney General, with prior review and
approval by Director of Department of Consumer and Business
Services, to adopt rules for investigating and prosecuting
unlawful trade practices involving insurance.
Requires indemnification from costs, damages and attorney fees
arising out of violation of unfair claim settlement practice of
person who transacts insurance for another. + }
A BILL FOR AN ACT
Relating to unlawful insurance practices; creating new
provisions; and amending ORS 646.605.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 646.605, as amended by section 1, chapter 94,
Oregon Laws 2010, is amended to read:
646.605. As used in ORS 646.605 to 646.652:
(1) 'Appropriate court' means the circuit court of a county:
(a) Where one or more of the defendants reside;
(b) Where one or more of the defendants maintain a principal
place of business;
(c) Where one or more of the defendants are alleged to have
committed an act prohibited by ORS 646.605 to 646.652; or
(d) With the defendant's consent, where the prosecuting
attorney maintains an office.
(2) 'Documentary material' means the original or a copy of any
book, record, report, memorandum, paper, communication,
tabulation, map, chart, photograph, mechanical transcription, or
other tangible document or recording, wherever situate.
(3) 'Examination' of documentary material shall include
inspection, study or copying of any such material, and taking
testimony under oath or acknowledgment in respect of any such
documentary material or copy thereof.
(4) 'Person' means natural persons, corporations, trusts,
partnerships, incorporated or unincorporated associations and any
other legal entity except bodies or officers acting under
statutory authority of this state or the United States.
(5) 'Prosecuting attorney' means the Attorney General or the
district attorney of any county in which a violation of ORS
646.605 to 646.652 is alleged to have occurred.
(6)(a) 'Real estate, goods or services' means those that are or
may be obtained primarily for personal, family or household
purposes, or that are or may be obtained for any purposes as a
result of a telephone solicitation, and includes loans and
extensions of credit, { + insurance + } and franchises,
distributorships and other similar business opportunities { - ,
but does not include insurance - } .
(b) Notwithstanding paragraph (a) of this subsection:
(A) 'Real estate' does not cover conduct covered by ORS chapter
90 except as provided in section 2, chapter 658, Oregon Laws
2003.
(B) 'Loans and extensions of credit' does not include
transactions involving a pawnbroker, as defined in ORS 726.010,
that is required to be licensed under ORS chapter 726.
{ + (C) 'Insurance' does not cover public bodies, as defined
in ORS 30.260, to the extent public bodies are exempt from
application of the Insurance Code under ORS 731.036.
(D) 'Insurance' does not cover cities, counties, school
districts, community college districts, community college service
districts or districts, as defined in ORS 198.010 and 198.180, to
the extent those entities are exempt from application of the
Insurance Code under ORS 731.036.
(E) 'Insurance' does not cover workers' compensation insurance
under ORS chapter 656. + }
(7) 'Telephone solicitation' means a solicitation where a
person, in the course of the person's business, vocation or
occupation, uses a telephone or an automatic dialing-announcing
device to initiate telephonic contact with a potential customer
and the person is not one of the following:
(a) A person who is a broker-dealer or salesperson licensed
under ORS 59.175, or a mortgage banker or mortgage broker
licensed under ORS 86A.106 when the solicitation is for a
security qualified for sale pursuant to ORS 59.055.
(b) A real estate licensee or a person who is otherwise
authorized to engage in professional real estate activity
pursuant to ORS chapter 696, when the solicitation involves
professional real estate activity.
(c) A person licensed or exempt from licensure as a builder
pursuant to ORS chapter 701, when the solicitation involves the
construction, alteration, repair, improvement or demolition of a
structure.
(d) A person licensed or otherwise authorized to sell insurance
as an insurance producer pursuant to ORS chapter 744, when the
solicitation involves insurance.
(e) A person soliciting the sale of a newspaper of general
circulation, a magazine or membership in a book or record club
who complies with ORS 646.611, when the solicitation involves
newspapers, magazines or membership in a book or record club.
(f) A person soliciting without the intent to complete and who
does not complete the sales presentation during the telephone
solicitation and who only completes the sales presentation at a
later face-to-face meeting between the solicitor and the
prospective purchaser.
(g) A supervised financial institution or parent, subsidiary or
affiliate thereof. As used in this paragraph, 'supervised
financial institution' means any financial institution or trust
company, as those terms are defined in ORS 706.008, or any
personal property broker, consumer finance lender, commercial
finance lender or insurer that is subject to regulation by an
official or agency of this state or of the United States.
(h) A person who is authorized to conduct prearrangement or
preconstruction funeral or cemetery sales, pursuant to ORS
chapter 692, when the solicitation involves prearrangement or
preconstruction funeral or cemetery plans.
(i) A person who solicits the services provided by a cable
television system licensed or franchised pursuant to state, local
or federal law, when the solicitation involves cable television
services.
(j) A person or affiliate of a person whose business is
regulated by the Public Utility Commission of Oregon.
(k) A person who sells farm products as defined by ORS 576.006
if the solicitation neither intends to nor actually results in a
sale that costs the purchaser in excess of $100.
(L) An issuer or subsidiary of an issuer that has a class of
securities that is subject to section 12 of the Securities
Exchange Act of 1934 and that is either registered or exempt from
registration under paragraph (A), (B), (C), (E), (F), (G) or (H)
or subsection (g) of that section.
(m) A person soliciting exclusively the sale of telephone
answering services to be provided by that person or that person's
employer when the solicitation involves answering services.
(n) A telecommunications utility with access lines of 15,000 or
less or a cooperative telephone association when the solicitation
involves regulated goods or services.
(8) 'Trade' and 'commerce' mean advertising, offering or
distributing, whether by sale, rental or otherwise, any real
estate, goods or services, and include any trade or commerce
directly or indirectly affecting the people of this state.
(9) 'Unconscionable tactics' include, but are not limited to,
actions by which a person:
(a) Knowingly takes advantage of a customer's physical
infirmity, ignorance, illiteracy or inability to understand the
language of the agreement;
(b) Knowingly permits a customer to enter into a transaction
from which the customer will derive no material benefit;
(c) Permits a customer to enter into a transaction with
knowledge that there is no reasonable probability of payment of
the attendant financial obligation in full by the customer when
due; or
(d) Knowingly takes advantage of a customer who is a disabled
veteran, a disabled servicemember or a servicemember in active
service, or the spouse of a disabled veteran, disabled
servicemember or servicemember in active service. For purposes of
this paragraph:
(A) 'Disabled veteran' has the meaning given that term in ORS
408.225.
(B) 'Disabled servicemember' means a servicemember, as defined
in 50 U.S.C. App. 511 as in effect on January 1, 2010, who may be
entitled to disability compensation under laws administered by
the United States Department of Veterans Affairs.
(C) 'Servicemember in active service' means:
(i) A servicemember called into active service under Title 10
or Title 32 of the United States Code as in effect on January 1,
2010; or
(ii) A servicemember on active state duty, as defined in ORS
398.002.
(10) A willful violation occurs when the person committing the
violation knew or should have known that the conduct of the
person was a violation.
(11) A loan is made 'in close connection with the sale of a
manufactured dwelling' if:
(a) The lender directly or indirectly controls, is controlled
by or is under common control with the seller, unless the
relationship is remote and is not a factor in the transaction;
(b) The lender gives a commission, rebate or credit in any form
to a seller who refers the borrower to the lender, other than
payment of the proceeds of the loan jointly to the seller and the
borrower;
(c) The lender is related to the seller by blood or marriage;
(d) The seller directly and materially assists the borrower in
obtaining the loan;
(e) The seller prepares documents that are given to the lender
and used in connection with the loan; or
(f) The lender supplies documents to the seller used by the
borrower in obtaining the loan.
SECTION 2. ORS 646.605, as amended by section 12, chapter 658,
Oregon Laws 2003, section 199, chapter 71, Oregon Laws 2007,
section 32, chapter 319, Oregon Laws 2007, section 2, chapter
215, Oregon Laws 2009, and section 2, chapter 94, Oregon Laws
2010, is amended to read:
646.605. As used in ORS 646.605 to 646.652:
(1) 'Appropriate court' means the circuit court of a county:
(a) Where one or more of the defendants reside;
(b) Where one or more of the defendants maintain a principal
place of business;
(c) Where one or more of the defendants are alleged to have
committed an act prohibited by ORS 646.605 to 646.652; or
(d) With the defendant's consent, where the prosecuting
attorney maintains an office.
(2) 'Documentary material' means the original or a copy of any
book, record, report, memorandum, paper, communication,
tabulation, map, chart, photograph, mechanical transcription, or
other tangible document or recording, wherever situate.
(3) 'Examination' of documentary material shall include
inspection, study or copying of any such material, and taking
testimony under oath or acknowledgment in respect of any such
documentary material or copy thereof.
(4) 'Person' means natural persons, corporations, trusts,
partnerships, incorporated or unincorporated associations and any
other legal entity except bodies or officers acting under
statutory authority of this state or the United States.
(5) 'Prosecuting attorney' means the Attorney General or the
district attorney of any county in which a violation of ORS
646.605 to 646.652 is alleged to have occurred.
(6)(a) 'Real estate, goods or services' means those that are or
may be obtained primarily for personal, family or household
purposes, or that are or may be obtained for any purposes as a
result of a telephone solicitation, and includes loans and
extensions of credit, { + insurance + } and franchises,
distributorships and other similar business opportunities { - ,
but does not include insurance - } .
(b) Notwithstanding paragraph (a) of this subsection:
(A) 'Real estate' does not cover conduct covered by ORS chapter
90.
(B) 'Loans and extensions of credit' does not include
transactions involving a pawnbroker, as defined in ORS 726.010,
that is required to be licensed under ORS chapter 726.
{ + (C) 'Insurance' does not cover public bodies, as defined
in ORS 30.260, to the extent public bodies are exempt from
application of the Insurance Code under ORS 731.036.
(D) 'Insurance' does not cover cities, counties, school
districts, community college districts, community college service
districts or districts, as defined in ORS 198.010 and 198.180, to
the extent those entities are exempt from application of the
Insurance Code under ORS 731.036.
(E) 'Insurance' does not cover workers' compensation insurance
under ORS chapter 656. + }
(7) 'Telephone solicitation' means a solicitation where a
person, in the course of the person's business, vocation or
occupation, uses a telephone or an automatic dialing-announcing
device to initiate telephonic contact with a potential customer
and the person is not one of the following:
(a) A person who is a broker-dealer or salesperson licensed
under ORS 59.175, or a mortgage banker or mortgage broker
licensed under ORS 86A.106 when the solicitation is for a
security qualified for sale pursuant to ORS 59.055.
(b) A real estate licensee or a person who is otherwise
authorized to engage in professional real estate activity
pursuant to ORS chapter 696, when the solicitation involves
professional real estate activity.
(c) A person licensed or exempt from licensure as a builder
pursuant to ORS chapter 701, when the solicitation involves the
construction, alteration, repair, improvement or demolition of a
structure.
(d) A person licensed or otherwise authorized to sell insurance
as an insurance producer pursuant to ORS chapter 744, when the
solicitation involves insurance.
(e) A person soliciting the sale of a newspaper of general
circulation, a magazine or membership in a book or record club
who complies with ORS 646.611, when the solicitation involves
newspapers, magazines or membership in a book or record club.
(f) A person soliciting without the intent to complete and who
does not complete the sales presentation during the telephone
solicitation and who only completes the sales presentation at a
later face-to-face meeting between the solicitor and the
prospective purchaser.
(g) A supervised financial institution or parent, subsidiary or
affiliate thereof. As used in this paragraph, 'supervised
financial institution' means any financial institution or trust
company, as those terms are defined in ORS 706.008, or any
personal property broker, consumer finance lender, commercial
finance lender or insurer that is subject to regulation by an
official or agency of this state or of the United States.
(h) A person who is authorized to conduct prearrangement or
preconstruction funeral or cemetery sales, pursuant to ORS
chapter 692, when the solicitation involves prearrangement or
preconstruction funeral or cemetery plans.
(i) A person who solicits the services provided by a cable
television system licensed or franchised pursuant to state, local
or federal law, when the solicitation involves cable television
services.
(j) A person or affiliate of a person whose business is
regulated by the Public Utility Commission of Oregon.
(k) A person who sells farm products as defined by ORS 576.006
if the solicitation neither intends to nor actually results in a
sale that costs the purchaser in excess of $100.
(L) An issuer or subsidiary of an issuer that has a class of
securities that is subject to section 12 of the Securities
Exchange Act of 1934 and that is either registered or exempt from
registration under paragraph (A), (B), (C), (E), (F), (G) or (H)
or subsection (g) of that section.
(m) A person soliciting exclusively the sale of telephone
answering services to be provided by that person or that person's
employer when the solicitation involves answering services.
(n) A telecommunications utility with access lines of 15,000 or
less or a cooperative telephone association when the solicitation
involves regulated goods or services.
(8) 'Trade' and 'commerce' mean advertising, offering or
distributing, whether by sale, rental or otherwise, any real
estate, goods or services, and include any trade or commerce
directly or indirectly affecting the people of this state.
(9) 'Unconscionable tactics' include, but are not limited to,
actions by which a person:
(a) Knowingly takes advantage of a customer's physical
infirmity, ignorance, illiteracy or inability to understand the
language of the agreement;
(b) Knowingly permits a customer to enter into a transaction
from which the customer will derive no material benefit;
(c) Permits a customer to enter into a transaction with
knowledge that there is no reasonable probability of payment of
the attendant financial obligation in full by the customer when
due; or
(d) Knowingly takes advantage of a customer who is a disabled
veteran, a disabled servicemember or a servicemember in active
service, or the spouse of a disabled veteran, disabled
servicemember or servicemember in active service. For purposes of
this paragraph:
(A) 'Disabled veteran' has the meaning given that term in ORS
408.225.
(B) 'Disabled servicemember' means a servicemember, as defined
in 50 U.S.C. App. 511 as in effect on January 1, 2010, who may be
entitled to disability compensation under laws administered by
the United States Department of Veterans Affairs.
(C) 'Servicemember in active service' means:
(i) A servicemember called into active service under Title 10
or Title 32 of the United States Code as in effect on January 1,
2010; or
(ii) A servicemember on active state duty, as defined in ORS
398.002.
(10) A willful violation occurs when the person committing the
violation knew or should have known that the conduct of the
person was a violation.
(11) A loan is made 'in close connection with the sale of a
manufactured dwelling' if:
(a) The lender directly or indirectly controls, is controlled
by or is under common control with the seller, unless the
relationship is remote and is not a factor in the transaction;
(b) The lender gives a commission, rebate or credit in any form
to a seller who refers the borrower to the lender, other than
payment of the proceeds of the loan jointly to the seller and the
borrower;
(c) The lender is related to the seller by blood or marriage;
(d) The seller directly and materially assists the borrower in
obtaining the loan;
(e) The seller prepares documents that are given to the lender
and used in connection with the loan; or
(f) The lender supplies documents to the seller used by the
borrower in obtaining the loan.
SECTION 3. { + Section 4 of this 2011 Act is added to and made
a part of ORS 646.605 to 646.652. + }
SECTION 4. { + (1) As used in this section, 'insurance' has
the meaning given that term in ORS 731.102.
(2) The Attorney General may not adopt rules with respect to
action taken by a prosecuting attorney under ORS 646.618 or
646.632 when the conduct that is the subject of the action
involves insurance except with the prior review and approval of
the proposed rules by the Director of the Department of Consumer
and Business Services. + }
SECTION 5. { + (1) A person on whose behalf another person,
including but not limited to an insurance producer, transacts
insurance shall indemnify the other person and hold the other
person harmless from any cost, loss or damages, including
attorney fees, that may arise out of a claim, action or judgment
for violation of ORS 746.230.
(2) For purposes of this section:
(a) 'Insurance producer' and 'transact insurance' have the
meanings given those terms in ORS 731.104 and 731.146.
(b) 'Person' means an individual, corporation, association,
partnership, limited liability company, limited liability
partnership or any other legal entity except bodies or officers
acting under statutory authority of this state or the United
States. + }
SECTION 6. { + Sections 4 and 5 of this 2011 Act and the
amendments to ORS 646.605 by sections 1 and 2 of this 2011 Act
apply to unlawful insurance practices occurring on or after the
effective date of this 2011 Act. + }
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