Bill Text: TX HB2147 | 2011-2012 | 82nd Legislature | Introduced


Bill Title: Relating to the regulation of certain transactions related to life insurance and related products; providing penalties.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2011-05-04 - Reported favorably as substituted [HB2147 Detail]

Download: Texas-2011-HB2147-Introduced.html
  82R9393 PMO-F
 
  By: Eiland H.B. No. 2147
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of certain transactions related to life
  insurance and related products; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle B, Title 5, Insurance Code, is amended
  by adding Chapter 525 to read as follows:
  CHAPTER 525. LIFE INSURANCE CONSUMER DISCLOSURE ACT
         Sec. 525.001.  SHORT TITLE. This Act may be cited as the
  Life Insurance Consumer Disclosure Act.
         Sec. 525.002.  DEFINITIONS. In this chapter:
               (1)  "Insured" means a consumer who purchased a policy
  from an insurer.
               (2)  "Insurer" means the insurance company that issued
  the policy.
               (3)  "Person" means an individual, corporation, trust,
  partnership, association, or any other legal entity.
               (4)  "Policy" means an individual life insurance policy
  owned by a person who is a resident of this state regardless of
  whether the policy is issued, delivered, or renewed in this state.
               (5)  "Policy owner" means the owner of a policy.
         Sec. 525.003.  NOTICE TO POLICY OWNER REQUIRED. (a) An
  insurer shall provide the written notice required by Subsection (b)
  to a policy owner if the insured is at least 60 years old or if the
  insurer has actual knowledge that the insured is terminally or
  chronically ill, and if:
               (1)  the policy owner requests:
                     (A)  the surrender, wholly or partly, of a policy;
  or
                     (B)  an accelerated death benefit under a policy;
               (2)  the insurer sends notice to the policy owner that
  the policy may lapse; or
               (3)  another circumstance occurs and the commissioner
  has prescribed by rule that an insurer must send the notice under
  this chapter in that circumstance.
         (b)  The commissioner by rule shall adopt or approve forms to
  be used for notices under this chapter to inform a policy owner of:
               (1)  alternatives to the lapse or surrender of a
  policy; and
               (2)  the policy owner's rights related to the
  disposition of a policy.
         (c)  The written notice must be developed at no cost to
  insurers or other license holders and must be written in simple,
  nontechnical language.
         (d)  The written notice must contain:
               (1)  a statement explaining that life insurance is a
  critical part of a broader financial plan;
               (2)  a statement explaining that there are alternatives
  to the lapse or surrender of a policy;
               (3)  a general description of the following
  alternatives to the lapse or surrender of a policy:
                     (A)  accelerated death benefits available under
  the policy or as a rider to the policy;
                     (B)  the assignment of the policy as a gift;
                     (C)  the sale of the policy under a life
  settlement contract, including a life settlement under Chapter
  1111;
                     (D)  the replacement of the policy under Chapter
  1114;
                     (E)  the maintenance of the policy under the terms
  of the policy or a rider to the policy or through a life settlement
  contract;
                     (F)  the maintenance of the policy through a loan
  issued by an insurer or a third party, using the policy or the cash
  surrender value of the policy as collateral for the loan;
                     (G)  conversion of the policy from a term policy
  to a permanent policy; and
                     (H)  conversion of the policy to obtain long-term
  care health insurance coverage or a long-term care benefit plan;
  and
               (4)  a statement explaining that life insurance, life
  settlements, or other alternatives to the lapse or surrender of the
  policy described in the notice may be available to a particular
  policy owner depending on a number of circumstances, including the
  age and health status of the insured or the terms of a life
  insurance policy, and that policy owners should contact their
  financial advisor, insurance agent, broker, or attorney to obtain
  further advice and assistance.
         Sec. 525.004.  PENALTIES. A violation of Section 525.003(a)
  is an unfair or deceptive act or practice in the business of
  insurance subject to sanctions and penalties under Chapter 541.
         SECTION 2.  The heading to Chapter 1111, Insurance Code, is
  amended to read as follows:
  CHAPTER 1111.  LIFE SETTLEMENT CONTRACTS, [AND] VIATICAL
  SETTLEMENTS, AND CERTAIN RELATED PRACTICES; ACCELERATED TERM LIFE
  INSURANCE BENEFITS
         SECTION 3.  The heading to Subchapter A, Chapter 1111,
  Insurance Code, is amended to read as follows:
  SUBCHAPTER A.  LIFE SETTLEMENT CONTRACTS AND VIATICAL SETTLEMENTS
         SECTION 4.  Section 1111.001, Insurance Code, is amended by
  adding Subsections (2-a), (2-b), (2-c), (2-d), and (2-e) to read as
  follows:
               (2-a)  "Premium finance loan" means a loan, made
  primarily for the purpose of making premium payments on a life
  insurance policy, that is secured by an interest in the life
  insurance policy.
               (2-b)  "Provider" means a person, other than an owner,
  who enters into or effectuates a life settlement contract with an
  owner.  The term does not include:
                     (A)  a bank, savings bank, savings and loan
  association, or credit union;
                     (B)  a licensed lending institution, creditor, or
  secured party under a premium finance loan agreement that takes an
  assignment of a policy or certificate as collateral for a loan;
                     (C)  the insurer of a policy or rider to the extent
  of providing accelerated death benefits, riders, or cash surrender
  value;
                     (D)  any individual who enters into or effectuates
  not more than one agreement in a calendar year for the transfer of
  an insurance policy or certificate for compensation or anything of
  value less than the expected death benefit payable under the
  policy;
                     (E)  a purchaser;
                     (F)  an authorized or eligible insurer that
  provides stop loss coverage to a provider, purchaser, financing
  entity, special purpose entity, or related provider trust;
                     (G)  a financing entity;
                     (H)  a special purpose entity;
                     (I)  a related provider trust;
                     (J)  a broker; or
                     (K)  an accredited investor or qualified
  institutional buyer, as defined respectively by Securities and
  Exchange Commission Regulation D (17 C.F.R. Section 230.501 et
  seq.) and Securities and Exchange Commission Rule 144A (17 C.F.R.
  Section 230.144A), who purchases a life settlement contract from a
  provider.
               (2-c)  "Purchaser" means a person who pays compensation
  or anything of value as consideration for a beneficial interest in a
  trust that is vested with, or for the assignment, transfer, or sale
  of, an ownership or other interest in an insurance policy or a
  certificate that has been the subject of a life settlement
  contract.
               (2-d)  "Related provider trust" means a titling trust
  or other trust established by a registered provider or a financing
  entity for the sole purpose of holding the ownership or beneficial
  interest in purchased policies in connection with a financing
  transaction, that includes a written agreement with the registered
  provider under which:
                     (A)  the registered provider is responsible for
  ensuring compliance with all statutory and regulatory
  requirements; and
                     (B)  the trust agrees to make all records and
  files relating to life settlement transactions available to the
  department as if those records and files were maintained directly
  by the provider.
               (2-e)  "Special purpose entity" means a corporation,
  partnership, trust, limited liability company, or other legal
  entity formed solely to provide, either directly or indirectly,
  access to institutional capital markets for a financing entity or
  provider in connection with a transaction in which the securities
  in the special purpose entity:
                     (A)  are acquired by the owner or by a "qualified
  institutional buyer," as defined by Securities and Exchange
  Commission Rule 144A (17 C.F.R. Section 230.144A); or
                     (B)  pay a fixed rate of return commensurate with
  established asset-backed institutional capital markets.
         SECTION 5.  Subchapter A, Chapter 1111, Insurance Code, is
  amended by adding Sections 1111.0011, 1111.0012, and 1111.0013 to
  read as follows:
         Sec. 1111.0011.  LIFE SETTLEMENT CONTRACT.  (a) For
  purposes of this subchapter, a "life settlement contract" means a
  written agreement, entered into between a provider and an owner,
  that establishes the terms under which:
               (1)  compensation or any thing of value that is less
  than the expected death benefit of an insurance policy or
  certificate of insurance will be paid in return for the owner's
  assignment, transfer, sale, devise, or bequest, for compensation,
  of the death benefit or any portion of the insurance policy or
  certificate of insurance for compensation; and
               (2)  the minimum contract value is greater than any
  cash surrender value or accelerated death benefit available on the
  date of the application for the contract.
         (b)  The term includes:
               (1)  the transfer for compensation or value of
  ownership or a beneficial interest in a trust or other entity that
  owns the policy if the trust or other entity was formed or availed
  of for the principal purpose of acquiring one or more life insurance
  contracts owned by a person residing in this state; and
               (2)  a premium finance loan made for a policy on or
  before the date of issuance of the policy if:
                     (A)  the loan proceeds are not used solely to pay:
                           (i)  policy premiums; and
                           (ii)  any costs or expenses incurred by the
  lender or the borrower in connection with the financing;
                     (B)  the owner receives on the date of the premium
  finance loan a guarantee of the future life settlement value of the
  policy; or
                     (C)  the owner agrees on the date of the premium
  finance loan to sell the policy or any portion of the death benefit
  of the policy on any date following the issuance of the policy.
         (c)  The term does not include:
               (1)  a policy loan made by a life insurer under the
  terms of a life insurance policy or accelerated death provisions
  contained in the life insurance policy, whether issued with the
  original policy or as a rider;
               (2)  a premium finance loan, or any loan made by a bank
  or other licensed financial institution, if default on the loan or
  the transfer of the policy in connection with such a default is not
  in accordance with an agreement or understanding with any other
  person entered into for the purpose of evading regulation under
  this subchapter;
               (3)  a collateral assignment of a life insurance policy
  made by an owner;
               (4)  a loan made by a lender that does not violate
  Chapter 651, if the loan does not qualify as a life settlement
  contract under Subsection (a) or (b);
               (5)  an agreement:
                     (A)  in which each of the parties:
                           (i)  is closely related to the insured by
  consanguinity or affinity; or
                           (ii)  otherwise has a lawful substantial
  economic interest in the continued life, health, and bodily safety
  of the insured; or
                     (B)  that is a trust established primarily for the
  benefit of a party described by Paragraph (A);
               (6)  any designation, consent, or agreement by an
  insured who is an employee of an employer in connection with the
  purchase by the employer, or a trust established by the employer, of
  life insurance on the life of the employee;
               (7)  a bona fide business succession planning
  arrangement:
                     (A)  between one or more shareholders in a
  corporation or between a corporation and one or more of its
  shareholders or one or more trusts established by its shareholders;
                     (B)  between one or more partners in a partnership
  or between a partnership and one or more of its partners or one or
  more trusts established by its partners; or
                     (C)  between one or more members in a limited
  liability company or between a limited liability company and one or
  more of its members or one or more trusts established by its
  members;
               (8)  an agreement entered into by a service recipient,
  or a trust established by the service recipient, and a service
  provider, or a trust established by the service provider, who
  performs significant services for the service recipient's trade or
  business; or
               (9)  any other contract, transaction, or arrangement
  that the commissioner determines is not of the type intended to be
  regulated by this subchapter.
         Sec. 1111.0012.  OWNER. (a) In this subchapter, "owner"
  means the owner of a life insurance policy or a certificate holder
  under a group policy who is a resident of this state who enters or
  seeks to enter into a life settlement contract. The term includes a
  viator. Except as otherwise provided by this subchapter, the term
  is not limited to an owner of a life insurance policy or a
  certificate holder under a group policy that insures the life of an
  individual with a terminal or chronic illness or condition.
         (b)  The term does not include:
               (1)  a registered provider or any other person licensed
  under this code while operating under this subchapter;
               (2)  a qualified institutional buyer, as defined by
  Securities and Exchange Commission Rule 144A (17 C.F.R. Section
  230.144A) under the Securities Act of 1933 (15 U.S.C. Section 77a et
  seq.);
               (3)  a financing entity;
               (4)  a special purpose entity; or
               (5)  a related provider trust.
         Sec. 1111.0013.  STRANGER-ORIGINATED LIFE INSURANCE.  (a) A
  person may not procure a new insurance policy covering the life of
  an insured if the person:
               (1)  lacks an insurable interest in the insured; and
               (2)  at the inception of the policy, owns or controls
  the policy or the majority of the policy's death benefits.
         (b)  This section does not apply to the lawful assignment of
  a life insurance policy, including a life settlement contract or a
  viatical settlement, or a practice described by Section
  1111.0011(c).
         (c)  For purposes of Chapter 701, an act that violates this
  section constitutes a fraudulent insurance act.
         SECTION 6.  Section 1111.002, Insurance Code, is amended to
  read as follows:
         Sec. 1111.002.  PURPOSE.  The purpose of this subchapter is
  to:
               (1)  provide for registration of persons engaged in the
  business of life settlement contracts or viatical settlements; and
               (2)  provide consumer protection for a person who may
  sell or otherwise transfer the person's life insurance policy.
         SECTION 7.  Section 1111.003, Insurance Code, is amended to
  read as follows:
         Sec. 1111.003.  RULES; REGISTRATION AND REGULATION.  (a)  To
  implement this subchapter, the commissioner shall adopt reasonable
  rules relating to life settlement contracts [settlements] and
  relating to viatical settlements.
         (b)  The rules adopted by the commissioner under this section
  must include rules governing:
               (1)  registration of providers [a person engaged in the
  business of life settlements];
               (2)  registration of persons [a person] engaged in the
  business of viatical settlements;
               (3)  approval of contract forms;
               (4)  disclosure requirements;
               (5)  prohibited practices relating to:
                     (A)  unfair discrimination regarding [in the
  provision of] life settlement contracts or in the provision of
  viatical settlements; and
                     (B)  referral fees paid by providers and persons
  engaged in the business of [life or] viatical settlements;
               (6)  assignment or resale of life insurance policies;
               (7)  maintenance of appropriate confidentiality of
  personal and medical information; and
               (8)  the responsibility of a registrant to ensure
  compliance with this subchapter and rules relating to life
  settlement contracts or viatical settlements after the
  registration is revoked, suspended, or otherwise lapses.
         (c)  The commissioner may not adopt a rule establishing a
  price or fee for the sale or purchase of a life settlement under a
  life settlement contract. This subsection does not prohibit the
  commissioner from adopting a rule relating to an unjust price or fee
  for the sale or purchase of a life settlement.
         (d)  The commissioner may not adopt a rule that regulates the
  actions of an investor providing money to a provider [life] or a
  viatical settlement company.
         SECTION 8.  Section 1111.005(a), Insurance Code, is amended
  to read as follows:
         (a)  The commissioner may suspend or revoke a registration or
  deny an application for registration if the commissioner determines
  that the registrant or applicant, individually or through any
  officer, director, or shareholder of the registrant or applicant:
               (1)  wilfully violated:
                     (A)  this subchapter;
                     (B)  an applicable provision of this code or
  another insurance law of this state; or
                     (C)  a rule adopted under a law described by
  Paragraph (A) or (B);
               (2)  intentionally made a material misstatement in the
  application for registration;
               (3)  obtained or attempted to obtain registration by
  fraud or misrepresentation;
               (4)  misappropriated, converted to the registrant's or
  applicant's own use, or illegally withheld money belonging to a
  party to a life settlement contract or viatical settlement;
               (5)  was guilty of fraudulent or dishonest practices;
               (6)  materially misrepresented the terms of business
  conducted under this subchapter or any other provision of this code
  or another insurance law of this state;
               (7)  made or issued, or caused to be made or issued, a
  statement materially misrepresenting or making incomplete
  comparisons regarding the material terms of any business conducted
  under this subchapter; or
               (8)  was convicted of a felony or was convicted of a
  misdemeanor involving moral turpitude or fraud.
         SECTION 9.  Section 1111.006, Insurance Code, is amended to
  read as follows:
         Sec. 1111.006.  APPLICABILITY OF OTHER INSURANCE LAWS.  The
  following laws apply to a provider or a person engaged in the
  business of [life or] viatical settlements:
               (1)  Chapters 82, 83, 84, 481, 541, and 701;
               (2)  Sections 31.002, 32.021, 32.023, 32.041, 38.001,
  81.004, 86.001, 86.051, 86.052, 201.004, 401.051, 401.054,
  401.151(a), 521.003, 521.004, 543.001(c), 801.056, and 862.052;
               (3)  Subchapter A, Chapter 32;
               (4)  Subchapter C, Chapter 36;
               (5)  Subchapter B, Chapter 404; and
               (6)  Subchapter B, Chapter 491.
         SECTION 10.  Subchapter A, Chapter 1111, Insurance Code, is
  amended by adding Sections 1111.007, 1111.008, and 1111.009 to read
  as follows:
         Sec. 1111.007.  DISCLOSURE TO INSURER.  (a) In addition to
  other questions an insurer may lawfully pose to an applicant for
  life insurance, an insurer may inquire in the application for
  insurance whether the proposed owner intends to pay premiums with
  the assistance of financing from a lender who will use the policy as
  collateral for a premium finance loan used to support the
  financing.
         (b)  If the premium finance loan provides funds that can be
  used for a purpose other than paying for the premiums, costs, and
  expenses associated with obtaining and maintaining the life
  insurance policy and loan, the application may be rejected as a
  prohibited practice.
         (c)  If the financing does not violate Subsection (b) or the
  insurer's lawful underwriting guidelines, the insurer may not
  reject the application solely because the premiums will be
  financed.  The insurer may make disclosures to the applicant, on
  either the application or an amendment to the application, to be
  completed not later than the date the policy is delivered, that
  include the following:
         "If you have entered into a loan arrangement under which the
  policy is used as collateral, and the policy changes ownership at
  some point in the future in satisfaction of the loan, the following
  may be true:
               (A)  a change of ownership could lead to a stranger
  owning an interest in the insured's life; and
               (B)  a change of ownership could in the future limit
  your ability to purchase insurance on the insured's life because
  there is a limit to how much coverage insurers will issue on one
  life.
         You should consult a professional adviser, since a change in
  ownership in satisfaction of the loan may result in tax
  consequences to the owner, depending on the structure of the loan."
         (d)  The insurer may also require certifications from the
  applicant for insurance coverage or the insured, such as the
  following:
               "(A)  I have not entered into any agreement or
  arrangement under which I have agreed to make a future sale of this
  life insurance policy.";
               "(B)  My loan arrangement for this policy provides
  funds sufficient to pay for some or all of the premiums, costs, and
  expenses associated with obtaining and maintaining my life
  insurance policy, but I have not entered into any agreement under
  which I am to receive consideration in exchange for procuring this
  policy."; and
               "(C)  The borrower has an insurable interest in the
  insured."
         Sec. 1111.008.  GENERAL REQUIREMENTS REGARDING LIFE
  SETTLEMENT CONTRACTS. (a) Effective September 1, 2011, a person
  may not enter into a life settlement contract during any period
  before or on the date of the application for or the issuance of an
  insurance policy, or during a period before the second anniversary
  of issuance of the policy, regardless of the date:
               (1)  the compensation is to be provided; or
               (2)  the assignment, transfer, sale, devise, bequest,
  or surrender of the policy is to occur.
         (b)  The prohibition under Subsection (a) does not apply if
  the owner certifies to the provider that:
               (1)  the policy was issued on the owner's exercise of
  conversion rights arising out of a group or individual policy, if
  the total time covered under the conversion policy plus the time
  covered under the prior policy is at least 24 months, and the time
  covered under a group policy is computed without regard to a change
  in insurers if the coverage has been continuous and under the same
  group sponsorship; or
               (2)  the owner submits independent evidence to the
  provider that one or more of the following conditions have been met
  within the 24-month period:
                     (A)  the owner or insured is terminally or
  chronically ill;
                     (B)  the owner or insured disposes of the
  ownership interests in a closely held corporation under the terms
  of a buyout or other similar agreement in effect at the time the
  insurance policy was initially issued;
                     (C)  the owner's spouse dies;
                     (D)  the owner divorces his or her spouse;
                     (E)  the owner retires from full-time employment;
                     (F)  the owner becomes physically or mentally
  disabled and a physician determines that the disability prevents
  the owner from maintaining full-time employment; or
                     (G)  on the application of a creditor of the
  owner, a final order, judgment, or decree is entered by a court of
  competent jurisdiction:
                           (i)  adjudicating the owner bankrupt or
  insolvent;
                           (ii)  approving a petition seeking
  reorganization of the owner; or
                           (iii)  appointing a receiver, trustee, or
  liquidator to all or a substantial part of the owner's assets.
         (c)  Copies of the independent evidence required by
  Subsection (b)(2) must be submitted to the insurer when the
  provider submits a request to the insurer for verification of
  coverage. The copies must be accompanied by a letter from the
  provider attesting that the copies are true and correct copies of
  the documents received by the provider. Nothing in this subsection
  affects the right of an insurer to contest the validity of any
  insurance policy.
         (d)  If the provider submits to the insurer a copy of
  independent evidence under Subsection (b)(2) on submission of a
  request to the insurer to effect the transfer of the policy to the
  provider, the copy is deemed to establish that the life settlement
  contract satisfies the requirements of this section.
         Sec. 1111.009.  REPORTING REQUIREMENTS AND PRIVACY. (a)
  Each registered provider shall file with the commissioner on or
  before March 1 of each year an annual statement containing the
  information the commissioner prescribes by rule.
         (b)  In addition to any other information required by
  commissioner rule, the annual statement required under Subsection
  (a) must specify:
               (1)  the total number, aggregate face amount, and life
  settlement proceeds of insurance policies settled during the
  immediately preceding calendar year; and
               (2)  a breakdown of the information described by
  Subdivision (1) by policy issue year.
         (c)  The information required under Subsection (b) is
  limited to transactions in which the owner is a resident of this
  state and does not include:
               (1)  individual transaction information regarding the
  business of life settlements; or
               (2)  information that reasonably could be used to
  identify the owner or the insured.
         (d)  Each provider who wilfully fails to file the annual
  statement required by this section, or who wilfully fails to reply
  not later than the 30th day after the date of a written inquiry by
  the department in connection with the annual statement, is subject,
  after notice and an opportunity for a hearing, to an administrative
  penalty of up to $250 per day of delay, not to exceed $25,000 in the
  aggregate, for each failure. A penalty imposed under this
  subsection is in addition to other penalties provided by this
  chapter.
         (e)  Except as otherwise allowed or required by law, a
  provider, broker, insurer, agent, information bureau, or rating
  agency or company, or any other person with actual knowledge of an
  insured's identity, may not disclose the identity of an insured, or
  information that reasonably could be used to identify the insured
  or the insured's financial or medical information, to any other
  person unless the disclosure:
               (1)  is necessary to effect a life settlement contract
  between the owner and a provider and the owner and insured have
  provided prior written consent to the disclosure;
               (2)  is necessary to effect the sale of life settlement
  contracts, or interests in those contracts, as investments, if:
                     (A)  the sale is conducted in accordance with
  applicable state and federal securities laws; and
                     (B)  the owner and the insured have both provided
  prior written consent to the disclosure;
               (3)  is provided:
                     (A)  in response to an investigation or
  examination by the commissioner or any other governmental officer
  or agency; or
                     (B)  under the investigation of fraud
  requirements of Subtitle F, Title 5;
               (4)  is a term or condition to the transfer of a policy
  by one provider to another provider, in which case the receiving
  provider is required to comply with the confidentiality
  requirements of this section;
               (5)  is necessary to allow the provider or broker or
  their authorized representatives to make contacts for the purpose
  of determining health status; or
               (6)  is required to purchase stop loss coverage.
         (f)  For the purposes of Subsection (e)(5), the term
  "authorized representative" does not include a person who has or
  may have any financial interest in the life settlement contract
  other than a provider, licensed broker, financing entity, related
  provider trust, or special purpose entity. A provider or broker
  must require its authorized representative to agree in writing to
  adhere to the privacy provisions of this subchapter.
         (g)  Nonpublic personal information solicited or obtained in
  connection with a proposed or actual life settlement contract is
  subject to the provisions applicable to financial institutions
  under 15 U.S.C. Section 6801 et seq. and all other state and federal
  laws relating to confidentiality of nonpublic personal
  information.
         SECTION 11.  Section 1111.001(1), Insurance Code, is
  repealed.
         SECTION 12.  The commissioner of insurance shall adopt all
  rules necessary to implement Chapter 1111, Insurance Code, as
  amended by this Act, not later than March 1, 2012.
         SECTION 13.  An insurer is not required to provide a notice
  under Chapter 525, Insurance Code, as added by this Act, before
  September 1, 2011.
         SECTION 14.  This Act applies only to a life settlement
  contract entered into or renewed on or after January 1, 2012. A
  life settlement contract entered into or renewed before January 1,
  2012, is governed by the law as it existed immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
         SECTION 15.  This Act takes effect September 1, 2011.
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