HF 3607

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/21/2022 02:49pm

A bill for an act
relating to commerce; modifying department enforcement powers; regulating
market conduct examinations; requiring a report; amending Minnesota Statutes
2020, sections 45.027, subdivisions 1a, 6, by adding a subdivision; 60A.031,
subdivision 3, by adding a subdivision; 60A.033, subdivision 9, by adding
subdivisions; 70A.06, by adding a subdivision; 72A.19, subdivision 1; repealing
Minnesota Statutes 2020, section 60A.033, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2020, section 45.027, subdivision 1a, is amended to read:

Subd. 1a.

Response to department requests.

An applicant, registrant, certificate holder,
licensee, or other person subject to the jurisdiction of the commissioner shall comply with
requests for information, documents, or other requests from the department within the time
specified in the request, or, if no time is specified, within 30 days of the mailing of the
request by the department. Applicants, registrants, certificate holders, licensees, or other
persons subject to the jurisdiction of the commissioner shall appear before the commissioner
or the commissioner's representative when requested to do so and shall bring all documents
or materials that the commissioner or the commissioner's representative has requested. new text begin All
data and information produced pursuant to this subdivision by a licensee subject to section
60A.031 is classified as confidential under section 60A.031, subdivision 4, paragraph (f),
and is subject to section 60A.031, subdivision 4, paragraph (g), clause (2).
new text end

Sec. 2.

Minnesota Statutes 2020, section 45.027, subdivision 6, is amended to read:

Subd. 6.

Violations and penalties.

new text begin (a) new text end The commissioner may impose a civil penalty
not to exceed $10,000 per violation upon a person who violates any law, rule, or order
related to the duties and responsibilities entrusted to the commissioner unless a different
penalty is specified new text begin , except that the maximum total amount of civil penalties imposed upon
a person by the commissioner under this section for all violations of an identical or
substantially similar law, rule, or order related to conduct prohibited by chapters 60A to 79
during a calendar year must not exceed $25,000 new text end .

new text begin (b) new text end If a civil penalty is imposed on a health carrier as defined in section 62A.011, the
commissioner must divide 50 percent of the amount among any policyholders or certificate
holders affected by the violation, unless the commissioner certifies in writing that the division
and distribution to enrollees would be too administratively complex or that the number of
enrollees affected by the penalty would result in a distribution of less than $50 per enrollee.

Sec. 3.

Minnesota Statutes 2020, section 45.027, is amended by adding a subdivision to
read:

new text begin Subd. 13. new text end

new text begin Limitation of enforcement actions or administrative proceedings. new text end

new text begin An
enforcement action or administrative proceeding brought by the commissioner against a
licensee who violates any law, rule, or order related to the duties and responsibilities entrusted
to the commissioner in chapters 60A to 79, including without limitation the issuance of an
order pursuant to chapters 60A to 79, must be commenced within six years of the date the
violation occurs.
new text end

Sec. 4.

Minnesota Statutes 2020, section 60A.031, subdivision 3, is amended to read:

Subd. 3.

Access to examinee.

(a) The commissioner, or the designated person, shall
have timely, convenient, and free access at all reasonable hours to all books, records,
securities, accounts, documents, and any or all computer or other records and papers relating
to the property, assets, business, and affairs of any company, applicant, association, or
person which may be examined pursuant to this section for the purpose of ascertaining,
appraising, and evaluating the assets, conditions, affairs, operations, ability to fulfill
obligations, and compliance with all the provisions of law of the company or person insofar
as any of the above pertain to the business of insurance of a person, organization, or
corporation transacting, having transacted, or being organized to transact business in this
state. Every company or person being examined, its officers, directors, and agents, shall
provide to the commissioner or the designated person timely, convenient, and free access
at all reasonable hours at its office to all its books, records, accounts, papers, securities,
documents, any or all computer or other records relating to the property, assets, business,
and affairs of the company or person. The officers, directors, and agents of the company or
person shall facilitate the examination and aid in the examination so far as it is in their power
to do so.

The refusal of a company, by its officers, directors, employees, or agents, to submit to
examination or to comply with a reasonable request of the examiners is grounds for
suspension or refusal of, or nonrenewal of, a license or authority held by the company to
engage in an insurance or other business subject to the commissioner's jurisdiction. The
proceedings for suspension, revocation, or refusal of a license or authority must be conducted
as provided in section 45.027.

(b) The commissioner or any examiners may issue subpoenas, administer oaths, and
examine under oath any person as to any matter pertinent to the examination. If a person
fails or refuses to obey a subpoena, the commissioner may petition a court of competent
jurisdiction, and upon proper showing, the court may enter an order compelling the witness
to appear and testify or produce documentary evidence. Failure to obey the court order is
punishable as contempt of court.

(c) When making an examination or audit under this section, the commissioner may
retain attorneys, appraisers, independent actuaries, independent certified public accountants,
or other professionals and specialists as examiners, the cost of which must be paid by the
company that is the subject of the examination or audit. new text begin An action to collect costs incurred
pursuant to section 45.027, subdivision 1, or this section must be commenced pursuant to
an action under section 45.027 and not chapter 16D.
new text end

(d) This section does not limit the commissioner's authority to terminate or suspend any
examination in order to pursue other legal or regulatory action pursuant to the insurance
laws of this state. Findings of fact and conclusions made pursuant to an examination are
prima facie evidence in a legal or regulatory action.

(e) Nothing contained in this section shall be construed to limit the commissioner's
authority to use as evidence a final or preliminary examination report, examiner or company
work papers or other documents, or other information discovered or developed during the
course of an examination in the furtherance of a legal or administrative action which the
commissioner may, in the commissioner's sole discretion, consider appropriate.

Sec. 5.

Minnesota Statutes 2020, section 60A.031, is amended by adding a subdivision to
read:

new text begin Subd. 10. new text end

new text begin Multistate examinations. new text end

new text begin If the commissioner elects to participate in an
examination of a licensee that involves multiple states, the commissioner is prohibited from
commencing, undertaking, or continuing an examination under this section or an investigation
under section 45.027 against the subject examinee related to the same alleged conduct,
including without limitation incurring or charging any examination costs, unless and until
the multistate examination is complete or Minnesota has formally withdrawn from that
examination. With respect to any completed multistate examination that Minnesota elected
to participate in, the commissioner is prohibited from taking action against a licensee that
was subject to the multistate examination unless the commissioner follows the procedures
set forth in this section and sections 60A.031 and 60A.033, as applicable.
new text end

Sec. 6.

Minnesota Statutes 2020, section 60A.033, subdivision 9, is amended to read:

Subd. 9.

Completion of examination.

new text begin (a) new text end An examination under section 60A.031 must
not exceed 18 months from the date the commissioner receives the insurance company's
first submission pursuant to a scheduling order, unless:

(1) the commissioner determines that there has been a material lack of cooperation by
the insurance company new text begin and advises the company in writing of the specific instances
demonstrating a lack of cooperation new text end ; new text begin or
new text end

(2) the examination is a multistate examination deleted text begin ; or deleted text end new text begin .
new text end

deleted text begin (3) the commissioner determines that additional time is necessary to complete the
examination and the commissioner notifies the insurance company in writing of the reasons
why the examination requires additional time.
deleted text end

new text begin (b) A company's inability to promptly produce information involving a significant amount
of documentation is not considered a lack of cooperation if the commissioner has not worked
in good faith to narrow and tailor information requests to the commissioner's reasonable
needs.
new text end

Sec. 7.

Minnesota Statutes 2020, section 60A.033, is amended by adding a subdivision to
read:

new text begin Subd. 11. new text end

new text begin Informal disposition. new text end

new text begin (a) The commissioner must make a good faith attempt
to informally resolve any alleged violations of law identified during the examination or
investigation. An attempt to informally resolve a violation may consist of a consent order
or other informal resolution or disposition.
new text end

new text begin (b) The terms of a consent order or other informal disposition that prescribes compliance
requirements must not be inconsistent with or supersede the requirements of Minnesota
law, nor may the terms be identical or substantially similar to the compliance requirements
in a consent order entered into by another licensee. A consent order containing identical or
substantially similar requirements is unlawful rulemaking in violation of section 14.381,
and a licensee has the remedies available for a violation under section 14.381.
new text end

new text begin (c) If requested by a licensee, the commissioner must enter into an informal, agreed
upon consent order contemporaneously with the consent order's delivery to the department.
new text end

Sec. 8.

Minnesota Statutes 2020, section 60A.033, is amended by adding a subdivision to
read:

new text begin Subd. 12. new text end

new text begin Report to the legislature. new text end

new text begin Each year by February 1 the commissioner must
report the following information to the chairs and ranking minority members of the house
of representatives and senate committees having jurisdiction over commerce: a listing of
the number of pending market conduct exams and the year the exams were commenced;
the number of exams closed during the prior year and the current total of costs charged to
the companies for each exam; whether the exam is being conducted, in whole or in part, by
third-party examiners; and other information that the chairs or ranking minority members
may reasonably request, subject to the limitations of section 60A.031, subdivision 4,
paragraph (f).
new text end

Sec. 9.

Minnesota Statutes 2020, section 70A.06, is amended by adding a subdivision to
read:

new text begin Subd. 4. new text end

new text begin Enforcement. new text end

new text begin With respect to any rate or form filed under this section that is
not disapproved under subdivision 1a or 2 or section 70A.11, upon a determination that the
rate or form violates Minnesota law the commissioner may only order a filer to prospectively
discontinue use of the rate or the form. The commissioner is prohibited from subjecting the
filer to a civil penalty or other sanction for any filed rate or form.
new text end

Sec. 10.

Minnesota Statutes 2020, section 72A.19, subdivision 1, is amended to read:

Subdivision 1.

Prohibition.

No person shall engage in this state in any trade practice
which is defined in sections 72A.17 to 72A.32 as or determined pursuant to sections 72A.17
to 72A.32 to be an unfair method of competition or an unfair or deceptive act or practice
in the business of insurance new text begin if the practice (1) is committed flagrantly and in conscious
disregard of the prohibitions, or (2) has been committed with sufficient frequency to indicate
a general business practice of engaging in unfair methods of competition or unfair or
deceptive acts or practices new text end .

Sec. 11. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2020, section 60A.033, subdivision 3, new text end new text begin is repealed.
new text end

Sec. 12. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective July 1, 2022.
new text end

APPENDIX

Repealed Minnesota Statutes: 22-05513

60A.033 SCHEDULING CONFERENCE AND ORDER.

Subd. 3.

Exception.

A scheduling conference and order is not required under this section if the insurance company waives its right to a scheduling conference and order.