HF 1841

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; establishing an insurance 
  1.3             compliance self-audit privilege; proposing coding for 
  1.4             new law in Minnesota Statutes, chapter 60A. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [60A.033] [DEFINITIONS.] 
  1.7      Subdivision 1.  [APPLICATION.] For purposes of sections 
  1.8   60A.033 to 60A.036, the definitions in this section have the 
  1.9   meanings given them. 
  1.10     Subd. 2.  [INSURANCE COMPLIANCE SELF-AUDIT.] "Insurance 
  1.11  compliance self-audit" or "self-audit" means a voluntary 
  1.12  internal evaluation, review, assessment, process, or audit, not 
  1.13  expressly required by law of an insurer and designed to 
  1.14  identify, correct, or prevent noncompliance or to improve 
  1.15  compliance with statutes, rules, and orders of an activity 
  1.16  regulated under chapters 60A to 79A or other laws of this state 
  1.17  or other states or federal law applicable to an insurer. 
  1.18     Subd. 3.  [INSURANCE COMPLIANCE SELF-AUDIT 
  1.19  DOCUMENT.] "Insurance compliance self-audit document" or 
  1.20  "self-audit document" means a document prepared as a result of 
  1.21  or in connection with and not before an insurance compliance 
  1.22  self-audit and includes, but is not limited to, any of the 
  1.23  following: 
  1.24     (1) correspondence, instructions, field notes and records 
  1.25  of observations, findings, opinions, suggestions, conclusions, 
  2.1   drafts, checklists, memoranda, drawings, photographs, 
  2.2   computer-generated or electronically recorded information, 
  2.3   telephone records, maps, charts, graphs, and surveys, if this 
  2.4   information is collected or developed for the primary purpose 
  2.5   and in the course of an insurance compliance self-audit; 
  2.6      (2) a report prepared by an auditor, who may be an employee 
  2.7   of the insurer or an independent contractor, which may include 
  2.8   the scope of the audit, the information gained in the audit, and 
  2.9   conclusions and recommendations, with exhibits and appendices; 
  2.10     (3) memoranda and documents analyzing portions or all of 
  2.11  the report and discussing potential implementation issues; 
  2.12     (4) an implementation plan that addresses correcting past 
  2.13  noncompliance, improving current compliance, and preventing 
  2.14  future noncompliance identified as part of the self-audit; 
  2.15     (5) analytic data generated in the course of conducting the 
  2.16  insurance compliance self-audit; or 
  2.17     (6) a written response to the findings of an insurance 
  2.18  compliance self-audit. 
  2.19     Documents or other information contained within the 
  2.20  self-audit document, but not prepared as a part of, or as a 
  2.21  result of, the self-audit is not privileged. 
  2.22     Sec. 2.  [60A.034] [SCOPE OF PRIVILEGE.] 
  2.23     Subdivision 1.  [PRIVILEGED INFORMATION.] An insurance 
  2.24  compliance self-audit document is privileged information and is 
  2.25  not discoverable or admissible as evidence in a civil or 
  2.26  criminal legal action, or in an administrative proceeding, 
  2.27  except as otherwise provided in section 60A.035.  If an 
  2.28  insurance compliance self-audit document provided by an insurer 
  2.29  to the commissioner is disclosed to a third party by the 
  2.30  commissioner, the document is not admissible as evidence in a 
  2.31  civil or criminal legal action or administrative proceeding.  
  2.32  This privilege does not extend to self-audits initiated after 
  2.33  the insurer has received notice of an examination by state or 
  2.34  federal regulators.  Assertion of the privilege established 
  2.35  under this subdivision to prevent disclosure of an insurance 
  2.36  compliance self-audit document does not constitute a fraudulent 
  3.1   purpose under section 60A.035. 
  3.2      Subd. 2.  [EXAMINATION PROHIBITED.] If an insurer, person, 
  3.3   or entity performs or directs the performance of an insurance 
  3.4   compliance self-audit, an officer or employee involved with the 
  3.5   insurance compliance self-audit, or consultant who is hired for 
  3.6   the purpose of performing or assisting in the performance of the 
  3.7   insurance compliance self-audit, may not be examined in a civil, 
  3.8   criminal, or administrative proceeding as to the insurance 
  3.9   compliance self-audit or an insurance compliance self-audit 
  3.10  document.  This subdivision does not apply if the privilege is 
  3.11  determined under section 60A.035 not to apply. 
  3.12     Subd. 3.  [NO BASIS FOR FINDING VIOLATION.] No findings, 
  3.13  facts, conclusions, or observations developed in an insurance 
  3.14  compliance self-audit and stated in an insurance compliance 
  3.15  self-audit document may be used either as the basis for finding 
  3.16  a violation of an insurance statute or rule or the basis for 
  3.17  fines or other penalties, including forfeitures, injunctions, or 
  3.18  other sanctions or remedies, unless the commissioner finds that 
  3.19  the insurer submitting the self-audit document has failed to 
  3.20  make, within six months following the commissioner's receipt of 
  3.21  the self-audit document, a good faith effort to correct the 
  3.22  action or omission revealed by the self-audit that would 
  3.23  constitute the violation.  This subdivision does not apply to 
  3.24  self-audits initiated after the insurer has received notice of 
  3.25  an examination by state or federal regulators. 
  3.26     Sec. 3.  [60A.035] [PRIVILEGE WAIVED OR DISCLOSURE 
  3.27  ORDERED.] 
  3.28     Subdivision 1.  [WAIVER.] The insurance compliance 
  3.29  self-audit privilege does not apply to the extent the insurer 
  3.30  that prepared or caused to be prepared the insurance compliance 
  3.31  self-audit document expressly waives the privilege by so stating 
  3.32  its intent in writing. 
  3.33     Subd. 2.  [REQUIRED DISCLOSURE.] In a civil or 
  3.34  administrative proceeding, a court of record may, after an 
  3.35  in-camera review, require disclosure of material for which the 
  3.36  insurance compliance self-audit privilege is asserted, if the 
  4.1   court determines one of the following: 
  4.2      (1) the privilege is asserted for a fraudulent purpose; or 
  4.3      (2) the material is not subject to the privilege. 
  4.4      Sec. 4.  [60A.036] [BURDEN OF PROOF.] 
  4.5      Subdivision 1.  [BURDEN.] An insurer asserting the 
  4.6   insurance compliance self-audit privilege has the burden of 
  4.7   demonstrating the applicability of the privilege. 
  4.8      Subd. 2.  [STIPULATION.] The parties may at any time 
  4.9   stipulate in proceedings under section 60A.035 to entry of an 
  4.10  order directing that specific information contained in an 
  4.11  insurance compliance self-audit document is or is not subject to 
  4.12  the insurance compliance self-audit privilege. 
  4.13     Sec. 5.  [EXCEPTIONS TO PRIVILEGE.] The insurance 
  4.14  compliance self-audit privilege does not apply to the following: 
  4.15     (1) documents, communications, data, reports, or other 
  4.16  information, other than an insurance self-audit document, 
  4.17  required to be collected, developed, maintained, reported, or 
  4.18  otherwise made available to the commissioner, or under federal 
  4.19  or state law, rule, or order; 
  4.20     (2) information obtained by observation or monitoring by 
  4.21  the commissioner of commerce or commissioner or head of any 
  4.22  other regulatory agency; or 
  4.23     (3) information obtained from a source independent of the 
  4.24  insurance compliance self-audit. 
  4.25     Sec. 6.  [STATUTORY OR COMMON LAW PRIVILEGE PRESERVED.] 
  4.26     Nothing in sections 60A.033 to 60A.036 limits, waives, or 
  4.27  abrogates the scope or nature of any statutory or common law 
  4.28  privilege including, but not limited to, the work product 
  4.29  doctrine, the attorney-client privilege, or the subsequent 
  4.30  remedial measures exclusion.