as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to insurance; providing safe harbor 1.3 protection for insurance self-audit information; 1.4 proposing coding for new law in Minnesota Statutes, 1.5 chapter 60A. 1.6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.7 Section 1. [60A.033] [DEFINITIONS.] 1.8 Subdivision 1. [APPLICATION.] For purposes of sections 1.9 60A.033 to 60A.039, the terms in this section have the meanings 1.10 given them. 1.11 Subd. 2. [INSURANCE SELF-AUDIT.] "Insurance self-audit" or 1.12 "self-audit" means a voluntary internal evaluation, review, 1.13 assessment, process, or audit, not expressly required by law of 1.14 an insurer and designed to identify, correct, or prevent 1.15 noncompliance or to improve compliance with statutes, rules, and 1.16 orders of an activity regulated under chapters 60A to 79A or 1.17 other laws of this state or other states or federal law 1.18 applicable to an insurer. 1.19 Subd. 3. [INSURANCE SELF-AUDIT DOCUMENT.] "Insurance 1.20 self-audit document" or "self-audit document" means a document 1.21 prepared as a result of or in connection with and not before an 1.22 insurance self-audit and includes, but is not limited to, any of 1.23 the 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 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 self-audit; or 2.17 (6) a written response to the findings of an insurance 2.18 self-audit. 2.19 An "insurance self-audit document" does not include (1) a 2.20 document or other information contained within an insurance 2.21 self-audit document, but not prepared in connection with or 2.22 result of a self-audit, or (2) a document, not prepared in 2.23 connection with or as a result of a self-audit, requested by the 2.24 commissioner in conjunction with the investigation of a consumer 2.25 complaint where the document relates solely to the complainant's 2.26 policy or any claim made against the policy and the complainant 2.27 has provided the commissioner with written authorization 2.28 requesting its release. 2.29 Sec. 2. [60A.034] [SCOPE.] 2.30 Subdivision 1. [SAFE HARBOR INFORMATION.] An insurance 2.31 self-audit document is safe harbor information and is not 2.32 discoverable or admissible as evidence in a civil action except 2.33 as otherwise provided in section 60A.035. If an insurance 2.34 self-audit document is made available to the commissioner by an 2.35 insurer and is disclosed to a third party by the commissioner, 2.36 the document is not admissible as evidence in a civil action. 3.1 The safe harbor protection does not extend to self-audits 3.2 initiated after the insurer has received notice of an 3.3 examination by state or federal regulators. Assertion of the 3.4 safe harbor protection established under this subdivision to 3.5 prevent disclosure of an insurance self-audit document does not 3.6 constitute a fraudulent purpose under section 60A.035. 3.7 Subd. 2. [EXAMINATION PROHIBITED.] If an insurer, person, 3.8 or entity performs or directs the performance of an insurance 3.9 self-audit, an officer or employee involved with the insurance 3.10 self-audit, or consultant who is hired for the purpose of 3.11 performing or assisting in the performance of the insurance 3.12 self-audit, may not be examined in a civil proceeding as to the 3.13 insurance self-audit or an insurance self-audit document. This 3.14 subdivision does not apply if the safe harbor protection is 3.15 determined under section 60A.035 not to apply. 3.16 Subd. 3. [SUBMISSION PURSUANT TO EXAMINATION.] An insurer 3.17 must make available, in connection with examinations conducted 3.18 under chapter 60A or 60D, an insurance self-audit document to 3.19 the commissioner. The submission does not waive the safe harbor 3.20 protection established under this section to which the insurer 3.21 is otherwise entitled, and the submission is subject to sections 3.22 60A.03, subdivision 9, and 60A.031, subdivision 4, paragraph (f). 3.23 Subd. 4. [NO BASIS FOR FINDING VIOLATION.] No findings, 3.24 facts, conclusions, or observations developed in an insurance 3.25 self-audit and stated in an insurance self-audit document may be 3.26 used either as the basis for finding a violation of an insurance 3.27 statute or rule or the basis for fines or other penalties, 3.28 including forfeitures, injunctions, or other sanctions or 3.29 remedies, unless the commissioner finds that the insurer 3.30 submitting the self-audit document has failed to make, within 3.31 six months following the commissioner's review of the self-audit 3.32 document, a good faith effort to correct the action or omission 3.33 revealed by the self-audit that would constitute the violation. 3.34 This subdivision does not apply to self-audits initiated after 3.35 the insurer has received notice of an examination by state or 3.36 federal regulators. 4.1 Sec. 3. [60A.035] [SAFE HARBOR PROTECTION WAIVED OR 4.2 DISCLOSURE ORDERED.] 4.3 Subdivision 1. [WAIVER.] The safe harbor protection under 4.4 section 60A.034 does not apply to the extent the insurer that 4.5 prepared or caused to be prepared the insurance self-audit 4.6 document expressly waives the protection in writing. 4.7 Subd. 2. [REQUIRED DISCLOSURE.] In a civil proceeding, a 4.8 court of record may, after an in-camera review, require 4.9 disclosure of material for which the safe harbor protection is 4.10 asserted, if the court determines one of the following: 4.11 (1) the safe harbor protection is asserted for a fraudulent 4.12 purpose; or 4.13 (2) the material is not subject to the safe harbor 4.14 protection. 4.15 Sec. 4. [60A.036] [BURDEN OF PROOF.] 4.16 Subdivision 1. [BURDEN.] An insurer asserting the safe 4.17 harbor protection has the burden of demonstrating the 4.18 applicability of the protection. 4.19 Subd. 2. [STIPULATION.] The parties may at any time 4.20 stipulate in proceedings under section 60A.035 to entry of an 4.21 order directing that specific information contained in an 4.22 insurance self-audit document is or is not subject to the safe 4.23 harbor protection. 4.24 Sec. 5. [60A.037] [EXCEPTIONS TO SAFE HARBOR PROTECTION.] 4.25 The safe harbor protection does not apply to the following: 4.26 (1) documents, communications, data, reports, or other 4.27 information, other than an insurance self-audit document, 4.28 required to be collected, developed, maintained, reported, or 4.29 otherwise made available to the commissioner, or under federal 4.30 or state law, rule, or order; 4.31 (2) information obtained by observation or monitoring by 4.32 the commissioner of commerce or commissioner or head of any 4.33 other regulatory agency; or 4.34 (3) information obtained from a source independent of the 4.35 insurance self-audit. 4.36 Sec. 6. [60A.038] [STATUTORY OR COMMON LAW PRESERVED.] 5.1 Nothing in sections 60A.033 to 60A.037 limits, waives, or 5.2 abrogates the scope or nature of any statutory or common law 5.3 privilege including, but not limited to, the work product 5.4 doctrine, the attorney-client privilege, or the subsequent 5.5 remedial measures exclusion. 5.6 Sec. 7. [60A.039] [COMMISSIONER'S AUTHORITY NOT 5.7 RESTRICTED.] 5.8 Nothing in sections 60A.033 to 60A.037 restricts the 5.9 authority of the commissioner to examine and investigate 5.10 insurers or conduct appropriate disciplinary actions or other 5.11 administrative proceedings.