HF 1732

as introduced - 90th Legislature (2017 - 2018) Posted on 03/02/2017 09:12pm

A bill for an act
relating to insurance; examinations by the commissioner of commerce; amending
Minnesota Statutes 2016, sections 45.027, subdivision 7; 60A.031, subdivisions
2a, 6; 62C.11, by adding a subdivision; 62D.24; proposing coding for new law in
Minnesota Statutes, chapter 60A.

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

Section 1.

Minnesota Statutes 2016, section 45.027, subdivision 7, is amended to read:

Subd. 7.

Actions against licensees.

(a) In addition to any other actions authorized by
this section, the commissioner may, by order, deny, suspend, or revoke the authority or
license of a person subject to the duties and responsibilities entrusted to the commissioner,
as described under section 45.011, subdivision 4, or censure that person if the commissioner
finds that:

(1) the order is in the public interest; and

(2) the person has violated any law, rule, or order related to the duties and responsibilities
entrusted to the commissioner; or

(3) the person has provided false, misleading, or incomplete information to the
commissioner or has refused to allow a reasonable inspection of records or premises; or

(4) the person has engaged in an act or practice, whether or not the act or practice directly
involves the business for which the person is licensed or authorized, which demonstrates
that the applicant or licensee is untrustworthy, financially irresponsible, or otherwise
incompetent or unqualified to act under the authority or license granted by the commissioner.

(b)(1) The commissioner shall issue an order requiring a licensee or applicant for a
license to show cause why the license should not be revoked or suspended, or the licensee
censured, or the application denied and provide the licensee or applicant an opportunity to
request a hearing under the contested case provisions of chapter 14. The order must: (i) state
the reasons that an order is being sought and whether a civil penalty is sought; and (ii)
inform the licensee or applicant that unless the licensee or applicant requests a hearing on
the matter within 30 days of receipt of the order, it becomes final by operation of law and
that a final order will be issued under paragraph (a). If a hearing is requested by the licensee
or applicant pursuant to item (ii): (A) the commissioner shall, within 15 days of receiving
the request, set the date and time for the hearing and notify the licensee or applicant of those
facts; and (B) the commissioner may modify, vacate, or extend the order, until the
commissioner issues a final order under paragraph (a).

(2) The commissioner may, by order, summarily suspend a license pending final
determination of an order to show cause issued under clause (1). If a license is suspended
pending final determination of an order to show cause and the licensee requests a hearing
on the matter within 30 days of receipt of the order to show cause, a hearing on the merits
must be held within 30 days of receipt of the hearing request. The summary suspension or
summary revocation procedure does not apply to action by the commissioner against the
certificate of authority of an insurer authorized to do business in Minnesota.

(c) All hearings must be conducted according to chapter 14. After the hearing, the
commissioner shall enter a final order disposing of the matter as the facts require. If the
licensee or applicant fails to appear at a hearing after having been duly notified of it, the
person is considered in default, and the proceeding may be determined against the licensee
or applicant.

(d) If an order becomes final because a person subject to an order does not timely request
a hearing as provided in paragraph (b) or if the petition for judicial review is not timely
filed after a hearing and a final order is issued by the commissioner as provided in paragraph
(a), the commissioner may file a certified copy of the final order with the clerk of a court
of competent jurisdiction. The final order so filed has the same effect as a judgment of the
court and may be recorded, enforced, or satisfied in the same manner as a judgment of the
court.

(e) If a person does not comply with a final order under this section, the commissioner
may petition a court of competent jurisdiction to enforce the order. The court may not require
the commissioner to post a bond in an action or proceeding under this section. If the court
finds, after service and opportunity for hearing, that the person was not in compliance with
the order, the court may adjudge the person in civil contempt of the order. The court may
impose a further civil penalty against the person for contempt in an amount up to $10,000
for each violation and may grant any other relief the court determines is just and proper in
the circumstances.

(f) Except for information classified as confidential under sections 60A.03, subdivision
9; 60A.031; 60A.93; and 60D.22, the commissioner may make any data otherwise classified
as private or confidential pursuant to this section accessible to an appropriate person or
agency if the commissioner determines that the access will aid the law enforcement process,
promote public health or safety, or dispel widespread rumor or unrest. If the commissioner
determines that private or confidential information should be disclosed, the commissioner
shall notify the attorney general as to the information to be disclosed, the purpose of the
disclosure, and the need for the disclosure. The attorney general shall review the
commissioner's determination. If the attorney general believes that the commissioner's
determination does not satisfy the purpose and intent of this paragraph, the attorney general
shall advise the commissioner in writing that the information may not be disclosed. If the
attorney general believes the commissioner's determination satisfies the purpose and intent
of this provision, the attorney general shall advise the commissioner in writing, accordingly.

After disclosing information pursuant to this provision, the commissioner shall advise
the chairs of the senate and house of representatives judiciary committees of the disclosure
and the basis for it.

new text begin (g) Information in the possession or control of, or obtained or disclosed to, the
commissioner by an insurance company, as defined in section 60A.02, subdivision 4, or
derived from information provided by an insurance company, is:
new text end

new text begin (1) private data on individuals, as defined in section 13.02, subdivision 12, or nonpublic
data, as defined in section 13.02, subdivision 9; and
new text end

new text begin (2) not subject to subpoena or other discovery nor admissible in evidence in a private
civil action. Neither the commissioner nor any person who has received such information,
while acting under the authority of the commissioner, is permitted or required to testify in
a private civil action concerning that information. Nothing in this paragraph limits the ability
of the commissioner to use that information in the furtherance of an action brought by the
commissioner.
new text end

Sec. 2.

Minnesota Statutes 2016, section 60A.031, subdivision 2a, is amended to read:

Subd. 2a.

Purpose, scope, and notice of examination.

new text begin (a) new text end An examination may, but
need not, cover comprehensively all aspects of the examinee's affairs, practices, and
conditions. The commissioner shall determine the nature and scope of each examination
and in doing so shall take into account all available relevant factors concerning the financial
and business affairs, practices and conditions of the examinee. For examinations undertaken
pursuant to this section, the commissioner shall issue an order stating the scope of the
examination and designating the person responsible for conducting the examination. A copy
of the order shall be provided to the examinee.

new text begin (b) new text end In conducting the examination, the examiner shall observe the guidelines and
procedures in the examiner's handbook adopted by the National Association of Insurance
Commissioners. The commissioner may also employ other guidelines or procedures that
the commissioner may consider appropriate.

new text begin (c) Requests for information issued by the commissioner to an examinee must be issued
under the commissioner's authority as provided in this section.
new text end

new text begin (d) Notwithstanding paragraph (c), the commissioner may request information from an
examinee pursuant to the commissioner's authority under section 45.027, subdivision 1a or
2 if:
new text end

new text begin (1) the request for information is in connection with an unresolved consumer complaint;
or
new text end

new text begin (2) there is an imminent risk of significant harm to a consumer.
new text end

Sec. 3.

Minnesota Statutes 2016, section 60A.031, subdivision 6, is amended to read:

Subd. 6.

Penalty.

Notwithstanding section 72A.05, any person who violates or aids and
abets any violation of a written order issued pursuant to this section may be fined not more
than $10,000 for each day the violation continues for each violation of the order deleted text begin in an action
commenced in Ramsey County by the attorney general on behalf of the state of Minnesota deleted text end
and the money so recovered shall be paid into the general fund.

Sec. 4.

new text begin [60A.033] SCHEDULING CONFERENCE AND ORDER.
new text end

new text begin Subdivision 1. new text end

new text begin Scheduling conference required. new text end

new text begin Within 30 days of issuing an
examination order under section 60A.031, the commissioner must hold a scheduling
conference with the insurance company.
new text end

new text begin Subd. 2. new text end

new text begin Exception. new text end

new text begin A scheduling conference and order is not required under this section
if the insurance company waives their right to a scheduling conference and order.
new text end

new text begin Subd. 3. new text end

new text begin Scheduling conference. new text end

new text begin At the scheduling conference, the commissioner must
provide the insurance company with the following:
new text end

new text begin (1) the justification for the examination and the specific regulatory issues the examination
will address;
new text end

new text begin (2) the information that must be produced by the insurance company and the timing for
its production in accordance with the requirements of subdivision 6;
new text end

new text begin (3) the estimated length of the examination, subject to the requirements of subdivision
9;
new text end

new text begin (4) whether contract examiners will be used;
new text end

new text begin (5) a budget for the exam including:
new text end

new text begin (i) the daily or hourly rates for the examiners that will be involved in the examination
and the estimated number of hours for the examination;
new text end

new text begin (ii) the estimated travel, lodging, meal, and other expenses of the examiners; and
new text end

new text begin (iii) the estimated administrative and supply costs directly associated with the
examination;
new text end

new text begin (6) an explanation of the invoicing process and the process for resolving billing disputes;
and
new text end

new text begin (7) the direct consumer harm caused by the alleged conduct of the insurance company.
new text end

new text begin Subd. 4. new text end

new text begin Scheduling order. new text end

new text begin Within ten business days following the scheduling
conference, the commissioner must issue a scheduling order that includes the information
required by subdivision 3, based on the discussion at the scheduling conference. The
commissioner and insurance company must follow the terms of the scheduling order. To
amend a scheduling order there must be a supplemental scheduling conference that complies
with subdivision 3 and a supplemental scheduling order that complies with this subdivision,
unless otherwise agreed upon by the commissioner and the insurance company.
new text end

new text begin Subd. 5. new text end

new text begin Administrative review of scheduling order. new text end

new text begin (a) The scheduling order
constitutes a final administrative decision, and the order and the commissioner's conduct
under this section may be appealed as provided under chapter 14. While an administrative
law judge is conducting an administrative review, the scheduling order and examination
are in force and compliance cannot be delayed by the insurance company. If after a hearing
the administrative law judge finds that the order or the commissioner's conduct violates this
section, the administrative law judge shall report findings and conclusions and order the
commissioner to revise the scheduling order accordingly and to comply with its terms and
this section. The order of the administrative law judge shall constitute the final decision in
the case and, absent a stipulation of the parties, may not be rejected or modified by the
commissioner. The order may be appealed to the Court of Appeals under sections 14.63 to
14.68, pursuant to the standard of review in section 14.69.
new text end

new text begin (b) Upon the request of the insurance company, the administrative law judge shall have
continuing jurisdiction to review the conduct and reasonableness of the actions of the
commissioner in undertaking the balance of the examination. An insurance company may
request an administrative hearing at any time during the examination if the commissioner
departs from the terms of the scheduling order or otherwise violates any of the requirements
of this section.
new text end

new text begin Subd. 6. new text end

new text begin Production of information. new text end

new text begin (a) Any information requested from an insurance
company by the commissioner must:
new text end

new text begin (1) be limited to matters relevant to the regulatory issue the examination will address;
new text end

new text begin (2) provide the insurance company with a reasonable period of time to respond to the
request, but not less than 30 business days from the receipt of the request; and
new text end

new text begin (3) be reasonable in relation to the burden or expense of gathering the requested
information and the needs of the examination.
new text end

new text begin (b) The commissioner may not request information that is cumulative or duplicative,
including information that may have been provided by the insurance company as part of
any other examination, such as information produced to other states. The commissioner
may not request information if it is obtainable from some other source that is more
convenient, less burdensome, or less expensive, for the commissioner.
new text end

new text begin (c) An insurance company can extend the time period by which a response to an
information request from the commissioner is due by 30 business days upon giving notice
of the extension to the commissioner. An insurance company can further extend the time
period by which a response to an information request from the commissioner is due by a
showing of good cause for the delay to the commissioner. The commissioner may extend
any time period by which information is due relating to an examination.
new text end

new text begin Subd. 7. new text end

new text begin Conduct of an examination. new text end

new text begin (a) Unless required to preserve evidence, the
commissioner, department, and examiners:
new text end

new text begin (1) may not appear at an insurance company's place of business unannounced to conduct
the examination; or
new text end

new text begin (2) may not be present at an insurance company's place of business outside of normal
hours without the insurance company's written consent.
new text end

new text begin (b) If a statement is taken by the commissioner from a person under oath, the person
must first be informed of the following:
new text end

new text begin (1) the scope of the proposed statement;
new text end

new text begin (2) whether the person is the subject of an examination; and
new text end

new text begin (3) that the person may be represented by legal counsel during the taking of the statement.
new text end

new text begin (c) If a statement is taken by the commissioner from a person under oath and the statement
is recorded, the person must be provided with a transcript or recording of the statement
within ten business days of requesting it from the commissioner.
new text end

new text begin Subd. 8. new text end

new text begin Costs. new text end

new text begin All bills for examination costs being charged to an insurance company
pursuant to section 60A.031, subdivision 3, paragraph (c), or subdivision 5, must:
new text end

new text begin (1) be provided to the insurance company on a monthly basis;
new text end

new text begin (2) be itemized and, with respect to examiner billings, contain activity detail on a quarterly
hourly basis by an individual examiner and disclose the applicable hourly billing rates,
together with per-charge detail for related travel or other expenses; and
new text end

new text begin (3) provide a due date no less than 30 business days from receipt of the bill.
new text end

new text begin Subd. 9. new text end

new text begin Completion of examination. new text end

new text begin An examination under section 60A.031 must not
exceed 12 months from the issuance of a scheduling order if:
new text end

new text begin (1) there has not been a material lack of cooperation by the insurance company; or
new text end

new text begin (2) the commissioner can show that additional time is necessary to complete the
examination.
new text end

new text begin Subd. 10. new text end

new text begin Administrative review. new text end

new text begin An administrative law judge conducting a hearing
with respect to any allegations of the commissioner arising from an order issued pursuant
to section 60A.031, subdivision 4, paragraph (d), clause (1), or other examination process
is authorized to make findings of fact, conclusions of law, and impose discipline pursuant
to section 45.027, subdivisions 6 and 7, or other civil penalty statute if applicable, by taking
into account the factors set forth in section 14.045, subdivision 3. The report or order of the
administrative law judge shall constitute the final decision in the case and, absent a stipulation
of the parties, may not be rejected or modified by the commissioner. Such findings of fact,
conclusions of law, and discipline may be appealed to the Court of Appeals under sections
14.63 to 14.68, pursuant to the standard of review set forth in section 14.69.
new text end

new text begin Subd. 11. new text end

new text begin Confidentiality. new text end

new text begin Information in the possession or control of, or obtained or
disclosed to, the commissioner by an insurance company, or derived from information
provided by an insurance company pursuant to section 60A.031 and this section are not
subject to subpoena or other discovery nor admissible in evidence in a private civil action.
Neither the commissioner nor any person who has received such information, while acting
under the authority of the commissioner, is permitted or required to testify in a private civil
action concerning that information. Nothing in this subdivision limits the ability of the
commissioner to use that information in the furtherance of an action brought by the
commissioner.
new text end

Sec. 5.

Minnesota Statutes 2016, section 62C.11, is amended by adding a subdivision to
read:

new text begin Subd. 4a. new text end

new text begin Scheduling conference and order. new text end

new text begin A service plan corporation and the
commissioner are subject to section 60A.033.
new text end

Sec. 6.

Minnesota Statutes 2016, section 62D.24, is amended to read:

62D.24 COMMISSIONER OF HEALTH'S AUTHORITY TO CONTRACT.

new text begin (a) new text end The commissioner of health, in carrying out the obligations under sections 62D.01
to 62D.30, may contract with the commissioner of commerce or other qualified persons to
make recommendations concerning the determinations required to be made. Such
recommendations may be accepted in full or in part by the commissioner of health.

new text begin (b) If the commissioner of health contracts with the commissioner of commerce for an
examination under section 60A.031, then the health maintenance organization and the
commissioner of commerce are subject to section 60A.033.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 6 are effective August 1, 2017, and apply to examinations and investigations
initiated on or after that date.
new text end