HB 1167

1
A bill to be entitled
2An act relating to viatical settlements; amending s.
3626.9911, F.S.; providing and revising definitions;
4amending s. 626.9913, F.S.; requiring additional
5information in an annual statement; revising a deposit
6requirement; amending s. 626.9914, F.S.; adding an
7additional ground for imposing adverse consequences on
8viatical settlement provider licenses; increasing
9administrative fines; amending s. 626.99175, F.S.;
10deleting an exception from registration requirements for
11life expectancy providers; creating s. 626.99185, F.S.;
12requiring viatical settlement providers to provide viators
13with a disbursement disclosure statement; providing
14statement requirements and procedures; amending ss.
15626.9924 and 626.99245, F.S.; conforming cross-references;
16creating s. 626.99273, F.S.; prohibiting certain practices
17or activities relating to viatical settlement contracts or
18insurance policies; specifying that such practices or
19activities are fraudulent; requiring certain materials to
20be filed with the Office of Insurance Regulation before
21entering into viatical settlement contracts; prohibiting
22certain references in marketing materials; prohibiting  
23certain statements or representations to applicants or
24policyholders; amending s. 626.99275, F.S.; specifying an
25additional prohibited practice; prohibiting any person
26from entering into a viatical settlement contract and from
27issuing, soliciting, marketing, or otherwise promoting the
28purchase of a policy under certain circumstances;
29providing criteria; providing criminal penalties; creating
30s. 626.99276, F.S.; providing insurer notification
31requirements for viatical settlement providers; providing
32insurer requirements for provider requests for transfers
33of certain policies; specifying prohibitions against
34insurers relating to such transfers; providing insurer
35response requirements for requests for such transfers;
36amending s. 626.99278, F.S.; specifying certain
37information required to be maintained and reported
38relating to anti-fraud plans and procedures, medical
39records and insurance applications, and reporting of
40fraudulent acts and prohibited practices; creating s.
41626.99289, F.S.; providing that certain contracts,
42agreements, arrangements, and transactions are void and
43unenforceable; repealing s. 626.99287, F.S., relating to
44the contestability of viaticated policies; providing an
45effective date.
46
47Be It Enacted by the Legislature of the State of Florida:
48
49     Section 1.  Section 626.9911, Florida Statutes, is amended
50to read:
51     626.9911  Definitions.--As used in this act, the term:
52     (1)  "Business of viatical settlements" means an activity
53involved in, but not limited to, the offering, soliciting,
54negotiating, procuring, effectuating, purchasing, investing,
55monitoring, tracking, underwriting, selling, transferring,
56assigning, pledging, hypothecating, or in any other manner
57acquiring an interest in a life insurance policy by means of a
58viatical settlement contract.
59     (2)(1)  "Financing entity" means an underwriter, placement
60agent, lender, purchaser of securities, or purchaser of a policy
61or certificate from a viatical settlement provider, credit
62enhancer, or any entity that has direct ownership in a policy or
63certificate that is the subject of a viatical settlement
64contract, but whose principal activity related to the
65transaction is providing funds or credit enhancement to effect
66the viatical settlement or the purchase of one or more
67viaticated policies and who has an agreement in writing with one
68or more licensed viatical settlement providers to finance the
69acquisition of viatical settlement contracts. The term does not
70include a nonaccredited investor or other natural person. A
71financing entity may not enter into a viatical settlement
72contract.
73     (3)  "Fraudulent viatical settlement act" means an act or
74omission committed by any person who, knowingly or with intent
75to defraud, for the purpose of depriving another of property or
76for pecuniary gain, commits or permits its employees or its
77agents to engage in acts including:
78     (a)1.  Presenting, causing to be presented, or preparing
79with knowledge or belief that it will be presented to or by a
80viatical settlement provider, viatical settlement broker,
81financing entity, insurer, insurance producer, or any other
82person false material information or concealing material
83information as part of, in support of, or concerning a fact
84material to one or more of the following:
85     a.  An application for the issuance of a viatical
86settlement contract or insurance policy;
87     b.  The underwriting of a viatical settlement contract or
88insurance policy;
89     c.  A claim for payment or benefit pursuant to a viatical
90settlement contract or insurance policy;
91     d.  Premiums paid on an insurance policy;
92     e.  Payments and changes in ownership or beneficiary made
93in accordance with the terms of a viatical settlement contract
94or insurance policy;
95     f.  The reinstatement or conversion of an insurance policy;
96     g.  The solicitation, offer, effectuation, or sale of a
97viatical settlement contract or insurance policy;
98     h.  The issuance of written evidence of a viatical
99settlement contract or insurance policy; or
100     i.  A financing transaction.
101     2.a.  Employing any plan, financial structure, device,
102scheme, or artifice to defraud related to viaticated policies;
103     b.  Entering into any practice or plan that involves
104stranger-originated life insurance; or
105     c.  Failing to disclose to the insurer when requested by
106the insurer that the prospective insured has undergone a life
107expectancy evaluation by any person or entity other than the
108insurer or its authorized representatives in connection with the
109issuance of the policy.
110     (b)  In the furtherance of a fraud or to prevent the
111detection of a fraud, any person who commits or permits its
112employees or its agents to:
113     1.  Remove, conceal, alter, destroy, or sequester from the
114office the assets or records of a licensee or other person
115engaged in the business of viatical settlements;
116     2.  Misrepresent or conceal the financial condition of a
117licensee, financing entity, insurer, or other person;
118     3.  Transact the business of viatical settlements in
119violation of laws requiring a license, certificate of authority,
120or other legal authority for the transaction of the business of
121viatical settlements; or
122     4.  File with the office or the equivalent chief insurance
123regulatory official of another jurisdiction a document that
124contains false information or otherwise conceals information
125about a material fact from the office or other regulatory
126official;
127     (c)  Embezzlement, theft, misappropriation, or conversion
128of moneys, funds, premiums, credits, or other property of a
129viatical settlement provider, insurer, insured, viator,
130insurance policyowner, or any other person engaged in the
131business of viatical settlements or insurance;
132     (d)  Recklessly entering into, negotiating, brokering, or
133otherwise dealing in a viatical settlement contract, the subject
134of which is a life insurance policy that was obtained by
135presenting false information concerning any fact material to the
136policy or by concealing, for the purpose of misleading another,
137information concerning any fact material to the policy, in which
138the person or persons intended to defraud the policy's issuer,
139viatical settlement provider, or viator. For purposes of this
140paragraph, the term "recklessly" means consciously and with
141clear, unjustifiable disregard for the substantial likelihood of
142the relevant facts or risks, which disregard involves a gross
143deviation from acceptable standards of conduct;
144     (e)  Knowingly or intentionally facilitating the viator's
145change of residency state to avoid the provisions of this act;
146     (f)  Knowingly or intentionally, directly or indirectly,
147facilitating or causing the creation of a trust with a non-
148Florida situs or other nonresident entity for the purpose of
149being a policyowner of a life insurance policy covering a
150Florida resident insured to avoid the provisions of this act;
151     (g)  Knowingly or intentionally, directly or indirectly,
152facilitating or causing the transfer of the ownership of a
153policy covering a Florida resident insured to a trust with a
154non-Florida situs or other nonresident entity to avoid the
155provisions of this act;
156     (h)  Attempting to commit, assisting, aiding, or abetting
157in the commission of or conspiring to commit the acts or
158omissions specified in this subsection;
159     (i)  Any application for, the existence of, or any payments
160related to a loan secured directly or indirectly by any interest
161in a life insurance policy; or
162     (j)  Failing to disclose to the insurer when the request
163for such disclosure has been asked for by the insurer that the
164prospective insured has undergone a life expectancy evaluation
165by any person or entity other than the insurer or its authorized
166representatives in connection with the issuance of the policy.
167     (4)(2)  "Independent third-party trustee or escrow agent"
168means an attorney, certified public accountant, financial
169institution, or other person providing escrow services under the
170authority of a regulatory body. The term does not include any
171person associated, affiliated, or under common control with a
172viatical settlement provider or viatical settlement broker.
173     (5)(3)  "Life expectancy" means an opinion or evaluation as
174to how long a particular person is to live, or relating to such
175person's expected demise.
176     (6)(4)  "Life expectancy provider" means a person who
177determines, or holds himself or herself out as determining, life
178expectancies or mortality ratings used to determine life
179expectancies:
180     (a)  On behalf of a viatical settlement provider, viatical
181settlement broker, life agent, or person engaged in the business
182of viatical settlements;
183     (b)  In connection with a viatical settlement investment,
184pursuant to s. 517.021(23); or
185     (c)  On residents of this state in connection with a
186viatical settlement contract or viatical settlement investment.
187     (7)(5)  "Person" has the meaning specified in s. 1.01.
188     (8)(6)  "Related form" means any form, created by or on
189behalf of a licensee, which a viator or insured is required to
190sign or initial. The forms include, but are not limited to, a
191power of attorney, a release of medical information form, a
192suitability questionnaire, a disclosure document, or any
193addendum, schedule, or amendment to a viatical settlement
194contract considered necessary by a provider to effectuate a
195viatical settlement transaction.
196     (9)(7)  "Related provider trust" means a titling trust or
197other trust established by a licensed viatical settlement
198provider or financing entity for the sole purpose of holding the
199ownership or beneficial interest in purchased policies in
200connection with a financing transaction. The trust must have a
201written agreement with a licensed viatical settlement provider
202or financing entity under which the licensed viatical settlement
203provider or financing entity is responsible for insuring
204compliance with all statutory and regulatory requirements and
205under which the trust agrees to make all records and files
206relating to viatical settlement transactions available to the
207office as if those records and files were maintained directly by
208the licensed viatical settlement provider. This term does not
209include an independent third-party trustee or escrow agent or a
210trust that does not enter into agreements with a viator. A
211related provider trust shall be subject to all provisions of
212this act that apply to the viatical settlement provider who
213established the related provider trust, except s. 626.9912,
214which shall not be applicable. A viatical settlement provider
215may establish no more than one related provider trust, and the
216sole trustee of such related provider trust shall be the
217viatical settlement provider licensed under s. 626.9912. The
218name of the licensed viatical settlement provider shall be
219included within the name of the related provider trust.
220     (10)(8)  "Special purpose entity" means an entity
221established by a licensed viatical settlement provider or by a
222financing entity, which may be a corporation, partnership,
223trust, limited liability company, or other similar entity formed
224solely to provide, either directly or indirectly, access to
225institutional capital markets to a viatical settlement provider
226or financing entity. A special purpose entity may not obtain
227capital from any natural person or entity with less than $50
228million in assets and may not enter into a viatical settlement
229contract.
230     (11)  "Stranger-originated life insurance" means a practice
231or plan to initiate a life insurance policy for the benefit of a
232third-party investor who, at the time of policy origination, has
233no insurable interest in the insured. Stranger-originated life
234insurance practices include, but are not limited to, cases in
235which life insurance is purchased with resources or guarantees
236from or through a person or entity who, at the time of policy
237inception, could not lawfully initiate the policy himself,
238herself, or itself and when, at the time of inception, there is
239a verbal or written arrangement or agreement to directly or
240indirectly transfer the ownership of the policy or policy
241benefits to a third party. Trusts that are created to give the
242appearance of an insurable interest and are used to initiate
243policies for investors violate insurable interest laws and the
244prohibition against wagering on life.
245     (12)(9)  "Viatical settlement broker" means a person who,
246on behalf of a viator and for a fee, commission, or other
247valuable consideration, offers or attempts to negotiate viatical
248settlement contracts between a viator resident in this state and
249one or more viatical settlement providers. Notwithstanding the
250manner in which the viatical settlement broker is compensated, a
251viatical settlement broker is deemed to represent only the
252viator and owes a fiduciary duty to the viator to act according
253to the viator's instructions and in the best interest of the
254viator. The term does not include an attorney, licensed
255Certified Public Accountant, or investment adviser lawfully
256registered under chapter 517, who is retained to represent the
257viator and whose compensation is paid directly by or at the
258direction and on behalf of the viator.
259     (13)(10)  "Viatical settlement contract" means a written
260agreement entered into between a viatical settlement provider,
261or its related provider trust, and a viator. The viatical
262settlement contract includes an agreement to transfer ownership
263or change the beneficiary designation of a life insurance policy
264at a later date, regardless of the date that compensation is
265paid to the viator. The agreement must establish the terms under
266which the viatical settlement provider will pay compensation or
267anything of value, which compensation or value is less than the
268expected death benefit of the insurance policy or certificate,
269in return for the viator's assignment, transfer, sale, devise,
270or bequest of the death benefit or ownership of all or a portion
271of the insurance policy or certificate of insurance to the
272viatical settlement provider. The term "viatical settlement
273contract" also includes the transfer for compensation or value
274of ownership or beneficial interest in a trust or other entity
275that owns such policy if the trust or other entity was formed or
276used for the principal purpose of acquiring one or more life
277insurance contracts, which contract or contracts insure the life
278of a person residing in this state. A viatical settlement
279contract also includes a contract for a loan or other financial
280transaction secured primarily by an individual or group life
281insurance policy. The term "viatical settlement contract" does
282not include, other than a policy loan by a life insurance
283company pursuant to the terms of the life insurance contract or
284accelerated death provisions contained in a life insurance
285policy, whether issued with the original policy or as a rider,
286or a loan secured by the cash surrender value of a policy as
287determined by the policy issuer and the life insurance policy
288terms, or any loan or advance from the issuer of the policy to
289the policyowner.
290     (14)(11)  "Viatical settlement investment" has the same
291meaning as specified in s. 517.021.
292     (15)(12)  "Viatical settlement provider" means a person
293who, in this state, from this state, or with a resident of this
294state, effectuates a viatical settlement contract. The term does
295not include:
296     (a)  Any bank, savings bank, savings and loan association,
297or credit union, or other licensed lending institution that
298takes an assignment of a life insurance policy as collateral for
299a loan.
300     (b)  A life and health insurer that has lawfully issued a
301life insurance policy that provides accelerated benefits to
302terminally ill policyholders or certificateholders.
303     (c)  Any natural person who enters into no more than one
304viatical settlement contract with a viator in 1 calendar year,
305unless such natural person has previously been licensed under
306this act or is currently licensed under this act.
307     (d)  A trust that meets the definition of a "related
308provider trust."
309     (e)  A viator in this state.
310     (f)  A financing entity.
311     (16)(13)  "Viaticated policy" means a life insurance
312policy, or a certificate under a group policy, which is the
313subject of a viatical settlement contract.
314     (17)(14)  "Viator" means the owner of a life insurance
315policy or a certificateholder under a group policy, which policy
316is not a previously viaticated policy, who enters or seeks to
317enter into a viatical settlement contract. This term does not
318include a viatical settlement provider or any person acquiring a
319policy or interest in a policy from a viatical settlement
320provider, nor does it include an independent third-party trustee
321or escrow agent.
322     Section 2.  Subsections (2) and (3) of section 626.9913,
323Florida Statutes, are amended to read:
324     626.9913  Viatical settlement provider license continuance;
325annual report; fees; deposit.--
326     (2)(a)  Annually, on or before March 1, the viatical
327settlement provider licensee shall file a statement containing
328information the commission requires and shall pay to the office
329a license fee in the amount of $500.
330     (b)  In addition to any other requirements, the annual
331statement shall specify:
332     1.  The total number of unsettled viatical settlement
333contracts and corresponding total amount due viators on viatical
334settlement contracts that have been signed by the viator but
335have not been settled as of December 31 of the preceding
336calendar year, categorized by the number of days since the
337viator signed the contract for transactions regulated by this
338state.
339     2.  The total number of policies purchased in any state,
340territory, or jurisdiction; total gross amount paid for policies
341purchased in any state, territory, or jurisdiction; and the
342total face value of policies purchased for the preceding
343calendar year and most recent 5 years in any state, territory,
344or jurisdiction.
345     3.  The total number of policies purchased, total gross
346amount paid for policies purchased, total commissions or
347compensation paid for policies purchased, and total face value
348of policies purchased, allocated by state, territory, or
349jurisdiction.
350     4.  The total amount of proceeds or compensation paid to
351policyowners, allocated by state, territory, or jurisdiction.
352     (c)  After December 31, 2007, The annual statement shall
353include an annual audited financial statement of the viatical
354settlement provider prepared in accordance with generally
355accepted accounting principles by an independent certified
356public accountant covering a 12-month period ending on a day
357falling during the last 6 months of the preceding calendar year.
358If the audited financial statement has not been completed,
359however, the licensee shall include in its annual statement an
360unaudited financial statement for the preceding calendar year
361and an affidavit from an officer of the licensee stating that
362the audit has not been completed. In this event, the licensee
363shall submit the audited statement on or before June 1. The
364annual statement, due on or before March 1 each year, shall also
365provide the office with a report of all life expectancy
366providers who have provided life expectancies directly or
367indirectly to the viatical settlement provider for use in
368connection with a viatical settlement contract or a viatical
369settlement investment. A viatical settlement provider shall
370include in all statements filed with the office all information
371requested by the office regarding a related provider trust
372established by the viatical settlement provider. The office may
373require more frequent reporting. Failure to timely file the
374annual statement or the audited financial statement or to timely
375pay the license fee is grounds for immediate suspension of the
376license. The commission may by rule require all or part of the
377statements or filings required under this section to be
378submitted by electronic means in a computer-readable form
379compatible with the electronic data format specified by the
380commission.
381     (3)  To ensure the faithful performance of its obligations
382to its viators in the event of insolvency or the loss of its
383license, a viatical settlement provider licensee must deposit
384and maintain deposited in trust with the department securities
385eligible for deposit under s. 625.52, having at all times a
386value of not less than $100,000; however, a viatical settlement
387provider licensed in this state prior to June 1, 2004, which has
388deposited and maintains continuously deposited in trust with the
389department securities in the amount of $25,000 and which posted
390and maintains continuously posted a security bond acceptable to
391the department in the amount of $75,000, has until June 1, 2005,
392to comply with the requirements of this subsection.
393     Section 3.  Subsections (1) and (2) of section 626.9914,
394Florida Statutes, are amended to read:
395     626.9914  Suspension, revocation, denial, or nonrenewal of
396viatical settlement provider license; grounds; administrative
397fine.--
398     (1)  The office shall suspend, revoke, deny, or refuse to
399renew the license of any viatical settlement provider if the
400office finds that the licensee:
401     (a)  Has made a misrepresentation in the application for
402the license;
403     (b)  Has engaged in fraudulent or dishonest practices, or
404otherwise has been shown to be untrustworthy or incompetent to
405act as a viatical settlement provider;
406     (c)  Demonstrates a pattern of unreasonable payments to
407viators;
408     (d)  Has been found guilty of, or has pleaded guilty or
409nolo contendere to, any felony, or a misdemeanor involving fraud
410or moral turpitude, regardless of whether a judgment of
411conviction has been entered by the court;
412     (e)  Has issued viatical settlement contracts that have not
413been approved pursuant to this act;
414     (f)  Has failed to honor contractual obligations related to
415the business of viatical settlement contracts;
416     (g)  Deals in bad faith with viators;
417     (h)  Has violated any provision of the insurance code or of
418this act;
419     (i)  Employs any person who materially influences the
420licensee's conduct and who fails to meet the requirements of
421this act;
422     (j)  No longer meets the requirements for initial
423licensure; or
424     (k)  Obtains or utilizes life expectancies from life
425expectancy providers who are not registered with the office
426pursuant to this act; or
427     (l)  Has engaged in a fraudulent viatical settlement act.
428     (2)  The office may, in lieu of or in addition to any
429suspension or revocation, assess an administrative fine not to
430exceed $10,000 $2,500 for each nonwillful violation or $25,000
431$10,000 for each willful violation by a viatical settlement
432provider licensee. The office may also place a viatical
433settlement provider licensee on probation for a period not to
434exceed 2 years.
435     Section 4.  Subsection (1) of section 626.99175, Florida
436Statutes, is amended to read:
437     626.99175  Life expectancy providers; registration
438required; denial, suspension, revocation.--
439     (1)  After July 1, 2006, A person may not perform the
440functions of a life expectancy provider without first having
441registered as a life expectancy provider, except as provided in
442subsection (6).
443     Section 5.  Section 626.99185, Florida Statutes, is created
444to read:
445     626.99185  Disclosures to viator of disbursement.--
446     (1)  Prior to or concurrently with a viator's execution of
447a viatical settlement contract, the viatical settlement provider
448shall provide to the viator, in duplicate, a disclosure
449statement in legible written form disclosing:
450     (a)  The name of each viatical settlement broker who
451receives or is to receive compensation and the amount of each
452broker's compensation related to that transaction. For the
453purpose of this subsection, compensation includes anything of
454value paid or given by or at the direction of a viatical
455settlement provider or person acquiring an interest in one or
456more life insurance policies to a viatical settlement broker in
457connection with the viatical settlement contract.
458     (b)  A complete reconciliation of the gross offer or bid by
459the viatical settlement provider to the net amount of proceeds
460or value to be received by the viator related to that
461transaction. The terms "gross offer" or "bid" means the total
462amount or value offered by the viatical settlement provider for
463the purchase of an interest in one or more life insurance
464policies, inclusive of commissions, compensation, or other
465proceeds or value being deducted from the gross offer or bid.
466     (2)  The disclosure statement shall be signed and dated by
467the viator prior to or concurrently with the viator's execution
468of a viatical settlement contract with the duplicate copy of the
469disclosure statement to be retained by the viator.
470     (3)  If a viatical settlement contract has been entered
471into and the contract is subsequently amended or if there is any
472change in the viatical settlement provider's gross offer or bid
473amount, change in the net amount of proceeds or value to be
474received by the viator, or change in the information provided in
475the disclosure statement to the viator, the viatical settlement
476provider shall provide, in duplicate, an amended disclosure
477statement to the viator containing the information in subsection
478(1). The amended disclosure statement shall be signed and dated
479by the viator with the duplicate copy of the amended disclosure
480statement to be retained by the viator. The viatical settlement
481provider shall obtain the signed and dated amended disclosure
482statement.
483     (4)  Prior to a viatical settlement provider's execution of
484a viatical settlement contract, the viatical settlement provider
485must have obtained the signed and dated disclosure statement and
486any amended disclosure statement required by this section. In
487transactions for which no broker is used, the viatical
488settlement provider must have obtained the signed and dated
489disclosure statement from the viator.
490     (5)  The viatical settlement provider shall maintain the
491documentation required by this section pursuant to the
492provisions set forth in s. 626.9922(2) and shall make such
493documentation available to the office at any time for copying
494and inspection upon reasonable notice by the office to the
495viatical settlement provider.
496     Section 6.  Subsection (7) of section 626.9924, Florida
497Statutes, is amended to read:
498     626.9924  Viatical settlement contracts; procedures;
499rescission.--
500     (7)  At any time during the contestable period, within 20
501days after a viator executes documents necessary to transfer
502rights under an insurance policy or within 20 days of any
503agreement, option, promise, or any other form of understanding,
504express or implied, to viaticate the policy, the provider must
505give notice to the insurer of the policy that the policy has or
506will become a viaticated policy. The notice must be accompanied
507by the documents required by s. 626.99287(5)(a) in their
508entirety.
509     Section 7.  Subsection (2) of section 626.99245, Florida
510Statutes, is amended to read:
511     626.99245  Conflict of regulation of viaticals.--
512     (2)  This section does not affect the requirement of ss.
513626.9911(15)(12) and 626.9912(1) that a viatical settlement
514provider doing business from this state must obtain a viatical
515settlement license from the office. As used in this subsection,
516the term "doing business from this state" includes effectuating
517viatical settlement contracts from offices in this state,
518regardless of the state of residence of the viator.
519     Section 8.  Section 626.99273, Florida Statutes, is created
520to read:
521     626.99273  Prohibited practices and conflicts of
522interest.--
523     (1)  With respect to any viatical settlement contract or
524insurance policy, a viatical settlement broker may not knowingly
525solicit an offer from, effectuate a viatical settlement with, or
526make a sale to any viatical settlement provider, financing
527entity, or related provider trust that is controlling,
528controlled by, or under common control with such viatical
529settlement broker.
530     (2)  With respect to any viatical settlement contract or
531insurance policy, a viatical settlement provider may not
532knowingly enter into a viatical settlement contract with a
533viator if, in connection with such viatical settlement contract,
534anything of value will be paid to a viatical settlement broker
535that is controlling, controlled by, or under common control with
536such viatical settlement provider, financing entity, or related
537provider trust that is involved in such viatical settlement
538contract.
539     (3)  A violation of subsection (1) or subsection (2) is a
540fraudulent viatical settlement act.
541     (4)  A viatical settlement provider may not enter into a
542viatical settlement contract unless the viatical settlement
543promotional, advertising, and marketing materials, as may be
544prescribed by rule, have been filed with the office. In no event
545may any marketing materials expressly indicate that the
546insurance is free for any period of time. The inclusion of any
547reference in the marketing materials that would cause a viator
548to reasonably believe that the insurance is free for any period
549of time is a violation of this section.
550     (5)  A life insurance producer, insurer, viatical
551settlement broker, or viatical settlement provider may not make
552any statement or representation to an applicant or policyholder
553in connection with the sale of a life insurance policy to the
554effect that the insurance is free or without cost to the
555policyholder for any period of time.
556     Section 9.  Section 626.99275, Florida Statutes, is amended
557to read:
558     626.99275  Prohibited practices; penalties.--
559     (1)  It is unlawful for any person to:
560     (a)  To Knowingly enter into, broker, or otherwise deal in
561a viatical settlement contract the subject of which is a life
562insurance policy, knowing that the policy was obtained by
563presenting materially false information concerning any fact
564material to the policy or by concealing, for the purpose of
565misleading another, information concerning any fact material to
566the policy, where the viator or the viator's agent intended to
567defraud the policy's issuer.
568     (b)  To Knowingly or with the intent to defraud, for the
569purpose of depriving another of property or for pecuniary gain,
570issue or use a pattern of false, misleading, or deceptive life
571expectancies.
572     (c)  To Knowingly engage in any transaction, practice, or
573course of business intending thereby to avoid the notice
574requirements of s. 626.9924(7).
575     (d)  To Knowingly or intentionally facilitate the change of
576state of residency of a viator to avoid the provisions of this
577chapter.
578     (e)  Engage in a fraudulent viatical settlement act.
579     (2)  A person who violates any provision of this section
580commits:
581     (a)  A felony of the third degree, punishable as provided
582in s. 775.082, s. 775.083, or s. 775.084, if the insurance
583policy involved is valued at any amount less than $20,000.
584     (b)  A felony of the second degree, punishable as provided
585in s. 775.082, s. 775.083, or s. 775.084, if the insurance
586policy involved is valued at $20,000 or more, but less than
587$100,000.
588     (c)  A felony of the first degree, punishable as provided
589in s. 775.082, s. 775.083, or s. 775.084, if the insurance
590policy involved is valued at $100,000 or more.
591     (3)  It is a violation of this section for any person to
592enter into a viatical settlement contract at any time prior to
593the application or issuance of a policy that is the subject of a
594viatical settlement contract or within a 5-year period
595commencing with the date of issuance of the insurance policy or
596certificate, unless the viator provides a sworn affidavit and
597accompanying documentation that certifies to the viatical
598settlement provider that one or more of the following conditions
599have been met within the 5-year period:
600     (a)  The policy was issued upon the viator's exercise of
601conversion rights arising out of a group or individual policy,
602provided the total of the time covered under the conversion
603policy plus the time covered under the prior policy is at least
60460 months. The time covered under a group policy shall be
605calculated without regard to any change in insurance carriers,
606provided the coverage has been continuous and under the same
607group sponsorship;
608     (b)  The viator submits independent evidence to the
609viatical settlement provider that one or more of the following
610conditions have been met within the 5-year period:
611     1.  The viator or insured is terminally or chronically ill;
612     2.  The viator's spouse dies;
613     3.  The viator divorces his or her spouse;
614     4.  The viator retires from full-time employment;
615     5.  The viator becomes physically or mentally disabled and
616a physician determines that the disability prevents the viator
617from maintaining full-time employment; or
618     6.  A final order, judgment, or decree is entered by a
619court of competent jurisdiction, upon the application by a
620viator's creditor, adjudicating the viator bankrupt or insolvent
621or approving a petition seeking reorganization of the viator or
622appointing a receiver, trustee, or liquidator to all or a
623substantial part of the viator's assets; or
624     (c)  The viator enters into a viatical settlement contract
625more than 2 years after a policy's issuance date and, with
626respect to the policy, at all times prior to such date the
627following conditions are met:
628     1.  Policy premiums have been funded exclusively with
629unencumbered assets, including an interest in the life insurance
630policy being financed only to the extent of its net cash
631surrender value provided by, or full recourse liability incurred
632by, the insured.
633     2.  There is no agreement or understanding with any other
634person to guarantee any such liability or to purchase, or be
635ready to purchase, the policy, including through an assumption
636or forgiveness of the loan.
637     3.  Neither the insured nor the policy has been evaluated
638for settlement.
639     (4)  It is a violation of this section for any person to
640issue, solicit, market, or otherwise promote the purchase of a
641policy for the purpose of or with an emphasis on selling the
642policy.
643     Section 10.  Section 626.99276, Florida Statutes, is
644created to read:
645     626.99276  Notification to insurer required.--
646     (1)  A copy of the sworn affidavit and the documentation
647required in s. 626.99275(3) shall be submitted to the insurer
648when the viatical settlement provider or other party entering
649into a viatical settlement contract with a viator submits a
650request to the insurer for verification of coverage. The copy
651shall be accompanied by a sworn affidavit from the viatical
652settlement provider affirming that the copy is a true and
653correct copy of the documents received by the viatical
654settlement provider.
655     (2)  If the viatical settlement provider submits to the
656insurer a copy of the owner's or insured's certification
657described in and the independent evidence required by s.
658626.99275(3) when the provider submits a request to the insurer
659to effect the transfer of the policy or certificate to the
660viatical settlement provider, the copy conclusively establishes
661that the viatical settlement contract satisfies the requirements
662of this section and the insurer shall timely respond to the
663request.
664     (3)  An insurer may not require, as a condition of
665responding to a request for verification of coverage or
666effecting the transfer of a policy pursuant to a viatical
667settlement contract, that the viator, insured, viatical
668settlement provider, or viatical settlement broker sign any
669forms, disclosures, consent, or waiver form that has not been
670expressly approved by the office for use in connection with
671viatical settlement contracts in this state.
672     (4)  Upon receipt of a properly completed request for
673change of ownership or beneficiary of a policy, the insurer
674shall respond in writing within 30 calendar days with written
675acknowledgement confirming that the change has been effectuated
676or specifying the reasons why the requested change cannot be
677processed. The insurer may not unreasonably delay effectuating
678change of ownership or beneficiary and may not otherwise seek to
679interfere with any viatical settlement contract lawfully entered
680into in this state.
681     Section 11.  Section 626.99278, Florida Statutes, is
682amended to read:
683     626.99278  Viatical provider anti-fraud plan.--
684     (1)  Every licensed viatical settlement provider and
685registered life expectancy provider must adopt an anti-fraud
686plan and file it with the Division of Insurance Fraud of the
687department. Each anti-fraud plan shall include:
688     (a)(1)  A description of the procedures for detecting and
689investigating possible fraudulent acts and procedures for
690resolving material inconsistencies between medical records and
691insurance applications.
692     (b)(2)  A description of the procedures for the mandatory
693reporting of possible fraudulent insurance acts and prohibited
694practices set forth in s. 626.99275 to the Division of Insurance
695Fraud of the department.
696     (c)(3)  A description of the plan for anti-fraud education
697and training of its underwriters or other personnel.
698     (d)(4)  A written description or chart outlining the
699organizational arrangement of the anti-fraud personnel who are
700responsible for the investigation and reporting of possible
701fraudulent insurance acts and for the investigation of
702unresolved material inconsistencies between medical records and
703insurance applications.
704     (e)(5)  For viatical settlement providers, a description of
705the procedures used to perform initial and continuing review of
706the accuracy of life expectancies used in connection with a
707viatical settlement contract or viatical settlement investment.
708     (2)  Every licensed viatical settlement provider shall
709establish and maintain in accordance with the provisions of s.
710626.9922:
711     (a)  Documentation of compliance with its anti-fraud plan
712and procedures filed in accordance with this section.
713     (b)  Documentation pertaining to resolved and unresolved
714material inconsistencies between medical records and insurance
715applications.
716     (c)  Documentation pertaining to the mandatory reporting of
717possible fraudulent acts and prohibited practices set forth in
718s. 626.99275 to the Division of Insurance Fraud of the
719department.
720     Section 12.  Section 626.99289, Florida Statutes, is
721created to read:
722     626.99289  Void and unenforceable contracts, agreements,
723arrangements, and transactions.--Any contract, agreement,
724arrangement, or transaction, including, but not limited to, any
725financing agreement or any other arrangement or understanding
726entered into, whether written or verbal, for the furtherance or
727aid of a stranger-originated life insurance act, practice,
728arrangement, or agreement is void and unenforceable.
729     Section 13.  Section 626.99287, Florida Statutes, is
730repealed.
731     Section 14.  This act shall take effect July 1, 2009.


CODING: Words stricken are deletions; words underlined are additions.