Florida Senate - 2017                                    SB 1600
       
       
        
       By Senator Young
       
       
       
       
       
       18-01216-17                                           20171600__
    1                        A bill to be entitled                      
    2         An act relating to viatical settlement contracts;
    3         amending s. 626.9911, F.S.; defining the terms
    4         “fraudulent viatical settlement act” and “recklessly”
    5         for purposes of provisions relating to the Viatical
    6         Settlement Act; amending ss. 626.9924 and 626.99245,
    7         F.S.; conforming cross-references; amending s.
    8         626.99275, F.S.; providing additional prohibited acts
    9         related to viatical settlement contracts; amending s.
   10         626.99287, F.S.; extending the period in which
   11         viatical settlement contracts are void and
   12         unenforceable; revising conditions and requirements in
   13         which viatical settlement contracts entered into
   14         within a specified time period are valid and
   15         enforceable; deleting provisions related to the
   16         transfer of insurance policies or certificates to
   17         viatical settlement providers; creating s. 626.99289,
   18         F.S.; defining the term “stranger-originated life
   19         insurance practice”; providing that specified acts and
   20         transactions relating to stranger-originated life
   21         insurance practices are void and unenforceable;
   22         authorizing a life insurer to contest policies
   23         obtained through such practices; providing an
   24         effective date.
   25          
   26  Be It Enacted by the Legislature of the State of Florida:
   27  
   28         Section 1. Subsections (2) through (14) of section
   29  626.9911, Florida Statutes, are renumbered as subsections (3)
   30  through (15), respectively, and a new subsection (2) is added to
   31  that section, to read:
   32         626.9911 Definitions.—As used in this act, the term:
   33         (2)“Fraudulent viatical settlement act” means an act or
   34  omission of a person or the person’s employees or agents who
   35  knowingly or with the intent to defraud, for the purpose of
   36  depriving another of property or for pecuniary gain:
   37         (a)Presents, causes to be presented, or prepares with the
   38  knowledge or belief a document or information listed in this
   39  paragraph knowing that the document or information contains
   40  false or concealed material information as part of, in support
   41  of, or concerning a fact that is material to it:
   42         1.An application for the issuance of a viatical settlement
   43  contract or an insurance policy.
   44         2.The underwriting of a viatical settlement contract or an
   45  insurance policy.
   46         3.A claim for payment or benefit pursuant to a viatical
   47  settlement contract or an insurance policy.
   48         4.A premium paid on an insurance policy.
   49         5.A change in ownership or beneficiary for a viatical
   50  settlement contract or an insurance policy.
   51         6.The reinstatement or conversion of an insurance policy.
   52         7.The solicitation, offer, effectuation, or sale of a
   53  viatical settlement contract or an insurance policy.
   54         8.The written evidence of a viatical settlement contract
   55  or an insurance policy.
   56         9.A financing transaction.
   57         (b)Uses a plan, financial structure, device, scheme, or
   58  artifice to defraud another person in a viatical settlement
   59  contract.
   60         (c)Engages in a stranger-originated life insurance
   61  practice in violation of s. 626.99289.
   62         (d)Fails to disclose upon request by a viatical settlement
   63  provider that the prospective insured’s life expectancy has been
   64  evaluated by a person other than the provider or its authorized
   65  representatives in connection with the issuance of the contract.
   66         (e)Perpetuates a fraud or prevents the detection of a
   67  fraud by:
   68         1.Removing, concealing, altering, destroying, or
   69  sequestering the assets or records of a licensee or other person
   70  engaged in the business of viatical settlements from the office.
   71         2.Misrepresenting or concealing the financial condition of
   72  a licensee, financing entity, insurer, or other person.
   73         3.Transacting business relating to viatical settlement
   74  contracts in violation of this part.
   75         4.Filing with the office or the equivalent chief insurance
   76  regulatory official of another jurisdiction documents that
   77  contain false information or concealing information about a
   78  material fact from the office or such other regulatory official.
   79         (f)Embezzles, steals, or misappropriates moneys, funds,
   80  premiums, credits, or other property of a viatical settlement
   81  provider, insurer, insured, viator, insurance policyholder, or
   82  other person engaged in the business of viatical settlement
   83  contracts or insurance.
   84         (g)Recklessly enters, negotiates, brokers, or otherwise
   85  deals in a viatical settlement contract based on false or
   86  misleading information to defraud the policy’s issuer, a
   87  viatical settlement provider, or a viator. As used in this
   88  paragraph, the term “recklessly” means an act or failure to act
   89  with conscious disregard of the relevant facts or risks that
   90  grossly deviates from acceptable standards of conduct.
   91         (h)Facilitates in the change of a viator’s state of
   92  residency from this state to another state by transferring the
   93  ownership of an insurance policy to a trust or other instruments
   94  to avoid requirements of this part.
   95         (i)Applies for or obtains a loan that is secured directly
   96  or indirectly by an interest in a life insurance policy.
   97         (j)Attempts to commit, assists, aids, or abets in the
   98  commission of or conspires to commit an act or omission
   99  described in this subsection.
  100         Section 2. Subsection (7) of section 626.9924, Florida
  101  Statutes, is amended to read:
  102         626.9924 Viatical settlement contracts; procedures;
  103  rescission.—
  104         (7) At any time during the contestable period, within 20
  105  days after a viator executes documents necessary to transfer
  106  rights under an insurance policy or within 20 days of any
  107  agreement, option, promise, or any other form of understanding,
  108  express or implied, to viaticate the policy, the provider must
  109  give notice to the insurer of the policy that the policy has or
  110  will become a viaticated policy. The notice must be accompanied
  111  by the documents required by s. 626.99287 626.99287(5)(a) in
  112  their entirety.
  113         Section 3. Subsection (2) of section 626.99245, Florida
  114  Statutes, is amended to read:
  115         626.99245 Conflict of regulation of viaticals.—
  116         (2) This section does not affect the requirement of ss.
  117  626.9911(13) 626.9911(12) and 626.9912(1) that a viatical
  118  settlement provider doing business from this state must obtain a
  119  viatical settlement license from the office. As used in this
  120  subsection, the term “doing business from this state” includes
  121  effectuating viatical settlement contracts from offices in this
  122  state, regardless of the state of residence of the viator.
  123         Section 4. Subsection (1) of section 626.99275, Florida
  124  Statutes, is amended to read:
  125         626.99275 Prohibited practices; penalties.—
  126         (1) It is unlawful for a any person to:
  127         (a) To Knowingly enter into, broker, or otherwise deal in a
  128  viatical settlement contract the subject of which is a life
  129  insurance policy, knowing that the policy was obtained by
  130  presenting materially false information concerning any fact
  131  material to the policy or by concealing, for the purpose of
  132  misleading another, information concerning any fact material to
  133  the policy, where the viator or the viator’s agent intended to
  134  defraud the policy’s issuer.
  135         (b) To Knowingly or with the intent to defraud, for the
  136  purpose of depriving another of property or for pecuniary gain,
  137  issue or use a pattern of false, misleading, or deceptive life
  138  expectancies.
  139         (c) To Knowingly engage in any transaction, practice, or
  140  course of business intending thereby to avoid the notice
  141  requirements of s. 626.9924(7).
  142         (d) To Knowingly or intentionally facilitate the change of
  143  state of residency of a viator to avoid the provisions of this
  144  chapter.
  145         (e)Knowingly enter into a viatical settlement contract
  146  before the application for or issuance of a viaticated policy,
  147  or within 5 years after the date of the viaticated policy unless
  148  the viator complied with s. 626.99287.
  149         (f)Engage in a fraudulent viatical settlement act, as
  150  defined in s. 626.9911.
  151         (g)Knowingly issue, solicit, market, or otherwise promote
  152  the purchase of a life insurance policy for the purpose of, or
  153  with an emphasis on, selling the policy.
  154         (h)Engage in a stranger-originated life insurance practice
  155  as provided in s. 626.99289.
  156         Section 5. Section 626.99287, Florida Statutes, is amended
  157  to read:
  158         626.99287 Contestability of viaticated policies.—Except as
  159  hereinafter provided, if a viatical settlement contract is
  160  entered into within 5 years after the 2-year period commencing
  161  with the date of issuance of the insurance policy or certificate
  162  to be acquired, the viatical settlement contract is void and
  163  unenforceable by either party. However Notwithstanding this
  164  limitation, such a viatical settlement contract is not void and
  165  unenforceable if the viator provides a sworn affidavit with
  166  supporting documentation to a viatical settlement provider which
  167  certifies one or more of the following conditions apply within 5
  168  years after the date of issuance of the insurance policy or
  169  certificate:
  170         (1) The policy was issued upon the owner’s exercise of
  171  conversion rights arising out of a group or term policy that has
  172  been in effect for at least 60 months. The time covered under a
  173  group policy is calculated without regard to change in insurance
  174  carriers if the coverage has been continuous and under the same
  175  group sponsorship.;
  176         (2) The owner of the policy is a charitable organization
  177  exempt from taxation under 26 U.S.C. s. 501(c)(3).;
  178         (3) The owner of the policy is not a natural person.;
  179         (4)The viatical settlement contract was entered into
  180  before July 1, 2000;
  181         (4)(5) The viator certifies by producing independent
  182  evidence to the viatical settlement provider that one or more of
  183  the following conditions apply within 5 years after the date of
  184  issuance of the insurance policy or certificate have been met
  185  within the 2-year period:
  186         (a)1. The viator or insured is terminally or chronically
  187  ill diagnosed with an illness or condition that is either:
  188         a.Catastrophic or life threatening; or
  189         b.Requires a course of treatment for a period of at least
  190  3 years of long-term care or home health care; and
  191         2. the condition was not known to the insured at the time
  192  the life insurance contract was entered into;.
  193         (b) The viator’s spouse dies;
  194         (c) The viator divorces his or her spouse;
  195         (d) The viator retires from full-time employment;
  196         (e) The viator becomes physically or mentally disabled and
  197  a physician determines that the disability prevents the viator
  198  from maintaining full-time employment;
  199         (f) The owner of the policy was the insured’s employer at
  200  the time the policy or certificate was issued and the employment
  201  relationship terminated;
  202         (g) A final order, judgment, or decree is entered by a
  203  court of competent jurisdiction, on the application of a
  204  creditor of the viator, adjudicating the viator bankrupt or
  205  insolvent, or approving a petition seeking reorganization of the
  206  viator or appointing a receiver, trustee, or liquidator to all
  207  or a substantial part of the viator’s assets; or
  208         (h) The viator experiences a significant decrease in income
  209  which is unexpected by the viator and which impairs his or her
  210  reasonable ability to pay the policy premium.
  211         (5)The viator entered into a viatical settlement contract
  212  2 years after the viaticated policy’s issuance date and during
  213  that period, the viator:
  214         (a)Continuously funded the policy premiums exclusively
  215  with unencumbered assets of the viator, which may include the
  216  net surrender value of the life insurance policy being financed.
  217         (b)Did not enter into an agreement or understanding with
  218  another person to guarantee the liability, purchase, assumption,
  219  or forgiveness of a loan on a viatical settlement contract or a
  220  viaticated policy.
  221         (c)The insured and the policy were not evaluated for
  222  settlement.
  223  
  224  If the viatical settlement provider submits to the insurer a
  225  copy of the viator’s or owner’s certification described above,
  226  then the provider submits a request to the insurer to effect the
  227  transfer of the policy or certificate to the viatical settlement
  228  provider, the viatical settlement agreement shall not be void or
  229  unenforceable by operation of this section. The insurer shall
  230  timely respond to such request. Nothing in this section shall
  231  prohibit an insurer from exercising its right during the
  232  contestability period to contest the validity of any policy on
  233  grounds of fraud.
  234         Section 6. Section 626.99289, Florida Statutes, is created
  235  to read:
  236         626.99289Stranger-originated life insurance.—
  237         (1)As used in this section, the term “stranger-originated
  238  life insurance practice” means an act, practice, arrangement, or
  239  agreement to initiate a life insurance policy for the benefit of
  240  a third-party investor who does not have an insurable interest
  241  in the insured at the time the policy originated. Stranger
  242  originated life insurance practices include, but are not limited
  243  to:
  244         (a)The purchase of a life insurance policy with resources
  245  or guarantees from or through a person who, at the time of such
  246  policy’s inception, is not lawfully able to execute an
  247  arrangement or agreement to directly or indirectly transfer the
  248  ownership, or benefits of such a policy to a third party.
  249         (b)The creation of a trust or other entity intended to
  250  create the appearance of having an insurable interest that
  251  would, if such an entity had such an interest, allow the trust
  252  or entity to initiate and execute a life insurance policy, when
  253  the entity has no such interest.
  254         (2)Notwithstanding s. 627.455, a written or verbal
  255  contract, agreement, arrangement, or transaction, including, but
  256  not limited to, a financing agreement, arrangement, or
  257  understanding, entered into to further or aid a stranger
  258  originated life insurance practice is void and unenforceable.
  259         (3)A life insurer may contest a life insurance policy that
  260  was obtained by a stranger-originated life insurance practice.
  261         Section 7. This act shall take effect upon becoming a law.