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Introduced Version House Bill 2534 History

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Key: Green = existing Code. Red = new code to be enacted
H. B. 2534


(By Delegates Perry, Shook, Ashley, Azinger,
Walters and Moore)
[Introduced February 17, 2009; referred to the
Committee on Banking and Insurance then the Judiciary.]



A BILL to amend and reenact §33-13C-3 and §33-13C-16 of the Code of West Virginia, 1931, as amended, all relating to viatical settlements; adding alternative means for satisfying financial requirements for the licensing of viatical settlement brokers; and making criminal provisions applicable to any person.

Be it enacted by the Legislature of West Virginia:
That §33-13C-3 and §33-13C-16 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 13C. VIATICAL SETTLEMENTS ACT.
§33-13C-3. License and bond requirements.
(a) (1) A person shall may not operate as a viatical settlement provider or viatical settlement broker without first obtaining a license from the commissioner.
(2) (A) An insurance producer who is authorized to sell life insurance in this state pursuant to a resident or nonresident license issued in accordance with the provisions of article twelve of this chapter may operate as a viatical settlement broker without obtaining a license pursuant to this section if the viatical settlement activities of the producer are incidental to the producer's insurance business activities.
(B) The insurer that issued the policy being viaticated shall is not be responsible for any act or omission of a viatical settlement broker or viatical settlement provider arising out of or in connection with the viatical settlement transaction, unless the insurer receives compensation for the placement of a viatical settlement contract from the viatical settlement provider or viatical settlement broker in connection with the viatical settlement contract.
(3) A person licensed as an attorney, certified public accountant or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator, whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate viatical settlement contracts on behalf of the viator without having to obtain a license as a viatical settlement broker.
(b) Application for a viatical settlement provider or viatical settlement broker license and for renewals of such the licenses shall be made in the manner prescribed by the commissioner and shall be accompanied by fees established in legislative rules, including emergency rules, promulgated by the commissioner.
(c) The commissioner shall have has authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members and employees, and the commissioner may, in the exercise of the commissioner's discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner or member thereof of the entity who may materially influence the applicant's conduct meets the standards of this article.
(d) The commissioner shall make an investigation of each applicant and issue a license if the commissioner finds that the applicant:
(1) If a viatical settlement provider, has provided a detailed plan of operation;
(2) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;
(3) Has a good business reputation and has had experience, training or education so as to be qualified in the business for which the license is applied for;
(4) Has demonstrated evidence of financial responsibility in a format prescribed by the commissioner by possessing a minimum equity of not less than $250,000 in cash or cash equivalents reflected in the applicant's audited financial statements or through a surety bond executed and issued by an insurer authorized to issue surety bonds in this state in the amount of $250,000: Provided, That the commissioner shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this paragraph have been filed with a state in which the applicant is licensed as a viatical settlement provider or viatical settlement broker may permit an applicant for a broker's license to demonstrate evidence of financial responsibility through a policy of insurance covering legal liability resulting from erroneous acts or failure to act in their capacity as a viatical settlement broker and inuring to the benefit of any aggrieved party as the result of any single occurrence in the sum of not less than $20,000 and $100,000 in the aggregate for all occurrences within one year. Any surety bond issued pursuant to this subdivision shall be in the favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of erroneous acts, failure to act, conviction of fraud or conviction of unfair practices by the viatical settlement provider or viatical settlement broker. The commissioner shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this paragraph have been filed with a state in which the applicant is licensed as a viatical settlement provider or viatical settlement broker. The commissioner may ask for evidence of financial responsibility at any time he or she deems considers it necessary.
(5) If a legal entity, has provided a certificate of good standing from the state of its domicile; and
(6) Has provided an antifraud plan that meets the requirements of subsection (g), section fourteen of this article.
(e) The commissioner shall may not issue a license to a nonresident applicant unless the applicant files with the commissioner either a written designation of an agent for service of process or the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner.
(f) A viatical settlement provider or viatical settlement broker shall provide to the commissioner new or revised information about officers, ten percent or more stockholders, partners, directors, members or designated employees within thirty days of the change.
(g) An individual licensed as a viatical settlement broker shall complete on a biennial basis fifteen hours of training related to viatical settlements and viatical settlement transactions, as required by the commissioner. A life insurance producer operating as a viatical settlement broker pursuant to subdivision (2), subsection (a) of this section shall is not be subject to the requirements of this subsection. Any person failing to meet the requirements of this subsection shall be is subject to the penalties imposed by the commissioner.
§33-13C-16. Criminal penalties.
(a) A viator person convicted of a fraudulent viatical settlement act is guilty of a felony and, upon conviction thereof, shall be sentenced as follows:
(1) Imprisonment in a state correctional facility for not more than twenty years or payment of a fine of not more than $100,000, or both, if the value of the viatical settlement contract is more than $35,000;
(2) Imprisonment in a state correctional facility for not more than ten years or to payment of a fine of not more than $20,000, or both if the value of the viatical settlement contract is more than $2,500, but not more than $35,000;
(3) Imprisonment in a state correctional facility for not more than five years or payment of a fine of not more than $10,000, or both, if the value of the viatical settlement contract is more than $500, but not more than $2,500.
(b) Any person who violates any other provision of this article is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $1,000 or confined in jail not more than one year, or both fined and imprisoned confined.


NOTE: The purpose of this bill is to provide an alternative means for viatical settlement brokers to provide evidence of financial security and to expand the criminal provisions to all persons convicted of a violation of the Viatical Settlement Act.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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