Section 626.10 - Fraud prevention and control(a) Fraudulent viatical settlement acts, interference and participation of convicted felons prohibited.--(1) A person shall not commit a fraudulent viatical settlement act.(2) A person shall not knowingly or intentionally interfere with the enforcement of the provisions of this act or investigations of suspected or actual violations of this act.(3) A person in the business of viatical settlements shall not knowingly or intentionally permit any person convicted of a felony to effectuate the business of viatical settlements.(b) Fraud warning required.-- (1) Viatical settlement contracts and applications for viatical settlements, regardless of the form of transmission, shall contain the following statement: Any person who knowingly and with the intent to defraud another presents or causes to be presented any statement forming a part of or in support of an application for insurance or viatical settlement contract any false, incomplete or misleading information concerning any fact or thing material to the insurance policy or viatical settlement contract, or any claim thereunder, commits a fraudulent viatical settlement act and is subject to civil and criminal penalties.
(2) The lack of a statement as required in paragraph (1) does not constitute a defense in any prosecution for a fraudulent viatical settlement act.(c) Mandatory reporting.-- (1) Any person engaged in the business of viatical settlements having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed shall within 30 days make a written report of that information to a Federal, State or local criminal law enforcement agency and provide to the commissioner that information in a manner prescribed by the commissioner.(2) Any other person having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed may provide to the commissioner the information required by and in a manner prescribed by the commissioner.(d) Immunity from liability.-- (1) No civil liability shall be imposed on and no cause of action shall arise from a person's furnishing information concerning suspected, anticipated or completed fraudulent viatical settlement acts or suspected or completed fraudulent insurance acts if the information is provided to or received from:(i) the commissioner or the commissioner's employees, agents or representatives;(ii) Federal, State or local law enforcement or regulatory officials or their employees, agents or representatives;(iii) a person involved in the prevention and detection of fraudulent viatical settlement acts or that person's agents, employees or representatives;(iv) the National Association of Insurance Commissioners (NAIC), National Association of Securities Dealers (NASD), the North American Securities Administrators Association (NASAA) or the United States Securities and Exchange Commission or their employees, agents or representatives, or other regulatory body overseeing life insurance, viatical settlements, securities or investment fraud; or(v) the life insurer that issued the life insurance policy covering the life of the insured.(2) Paragraph (1) shall not apply to statements made with actual malice.(3) A person identified in paragraph (1) shall be entitled to an award of attorney fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of activities in carrying out the provisions of this act and the party bringing the action was not substantially justified in doing so. For the purpose of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.(4) This section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in paragraph (1).(e) Confidentiality.-- (1) The documents and evidence provided pursuant to subsection (c) or obtained by the commissioner in an investigation of suspected or actual fraudulent viatical settlement acts shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil action.(2) Paragraph (1) does not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent viatical settlement acts: (i) in administrative or judicial proceedings to enforce laws administered by the commissioner;(ii) to Federal, State or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent viatical settlement acts or to the NAIC;(iii) at the discretion of the commissioner, to a person in the business of viatical settlement that is aggrieved by a fraudulent viatical settlement act.(3) Release of documents and evidence under paragraph (2) does not abrogate or modify the privilege granted in paragraph (1).(f) Other law enforcement or regulatory authority.--This act shall not: (1) preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine and prosecute suspected violations of law;(2) prevent or prohibit a person from voluntarily disclosing information concerning viatical settlement fraud to a law enforcement or regulatory agency other than the insurance department; or(3) limit the powers granted elsewhere by the laws of this Commonwealth to the commissioner, the department or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.(g) Viatical settlement antifraud initiatives.--(1) Viatical settlement providers shall within 60 days of licensure and annually by March 31 of each year thereafter certify to the department implementation of antifraud initiatives reasonably calculated to detect, investigate, prevent and report fraudulent viatical settlement acts. Antifraud initiatives shall include: (i) Hiring of individuals qualified by experience and education for the investigation of fraudulent viatical settlement acts, including the viatical settlement provider's criteria and rationale for securing the services of such individuals.(ii) An antifraud plan that includes: (A) A description of the procedures for detecting and investigating actual or possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications.(B) A description of the procedures for reporting possible fraudulent viatical settlement acts to the department and any appropriate law enforcement agency.(C) Procedures to prevent fraudulent viatical settlement acts, including fraud awareness, detection and antifraud education and training of underwriters and other personnel.(D) A description of the viatical settlement provider's organizational structure and key personnel, including antifraud personnel who are responsible for the investigation and reporting of possible fraudulent viatical settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.(2) A statistical reporting on the number of viatical settlement applications, viatical settlement contracts and actual or potential viatical settlement fraudulent acts that relate to the business of viatical settlements occurring within this Commonwealth. This statistical reporting shall accompany the initial and annual antifraud initiative certification submitted to the department.(h) Antifraud plan confidential.--Antifraud certifications, plans and reports submitted to the department shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.2002, July 4, P.L. 699, No. 107, § 10, effective in 180 days.