House Bill hb0193c3
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Florida House of Representatives - 2002 CS/CS/CS/HB 193
By the Council for Competitive Commerce, and Committees on
Judicial Oversight, Insurance and Representatives Gannon and
Kallinger
1 A bill to be entitled
2 An act relating to insurer rehabilitation and
3 liquidation; amending s. 626.9541, F.S.;
4 correcting a cross reference; amending s.
5 631.001, F.S.; revising construction and
6 purpose provisions; amending s. 631.011, F.S.;
7 providing additional definitions; revising
8 certain definitions; creating s. 631.015, F.S.;
9 providing for reciprocity; creating s. 631.025,
10 F.S.; specifying application to certain persons
11 and entities; amending s. 631.041, F.S.;
12 correcting a cross reference; creating s.
13 631.042, F.S.; limiting application of certain
14 time restrictions; providing for tolling
15 certain time limitations in certain actions;
16 amending s. 631.141, F.S.; authorizing the
17 Department of Insurance to exercise certain
18 third-party rights; providing an exception;
19 amending s. 631.154, F.S.; including certain
20 assets within provisions authorizing a receiver
21 to take certain actions; including certain
22 costs and expenses of the department in costs
23 and expenses entitled to be recovered by the
24 receiver under certain circumstances; creating
25 s. 631.156, F.S.; providing for investigations
26 by the department; providing department powers;
27 authorizing the department to provide certain
28 information in such investigations; requiring a
29 receivership court to order expedited discovery
30 under certain circumstances; providing for
31 penalties; creating s. 631.157, F.S.; providing
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1 for civil actions by receivers; imposing
2 liability on certain persons or entities for
3 certain actions; specifying amounts of damages;
4 providing construction; providing costs and
5 expenses entitled to be recovered by the
6 receiver under certain circumstances; providing
7 a time certain for bringing certain actions;
8 creating s. 631.3915, F.S.; authorizing the
9 department to pursue actions for damages or
10 recoveries; amending s. 631.54, F.S.; revising
11 a definition; amending s. 631.57, F.S.; vesting
12 the Florida Insurance Guaranty Association with
13 the defenses of certain insolvent insurers;
14 amending s. 631.904, F.S.; revising a
15 definition; creating s. 817.2341, F.S.;
16 specifying certain activities relating to false
17 or misleading financial statements or
18 supporting documents as criminal offenses;
19 providing penalties; repealing s. 624.3101,
20 F.S., relating to false or misleading financial
21 statements or supporting documents; providing
22 an effective date.
23
24 Be It Enacted by the Legislature of the State of Florida:
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26 Section 1. Paragraph (w) of subsection (1) of section
27 626.9541, Florida Statutes, is amended to read:
28 626.9541 Unfair methods of competition and unfair or
29 deceptive acts or practices defined.--
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1 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR
2 DECEPTIVE ACTS.--The following are defined as unfair methods
3 of competition and unfair or deceptive acts or practices:
4 (w) Soliciting or accepting new or renewal insurance
5 risks by insolvent or impaired insurer prohibited; penalty.--
6 1. Whether or not delinquency proceedings as to the
7 insurer have been or are to be initiated, but while such
8 insolvency or impairment exists, no director or officer of an
9 insurer, except with the written permission of the Department
10 of Insurance, shall authorize or permit the insurer to solicit
11 or accept new or renewal insurance risks in this state after
12 such director or officer knew, or reasonably should have
13 known, that the insurer was insolvent or impaired. "Impaired"
14 includes impairment of for capital or surplus, as defined in
15 s. 631.011(12)(9) and (13)(10).
16 2. Any such director or officer, upon conviction of a
17 violation of this paragraph, is guilty of a felony of the
18 third degree, punishable as provided in s. 775.082, s.
19 775.083, or s. 775.084.
20 Section 2. Section 631.001, Florida Statutes, is
21 amended to read:
22 631.001 Title, construction, and purpose.--
23 (1) This part constitutes and may be cited as the
24 "Insurers Rehabilitation and Liquidation Act."
25 (2) This part may not be interpreted to limit the
26 powers granted the Department of Insurance by other provisions
27 of law.
28 (2)(3) This part shall be liberally construed to
29 effect the purposes of this part purpose stated in subsection
30 (4).
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1 (3)(4) The purposes purpose of this part, which are
2 integral elements of the regulation of the business of
3 insurance and are of vital public interest and concern, are
4 to:
5 (a) Protect is the protection of the interests of
6 policyholders insureds, creditors, and other claimants and the
7 public.
8 (b) Provide a comprehensive scheme for administering
9 insurer receiverships. generally, through:
10 (c)(a) Detect Early detection of any potentially
11 dangerous condition in an insurer and promptly apply prompt
12 application of appropriate corrective measures. which are
13 neither unduly harsh nor subject to unwarranted publicity
14 needlessly damaging to the insurer;
15 (d)(b) Implement improved methods for rehabilitating
16 insurers, which methods involve the cooperation and management
17 expertise of the insurance industry.;
18 (e)(c) Enhance the Enhanced efficiency and economy of
19 the liquidation process by clarifying through clarification
20 and specification of the law to minimize legal uncertainty and
21 litigation.;
22 (f)(d) Establish a system to equitably apportion
23 Equitable apportionment of any unavoidable loss.; and
24 (g)(e) Administer insurer receiverships more
25 efficiently on an interstate and international basis Lessening
26 the problems of interstate rehabilitation and liquidation by
27 facilitating cooperation between states in the liquidation
28 process and by extending extension of the scope of personal
29 jurisdiction over debtors of the insurer outside this state.
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1 (h) Maximize recovery of assets for the benefit of the
2 insurer's estate; policyholders, creditors, and other
3 claimants; and the public.
4 (5) The Insurers Rehabilitation and Liquidation Act
5 shall be so interpreted and construed as to effectuate its
6 general purpose to make uniform the law of those states which
7 in substance and effect enact the Insurers Rehabilitation and
8 Liquidation Act. To the extent that the provisions of the
9 Insurers Rehabilitation and Liquidation Act, when applicable,
10 conflict with other provisions of this chapter, the provisions
11 of such act shall control.
12 Section 3. Section 631.011, Florida Statutes, is
13 amended to read:
14 631.011 Definitions.--For the purpose of this part,
15 the term:
16 (1) "Affiliate" means any entity which exercises
17 control over or is controlled by the insurer, directly or
18 indirectly through:
19 (a) Equity ownership of voting securities;
20 (b) Common managerial control; or
21 (c) Collusive participation by the management of the
22 insurer and affiliate in the management of the insurer or the
23 affiliate.
24 (2) "Ancillary state" means, any state other than a
25 domiciliary state.
26 (3) "Assets," as used in this section subsections
27 (8)-(10), means only allowed assets as defined in chapter 625.
28 (4) "Bona fide holder for value" means a person who,
29 while not possessing information that would lead a reasonable
30 person similarly situated to believe that the insurer is
31 insolvent or is experiencing an impairment of capital or an
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1 impairment of surplus and while unaware of the imminence or
2 pendency of any receivership proceeding against the insurer,
3 has, in the exercise of reasonable business judgment,
4 exchanged his or her own funds, assets, or property for funds,
5 assets, or property of the insurer having an equivalent market
6 value.
7 (5)(4) "Court" refers to the circuit court in which
8 the receivership proceeding is pending.
9 (6)(5) "Delinquency proceeding" means any proceeding
10 commenced against an insurer pursuant to this chapter for the
11 purpose of liquidating, rehabilitating, reorganizing, or
12 conserving such insurer.
13 (7)(6) "Domiciliary state" means the state in which an
14 insurer is incorporated or organized or, in the case of an
15 insurer incorporated or organized in a foreign country, the
16 state in which such insurer, having become authorized to do
17 business in such state, has, at the commencement of a
18 delinquency proceeding, the largest amount of its assets held
19 in trust and assets held on deposit for the benefit of its
20 policyholders or policyholders and creditors in the United
21 States; and any such insurer is deemed to be domiciled in such
22 state.
23 (8) "Fair consideration" means that consideration
24 which is given for property or assets of an insurer when, in
25 exchange for the funds, assets, or property and in good faith,
26 property is conveyed, services are rendered, or an enforceable
27 obligation not invalidated by the receivership proceedings is
28 created having a value to the insurer of not less than the
29 value of the funds, assets, or property given in exchange.
30 (9)(7) "Foreign country" means territory not in any
31 state.
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1 (10)(8) "General assets" means all property, real,
2 personal, or otherwise, not specifically mortgaged, pledged,
3 deposited, or otherwise encumbered for the security or benefit
4 of specified persons or a limited class or classes of persons,
5 and as to such specifically encumbered property the term
6 includes all such property or its proceeds in excess of the
7 amount necessary to discharge the sum or sums secured thereby.
8 Assets held in trust and assets held on deposit for the
9 security or benefit of all policyholders or all policyholders
10 and creditors in the United States shall be deemed general
11 assets.
12 (11) "Good faith" means honesty in fact, including,
13 but not limited to, the exercise of reasonable business
14 judgment, in the conduct or transaction concerned, together
15 with the absence of information that would lead a reasonable
16 person in the same position to know that the insurer is
17 insolvent or is experiencing an impairment of capital or an
18 impairment of surplus and together with the absence of
19 knowledge regarding the imminence or pendency of any
20 receivership proceeding against the insurer.
21 (12)(9) "Impairment of capital" means that the minimum
22 surplus required to be maintained in s. 624.408 has been
23 dissipated and the insurer is not possessed of assets at least
24 equal to all its liabilities together with its total issued
25 and outstanding capital stock, if a stock insurer, or the
26 minimum surplus or net trust fund required by s. 624.407, if a
27 mutual, reciprocal, or business trust insurer.
28 (13)(10) "Impairment of surplus" means that the
29 surplus of a stock insurer, the additional surplus of a mutual
30 or reciprocal insurer, or the additional net trust fund of a
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1 business trust insurer does not comply with the requirements
2 of s. 624.408.
3 (14)(11) "Insolvency" means that all the assets of the
4 insurer, if made immediately available, would not be
5 sufficient to discharge all its liabilities or that the
6 insurer is unable to pay its debts as they become due in the
7 usual course of business. When the context of any provision of
8 this code so indicates, insolvency also includes and is
9 defined as "impairment of surplus," as defined in subsection
10 (13)(9), and "impairment of capital," as defined in subsection
11 (12)(8).
12 (15)(12) "Insurer," in addition to persons so defined
13 under s. 624.03, also includes persons purporting to be
14 insurers or organizing, or holding themselves out as
15 organizing, in this state for the purpose of becoming insurers
16 and all insurers who have policyholders insureds resident in
17 this state.
18 (16)(13) "Liabilities," as used in subsections (12)
19 and (14) (8)-(10), means all liabilities, including those
20 specifically required in s. 625.041.
21 (14) "Person" includes natural persons, corporations,
22 partnerships, trusts, estates, and sole proprietorships.
23 (17) "Property" includes:
24 (a) All right, title, and interest of the insolvent
25 entity, whether legal or equitable, tangible or intangible, or
26 choate or inchoate, and includes choses in action, contract
27 rights, and any other interest recognized under the laws of
28 this state.
29 (b) Entitlements that existed prior to the entry of an
30 order of conservation, rehabilitation, or liquidation and
31 entitlements that may arise by operation of the provisions of
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1 this part or other provisions of law allowing the department
2 to avoid prior transfers or assert other rights in its
3 capacity as receiver.
4 (c) All records and data that are otherwise the
5 property of the insolvent insurer, in whatever form
6 maintained, including, but not limited to, claims and claim
7 files, application files, litigation files, premium records,
8 rate books, underwriting manuals, personnel records, or
9 financial records, or similar records within the possession,
10 custody, or control of a managing general agent, third-party
11 administrator, management company, accountant, attorney,
12 affiliate, or other person.
13
14 The term does not include privileged or confidential documents
15 of an insolvent insurer generated by a third party.
16 (18)(15) "Receiver" means a receiver, liquidator,
17 rehabilitator, reorganizer, or conservator, as the context may
18 require.
19 (19) "Receivership" means the placement of an insurer
20 under the control of a receiver pursuant to a delinquency
21 proceeding under this part.
22 (20)(16) "Reciprocal state" means any state other than
23 this state in which in substance and effect the provisions of
24 the Insurers Rehabilitation and Liquidation Act are in force,
25 including the provisions requiring that the commissioner of
26 insurance or equivalent insurance supervisory official be the
27 receiver of a delinquent insurer.
28 (21)(17) "Secured claim" means any claim secured by
29 mortgage, trust deed, pledge, deposit as security, escrow, or
30 otherwise but does not include a special deposit claim, a
31 claim against general assets, or a claim based on mere
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1 possession. The term also includes a claim which more than 4
2 months before the commencement of a delinquency proceeding in
3 the state of the insurer's domicile has become a lien upon
4 specific assets by reason of judicial process.
5 (22)(18) "Special deposit claim" means any claim
6 secured by a deposit made pursuant to statute for the security
7 or benefit of a limited class or classes of persons, but not
8 including any general assets.
9 (23)(19) "State" is as defined in s. 624.08.
10 Section 4. Section 631.015, Florida Statutes, is
11 created to read:
12 631.015 Reciprocity; treatment of
13 policyholders.--Reciprocity in the treatment of policyholders
14 in receivership is extended to those states which, in
15 substance and effect, enact the National Association of
16 Insurance Commissioners Rehabilitation and Liquidation Model
17 Act or the Uniform Insurers Liquidation Act.
18 Section 5. Section 631.025, Florida Statutes, is
19 created to read:
20 631.025 Persons subject to this part.--Delinquency
21 proceedings authorized by this part may be initiated against
22 any insurer, as defined in s. 631.011(15), if the statutory
23 grounds are present as to that insurer, and the court may
24 exercise jurisdiction over any person required to cooperate
25 with the department pursuant to s. 631.391 and over all
26 persons made subject to the court's jurisdiction by other
27 provisions of law. Such persons include, but are not limited
28 to:
29 (1) A person transacting, or that has transacted,
30 insurance business in or from this state and against whom
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1 claims arising from that business may exist now or in the
2 future.
3 (2) A person purporting to transact an insurance
4 business in this state and any person who acts as an insurer,
5 transacts insurance, or otherwise engages in insurance
6 activities in or from this state, with or without a
7 certificate of authority or proper authority from the
8 department.
9 (3) An insurer with policyholders resident in this
10 state.
11 (4) All other persons organized or in the process of
12 organizing with the intent to transact an insurance business
13 in this state.
14 Section 6. Paragraph (d) of subsection (1) of section
15 631.041, Florida Statutes, is amended to read:
16 631.041 Automatic stay; relief from stay;
17 injunctions.--
18 (1) An application or petition under s. 631.031
19 operates as a matter of law as an automatic stay applicable to
20 all persons and entities, other than the receiver, which shall
21 be permanent and survive the entry of an order of
22 conservation, rehabilitation, or liquidation, and which shall
23 prohibit:
24 (d) Any act to create, perfect, or enforce a lien
25 against property of the insurer, except that a secured claim
26 as defined in s. 631.011(21)(17) may proceed under s. 631.191
27 after the order of liquidation is entered;
28 Section 7. Section 631.042, Florida Statutes, is
29 created to read:
30 631.042 Extension of time.--
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1 (1) With respect to any action by or against an
2 insurer, no statute of limitations or defense of laches shall
3 run between the date the department files a petition for a
4 delinquency proceeding against an insurer and the date the
5 court enters an order granting or denying that petition. If
6 the petition is denied, any action against the insurer that
7 might have been commenced when the petition was filed may be
8 commenced for at least 60 days after the order denying such
9 relief.
10 (2) The running of any unexpired statute of
11 limitations, as to any claims brought by the administrator, a
12 receiver, or an official or agency exercising powers pursuant
13 to this chapter seeking damages or other recoveries on behalf
14 of an insurer, its policyholders, its creditors, or its
15 estate, shall be tolled for a period of 4 years from the date
16 the court enters an order placing the insurer in receivership.
17 If the delinquency proceedings against the insurer terminate
18 in fewer than 4 years, tolling shall cease at the time the
19 proceedings are final, including all appeals.
20 (3) The right of action does not accrue, and the
21 limitations period for any such action does not run, during
22 the time the insurer is controlled by parties acting contrary
23 to the company's interests or when facts giving rise to the
24 claim are concealed fraudulently from regulatory authorities
25 or from any members of company management. The provisions of
26 chapter 95 shall be construed to be consistent with the
27 provisions of this section. The receiver may institute any
28 action or proceeding authorized under this part while any
29 statute of limitation is tolled pursuant to this section.
30 This tolling provision shall be in addition to any other
31 applicable tolling provision.
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1 (4) For actions not covered by subsection (2), if any
2 unexpired time period is fixed by any agreement or in any
3 proceeding for doing any act for the benefit of the estate,
4 the receiver shall have 180 days, or for good cause shown more
5 than 180 days as allowed by the court, from the date the court
6 enters the order granting the department's petition for a
7 delinquency proceeding.
8 Section 8. Subsections (6) through (9) of section
9 631.141, Florida Statutes, are renumbered as subsections (7)
10 through (10), respectively, and a new subsection (6) is added
11 to said section to read:
12 631.141 Conduct of delinquency proceeding; domestic
13 and alien insurers.--
14 (6) The department may assert all rights belonging to
15 third parties, including, but not limited to, policyholders,
16 creditors, and other claimants, except to the extent an
17 individual claim is personal and unique to the claimant and
18 could not inure to the benefit of the estate or to
19 policyholders, creditors, or other claimants.
20 Section 9. Section 631.154, Florida Statutes, is
21 amended to read:
22 631.154 Funds, assets, or other property in the
23 possession of third person.--
24 (1) If the receiver determines that funds, assets, or
25 property in the possession of another person are rightfully
26 the property of the estate, the receiver shall deliver to such
27 person a written demand for immediate delivery of the funds,
28 assets, or property to the receiver, referencing this section
29 by number, referencing the court and docket number of the
30 receivership action, and notifying the person that any claim
31 of right to the funds, assets, or property by her or him must
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1 be presented to the receivership court within 20 days after
2 the date of the written demand. Any person who holds funds,
3 assets, or other property belonging to an entity placed in
4 receivership subject to an order of conservation,
5 rehabilitation, or liquidation under this chapter shall
6 deliver the funds, assets, or other property to the receiver
7 on demand. Should the person allege any right to retain the
8 funds, assets, or other property pursuant to s. 631.155, s.
9 631.191, s. 631.261, s. 631.262, s. 631.263, or s. 631.281, a
10 pleading setting out the right shall be filed with the court
11 within 20 days after of the receipt of the receiver's demand
12 that the funds, assets, or property be delivered to the
13 receiver. The person shall serve a copy of the pleading on
14 the receiver. The pleading of the person shall inform the
15 court as to the nature of the claim to the property, the
16 alleged value of the assets or property, or the amount of
17 funds held, and what action has been taken by the person to
18 preserve and protect the assets or property or to preserve any
19 funds pending determination of the dispute.
20 (2) If requested by the receiver, a hearing shall be
21 held to determine where and under what conditions the
22 property, assets, or funds shall be held by the person pending
23 determination of the dispute. The court may impose conditions
24 as it may deem necessary or appropriate for the preservation
25 of the property until the court can determine the validity of
26 the person's claim to the property, assets, or funds. If any
27 property, assets, or funds are allowed to remain in the
28 possession of the person after demand made by the receiver,
29 that person shall be strictly liable for any waste, loss, or
30 damage of the property, assets, or funds retained.
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1 (3) If a person has filed a pleading alleging any
2 right to retain funds, assets, or property, the court shall
3 hold a subsequent hearing to determine entitlement to the
4 funds, assets, or property claimed by the receiver.
5 (4) If a person fails to file the pleading required by
6 subsection (1) within the 20-day period, the court may, upon
7 petition of the receiver and upon a copy of the petition being
8 served by the petitioner to such person, issue its summary
9 order directing the immediate delivery of the funds, assets,
10 or property to the receiver and finding that the person has
11 waived all claims of right to the funds, assets, or property.
12 (5) This section shall apply to all proceedings
13 brought by the receiver to recover funds, assets, or property
14 believed by the receiver under this chapter to be assets of
15 the entity subject to an order of conservation,
16 rehabilitation, or liquidation. The receiver shall be exempt
17 from the provisions of s. 57.111.
18 (6) Should the receiver be successful in establishing
19 its claim or any part thereof, the receiver shall be entitled
20 to recover judgment for the following:
21 (a) The property or its cash value as of the date of
22 the order of conservation, rehabilitation, or liquidation,
23 whichever is applicable.
24 (b) Rental for the use of the property to run from the
25 date of the order of conservation, rehabilitation, or
26 liquidation, whichever is applicable, to the date the property
27 is delivered to the receiver.
28 (c) In the case of funds, interest at the statutory
29 rate to run from the date of the order of conservation,
30 rehabilitation, or liquidation, whichever is applicable, to
31 the date the funds are delivered to the receiver.
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1 (d) All costs, investigative and other expenses,
2 including, but not limited to, those for department staff,
3 incurred in necessary to the recovery of the property, assets,
4 or funds, and reasonable attorney's fees. Department staff
5 costs and expenses include staff salaries.
6
7 It is the intent of this section that a person found to be
8 holding receivership assets fully reimburse the receiver for
9 any and all efforts made to recover those assets.
10 Section 10. Section 631.156, Florida Statutes, is
11 created to read:
12 631.156 Investigation by the department; scope of
13 authority; sharing of materials.--
14 (1) The department may, under the direction and
15 supervision of the receivership court, conduct an
16 investigation to determine the cause of the insolvency,
17 including whether false statements filed with the department
18 contributed to the insolvency and if any laws of this state,
19 any other state, or the Federal Government relating to the
20 solvency of the insurer were violated; to discover assets for
21 recovery; and to determine the location of assets and their
22 manner of recovery. The department may take statements under
23 oath and examine and review the books, records, and documents
24 of the insurer or any affiliate, controlling person, officer,
25 director, manager, trustee, agent, adjuster, employee, or
26 independent contractor of any insurer or affiliate and any
27 other person possessing any executive authority over, or
28 exercising or having exercised any control over, any segment
29 of the affairs of the insurer or affiliate. Contracts of
30 reinsurance between an insurer and a reinsurer do not
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1 constitute the exercise of control by the reinsurer over the
2 insurer for purposes of this section.
3 (2) The department may provide documents, books, and
4 records; other investigative products, work product, and
5 analysis; and copies of any or all of such materials to the
6 Division of Insurance Fraud or any other appropriate
7 government agency. The sharing of these materials shall not
8 waive any work product or other privilege otherwise applicable
9 under law.
10 (3) The receivership court shall order expedited
11 compliance with the requirements of subsection (1) and shall
12 impose appropriate penalties and sanctions for noncompliance,
13 including penalties and sanctions for the loss, destruction,
14 or spoliation of any evidence after entry of the order.
15 Section 11. Section 631.157, Florida Statutes, is
16 created to read:
17 631.157 Civil action by the receiver.--
18 (1) Any person who is engaged in the business of
19 insurance, is or acts as an officer, director, agent, or
20 employee of any person engaged in the business of insurance,
21 or is involved in a transaction relating to the conduct of
22 affairs of such a business, other than as an insured or
23 beneficiary under a policy of insurance, and who willfully
24 obtains or uses, as defined in s. 812.012(3), any funds,
25 assets, or property, including, but not limited to, moneys,
26 funds, premiums, credits, or other property of an insurer,
27 shall be liable to the department as receiver for the use and
28 benefit of an insolvent insurer's estate, claimants,
29 creditors, and policyholders, as follows:
30 (a) If the funds, assets, or property obtained or used
31 did not jeopardize the safety and soundness of an insurer and
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1 was not a significant cause of such insurer being placed in
2 receivership, the person shall be liable only for the full
3 amount of any funds, assets, or property obtained or used,
4 plus prejudgment interest provided by law.
5 (b) If the funds, assets, or property obtained or used
6 jeopardized the safety and soundness of an insurer or was a
7 significant cause of the insurer being placed in receivership,
8 the person shall be liable for triple the full amount of any
9 funds, assets, or property obtained or used, plus prejudgment
10 interest provided by law on the original amount.
11 (2)(a) Any person who:
12 1. Is engaged in the business of insurance, is or acts
13 as an officer, director, agent, or employee of any person
14 engaged in the business of insurance, or is involved in a
15 transaction relating to the conduct of affairs of such a
16 business, other than as an insured or beneficiary under a
17 policy of insurance;
18 2. Has actual knowledge or such constructive knowledge
19 as should have been obtained through reasonable inquiry by a
20 person in that position; and
21 3. Misreports a material fact in any book, report, or
22 statement of an insurer
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24 with the intent to deceive the insurer, including any officer,
25 employee, or agent of the insurer, the department, or any
26 agent or examiner appointed by the department to examine the
27 affairs of the person or insurer, concerning the financial
28 condition or solvency of such business is liable to the
29 department as receiver for the use and benefit of the
30 insolvent insurer's estate, creditors, and policyholders, as
31 provided in paragraph (b).
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1 (b)1. If the misreporting did not jeopardize the
2 safety and soundness of an insurer and was not a significant
3 cause of the insurer being placed in receivership, the person
4 shall be liable only for the full amount of any asset
5 misreported.
6 2. If the misreporting jeopardized the safety and
7 soundness of an insurer or was a significant cause of the
8 insurer being placed in receivership, the person shall be
9 liable for triple the full amount of any asset misreported.
10 (3) If the asset or property that has been obtained or
11 used was reported to the department as being available to the
12 insurer as an admitted asset and such asset is unavailable to
13 the receiver for payment of the obligations of the insurer at
14 the time a receivership proceeding is instituted, the
15 obtaining or using shall be presumed to have jeopardized the
16 safety and soundness of the insurer and to have been a
17 significant cause of the insurer's being placed in
18 conservation, rehabilitation, or liquidation, with the burden
19 of proof on the defendants to show otherwise.
20 (4) If the receiver is successful in establishing a
21 claim under this section, the receiver shall be entitled to
22 recover all of its costs; investigative and other expenses,
23 which shall include the department's in-house staff and staff
24 attorney's expenses, costs, and salaries, expended in the
25 prosecution of the action; and reasonable attorney's fees.
26 The receiver shall be exempt from the provisions of s. 57.111.
27 (5) An action under this section may be brought at any
28 time before the expiration of 4 years after the entry of the
29 initial order of rehabilitation or liquidation under this part
30 but shall be filed before the time the receivership proceeding
31 is closed or dismissed.
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1 Section 12. Section 631.3915, Florida Statutes, is
2 created to read:
3 631.3915 Actions for damages.--The department, in its
4 capacity as administrator, receiver, or similar capacity, may
5 pursue any actions for damages or other recoveries on behalf
6 of the insurer's estate and the insurer's policyholders,
7 creditors, and other claimants.
8 Section 13. Subsection (3) of section 631.54, Florida
9 Statutes, is amended to read:
10 631.54 Definitions.--As used in this part:
11 (3) "Covered claim" means an unpaid claim, including
12 one of unearned premiums, which arises out of, and is within
13 the coverage, and not in excess of, the applicable limits of
14 an insurance policy to which this part applies, issued by an
15 insurer, if such insurer becomes an insolvent insurer after
16 October 1, 1970, and the claimant or insured is a resident of
17 this state at the time of the insured event or the property
18 from which the claim arises is permanently located in this
19 state. "Covered claim" shall not include any amount due any
20 reinsurer, insurer, insurance pool, or underwriting
21 association, as subrogation, contribution, indemnification,
22 recoveries or otherwise. Member insurers shall have no right
23 of subrogation against the insured of any insolvent member.
24 Section 14. Paragraph (b) of subsection (1) of section
25 631.57, Florida Statutes, is amended to read:
26 631.57 Powers and duties of the association.--
27 (1) The association shall:
28 (b) Be deemed the insurer to the extent of its
29 obligation on the covered claims, and, to such extent, shall
30 have all rights, duties, defenses, and obligations of the
31 insolvent insurer as if the insurer had not become insolvent.
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1 In no event shall the association be liable for any penalties
2 or interest.
3 Section 15. Subsection (2) of section 631.904, Florida
4 Statutes, is amended to read:
5 631.904 Definitions.--As used in this part, the term:
6 (2) "Covered claim" means an unpaid claim, including a
7 claim for return of unearned premiums, which arises out of, is
8 within the coverage of, and is not in excess of the applicable
9 limits of, an insurance policy to which this part applies,
10 which policy was issued by an insurer and which claim is made
11 on behalf of a claimant or insured who was a resident of this
12 state at the time of the injury. The term "covered claim" does
13 not include any amount sought as a return of premium under any
14 retrospective rating plan; any amount due any reinsurer,
15 insurer, insurance pool, or underwriting association, as
16 subrogation recoveries or otherwise; or any return of premium
17 resulting from a policy that was not in force on the date of
18 the final order of liquidation. Member insurers have no right
19 of subrogation against the insured of any insolvent insurer.
20 This provision shall be applied retroactively to cover claims
21 of an insolvent self-insurance fund resulting from accidents
22 or losses incurred prior to January 1, 1994, regardless of the
23 date the Department of Insurance filed a petition in circuit
24 court alleging insolvency and the date the court entered an
25 order appointing a receiver.
26 Section 16. Section 817.2341, Florida Statutes, is
27 created to read:
28 817.2341 False or misleading statements or supporting
29 documents; penalty.--
30 (1) Any person who willfully files with the
31 department, or who willfully signs for filing with the
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1 department, a materially false or materially misleading
2 financial statement or document in support of such statement
3 required by law or rule, with intent to deceive and with
4 knowledge that the statement or document is materially false
5 or materially misleading, commits a felony of the third
6 degree, punishable as provided in s. 775.082, s. 775.083, or
7 s. 775.084.
8 (2)(a) Any person who makes a false entry of a
9 material fact in any book, report, or statement relating to a
10 transaction of an insurer or entity organized pursuant to
11 chapter 624 or chapter 641, intending to deceive any person
12 about the financial condition or solvency of the insurer or
13 entity, commits a felony of the third degree, punishable as
14 provided in s. 775.082, s. 775.083, or s. 775.084.
15 (b) If the false entry of a material fact is made with
16 the intent to deceive any person as to the impairment of
17 capital, as defined in s. 631.011(12), of the insurer or
18 entity or is the significant cause of the insurer or entity
19 being placed in conservation, rehabilitation, or liquidation
20 by a court, the person commits a felony of the first degree,
21 punishable as provided in s. 775.082, s. 775.083, or s.
22 775.084.
23 (3)(a) Any person who knowingly makes a material false
24 statement or report to the department or any agent of the
25 department, or knowingly and materially overvalues any
26 property in any document or report prepared to be presented to
27 the department or any agent of the department, commits a
28 felony of the third degree, punishable as provided in s.
29 775.082, s. 775.083, or s. 775.084.
30 (b) If the material false statement or report or the
31 material overvaluation is made with the intent to deceive any
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1 person as to the impairment of capital, as defined in s.
2 631.011(12), of an insurer or entity organized pursuant to
3 chapter 624 or chapter 641, or is the significant cause of the
4 insurer or entity being placed in receivership by a court, the
5 person commits a felony of the first degree, punishable as
6 provided in s. 775.082, s. 775.083, or s. 775.084.
7 Section 17. Section 624.3101, Florida Statutes, is
8 repealed.
9 Section 18. This act shall take effect July 1, 2002.
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