(a) Any insurer or health maintenance organization failing, without just cause, to file any registration statement as required in this part shall be required, after notice and hearing, to pay a penalty of one hundred dollars ($100) for each day’s delay, to be recovered by the commissioner, and the penalty so recovered shall be paid into the general revenue fund of this state. The maximum penalty under this section is ten thousand dollars ($10,000). The commissioner may reduce the penalty if the insurer or health maintenance organization demonstrates to the commissioner that the imposition of the penalty would constitute a financial hardship to the insurer or health maintenance organization.

Attorney's Note

Under the Tennessee Code, punishments for crimes depend on the classification. In the case of this section:
ClassPrisonFine
class E felony1 to 6 yearsup to $3,000
For details, see Tenn. Code § 40-35-111
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Terms Used In Tennessee Code 56-11-111

  • Civil forfeiture: The loss of ownership of property used to conduct illegal activity.
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-11-101
  • Contract: A legal written agreement that becomes binding when signed.
  • Conviction: A judgement of guilt against a criminal defendant.
  • Enterprise Risk: means any activity, circumstance, event or series of events involving one (1) or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including, but not limited to, anything that would cause the insurer's Risk-Based Capital to fall into company action level as set forth in §. See Tennessee Code 56-11-101
  • Health maintenance organization: means a health maintenance organization as defined at §. See Tennessee Code 56-11-101
  • Health maintenance organization holding company system: means two (2) or more affiliated persons, one (1) of which is a health maintenance organization. See Tennessee Code 56-11-101
  • Insurance holding company system: means two (2) or more affiliated persons, one (1) or more of which is an insurer. See Tennessee Code 56-11-101
  • Person: means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but does not include any joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property. See Tennessee Code 56-11-101
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(b) Every director or officer of an insurance holding company system or health maintenance organization holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any of the officers or agents of the insurer or health maintenance organization to engage in transactions or make investments that have not been properly reported or submitted pursuant to §§ 56-11-105(a) and 56-11-106(a)(2) and (b), or that violate this part, shall pay, in the director’s or officer’s individual capacity, a civil forfeiture of not more than one thousand dollars ($1,000) per violation, after notice and hearing before the commissioner. In determining the amount of the civil forfeiture, the commissioner shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and other matters as justice may require.
(c) Whenever it appears to the commissioner that any insurer or health maintenance organization subject to this part, or any director, officer, employee or agent thereof, has engaged in any transaction or entered into a contract that is subject to § 56-11-106 and that would not have been approved had such approval been requested, the commissioner may order the insurer or health maintenance organization to cease and desist immediately any further activity under that transaction or contract. After notice and hearing, the commissioner may also order the insurer or health maintenance organization to void any such contracts and restore the status quo if the action is in the best interest of the policyholders, creditors, or the public.
(d) Whenever it appears to the commissioner that any insurer or health maintenance organization or any director, officer, employee or agent thereof has committed a willful violation of this part, the commissioner may cause criminal proceedings to be instituted against the insurer or health maintenance organization or the responsible director, officer, employee or agent. Any insurer or health maintenance organization that willfully violates this part may be fined not more than ten thousand dollars ($10,000). Any individual who willfully violates this part may be fined in the person‘s individual capacity not more than ten thousand dollars ($10,000) or be punished for a Class E felony, or both.
(e) Any officer, director or employee of an insurance holding company system or health maintenance organization holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the commissioner in the performance of the officer, director or employee’s duties under this part, upon conviction, shall be fined not more than ten thousand dollars ($10,000) or be punished for a Class E felony, or both. Any fines imposed shall be paid by the officer, director, or employee in the person’s individual capacity.
(f) Whenever it appears to the commissioner that any person has committed a violation of § 56-11-103 and which prevents the full understanding of the enterprise risk to the insurer by affiliates or by the insurance holding company system, the violation may serve as an independent basis for disapproving dividends or distributions and for placing the insurer under an order of supervision in accordance with § 56-9-503.
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