North Dakota Code 26.1-33.4-13 – Fraud prevention and control
1. a. A person may not commit a fraudulent life settlement act.
Terms Used In North Dakota Code 26.1-33.4-13
- Allegation: something that someone says happened.
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Contract: A legal written agreement that becomes binding when signed.
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- Fraud: Intentional deception resulting in injury to another.
- Organization: includes a foreign or domestic association, business trust, corporation, enterprise, estate, joint venture, limited liability company, limited liability partnership, limited partnership, partnership, trust, or any legal or commercial entity. See North Dakota Code 1-01-49
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
- Prosecute: To charge someone with a crime. A prosecutor tries a criminal case on behalf of the government.
- Rule: includes regulation. See North Dakota Code 1-01-49
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See North Dakota Code 1-01-49
- Subpoena: A command to a witness to appear and give testimony.
- Tort: A civil wrong or breach of a duty to another person, as outlined by law. A very common tort is negligent operation of a motor vehicle that results in property damage and personal injury in an automobile accident.
b. A person may not knowingly and intentionally interfere with the enforcement of the provisions of this chapter or investigations of suspected or actual violations of this chapter.
c. A person in the business of life settlements may not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.
2. a. Life settlement contracts and applications for life settlement contracts, regardless of the form of transmission, must contain the following statement or a substantially similar statement:
Any person that knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and may be subject to fines and confinement in prison.
b. The lack of a statement as required in subdivision a does not constitute a defense in any prosecution for a fraudulent life settlement act.
3. a. Any person engaged in the business of life settlements having knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed shall provide to the commissioner the information required by and in a manner prescribed by the commissioner.
b. Any other person having knowledge or a reasonable belief that a fraudulent life 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.
4. a. Civil liability may not be imposed on and no cause of action may arise from a person’s furnishing information concerning suspected, anticipated, or completed fraudulent life settlement acts or suspected or completed fraudulent insurance acts if the information is provided to or received from:
(1) The commissioner or the commissioner’s employees, agents, or representatives; (2) Federal, state, or local law enforcement or regulatory officials or their employees, agents, or representatives; (3) A person involved in the prevention and detection of fraudulent life settlement acts or that person’s agents, employees, or representatives; (4) Any regulatory body or its employees, agents, or representatives overseeing life insurance, life settlements, securities, or investment fraud; (5) The life insurer that issued the life insurance policy covering the life of the insured; or
(6) The licensee and any agents, employees, or representatives.
b. Subdivision a does not apply to statements made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent life settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that subdivision a does not apply because the person filing the report or furnishing the information did so with actual malice.
c. A person identified in subdivision a is entitled to an award of attorney’s fees and costs if that person 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 chapter and the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is “substantially justified” if the proceeding had a reasonable basis in law or fact at the time the proceeding was initiated.
d. This section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in subdivision a.
5. a. The documents and evidence provided pursuant to subsection 4 or obtained by the commissioner in an investigation of suspected or actual fraudulent life settlement acts is privileged and confidential and may not be a public record and may not be subject to discovery or subpoena in a civil or criminal action.
b. Subdivision a does not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent life settlement acts:
(1) In administrative or judicial proceedings to enforce laws administered by the commissioner; (2) To federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent life settlement acts, or to the national association of insurance commissioners; or
(3) At the discretion of the commissioner, to a person in the business of life settlements that is aggrieved by a fraudulent life settlement act.
c. Release of documents and evidence under subdivision b does not abrogate or modify the privilege granted in subdivision a.
6. This chapter does not:
a. Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law; b. Preempt, supersede, or limit any provision of any state securities law or any rule, order, or notice issued thereunder; c. Prevent or prohibit a person from disclosing voluntarily information concerning life settlement fraud to a law enforcement or regulatory agency other than the insurance department; or
d. Limit the powers granted elsewhere by the laws of this state to the commissioner or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.
7. a. Providers and brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute, and prevent fraudulent life settlement acts. The commissioner may order, or a licensee may request and the commissioner may grant, such modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications may reasonably be expected to accomplish the purpose of this section. Antifraud initiatives include:
(1) Fraud investigators, who may be provider or broker employees or independent contractors; and
(2) An antifraud plan, which must be submitted to the commissioner. The antifraud plan must include:
(a) A description of the procedures for detecting and investigating possible fraudulent life settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications; (b) A description of the procedures for reporting possible fraudulent life settlement acts to the commissioner; (c) A description of the plan for antifraud education and training of underwriters and other personnel; and
(d) A description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent life settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.
b. Antifraud plans submitted to the commissioner are privileged and confidential and are not a public record and may not be subject to discovery or subpoena in a civil or criminal action.