Bill Text: FL S0650 | 2016 | Regular Session | Comm Sub
Bill Title: Viatical Settlements
Spectrum: Bipartisan Bill
Status: (Failed) 2016-03-11 - Died in Appropriations Subcommittee on General Government [S0650 Detail]
Download: Florida-2016-S0650-Comm_Sub.html
Florida Senate - 2016 CS for SB 650 By the Committee on Banking and Insurance; and Senator Legg 597-02609-16 2016650c1 1 A bill to be entitled 2 An act relating to viatical settlements; amending s. 3 626.9911, F.S.; revising definitions; defining the 4 terms “business of viatical settlements,” “fraudulent 5 viatical settlement act,” and “stranger-originated 6 life insurance practice”; amending s. 626.9913, F.S.; 7 requiring additional information in an annual 8 statement filed by viatical settlement provider 9 licensees; revising deposit requirements for viatical 10 settlement provider licensees; deleting an obsolete 11 provision regarding a deposit requirement; authorizing 12 the Financial Services Commission to adopt rules; 13 amending s. 626.9914, F.S.; adding an act that 14 warrants the imposition of administrative penalties 15 against viatical settlement provider licensees; 16 increasing the amount of administrative fines that may 17 be imposed by the Office of Insurance Regulation 18 against licensees for certain violations; amending s. 19 626.99175, F.S.; deleting an obsolete provision; 20 deleting an exception from registration requirements 21 for life expectancy providers; creating s. 626.99185, 22 F.S.; requiring viatical settlement providers to 23 provide viators with a disclosure statement before or 24 concurrently with a viator’s execution of a viatical 25 settlement contract; providing requirements and 26 procedures for such disclosure statements; amending s. 27 626.9924, F.S.; correcting cross-references relating 28 to a requirement to provide specified documents with a 29 notice that a policy has or will become a viaticated 30 policy; amending s. 626.99245, F.S.; conforming a 31 cross-reference; creating s. 626.99273, F.S.; 32 prohibiting certain practices and conflicts of 33 interest relating to viatical settlement contracts or 34 insurance policies; requiring a viatical settlement 35 provider to file certain promotional, advertising, and 36 marketing materials with the office before entering 37 into viatical settlement contracts; prohibiting 38 certain references relating to the cost of life 39 insurance policies in such materials and other 40 specified statements and representations; authorizing 41 the commission to adopt rules; amending s. 626.99275, 42 F.S.; prohibiting a person from entering into a 43 viatical settlement contract before a specified date 44 except under specified circumstances, from issuing, 45 soliciting, marketing, or otherwise promoting the 46 purchase of a policy under certain circumstances, and 47 from engaging in a fraudulent viatical settlement act; 48 providing criminal penalties for a violation of such 49 prohibitions; creating s. 626.99276, F.S.; requiring 50 specified affidavits and other documentation to be 51 provided to an insurer for requests to verify coverage 52 and to transfer a policy or certificate to a viatical 53 settlement provider; prohibiting insurers from 54 requiring certain forms that have not been approved by 55 the office to be signed as a condition of responding 56 to such requests; requiring insurers to respond in 57 writing during a specified period to properly 58 completed requests to change the ownership or 59 beneficiary of a policy; amending s. 626.99278, F.S.; 60 providing requirements for licensed viatical 61 settlement providers to maintain specified 62 documentation relating to anti-fraud plans and 63 procedures, material inconsistencies between medical 64 records and insurance applications, and reporting of 65 specified fraudulent acts and prohibited practices; 66 amending s. 626.99287, F.S.; revising the period 67 during which certain viatical settlement contracts are 68 void and unenforeceable; revising exceptions to such 69 contracts being void and unenforceable; creating s. 70 626.99289, F.S.; providing that certain contracts, 71 agreements, arrangements, and transactions relating to 72 stranger-originated life insurance practices are void 73 and unenforceable; providing an effective date. 74 75 Be It Enacted by the Legislature of the State of Florida: 76 77 Section 1. Section 626.9911, Florida Statutes, is amended 78 to read: 79 626.9911 Definitions.—As used in this act, the term: 80 (1) “Business of viatical settlements” means an activity 81 involved in the offering, soliciting, negotiating, procuring, 82 effectuating, purchasing, investing, monitoring, tracking, 83 underwriting, selling, transferring, assigning, pledging, or 84 hypothecating of, or acquiring in other manner, an interest in a 85 life insurance policy by means of a viatical settlement 86 contract. 87 (2) “Financing entity” means an underwriter, placement 88 agent, lender, purchaser of securities, or purchaser of a policy 89 or certificate from a viatical settlement provider, credit 90 enhancer, or any entity that has direct ownership in a policy or 91 certificate that is the subject of a viatical settlement 92 contract, but whose principal activity related to the 93 transaction is providing funds or credit enhancement to effect 94 the viatical settlement or the purchase of one or more 95 viaticated policies and who has an agreement in writing with one 96 or more licensed viatical settlement providers to finance the 97 acquisition of viatical settlement contracts. The term does not 98 include a nonaccredited investor or other natural person. A 99 financing entity may not enter into a viatical settlement 100 contract. 101 (3) “Fraudulent viatical settlement act” means an act or 102 omission committed by a person who, knowingly or with the intent 103 to defraud for the purpose of depriving another of property or 104 for pecuniary gain, commits or allows an employee or agent to 105 commit an act specified in this subsection. 106 (a) Presenting, causing to be presented, or preparing with 107 the knowledge or belief that it will be presented to or by 108 another person false or concealed material information as part 109 of, in support of, or concerning a fact material to: 110 1. An application for the issuance of a viatical settlement 111 contract or an insurance policy; 112 2. The underwriting of a viatical settlement contract or an 113 insurance policy; 114 3. A claim for payment or benefit pursuant to a viatical 115 settlement contract or an insurance policy; 116 4. Premiums paid on an insurance policy; 117 5. Payments and changes in ownership or beneficiary made in 118 accordance with the terms of a viatical settlement contract or 119 an insurance policy; 120 6. The reinstatement or conversion of an insurance policy; 121 7. The solicitation, offer, effectuation, or sale of a 122 viatical settlement contract or an insurance policy; 123 8. The issuance of written evidence of a viatical 124 settlement contract or an insurance policy; or 125 9. A financing transaction. 126 (b) Employing a plan, financial structure, device, scheme, 127 or artifice to defraud related to viaticated policies. 128 (c) Engaging in a stranger-originated life insurance 129 practice. 130 (d) Failing to disclose upon request by an insurer that the 131 prospective insured has undergone a life expectancy evaluation 132 by a person other than the insurer or its authorized 133 representatives in connection with the issuance of the policy. 134 (e) Perpetuating a fraud or preventing the detection of a 135 fraud by: 136 1. Removing, concealing, altering, destroying, or 137 sequestering from the office the assets or records of a licensee 138 or other person engaged in the business of viatical settlements; 139 2. Misrepresenting or concealing the financial condition of 140 a licensee, financing entity, insurer, or other person; 141 3. Transacting in the business of viatical settlements in 142 violation of laws requiring a license, certificate of authority, 143 or other legal authority to transact such business; or 144 4. Filing with the office or the equivalent chief insurance 145 regulatory official of another jurisdiction a document that 146 contains false information or conceals information about a 147 material fact from the office or other regulatory official. 148 (f) Embezzlement, theft, misappropriation, or conversion of 149 moneys, funds, premiums, credits, or other property of a 150 viatical settlement provider, insurer, insured, viator, 151 insurance policyowner, or other person engaged in the business 152 of viatical settlements or insurance. 153 (g) Recklessly entering into, negotiating, brokering, or 154 otherwise dealing in a viatical settlement contract, the subject 155 of which is a life insurance policy that was obtained based on 156 information that was falsified or concealed for the purpose of 157 defrauding the policy’s issuer, viatical settlement provider, or 158 viator. As used in this paragraph, the term “recklessly” means 159 acting or failing to act in conscious disregard for the relevant 160 facts or risks, and which disregard involves a gross deviation 161 from acceptable standards of conduct. 162 (h) Facilitating the viator’s change of residency state to 163 avoid the provisions of this act. 164 (i) Facilitating or causing the creation of a trust with a 165 non-Florida situs or other nonresident entity for the purpose of 166 owning a life insurance policy covering a Florida resident to 167 avoid the provisions of this act. 168 (j) Facilitating or causing the transfer of the ownership 169 of an insurance policy covering a Florida resident to a trust 170 with a non-Florida situs or other nonresident entity to avoid 171 the provisions of this act. 172 (k) Applying for or obtaining a loan that is secured 173 directly or indirectly by an interest in a life insurance 174 policy. 175 (l) Violating s. 626.99273(1) or (2). 176 (m) Attempting to commit, assisting, aiding, or abetting in 177 the commission of or conspiring to commit an act or omission 178 specified in this subsection. 179 (4)(2)“Independent third-party trustee or escrow agent” 180 means an attorney, certified public accountant, financial 181 institution, or other person providing escrow services under the 182 authority of a regulatory body. The term does not include any 183 person associated, affiliated, or under common control with a 184 viatical settlement provider or viatical settlement broker. 185 (5)(3)“Life expectancy” means an opinion or evaluation as 186 to how long a particular person is to live, or relating to such 187 person’s expected demise. 188 (6)(4)“Life expectancy provider” means a person who 189 determines, or holds himself or herself out as determining, life 190 expectancies or mortality ratings used to determine life 191 expectancies under any of the following circumstances: 192 (a) On behalf of a viatical settlement provider, viatical 193 settlement broker, life agent, or person engaged in the business 194 of viatical settlements.;195 (b) In connection with a viatical settlement investment, 196 pursuant to s. 517.021(24).; or197 (c) On residents of this state in connection with a 198 viatical settlement contract or viatical settlement investment. 199 (7)(5)“Person” has the meaning specified in s. 1.01. 200 (8)(6)“Related form” means any form, created by or on 201 behalf of a licensee, which a viator or insured is required to 202 sign or initial. The forms include, but are not limited to, a 203 power of attorney, a release of medical information form, a 204 suitability questionnaire, a disclosure document, or any 205 addendum, schedule, or amendment to a viatical settlement 206 contract considered necessary by a provider to effectuate a 207 viatical settlement transaction. 208 (9)(7)“Related provider trust” means a titling trust or 209 other trust established by a licensed viatical settlement 210 provider or financing entity for the sole purpose of holding the 211 ownership or beneficial interest in purchased policies in 212 connection with a financing transaction. The trust must have a 213 written agreement with a licensed viatical settlement provider 214 or financing entity under which the licensed viatical settlement 215 provider or financing entity is responsible for insuring 216 compliance with all statutory and regulatory requirements and 217 under which the trust agrees to make all records and files 218 relating to viatical settlement transactions available to the 219 office as if those records and files were maintained directly by 220 the licensed viatical settlement provider. This term does not 221 include an independent third-party trustee or escrow agent or a 222 trust that does not enter into agreements with a viator. A 223 related provider trust isshall besubject to all provisions of 224 this act that apply to the viatical settlement provider who 225 established the related provider trust, except s. 626.9912, 226 which doesshallnot applybe applicable. A viatical settlement 227 provider may establish up tono more thanone related provider 228 trust, and the sole trustee of such related provider trust shall 229 be the viatical settlement provider licensed under s. 626.9912. 230 The name of the licensed viatical settlement provider shall be 231 included within the name of the related provider trust. 232 (10)(8)“Special purpose entity” means an entity 233 established by a licensed viatical settlement provider or by a 234 financing entity, which may be a corporation, partnership, 235 trust, limited liability company, or other similar entity formed 236 solely to provide, either directly or indirectly, access to 237 institutional capital markets to a viatical settlement provider 238 or financing entity. A special purpose entity may not obtain 239 capital from any natural person or entity with less than $50 240 million in assets and may not enter into a viatical settlement 241 contract. 242 (11) “Stranger-originated life insurance practice” means an 243 act, practice, arrangement, or agreement to initiate a life 244 insurance policy for the benefit of a third-party investor who, 245 at the time of policy origination, has no insurable interest in 246 the insured. Stranger-originated life insurance practices 247 include, but are not limited to: 248 (a) The purchase of a life insurance policy with resources 249 or guarantees from or through a person who, at the time of such 250 policy’s inception, could not lawfully initiate the policy and 251 the execution of a verbal or written arrangement or agreement to 252 directly or indirectly transfer the ownership of such policy or 253 policy benefits to a third party. 254 (b) The creation of a trust or other entity that has the 255 appearance of an insurable interest to initiate policies for 256 investors, which violates insurable interest laws and the 257 prohibition against wagering on life. 258 (12)(9)“Viatical settlement broker” means a person who, on 259 behalf of a viator and for a fee, commission, or other valuable 260 consideration, offers or attempts to negotiate viatical 261 settlement contracts between a viator resident in this state and 262 one or more viatical settlement providers. Notwithstanding the 263 manner in which the viatical settlement broker is compensated, a 264 viatical settlement broker is deemed to represent only the 265 viator and owes a fiduciary duty to the viator to act according 266 to the viator’s instructions and in the best interest of the 267 viator. The term does not include an attorney, licensed 268 Certified Public Accountant, or investment adviser lawfully 269 registered under chapter 517, who is retained to represent the 270 viator and whose compensation is paid directly by or at the 271 direction and on behalf of the viator. 272 (13)(10)“Viatical settlement contract” means a written 273 agreement entered into between a viatical settlement provider, 274 or its related provider trust, and a viator. The viatical 275 settlement contract includes an agreement to transfer ownership 276 or change the beneficiary designation of a life insurance policy 277 at a later date, regardless of the date that compensation is 278 paid to the viator. The agreement must establish the terms under 279 which the viatical settlement provider will pay compensation or 280 anything of value, which compensation or value is less than the 281 expected death benefit of the insurance policy or certificate, 282 in return for the viator’s assignment, transfer, sale, devise, 283 or bequest of the death benefit or ownership of all or a portion 284 of the insurance policy or certificate of insurance to the 285 viatical settlement provider. The term also includes the 286 transfer for compensation or value of an ownership or a 287 beneficial interest in a trust or other entity that owns such 288 policy if the trust or other entity was formed or used for the 289 principal purpose of acquiring one or more life insurance 290 contracts that insure the life of a person residing in this 291 state, andA viatical settlement contract also includesa 292 contract for a loan or other financial transaction secured 293 primarily by an individual or group life insurance policy. The 294 term does not include, other thana policy loan by a life 295 insurance company pursuant to the terms of the life insurance 296 contract or accelerated death provisions contained in a life 297 insurance policy, whether issued with the original policy or as 298 a rider,ora loan secured by the cash surrender value of a 299 policy as determined by the policy issuer and the life insurance 300 policy terms, or a loan or advance from the issuer of the policy 301 to the policyowner. 302 (14)(11)“Viatical settlement investment” has the same 303 meaning as specified in s. 517.021. 304 (15)(12)“Viatical settlement provider” means a person who, 305 in this state, from this state, or with a resident of this 306 state, effectuates a viatical settlement contract. The term does 307 not include: 308 (a) AAnybank, savings bank, savings and loan association, 309 or credit union, or other licensed lending institutionthat 310 takes an assignment of a life insurance policy as collateral for 311 a loan. 312 (b) A life and health insurer that has lawfully issued a 313 life insurance policy that provides accelerated benefits to 314 terminally ill policyholders or certificateholders. 315 (c) AAnynatural person who enters into no more than one 316 viatical settlement contract with a viator in 1 calendar year, 317 unless such natural person has previously been licensed under 318 this act or is currently licensed under this act. 319 (d) A trust that meets the definition of a “related 320 provider trust.” 321 (e) A viator in this state. 322 (f) A financing entity. 323 (16)(13)“Viaticated policy” means a life insurance policy, 324 or a certificate under a group policy, which is the subject of a 325 viatical settlement contract. 326 (17)(14)“Viator” means the owner of a life insurance 327 policy or a certificateholder under a group policy, which policy 328 is not a previously viaticated policy, who enters or seeks to 329 enter into a viatical settlement contract. This term does not 330 include a viatical settlement provider, aoranyperson 331 acquiring a policy or interest in a policy from a viatical 332 settlement provider, ornor does it includean independent 333 third-party trustee or escrow agent. 334 Section 2. Subsections (2) and (3) of section 626.9913, 335 Florida Statutes, are amended, and subsection (6) is added to 336 that section, to read: 337 626.9913 Viatical settlement provider license continuance; 338 annual report; fees; deposit.— 339 (2)(a) Annually, on or before March 1, the viatical 340 settlement provider licensee shall file a statement containing 341 information the commission requires and shall pay to the office 342 a license fee in the amount of $500. 343 (b) In addition to any other requirements, the annual 344 statement must specify: 345 1. The total number of unsettled viatical settlement 346 contracts and corresponding total amount due to viators under 347 viatical settlement contracts that have been signed by the 348 viator but have not been settled as of December 31 of the 349 preceding calendar year, categorized by the number of days since 350 the viator signed the contract for transactions regulated by 351 this state. 352 2. For each of the most recent 5 years, the total number of 353 policies purchased, total gross amount paid for policies 354 purchased, total commissions or compensation paid for policies 355 purchased, and total face value of policies purchased, allocated 356 by state, territory, and jurisdiction. 357 3. For the most recent calendar year, the total amount of 358 proceeds or compensation paid to policyowners, allocated by 359 state, territory, and jurisdiction. 360 (c)After December 31, 2007,The annual statement shall 361 include an annual audited financial statement of the viatical 362 settlement provider prepared in accordance with generally 363 accepted accounting principles by an independent certified 364 public accountant covering a 12-month period ending on a day 365 occurring withinfalling duringthe last 6 months of the 366 preceding calendar year. If the audited financial statement has 367 not been completed, however, the licensee shall include in its 368 annual statement an unaudited financial statement for the 369 preceding calendar year and an affidavit from an officer of the 370 licensee stating that the audit has not been completed. In this 371 event, the licensee shall submit the audited statement on or 372 before June 1. The annual statement, due on or before March 1 373 each year, shall also provide the office with a report of all 374 life expectancy providers who have provided life expectancies 375 directly or indirectly to the viatical settlement provider for 376 use in connection with a viatical settlement contract or a 377 viatical settlement investment. A viatical settlement provider 378 shall include in all statements filed with the office all 379 information requested by the office regarding a related provider 380 trust established by the viatical settlement provider. The 381 office may require more frequent reporting. Failure to timely 382 file the annual statement or the audited financial statement or 383 to timely pay the license fee is grounds for immediate 384 suspension of the license. The commission may by rule require 385 all or part of the statements or filings required under this 386 section to be submitted by electronic means in a computer 387 readable form compatible with the electronic data format 388 specified by the commission. 389 (3) To ensure the faithful performance of its obligations 390 to its viators in the event of insolvency or the loss of its 391 license, a viatical settlement provider licensee must deposit 392 and maintain deposited in trust with the department securities 393 eligible for deposit under s. 625.52, having at all times a 394 value of not less than $250,000$100,000; however, a viatical395settlement provider licensed in this state prior to June 1,3962004, which has deposited and maintains continuously deposited397in trust with the department securities in the amount of $25,000398and which posted and maintains continuously posted a security399bond acceptable to the department in the amount of $75,000, has400until June 1, 2005, to comply with the requirements of this401subsection. 402 (6) The commission may adopt rules to implement this 403 section. 404 Section 3. Subsections (1) and (2) of section 626.9914, 405 Florida Statutes, are amended to read: 406 626.9914 Suspension, revocation, denial, or nonrenewal of 407 viatical settlement provider license; grounds; administrative 408 fine.— 409 (1) The office shall suspend, revoke, deny, or refuse to 410 renew the license of any viatical settlement provider if the 411 office finds that the licensee has committed any of the 412 following acts: 413 (a) Has made a misrepresentation in the application for the 414 license.;415 (b) Has engaged in fraudulent or dishonest practices, or 416 otherwise has been shown to be untrustworthy or incompetent to 417 act as a viatical settlement provider.;418 (c) Demonstrates a pattern of unreasonable payments to 419 viators.;420 (d) Has been found guilty of, or has pleaded guilty or nolo 421 contendere to, any felony, or a misdemeanor involving fraud or 422 moral turpitude, regardless of whether a judgment of conviction 423 has been entered by the court.;424 (e) Has issued viatical settlement contracts that have not 425 been approved pursuant to this act.;426 (f) Has failed to honor contractual obligations related to 427 the business of viatical settlement contracts.;428 (g) Deals in bad faith with viators.;429 (h) Has violated any provision of the insurance code or of 430 this act.;431 (i) Employs or contracts with aanyperson who materially 432 influences the licensee’s conduct and who fails to meet the 433 requirements of this act.;434 (j) No longer meets the requirements for initial 435 licensure.; or436 (k) Obtains or utilizes life expectancies from life 437 expectancy providers who are not registered with the office 438 pursuant to this act. 439 (l) Has engaged in a fraudulent viatical settlement act. 440 (2) The office may, in lieu of or in addition to any 441 suspension or revocation, assess an administrative fine not to 442 exceed $10,000$2,500for each nonwillful violation or $25,000 443$10,000for each willful violation by a viatical settlement 444 provider licensee. The office may also place a viatical 445 settlement provider licensee on probation for a period not to 446 exceed 2 years. 447 Section 4. Subsection (1) of section 626.99175, Florida 448 Statutes, is amended to read: 449 626.99175 Life expectancy providers; registration required; 450 denial, suspension, revocation.— 451 (1)After July 1, 2006,A person may not perform the 452 functions of a life expectancy provider without first having 453 registered as a life expectancy provider, except as provided in454subsection (6). 455 Section 5. Section 626.99185, Florida Statutes, is created 456 to read: 457 626.99185 Disclosures to viator of disbursement.— 458 (1) Before or concurrently with a viator’s execution of a 459 viatical settlement contract, the viatical settlement provider 460 shall provide to the viator, in duplicate, a disclosure 461 statement in legible written form disclosing: 462 (a) The name of each viatical settlement broker who 463 receives or will receive compensation and the amount of each 464 broker’s compensation related to that transaction. For the 465 purpose of this section, compensation includes anything of value 466 paid or given by or at the direction of a viatical settlement 467 provider or person acquiring an interest in one or more life 468 insurance policies to a viatical settlement broker in connection 469 with the viatical settlement contract. 470 (b) A complete reconciliation of the gross offer or bid by 471 the viatical settlement provider to the net amount of proceeds 472 or value to be received by the viator related to that 473 transaction. As used in this section, the term “gross offer” or 474 “bid” means the total amount or value offered by the viatical 475 settlement provider for the purchase of an interest in one or 476 more life insurance policies, including commissions, 477 compensation, or other proceeds or value being deducted from the 478 gross offer or bid. 479 (2) The viator shall sign and date the disclosure statement 480 before or concurrently with the viator’s execution of a viatical 481 settlement contract, with the viator retaining the duplicate 482 copy of the disclosure statement. 483 (3) If a viatical settlement contract is entered into and 484 the contract is subsequently amended or if there is a change in 485 the viatical settlement provider’s gross offer or bid amount, a 486 change in the net amount of proceeds or value to be received by 487 the viator, or a change in the information provided in the 488 disclosure statement to the viator, the viatical settlement 489 provider shall provide, in duplicate, an amended disclosure 490 statement to the viator containing the information in subsection 491 (1). The viator shall sign and date the amended disclosure 492 statement, with the viator retaining the duplicate copy of the 493 amended disclosure statement. 494 (4) Before a viatical settlement provider’s execution of a 495 viatical settlement contract or an amendment to such contract, 496 the viatical settlement provider must obtain the signed and 497 dated disclosure statement and any amended disclosure statement 498 required by this section. In transactions for which a broker is 499 not used, the viatical settlement provider must obtain the 500 signed and dated disclosure statement from the viator. 501 (5) The viatical settlement provider shall maintain the 502 documentation required by this section pursuant to s. 503 626.9922(2) and shall make such documentation available to the 504 office at any time for copying and inspection upon reasonable 505 notice by the office to the viatical settlement provider. 506 Section 6. Subsection (7) of section 626.9924, Florida 507 Statutes, is amended to read: 508 626.9924 Viatical settlement contracts; procedures; 509 rescission.— 510 (7) At any time during the contestable period, within 20 511 days after a viator executes documents necessary to transfer 512 rights under an insurance policy or within 20 days of any 513 agreement, option, promise, or any other form of understanding, 514 express or implied, to viaticate the policy, the provider must 515 give notice to the insurer of the policy that the policy has or 516 will become a viaticated policy. The notice must be accompanied 517 by the documents required by ss. 626.99276 and 626.99287s.518626.99287(5)(a)in their entirety. 519 Section 7. Subsection (2) of section 626.99245, Florida 520 Statutes, is amended to read: 521 626.99245 Conflict of regulation of viaticals.— 522 (2) This section does not affect the requirement of ss. 523 626.9911(15)626.9911(12)and 626.9912(1) that a viatical 524 settlement provider doing business from this state must obtain a 525 viatical settlement license from the office. As used in this 526 subsection, the term “doing business from this state” includes 527 effectuating viatical settlement contracts from offices in this 528 state, regardless of the state of residence of the viator. 529 Section 8. Section 626.99273, Florida Statutes, is created 530 to read: 531 626.99273 Prohibited practices and conflicts of interest.— 532 (1) With respect to a viatical settlement contract or an 533 insurance policy, a viatical settlement broker may not knowingly 534 solicit an offer from, effectuate a viatical settlement with, or 535 make a sale to any viatical settlement provider, financing 536 entity, or related provider trust that is controlling, 537 controlled by, or under common control with such viatical 538 settlement broker. 539 (2) With respect to a viatical settlement contract or an 540 insurance policy, a viatical settlement provider may not 541 knowingly enter into a viatical settlement contract with a 542 viator if, in connection with such viatical settlement contract, 543 anything of value will be paid to a viatical settlement broker 544 that is controlling, controlled by, or under common control with 545 such viatical settlement provider, financing entity, or related 546 provider trust that is involved in such viatical settlement 547 contract. 548 (3) A viatical settlement provider may not enter into a 549 viatical settlement contract unless the viatical settlement 550 promotional, advertising, and marketing materials, as may be 551 prescribed by rule, have been filed with the office. Such 552 materials may not expressly indicate, or include any reference 553 that would cause a viator to reasonably believe, that the life 554 insurance is free for any period of time. 555 (4) A life insurance agent, insurer, viatical settlement 556 broker, or viatical settlement provider may not make a statement 557 or representation to an applicant or policyholder in connection 558 with the sale of a life insurance policy to the effect that the 559 insurance is free or without cost to the policyholder for any 560 period of time. 561 (5) The commission may adopt rules to implement this 562 section. 563 Section 9. Section 626.99275, Florida Statutes, is amended 564 to read: 565 626.99275 Prohibited practices; penalties.— 566 (1) It is unlawful for aanyperson to: 567 (a)ToKnowingly enter into, broker, or otherwise deal in a 568 viatical settlement contract the subject of which is a life 569 insurance policy, knowing that the policy was obtained by 570 presenting materially false information concerning any fact 571 material to the policy or by concealing, for the purpose of 572 misleading another, information concerning any fact material to 573 the policy, where the viator or the viator’s agent intended to 574 defraud the policy’s issuer. 575 (b)ToKnowingly or with the intent to defraud, for the 576 purpose of depriving another of property or for pecuniary gain, 577 issue or use a pattern of false, misleading, or deceptive life 578 expectancies. 579 (c)ToKnowingly engage in any transaction, practice, or 580 course of business intending thereby to avoid the notice 581 requirements of s. 626.9924(7). 582 (d)ToKnowingly or intentionally facilitate the change of 583 state of residency of a viator to avoid the provisions of this 584 chapter. 585 (e) Knowingly enter into a viatical settlement contract 586 before the application for or issuance of a life insurance 587 policy that is the subject of a viatical settlement contract or 588 during the 5-year period commencing on the date of issuance of 589 the policy or certificate, unless the viator provides a sworn 590 affidavit and accompanying documentation in accordance with s. 591 626.9987. 592 (f) Knowingly issue, solicit, market, or otherwise promote 593 the purchase of a life insurance policy for the purpose of or 594 with an emphasis on selling the policy. 595 (g) Engage in a fraudulent viatical settlement act. 596 (2) A person who violates any provision of this section 597 commits: 598 (a) A felony of the third degree, punishable as provided in 599 s. 775.082, s. 775.083, or s. 775.084, if the insurance policy 600 involved is valued at any amount less than $20,000. 601 (b) A felony of the second degree, punishable as provided 602 in s. 775.082, s. 775.083, or s. 775.084, if the insurance 603 policy involved is valued at $20,000 or more, but less than 604 $100,000. 605 (c) A felony of the first degree, punishable as provided in 606 s. 775.082, s. 775.083, or s. 775.084, if the insurance policy 607 involved is valued at $100,000 or more. 608 Section 10. Section 626.99276, Florida Statutes, is created 609 to read: 610 626.99276 Notification to insurer required.— 611 (1) A copy of the sworn affidavit and the documentation 612 required in s. 626.99287 must be submitted to the insurer if the 613 viatical settlement provider or other party entering into a 614 viatical settlement contract with a viator submits a request to 615 the insurer for verification of coverage or if the viatical 616 settlement provider submits a request to transfer the policy or 617 certificate to the provider. If the request is made by a 618 viatical settlement provider, the copy shall be accompanied by a 619 sworn affidavit from the viatical settlement provider affirming 620 that the copy is a true and correct copy of the documentation 621 received by the provider. 622 (2) An insurer may not require, as a condition of 623 responding to a request for verification of coverage or 624 effecting the transfer of a policy pursuant to a viatical 625 settlement contract, that the viator, insured, viatical 626 settlement provider, or viatical settlement broker sign any 627 disclosures, consent form, waiver form, or other form that has 628 not been approved by the office for use in connection with 629 viatical settlement contracts in this state. 630 (3) Upon receipt of a properly completed request for change 631 of ownership or beneficiary of a policy, the insurer shall 632 respond in writing within 30 calendar days confirming that the 633 change has been effectuated or specifying the reasons why the 634 requested change cannot be processed. The insurer may not 635 unreasonably delay effectuating a change of ownership or 636 beneficiary and may not otherwise seek to interfere with any 637 viatical settlement contract lawfully entered into in this 638 state. 639 Section 11. Section 626.99278, Florida Statutes, is amended 640 to read: 641 626.99278 Viatical provider anti-fraud plan.— 642 (1) EachEverylicensed viatical settlement provider and 643 registered life expectancy provider must adopt an anti-fraud 644 plan and file it with the Division of Insurance Fraud of the 645 department. Each anti-fraud plan shall include: 646 (a)(1)A description of the procedures for detecting and 647 investigating possible fraudulent acts and procedures for 648 resolving material inconsistencies between medical records and 649 insurance applications. 650 (b)(2)A description of the procedures for the mandatory 651 reporting of possible fraudulent insurance acts and prohibited 652 practices specifiedset forthin s. 626.99275 to the Division of 653 Insurance Fraudof the department. 654 (c)(3)A description of the plan for anti-fraud education 655 and training of its underwriters or other personnel. 656 (d)(4)A written description or chart outlining the 657 organizational arrangement of the anti-fraud personnel who are 658 responsible for the investigation and reporting of possible 659 fraudulent insurance acts and for the investigation of 660 unresolved material inconsistencies between medical records and 661 insurance applications. 662 (e)(5)For viatical settlement providers, a description of 663 the procedures used to perform initial and continuing review of 664 the accuracy of life expectancies used in connection with a 665 viatical settlement contract or viatical settlement investment. 666 (2) Each licensed viatical settlement provider shall 667 maintain in accordance with s. 626.9922: 668 (a) Documentation of compliance with its anti-fraud plan 669 and procedures filed in accordance with this section. 670 (b) Documentation pertaining to resolved and unresolved 671 material inconsistencies between medical records and insurance 672 applications. 673 (c) Documentation of its mandatory reporting of the 674 possible fraudulent acts and prohibited practices specified in 675 s. 626.99275 to the Division of Insurance Fraud. 676 Section 12. Section 626.99287, Florida Statutes, is 677 amended, to read: 678 626.99287 Contestability of viaticated policies.—Except as 679 hereinafter provided, if a viatical settlement contract is 680 entered into duringwithinthe 5-year2-yearperiod commencing 681 onwiththe date of issuance of the insurance policy or 682 certificate to be acquired, the viatical settlement contract is 683 void and unenforceable by either party. Notwithstanding this 684 limitation, such a viatical settlement contract is not void and 685 unenforceable if the viator provides a sworn affidavit and 686 accompanying documentation that certifies to the viatical 687 settlement provider that one or more of the following conditions 688 were met during the 5-year period: 689 (1) The policy was issued upon the owner’s exercise of 690 conversion rights arising out of a group or term policy, if the 691 total time covered under the prior policy is at least 60 months. 692 The time covered under a group policy shall be calculated 693 without regard to any change in insurance carriers, provided the 694 coverage has been continuous and under the same group 695 sponsorship; 696 (2) The owner of the policy is a charitable organization 697 exempt from taxation under 26 U.S.C. s. 501(c)(3); 698 (3) The owner of the policy is not a natural person; 699 (4) The viatical settlement contract was entered into 700 before July 1, 2000; 701 (5) The viator certifies by producing independent evidence 702 to the viatical settlement provider that one or more of the 703 following conditions werehave beenmet duringwithinthe 5-year 7042-yearperiod: 705 (a)1.The viator or insured is terminally or chronically 706 illdiagnosed with an illness or condition that is either:707a.Catastrophic or life threatening; or708b.Requires a course of treatment for a period of at least7093 years of long-term care or home health care;and 7102.the condition was not known to the insured at the time 711 the life insurance contract was entered into;.712 (b) The viator’s spouse dies; 713 (c) The viator divorces his or her spouse; 714 (d) The viator retires from full-time employment; 715 (e) The viator becomes physically or mentally disabled and 716 a physician determines that the disability prevents the viator 717 from maintaining full-time employment; 718 (f) The owner of the policy was the insured’s employer at 719 the time the policy or certificate was issued and the employment 720 relationship terminated; 721 (g) A final order, judgment, or decree is entered by a 722 court of competent jurisdiction, on the application of a 723 creditor of the viator, adjudicating the viator bankrupt or 724 insolvent, or approving a petition seeking reorganization of the 725 viator or appointing a receiver, trustee, or liquidator to all 726 or a substantial part of the viator’s assets; or 727 (h) The viator experiences a significant decrease in income 728 which is unexpected by the viator and which impairs his or her 729 reasonable ability to pay the policy premium. 730 (6) The viator entered into a viatical settlement contract 731 more than 2 years after the policy’s issuance date and, with 732 respect to the policy, at all times before such date each of the 733 following conditions were met: 734 (a) Policy premiums were funded exclusively with 735 unencumbered assets, including an interest in the life insurance 736 policy being financed but only to the extent of its net cash 737 surrender value provided by or full recourse liability incurred 738 by the insured; 739 (b) An agreement or understanding with another person was 740 not entered into to guarantee any such liability or to purchase, 741 or agree to purchase, the policy, including through an 742 assumption or forgiveness of the loan; and 743 (c) The insured and the policy were not evaluated for 744 settlement. 745 746If the viatical settlement provider submits to the insurer a747copy of the viator’s or owner’s certification described above,748then the provider submits a request to the insurer to effect the749transfer of the policy or certificate to the viatical settlement750provider, the viatical settlement agreement shall not be void or751unenforceable by operation of this section. The insurer shall752timely respond to such request. Nothing in this section shall753prohibit an insurer from exercising its right during the754contestability period to contest the validity of any policy on755grounds of fraud.756 Section 13. Section 626.99289, Florida Statutes, is created 757 to read: 758 626.99289 Void and unenforceable contracts, agreements, 759 arrangements, and transactions.—A contract, agreement, 760 arrangement, or transaction, including, but not limited to, a 761 financing agreement or any other arrangement or understanding 762 entered into, whether written or verbal, for the furtherance or 763 aid of a stranger-originated life insurance practice is void and 764 unenforceable. 765 Section 14. This act shall take effect July 1, 2016.