Sec. 65. Fraud prevention and control.

1,160 words·~5 min read·/il/chapter-215/act-159/65

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)A person shall not commit the offense of viatical settlement fraud.

A person shall not knowingly or intentionally interfere with the enforcement of the provisions of this Act or investigations of suspected or actual violations of this Act.

A person in the business of viatical settlements shall not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements.

(b)Viatical settlements contracts and applications for viatical settlements, regardless of the form of transmission, shall contain the following statement: "Any person who knowingly presents false information in an application for insurance or a viatical settlement contract is guilty of a crime and may be subject to fines and confinement in prison.".

The lack of a statement as required in this subsection

(b)does not constitute a defense in any prosecution for the offense of viatical settlement fraud.

(c)Any person engaged in the business of viatical settlements having knowledge or a reasonable suspicion that a viatical settlement fraud is being, will be, or has been committed shall provide to the Director such information as required by, and in a manner prescribed by, the Director.

Any other person having knowledge or a reasonable belief that viatical settlement fraud is being, will be, or has been committed may provide to the Director the information required by, and in a manner prescribed by, the Director.

(d)No civil liability shall be imposed on and no cause of action shall arise from a person's furnishing information concerning suspected, anticipated, or completed viatical settlement fraud or suspected or completed fraudulent insurance acts, if the information is provided to or received from:

(1)the Director or the Director'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 viatical settlement fraud or

that person's agents, employees, or representatives;

(4)the NAIC, the National Association of Securities Dealers (NASD), the North American

Securities Administrators Association (NASAA), or their employees, agents, or representatives, or other regulatory body overseeing life insurance, viatical settlements, securities, or investment fraud; or

(5)the life insurer that issued the life insurance policy covering the life of the

insured.

(e)The immunity provided by subsection

(d)of this Section shall not apply to false statements made willfully or wantonly. In an action brought against a person for filing a report or furnishing other information concerning viatical settlement fraud, the party bringing the action shall plead specifically any allegation that subsection

(d)does not apply.

(f)A person furnishing information as identified in subsection

(d)of this Section shall be entitled to an award of attorney's fees and costs if the 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 Act and the party bringing the action was not substantially justified in doing so. For purposes of this Section a proceeding is substantially justified if it had a reasonable basis in law or fact at the time that it was initiated. However, such an award does not apply to any person furnishing information concerning the person's own fraudulent viatical settlement acts.

(g)This Section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in subsection

(d)of this Section.

Subsection

(d)of this Section does not apply to a person furnishing information concerning that person's own suspected, anticipated, or completed viatical settlement fraud or suspected, anticipated, or completed fraudulent insurance acts.

(h)The documents and evidence provided pursuant to subsection

(d)of this Section or obtained by the Director in an investigation of suspected or actual viatical settlement fraud shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action. This subsection

(h)does not prohibit release by the Director of documents and evidence obtained in an investigation of suspected or actual viatical settlement fraud:

(1)in administrative or judicial proceedings to enforce laws administered by the Director;

(2)to federal, State, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing viatical settlement fraud or to the NAIC; or

(3)at the discretion of the Director, to a person in the business of viatical settlements that is aggrieved by a viatical settlement fraud. Release of documents and evidence under this subsection

(h)does not abrogate or modify the privilege granted in this subsection.

(i)This Act shall not do any of the following:

(1)Preempt the authority or relieve the duty of other law enforcement or regulatory

agencies to investigate, examine and prosecute suspected violations of law.

(2)Prevent or prohibit a person from disclosing voluntarily information concerning

viatical settlement fraud to a law enforcement or regulatory agency other than the Division.

(3)Limit the powers granted elsewhere by the laws of this State to the Director or an

insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.

(j)Viatical settlement providers and viatical settlement brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute, and prevent viatical settlement fraud. At the discretion of the Director, the Director may order, or a licensee may request and the Director 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 shall include the following:

(1)fraud investigators, who may be viatical settlement providers or viatical settlement

broker employees or independent contractors; and

(2)an antifraud plan, which shall be submitted to the Director. The antifraud plan

shall include, but not be limited to:

(A)a description of the procedures for detecting and investigating possible

viatical settlement fraud and procedures for resolving material inconsistencies between medical records and insurance applications;

(B)a description of the procedures for reporting possible viatical settlement fraud

to the Director;

(C)a description of the plan for antifraud education and training of underwriters

and other personnel;

(D)a description or chart outlining the organizational arrangement of the antifraud

personnel who are responsible for the investigation and reporting of possible viatical settlement fraud and investigating unresolved material inconsistencies between medical records and insurance applications; and

(E)a description of the procedures used to perform initial and continuing review of

the accuracy of life expectancies used in connection with a viatical settlement contract.

Antifraud plans submitted to the Director shall be privileged and confidential and are not public record and are not subject to discovery or subpoena in a civil or criminal action.