2000 -- H 7837
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LC02389
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2000
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A N A C T
RELATING TO INSURANCE COMPLIANCE SELF AUDIT
It is enacted by the General Assembly as follows:
SECTION 1. Title 27 of the General Laws entitled "Insurance" is hereby amended by adding thereto the following chapter:
CHAPTER 12.3
INSURANCE COMPLIANCE SELF AUDIT
27-12.3-1. Definitions. --
The following words, as used in this section, unless the context otherwise requires, shall have the following meanings:(1) "Insurance compliance self audit" means a voluntary evaluation, review, assessment, or audit not otherwise expressly required by law of an insurer, or of management systems related to the insurer or activity, that is designed to identify and prevent noncompliance and to improve compliance with such statutes, rules, or orders. An insurance compliance self audit may be conducted by the insurer, its employees, or by independent contractors.
(2) "Insurance compliance self audit document" means any document prepared as a result of or in connection with and not prior to an insurance compliance self audit. An insurance compliance self audit document includes a written response to the findings of an insurance compliance self audit. An insurance compliance self audit document includes, but is not limited to, field notes and records of observations, findings, opinions, suggestions, conclusions, drafts, memoranda, drawings, photographs, computer generated or electronically recorded information, phone records, maps, charts, graphs, and surveys, provided this supporting information is collected or developed for the primary purpose and in the course of an insurance compliance self audit. An insurance compliance self audit document also includes any of the following:
(a) A report prepared by an auditor, who may be an employee of the insurer or an independent contractor, which may include the scope of the audit, the information gained in the audit, and conclusions and recommendations, with exhibits and appendices;
(b) Memoranda and documents analyzing portions or all of the report and discussing potential implementation issues;
(c) An implementation plan that addresses correcting past noncompliance, improving current compliance, and preventing future noncompliance; or
(d) Analytic data generated in the course of conducting the insurance compliance self audit.
27-12.3-2. Insurance compliance self audit document. --
(a) An insurance compliance self audit document is privileged information and is not discoverable or admissible as evidence in any civil or criminal legal action, or in any administrative proceeding, except as provided in subsections (3) and (4) of this section. In the event that any insurance compliance self audit document provided by an insurer to the commissioner is disclosed to a third party by the commissioner's office, that document shall not be admissible as evidence in any civil or criminal legal action or administrative proceeding. The privilege created in this paragraph is a matter of the substantive law of this state.(b) If any insurer, person, or entity performs or directs the performance of an insurance compliance self audit, an officer or employee involved with the insurance compliance self audit, or any consultant who is hired for the purpose of performing the insurance compliance self audit, may not be examined in any civil, criminal, or administrative proceeding as to the insurance compliance self audit or any insurance compliance self audit document, as defined in this section. This paragraph shall not apply if the privilege set forth in paragraph (a) of this subsection is determined under sections 27-12.3-3 or 27-12.3-4.
(c) An insurer may voluntarily submit, in connection with examinations conducted under this chapter, an insurance compliance self audit document to the commissioner, or his or her designee, as a confidential document without waiving the privilege set forth in this section to which the insurer would otherwise be entitled. Any provisions permitting the commissioner to make records and reports public shall not apply to any insurance compliance self audit document voluntarily submitted under this paragraph. Nothing contained in this section shall give the commissioner any authority to compel an insurer to disclose involuntarily or otherwise provide an insurance compliance self audit document. Any insurance compliance self audit document submitted to the commissioner shall remain the property of the insurer. An insurance compliance self audit document submitted to the commissioner under this paragraph may be forwarded to the national association of insurance commissioners or an insurance commissioner in another state; provided, however, that the document retains the insurance self evaluation privilege recognized by this statute (as well as any other applicable privilege) and the receiving commissioner or the national association of insurance commissioners recognizes the privileged status of the document.
27-12.3-3. Privilege waived by so stating its intent in writing. --
(a) The privilege set forth in section 27-12.3-2 does not apply to the extent the insurer that prepared or caused to be prepared the insurance compliance self audit document expressly waives the privilege by so stating its intent in writing.(b) In a civil or administrative proceeding, a court of record may, after an in camera review, require disclosure of material for which the privilege set forth in section 27-12.3-2 is asserted, if the court determines one of the following:
(1) The privilege is asserted for a fraudulent purpose; or
(2) The material is not subject to the privilege.
(c) The privilege set forth in section 27-12.3-2 does not apply if the material contains evidence relevant to commission of a criminal offense under the state insurance laws, and all of the following factors are present:
(1) The commissioner or attorney general has a compelling need for the information;
(2) The information is not otherwise available; and
(3) The commissioner or attorney general is unable to obtain the substantial equivalent of the information by any means without incurring unreasonable cost and delay.
27-12.3-4. Hearing. --
(a) Within thirty (30) days after the commissioner under section 27-12.3-3(b), or attorney general under section 27-12.3-3(c), makes a written request by certified mail for disclosure of an insurance compliance self audit document, the insurer that prepared or caused the document to be prepared may file with the appropriate court a petition requesting an in camera hearing on whether the insurance compliance self audit document or portions of the document are privileged or subject to disclosure. An insurer asserting the insurance compliance self audit privilege in response to a request for disclosure under this subsection shall include in its request for an in camera hearing all of the information set forth in paragraph (d) of this subsection.(b) Upon the filing of a petition under this subsection, the court shall issue an order scheduling, within forty-five (45) days after the filing of the petition, an in camera hearing to determine whether the insurance compliance self audit document or portions of the document are privileged under this section or subject to disclosure.
(c) The court, after an in camera review, may require disclosure of material for which the privilege in section 27-12.3-2 is asserted if the court determines, based upon its in camera review, that any one of the conditions set forth in section 27-12.3-3(b)(1) and (2) is applicable as to a civil or administrative proceeding or that any one of the conditions set forth in section 27-12.3-3(c)(1) to (3) is applicable as to a criminal proceeding. Upon making such a determination, the court may only compel the disclosure of those portions of an insurance compliance self audit document relevant to issues in dispute in the underlying proceeding. A party unsuccessfully opposing disclosure may apply to the court for an appropriate order protecting the document from further disclosure.
(d) An insurer asserting the insurance compliance self audit privilege in response to a request for disclosure under this subsection shall provide to the commissioner or attorney general, as the case may be, at the time of filing any objection to the disclosure, all of the following information:
(1) The date of the insurance compliance self audit document;
(2) The identity of the entity conducting the audit;
(3) The general nature of the activities covered by the insurance compliance self audit; and
(4) An identification of the portions of the insurance compliance self audit document for which the privilege is being asserted.
27-12.3-5. Burden of demonstrating applicability of the privilege. --
(a) An insurer asserting the insurance compliance self audit privilege set forth in section 27-12.3-2 has the burden of demonstrating the applicability of the privilege. A party seeking disclosure under section 27-12.3-3(b)(1) or (2) has the burden of proving that the privilege is asserted for a fraudulent purpose or that the privilege is not available. The commissioner or attorney general seeking disclosure under section 27-12.3-3(c) has the burden of proving the elements set forth in section 27-12.3-3(c).(b) The parties may at any time stipulate in proceedings under section 27-12.3-3 or 27-12.3-4 to entry of an order directing that specific information contained in an insurance compliance self audit document is or is not subject to the privilege provided under 27-12.3-2.
27-12.3-6. Privileges not allowed. --
The privilege set forth in section 27-12.3-2 shall not extend to any of the following:(a) Documents, communications, data, reports, or other information required to be collected, developed, maintained, reported, or otherwise made available to a regulatory agency pursuant to this code or other federal or state law, rule, or order;
(b) Information obtained by observation or monitoring by any regulatory agency; or
(c) Information obtained from a source independent of the insurance compliance audit.
27-12.3-7. No waiver or limitation to statutory or common law privilege. --
Nothing in this section shall limit, waive, or abrogate the scope or nature of any statutory or common law privilege including, but not limited to, the work product doctrine the attorney-client privilege, or the subsequent remedial measures exclusion.27-12.3-8. Immunity from imposition of penalties. --
Insurers shall be immune from the imposition of all penalties under the state insurance laws for any violations of those laws which meet all of the following:(a) The violations were the subject of an "insurance compliance self audit" as defined in section 27-12.3-1; and
(b) The insurer has taken reasonable steps to correct such violations within ninety (90) days of the conclusion of the insurance compliance self audit.
27-12.3-9. Confidentiality of information. --
The commissioner is required to maintain the confidentiality of information protected under this section, subject to the specific exceptions set forth in section 27-12.3-6 and section 27-12.3-4.SECTION 2. This act shall take effect upon passage.
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LC02389
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO InSURANCE COMPLIANCE SELF AUDIT
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This act encourages the voluntary review and in house evaluation by insurance companies of their regulatory compliance systems and programs.
This act would take effect upon passage.
