2005-2006 Bill 639: Insurance Department - South Carolina Legislature Online

1 South Carolina General Assembly 2 116th Session, 2005-2006 3 4 S. 639 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Senator Thomas 10 Document Path: l:\council\bills\ms\7349ahb05.doc 11 12 Introduced in the Senate on March 22, 2005 13 Currently residing in the Senate 14 15 Summary: Insurance Department 16 17 18 HISTORY OF LEGISLATIVE ACTIONS 19 20 Date Body Action Description with journal page number 21 3/22/2005 Senate Introduced and read first time SJ-2 22 3/22/2005 Senate Referred to Committee on Banking and Insurance SJ-2 23 2/8/2006 Senate Committee report: Favorable with amendment Banking and Insurance SJ-10 24 2/9/2006 Scrivener's error corrected 25 26 27 VERSIONS OF THIS BILL 28 29 3/22/2005 30 2/8/2006 31 2/9/2006 32 1 Indicates Matter Stricken 2 Indicates New Matter 3 4 COMMITTEE REPORT 5 February 8, 2006 6 7 S. 639 8 9 Introduced by Senator Thomas 10 11 S. Printed 2/8/06--S. [SEC 2/9/06 4:02 PM] 12 Read the first time March 22, 2005. 13 14 15 THE COMMITTEE ON BANKING AND INSURANCE 16 To whom was referred a Bill (S. 639) to amend Section 38-1-20, 17 as amended, Code of Laws of South Carolina, 1976, relating to 18 definitions for insurance purposes, so as to define the terms, etc., 19 respectfully 20 REPORT: 21 That they have duly and carefully considered the same and 22 recommend that the same do pass with amendment: 23 24 Amend the bill, as and if amended, by striking on page 3, lines 25 8-13 and inserting: 26 / (C) The penalties in items (1) and (2) may be assessed 27 only after a contested case hearing or if the violator does not 28 request a contested case hearing, the penalties in items (1) and (2) 29 may be assessed following the execution of a consent order by the 30 parties involved after thirty days following notice by the director 31 or his designee of the intent to assess a penalty pursuant to this 32 section.” /. 33 Amend the bill further, as and if amended, by striking on page 3, 34 lines 21 and 22 that read / or by one or more of his duly authorized 35 assistants or agents. All Notwithstanding another provision of law, 36 all contested case/ 37 and inserting: 38 / or by one or more of his duly authorized assistants or agents. 39 All contested case /. 40 Amend the bill further, as and if amended, by striking on page 4, 41 lines 4 and 5 that read / “Section 38-3-210. Any Notwithstanding

1 [639-1] 1 another provision of law, a final order or decision made, issued, or 2 executed by the / 3 and inserting: 4 / “Section 38-3-210. Any A final order or decision made, 5 issued, or executed by the /. 6 Renumber sections to conform. 7 Amend title to conform. 8 9 DAVID L. THOMAS for Committee. 10 11 12 13 STATEMENT OF ESTIMATED FISCAL IMPACT 14 ESTIMATED FISCAL IMPACT ON GENERAL FUND 15 EXPENDITURES: 16 $0 (No additional expenditures or savings are expected) 17 ESTIMATED FISCAL IMPACT ON FEDERAL & OTHER 18 FUND EXPENDITURES: 19 $0 (No additional expenditures or savings are expected) 20 EXPLANATION OF IMPACT: 21 The Department of Insurance and the Administrative Law Judge 22 Division reports this bill will have no impact on the General Fund 23 of the State, or on federal and/or other funds. 24 25 Approved By: 26 Don Addy 27 Office of State Budget 28

1 [639-2] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 38-1-20, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO 13 DEFINITIONS FOR INSURANCE PURPOSES, SO AS TO 14 DEFINE THE TERMS “APPEAL”, “HEARING”, “PUBLIC 15 HEARING”, “PROCEEDING”, “NOTICE”, AND 16 “REGULATION HEARING”; TO AMEND SECTION 38-2-10, 17 RELATING TO ADMINISTRATIVE PENALTIES, SO AS TO 18 PROVIDE THAT THE PENALTIES MAY BE ASSESSED 19 ONLY AFTER A CONTESTED CASE HEARING AND TO 20 REQUIRE NOTICE TO A VIOLATOR WHEN A CONTESTED 21 CASE HEARING IS NOT REQUESTED BEFORE A PENALTY 22 IS ASSESSED; TO AMEND SECTION 38-3-150, RELATING 23 TO HEARINGS CONDUCTED BY THE DIRECTOR OF THE 24 DEPARTMENT OF INSURANCE OR HIS AUTHORIZED 25 AGENTS, SO AS TO CLARIFY THAT THE HEARINGS ARE 26 CONTESTED CASE HEARINGS; TO AMEND SECTION 27 38-3-170, RELATING TO NOTICE OF THE HEARINGS, SO 28 AS TO CLARIFY THAT THE HEARINGS ARE CONTESTED 29 CASE HEARINGS AND TO PROVIDE THAT THEY ARE TO 30 BE CONDUCTED BY THE DIRECTOR OF THE 31 DEPARTMENT OF INSURANCE OR HIS DESIGNEE IN 32 ACCORDANCE WITH THE PROVISIONS OF CHAPTER 23, 33 TITLE 1; TO AMEND SECTION 38-3-210, RELATING TO 34 APPEALS ORDERS OF THE DIRECTOR OF THE 35 DEPARTMENT OF INSURANCE, SO AS TO PROVIDE THAT 36 APPEALS ARE TO THE ADMINISTRATIVE LAW COURT IN 37 ACCORDANCE WITH ITS RULES OF PROCEDURE; TO 38 AMEND SECTION 38-5-160, RELATING TO THE 39 PROCEDURE FOR THE DIRECTOR OF THE DEPARTMENT 40 OF INSURANCE TO APPLY FOR AN INJUNCTION, SO AS 41 TO PROVIDE THAT THE DIRECTOR MAY APPLY TO THE 42 ADMINISTRATIVE LAW COURT RATHER THAN THE

1 [639] 1 1 CIRCUIT COURT FOR AN INJUNCTION; AND TO REPEAL 2 SECTION 38-3-180, RELATING TO THE DIRECTOR OF THE 3 DEPARTMENT OF INSURANCE’S ABILITY TO SUMMON 4 WITNESSES AND PUNISH FOR CONTEMPT. 5 6 Be it enacted by the General Assembly of the State of South 7 Carolina: 8 9 SECTION 1. Section 38-1-20 of the 1976 Code, as last amended 10 by Act 290 of 2004, is further amended by adding appropriately 11 numbered items to read: 12 13 “( ) ‘Appeal’ means an appeal from a final decision of the 14 director or his designee after a contested case hearing that must be 15 made in accordance with the rules of procedure of the 16 Administrative Law Court. 17 ( ) ‘Hearing’, ‘public hearing’, or ‘proceeding’ means a 18 contested case hearing as defined in Section 1-23-310(3). 19 ( ) ‘Notice’ means notice of a hearing as defined in Section 20 1-23-320. 21 ( ) ‘Regulation hearing’ means a hearing in accordance with 22 Section 1-23-110. 23 24 SECTION 2. Section 38-2-10 of the 1976 Code is amended to 25 read: 26 27 “Section 38-2-10. (A) Unless otherwise specifically provided 28 by law, the following administrative penalties apply for each 29 violation of the insurance laws of this State: 30 (1) If the violator is an insurer or a health maintenance 31 organization licensed in this State, the director or his designee 32 shall (a) fine the violator in an amount not to exceed fifteen 33 thousand dollars, or (b) suspend or revoke the violator’s authority 34 to do business in this State, or both. If the violation is wilful, the 35 director or his designee shall (a) fine the violator in an amount not 36 to exceed thirty thousand dollars, or (b) suspend or revoke the 37 violator’s authority to do business in this State, or both. 38 (2) If the violator is a person, other than an insurer or a 39 health maintenance organization, licensed by the director or his 40 designee in this State, the director or his designee shall (a) fine the 41 person in an amount not to exceed two thousand five hundred 42 dollars, or (b) suspend or revoke the license of the person, or both. 43 If the violation is wilful, the director or his designee shall (a) fine

1 [639] 2 1 the person in an amount not to exceed five thousand dollars, or (b) 2 suspend or revoke the license of the person, or both. 3 (B) The penalties in items (1) and (2) are in addition to any 4 criminal penalties provided by law or any other remedies provided 5 by law. The administrative proceedings in items (1) and (2) do not 6 preclude civil or criminal proceedings from taking place before, 7 during, or after the administrative proceeding. 8 (C) The penalties in items (1) and (2) may be assessed only 9 after a contested case hearing or if the violator does not request a 10 contested case hearing, the penalties in items (1) and (2) may be 11 assessed only after thirty days following notice by the director or 12 his designee of the intent to assess a penalty pursuant to this 13 section.” 14 15 SECTION 3. Section 38-3-150 of the 1976 Code is amended to 16 read: 17 18 “Section 38-3-150. All examinations or investigations provided 19 by this title, unless otherwise provided by any other another 20 insurance laws law of this State, may be conducted by the director 21 or by one or more of his duly authorized assistants or agents. All 22 Notwithstanding another provision of law, all contested case 23 hearings provided by this title must be held by the director or by 24 one of his duly authorized assistants or agents when authorized to 25 do so in writing by the director. However, in any a contested case 26 hearing concerning the adjustment of insurance rates, the director 27 or his designee may conduct the hearing.” 28 29 SECTION 4. Section 38-3-170 of the 1976 Code is amended to 30 read: 31 32 “Section 38-3-170. All contested case hearings, unless otherwise 33 specifically provided, must be held at the time and place 34 designated in a written notice given by the director or his designee 35 to the person cited to appear at least thirty days before the 36 designated date. The notice shall state the subject of the inquiry 37 and specific charges, if any. It is sufficient to give notice either by 38 delivering it to the person or by depositing it in the United States 39 mail, postage prepaid, addressed to the last known address of the 40 person and registered with return receipt requested by the director 41 or his designee in accordance with the provisions of Chapter 23, 42 Title 1.” 43

1 [639] 3 1 SECTION 5. Section 38-3-210 of the 1976 Code is amended to 2 read: 3 4 “Section 38-3-210. Any Notwithstanding another provision of 5 law, a final order or decision made, issued, or executed by the 6 director or his designee after a contested case hearing is subject to 7 judicial review by the Administrative Law Court in accordance 8 with the its appellate procedures of the South Carolina 9 Administrative Law Judge Division, as provided by law rules of 10 procedure. An appeal from an order or decision under this section 11 must be heard in the Administrative Law Judge Division, as 12 provided by law. The administrative law judge or judges may not, 13 under any terms, order a stay of enforcement of any an order of the 14 director or his designee to make good an impairment of capital or 15 surplus or a deficiency in the amount of admitted assets.” 16 17 SECTION 6. Section 38-5-160 of the 1976 Code is amended to 18 read: 19 20 “Section 38-5-160. If he considers it necessary, the director or 21 his designee may apply to a judge of the circuit court the 22 Administrative Law Court to issue an injunction restraining a 23 domestic insurer whose certificate of authority has been 24 suspended, in whole or in part, from proceeding further with its 25 business. The administrative law judge may immediately issue the 26 injunction and, upon notice and after a full hearing of the matter, 27 may: 28 (a) (1) dissolve or modify the injunction or make it permanent, ; 29 (b) (2) make all orders and judgments necessary in the matter, ; 30 and 31 (c) (3) appoint agents or a receiver to take possession of the 32 property and effects of the insurer and to settle its affairs, subject 33 to any rules and orders the court prescribes.” 34 35 SECTION 7. Section 38-3-180 of the 1976 Code is repealed. 36 37 SECTION 8. The repeal or amendment by this act of any law, 38 whether temporary or permanent or civil or criminal, does not 39 affect pending actions, rights, duties, or liabilities founded thereon, 40 or alter, discharge, release or extinguish any penalty, forfeiture, or 41 liability incurred under the repealed or amended law, unless the 42 repealed or amended provision shall so expressly provide. After 43 the effective date of this act, all laws repealed or amended by this

1 [639] 4 1 act must be taken and treated as remaining in full force and effect 2 for the purpose of sustaining any pending or vested right, civil 3 action, special proceeding, criminal prosecution, or appeal existing 4 as of the effective date of this act, and for the enforcement of 5 rights, duties, penalties, forfeitures, and liabilities as they stood 6 under the repealed or amended laws. 7 8 SECTION 9. If any section, subsection, paragraph, subparagraph, 9 sentence, clause, phrase, or word of this act is for any reason held 10 to be unconstitutional or invalid, such holding shall not affect the 11 constitutionality or validity of the remaining portions of this act, 12 the General Assembly hereby declaring that it would have passed 13 this act, and each and every section, subsection, paragraph, 14 subparagraph, sentence, clause, phrase, and word thereof, 15 irrespective of the fact that any one or more other sections, 16 subsections, paragraphs, subparagraphs, sentences, clauses, 17 phrases, or words hereof may be declared to be unconstitutional, 18 invalid, or otherwise ineffective. 19 20 SECTION 10. This act takes effect upon approval by the 21 Governor. 22 ----XX---- 23

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