N.Y. Insurance Law § 411: Life settlements fraud prevention plans

§ 411. Life settlements fraud prevention plans. (a) Every life

settlement provider shall file with the superintendent a plan for the

detection, investigation and prevention of fraudulent life settlement

acts in this state and those fraudulent life settlement acts affecting

life settlement contracts in this state.

(1) The plan shall provide the time and manner in which such plan

shall be implemented, including provisions for a special investigations

unit and staffing levels within such unit. Such investigators shall be

responsible for investigating information on or cases of suspected

fraudulent activity and for effectively implementing fraud prevention

and reduction activities pursuant to the plan filed with the

superintendent. A life settlement provider shall include in such plan

staffing levels and allocations of resources of such special

investigations unit that shall be sufficient and appropriate for the

proper implementation of the plan and approval of such plan pursuant to

subsection (c) of this section.

(2) In lieu of a special investigations unit, a life settlement

provider may contract with a provider of services related to the

investigation of information on or cases of suspected fraudulent

activities; provided, however, that a life settlement provider that opts

for contracting with a separate provider of services, shall provide to

the superintendent a detailed plan therefor, pursuant to requirements

set forth in regulation by the superintendent.

(3) A person employed by a special investigations unit or an

independent provider of investigative services under contract with a

life settlement provider shall be qualified by education or experience

to act in such capacity, subject to requirements established by the

superintendent in a regulation.

(b) The plan shall provide for the following:

(1) interface of special investigations unit personnel with law

enforcement and prosecutorial agencies, including the financial frauds

and consumer protection unit in the department;

(2) reporting of fraud data to a central organization approved by the

superintendent;

(3) in-service education and training for personnel in identifying and

evaluating instances of suspected fraudulent activity;

(4) coordination with other units of a life settlement provider for

the investigation and initiation of civil actions based upon information

received by or through the special investigation unit;

(5) public awareness of the cost and frequency of fraudulent

activities, and the methods of preventing fraud;

(6) development and use of a fraud detection and procedures manual to

assist in the detection and elimination of fraudulent activity; and

(7) the time and manner in which such plan shall be implemented and a

demonstration that the fraud prevention and reduction measures outlined

in the plan will be fully implemented.

(c)(1) A fraud detection and prevention plan filed by a life

settlement provider with the superintendent pursuant to this section

shall be deemed approved by the superintendent if not returned by the

superintendent for revision within one hundred twenty days of the date

of filing. If the superintendent returns a plan for revision, the

superintendent shall state the points of objection with such plan, and

any amendments as the superintendent may require consistent with the

provisions of this section, including staffing levels, resource

allocation, or other policy or operational considerations. An amended

plan reflecting the changes shall be filed with the superintendent

within forty-five days from the date of return.

(2) If the superintendent has returned a plan for revision more than

one time, then the life settlement provider shall be entitled to a

hearing pursuant to the provisions of article three of this chapter and

regulations promulgated thereunder.

(3) If a life settlement provider fails to submit a final plan within

thirty days after a determination of the superintendent after the

hearing held pursuant to paragraph two of this subsection, or otherwise

fails to submit a plan, or fails to implement the provisions of a plan

in a time and manner provided for in such plan, or otherwise refuses to

comply with the provisions of this section, the superintendent may

impose:

(A) a fine of not more than two thousand dollars per day for such

failure by a life settlement provider until the superintendent deems the

life settlement provider to be in compliance;

(B) upon the life settlement provider a fraud detection and prevention

plan deemed to be appropriate by the superintendent, which shall be

implemented by the life settlement provider; or

(C) both a fine and a fraud detection and prevention plan pursuant to

subparagraphs (A) and (B) of this paragraph.

(d) Any plan, the information contained therein, or correspondence

related thereto, or any other information furnished pursuant to this

section shall be deemed to be a confidential communication and shall not

be open for review or be subject to a subpoena except by a court order

or by request from any law enforcement agency or authority.

(e) Every life settlement provider required to file a fraud prevention

plan shall report to the superintendent on an annual basis, no later

than March fifteenth, describing the provider's experience, performance

and cost effectiveness in implementing the plan, utilizing such forms as

the superintendent may prescribe. Upon consideration of such reports,

the superintendent may require amendments to the provider's fraud

detection and prevention plan as deemed necessary.