N.Y. Insurance Law § 4413: Prohibitions

§ 4413. Prohibitions. (a) The trustees of every employee welfare fund

shall be responsible in a fiduciary capacity for all assets received,

managed or disbursed by them, or under their authority, on behalf of

such fund.

(b) (1) No such fund and no employer or labor organization

representing any employees eligible for employee benefits thereunder,

and no trustee or other officer or employee of any such fund, employer

or labor organization shall receive, directly or indirectly, any thing

of value from any insurance company, insurance agent, insurance broker

or any hospital, surgical, dental or medical service plan, in connection

with the solicitation, sale, service or administration of a contract

providing employee benefits for such fund. No such employer, labor

organization, trustee, officer or employee shall receive any thing of

value from such fund, or which is charged against such fund or would

otherwise be payable to such fund, either directly or indirectly, except

that any such person may receive any employee benefits to which he is

otherwise entitled, and any such trustee or other officer or employee of

a fund, may receive from such fund reasonable compensation for necessary

services and expenses rendered or incurred by him in connection with his

official duties as such. Nothing in this subsection shall affect the

payment of any dividend or rate credit or other adjustment due under the

terms of any insurance or annuity contract.

(2) No insurance company, insurance agent or insurance broker,

hospital, surgical, dental or medical service plan, shall directly or

indirectly, pay any commission, make any loan or give any thing of value

to any employee welfare fund or to any employer or labor organization

representing any employees eligible for employee benefits thereunder or

to any trustee or other officer or employee of any such fund, employer

or labor organization, in connection with the solicitation, sale,

service or administration of a contract providing employee benefits for

such fund.

(3) The superintendent may, after notice and a hearing, prohibit the

trustees of an employee welfare fund from employing or retaining or

continuing to employ or retain any person upon finding that such

employment or retention involves a conflict of interest which is not in

the best interests of the fund or adversely affects the interests of

covered employees.

(4) The superintendent may, by regulation or order, and upon such

terms and conditions as he requires, authorize or approve any

transaction or transactions otherwise prohibited by this subsection upon

his finding that the transaction or transactions promote or will promote

the best interests of the relevant employee welfare funds, and do not or

will not adversely affect the interests of the covered employees.

(c) (1) No person who has been convicted by a court of the United

States or by a court of any state or territory thereof of a felony, or

of any crime or offense involving fraudulent or dishonest practices,

shall serve, be appointed, designated or employed as a trustee,

administrator, officer, agent or employee of any employee welfare fund

(other than an employee performing non-discretionary clerical or

building maintenance duties exclusively) during or for five years after

such conviction or the suspension of sentence therefor or from the date

of his unrevoked release from custody by parole, commutation or

termination of sentence, whichever event occurs later, unless prior to

the expiration of said five year period the conviction is finally

reversed by a court of competent jurisdiction or he has been pardoned

therefor by the governor or other appropriate authority of the state or

jurisdiction in which he was convicted or he has received a certificate

of relief from disabilities or a certificate of good conduct pursuant to

the provisions of article twenty-three of the correction law which

specifically removes the disability herein provided.

(2) If the superintendent, after notice and a hearing, finds that a

person has been or is currently serving, appointed, designated or

employed in violation of the provisions of this subsection, he shall

enter an order removing such person from his position and directing that

such person shall be disabled from service, appointment, designation or

employment in any of the capacities hereinabove described for a period

of five years following the entry of such order. The superintendent may,

in addition, impose the penalties provided in subsection (e) of this

section for the wilful violation hereof.

(d) (1) No insurance company shall pay any dividend or retrospective

rate credit on any covering policy except by check payable to the

affected employee welfare fund or by credit memo forwarded to such fund.

(2) No employee welfare fund shall pay any premium on a covering

policy except by check payable to the insurance company directly.

(3) No political contributions shall be made directly or indirectly by

or from any employee welfare fund.

(e) The superintendent may impose a penalty of not to exceed

twenty-five hundred dollars upon any trustee or other officer, agent or

employee of any employee welfare fund subject to this article or may

remove such trustee, officer, agent or employee from office or

employment, or both such penalty and removal, if after notice and a

hearing he shall find that he has wilfully failed to comply with the

requirements of this article.

(f) In any case where, after notice and a hearing, the superintendent

finds that any employee welfare fund has been depleted by reason of any

wrongful or negligent act or omission of a trustee or of any other

person, he may transmit a copy of his findings to the attorney general.

The attorney general may bring an action in the name of the people of

the state, or intervene in an action brought by or on behalf of an

employee, to recover the monies of the fund for the benefit of the

employees and other persons as may have an interest in the fund.

(g) (1) Any person who wilfully violates or causes or induces the

violation of any provision of this article or any regulation issued

under it shall be in violation of the provisions of this chapter.

(2) Any person who makes a false statement or representation of a

material fact, knowing it to be false, or who knowingly fails to

disclose a material fact in any registration, examination, statement or

report required under this article or the regulations thereunder shall

be guilty of a misdemeanor.

(3) Any person who makes a false entry in any book, record, report, or

statement required by this article or any regulation thereunder, to be

kept by him for any employee welfare fund, with intent to injure or

defraud such fund or any beneficiary thereunder, or to deceive any one

authorized or entitled to examine the affairs of such fund, shall be

guilty of a misdemeanor.

(4) Nothing in paragraph two or three of this subsection shall be

construed in any manner to limit the effect of paragraph one hereof.