P.R. Laws tit. 26, § 4226

2019-02-20 00:00:00+00

§ 4226. Examinations or investigations

(a) Authority, scope and scheduling of examinations.—

(1) The Commissioner may conduct an examination under this chapter of an authorized person or entity as often as the Commissioner in his or her sole discretion deems appropriate.

(2) For purposes of completing an examination of an authorized person or entity under this chapter, the commissioner may examine or investigate any person, or the business of any person, in so far as the examination or investigation is, in the sole discretion of the Commissioner, necessary or material to the examination of the authorized person or entity.

(3) In lieu of an examination of any foreign or alien person or entity authorized in Puerto Rico under this chapter, the Commissioner may, at her/his discretion, accept an examination report on the authorized person or entity as prepared by the Commissioner for the state of domicile or port-of-entry state of said authorized person or entity.

(b) Record retention requirements.—

(1) A person required to be licensed by this chapter shall retain for five (5) years copies of the following documents:

(A) Proposed, offered or executed contracts, purchase agreements, underwriting documents, policy forms, and applications from the date of the proposal, offer or execution of the contract or purchase agreement, whichever is later;

(B) all checks, drafts or other evidence and documentation related to the payment, transfer, deposit or release of funds from the date of the transaction, and

(2) This section does not waive a person’s obligation to produce these documents to the Commissioner after the retention period has expired if the person has retained the documents.

(3) Records required to be retained by this section must be legible and complete and may be retained in paper, photograph, microprocessor, magnetic, mechanical, or electronic media, or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.

(1) Upon determining that an examination should be conducted, the Commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners’ Handbook adopted by the National Association of Insurance Commissioners (NAIC). The examiners may also employ such other guidelines or procedures, as the Commissioner may deem appropriate.

(2) Every authorized person or entity, or person from whom information is sought, its officers, directors and agents shall provide to the examiners timely, convenient and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets and computer or other recordings relating to the property, assets, business and affairs of the authorized person or entity being examined. The officers, directors, employees and agents of the authorized person or entity shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of an authorized person or entity, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the Commissioner shall be grounds for suspension or refusal of, or non renewal of any license or authority held by the authorized person or entity to engage in the viatical settlement business or other business subject to the Commissioner’s jurisdiction. Any proceedings for suspension, revocation or refusal of any license or authority shall be conducted pursuant to the Insurance Code of Puerto Rico and the Uniform Administrative Procedures Act of Puerto Rico, §§ 2101 et seq. of Title 3.

(3) The Commissioner shall have the power to issue subpoenas, to administer oaths and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the Commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court.

(4) When making an examination under this chapter, the Commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the authorized person or entity that is the subject of the examination.

(5) Nothing contained in this chapter shall be construed to limit the Commissioner’s authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the Insurance Code of Puerto Rico. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or administrative action.

(6) Nothing contained in this chapter shall be construed to limit the Commissioner’s authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or administrative action which the Commissioner may, in his or her sole discretion, deem appropriate.

(d) Examination reports.—

(1) Examination reports shall be comprised of only facts appearing upon the books, records or other documents of the authorized person or entity, its agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from the facts. These reports shall never disclose the viators’ confidential financial, medical or personal information.

(2) The Commissioner shall transmit the report to the authorized person or entity investigated or examined, together with a notice that shall afford the authorized person or entity a reasonable opportunity of not more than twenty (20) days to make a written comment or rebuttal with respect to any matters contained in the examination report.

(3) The Commissioner may initiate any proceedings or actions provided by law, if at his/her discretion the Commissioner determines that it is appropriate as a result of an investigation or examination.

(e) Confidentiality of examination information.—

(1) Names and individual identification data for all viators shall be considered private and confidential information and shall not be disclosed by the Commissioner, unless required by law.

(2) Except as otherwise provided in this chapter, all working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the Commissioner or any other person in the course of an investigation or examination made under this chapter, or in the course of analysis or investigation by the Commissioner of the financial condition or market conduct of an authorized person or entity shall be confidential by law and therefore privileged, and shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action, unless otherwise ordered by the court. The Commissioner is authorized to use the documents, materials or other information regarding any administrative or legal action brought as part of the Commissioner’s official duties.

(3) Documents, materials or other information, including, but not limited to, all working papers, and copies thereof, in the possession or control of the NAIC and its affiliates and subsidiaries shall be confidential by law and therefore privileged information, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action if they are:

(A) Created, produced and/or obtained by or disclosed to the NAIC and its affiliates and subsidiaries in the course of assisting an investigation or examination made under this chapter, or assisting the Commissioner in the analysis or investigation of the financial condition or market conduct of an authorized person or entity, or

(B) disclosed to the NAIC and its affiliates and subsidiaries under clause (4) of this subsection by the Commissioner.

(C) For the purposes of clauses (2) and (3) of this subsection, “act” includes the law of another state or jurisdiction that is substantially similar to this chapter.

(4) Neither the Commissioner nor any person that received the documents, material or other information while acting under the authority of the commissioner, including the NAIC and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information pursuant to clause (1) of this subsection, unless otherwise ordered by the court.

(5) In the performance of his/her duties the Commissioner:

(A) May share documents, materials or other information, including the confidential and/or privileged documents, materials or information pursuant to clause (1) of this subsection, with other state, federal and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that said agency, organization or authority agrees to maintain the confidentiality and privileged status of the document, material, communication or other information;

(B) may receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with the understanding that they are confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information, and

(6) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in clause (4) of this subsection.

(7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall apply and be enforced in any legal or administrative procedure conducted in Puerto Rico.

(8) Nothing contained in this chapter shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the commissioner of any other state or country, or to law enforcement officials of Puerto Rico or any other state or agency of the federal government at any time or to the NAIC, so long as such agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this chapter.

(f) Conflict of interest.—

(1) An examiner may not be appointed by the Commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this chapter. This section shall not be construed to automatically preclude an examiner from being:

(A) A viator;

(B) an insured in a viaticated insurance policy, or

(2) Notwithstanding the requirements of this clause, the Commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions, even though these persons may from time to time be similarly employed or retained by persons subject to examination under this chapter. These professionals shall never be retained at the same time by the Commissioner or by the person under investigation.

(g) Immunity from liability.—

(1) No cause of action shall arise nor shall any liability be imposed against the Commissioner, the Commissioner’s authorized representatives or any examiner appointed by the Commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this section.

(2) No cause of action shall arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the Commissioner or the Commissioner’s authorized representative or examiner pursuant to an examination made under this chapter, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This clause does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in clause (1) of this subsection.

(3) A person identified in clauses (1) or (2) of this subsection shall be entitled to an award of attorney’s fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander or any other relevant damage arising out of activities in carrying out the provisions of this chapter and the party bringing the action was not substantially justified in doing so. For purposes of this subsection a proceeding is “substantially justified” if it had a reasonable basis in law or fact at the time that it was initiated.

(h) Investigative authority of the Commissioner.— The Commissioner may investigate suspected fraudulent viatical settlement acts and persons engaged in the business of viatical settlements.

History —Ins. Code, added as § 43.060 on Dec. 28, 2005, No. 164, § 2, eff. 90 days after Dec. 28, 2005.