Mass. Gen. Laws ch. 175, sec. 218 — MA Code / Part I / Title XXII / Chapter 175 / Section 218
Examination of business and affairs of life settlement provider, broker or applicant
Status: in_force

Section 218. (a) The commissioner may, when the commissioner deems it reasonably necessary to protect the interests of the public, examine the business and affairs of any licensee or applicant for a license. The commissioner may order a licensee or applicant to produce records, books, files or other information reasonably necessary to ascertain whether such licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interests of the public. The expenses incurred in conducting an examination shall be paid by the licensee or applicant. (b) For a foreign or alien licensee, the commissioner may accept an examination report on the licensee as prepared by the appropriate licensing authority for the licensee's state of domicile or port-of-entry state. (c) Individual identification data for all owners, purchasers and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner unless the disclosure is required by law or is disclosed to the National Association of Insurance Commissioners, to the insurance department of any other state or country or to law enforcement officials of the commonwealth or any other state or agency of the federal government at any time, so long as the agency or office receiving the information agrees in writing to hold such material confidential. (d) Records of all completed transactions and life settlement contracts shall be maintained by the life settlement provider for 3 years after the death of the insured and shall be available to the commissioner for inspection during reasonable business hours. (e)(1) In conducting an examination, the commissioner shall use methods common to the examination of licensees, including guidelines and procedures for examinations as adopted by the National Association of Insurance Commissioners. (2) A licensee or person from whom information is sought, including the licensee's or person's officers, directors and agents, shall provide to the commissioner timely, convenient and free access 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 licensee being examined. The officers, directors, employees and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, or its officers, directors, employees or agents, to submit to examination or to comply with a reasonable written request of the commissioner shall be grounds for suspension, refusal or nonrenewal of a license or authority held by the licensee to engage in the life settlement business or any other business subject to the commissioner's jurisdiction. (3) The commissioner may issue subpoenas, administer oaths and 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 under this section, 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. (4) When making an examination, 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 licensee that is the subject of the examination. (5) Nothing in sections 213 to 223E, inclusive, shall limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action under any other insurance law. Findings of fact and conclusions made pursuant to an examination shall be prima facie evidence in a legal or regulatory action. (6) Nothing in sections 213 to 223E, inclusive, shall limit the commissioner's authority to use and, if the commissioner deems appropriate, to make public any final or preliminary examination report, any examiner's or licensee's work papers or other documents or any other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action. (f)(1) Examination reports shall be comprised of only facts appearing upon the books, 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. (2) Not later than 60 days after completion of the examination, the commissioner shall transmit a report of the examination to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report, which shall become part of the report, or to request a hearing on any matter in dispute. (g) Except as otherwise provided, all examination reports, 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 examination, or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee, shall be confidential and privileged, shall not be subject to chapter 66 or clause Twenty-sixth of section 7 of chapter 4, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. The licensee being examined shall have access to all documents used to make the report. (h)(1) An examiner shall 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; provided, however, that an examiner may be: (i) an owner; (ii) an insured in a life settlement contract or insurance policy; or (iii) a beneficiary in an insurance policy that is proposed for a life settlement contract. (2) Notwithstanding the requirements of this subsection, 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 such persons may from time to time be similarly employed or retained by persons subject to examination under sections 213 to 223E, inclusive. (i)(1) No cause of action shall arise and no liability shall be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for statements made or conduct performed in good faith while carrying out sections 213 to 223E, inclusive. (2) No cause of action shall arise and no liability shall be imposed against a person for communicating or delivering information or data to the commissioner, the commissioner's authorized representative or an examiner related to an examination if the communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. Nothing in this paragraph shall abrogate or modify any common law or statutory privilege or immunity enjoyed by any person referenced in paragraph (1). (3) A person referenced in paragraph (1) or (2) shall be entitled to an award of attorneys' fees and costs if that person is the prevailing party in a civil action for libel, slander or any other relevant tort arising out of activities in carrying out sections 213 to 223E, inclusive and the party bringing the action was not substantially justified in doing so. For purposes of this section ''substantially justified'' shall mean that the action had a reasonable basis in law or in fact at the time it was initiated. (j) The charge for an examination under this section shall be determined annually by the secretary of administration and finance under section 3B of chapter 7 and shall be paid by each licensee within 30 days after notice from the commissioner of the charge. The charge shall include an amount equal to the cost of fringe benefits as established by the secretary of administration and finance under section 5D of chapter 29. If in the course of an examination of a domestic or foreign licensee that maintains a branch office outside the commonwealth it becomes necessary or expedient for the commissioner or any deputies or examiners to travel outside the commonwealth, the licensee shall pay the proper expenses incurred by the commissioner or the deputies or examiner. Whenever the commissioner deems it advisable, the commissioner shall cause a complete audit of the books of the licensee to be made by a disinterested expert accountant and such licensee shall pay the proper expenses of the audit.

Section 218. (a) The commissioner may, when the commissioner deems it reasonably necessary to protect the interests of the public, examine the business and affairs of any licensee or applicant for a license. The commissioner may order a licensee or applicant to produce records, books, files or other information reasonably necessary to ascertain whether such licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interests of the public. The expenses incurred in conducting an examination shall be paid by the licensee or applicant.

(b) For a foreign or alien licensee, the commissioner may accept an examination report on the licensee as prepared by the appropriate licensing authority for the licensee's state of domicile or port-of-entry state.

(c) Individual identification data for all owners, purchasers and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner unless the disclosure is required by law or is disclosed to the National Association of Insurance Commissioners, to the insurance department of any other state or country or to law enforcement officials of the commonwealth or any other state or agency of the federal government at any time, so long as the agency or office receiving the information agrees in writing to hold such material confidential.

(d) Records of all completed transactions and life settlement contracts shall be maintained by the life settlement provider for 3 years after the death of the insured and shall be available to the commissioner for inspection during reasonable business hours.

(e)(1) In conducting an examination, the commissioner shall use methods common to the examination of licensees, including guidelines and procedures for examinations as adopted by the National Association of Insurance Commissioners.

(2) A licensee or person from whom information is sought, including the licensee's or person's officers, directors and agents, shall provide to the commissioner timely, convenient and free access 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 licensee being examined. The officers, directors, employees and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, or its officers, directors, employees or agents, to submit to examination or to comply with a reasonable written request of the commissioner shall be grounds for suspension, refusal or nonrenewal of a license or authority held by the licensee to engage in the life settlement business or any other business subject to the commissioner's jurisdiction.

(3) The commissioner may issue subpoenas, administer oaths and 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 under this section, 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.

(4) When making an examination, 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 licensee that is the subject of the examination.

(5) Nothing in sections 213 to 223E, inclusive, shall limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action under any other insurance law. Findings of fact and conclusions made pursuant to an examination shall be prima facie evidence in a legal or regulatory action.

(6) Nothing in sections 213 to 223E, inclusive, shall limit the commissioner's authority to use and, if the commissioner deems appropriate, to make public any final or preliminary examination report, any examiner's or licensee's work papers or other documents or any other information discovered or developed during the course of an examination in the furtherance of a legal or regulatory action.

(f)(1) Examination reports shall be comprised of only facts appearing upon the books, 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.

(2) Not later than 60 days after completion of the examination, the commissioner shall transmit a report of the examination to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report, which shall become part of the report, or to request a hearing on any matter in dispute.

(g) Except as otherwise provided, all examination reports, 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 examination, or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee, shall be confidential and privileged, shall not be subject to chapter 66 or clause Twenty-sixth of section 7 of chapter 4, shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. The licensee being examined shall have access to all documents used to make the report.

(h)(1) An examiner shall 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; provided, however, that an examiner may be: (i) an owner; (ii) an insured in a life settlement contract or insurance policy; or (iii) a beneficiary in an insurance policy that is proposed for a life settlement contract.

(2) Notwithstanding the requirements of this subsection, 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 such persons may from time to time be similarly employed or retained by persons subject to examination under sections 213 to 223E, inclusive.

(i)(1) No cause of action shall arise and no liability shall be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for statements made or conduct performed in good faith while carrying out sections 213 to 223E, inclusive.

(2) No cause of action shall arise and no liability shall be imposed against a person for communicating or delivering information or data to the commissioner, the commissioner's authorized representative or an examiner related to an examination if the communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. Nothing in this paragraph shall abrogate or modify any common law or statutory privilege or immunity enjoyed by any person referenced in paragraph (1).

(3) A person referenced in paragraph (1) or (2) shall be entitled to an award of attorneys' fees and costs if that person is the prevailing party in a civil action for libel, slander or any other relevant tort arising out of activities in carrying out sections 213 to 223E, inclusive and the party bringing the action was not substantially justified in doing so. For purposes of this section ''substantially justified'' shall mean that the action had a reasonable basis in law or in fact at the time it was initiated.

(j) The charge for an examination under this section shall be determined annually by the secretary of administration and finance under section 3B of chapter 7 and shall be paid by each licensee within 30 days after notice from the commissioner of the charge. The charge shall include an amount equal to the cost of fringe benefits as established by the secretary of administration and finance under section 5D of chapter 29. If in the course of an examination of a domestic or foreign licensee that maintains a branch office outside the commonwealth it becomes necessary or expedient for the commissioner or any deputies or examiners to travel outside the commonwealth, the licensee shall pay the proper expenses incurred by the commissioner or the deputies or examiner. Whenever the commissioner deems it advisable, the commissioner shall cause a complete audit of the books of the licensee to be made by a disinterested expert accountant and such licensee shall pay the proper expenses of the audit.