2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 42A - Viatical Settlements (§§ 4221 — 4235) › § 4231 - Fraud prevention and control

(a) [Prohibition].— Fraudulent viatical settlement acts or practices, interference and participation of convicted felons are hereby prohibited.
(1) A person shall not commit a fraudulent viatical settlement act.
(2) A person shall not knowingly or intentionally interfere with the enforcement of the provisions of this chapter or investigations of suspected or actual violations of this chapter.
(3) A person in the viatical settlement business shall not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the [viatical] settlement business.
(b) Fraud warning.—
(1) Viatical settlements and applications for viatical settlements, regardless of the form of transmission, shall contain the following statement or a substantially similar statement: “Any person who knowingly presents false information in an application for insurance or viatical settlement is guilty of a crime and may be subject to fines and imprisonment.”
(2) The lack of a statement as required in clause (1) of this subsection does not constitute a defense in any prosecution for a fraudulent viatical settlement act.
(c) Mandatory reporting of fraudulent viatical settlement acts.—
(1) Any person engaged in the business of viatical settlements having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed shall provide to the Commissioner the information required by, and in a manner prescribed by, the Commissioner.
(2) Any person having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed may provide to the Commissioner the information required by, and in a manner prescribed by the Commissioner.
(d) Immunity.—
(1) No civil liability shall be imposed on, and no cause of action shall arise from a person’s furnishing information concerning suspected, anticipated or completed fraudulent viatical settlement acts or suspected or completed fraudulent insurance acts, if the information is provided to or received from the following persons or entities:
(A) The Commissioner or the Commissioner’s employees, agents or representatives;
(B) federal, state or local law enforcement or regulatory officials or their employees, agents or representatives;
(C) any person involved in the prevention and detection of fraudulent viatical settlement acts or that person’s agents, employees or representatives;
(D) the National Association of Insurance Commissioners (NAIC, English acronym), National Association of Securities Dealers (NASD, English acronym), the North American Securities Administrators Association (NASAA, English acronym), or their employees, agents or representatives, or other regulatory agency overseeing life insurance, viatical settlements, securities or investment fraud, or
(E) the life insurer that issued the life insurance policy covering the life of the insured.
(2) Clause (1) of this subsection shall not apply to statements made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent viatical settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that clause (1) of this subsection does not apply because the person filing the report or furnishing the information did so with actual malice.
(3) A person identified in clause (1) 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 section a proceeding is “substantially justified” if it had a reasonable basis in law or fact at the time that it was initiated.
(4) This section does not repeal or modify the privileges or immunities enjoyed by a person described in clause (1) of this subsection.
(e) Confidentiality.—
(1) The documents and evidence provided pursuant to subsection (d) of this section or obtained by the Commissioner in an investigation of fraudulent viatical settlement acts shall be privileged and confidential, and shall not be a public record nor be subject to discovery or subpoena in a civil or criminal action.
(2) Clause (1) of this subsection does not prohibit release by the Commissioner of documents and evidence obtained in an investigation of viatical settlement acts, under the following circumstances:
(A) In administrative or judicial proceedings to enforce laws administered by the Commissioner;
(B) to federal, state or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent viatical settlement acts or to the NAIC, or
(C) at the discretion of the Commissioner, to a person in the business of viatical settlements that is aggrieved by a fraudulent viatical settlement act.
(3) Disclosure of documents and evidence under clause (2) of this subsection does not repeal or modify the privilege granted in clause (1) of this subsection.
(f) Other law enforcement or regulatory authority.— This chapter shall not:
(1) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine and prosecute suspected violations of law;
(2) prevent or prohibit a person from disclosing voluntarily information concerning viatical settlement fraud to a law enforcement or regulatory agency other than the Office of the Insurance Commissioner, or
(3) limit the powers granted elsewhere by the laws of the Commonwealth of Puerto Rico to the Insurance Commissioner or the Antifraud Unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.
(g) Antifraud program.— Viatical settlement providers and viatical settlement brokers shall implement an antifraud program to detect, prosecute and prevent fraudulent viatical settlement acts. At the discretion of the Commissioner or upon request of an authorized person or entity, the Commissioner may order the following modifications, as necessary, to ensure an effective antifraud program. The modifications may be more or less restrictive than the required program provided they comply with the purpose of this section. The antifraud program shall include:
(1) The appointment of fraud investigators, who may be viatical settlement providers or viatical settlement brokers or employees of independent contractors, and
(2) the establishment of an antifraud plan, which shall be submitted to the Commissioner. The antifraud plan shall include, but not be limited to:
(A) A description of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;
(B) a description of the procedures for reporting possible fraudulent viatical settlement acts to the Commissioner;
(C) a description of the plan for antifraud education and training of its personnel, and
(D) a description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent viatical settlement acts, and resolve material inconsistencies between medical records and insurance applications.
(3) Antifraud plans submitted to the Commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.
History —Ins. Code, added as § 43.110 on Dec. 28, 2005, No. 164, § 2; Aug. 4, 2006, No. 147, § 29.