(1) (a) A person shall not commit a fraudulent
viatical settlement act.
(b) A person shall not knowingly or intentionally interfere with the
enforcement of the provisions of this part 6 or investigations of suspected or actual
violations of this part 6.
(c) A person in the business of viatical settlements shall not knowingly or
intentionally permit a person convicted of a felony involving dishonesty or breach of
trust to participate in the business of viatical settlements.
(2) (a) A viatical settlement contract and an application for a viatical
settlement contract, 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 contract is guilty of a crime and, upon conviction, may be subject to
fines or confinement in prison, or both.
(b) The lack of a statement as provided for in paragraph (a) of this subsection
(2) does not constitute a defense in any prosecution for a fraudulent viatical
settlement act.
(3) (a) A 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.
(b) Another 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.
(4) (a) No civil liability shall be imposed upon, and no cause of action shall
arise from the otherwise lawful conduct of, a person who furnishes 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:
(I) The commissioner or the commissioner's employees, agents, or
representatives;
(II) Federal, state, or local law enforcement or regulatory officials or their
employees, agents, or representatives;
(III) A person involved in the prevention and detection of fraudulent viatical
settlement acts or that person's agents, employees, or representatives;
(IV) The NAIC, the national association of securities dealers, or the North
American securities administrators association, or their employees, agents, or
representatives, or another regulatory body overseeing life insurance or viatical
settlement contracts; or
(V) The insurer that issued the policy covering the life of the insured.
(b) Paragraph (a) of this subsection (4) does not apply to a statement 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 paragraph (a) of this subsection (4) does not apply because the
person filing the report or furnishing the information did so with actual malice.
(c) A person identified in paragraph (a) of this subsection (4) is entitled to an
award of attorney fees and costs if the person is the prevailing party in a civil cause
of action for libel, slander, or another relevant tort arising out of activities in
carrying out the provisions of this part 6 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.
(d) This section does not abrogate or modify common law or statutory
privileges or immunities enjoyed by a person described in paragraph (a) of this
subsection (4).
(e) Paragraph (a) of this subsection (4) does not apply to a person's
furnishing information concerning the person's own suspected, anticipated, or
completed fraudulent viatical settlement acts or suspected, anticipated, or
completed fraudulent insurance acts.
(5) (a) The documents and evidence provided pursuant to subsection (4) of
this section or obtained by the commissioner in an investigation of suspected or
actual fraudulent viatical settlement acts are privileged and confidential, are not a
public record, and are not subject to discovery or subpoena in a civil or criminal
action.
(b) Paragraph (a) of this subsection (5) does not prohibit release by the
commissioner of documents and evidence obtained in an investigation of suspected
or actual fraudulent viatical settlement acts:
(I) In administrative or judicial proceedings to enforce laws administered by
the commissioner;
(II) 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
(III) At the discretion of the commissioner, to a person in the business of
viatical settlements that is aggrieved by a fraudulent viatical settlement act.
(c) Release of documents and evidence pursuant to paragraph (b) of this
subsection (5) does not abrogate or modify the privilege granted in paragraph (a) of
this subsection (5).
(6) This part 6 does not:
(a) Preempt the authority or relieve the duty of other law enforcement or
regulatory agencies to investigate, examine, and prosecute suspected violations of
law;
(b) Prevent or prohibit a person from voluntarily disclosing information
concerning fraudulent viatical settlement acts to a law enforcement or regulatory
agency other than the division; or
(c) Limit the powers granted elsewhere by the laws of this state to the
commissioner or to an insurance fraud unit to investigate and examine possible
violations of law and to take appropriate action against wrongdoers.
(7) (a) A viatical settlement provider shall adopt anti-fraud initiatives
reasonably calculated to detect, assist in the prosecution of, and prevent
fraudulent viatical settlement acts. The commissioner may order or, if a licensee
requests, may grant modifications of the following initiatives as necessary to
ensure an effective anti-fraud program. The modifications may be more or less
restrictive than the initiatives if the modifications may reasonably be expected to
accomplish the purpose of this section. Anti-fraud initiatives include:
(I) Fraud investigators, who may be viatical settlement providers or
employees or independent contractors of those viatical settlement providers; and
(II) An anti-fraud plan that is submitted to the commissioner. The anti-fraud
plan shall include, but not be limited to:
(A) A chart outlining the organizational arrangement of the anti-fraud
personnel who are responsible for the investigation and reporting of possible
fraudulent viatical settlement acts and investigating unresolved material
inconsistencies between medical records and insurance applications; and
(B) 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, a description
of the procedures for reporting possible fraudulent viatical settlement acts to the
commissioner, and a description of the plan for anti-fraud education and training of
underwriters and other personnel.
(b) Anti-fraud plans submitted to the commissioner are privileged and
confidential, are not public records pursuant to article 72 of title 24, C.R.S., and are
not subject to discovery or subpoena in a civil or criminal action.