103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB1479

 

Introduced 2/7/2023___________, by

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/132  from Ch. 73, par. 744
215 ILCS 5/132.5  from Ch. 73, par. 744.5
215 ILCS 5/155.35
215 ILCS 5/402  from Ch. 73, par. 1014
215 ILCS 5/511.109  from Ch. 73, par. 1065.58-109
215 ILCS 5/512-3  from Ch. 73, par. 1065.59-3
215 ILCS 5/512-5  from Ch. 73, par. 1065.59-5
215 ILCS 5/512-11 new
215 ILCS 5/513b3

    Amends the Illinois Insurance Code. Sets forth provisions concerning market conduct and nonfinancial examinations; market analysis and market conduct actions; access to books and records; examination reports; hearings; disclosures; confidentiality; corrective actions; and immunity to liability of market conduct surveillance personnel. Provides that the Director of Insurance shall collect and report market data to the National Association of Insurance Commissioner's market information systems. Provides that if the Director or an examiner finds that an administrator or pharmacy benefit manager has violated insurance-related laws or regulations under specified circumstances, then, unless the health care payer, health insurer, or plan sponsor is included in the examination and has been afforded the same opportunity to request or participate in a hearing on the examination report, the examination report shall not allege a violation by the health care payer, health insurer, or plan sponsor and the Director's order based on the report shall not impose any requirements, prohibitions, or penalties on the health care payer, health insurer, or plan sponsor. Removes various provisions concerning market conduct and nonfinancial examinations. Defines terms. Makes other changes. Effective immediately.


LRB103 05817 BMS 50837 b

 

 

A BILL FOR

 

SB1479LRB103 05817 BMS 50837 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 132, 132.5, 155.35, 402, 511.109, 512-3,
6512-5, and 513b3 and by adding Section 512-11 as follows:
 
7    (215 ILCS 5/132)  (from Ch. 73, par. 744)
8    Sec. 132. Market conduct and nonfinancial non-financial
9examinations.
10    (a) Definitions. As used in this Section:
11    "Data call" means a written request by the Director to one
12or more regulated companies or persons seeking data or other
13information to be provided within a reasonable period for a
14narrow and targeted purpose to address specific questions of
15the Director.
16    "Desk examination" means an examination that is conducted
17by market conduct surveillance personnel at a location other
18than the regulated company's or person's premises. "Desk
19examination" includes an examination performed at the
20Department's offices with the company or person providing
21requested documents by hard copy, microfiche, or discs or
22other electronic media for review without an on-site
23examination.

 

 

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1    "Market analysis" means a process whereby market conduct
2surveillance personnel collect and analyze information from
3filed schedules, surveys, data calls, required reports, and
4other sources to develop a baseline understanding of the
5marketplace and to identify patterns or practices of regulated
6persons that deviate significantly from the norm or that may
7pose a potential risk to insurance consumers.
8    "Market conduct action" means any activity that the
9Director may initiate to assess and address the market
10practices of regulated persons, including market analysis and
11market conduct examinations. The Department's consumer
12complaint process outlined in 50 Ill. Adm. Code 926 is not a
13market conduct action for purposes of this Section; however,
14the Department may initiate market conduct actions based on
15information gathered during that process. "Market conduct
16action" includes, but is not limited to:
17        (1) correspondence with the company or person;
18        (2) interviews with the company or person;
19        (3) information gathering;
20        (4) policy and procedure reviews;
21        (5) interrogatories;
22        (6) review of company or person self-evaluations and
23    voluntary compliance programs;
24        (7) self-audits; and
25        (8) market conduct examinations.
26    "Market conduct examination" or "examination" means any

 

 

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1type of examination that assesses a regulated person's
2compliance with the laws, rules, and regulations applicable to
3the examinee. "Market conduct examination" includes
4comprehensive examinations, targeted examinations, and
5follow-up examinations, which may be conducted as desk
6examinations, on-site examinations, or a combination of those
72 methods.
8    "Market conduct surveillance" means market analysis or a
9market conduct action.
10    "Market conduct surveillance personnel" means those
11individuals employed or retained by the Department and
12designated by the Director to collect, analyze, review, or act
13on information in the insurance marketplace that identifies
14patterns or practices of persons subject to the Director's
15jurisdiction. "Market conduct surveillance personnel" includes
16all persons identified as an examiner in the insurance laws or
17rules of this State if the Director has designated them to
18assist her or him in ascertaining the nonfinancial business
19practices, performance, and operations of a company or person
20subject to the Director's jurisdiction.
21    "On-site examination" means an examination conducted at
22the company's or person's home office or the location where
23the records under review are stored.
24    (b) Companies and persons subject to surveillance. The
25Director, for the purposes of ascertaining the nonfinancial
26business practices, performance, and operations of any person

 

 

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1subject to the Director's jurisdiction or within the
2marketplace, may engage in market conduct actions or market
3analysis relating to:
4        (1) any company transacting or being organized to
5    transact business in this State;
6        (2) any person engaged in or proposing to be engaged
7    in the organization, promotion, or solicitation of shares
8    or capital contributions to or aiding in the formation of
9    a company;
10        (3) any person having a written or oral contract
11    pertaining to the management or control of a company as
12    general agent, managing agent, or attorney-in-fact;
13        (4) any licensed or registered producer, firm,
14    pharmacy benefit manager, administrator, or any person
15    making application for any license, certificate, or
16    registration;
17        (5) any person engaged in the business of adjusting
18    losses or financing premiums; or
19        (6) any person, organization, trust, or corporation
20    having custody or control of information reasonably
21    related to the operation, performance, or conduct of a
22    company or person subject to the Director's jurisdiction.
23    (c) Market analysis and market conduct actions.
24        (1) The Director may perform market analysis by
25    gathering and analyzing information from data currently
26    available to the Director, information from surveys or

 

 

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1    reports that are submitted regularly to the Director or
2    that are required in a data call, information collected by
3    the NAIC, and information from a variety of other sources
4    to develop a baseline understanding of the marketplace and
5    to identify for further review companies or practices that
6    deviate from the norm or that may pose a potential risk to
7    insurance consumers. The Director shall use the most
8    recent NAIC Market Regulation Handbook as a guide in
9    performing market analysis. The Director may also employ
10    other guidelines or procedures as the Director may deem
11    appropriate.
12        (2) The Director may initiate a market conduct action
13    subject to the following:
14            (A) If the Director determines that further
15        inquiry into a particular person or practice is
16        needed, then the Director may consider the continuum
17        of market conduct actions. The Director shall inform
18        the examinee of the initiation of the market conduct
19        action and shall use the most recent NAIC Market
20        Regulation Handbook as a guide in performing the
21        market conduct action. The Director may also employ
22        other guidelines or procedures as the Director may
23        deem appropriate.
24            (B) For an examination, the Director shall conduct
25        a pre-examination conference with the examinee to
26        clarify expectations before commencement of the

 

 

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1        examination. The Director shall provide at least
2        30-days' advance notice of the date of the
3        pre-examination conference unless circumstances
4        warrant that the examination proceed more quickly.
5            (C) The Director may coordinate a market conduct
6        action and findings of this State with market conduct
7        actions and findings of other states.
8        (3) Nothing in this Section requires the Director to
9    undertake market analysis before initiating any market
10    conduct action.
11        (4) Nothing in this Section restricts the Director to
12    the type of market conduct action he or she initially
13    selected.
14        (5) A regulated person is required to respond to a
15    data call on the terms and conditions established by the
16    Director, and failure to do so may be punished as set forth
17    in subsection (j).
18    (d) Access to books and records. Every examinee and its
19officers, directors, and agents must provide to the Director
20convenient and free access at all reasonable hours at its
21office or location to all books, records, and documents and
22any or all papers relating to the business, performance,
23operations, and affairs of the examinee. The officers,
24directors, and agents of the examinee must facilitate the
25market conduct action and aid in the action so far as it is in
26their power to do so. The Director and any authorized market

 

 

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1conduct surveillance personnel have the power to administer
2oaths and examine under oath any person relevant to the
3business of the examinee. Any delay of more than 5 business
4days in the transmission of requested documents without an
5extension approved by the Director or designated market
6conduct surveillance personnel is a violation of this Section.
7    (e) Examination report. The market conduct surveillance
8personnel designated by the Director under Section 402 must
9make a full and true report of every examination made by them
10that contains only facts ascertained from the books, papers,
11records, documents, and other evidence obtained by
12investigation and examined by them or ascertained from the
13testimony of officers, agents, or other persons examined under
14oath concerning the business, affairs, conduct, and
15performance of the examinee. The report of examination must be
16verified by the oath of the examiner in charge thereof, and
17when so verified is prima facie evidence in any action or
18proceeding in the name of the State against the examinee, its
19officers, directors, or agents upon the facts stated therein.
20    (f) Examinee response to examination report. The
21Department and the examinee shall comply with the following
22timeline, unless a mutual agreement is reached to modify the
23timeline:
24        (1) The Department shall deliver a draft report to the
25    examinee as soon as reasonably practicable. Nothing in
26    this Section prevents the Department from sharing an

 

 

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1    earlier draft of the report with the examinee before
2    confirming that the examination is completed.
3        (2) If the examinee chooses to respond with written
4    submissions or rebuttals, then the examinee must do so
5    within 30 days after receipt of any draft report delivered
6    after the completion of the examination.
7        (3) As soon as reasonably practicable after receipt of
8    any written submissions or rebuttals, the Department shall
9    issue a final report. The Department may share draft
10    corrections or changes to the draft report with the
11    examinee at any time before issuing a final report, and
12    the examinee shall have 30 days to respond to the revised
13    draft.
14        (4) The examinee shall, within 10 days after the
15    issuance of the final report, accept the final report or
16    request a hearing in writing. Failure to take either
17    action within 10 days shall be deemed an acceptance of the
18    final report. If the examinee accepts the examination
19    report, the Director shall continue to hold the content of
20    the examination report as private and confidential for a
21    period of 30 days. Thereafter, the Director shall open the
22    report for public inspection.
23    (g) Hearing; final examination report. Notwithstanding
24anything to the contrary in this Code or Department rules, if
25the examinee requests a hearing, then the following procedures
26apply:

 

 

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1        (1) The examinee must request the hearing in writing
2    and must specify the issues in the final report that the
3    examinee is challenging. The examinee is limited to
4    challenging the issues that were previously challenged in
5    the examinee's written submission and rebuttal or
6    supplemental submission and rebuttal pursuant to
7    paragraphs (2) and (3) of subsection (f).
8        (2) Except as permitted in paragraphs (3) and (8) of
9    this subsection, the hearing shall be limited to the
10    written arguments submitted by the parties to the
11    designated hearing officer. The designated hearing officer
12    may, however, grant a live hearing upon the request of
13    either party if the hearing officer deems it necessary or
14    useful to the resolution of any or all of the matters in
15    dispute.
16        (3) Discovery is limited to the market conduct
17    surveillance personnel's work papers that are relevant to
18    the issues the examinee is challenging. The relevant
19    market conduct surveillance personnel's work papers shall
20    be admitted into the record. No other forms of discovery,
21    including depositions and interrogatories, are allowed,
22    except upon written agreement of the examinee and the
23    Department when necessary to conduct a fair hearing or as
24    otherwise provided in this subsection.
25        (4) Only the examinee and the Department may submit
26    written arguments.

 

 

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1        (5) The examinee must submit its written argument and
2    any supporting evidence within 30 days after the
3    Department serves a formal notice of hearing.
4        (6) The Department must submit its written response
5    and any supporting evidence within 30 days after the
6    examinee submits its written argument.
7        (7) The designated hearing officer may allow
8    additional written submissions if necessary or useful to
9    the resolution of the hearing.
10        (8) If either the examinee or the Department submit
11    written testimony or affidavits, then the opposing party
12    shall be given the opportunity to cross-examine the
13    witness and to submit the cross-examination to the hearing
14    officer before a decision.
15        (9) The Director shall issue a decision accompanied by
16    findings and conclusions. The Director's order is a final
17    administrative decision and shall be served upon the
18    examinee together with a copy of the final report within
19    90 days after the conclusion of the hearing. The hearing
20    is deemed concluded on the later of the last date of any
21    live hearing or the final deadline date for written
22    submissions to the hearing officer, including any
23    continuances or supplemental briefings permitted by the
24    hearing officer.
25        (10) Any portion of the final examination report that
26    was not challenged by the examinee is incorporated into

 

 

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1    the decision of the Director.
2        (11) Findings of fact and conclusions of law in the
3    Director's final administrative decision are prima facie
4    evidence in any legal or regulatory action.
5        (12) If an examinee has requested a hearing, then the
6    Director shall continue to hold the final report and any
7    related decision as private and confidential for a period
8    of 49 days after the final administrative decision. After
9    the 49-day period expires, the Director shall open the
10    final report and any related decision for public
11    inspection if a court of competent jurisdiction has not
12    stayed its publication.
13    (h) Disclosure. So long as the recipient agrees to and
14verifies in writing its legal authority to hold the
15information confidential in a manner consistent with this
16Section, nothing in this Section prevents the Director from
17disclosing at any time the content of an examination report,
18preliminary examination report, or results, or any matter
19relating to a report or results, to:
20        (1) other public agencies of this State;
21        (2) the insurance regulatory authorities of any other
22    state; or
23        (3) any agency or office of the federal government.
24    (i) Confidentiality.
25        (1) The Director and any other person in the course of
26    market conduct surveillance shall keep confidential all

 

 

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1    documents, including working papers, third-party models,
2    or products; complaint logs; copies of any documents
3    created, produced, obtained by, or disclosed to the
4    Director, market conduct surveillance personnel, or any
5    other person in the course of market conduct surveillance
6    conducted pursuant to this Section; and all documents
7    obtained by the NAIC pursuant to this Section. The
8    documents shall remain confidential after the termination
9    of the market conduct surveillance, are not subject to
10    subpoena, are not subject to discovery or admissible as
11    evidence in private civil litigation, are not subject to
12    disclosure under the Freedom of Information Act, and must
13    not be made public at any time or used by the Director or
14    any other person, except as provided in paragraphs (3),
15    (4), and (6) of this subsection (i) and in subsection (k).
16        (2) The Director and any other person in the course of
17    market conduct surveillance shall keep confidential any
18    self-evaluation or voluntary compliance program documents
19    disclosed to the Director or other person by an examinee
20    and the data collected via the NAIC market conduct annual
21    statement. The documents are not subject to subpoena, are
22    not subject to discovery or admissible as evidence in
23    private civil litigation, are not subject to disclosure
24    under the Freedom of Information Act, and they shall not
25    be made public or used by the Director or any other person,
26    except as provided in paragraphs (3) and (4) of this

 

 

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1    subsection (i), in subsection (k), or in Section 155.35.
2        (3) Notwithstanding paragraphs (1) and (2) of this
3    subsection (i), and consistent with paragraph (5) of this
4    subsection (i), in order to assist in the performance of
5    the Director's duties, the Director may:
6            (A) share documents, materials, communications, or
7        other information, including the confidential and
8        privileged documents, materials, or information
9        described in this subsection (i), with other State,
10        federal, alien, and international regulatory agencies
11        and law enforcement authorities and the NAIC, its
12        affiliates, and subsidiaries, if the recipient agrees
13        to and verifies in writing its legal authority to
14        maintain the confidentiality and privileged status of
15        the document, material, communication, or other
16        information;
17            (B) receive documents, materials, communications,
18        or information, including otherwise confidential and
19        privileged documents, materials, or information, from
20        the NAIC and its affiliates or subsidiaries, and from
21        regulatory and law enforcement officials of other
22        State, federal, alien, or international jurisdictions,
23        authorities, and agencies, and shall maintain as
24        confidential or privileged any document, material,
25        communication, or information received with notice or
26        the understanding that it is confidential or

 

 

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1        privileged under the laws of the jurisdiction that is
2        the source of the document, material, communication,
3        or information; and
4            (C) enter into agreements governing the sharing
5        and use of information consistent with this Section.
6        (4) Nothing in this Section limits:
7            (A) the Director's authority to use, if consistent
8        with subsection (5) of Section 188.1, any final or
9        preliminary examination report, any market conduct
10        surveillance or examinee work papers or other
11        documents, or any other information discovered or
12        developed during the course of any market conduct
13        surveillance in the furtherance of any legal or
14        regulatory action initiated by the Director that the
15        Director may, in the Director's sole discretion, deem
16        appropriate; or
17            (B) the ability of an examinee to conduct
18        discovery in accordance with paragraph (3) of
19        subsection (g).
20        (5) Disclosure to or by the Director of documents,
21    materials, communications, or information required as part
22    of any type of market conduct surveillance does not waive
23    any applicable privilege or claim of confidentiality in
24    the documents, materials, communications, or information.
25        (6) Notwithstanding the confidentiality requirements
26    in this subsection (i) or confidentiality requirements

 

 

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1    otherwise imposed by law with the sole exception of the
2    Illinois Trade Secrets Act, if the Director performs any
3    data call for market analysis, excluding data collected
4    via the NAIC market conduct annual statement, then the
5    Director may make the results of the market analysis
6    available for public inspection in a manner deemed
7    appropriate by the Director, so long as:
8            (A) the company or individual providing the
9        information was given 15-days' notice identifying the
10        information to be publicly released; and
11            (B) no court of competent jurisdiction has stayed
12        its publication under the Illinois Trade Secrets Act.
13        (7) The Director may, upon one-day's notice to the
14    examinee, publicly acknowledge the existence of an ongoing
15    examination before filing the examination report but shall
16    not disclose any other information protected under this
17    subsection (i).
18    (j) Corrective actions.
19        (1) As a result of any market conduct action other
20    than market analysis, the Director may take any action the
21    Director considers necessary or appropriate in accordance
22    with the report of examination or any hearing thereon for
23    acts in violation of any law, rule, or prior lawful order
24    of the Director. Such actions include, but are not limited
25    to:
26            (A) requiring the regulated person to undertake

 

 

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1        corrective actions to cease and desist an identified
2        violation or institute processes and practices to
3        comply with applicable standards;
4            (B) requiring reimbursement or restitution of any
5        actual losses or damages to persons harmed by the
6        regulated person's violation with interest at the rate
7        of 9% per year from the date that the actual loss or
8        damage was incurred; and
9            (C) imposing civil penalties as provided in this
10        subsection (j).
11        (2) The Director may order a penalty of up to $3,000
12    for a violation of any law, rule, or prior lawful order of
13    the Director. Each day during which a violation occurs
14    constitutes a separate offense. If the examination report
15    finds a violation by the examinee that the report is
16    unable to quantify such as an operational policy or
17    procedure that conflicts with applicable law, then the
18    Director may order a penalty of up to $10,000 for that
19    violation. Any failure to respond to a data call or
20    violation of subsection (d) may carry a fine of up to
21    $2,000 per day up to a maximum of $500,000.
22        (3) If any other provision of this Code or any other
23    law or rule under the Director's jurisdiction prescribes
24    an amount or range of monetary penalty for a violation of a
25    particular statute or rule or a maximum penalty in the
26    aggregate for repeated violations, the Director shall

 

 

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1    assess penalties pursuant to the terms of the statute or
2    rule allowing the largest penalty.
3        (4) If any other provision of this Code or any other
4    law or rule under the Director's jurisdiction prescribes
5    or specifies a method by which the Director is to
6    determine a violation, then compliance with the process
7    set forth herein shall be deemed to comply with the method
8    prescribed or specified in the other provision.
9        (5) If the Director imposes any sanctions or
10    corrective actions described in subparagraphs (A) through
11    (C) of paragraph (1) of this subsection (j) based on the
12    final report, the Director shall include those actions in
13    a proposed stipulation and consent order enclosed with the
14    final report issued to the examinee under subsection (f).
15    The examinee shall have 10 days to sign the order or
16    request a hearing in writing on the actions proposed in
17    the order regardless of whether the examinee requests a
18    hearing on the contents of the report under subsection
19    (f). If the examinee does not sign the order or request a
20    hearing on the proposed actions or the final report within
21    10 days, the Director may issue a final order imposing the
22    sanctions or corrective actions. Nothing in this Section
23    prevents the Department from sharing an earlier draft of
24    the proposed order with the examinee before issuing the
25    final report.
26        (6) If the examinee accepts the order and the final

 

 

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1    report, the Director shall hold the content of the order
2    and report as private and confidential for a period of 30
3    days. Thereafter, the Director shall open the order and
4    report for public inspection.
5        (7) If the examinee makes a timely request for a
6    hearing on the order, the request must specify the
7    sanctions or corrective actions in the order that the
8    examinee is challenging. Any hearing shall follow the
9    procedures set forth in paragraphs (2) through (7) of
10    subsection (g).
11        (8) If the examinee has also requested a hearing on
12    the contents of the report, then that hearing shall be
13    consolidated with the hearing on the order. The Director
14    shall not impose sanctions or corrective actions under
15    this Section until the conclusion of the hearing.
16        (9) The Director shall issue a decision accompanied by
17    findings and conclusions along with any corrective actions
18    or sanctions. Any sanctions or corrective actions shall be
19    based on the final report accepted by the examinee or
20    adopted by the Director under paragraph (9) of subsection
21    (g). The Director's order is a final administrative
22    decision and shall be served upon the examinee together
23    with a copy of the final report within 90 days after the
24    conclusion of the hearing or within 10 days after the
25    examinee's acceptance of the proposed order and final
26    report, as applicable. The hearing is deemed concluded on

 

 

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1    the later of the last date of any live hearing or the final
2    deadline date for written submissions to the hearing
3    officer, including any continuances or supplemental
4    briefings permitted by the hearing officer.
5        (10) If an examinee has requested a hearing under this
6    subsection (i), the Director shall continue to hold the
7    final order and examination report as private and
8    confidential for a period of 49 days after the final
9    administrative decision. After the 49-day period expires,
10    the Director shall open the final order and examination
11    report if a court of competent jurisdiction has not stayed
12    their publication.
13    (k) National market conduct databases. The Director shall
14collect and report market data to the NAIC's market
15information systems, including, but not limited to, the
16Complaint Database System, the Examination Tracking System,
17and the Regulatory Information Retrieval System, or other
18successor NAIC products as determined by the Director.
19Information collected and maintained by the Department for
20inclusion in these NAIC market information systems shall be
21compiled in a manner that meets the requirements of the NAIC.
22    (l) Immunity of market conduct surveillance personnel.
23        (1) No cause of action shall arise nor shall any
24    liability be imposed against the Director, the Director's
25    authorized representatives, market conduct surveillance
26    personnel, or an examiner appointed by the Director for

 

 

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1    any statements made or conduct performed in good faith
2    while carrying out the provisions of this Section.
3        (2) No cause of action shall arise nor shall any
4    liability be imposed against any person for the act of
5    communicating or delivering information or data to the
6    Director, the Director's authorized representative, market
7    conduct surveillance personnel, or examiner pursuant to an
8    examination made under this Section, if the act of
9    communication or delivery was performed in good faith and
10    without fraudulent intent or the intent to deceive.
11        (3) A person identified in paragraph (1) of this
12    subsection (l) shall be entitled to an award of attorney's
13    fees and costs if he or she is the prevailing party in a
14    civil cause of action for libel, slander, or any other
15    relevant tort arising out of activities in carrying out
16    the provisions of this Section and the party bringing the
17    action was not substantially justified in doing so. As
18    used in this paragraph, a proceeding is substantially
19    justified if it had a reasonable basis in law or fact at
20    the time it was initiated.
21        (4) This subsection (l) does not abrogate or modify in
22    any way any common law or statutory privilege or immunity
23    heretofore enjoyed by any person identified in paragraph
24    (1) of this subsection (l).
25    (1) The Director, for the purposes of ascertaining the
26non-financial business practices, performance, and operations

 

 

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1of any company, may make examinations of:
2        (a) any company transacting or being organized to
3    transact business in this State;
4        (b) any person engaged in or proposing to be engaged
5    in the organization, promotion, or solicitation of shares
6    or capital contributions to or aiding in the formation of
7    a company;
8        (c) any person having a contract, written or oral,
9    pertaining to the management or control of a company as
10    general agent, managing agent, or attorney-in-fact;
11        (d) any licensed or registered producer, firm, or
12    administrator, or any person, organization, or corporation
13    making application for any licenses or registration;
14        (e) any person engaged in the business of adjusting
15    losses or financing premiums; or
16        (f) any person, organization, trust, or corporation
17    having custody or control of information reasonably
18    related to the operation, performance, or conduct of a
19    company or person subject to the jurisdiction of the
20    Director.
21    (2) Every company or person being examined and its
22officers, directors, and agents must provide to the Director
23convenient and free access at all reasonable hours at its
24office or location to all books, records, documents, and any
25or all papers relating to the business, performance,
26operations, and affairs of the company. The officers,

 

 

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1directors, and agents of the company or person must facilitate
2the examination and aid in the examination so far as it is in
3their power to do so.
4    The Director and any authorized examiner have the power to
5administer oaths and examine under oath any person relative to
6the business of the company being examined.
7    (3) The examiners designated by the Director under Section
8402 must make a full and true report of every examination made
9by them, which contains only facts ascertained from the books,
10papers, records, or documents, and other evidence obtained by
11investigation and examined by them or ascertained from the
12testimony of officers or agents or other persons examined
13under oath concerning the business, affairs, conduct, and
14performance of the company or person. The report of
15examination must be verified by the oath of the examiner in
16charge thereof, and when so verified is prima facie evidence
17in any action or proceeding in the name of the State against
18the company, its officers, or agents upon the facts stated
19therein.
20    (4) The Director must notify the company or person made
21the subject of any examination hereunder of the contents of
22the verified examination report before filing it and making
23the report public of any matters relating thereto, and must
24afford the company or person an opportunity to demand a
25hearing with reference to the facts and other evidence therein
26contained.

 

 

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1    The company or person may request a hearing within 10 days
2after receipt of the examination report by giving the Director
3written notice of that request, together with a statement of
4its objections. The Director must then conduct a hearing in
5accordance with Sections 402 and 403. He must issue a written
6order based upon the examination report and upon the hearing
7within 90 days after the report is filed or within 90 days
8after the hearing.
9    If the examination reveals that the company is operating
10in violation of any law, regulation, or prior order, the
11Director in the written order may require the company or
12person to take any action he considers necessary or
13appropriate in accordance with the report of examination or
14any hearing thereon. The order is subject to judicial review
15under the Administrative Review Law. The Director may withhold
16any report from public inspection for such time as he may deem
17proper and may, after filing the same, publish any part or all
18of the report as he considers to be in the interest of the
19public, in one or more newspapers in this State, without
20expense to the company.
21    (5) Any company which or person who violates or aids and
22abets any violation of a written order issued under this
23Section shall be guilty of a business offense and may be fined
24not more than $5,000. The penalty shall be paid into the
25General Revenue fund of the State of Illinois.
26(Source: P.A. 87-108.)
 

 

 

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1    (215 ILCS 5/132.5)  (from Ch. 73, par. 744.5)
2    Sec. 132.5. Examination reports.
3    (a) General description. All examination reports shall be
4comprised of only facts appearing upon the books, records, or
5other documents of the company, its agents, or other persons
6examined or as ascertained from the testimony of its officers,
7agents, or other persons examined concerning its affairs and
8the conclusions and recommendations as the examiners find
9reasonably warranted from those facts.
10    (b) Filing of examination report. No later than 60 days
11following completion of the examination, the examiner in
12charge shall file with the Department a verified written
13report of examination under oath. Upon receipt of the verified
14report, the Department shall transmit the report to the
15company examined, together with a notice that affords the
16company examined a reasonable opportunity of not more than 30
17days to make a written submission or rebuttal with respect to
18any matters contained in the examination report.
19    (c) Adoption of the report on examination. Within 30 days
20of the end of the period allowed for the receipt of written
21submissions or rebuttals, the Director shall fully consider
22and review the report, together with any written submissions
23or rebuttals and any relevant portions of the examiners work
24papers and enter an order:
25        (1) Adopting the examination report as filed or with

 

 

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1    modification or corrections. If the examination report
2    reveals that the company is operating in violation of any
3    law, regulation, or prior order of the Director, the
4    Director may order the company to take any action the
5    Director considers necessary and appropriate to cure the
6    violation.
7        (2) Rejecting the examination report with directions
8    to the examiners to reopen the examination for purposes of
9    obtaining additional data, documentation, or information
10    and refiling under subsection (b).
11        (3) Calling for an investigatory hearing with no less
12    than 20 days notice to the company for purposes of
13    obtaining additional documentation, data, information, and
14    testimony.
15    (d) Order and procedures. All orders entered under
16paragraph (1) of subsection (c) shall be accompanied by
17findings and conclusions resulting from the Director's
18consideration and review of the examination report, relevant
19examiner work papers, and any written submissions or
20rebuttals. The order shall be considered a final
21administrative decision and may be appealed in accordance with
22the Administrative Review Law. The order shall be served upon
23the company by certified mail, together with a copy of the
24adopted examination report. Within 30 days of the issuance of
25the adopted report, the company shall file affidavits executed
26by each of its directors stating under oath that they have

 

 

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1received a copy of the adopted report and related orders.
2    Any hearing conducted under paragraph (3) of subsection
3(c) by the Director or an authorized representative shall be
4conducted as a nonadversarial confidential investigatory
5proceeding as necessary for the resolution of any
6inconsistencies, discrepancies, or disputed issues apparent
7upon the face of the filed examination report or raised by or
8as a result of the Director's review of relevant work papers or
9by the written submission or rebuttal of the company. Within
1020 days of the conclusion of any hearing, the Director shall
11enter an order under paragraph (1) of subsection (c).
12    The Director shall not appoint an examiner as an
13authorized representative to conduct the hearing. The hearing
14shall proceed expeditiously with discovery by the company
15limited to the examiner's work papers that tend to
16substantiate any assertions set forth in any written
17submission or rebuttal. The Director or his representative may
18issue subpoenas for the attendance of any witnesses or the
19production of any documents deemed relevant to the
20investigation, whether under the control of the Department,
21the company, or other persons. The documents produced shall be
22included in the record, and testimony taken by the Director or
23his representative shall be under oath and preserved for the
24record. Nothing contained in this Section shall require the
25Department to disclose any information or records that would
26indicate or show the existence or content of any investigation

 

 

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1or activity of a criminal justice agency.
2    The hearing shall proceed with the Director or his
3representative posing questions to the persons subpoenaed.
4Thereafter the company and the Department may present
5testimony relevant to the investigation. Cross-examination
6shall be conducted only by the Director or his representative.
7The company and the Department shall be permitted to make
8closing statements and may be represented by counsel of their
9choice.
10    (e) Publication and use. Upon the adoption of the
11examination report under paragraph (1) of subsection (c), the
12Director shall continue to hold the content of the examination
13report as private and confidential information for a period of
1435 days, except to the extent provided in subsection (b).
15Thereafter, the Director may open the report for public
16inspection so long as no court of competent jurisdiction has
17stayed its publication.
18    Nothing contained in this Code shall prevent or be
19construed as prohibiting the Director from disclosing the
20content of an examination report, preliminary examination
21report or results, or any matter relating thereto, to the
22insurance department of any other state or country or to law
23enforcement officials of this or any other state or agency of
24the federal government at any time, so long as the agency or
25office receiving the report or matters relating thereto agrees
26in writing to hold it confidential and in a manner consistent

 

 

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1with this Code.
2    In the event the Director determines that regulatory
3action is appropriate as a result of any examination, he may
4initiate any proceedings or actions as provided by law.
5    (f) Confidentiality of ancillary information. All working
6papers, recorded information, documents, and copies thereof
7produced by, obtained by, or disclosed to the Director or any
8other person in the course of any examination must be given
9confidential treatment, are not subject to subpoena, and may
10not be made public by the Director or any other persons, except
11to the extent provided in subsection (e). Access may also be
12granted to the National Association of Insurance
13Commissioners. Those parties must agree in writing before
14receiving the information to provide to it the same
15confidential treatment as required by this Section, unless the
16prior written consent of the company to which it pertains has
17been obtained.
18    This subsection (f) applies to market conduct examinations
19described in Section 132 of this Code.
20    (g) Disclosure. Nothing contained in this Code shall
21prevent or be construed as prohibiting the Director from
22disclosing the information described in subsections (e) and
23(f) to the Illinois Insurance Guaranty Fund regarding any
24member company defined in Section 534.5 if the member company
25has an authorized control level event as defined in Section
2635A-25. The Director may disclose the information described in

 

 

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1this subsection so long as the Fund agrees in writing to hold
2that information confidential, in a manner consistent with
3this Code, and uses that information to prepare for the
4possible liquidation of the member company. Access to the
5information disclosed by the Director to the Fund shall be
6limited to the Fund's staff and its counsel. The Board of
7Directors of the Fund may have access to the information
8disclosed by the Director to the Fund once the member company
9is subject to a delinquency proceeding under Article XIII
10subject to any terms and conditions established by the
11Director.
12(Source: P.A. 102-929, eff. 5-27-22.)
 
13    (215 ILCS 5/155.35)
14    Sec. 155.35. Insurance compliance self-evaluative
15privilege.
16    (a) To encourage insurance companies and persons
17conducting activities regulated under this Code, both to
18conduct voluntary internal audits of their compliance programs
19and management systems and to assess and improve compliance
20with State and federal statutes, rules, and orders, an
21insurance compliance self-evaluative privilege is recognized
22to protect the confidentiality of communications relating to
23voluntary internal compliance audits. The General Assembly
24hereby finds and declares that protection of insurance
25consumers is enhanced by companies' voluntary compliance with

 

 

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1this State's insurance and other laws and that the public will
2benefit from incentives to identify and remedy insurance and
3other compliance issues. It is further declared that limited
4expansion of the protection against disclosure will encourage
5voluntary compliance and improve insurance market conduct
6quality and that the voluntary provisions of this Section will
7not inhibit the exercise of the regulatory authority by those
8entrusted with protecting insurance consumers.
9    (b)(1) An insurance compliance self-evaluative audit
10document is privileged information and is not admissible as
11evidence in any legal action in any civil, criminal, or
12administrative proceeding, except as provided in subsections
13(c) and (d) of this Section. Documents, communications, data,
14reports, or other information created as a result of a claim
15involving personal injury or workers' compensation made
16against an insurance policy are not insurance compliance
17self-evaluative audit documents and are admissible as evidence
18in civil proceedings as otherwise provided by applicable rules
19of evidence or civil procedure, subject to any applicable
20statutory or common law privilege, including, but not limited
21to, the work product doctrine, the attorney-client privilege,
22or the subsequent remedial measures exclusion.
23    (2) If any company, person, or entity performs or directs
24the performance of an insurance compliance audit, an officer
25or employee involved with the insurance compliance audit, or
26any consultant who is hired for the purpose of performing the

 

 

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1insurance compliance audit, may not be examined in any civil,
2criminal, or administrative proceeding as to the insurance
3compliance audit or any insurance compliance self-evaluative
4audit document, as defined in this Section. This subsection
5(b)(2) does not apply if the privilege set forth in subsection
6(b)(1) of this Section is determined under subsection (c) or
7(d) not to apply.
8    (3) A company may voluntarily submit, in connection with
9examinations conducted under this Article, an insurance
10compliance self-evaluative audit document to the Director, or
11his or her designee, as a confidential document under
12subsection (i) of Section 132 or subsection (f) of Section
13132.5 of this Code without waiving the privilege set forth in
14this Section to which the company would otherwise be entitled;
15provided, however, that the provisions in Sections 132 and
16subsection (f) of Section 132.5 permitting the Director to
17make confidential documents public pursuant to subsection (e)
18of Section 132.5 and grant access to the National Association
19of Insurance Commissioners shall not apply to the insurance
20compliance self-evaluative audit document so voluntarily
21submitted. Nothing contained in this subsection shall give the
22Director any authority to compel a company to disclose
23involuntarily or otherwise provide an insurance compliance
24self-evaluative audit document.
25    (c)(1) The privilege set forth in subsection (b) of this
26Section does not apply to the extent that it is expressly

 

 

SB1479- 32 -LRB103 05817 BMS 50837 b

1waived by the company that prepared or caused to be prepared
2the insurance compliance self-evaluative audit document.
3    (2) In a civil or administrative proceeding, a court of
4record may, after an in camera review, require disclosure of
5material for which the privilege set forth in subsection (b)
6of this Section is asserted, if the court determines one of the
7following:
8        (A) the privilege is asserted for a fraudulent
9    purpose;
10        (B) the material is not subject to the privilege; or
11        (C) even if subject to the privilege, the material
12    shows evidence of noncompliance with State and federal
13    statutes, rules and orders and the company failed to
14    undertake reasonable corrective action or eliminate the
15    noncompliance within a reasonable time.
16    (3) In a criminal proceeding, a court of record may, after
17an in camera review, require disclosure of material for which
18the privilege described in subsection (b) of this Section is
19asserted, if the court determines one of the following:
20        (A) the privilege is asserted for a fraudulent
21    purpose;
22        (B) the material is not subject to the privilege;
23        (C) even if subject to the privilege, the material
24    shows evidence of noncompliance with State and federal
25    statutes, rules and orders and the company failed to
26    undertake reasonable corrective action or eliminate such

 

 

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1    noncompliance within a reasonable time; or
2        (D) the material contains evidence relevant to
3    commission of a criminal offense under this Code, and all
4    of the following factors are present:
5            (i) the Director, State's Attorney, or Attorney
6        General has a compelling need for the information;
7            (ii) the information is not otherwise available;
8        and
9            (iii) the Director, State's Attorney, or Attorney
10        General is unable to obtain the substantial equivalent
11        of the information by any means without incurring
12        unreasonable cost and delay.
13    (d)(1) Within 30 days after the Director, State's
14Attorney, or Attorney General makes a written request by
15certified mail for disclosure of an insurance compliance
16self-evaluative audit document under this subsection, the
17company that prepared or caused the document to be prepared
18may file with the appropriate court a petition requesting an
19in camera hearing on whether the insurance compliance
20self-evaluative audit document or portions of the document are
21privileged under this Section or subject to disclosure. The
22court has jurisdiction over a petition filed by a company
23under this subsection requesting an in camera hearing on
24whether the insurance compliance self-evaluative audit
25document or portions of the document are privileged or subject
26to disclosure. Failure by the company to file a petition

 

 

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1waives the privilege.
2    (2) A company asserting the insurance compliance
3self-evaluative privilege in response to a request for
4disclosure under this subsection shall include in its request
5for an in camera hearing all of the information set forth in
6subsection (d)(5) of this Section.
7    (3) Upon the filing of a petition under this subsection,
8the court shall issue an order scheduling, within 45 days
9after the filing of the petition, an in camera hearing to
10determine whether the insurance compliance self-evaluative
11audit document or portions of the document are privileged
12under this Section or subject to disclosure.
13    (4) The court, after an in camera review, may require
14disclosure of material for which the privilege in subsection
15(b) of this Section is asserted if the court determines, based
16upon its in camera review, that any one of the conditions set
17forth in subsection (c)(2)(A) through (C) is applicable as to
18a civil or administrative proceeding or that any one of the
19conditions set forth in subsection (c)(3)(A) through (D) is
20applicable as to a criminal proceeding. Upon making such a
21determination, the court may only compel the disclosure of
22those portions of an insurance compliance self-evaluative
23audit document relevant to issues in dispute in the underlying
24proceeding. Any compelled disclosure will not be considered to
25be a public document or be deemed to be a waiver of the
26privilege for any other civil, criminal, or administrative

 

 

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1proceeding. A party unsuccessfully opposing disclosure may
2apply to the court for an appropriate order protecting the
3document from further disclosure.
4    (5) A company asserting the insurance compliance
5self-evaluative privilege in response to a request for
6disclosure under this subsection (d) shall provide to the
7Director, State's Attorney, or Attorney General, as the case
8may be, at the time of filing any objection to the disclosure,
9all of the following information:
10        (A) The date of the insurance compliance
11    self-evaluative audit document.
12        (B) The identity of the entity conducting the audit.
13        (C) The general nature of the activities covered by
14    the insurance compliance audit.
15        (D) An identification of the portions of the insurance
16    compliance self-evaluative audit document for which the
17    privilege is being asserted.
18    (e) (1) A company asserting the insurance compliance
19self-evaluative privilege set forth in subsection (b) of this
20Section has the burden of demonstrating the applicability of
21the privilege. Once a company has established the
22applicability of the privilege, a party seeking disclosure
23under subsections (c)(2)(A) or (C) of this Section has the
24burden of proving that the privilege is asserted for a
25fraudulent purpose or that the company failed to undertake
26reasonable corrective action or eliminate the noncompliance

 

 

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1with a reasonable time. The Director, State's Attorney, or
2Attorney General seeking disclosure under subsection (c)(3) of
3this Section has the burden of proving the elements set forth
4in subsection (c)(3) of this Section.
5    (2) The parties may at any time stipulate in proceedings
6under subsections (c) or (d) of this Section to entry of an
7order directing that specific information contained in an
8insurance compliance self-evaluative audit document is or is
9not subject to the privilege provided under subsection (b) of
10this Section.
11    (f) The privilege set forth in subsection (b) of this
12Section shall not extend to any of the following:
13        (1) documents, communications, data, reports, or other
14    information required to be collected, developed,
15    maintained, reported, or otherwise made available to a
16    regulatory agency pursuant to this Code, or other federal
17    or State law, rule, or order;
18        (2) information obtained by observation or monitoring
19    by any regulatory agency; or
20        (3) information obtained from a source independent of
21    the insurance compliance audit.
22    (g) As used in this Section:
23        (1) "Insurance compliance audit" means a voluntary,
24    internal evaluation, review, assessment, or audit not
25    otherwise expressly required by law of a company or an
26    activity regulated under this Code, or other State or

 

 

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1    federal law applicable to a company, or of management
2    systems related to the company or activity, that is
3    designed to identify and prevent noncompliance and to
4    improve compliance with those statutes, rules, or orders.
5    An insurance compliance audit may be conducted by the
6    company, its employees, or by independent contractors.
7        (2) "Insurance compliance self-evaluative audit
8    document" means documents prepared as a result of or in
9    connection with and not prior to an insurance compliance
10    audit. An insurance compliance self-evaluation audit
11    document may include a written response to the findings of
12    an insurance compliance audit. An insurance compliance
13    self-evaluative audit document may include, but is not
14    limited to, as applicable, field notes and records of
15    observations, findings, opinions, suggestions,
16    conclusions, drafts, memoranda, drawings, photographs,
17    computer-generated or electronically recorded
18    information, phone records, maps, charts, graphs, and
19    surveys, provided this supporting information is collected
20    or developed for the primary purpose and in the course of
21    an insurance compliance audit. An insurance compliance
22    self-evaluative audit document may also include any of the
23    following:
24            (A) an insurance compliance audit report prepared
25        by an auditor, who may be an employee of the company or
26        an independent contractor, which may include the scope

 

 

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1        of the audit, the information gained in the audit, and
2        conclusions and recommendations, with exhibits and
3        appendices;
4            (B) memoranda and documents analyzing portions or
5        all of the insurance compliance audit report and
6        discussing potential implementation issues;
7            (C) an implementation plan that addresses
8        correcting past noncompliance, improving current
9        compliance, and preventing future noncompliance; or
10            (D) analytic data generated in the course of
11        conducting the insurance compliance audit.
12        (3) "Company" has the same meaning as provided in
13    Section 2 of this Code.
14    (h) Nothing in this Section shall limit, waive, or
15abrogate the scope or nature of any statutory or common law
16privilege including, but not limited to, the work product
17doctrine, the attorney-client privilege, or the subsequent
18remedial measures exclusion.
19(Source: P.A. 90-499, eff. 8-19-97; 90-655, eff. 7-30-98.)
 
20    (215 ILCS 5/402)  (from Ch. 73, par. 1014)
21    Sec. 402. Examinations, investigations and hearings. (1)
22All examinations, investigations and hearings provided for by
23this Code may be conducted either by the Director personally,
24or by one or more of the actuaries, technical advisors,
25deputies, supervisors or examiners employed or retained by the

 

 

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1Department and designated by the Director for such purpose.
2When necessary to supplement its examination procedures, the
3Department may retain independent actuaries deemed competent
4by the Director, independent certified public accountants,
5attorneys, or qualified examiners of insurance companies
6deemed competent by the Director, or any combination of the
7foregoing, the cost of which shall be borne by the company or
8person being examined. The Director may compensate independent
9actuaries, certified public accountants, attorneys, and
10qualified examiners retained for supplementing examination
11procedures in amounts not to exceed the reasonable and
12customary charges for such services. The Director may also
13accept as a part of the Department's examination of any
14company or person (a) a report by an independent actuary
15deemed competent by the Director or (b) a report of an audit
16made by an independent certified public accountant. Neither
17those persons so designated nor any members of their immediate
18families shall be officers of, connected with, or financially
19interested in any company other than as policyholders, nor
20shall they be financially interested in any other corporation
21or person affected by the examination, investigation or
22hearing.
23    (2) All hearings provided for in this Code shall, unless
24otherwise specially provided, be held at such time and place
25as shall be designated in a notice which shall be given by the
26Director in writing to the person or company whose interests

 

 

SB1479- 40 -LRB103 05817 BMS 50837 b

1are affected, at least 10 days before the date designated
2therein. The notice shall state the subject of inquiry and the
3specific charges, if any. The hearings shall be held in the
4City of Springfield, the City of Chicago, or in the county
5where the principal business address of the person or company
6affected is located.
7(Source: P.A. 87-757.)
 
8    (215 ILCS 5/511.109)  (from Ch. 73, par. 1065.58-109)
9    (Section scheduled to be repealed on January 1, 2027)
10    Sec. 511.109. Examination.
11    (a) The Director or the Director's his designee may
12examine any applicant for or holder of an administrator's
13license in accordance with Sections 132 through 132.7. If the
14Director or the examiners find that the administrator has
15violated this Article or any other insurance-related laws,
16rules, or regulations under the Director's jurisdiction
17because of the manner in which the administrator has conducted
18business on behalf of an insurer or plan sponsor, then, unless
19the insurer or plan sponsor is included in the examination and
20has been afforded the same opportunity to request or
21participate in a hearing on the examination report, the
22examination report shall not allege a violation by the insurer
23or plan sponsor and the Director's order based on the report
24shall not impose any requirements, prohibitions, or penalties
25on the insurer or plan sponsor. Nothing in this Section shall

 

 

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1prevent the Director from using any information obtained
2during the examination of an administrator to examine,
3investigate, or take other appropriate regulatory or legal
4action with respect to an insurer or plan sponsor.
5    (b) Any administrator being examined shall provide to the
6Director or his designee convenient and free access, at all
7reasonable hours at their offices, to all books, records,
8documents and other papers relating to such administrator's
9business affairs.
10    (c) The Director or his designee may administer oaths and
11thereafter examine any individual about the business of the
12administrator.
13    (d) The examiners designated by the Director pursuant to
14this Section may make reports to the Director. Any report
15alleging substantive violations of this Article, any
16applicable provisions of the Illinois Insurance Code, or any
17applicable Part of Title 50 of the Illinois Administrative
18Code shall be in writing and be based upon facts obtained by
19the examiners. The report shall be verified by the examiners.
20    (e) If a report is made, the Director shall either deliver
21a duplicate thereof to the administrator being examined or
22send such duplicate by certified or registered mail to the
23administrator's address specified in the records of the
24Department. The Director shall afford the administrator an
25opportunity to request a hearing to object to the report. The
26administrator may request a hearing within 30 days after

 

 

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1receipt of the duplicate of the examination report by giving
2the Director written notice of such request together with
3written objections to the report. Any hearing shall be
4conducted in accordance with Sections 402 and 403 of this
5Code. The right to hearing is waived if the delivery of the
6report is refused or the report is otherwise undeliverable or
7the administrator does not timely request a hearing. After the
8hearing or upon expiration of the time period during which an
9administrator may request a hearing, if the examination
10reveals that the administrator is operating in violation of
11any applicable provision of the Illinois Insurance Code, any
12applicable Part of Title 50 of the Illinois Administrative
13Code or prior order, the Director, in the written order, may
14require the administrator to take any action the Director
15considers necessary or appropriate in accordance with the
16report or examination hearing. If the Director issues an
17order, it shall be issued within 90 days after the report is
18filed, or if there is a hearing, within 90 days after the
19conclusion of the hearing. The order is subject to review
20under the Administrative Review Law.
21(Source: P.A. 84-887.)
 
22    (215 ILCS 5/512-3)  (from Ch. 73, par. 1065.59-3)
23    Sec. 512-3. Definitions. For the purposes of this Article,
24unless the context otherwise requires, the terms defined in
25this Article have the meanings ascribed to them herein:

 

 

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1    "Health care payer" means an insurance company, health
2maintenance organization, limited health service organization,
3health services plan corporation, or dental service plan
4corporation authorized to do business in this State.
5    (a) "Third party prescription program" or "program" means
6any system of providing for the reimbursement of
7pharmaceutical services and prescription drug products offered
8or operated in this State under a contractual arrangement or
9agreement between a provider of such services and another
10party who is not the consumer of those services and products.
11Such programs may include, but need not be limited to,
12employee benefit plans whereby a consumer receives
13prescription drugs or other pharmaceutical services and those
14services are paid for by an agent of the employer or others.
15    (b) "Third party program administrator" or "administrator"
16means any person, partnership or corporation who issues or
17causes to be issued any payment or reimbursement to a provider
18for services rendered pursuant to a third party prescription
19program, but does not include the Director of Healthcare and
20Family Services or any agent authorized by the Director to
21reimburse a provider of services rendered pursuant to a
22program of which the Department of Healthcare and Family
23Services is the third party.
24(Source: P.A. 95-331, eff. 8-21-07.)
 
25    (215 ILCS 5/512-5)  (from Ch. 73, par. 1065.59-5)

 

 

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1    Sec. 512-5. Fiduciary and Bonding Requirements. A third
2party prescription program administrator shall (1) establish
3and maintain a fiduciary account, separate and apart from any
4and all other accounts, for the receipt and disbursement of
5funds for reimbursement of providers of services under the
6program, or (2) post, or cause to be posted, a bond of
7indemnity in an amount equal to not less than 10% of the total
8estimated annual reimbursements under the program.
9    The establishment of such fiduciary accounts and bonds
10shall be consistent with applicable State law. If a bond of
11indemnity is posted, it shall be held by the Director of
12Insurance for the benefit and indemnification of the providers
13of services under the third party prescription program.
14    An administrator who operates more than one third party
15prescription program may establish and maintain a separate
16fiduciary account or bond of indemnity for each such program,
17or may operate and maintain a consolidated fiduciary account
18or bond of indemnity for all such programs.
19    The requirements of this Section do not apply to any third
20party prescription program administered by or on behalf of any
21health care payer insurance company, Health Care Service Plan
22Corporation or Pharmaceutical Service Plan Corporation
23authorized to do business in the State of Illinois.
24(Source: P.A. 82-1005.)
 
25    (215 ILCS 5/512-11 new)

 

 

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1    Sec. 512-11. Examination. The Director or the Director's
2designee may examine any applicant for or holder of an
3administrator's registration in accordance with Sections 132
4through 132.7 of this Code. If the Director or the examiners
5find that the administrator has violated this Article or any
6other insurance-related laws or regulations under the
7Director's jurisdiction because of the manner in which the
8administrator has conducted business on behalf of a separately
9incorporated health care payer, then, unless the health care
10payer is included in the examination and has been afforded the
11same opportunity to request or participate in a hearing on the
12examination report, the examination report shall not allege a
13violation by the health care payer and the Director's order
14based on the report shall not impose any requirements,
15prohibitions, or penalties on the health care payer. Nothing
16in this Section shall prevent the Director from using any
17information obtained during the examination of an
18administrator to examine, investigate, or take other
19appropriate regulatory or legal action with respect to a
20health care payer.
 
21    (215 ILCS 5/513b3)
22    Sec. 513b3. Examination. (a) The Director, or his or her
23designee, may examine a registered pharmacy benefit manager in
24accordance with Sections 132-132.7. If the Director or the
25examiners find that the pharmacy benefit manager has violated

 

 

SB1479- 46 -LRB103 05817 BMS 50837 b

1this Article or any other insurance-related laws, rules, or
2regulations under the Director's jurisdiction because of the
3manner in which the pharmacy benefit manager has conducted
4business on behalf of a health insurer or plan sponsor, then,
5unless the health insurer or plan sponsor is included in the
6examination and has been afforded the same opportunity to
7request or participate in a hearing on the examination report,
8the examination report shall not allege a violation by the
9health insurer or plan sponsor and the Director's order based
10on the report shall not impose any requirements, prohibitions,
11or penalties on the health insurer or plan sponsor. Nothing in
12this Section shall prevent the Director from using any
13information obtained during the examination of an
14administrator to examine, investigate, or take other
15appropriate regulatory or legal action with respect to a
16health insurer or plan sponsor.
17    (b) Any pharmacy benefit manager being examined shall
18provide to the Director, or his or her designee, convenient
19and free access to all books, records, documents, and other
20papers relating to such pharmacy benefit manager's business
21affairs at all reasonable hours at its offices.
22    (c) The Director, or his or her designee, may administer
23oaths and thereafter examine the pharmacy benefit manager's
24designee, representative, or any officer or senior manager as
25listed on the license or registration certificate about the
26business of the pharmacy benefit manager.

 

 

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1    (d) The examiners designated by the Director under this
2Section may make reports to the Director. Any report alleging
3substantive violations of this Article, any applicable
4provisions of this Code, or any applicable Part of Title 50 of
5the Illinois Administrative Code shall be in writing and be
6based upon facts obtained by the examiners. The report shall
7be verified by the examiners.
8    (e) If a report is made, the Director shall either deliver
9a duplicate report to the pharmacy benefit manager being
10examined or send such duplicate by certified or registered
11mail to the pharmacy benefit manager's address specified in
12the records of the Department. The Director shall afford the
13pharmacy benefit manager an opportunity to request a hearing
14to object to the report. The pharmacy benefit manager may
15request a hearing within 30 days after receipt of the
16duplicate report by giving the Director written notice of such
17request together with written objections to the report. Any
18hearing shall be conducted in accordance with Sections 402 and
19403 of this Code. The right to a hearing is waived if the
20delivery of the report is refused or the report is otherwise
21undeliverable or the pharmacy benefit manager does not timely
22request a hearing. After the hearing or upon expiration of the
23time period during which a pharmacy benefit manager may
24request a hearing, if the examination reveals that the
25pharmacy benefit manager is operating in violation of any
26applicable provision of this Code, any applicable Part of

 

 

SB1479- 48 -LRB103 05817 BMS 50837 b

1Title 50 of the Illinois Administrative Code, a provision of
2this Article, or prior order, the Director, in the written
3order, may require the pharmacy benefit manager to take any
4action the Director considers necessary or appropriate in
5accordance with the report or examination hearing. If the
6Director issues an order, it shall be issued within 90 days
7after the report is filed, or if there is a hearing, within 90
8days after the conclusion of the hearing. The order is subject
9to review under the Administrative Review Law.
10(Source: P.A. 101-452, eff. 1-1-20.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.