Senate Bill No. 17

Introduced By waterman

By Request of the State Auditor



A Bill for an Act entitled: "An Act creating a senior insurance and a senior securities fraud education and prevention program; requiring disclosure of suspected senior insurance or securities fraud to the commissioner of insurance and securities; creating the offenses of senior insurance and senior securities fraud; providing penalties for senior insurance and senior securities fraud; and providing an effective date."



WHEREAS, the State Auditor's Office through its Insurance and Securities Departments has found that fraud involving senior citizens accounts for 80% of all insurance investigation cases and the majority of all security investigation cases; and

WHEREAS, senior fraud deprives senior citizens of their life savings and quality of life, and the burden of these losses often falls on Medicaid and other social programs.



Be it enacted by the Legislature of the State of Montana:



NEW SECTION. Section 1.  Senior insurance fraud education and prevention program. (1) The commissioner may:

(a) establish an education program for senior citizens and members of aging networks to enable citizens to recognize senior insurance fraud and establish a method for reporting senior insurance fraud;

(b) conduct investigations of fraudulent insurance practices targeting senior citizens; and

(c) refer evidence of suspected senior insurance fraud to the attorney general or other appropriate prosecuting authority.

(2) An insurer, insurance producer, or other person who has reason to believe senior insurance fraud has occurred shall report the suspected fraud to the commissioner within 60 days of discovery of the occurrence.

(3) In the absence of malice, an insurer, insurance producer, or other person may not be subjected to civil liability for reporting or providing information or otherwise cooperating with an investigation of senior insurance fraud.



NEW SECTION. Section 2.  Senior insurance fraud. (1) A person commits the act of senior insurance fraud when the person, in the course of offering or selling insurance to an individual over 60 years of age:

(a) engages in unfair trade practices as prohibited in 33-18-202, 33-18-203, or 33-18-204; or

(b) procures the sale of insurance through intimidation or coercion.

(2) The commissioner may, after having conducted a hearing pursuant to 33-1-701, impose the penalties provided for in 33-1-317 for a violation of this section. Failure to pay a fine under this section results in a lien upon the assets and property of the person as provided in 33-1-318(3).

(3) In addition to any penalty provided for in 33-1-317, the commissioner may require a person who commits senior insurance fraud to make full restitution to the victim for all financial losses sustained as a result of the fraud at 10% interest a year from the date of the order for payment of restitution, costs, and reasonable attorney fees, less the amount of any income or refund received by the victim from the insurance. Any sums ordered to be paid under this subsection constitute a lien upon all of the assets located in this state of the person ordered to pay. The person in whose favor sums are ordered to be paid under this subsection may recover those sums by suit, including attorney fees and costs incurred in collection. Failure of a person to pay any sums ordered under this subsection constitutes a forfeiture of the right to do business in this state under this title.

(4) A person who purposely or knowingly commits senior insurance fraud involving a misappropriation or theft of insurance premiums commits the offense of theft and is punishable as provided in 45-6-301.



NEW SECTION. Section 3.  Senior securities fraud education and prevention program. (1) The commissioner may:

(a) establish an education program for senior citizens and members of aging networks to enable citizens to recognize senior securities fraud and establish a method for the reporting of senior securities fraud;

(b) conduct investigations of fraudulent securities practices targeting senior citizens; and

(c) refer evidence of suspected senior securities fraud to the attorney general or other appropriate prosecuting authority.

(2) A broker-dealer, salesperson, investment adviser, investment adviser representative, or other person who has reason to believe senior securities fraud has occurred shall report the suspected fraud to the commissioner within 60 days of discovery of the occurrence.

(3) In the absence of malice, a broker-dealer, salesperson, investment adviser, investment adviser representative, or other person may not be subjected to civil liability for filing reports, providing information, or otherwise cooperating with an investigation of senior securities fraud.



NEW SECTION. Section 4.  Senior securities fraud. (1) A person commits the act of senior securities fraud when the person, in the course of offering or selling securities to an individual over 60 years of age, employs fraudulent or other practices prohibited by 30-10-301.

(2) The commissioner may, after having conducted a hearing pursuant to 30-10-305, impose any penalty provided for in 30-10-305. Failure to pay a fine under this section results in a lien upon the assets and property of the person as provided in 30-10-305.

(3) In addition to any penalty provided for in 30-10-305, the commissioner may require a person who commits senior securities fraud to make full restitution to the victim to recover the consideration paid for the security at 10% a year from the date of the order of payment, costs, and reasonable attorney fees, less the amount of any income received by the victim on the security, upon the tender of the security or for damages recovered if the person no longer owns the security. Any sums ordered to be paid under this subsection constitute a lien upon all of the assets located in this state of the person ordered to pay. The person in whose favor sums are ordered to be paid under this subsection may recover those sums by suit, including attorney fees and costs incurred in collection. Failure of a person to pay any sums ordered under this subsection constitutes a forfeiture of the right to do business in this state under this title.



NEW SECTION. Section 5.  Codification instruction. (1) [Sections 1 and 2] are intended to be codified as an integral part of Title 33, chapter 1, and the provisions of Title 33, chapter 1, apply to [sections 1 and 2].

(2) [Sections 3 and 4] are intended to be codified as an integral part of Title 30, chapter 10, part 3, and the provisions of Title 30, chapter 10, part 3, apply to [sections 3 and 4].



NEW SECTION. Section 6.  Effective date. [This act] is effective July 1, 1997.

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