374.046. Relief issued by director for violations of state laws--considerations--notice--effective date of order--contents of order, procedures--penalty--costs--powers of director--service--order file - Missouri Statutes

Relief issued by director for violations of statelaws--considerations--notice--effective date of order--contentsof order, procedures--penalty--costs--powers ofdirector--service--order filed--noncompliance--modification oforder--additional penalties--definitions.

374.046. 1. If the director determines based upon substantial andcompetent evidence that a person has engaged, is engaging in or has taken asubstantial step toward engaging in an act, practice, omission, or courseof business constituting a violation of the laws of this state relating toinsurance in this chapter, chapter 354, RSMo, and chapters 375 to 385,RSMo, or a rule adopted or order issued pursuant thereto or that a personhas materially aided or is materially aiding an act, practice, omission, orcourse of business constituting a violation of the laws of this staterelating to insurance in this chapter, chapter 354, RSMo, and chapters 375to 385, RSMo, or a rule adopted or order issued pursuant thereto, thedirector may order the following relief:

(1) An order directing the person to cease and desist from engagingin the act, practice, omission, or course of business;

(2) A curative order or order directing the person to take otheraction necessary or appropriate to comply with the insurance laws of thisstate;

(3) Order a civil penalty or forfeiture as provided in section374.049; and

(4) Award reasonable costs of the investigation.

2. In determining any relief sought, the director shall consider,among other factors, whether:

(1) The violations are likely to continue or reoccur;

(2) Actual financial loss was sustained by consumers and restitutionhas been made;

(3) The act, practice, omission, or course of business was detectedas part of a self-audit or internal compliance program and immediatelyreported to the director; and

(4) The act, practice, omission, or course of business had previouslybeen detected, but inadequate policies and procedures were implemented toprevent reoccurrence.

3. Unless the director determines that a summary order is appropriateunder subsection 4 of this section, the director shall provide notice ofthe intent to initiate administrative enforcement by serving a statement ofthe reasons for the action upon any person subject to the proceedings. Astatement of reasons, together with an order to show cause why a cease anddesist order and other relief should not be issued, shall be served eitherpersonally or by certified mail on any person named therein. The directorshall schedule a time and place at least ten days thereafter for hearing,and after notice of and opportunity for hearing to each person subject tothe order, the director may issue a final order under subsection 6 of thissection.

4. If the director determines that sections 375.014, 375.144, or375.310, RSMo, are being violated and consumers are being aggrieved by theviolations, the order issued under subdivision (1) of subsection 1 of thissection may be summary and be effective on the date of issuance. Uponissuance of the order, the director shall promptly serve each personsubject to the order with a copy of the order and a notice that the orderhas been entered.

5. A summary order issued under subsection 4 of this section mustinclude a statement of the reasons for the order, notice within five daysafter receipt of a request in a record from the person that the matter willbe scheduled for a hearing, and a statement whether the department isseeking a civil penalty or costs of the investigation. If a person subjectto the order does not request a hearing and none is ordered by the directorwithin thirty days after the date of service of the order, the orderbecomes final as to that person by operation of law. If a hearing isrequested or ordered, the director, after notice of and opportunity forhearing to each person subject to the order, may modify or vacate the orderor extend it until final determination.

6. If a hearing is requested or ordered pursuant to subsection 3 orsubsection 5 of this section, a hearing before the director or a hearingofficer designated by the director must be provided. A final order may notbe issued unless the director makes findings of fact and conclusions of lawin a record in accordance with the provisions of chapter 536, RSMo, andprocedural rules promulgated by the director. The final order may makefinal, vacate, or modify the order issued under subsection 5 of thissection.

7. In a final order under subsection 6 of this section, the directormay impose a civil penalty or forfeiture as provided in section 374.049.No civil penalty or forfeiture may be imposed against a person unless theperson has engaged in the act, practice, omission, or course of businessconstituting the violation.

8. In a final order under subsection 6 of this section, the directormay charge the actual cost of an investigation or proceeding for aviolation of the insurance laws of this state or a rule adopted or orderissued pursuant thereto. These funds shall be paid to the director to thecredit of the insurance dedicated fund.

9. The director is authorized to issue subpoenas, compel attendanceof witnesses, administer oaths, hear testimony of witnesses, receiveevidence, and require the production of books, papers, records,correspondence, and all other written instruments or documents relevant tothe proceeding and authorized in contested cases under the provisions ofchapter 536, RSMo, and procedural rules promulgated by the director.

10. Statements of charges, notices, orders, and other processes ofthe director may be served by anyone duly authorized by the director eitherin the manner provided by law for service of process in civil actions, orby registering or certifying and mailing a copy thereof to the personaffected by such statement, notice, order, or other process at his or itsresidence or principal office or place of business. The verified return bythe person so serving such statement, notice, order, or other processsetting forth the manner of such service shall be proof of the same, andthe return postcard receipt for such statement, notice, order, or otherprocess, registered and mailed as aforesaid, shall be proof of the serviceof the same.

11. If a petition for judicial review of a final order is not filedin accordance with section 374.055, the director may file a certified copyof the final order with the clerk of a court of competent jurisdiction.The order so filed has the same effect as a judgment of the court and maybe recorded, enforced, or satisfied in the same manner as a judgment of thecourt.

12. If a person violates or does not comply with an order under thissection, the director may under section 374.048 petition a court ofcompetent jurisdiction to enforce the order. The court may not require thedirector to post a bond in an action or proceeding under this section. Ifthe court finds, after service and opportunity for hearing, that the personwas not in compliance with the order, the court may, in addition to reliefauthorized in section 374.048, adjudge the person in civil contempt of theorder. A violation of or failure to comply with an order under thissection is a level three violation under section 374.049. The court mayimpose a further civil penalty against the person for contempt in an amountnot less than five thousand dollars but not greater than one hundredthousand dollars for each violation and may grant any other relief thecourt determines is just and proper in the circumstances.

13. Until the expiration of the time allowed under section 374.055for filing a petition for judicial review, if no such petition has beenduly filed within such time or if a petition for review has been filedwithin such time, then until the transcript of the record in the proceedinghas been filed in the circuit court of Cole County, the director may at anytime, upon such notice and in such manner as he shall deem proper, modifyor set aside in whole or in part any order issued by him under thissection.

14. The enforcement authority of the director under this section iscumulative to any other statutory authority of the director.

15. The director is authorized to issue administrative consent ordersin the public interest as complete or partial settlement of anyinvestigation, examination, or other proceeding, which curative orders maycontain any provision necessary or appropriate to assure compliance withthe insurance laws of this state, require payment of restitution to bedistributed directly or by the director to any aggrieved consumers, civilpenalties, or voluntary forfeiture, reimbursement for costs ofinvestigation or examination, or any other relief deemed by the director tobe necessary and appropriate. Any remaining matters not addressed insettlement may be submitted to the director through a contested proceedingunder this section.

16. (1) Any person willfully violating any provision of any ceaseand desist order of the director after it becomes final, while the same isin force, upon conviction thereof shall be punished by a fine of not morethan one hundred thousand dollars, by imprisonment of up to ten years, orby both such fine and imprisonment.

(2) In addition to any other penalty provided, violation of any ceaseand desist order shall subject the violator to suspension or revocation ofany certificate of authority or license as may be applicable under the lawsof this state relating to the business of insurance.

17. The term "person" as used in this chapter shall include anyindividual, partnership, corporation, association or trust, or any otherlegal entity.

18. The term "order" as used in this chapter shall include a formaladministrative direction or command of the director issued under thissection or in any contested case subject to the provisions of section536.063, RSMo, or any lawful administrative proceeding subject to judicialreview, but shall not include department bulletins, no-action letters,advisory opinions, or any other statement of general applicability thatshould be adopted by rule.

(L. 1967 p. 516, A.L. 2006 H.B. 1837)

(1984) Nothing in this section prevents the Governor from directing the division of insurance to issue a cease and desist order. American Family Life Assurance Co. v. Teasdale (8th Cir.) 733 F.2d 559.