374.049. Classification of violations--orders, penalties--enhancement of penalties--reduction of penalties--deposit and use of penalties--effective date. - Missouri Statutes

Classification of violations--orders, penalties--enhancement ofpenalties--reduction of penalties--deposit and use ofpenalties--effective date.

374.049. 1. Violations of the laws of this state relating toinsurance in this chapter, chapter 354 and chapters 375 to 385, RSMo, or arule adopted or order issued by the director, are classified for thepurpose of civil penalties and forfeitures into the following fiveclassifications:

(1) Level one violations;

(2) Level two violations;

(3) Level three violations;

(4) Level four violations; and

(5) Level five violations.

2. An order to impose a civil penalty or forfeiture, when imposed bythe director in an administrative proceeding under section 374.046 on aperson for any violation of the laws of this state relating to insurance inthis chapter, chapter 354 and chapters 375 to 385, RSMo, or a rule adoptedor order issued by the director, shall be an order to pay an amount notexceeding the following:

(1) No civil penalty or forfeiture for a level one violation;

(2) One thousand dollars per each level two violation, up to anaggregate civil penalty or forfeiture of fifty thousand dollars per annumfor multiple violations;

(3) Five thousand dollars per each level three violation, up to anaggregate civil penalty or forfeiture of one hundred thousand dollars perannum for multiple violations;

(4) Ten thousand dollars per each level four violation, up to anaggregate civil penalty or forfeiture of two hundred fifty thousand dollarsper annum for multiple violations;

(5) Fifty thousand dollars per each level five violation, up to anaggregate civil penalty or forfeiture of two hundred fifty thousand dollarsper annum for multiple violations.

3. An order to impose a civil penalty or forfeiture, when imposed bythe court in an enforcement proceeding under section 374.048 on a personfor any violation of the laws of this state relating to insurance in thischapter, chapter 354 and chapters 375 to 385, RSMo, or a rule adopted ororder issued by the director, shall be an order to pay an amount notexceeding the following:

(1) No civil penalty or forfeiture for a level one violation;

(2) One thousand dollars per each level two violation, up to anaggregate civil penalty or forfeiture of fifty thousand dollars per annumfor multiple violations;

(3) Five thousand dollars per each level three violation, up to anaggregate civil penalty or forfeiture of two hundred thousand dollars perannum for multiple violations;

(4) Twenty thousand dollars per each level four violation, up to anaggregate civil penalty or forfeiture of one million dollars per annum formultiple violations;

(5) One million dollars per each level five violation, with no limitto civil penalties or forfeitures for multiple violations.

4. No civil penalty or forfeiture may be imposed against a person,unless the person has engaged in the act, practice, omission or course ofbusiness constituting the violation.

5. Any violation of the laws of this state relating to insurance inthis chapter, chapter 354 and chapters 375 to 385, RSMo, which is notclassified or does not authorize a specific range for a civil penalty orforfeiture for violations, shall be classified as a level one violation.In bringing an action to enforce a rule adopted by the director, unless theconduct that violates the rule also violates the enabling statute, theviolation shall be classified as a level one violation and shall not besubject to any provision in this section regarding the enhancement of acivil penalty or forfeiture.

6. The civil penalties or forfeitures set forth in this sectionestablish a maximum range. The court, or the director in administrativeenforcement, shall consider all of the circumstances, including the natureof violations to determine whether, and to any extent, a civil penalty orforfeiture is justified.

7. In any enforcement proceeding, the court, or director inadministrative enforcement, may enhance the civil penalty or forfeiturewith a one-classification step increase under this section, if theviolation was knowing. The court, or director in administrativeenforcement, may enhance the civil penalty or forfeiture with a two-levelincrease if the violation was knowingly committed in conscious disregard ofthe law.

8. In any enforcement proceeding, the court, or director inadministrative enforcement, may, after consideration of the factorsspecified in subsection 2 of section 374.046, enhance the civil penalty orforfeiture with a one-classification step increase under this section, ifthe violations resulted in actual financial loss to consumers.

9. In any enforcement proceeding, the court, or director inadministrative enforcement, shall reduce the civil penalty or forfeiture onthat person with up to a two-classification step reduction under thissection, if prior to receiving notice of the violation from the department,the person detects the violation through a self-audit or internalcompliance program reasonably designed to detect and prevent insurance lawviolations and immediately reports the violation to the director.

10. If more than one error is caused by a single act or omission inthe use of data processing equipment and such errors are not known by theviolator at the time the error occurs, then any such errors shall beregarded as a single violation under this section.

11. Any civil penalty or forfeiture recovered by the director shallbe paid to the treasurer and then distributed to the public schools asrequired by Article IX, section 7 of the Missouri Constitution.

12. The penalties and forfeitures authorized by this section governall actions and proceedings that are instituted on the basis of conductoccurring after August 28, 2006.

(L. 2006 H.B. 1837)