§ 58-2-132. Examination reports. - North Carolina Statutes

§ 58‑2‑132. Examination reports.

(a)        All examinationreports shall comprise only facts appearing upon the books, records, or otherdocuments of the entity, its agents or other persons examined, or asascertained from the testimony of its officers or agents or other personsexamined concerning its affairs, and conclusions and recommendations that theexaminers find reasonably warranted from the facts.

(b)        No later than 60days following completion of an examination, the examiners shall file with theDepartment a verified written examination report under oath. Upon receipt ofthe verified report, the Department shall send the report to the entityexamined, together with a notice that affords the entity examined a reasonableopportunity of not more than 30 days to make a written submission or rebuttalwith respect to any matters contained in the examination report. Within 30 daysafter the date of the examination report, the entity examined shall fileaffidavits executed by each of its directors stating under oath that they havereceived and read a copy of the report.

(c)        At the end of the30 days provided for the receipt of written submissions or rebuttals, theCommissioner shall fully consider and review the report, together with anywritten submissions or rebuttals and any relevant parts of the examiners' workpapers and enter an order:

(1)        Adopting theexamination report as filed or with modifications or corrections. If theexamination report reveals that the entity examined is operating in violationof any law, rule, or prior order of the Commissioner, the Commissioner mayorder the entity examined to take any action the Commissioner considersnecessary and appropriate to cure the violation; or

(2)        Rejecting theexamination report with directions to the examiners to reopen the examinationto obtain additional data, documentation of the information, and refiling undersubdivision (1) of this subsection; or

(3)        Calling for aninvestigatory hearing with no less than 20 days' notice to the insurer forpurposes of obtaining additional documentation, data, and testimony.

(d)        All orders enteredunder subdivision (c)(1) of this section shall be accompanied by findings andconclusions resulting from the Commissioner's consideration and review of theexamination report, relevant examiner work papers, and any written submissionsor rebuttals. Any such order shall be considered a final administrationdecision and shall be served upon the entity examined by certified mail. Anyhearing conducted under subdivision (c)(3) of this section shall be conductedas a nonadversarial confidential investigatory proceeding as necessary for theresolution of any inconsistencies, discrepancies, or disputed issues apparenton the face of the filed examination report or raised by or as a result of theCommissioner's review of relevant work papers or by the written submission orrebuttal of the entity examined. Within 20 days after the conclusion of anysuch hearing, the Commissioner shall enter an order under subdivision (c)(1) ofthis section. The Commissioner may not appoint a member of the Department'sexamination staff as an authorized representative to conduct the hearing. Thehearing shall proceed expeditiously with discovery by the entity examinedlimited to the examiner's work papers that tend to substantiate any assertionsset forth in any written submission or rebuttal. The Commissioner may issuesubpoenas for the attendance of any witnesses or the production of anydocuments the Commissioner considers to be relevant to the investigation,whether they are under the control of the Department, the entity examined, orother persons. The documents produced shall be included in the record, andtestimony taken by the Commissioner shall be under oath and preserved for therecord. Nothing in this section requires the Department to disclose anyinformation or records that would show the existence or content of anyinvestigation or activity of any federal or state criminal justice agency. Inthe hearing, the Commissioner shall question the persons subpoenaed. Thereafterthe entity examined and the Department may present testimony relevant to theinvestigation. Cross‑examination shall be conducted only by theCommissioner. The entity examined and the Department may make closingstatements and may be represented by counsel of their choice.

(e)        Upon completion ofthe examination report under subdivision (c)(1) of this section, theCommissioner shall hold the content of the examination report as private andconfidential information for the 30‑day period provided for writtensubmissions or rebuttals. If after 30 days after the examination report hasbeen submitted to it, the entity examined has neither notified the Commissionerof its acceptance and approval of the report nor requested to be heard on the report,the report shall then be filed as a public document and shall be open to publicinspection, as long as no court of competent jurisdiction has stayed itspublication. Nothing in the Examination Law prohibits the Commissioner fromdisclosing the content of the examination report, preliminary examinationreport or results, or any related matter, to an insurance regulator or to lawenforcement officials of this or any other state or country or of the UnitedStates government at any time, as long as the person or agency receiving thereport or related matters agrees in writing and is authorized by law to hold itconfidential and in a manner consistent with this section. If the Commissionerdetermines that further regulatory action is appropriate as a result of anyexamination, the Commissioner may initiate such proceedings or actions asprovided by law.

(f)         All workingpapers, information, documents, and copies thereof produced by, obtained by, ordisclosed to the Commissioner or any other person in connection with anexamination, market analysis, market conduct action, or financial analysisshall be given confidential treatment, are not subject to subpoena, and shallnot be made public by the Commissioner or any other person. The Commissionermay use the documents, materials, or other information in the furtherance ofany regulatory or legal action brought as part of the Commissioner's officialduties.

(g)        In order to assistin the performance of the Commissioner's duties, the Commissioner may:

(1)        Share documents,materials, or other information, including the confidential and privilegeddocuments, materials, or information subject to subsection (f) of this section,with other state, federal, and international regulatory agencies, with theNAIC, and with state, federal, and international law enforcement authorities,provided that the recipient agrees to maintain the confidentiality andprivileged status of the document, material, communication, or otherinformation.

(2)        Receive documents,materials, communications, or information, including otherwise confidential andprivileged documents, materials, or information, from the NAIC, and fromregulatory and law enforcement officials of other foreign or domesticjurisdictions, and shall maintain as confidential or privileged any document,material, or information received with notice or the understanding that it isconfidential or privileged under the laws of the jurisdiction that is thesource of the document, material, or information.

(3)        Enter intoagreements governing sharing and use of information consistent with thissection.

(h)        No waiver of anexisting privilege or claim of confidentiality in the documents, materials, orinformation shall occur as a result of disclosure to the Commissioner underthis section or as a result of sharing as authorized in subsection (g) of thissection.

(i)         A privilegeestablished under the law of any state or jurisdiction that is substantiallysimilar to the privilege established under this section shall be available andenforced in any proceeding in, and in any court of, this State.

(j)         In this section,"department," "insurance regulator," "law enforcementofficial or authority," "NAIC," and "regulatory official oragency" include employees, agents, consultants, and contractors of thoseentities. (1991,c. 681, s. 2; 2001‑180, s. 4; 2005‑206, s. 2.)