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90_HB0223sam001
SRS90HB0223MNbmam01
1 AMENDMENT TO HOUSE BILL 223
2 AMENDMENT NO. . Amend House Bill 223 on page 1, in
3 line 1, by deleting "sales"; and
4 on page 1, in line 5, before "changing", by inserting "adding
5 Section 155.31 and"; and
6 on page 1, below line 5, by inserting the following:
7 "(215 ILCS 5/155.31 new)
8 Sec. 155.31. Insurance compliance self-evaluative
9 privilege.
10 (a) To encourage insurance companies and persons
11 conducting activities regulated under this Code, both to
12 conduct voluntary internal audits of their compliance
13 programs and management systems and to assess and improve
14 compliance with State and federal statutes, rules, and
15 orders, an insurance compliance self-evaluative privilege is
16 recognized to protect the confidentiality of communications
17 relating to voluntary internal compliance audits. The
18 General Assembly hereby finds and declares that protection of
19 insurance consumers is enhanced by companies' voluntary
20 compliance with this State's insurance and other laws and
21 that the public will benefit from incentives to identify and
22 remedy insurance and other compliance issues. It is further
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1 declared that limited expansion of the protection against
2 disclosure will encourage voluntary compliance and improve
3 insurance market conduct quality and that the voluntary
4 provisions of this Section will not inhibit the exercise of
5 the regulatory authority by those entrusted with protecting
6 insurance consumers.
7 (b)(1) An insurance compliance self-evaluative audit
8 document is privileged information and is not admissible as
9 evidence in any legal action in any civil, criminal, or
10 administrative proceeding, except as provided in subsections
11 (c) and (d) of this Section. Documents, communications,
12 data, reports, or other information created as a result of a
13 claim involving personal injury or workers' compensation made
14 against an insurance policy are not insurance compliance
15 self-evaluative audit documents and are admissible as
16 evidence in civil proceedings as otherwise provided by
17 applicable rules of evidence or civil procedure, subject to
18 any applicable statutory or common law privilege, including
19 but not limited to the work product doctrine, the
20 attorney-client privilege, or the subsequent remedial
21 measures exclusion.
22 (2) If any company, person, or entity performs or
23 directs the performance of an insurance compliance audit, an
24 officer or employee involved with the insurance compliance
25 audit, or any consultant who is hired for the purpose of
26 performing the insurance compliance audit, may not be
27 examined in any civil, criminal, or administrative proceeding
28 as to the insurance compliance audit or any insurance
29 compliance self-evaluative audit document, as defined in this
30 Section. This subsection (b)(2) does not apply if the
31 privilege set forth in subsection (b)(1) of this Section is
32 determined under subsection (c) or (d) not to apply.
33 (3) A company may voluntarily submit, in connection with
34 examinations conducted under this Article, an insurance
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1 compliance self-evaluative audit document to the Director, or
2 his or her designee, as a confidential document under
3 subsection (f) of Section 132.5 of this Code without waiving
4 the privilege set forth in this Section to which the company
5 would otherwise be entitled; provided, however, that the
6 provisions in subsection (f) of Section 132.5 permitting the
7 Director to make confidential documents public pursuant to
8 subsection (e) of Section 132.5 and access to the National
9 Association of Insurance Commissioners shall not apply to the
10 insurance compliance self-evaluative audit document so
11 voluntarily submitted. Nothing contained in this subsection
12 shall give the Director any authority to compel a company to
13 disclose involuntarily or otherwise provide an insurance
14 compliance self-evaluative audit document.
15 (c)(1) The privilege set forth in subsection (b) of this
16 Section does not apply to the extent that it is expressly
17 waived by the company that prepared or caused to be prepared
18 the insurance compliance self-evaluative audit document.
19 (2) In a civil or administrative proceeding, a court of
20 record may, after an in camera review, require disclosure of
21 material for which the privilege set forth in subsection (b)
22 of this Section is asserted, if the court determines one of
23 the following:
24 (A) the privilege is asserted for a fraudulent
25 purpose;
26 (B) the material is not subject to the privilege;
27 or
28 (C) even if subject to the privilege, the material
29 shows evidence of noncompliance with State and federal
30 statutes, rules and orders and the company failed to
31 undertake reasonable corrective action or eliminate the
32 noncompliance within a reasonable time.
33 (3) In a criminal proceeding, a court of record may,
34 after an in camera review, require disclosure of material for
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1 which the privilege described in subsection (b) of this
2 Section is asserted, if the court determines one of the
3 following:
4 (A) the privilege is asserted for a fraudulent
5 purpose;
6 (B) the material is not subject to the privilege;
7 (C) even if subject to the privilege, the material
8 shows evidence of noncompliance with State and federal
9 statutes, rules and orders and the company failed to
10 undertake reasonable corrective action or eliminate such
11 noncompliance within a reasonable time; or
12 (D) the material contains evidence relevant to
13 commission of a criminal offense under this Code, and all
14 of the following factors are present:
15 (i) the Director, State's Attorney, or
16 Attorney General has a compelling need for the
17 information;
18 (ii) the information is not otherwise
19 available; and
20 (iii) the Director, State's Attorney, or
21 Attorney General is unable to obtain the substantial
22 equivalent of the information by any means without
23 incurring unreasonable cost and delay.
24 (d)(1) Within 30 days after the Director, State's
25 Attorney, or Attorney General makes a written request by
26 certified mail for disclosure of an insurance compliance
27 self-evaluative audit document under this subsection, the
28 company that prepared or caused the document to be prepared
29 may file with the appropriate court a petition requesting an
30 in camera hearing on whether the insurance compliance
31 self-evaluative audit document or portions of the document
32 are privileged under this Section or subject to disclosure.
33 The court has jurisdiction over a petition filed by a company
34 under this subsection requesting an in camera hearing on
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1 whether the insurance compliance self-evaluative audit
2 document or portions of the document are privileged or
3 subject to disclosure. Failure by the company to file a
4 petition waives the privilege.
5 (2) A company asserting the insurance compliance
6 self-evaluative privilege in response to a request for
7 disclosure under this subsection shall include in its request
8 for an in camera hearing all of the information set forth in
9 subsection (d)(5) of this Section.
10 (3) Upon the filing of a petition under this subsection,
11 the court shall issue an order scheduling, within 45 days
12 after the filing of the petition, an in camera hearing to
13 determine whether the insurance compliance self-evaluative
14 audit document or portions of the document are privileged
15 under this Section or subject to disclosure.
16 (4) The court, after an in camera review, may require
17 disclosure of material for which the privilege in subsection
18 (b) of this Section is asserted if the court determines,
19 based upon its in camera review, that any one of the
20 conditions set forth in subsection (c)(2)(A) through (C) is
21 applicable as to a civil or administrative proceeding or that
22 any one of the conditions set forth in subsection (c)(3)(A)
23 through (D) is applicable as to a criminal proceeding. Upon
24 making such a determination, the court may only compel the
25 disclosure of those portions of an insurance compliance
26 self-evaluative audit document relevant to issues in dispute
27 in the underlying proceeding. Any compelled disclosure will
28 not be considered to be a public document or be deemed to be
29 a waiver of the privilege for any other civil, criminal, or
30 administrative proceeding. A party unsuccessfully opposing
31 disclosure may apply to the court for an appropriate order
32 protecting the document from further disclosure.
33 (5) A company asserting the insurance compliance
34 self-evaluative privilege in response to a request for
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1 disclosure under this subsection (d) shall provide to the
2 Director, State's Attorney, or Attorney General, as the case
3 may be, at the time of filing any objection to the
4 disclosure, all of the following information:
5 (A) The date of the insurance compliance
6 self-evaluative audit document.
7 (B) The identity of the entity conducting the
8 audit.
9 (C) The general nature of the activities covered by
10 the insurance compliance audit.
11 (D) An identification of the portions of the
12 insurance compliance self-evaluative audit document for
13 which the privilege is being asserted.
14 (e) (1) A company asserting the insurance compliance
15 self-evaluative privilege set forth in subsection (b) of this
16 Section has the burden of demonstrating the applicability of
17 the privilege. Once a company has established the
18 applicability of the privilege, a party seeking disclosure
19 under subsections (c)(2)(A) or (C) of this Section has the
20 burden of proving that the privilege is asserted for a
21 fraudulent purpose or that the company failed to undertake
22 reasonable corrective action or eliminate the noncompliance
23 with a reasonable time. The Director, State's Attorney, or
24 Attorney General seeking disclosure under subsection (c)(3)
25 of this Section has the burden of proving the elements set
26 forth in subsection (c)(3)of this Section.
27 (2) The parties may at any time stipulate in proceedings
28 under subsections (c) or (d) of this Section to entry of an
29 order directing that specific information contained in an
30 insurance compliance self-evaluative audit document is or is
31 not subject to the privilege provided under subsection (b) of
32 this Section.
33 (f) The privilege set forth in subsection (b) of this
34 Section shall not extend to any of the following:
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1 (1) documents, communications, data, reports, or
2 other information required to be collected, developed,
3 maintained, reported, or otherwise made available to a
4 regulatory agency pursuant to this Code, or other federal
5 or State law, rule, or order;
6 (2) information obtained by observation or
7 monitoring by any regulatory agency; or
8 (3) information obtained from a source independent
9 of the insurance compliance audit.
10 (g) As used in this Section:
11 (1) "Insurance compliance audit" means a voluntary,
12 internal evaluation, review, assessment, or audit not
13 otherwise expressly required by law of a company or an
14 activity regulated under this Code, or other State or
15 federal law applicable to a company, or of management
16 systems related to the company or activity, that is
17 designed to identify and prevent noncompliance and to
18 improve compliance with those statues, rules, or orders.
19 An insurance compliance audit may be conducted by the
20 company, its employees, or by independent contractors.
21 (2) "Insurance compliance self-evaluative audit
22 document" means documents prepared as a result of or in
23 connection with and not prior to an insurance compliance
24 audit. An insurance compliance self-evaluation audit
25 document may include a written response to the findings
26 of an insurance compliance audit. An insurance
27 compliance self-evaluative audit document may include,
28 but is not limited to, as applicable, field notes and
29 records of observations, findings, opinions, suggestions,
30 conclusions, drafts, memoranda, drawings, photographs,
31 computer-generated or electronically recorded
32 information, phone records, maps, charts, graphs, and
33 surveys, provided this supporting information is
34 collected or developed for the primary purpose and in the
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1 course of an insurance compliance audit. An insurance
2 compliance self-evaluative audit document may also
3 include any of the following:
4 (A) an insurance compliance audit report
5 prepared by an auditor, who may be an employee of
6 the company or an independent contractor, which may
7 include the scope of the audit, the information
8 gained in the audit, and conclusions and
9 recommendations, with exhibits and appendices;
10 (B) memoranda and documents analyzing portions
11 or of all of the insurance compliance audit report
12 and discussing potential implementation issues;
13 (C) an implementation plan that addresses
14 correcting past noncompliance, improving current
15 compliance, and preventing future noncompliance; or
16 (D) analytic data generated in the course of
17 conducting the insurance compliance audit.
18 (3) "Company" has the same meaning as provided in
19 Section 2 of this Code.
20 (h) Nothing in this Section shall limit, waive, or
21 abrogate the scope or nature of any statutory or common law
22 privilege including, but not limited to, the work product
23 doctrine, the attorney-client privilege, or the subsequent
24 remedial measures exclusion.
25 on page 3, below line 9, by inserting the following:
26 "Section 99. Effective date. This Act takes effect upon
27 becoming law.".