71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
Senate Bill 609
Sponsored by COMMITTEE ON BUSINESS, LABOR, AND ECONOMIC
DEVELOPMENT (at the request of State Farm Insurance Company)
CHAPTER ................
AN ACT
Relating to insurance compliance audits.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 8 of this 2001 Act are added to
and made a part of ORS chapter 731. + }
SECTION 2. { + As used in sections 2 to 8 of this 2001 Act:
(1) 'Insurance compliance audit' means a voluntary internal
evaluation, review, assessment, audit or investigation that is
undertaken to identify or prevent noncompliance with, or promote
compliance with, laws, regulations, orders or industry or
professional standards, and that is conducted by or on behalf of
an insurer regulated under the Insurance Code.
(2) 'Insurance compliance self-evaluative audit document '
means a document prepared as a result of or in connection with an
insurance compliance audit. 'Insurance compliance self-evaluative
audit document' includes, but is not limited to:
(a) A written response to the findings of an insurance
compliance audit.
(b) Field notes and records of observations, findings,
opinions, suggestions, conclusions, drafts, memoranda, drawings,
photographs, exhibits, computer-generated or electronically
recorded information, phone records, maps, charts, graphs and
surveys, provided this supporting information is collected or
developed solely for the purpose of an insurance compliance
audit.
(c) An insurance compliance audit report prepared by an
auditor, who may be an employee of the insurer or an independent
contractor, which may include the scope of the audit, the
information gained in the audit and conclusions and
recommendations, with exhibits and appendices.
(d) Memoranda and documents analyzing portions or all of the
insurance compliance audit report and discussing potential
implementation issues.
(e) An implementation plan that addresses correcting past
noncompliance, improving current compliance and preventing future
noncompliance.
(f) Analytic data generated in the course of conducting the
insurance compliance audit, not including any analytic data that
exists independently of the audit or existed before the audit was
conducted. + }
SECTION 3. { + (1) Except as provided in sections 2 to 8 of
this 2001 Act, an insurance compliance self-evaluative audit
Enrolled Senate Bill 609 (SB 609-A) Page 1
document is privileged information and is not discoverable, or
admissible as evidence, in any civil, criminal or administrative
proceeding.
(2) Except as provided in sections 2 to 8 of this 2001 Act, any
person who performs or directs the performance of an insurance
compliance audit, any officer, employee or agent of an insurer
who is involved with an insurance compliance audit and any
consultant who is hired for the purpose of performing an
insurance compliance audit may not be examined in any civil,
criminal or administrative proceeding about the insurance
compliance audit or any insurance compliance self-evaluative
audit document. + }
SECTION 4. { + (1) Section 3 of this 2001 Act does not limit
the authority of the Director of the Department of Consumer and
Business Services to acquire any insurance compliance
self-evaluative audit document or to examine any person in
connection with the document. If the director determines that the
actions of an insurer are egregious, the director may introduce
and use the document in any administrative proceeding or civil
action under the Insurance Code. The director may require that an
insurer submit an insurance compliance self-evaluative audit
document for the purpose of an examination or investigation
conducted under this chapter. An insurer may also voluntarily
submit an insurance compliance self-evaluative audit document to
the director.
(2) Any insurance compliance self-evaluative audit document
submitted to the director under this section and in the
possession of the director remains the property of the insurer
and is not subject to disclosure or production under ORS 192.410
to 192.505.
(3)(a) The director shall consider the corrective action taken
by an insurer to eliminate problems identified in the insurance
compliance self-evaluative audit document as a mitigating factor
when determining a civil penalty or other action against the
insurer.
(b) The director may, in the director's sole discretion,
decline to impose a civil penalty or take other action against an
insurer based on information obtained from an insurance
compliance self-evaluative audit document if the insurer has
taken reasonable corrective action to eliminate the problems
identified in the document.
(4) Disclosure of an insurance compliance self-evaluative audit
document to a governmental agency, whether voluntarily or
pursuant to compulsion of law, does not constitute a waiver of
the privilege set forth in section 3 of this 2001 Act for any
other purpose.
(5) The director may not be compelled to produce an insurance
compliance self-evaluative audit document. + }
SECTION 5. { + (1) The privilege set forth in section 3 of
this 2001 Act does not apply to the extent that the privilege is
expressly waived by the insurer that prepared or caused to be
prepared the insurance compliance self-evaluative audit document.
(2) The privilege set forth in section 3 of this 2001 Act does
not apply in any civil, criminal or administrative proceeding
commenced by the Attorney General relating to Medicaid fraud,
without regard to whether the proceeding is brought on behalf of
the state, a state agency or a federal agency. An insurer may
request an in camera review of any document or other evidence to
be released or used under this subsection and may request that
Enrolled Senate Bill 609 (SB 609-A) Page 2
appropriate protective orders be entered governing release and
use of the material.
(3) In any civil proceeding a court of record may, after an in
camera review, require disclosure of material for which the
privilege set forth in section 3 of this 2001 Act is asserted if
the court determines that the material is not subject to the
privilege, or that the privilege is asserted for a fraudulent
purpose, including but not limited to an assertion of the
privilege for an insurance compliance audit that was conducted
for the purpose of concealing a violation of any federal, state
or local law or rule. Nothing in this subsection shall be
construed to limit the authority of the Director of the
Department of Consumer and Business Services to acquire, examine
and use insurance compliance self-evaluative audit documents
under section 4 of this 2001 Act.
(4) In a criminal proceeding, a court of record may, after an
in camera review, require disclosure of material for which the
privilege set forth in section 3 of this 2001 Act is asserted if
the court determines that:
(a) The privilege is asserted for a fraudulent purpose,
including but not limited to an assertion of the privilege for an
insurance compliance audit that was conducted for the purpose of
concealing a violation of any federal, state or local law or
rule;
(b) The material is not subject to the privilege; or
(c) The material contains evidence relevant to commission of a
criminal offense, and:
(A) A district attorney or the Attorney General has a
compelling need for the information;
(B) The information is not otherwise available; or
(C) The district attorney or Attorney General is unable to
obtain the substantial equivalent of the information by any other
means without incurring unreasonable cost and delay. + }
SECTION 6. { + (1) Within 30 days after a district attorney or
the Attorney General serves on an insurer a written request by
certified mail for disclosure of an insurance compliance
self-evaluative audit document, the insurer that prepared or
caused the document to be prepared may file in circuit court a
petition requesting an in camera hearing on whether the insurance
compliance self-evaluative audit document or portions of the
document are privileged under section 3 of this 2001 Act or
subject to disclosure. Failure by the insurer to file a petition
waives the privilege only with respect to the specific request.
(2) A petition filed by an insurer under this section must
contain the following information:
(a) The date of the insurance compliance self-evaluative audit
document.
(b) The identity of the person that conducted the audit.
(c) The general nature of the activities covered by the
insurance compliance audit.
(d) An identification of the portions of the insurance
compliance self-evaluative audit document for which the privilege
is being asserted.
(3) Within 45 days after the filing of a petition by an insurer
under this section, the court shall schedule an in camera hearing
to determine whether the insurance compliance self-evaluative
audit document or portions of the document are privileged under
section 3 of this 2001 Act.
(4) The court, after an in camera review pursuant to this
section, may require disclosure of material for which the
Enrolled Senate Bill 609 (SB 609-A) Page 3
privilege established by section 3 of this 2001 Act is asserted
if the court determines that any of the conditions set forth in
section 5 of this 2001 Act are met. Upon making such a
determination, the court may compel the disclosure of only those
portions of an insurance compliance self-evaluative audit
document relevant to issues in dispute in the underlying
proceeding. Any disclosure that is compelled by the court will
not be considered to be a public document or be deemed to be a
waiver of the privilege for any other civil, criminal or
administrative proceeding. A party unsuccessfully opposing
disclosure may apply to the court for an appropriate order
protecting the document from further disclosure.
(5) An insurer asserting the privilege established under
section 3 of this 2001 Act has the burden of establishing that
the privilege applies. If the insurer establishes that the
privilege applies, a party seeking disclosure under section 5 of
this 2001 Act has the burden of proving the elements set forth in
section 5 of this 2001 Act. + }
SECTION 7. { + The privilege established under section 3 of
this 2001 Act does not apply to any of the following:
(1) Documents, communications, data, reports or other
information expressly required to be collected, developed,
maintained or reported to a regulatory agency under the Insurance
Code or other state or federal law;
(2) Information obtained by observation or monitoring by any
regulatory agency; or
(3) Information obtained from a source other than the insurance
compliance audit. + }
SECTION 8. { + Nothing in sections 2 to 8 of this 2001 Act, or
in the release of any insurance compliance self-evaluative audit
document under sections 2 to 8 of this 2001 Act, shall limit,
waive or abrogate the scope or nature of any statutory or common
law privilege or other limitation on admissibility of evidence
including, but not limited to, the work product doctrine, the
lawyer-client privilege under ORS 40.225 or the subsequent
remedial measures exclusion provided by ORS 40.185. + }
SECTION 9. { + Sections 2 to 8 of this 2001 Act apply only to
civil, criminal or administrative proceedings commenced on or
after the effective date of this 2001 Act. + }
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Passed by Senate April 2, 2001
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 21, 2001
...........................................................
Speaker of House
Enrolled Senate Bill 609 (SB 609-A) Page 4
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled Senate Bill 609 (SB 609-A) Page 5