HOUSE BILL NO. 509
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 23, TITLE 18, DELAWARE CODE, RELATING TO UNFAIR METHODS OF COMPETITION, UNFAIR DECEPTIVE ACTS AND PRACTICES IN THE BUSINESS OF INSURANCE.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Amend Chapter 23, Title 18, Delaware Code, by striking said Chapter 23 in its entirety and substitute a new Chapter 23 to read as follows:
CHAPTER 23 UNFAIR PRACTICES IN THE INSURANCE BUSINESS
§ 2301. Declaration of purpose
(a) The purpose of §2301 through §2316 of this Chapter is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945, Public Law 15, 79th Congress, by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.
(b) §2301 through §2316 of this Chapter constitute and may be cited as the Unfair Trade Practices Act.
When used in this Chapter:
(a) "Person" shall mean any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurer, fraternal benefit society, and other legal entity engaged in the business of insurance, including agents, brokers and adjusters. Person shall also mean medical service plans and hospital service plans as defined in §6302. For purposes of this Chapter, medical hospital service plans shall be deemed to be engaged in the business of insurance.
(b) "Commissioner" shall mean the Commissioner of Insurance of this State.
(c) "Insurance policy" or "insurance contract" shall mean any contract of insurance, indemnity, medical or hospital service, suretyship, or annuity issued, proposed for issuance, or intended for issuance by any person.
(d) "Service contract" is intended to cover the product issued by medical and hospital service plans and should be changed to conform to the laws of each state.
§ 2303. Unfair methods of competition and unfair or deceptive acts or practices prohibited
No person shall engage in this State in any trade practice which is defined in this Chapter as, or determined pursuant to this Chapter to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.
§ 2304. Unfair methods of competition and unfair or deceptive acts or practices defined
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance.
(1) Misrepresentations and False Advertising of Insurance policies.
No person shall make, issue, circulate, or cause to be made, issued, or circulated, any estimate, circular, statement sales presentation omission, or comparison which:
(a) misrepresents the benefits, advantages, conditions or terms of any insurance policy ; or
(b) misrepresents the dividends or share of the surplus to be received on any insurance policy; or
(c) makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; or
(d) is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates;
(e) or uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; or
(f) is a misrepresentation for the purpose of inducing or tending to induce to the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; or
() is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or
(a) misrepresents any insurance policy as being shares of stock.
(2) False Information and Advertising Generally.
No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published disseminated, circulated, or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.
No person shall make, publish, disseminate or circulate, directly or indirectly, or aid, abet or encourage the making, publishing, disseminating or circulating of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, or of an organization proposing to become an insurer, and which is circulated to injure any person engaged or proposing to engage in the business of insurance.
(4) Boycott, Coercion and Intimidation.
No person shall enter into any agreement to commit, or by any concerted action commit, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or any monopoly in, any business of insurance.
(5) Interlocking Ownership, Management.
(a) Any insurer may retain, invest in or acquire the whole or any part of the capital stock of any other insurer or insurers, or have a common management with any other insurer or insurers, unless such retention, investment, acquisition or common management is inconsistent with any other provision of this title, or unless by reason thereof the business of such insurers with the public is conducted in a manner which substantially lessens competition generally in the insurance business or tends to create any monopoly therein.
(b) Any person otherwise qualified may be a director of two or more insurers which are competitors, unless the effect thereof is to lessen substantially competition between insurers generally or tends materially to create any monopoly.
(6) Political Contributions Prohibited; Penalty.
(a) No insurer shall directly or indirectly pay or use, or offer, consent, or agree to pay or use, any money or property for or in aid of any political party, committee, or organization, or for or in aid of any corporation or other body organized or maintained for political purposes, or for or in aid of any candidate for political office, or for nomination for such office, or for any political purpose whatsoever, or for the reimbursement or indemnification of any person for money or property so used.
(b) Any officer, director, stockholder, attorney, or agent of any insurer which violates any of the provisions of this section, who participates in, aids, abets, or advises, or consents to any such violation, any person who solicits or knowingly receives any money or property in violation of this section, shall be guilty of a misdemeanor, and be punished by imprisonment for not more than one year and a fine of not more than $1,000; and any officer or director abetting in any contribution made in violation of this section shall be liable to the insurer for the amount so contributed.
(c) This section shall not prohibit reasonable expenditures by an insurer otherwise lawful, for presentation of information relative to proposed legislation affecting the insurer.
(7) Illegal Dealing in Premiums; Excess Charges for Insurance.
(a) No person shall willfully collect any sum as premium or charge for insurance, which insurance is not then provided or is not in due course to be provided (subject to acceptance of the risk by the insurer) by an insurance policy issued by an insurer as authorized by this title.
(b) No person shall willfully collect as premium or charge for insurance any sum in excess of the premium or charge applicable to such insurance, and as specified in the policy, in accordance with the applicable classifications and rates as filed with and approved by the Commissioner; or, in cases where classifications, premiums, or rates are not required to be so filed and approved, such premiums and charges shall not be in excess of those specified in the policy and as fixed by the insurer. This provision shall not be deemed to prohibit the charging and collection, by surplus lines brokers licensed under Chapter 19 of this title, of the amount of applicable state and federal taxes and nominal service charge to cover communication expenses, in addition to the premium required by the insurer. Nor shall it be deemed to prohibit the charging and collection, by a life insurer, of amounts actually to be expended for medical examination of an applicant for life insurance or for reinstatement of a life insurance policy.
(8) Insurance as Inducement to Purchase.
No person shall directly or indirectly participate in any plan to offer or effect any kind or kinds of life or health insurance or annuities as an inducement to, or in connection with, the purchase by the public of any goods, securities, commodities, services or subscriptions to periodicals. This section shall not apply as to insurance written or connection with an indebtedness if the purpose of such insurance is to pay the indebtedness in case of death of disability of the insured.
(9) Insurer Name; Deceptive Use Prohibited.
No person who is not an insurer shall assume or use any name which deceptively implies or suggests that it is an insurer. This section shall not preclude a corporation heretofore or hereafter formed under the laws of this State from using such a name between the date it is incorporated and the date it begins to engage in any business, if during such period the corporate activities are limited to its organization or reorganization or to those activities it would be permitted to engage in, if it were an insurer, under §4904(b) (2) of this title.
(10) Service and Processing Charges by Mortgagee Prohibited.
No mortgagee or agent of any mortgagee shall accept or receive any monetary charge or fee from a mortgagor for handling, servicing or processing insurance policies, or endorsements or for the issuances or cancellation of such policies, or property located within this State.
(11) False Statements and Entries.
(a) No person shall knowingly file with any supervisory or other public official, or knowingly make, publish, disseminate, circulate or deliver to any person, or place before the public, or knowingly cause directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or place before the public, any false material statement of fact as to the financial condition of an insurer.
(b) No person shall knowingly make any false entry of a material fact in any book, report or statement of any insurer with intent to deceive any agent or examiner lawfully appointed to examine into its condition or into any of the affairs, or any public official to whom such insurer is required by law to report, or who has authority by law to examine into its condition or into any of its affairs, or, with like intent, knowingly omit to make a true entry of any material fact pertaining to the business of such insurer in any book, report or statement of such insurer.
() No person shall advertise the capital or assets of any insurer without in the same advertisement setting forth the amount of the insurer's liabilities.
(12) Stock Operations and Advisory Board Contracts.
(a) No person shall offer, issue or deliver or permit its agents, officers, or employees to offer, issue or deliver, agency company stock or other capital stock, or benefit certificates or shares in any common-law corporation, or securities or any special or advisory board contracts of any kind promising returns and profits as an inducement to insurance.
(b) No insurer authorized or proposing to be authorized to transact insurance in this State shall offer, issue or deliver, or permit its agents, officers, or employees to offer, issue or deliver in any other state any such agency company stock, certificates, shares, or contracts as inducement to insurance.
(13) Unfair Discrimination; Life Insurance, Annuities, and Health Insurance.
(a) No person shall make or permit any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of such contract.
(b) No person shall make or permit any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable thereunder, or in any of the terms or conditions of such contract, or in any other manner whatever.
(14) Rebates—Life, Health and Annuity Contracts.
(a) Except as otherwise expressly provided by law, no person shall knowingly permit or offer to make or make any contract of life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the insurance contract issued thereon, or pay or allow, or give or offer to pay, allow, or give directly or indirectly, or knowingly accept, as inducement to such insurance, or annuity, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever not specified in the contract; or directly or indirectly give, or sell, or purchase or offer or agree to give, sell, or purchase, or allow as an inducement to such insurance contract or annuity or in connection therewith, and whether or not specified in the policy or contract, any agreement of any form or nature promising returns and profits, or any stocks, bonds, or other securities, or interest present or contingent therein or as measured thereby, or any insurer or any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or to accrue thereon, or anything of value whatsoever not specified in the contract.
(15) Unfair Discrimination, Rebates Prohibited, Property, Casualty, Surety Insurance.
(a) No property, casualty or surety insurer or any employee or representative thereof, and no broker, agent, or solicitor shall pay, allow, or give, or offer to pay, allow or give, directly or indirectly, as an inducement to insurance, or after insurance has been effected, any rebate, discount, abatement, credit or reduction of the premium named in a policy of insurance, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified or provided for in the policy, except to the extent provided for in an applicable filing with the Commissioner as provided by law.
(b) No insured named in a policy, nor any employee of such insured shall knowingly receive or accept directly or indirectly any such rebate, discount, abatement, credit or reduction of premium, or any such special favor or advantage or valuable consideration or inducement.
(c) No such insurer shall make or permit any unfair discrimination between insureds or property having life insuring or risk characteristics, in the premium or rates charged for insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the insurance.
(d) Nothing in this section shall be construed as prohibiting the payment of commissions or other compensation to licensed agents, brokers, or solicitors, or as prohibiting any insurer from allowing or returning to its participating policyholders, members or subscribers, dividends, savings or unabsorbed premium deposits. In this section "insurance" includes suretyship and "policy" include bond. This section does not apply to wet marine and transportation insurance.
(e) Nothing in Clause (13) or paragraph (a) of Clause (14) of this subsection shall be construed as including within the definition of discrimination or rebates any of the following practices:
(1) In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance, provided that any such bonuses, or abatement or premiums shall be fair and equitable to policyholders and for the best interests of the company and its policyholders ;
(2) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expenses;
(0) Readjustment of the rate of premium for a group insurance policy based on the loss or expense experience thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year ;
(1) Reduction of premium rates for policies of large amounts, but not exceeding savings in issuance and administration expenses reasonably attributable to such policies as compared with policies of similar plans issued in smaller amounts;
(2) Reduction in premium rates for life or health insurance policies on annuity contracts on salary savings, payroll deductions, pre-authorized checks, bank drafts or similar plans in amounts reasonably commensurate with the savings made by the use of such plans.
(f) Nothing in this Act shall be construed as including within the definition of securities as inducement to purchase insurance the selling or offering for sale, contemporaneously with life insurance, or mutual fund shares or face amount certificates of regulated investment companies under offerings registered with the Securities and Exchange Commission where such shares or such face amount certificates or such insurance may be purchased independently of and not contingent upon purchase of the other, at the same price and upon similar terms and conditions as where purchased independently.
(16) Unfair Claim Settlement Practices
No person shall commit or perform with such frequency as to indicate a general business practice any of the following:
(a) misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(b) failing to acknowledge and act reasonably promptly upon communication with respect to claims arising under insurance policies;
(c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(d) refusing to pay claims without conducting a reasonable investigation based upon all available information;
(e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
(g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
(h) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;
() attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;
(j) making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made;
(k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(l) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(m) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
(n) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(17) Failure to Maintain Complaint Handling Procedures
Failure of any person to maintain a complete record of all the complaints which it has received since the date of its last examination as otherwise required in this Title. This record shall indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. For purposes of this subsection, "complaint" shall mean any written communication primarily expressing a grievance.
(18) Misrepresentation in Insurance Applications
(a) Making false or fraudulent statements or representations on or relative to an application for an insurance policy, for the purpose of obtaining a fee, commission, money, or other benefit from any insurers, agent, broker, or individual.
(b) No agent, broker, solicitor, examining physician, applicant, or other person, shall knowingly or willfully make any false or fraudulent statement or representation in or with reference to any application for insurance; or for the purpose of obtaining any money or benefit, knowingly or willfully present or cause to be presented a false or fraudulent claim; or any proof in support of such a claim for the payment of the loss upon a contract of insurance; or prepare, make, or subscribe a false or fraudulent account, certificate, affidavit or proof of loss, or other document or writing, with intent that the same may be presented or used in support of such a claim.
(19) Fictitious Groups
(a) No insurer, whether an authorized insurer or an unauthorized insurer, shall make available through any rating plan or form, property, casualty or surety insurance to any firm, corporation, or association of individuals, any preferred rate or premium based upon any fictitious grouping of such firm, corporation or association.
(b) No form or plan of insurance covering any group or combination of persons or risks shall be written or delivered within or outside this State to cover persons or risks in this State at any preferred rate or on any form other than as offered to persons not in such group or combination and to the public generally, unless such form, plan of insurance, and the rates or premium to be charged therefor have been submitted to and approved by the Commissioner as being not unfairly discriminatory, and as not otherwise being in conflict with subsection (a) above or with any provision of Chapter 25 of this Title (Rates and Rating Organizations) to the extent that such Chapter 25 is, by its terms, applicable thereto.
(c) This section does not apply to life insurance, health insurance, annuity contracts, or wet marine and transportation insurance.
(20) "Twisting" Prohibited
No person shall make or issue, or cause to be made or issued, any written or oral statement misrepresenting or making incomplete comparisons as to the terms, conditions, or benefits contained in any policy for the purpose of inducing or attempting or tending to induce the policyholder to lapse, forfeit, surrender, retain, exchange or convert any insurance policy.
(21) Insurance on Public Construction Contracts
(a) No officer or employee of this State, or of any public agency, public authority or public corporation (except a public corporation or public authority created pursuant to agreement or compact with another state), and no person acting or purporting to act on behalf of such officer or employee, or public agency or public authority or public corporation, shall, with respect to any public building or construction contract which is about to be, or which has been competitively bid, require the bidder to make application to (or furnish financial data to) or to obtain or procure, any of the surety bonds or contracts of insurance specified in connection with such contract, or specified by any law, general, special or local, from a particular insurer or agent or broker.
() No such officer or employee or any person, acting or purporting to act on behalf of such officer or employee shall negotiate, make application for, obtain or procure any of such surety bonds or contracts of insurance (except contracts of insurance for builder's risk or owner's protective liability) which can be obtained or procured by the bidder, contractor or subcontractor.
(a) This section shall not, however, prevent the exercise by such officer or employee on behalf of the State or such public agency, public authority, or public corporation of its right to approve the form, sufficiency or manner of execution of the surety bonds or contracts of insurance furnished by the insurer selected by the bidder to underwrite such bonds, or contracts of insurance.
(b) Any provisions in any invitation for bids, or in any of the contract documents, in conflict with this section are declared to be contrary to the public policy of this State.
(c) A violation of this section shall be subject to the penalties provided by Section 2308 (a) of this Chapter.
§ 2305. Favored agent or insurer; coercion of debtors (a) No person shall
(i) require, as a condition precedent, concurrent or subsequent to the loaning of money upon the security of any real or personal property ; or to the selling of any such property under contract, or extension of credit, or any renewal thereof, that the owner of the property to whom the money is to be loaned or the vendee of the property so being sold, shall place, continue, or renew any policy of insurance covering or to cover such property, or covering any liability related to such property or the use thereof, or that the person to whom such money or credit is extended or whose obligation the creditor is to acquire or finance, negotiate any policy or contract of insurance through a particular insurance agent, broker or in a particular insurer or group of insurers or agent or broker or group of agents or brokers; except that this provision shall not prevent the exercise by any such lender or vendor upon a reasonable basis of the right to approve or disapprove of the insurer and representative selected to underwrite the insurance. Such basis shall relate only to
(1) the adequacy and terms of the coverage with respect to the interest of the vendor or lender to be insured thereunder,
(2) the financial standards to be met by the insurer, and
(3) the ability of the insurer or representative to service the policy;
(ii) unreasonably disapprove the insurance policy provided by a borrower for the protection of the property securing the credit or lien; or
(iii) require directly or indirectly that any borrower, mortgagor, purchaser, insurer, broker or agent pay a separate charge to substitute the insurance policy of one insurer for that of another ;
(iv) use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of mortgagee, vendor, or lender, or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the agent or broker complying with such a requirement.
(b) (i) Paragraph (a) (iii) does not include the interest which may be charged on premium loans or premium advancements in accordance with the security instrument.
(ii) For purpose of paragraph (a) (ii), such disapproval shall be deemed unreasonable if it is not based solely on reasonable standards uniformly applied, relative to the extent of coverage required and the financial soundness and the services of an insurer. Such standards shall not discriminate against any particular type of insurer, nor shall such standards call for the disapproval of an insurance policy because such policy contains coverage in addition to that required.
(iii) The Commissioner may investigate the affairs of any person to whom this subsection applies to determine whether such person has violated this subsection. If a violation of this subsection is found, the person in violation shall be subject to the same procedures and penalties as are applicable to other provisions of this Act.
(iv) For purposes of this section, "person" includes any individual, corporation, association, partnership, or other legal entity.
§ 2306. Power of Commissioner
The Commissioner shall have power to examine and investigate into the affairs of every person engaged in the business of insurance in this State in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by Section 2303 of this Chapter.
§ 2307. Procedures as to defined and undefined practices; hearings, witnesses, appearances, production of books and service of process
(a) Whenever the Commissioner shall have reason to believe that any such person has been engaged or is engaging in this State in any unfair method of competition or in any unfair or deceptive act or practice whether or not defined in Section 2304 or Section 2305 of this Chapter and that a proceeding by him in respect thereto would be in the interest of the public he shall issue and serve upon such person a statement of the charges in that respect and a notice of a hearing thereon to be held at a time and place fixed in the notice, which shall not be less than ten (10) days after the date of the service thereof.
(b) At the time and place fixed for such hearing, such person shall have an opportunity to be heard and to show cause why an order should not be made by the Commissioner requiring such person to cease and desist from the acts, methods or practices so complained of. Upon good cause shown, the Commissioner shall permit any person to intervene, appear and be heard at such hearing by counsel or in person.
() If such report charges a violation of this Chapter and if such method of competition, act or practice has not been discontinued, the Commissioner may, through the Attorney General, at any time after the service of such report cause an action to be instituted to enjoin and restrain such person from engaging in such method, act, or practice. In such action the Court may grant a restraining order or injunction upon such terms as may be just; but the State of Delaware shall not be required to give security before the issuance of any such order or injunction. If a stenographic record of the proceedings in the hearing before the Commissioner was made, a certified transcript thereof including all evidence taken and the report and findings shall be received in evidence in such action.
(a) If the Commissioner's report made under subsection (a) above, or order on hearing made under section 332 of this Title does not charge a violation of this Chapter, then any intervenor in the proceedings may appeal therefrom within the time and in the manner provided in this Title for appeals from the Commissioner generally.
(b) Nothing contained in this Act shall require the observance at any such hearing of formal rules of pleading or evidence.
(1) The Commissioner may hold a hearing in Dover or any other place of convenience to parties and witnesses, as the Commissioner determines. The Commissioner, or his deputy or assistant, shall preside at the hearing, and shall expedite the hearing and all procedures involved therein.
(2) Any party to the hearing shall have the right to appear in person and by counsel, to be present during the giving of all evidence, to have a reasonable opportunity to inspect all documentary and other evidence and to examine and cross-examine witnesses, to present evidence in support of his interest and to have subpoenas issued by the Commissioner to compel attendance of witnesses and production of evidence in his behalf. Testimony may be taken orally or by deposition, and any party shall have such right of introducing evidence by interrogatories or deposition as may obtain in a Court of Chancery.
(3) Upon good cause shown the Commissioner shall permit to become a party to the hearing by intervention, if timely, only such persons, not original parties thereto, whose pecuniary interests are to be directly and immediately affected by the Commissioner's order made upon the hearing.
(4) Formal rules of pleading or evidence need not be observed at any hearing.
(5) The Commissioner, upon such hearings, as to the subject of any examination, investigation or hearing being conducted by him, may administer oaths, or affirmations, examine and cross-examine witnesses, receive oral evidence, receive documentary evidence, and shall have the power to subpoena witnesses, compel their attendance, and require the production of books, papers, records, correspondence, or other documents which he deems relevant to the inquiry. Any delegation by the Commissioner of power of subpoena shall be in writing. The Commissioner, upon such hearing, may, and upon the request of any party, shall, at such person's expense, cause a stenographic record to be made of all the evidence and all the proceedings had at such hearing. If transcribed, a copy of such record shall be furnished for the Commissioner without cost to the Commissioner or the State, and shall be part of the Commissioner's record of the hearing, and a copy shall likewise be furnished to any other party to the hearing, at the request and expense of such other party. If no stenographic record is made, and if a judicial review is sought, the Commissioner shall prepare a statement of the evidence and proceedings for use or review.
(f) Subpoenas of witnesses shall be served in the same manner and at the same cost as if issued by the Court of Chancery. In case of a refusal of any person to comply with any subpoena issued hereunder or to testify with respect to any matter concerning which he may be lawfully interrogated, the Court of Chancery of the County where such party resides, on application of the Commissioner, may issue an order requiring such person to comply with such subpoena and to testify, and any failure to obey any such order of the Court may be punished by the Court as a contempt thereof. Any person knowingly testifying falsely under oath or making a false affirmation, as to any matter material to any such examination, investigation or hearing, shall upon conviction thereof be guilty of perjury.
(g) Witness fees and mileage, if claimed, shall be allowed the same as for testimony in the Court of Chancery. Witness fees, mileage and the actual expense necessarily incurred in securing attendance of witnesses and their testimony, shall be itemized and shall be a part of examination expense to be paid by the person being examined where payment of examination expense by such person is otherwise provided for in this Title, or paid by the person as to whom such proceedings, other than as part of an examination, are held if in such proceedings such person is found to have been in violation of the law; or by the person, if other than the Commissioner, at whose request the hearing is held.
() (1) Statements of charges, orders, and other processes of the Commissioner under this Act may be served by any one duly authorized by the Commissioner, either in the manner provided by law for service of process in civil actions, or by registering and mailing a copy thereof to the person affected by such statement, notice, order or other process at his or its residence or principal office or place of business. The verified return by the person so serving such statement, notice, order, or other process, setting forth the manner of such service, shall be proof of the same, and the return postcard receipt for such statement, notice, order or other process, registered and mailed as aforesaid, shall be proof of the service of the same.
(2) Service of all process, statements of charges, and notices under this Chapter upon unauthorized insurers shall be made by any deputy or employee of the department delivering to and leaving with the Commissioner or some person in apparent charge of his office, two (2) copies thereof, or in the manner provided for by Section 2105(b) (Service of Process, unauthorized Insurers Process Act) of this Title.
(3) The Commissioner shall forward all such process, statements of charges, and notices to the insurer in the manner provided in Section 2105 (a) of this Title.
(4) No default shall be taken against any such unauthorized insurer until expiration of 30 days after date of forwarding by the Commissioner under subsection (3) above, or date of service of process if under Section 2105 (b) of this Title.
(5) Section 2105 of this Title shall apply as to all process, statements of charges, and notices under this section.
§ 2308. Cease and desist and penalty orders and modifications thereof
(a) If, after such hearing, the Commissioner shall determine that the person charged has engaged in an unfair method of competition, or an unfair or deceptive act or practice he shall reduce his findings to writing and shall issue and cause to be served upon the person charged with the violation a copy of such findings and an order requiring such person to cease and desist from engaging in such method of competition, act or practice and if the act or practice is a violation of Sections (4) or (5), the Commissioner may at his discretion order any one or more of the following:
(1) payment of a monetary penalty of not more than $1,000 for each and every act or violation but not to exceed an aggregate penalty of $10,000 unless the person knew or reasonably should have known he was in violation of this Act, in which case the penalty shall not be more than $5,000 for each and every act or violation but not to exceed an aggregate penalty of $50,000 in any six month period.
(2) suspension or revocation of the person's license if he knew or reasonably should have known he was in violation of this Act, or
(3) such other relief as is reasonable and appropriate.
(b) Until the expiration of the time allowed under Section 2309 of this Act for filing a petition for review (by appeal or writ of certiorari) if no such petition has been duly filed within such time, or if a petition for review has been filed within such time, then until the transcript of the record of the proceeding has been filed in the Chancery Court, as hereinafter provided, the Commissioner may at any time, upon such notice and in such manner as he shall deem proper, modify or set aside in whole or in part any order issued by him under this section.
(c) After the expiration of the time allowed for filing such a petition for review if no such petition has been duly filed within such time, the Commissioner may at any time, after notice and opportunity for hearing, reopen and alter, modify or set aside, in whole or in part, any order issued by him under this section, whenever in his opinion conditions of fact or of law have so changed as to require such action or if the public interest shall so require.
(d) Such desist order shall become final upon expiration of the time allowed for appeals from the Commissioner's orders, if no such appeal is taken, or, in the event of such an appeal, upon final decision of the court if the court affirms the Commissioner's order or dismisses the appeal. An intervenor in such hearing shall have the right to appeal as provided in Section 333 of this Title.
(e) In event of such an appeal, to the extent that the Commissioner's order is affirmed the court shall issue its own order commanding obedience to the terms of the Commissioner's order.
(f) No order of the Commissioner pursuant to this section or order of court to enforce it shall in any way relieve or absolve any person affected by such order from any other liability, penalty, or forfeiture under law.
(g) Violation of any such desist order shall be deemed to be and shall be punishable as a violation of this Title.
(h) This section shall not be deemed to affect or prevent the imposition of any penalty provided by this Title or by other law for violation of any other provision of this Chapter, whether or not any such hearing is called or held or such desist order issued.
§ 2309. Judicial review of orders
(a) Except as to matters arising under Chapter 25 of this Title (Rates and Rating Organizations), an appeal from the Commissioner shall be taken only from an order on hearing, or as to a matter on which the Commissioner has refused or failed to hold a hearing after application therefor under Section 327 of this Title, or as to a matter as to which the Commissioner has refused or failed to make his order on hearing as required by Section 332 of this Title.
(b) Any person subject to an order of the Commissioner under Section 2308 or Section 2312 and who was a party to such hearing or whose pecuniary interests are directly and immediately affected by any such refusal or failure, and who is aggrieved by such order, refusal or failure, may obtain an appeal from the Commissioner's order by filing in the Court of Chancery in any county, within 60 days from the date of such order, a written verified petition praying that the order of the Commissioner be set aside. The petition shall state the grounds upon which the review is sought, together with a bond with good and sufficient sureties to be approved by the court conditioned to pay all costs which may be assessed against the appellant or petitioner in such proceedings. If the appeal is from the Commissioner's order on hearing, the petitioner shall also deliver to the Commissioner a sufficient number of copies of the petition and the Commissioner shall mail or otherwise furnish a copy thereof to the other parties to the hearing to the same extent as a copy of the Commissioner's order is required to be furnished to the hearing parties under Section 332 of this Title. A copy of such petition shall be forthwith served upon the Commissioner, and thereupon the Commissioner forthwith shall certify and file in such court a transcript of the entire record in the proceeding, including all the evidence taken and the report and order of the Commissioner. Upon such filing of the petition and transcript such court shall have jurisdiction of the proceeding and of the question determined therein, shall determine whether the filing of such petition shall operate as a stay of such order of the Commissioner, and shall have power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript a decree modifying, affirming, or reversing the order of the Commissioner, in whole or in part. The findings of the Commissioner as to the facts, if supported by the evidence, shall be conclusive.
(c) To the extent that the order of the Commissioner is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of such order of the Commissioner. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court. that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Commissioner, the court may order such additional evidence to be taken before the Commissioner and thereby adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commissioner may modify his findings of fact, or make new findings by reason of the additional evidence so taken, and he shall file such modified or new findings which if supported by the evidence shall be conclusive, and his recommendation if any, for the modification or setting aside of his original order, with the return of such additional evidence.
(d) An order issued by the Commissioner under Section 2308 shall become final:
(1) Upon the expiration of the time allowed for filing a petition for review if no such petition has been duly filed within such time; except that the Commissioner may thereafter modify or set aside his order to the extent provided elsewhere in this Title; or
(2) Upon the final decision of the highest state court if the court directs that the order of the Commissioner be affirmed or the petition for review dismissed. From the judgment of the Court of Chancery either the Commissioner or other party to the appeal may appeal directly to the Supreme Court of the State of Delaware in the same manner as is provided in civil cases.
(e) No order of the Commissioner under this Act, or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability of any other laws of this State.
§ 2311. Judicial review by intervenor
If after any hearing under Section 2306 or Section 2312, the Commissioner's report does not charge a violation of this chapter, then any intervenor in the proceedings may within twenty days after the service of such report, cause a petition to be filed in the Chancery Court of any county of this State, for a review of such report. Upon such review, the court shall have authority to issue appropriate orders and decrees in connection therewith, including, if the court finds that it is to the interest of the public, orders enjoining and restraining the continuance of any method of competition, act or practice which it finds, notwithstanding such report of the Commissioner, constitutes a violation of the chapter and containing penalties pursuant to Section 2308.
§ 2312. Penalty for violation of cease and desist orders
Any person who violates a cease and desist order of the Commissioner under Section 2308, and while such order is in effect, may after notice and hearing and upon order of the Commissioner be subject at the discretion of the Commissioner to any one or more of the following:
(a) a monetary penalty of not more than $10,000 for each and every act or violation; or
(b) suspension or revocation of such person's license; or
(c) such other relief as is reasonable and appropriate.
(d) Prosecutions for any such violation shall be brought in the Superior Court of the county in which the offense occurred.
(e) At the discretion of the Commissioner and the Attorney General, any fine provided for above may be recovered on behalf of the State by a civil action brought against the violator.
§ 2313. Regulations
(a) The Commissioner may, after notice and hearing, promulgate reasonable rules and regulations, as are necessary or proper to identify specific methods of competition or acts or practices which are prohibited by Section 2304 or Section 2305, but the regulations shall not enlarge upon or extend the provisions of Section 2304 or Section 2305. Such regulations shall be subject to review in accordance with Section 2309. No such rule or regulation shall extend, modify, or conflict with any law of this State or the reasonable implications thereof.
(b) Willful violation of any such rule or regulation shall subject the violator to such suspension or revocation of certificate of authority or license, or to such administrative fine in lieu thereof, as may be applicable under this Title for violation of the provision to which such rule or regulation relates; but no penalty shall apply to any act done or omitted in good faith in conformity with any such rule or regulation, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.
§ 2314. Provisions of act additional to existing law
The powers vested in the Commissioner by this Act, shall be additional to any other powers to enforce any penalties, fines, or forfeitures authorized by law with respect to the method, acts and practices hereby declared to be unfair or deceptive.
§ 2315. Immunity from prosecution
If any person shall ask to be excused from attending or testifying or from producing any books, papers, records, contracts, correspondence or other documents at any hearing on the ground that the testimony or evidence required of him may tend to incriminate him or subject him to a penalty or forfeiture, and shall thereafter notwithstanding this request be directed to give such testimony or produce such evidence, he must nonetheless comply with such direction, but he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he may testify or produce evidence thereto, and no testimony so given or evidence produced shall be received against him upon any criminal action, investigation or proceeding; provided, however, that no such individual so testifying shall be exempt from prosecution or punishment for any perjury committed by him while so testifying, and the testimony or evidence so given or produced shall be admissible against him upon any criminal action, investigation, or proceeding concerning such perjury, nor shall he be exempt from the refusal, suspension or revocation of any license, permission or authority conferred, or to be conferred, pursuant to the Insurance Law of this State. Any such individual may execute, acknowledge and file in the office of the Commissioner and of the Attorney General a statement expressly waiving such immunity or privilege in respect to any transaction, matter or thing specified such statement, and thereupon the testimony of such person or such evidence in relation to such transaction, matter or thing may be received or produced before any judge or justice, court, tribunal, grand jury or otherwise, and if so received or produced such individual shall not be entitled to any immunity or privileges on account of any testimony he may so give or evidence so produced.
§ 2316. Separability provision
If any provision of this Act, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the Act, and the application of such provision to person or circumstances other than those as to which it is held invalid, shall not be affected thereby.
Approved July 12, 1973.