2013 New York Consolidated Laws
ISC - Insurance
Article 44 - (4401 - 4414) EMPLOYEE WELFARE FUNDS
4413 - Prohibitions.

 
    §  4413. Prohibitions. (a) The trustees of every employee welfare fund
  shall be responsible in a fiduciary capacity for  all  assets  received,
  managed  or  disbursed  by  them, or under their authority, on behalf of
  such fund.
    (b)  (1)  No  such  fund  and  no  employer  or   labor   organization
  representing  any  employees  eligible for employee benefits thereunder,
  and no trustee or other officer or employee of any such  fund,  employer
  or  labor  organization shall receive, directly or indirectly, any thing
  of value from any insurance company, insurance agent,  insurance  broker
  or any hospital, surgical, dental or medical service plan, in connection
  with  the  solicitation,  sale,  service or administration of a contract
  providing employee benefits for  such  fund.  No  such  employer,  labor
  organization,  trustee,  officer  or employee shall receive any thing of
  value from such fund, or which is charged against  such  fund  or  would
  otherwise be payable to such fund, either directly or indirectly, except
  that  any  such  person may receive any employee benefits to which he is
  otherwise entitled, and any such trustee or other officer or employee of
  a fund, may receive from such fund reasonable compensation for necessary
  services and expenses rendered or incurred by him in connection with his
  official duties as such. Nothing in this  subsection  shall  affect  the
  payment of any dividend or rate credit or other adjustment due under the
  terms of any insurance or annuity contract.
    (2)  No  insurance  company,  insurance  agent  or  insurance  broker,
  hospital, surgical, dental or medical service plan,  shall  directly  or
  indirectly, pay any commission, make any loan or give any thing of value
  to  any  employee  welfare fund or to any employer or labor organization
  representing any employees eligible for employee benefits thereunder  or
  to  any  trustee or other officer or employee of any such fund, employer
  or labor  organization,  in  connection  with  the  solicitation,  sale,
  service  or administration of a contract providing employee benefits for
  such fund.
    (3) The superintendent may, after notice and a hearing,  prohibit  the
  trustees  of  an  employee  welfare  fund from employing or retaining or
  continuing to employ  or  retain  any  person  upon  finding  that  such
  employment  or retention involves a conflict of interest which is not in
  the best interests of the fund or adversely  affects  the  interests  of
  covered employees.
    (4)  The  superintendent  may,  by  regulation or order, and upon such
  terms  and  conditions  as  he  requires,  authorize  or   approve   any
  transaction or transactions otherwise prohibited by this subsection upon
  his finding that the transaction or transactions promote or will promote
  the best interests of the relevant employee welfare funds, and do not or
  will not adversely affect the interests of the covered employees.
    (c)  (1)  No  person  who  has been convicted by a court of the United
  States or by a court of any state or territory thereof of a  felony,  or
  of  any  crime  or  offense involving fraudulent or dishonest practices,
  shall  serve,  be  appointed,  designated  or  employed  as  a  trustee,
  administrator,  officer,  agent or employee of any employee welfare fund
  (other  than  an  employee  performing  non-discretionary  clerical   or
  building  maintenance duties exclusively) during or for five years after
  such conviction or the suspension of sentence therefor or from the  date
  of  his  unrevoked  release  from  custody  by  parole,  commutation  or
  termination of sentence, whichever event occurs later, unless  prior  to
  the  expiration  of  said  five  year  period  the conviction is finally
  reversed by a court of competent jurisdiction or he  has  been  pardoned
  therefor  by the governor or other appropriate authority of the state or
  jurisdiction in which he was convicted or he has received a  certificate
  of relief from disabilities or a certificate of good conduct pursuant to

  the  provisions  of  article  twenty-three  of  the correction law which
  specifically removes the disability herein provided.
    (2)  If  the  superintendent, after notice and a hearing, finds that a
  person has been  or  is  currently  serving,  appointed,  designated  or
  employed  in  violation  of  the provisions of this subsection, he shall
  enter an order removing such person from his position and directing that
  such person shall be disabled from service, appointment, designation  or
  employment  in  any of the capacities hereinabove described for a period
  of five years following the entry of such order. The superintendent may,
  in addition, impose the penalties provided in  subsection  (e)  of  this
  section for the wilful violation hereof.
    (d)  (1)  No insurance company shall pay any dividend or retrospective
  rate credit on any covering  policy  except  by  check  payable  to  the
  affected employee welfare fund or by credit memo forwarded to such fund.
    (2)  No  employee  welfare  fund  shall  pay any premium on a covering
  policy except by check payable to the insurance company directly.
    (3) No political contributions shall be made directly or indirectly by
  or from any employee welfare fund.
    (e)  The  superintendent  may  impose  a  penalty  of  not  to  exceed
  twenty-five  hundred dollars upon any trustee or other officer, agent or
  employee of any employee welfare fund subject to  this  article  or  may
  remove   such  trustee,  officer,  agent  or  employee  from  office  or
  employment, or both such penalty and removal,  if  after  notice  and  a
  hearing  he  shall  find  that he has wilfully failed to comply with the
  requirements of this article.
    (f) In any case where, after notice and a hearing, the  superintendent
  finds  that any employee welfare fund has been depleted by reason of any
  wrongful or negligent act or omission of  a  trustee  or  of  any  other
  person,  he may transmit a copy of his findings to the attorney general.
  The attorney general may bring an action in the name of  the  people  of
  the  state,  or  intervene  in  an  action brought by or on behalf of an
  employee, to recover the monies of the  fund  for  the  benefit  of  the
  employees and other persons as may have an interest in the fund.
    (g)  (1)  Any  person  who  wilfully violates or causes or induces the
  violation of any provision of this  article  or  any  regulation  issued
  under it shall be in violation of the provisions of this chapter.
    (2)  Any  person  who  makes  a false statement or representation of a
  material fact, knowing it  to  be  false,  or  who  knowingly  fails  to
  disclose  a material fact in any registration, examination, statement or
  report required under this article or the regulations  thereunder  shall
  be guilty of a misdemeanor.
    (3) Any person who makes a false entry in any book, record, report, or
  statement  required  by this article or any regulation thereunder, to be
  kept by him for any employee welfare fund,  with  intent  to  injure  or
  defraud  such  fund or any beneficiary thereunder, or to deceive any one
  authorized or entitled to examine the affairs of  such  fund,  shall  be
  guilty of a misdemeanor.
    (4)  Nothing  in  paragraph  two  or three of this subsection shall be
  construed in any manner to limit the effect of paragraph one hereof.