2013 North Dakota Century Code
Title 26.1 Insurance
Chapter 26.1-51 Self-Critical Insurance Analysis Privilege


Download as PDF CHAPTER 26.1-51 SELF-CRITICAL INSURANCE ANALYSIS PRIVILEGE 26.1-51-01. Definitions. In this chapter, unless the context or subject matter otherwise requires: 1. "Commissioner" means the insurance commissioner. 2. "Insurance compliance audit" means a voluntary, internal evaluation, review, assessment, audit, or investigation for the purpose of identifying or preventing noncompliance with, or promoting compliance with, laws, regulations, orders, or industry or professional standards, which is conducted by or on behalf of an insurer licensed or regulated under this title, or which involves an activity regulated under this title. 3. "Insurance compliance self-critical analysis audit document" means a document prepared as a result of or in connection with an insurance compliance audit. An insurance compliance self-critical analysis audit document may include a written response to the findings of an insurance compliance audit. An insurance compliance self-critical analysis audit document may include, as applicable, field notes and records of observations, workpapers, findings, opinions, suggestions, conclusions, drafts, memoranda, drawings, photographs, exhibits, computer-generated or electronically recorded information, telephone records, maps, charts, graphs, and surveys, provided this supporting information is collected or developed for the primary purpose and in the course of an insurance compliance audit. An insurance compliance self-critical analysis audit document also includes: a. 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; b. Memoranda and documents analyzing portions or all of the insurance compliance audit report and discussing potential implementation issues; c. An implementation plan that addresses correcting past noncompliance, improving current compliance, and preventing future noncompliance; or d. Analytic data generated in the course of conducting the insurance compliance audit. 4. "Insurer" means an insurance company, nonprofit service corporation, or health maintenance organization organized under the laws of this state or a foreign insurance company, nonprofit service corporation, or health maintenance organization authorized to do business in this state. 26.1-51-02. Self-critical analysis privilege created - Scope. An insurance compliance self-critical analysis privilege is created to protect the confidentiality of insurance compliance self-critical analysis documents or communications in regard to their content relating to voluntary internal compliance audits conducted by insurers and persons in regard to activities regulated under this title, both to conduct voluntary internal audits of its compliance programs and management systems, and to assess and improve compliance with state and federal statutes, rules, and orders. The insurance compliance self-critical analysis privilege applies to all litigation or administrative proceedings pending on August 1, 1999. 26.1-51-03. Insurance compliance self-critical analysis document not discoverable or admissible. Except as provided in sections 26.1-51-05, 26.1-51-06, and 26.1-51-07, an insurance compliance self-critical analysis audit document is privileged information and is not discoverable or admissible evidence in any legal action in any civil, criminal, or administrative proceeding. The privilege is a matter of substantive law of this state and is not merely a procedural matter governing administrative, civil, or criminal procedures in the courts of this state. Page No. 1 26.1-51-04. Application of privilege. If an insurer, person, or entity performs or directs the performance of an insurance compliance audit, an officer, employee, or agent involved with the insurance compliance audit, or any consultant who is hired for the purpose of performing the insurance compliance audit, may not be examined in any civil, criminal, or administrative proceeding as to the insurance compliance audit or any insurance compliance self-critical analysis audit document. This section does not apply if it is determined under section 26.1-51-06 or 26.1-51-07 that the privilege does not apply. 26.1-51-05. Submission to commissioner. 1. Upon request of the commissioner, an insurer must submit an insurance compliance self-critical analysis audit document to the commissioner, or the commissioner's designee, as a confidential document under the provisions of section 26.1-03-19.4 without waiving the privilege set forth in this chapter to which the insurer would otherwise be entitled. However, the provisions of sections 26.1-03-19.3 and 26.1-03-19.4 permitting the commissioner to make confidential documents public and accessible to the national association of insurance commissioners does not apply to the insurance compliance self-critical analysis audit documents voluntarily submitted. To the extent the commissioner has the authority to compel the disclosure of an insurance compliance self-critical analysis audit document under other provisions of applicable law, any report furnished to the commissioner may not be provided to any other person or entity and must be accorded the same confidentiality and other protections as provided above for voluntarily submitted documents. Any use of an insurance compliance self-critical analysis audit document furnished as a result of a request of the commissioner, whether under a claim of authority to compel disclosure or not, is limited to determining whether any disclosed defects in an insurer's policies or procedures or inappropriate treatment of customers has been remedied or that an appropriate plan for their remedy is in place. The commissioner may not impose any type of administrative fine or penalty as to any area addressed or matter covered in an insurance compliance self-critical analysis audit document furnished at the commissioner's request, except when there is clear and convincing evidence that the insurer failed to undertake reasonable corrective action, eliminate inappropriate treatment of customers, or failed to implement an appropriate plan to rectify any noncompliance with state and federal statutes, rules, and orders. 2. An insurer's insurance compliance self-critical analysis audit document submitted to the commissioner remains subject to all applicable statutory or common-law privileges, including the work product doctrine, attorney-client privilege, or the subsequent remedial measures exclusion. An insurance compliance self-critical analysis audit document submitted to and in the possession of the commissioner remains the property of the insurer and is not subject to any disclosure or production under section 44-04-18. 3. Disclosure of an insurance compliance self-critical analysis audit document to a governmental agency, whether voluntary or pursuant to compulsion of law, does not constitute a waiver of the privilege with respect to any other person or any other governmental agency. 26.1-51-06. Waiver of privilege by insurer - Grounds for determination of privilege Civil, administrative, or criminal proceedings. 1. The self-critical analysis privilege does not apply to the extent that it is expressly waived by the insurer that prepared or caused to be prepared the insurance compliance self-critical analysis audit document. 2. In a civil or administrative proceeding, a court of record, after an in-camera review, may require disclosure of material for which the privilege is asserted, if the court determines one of the following: a. The privilege is asserted for a fraudulent purpose; or b. The material is not subject to the privilege. Page No. 2 3. In a criminal proceeding, a court of record, after an in-camera review, may require disclosure of material for which the privilege is asserted, if the court determines one of the following: a. The privilege is asserted for a fraudulent purpose; b. The material is not subject to the privilege; or c. The material contains evidence relevant to commission of a criminal offense, and all three of the following factors are present: (1) The commissioner, state's attorney, or attorney general has a compelling need for the information; (2) The information is not otherwise available; and (3) The commissioner, state's attorney, or attorney general is unable to obtain the substantial equivalent of the information by any other means without incurring unreasonable cost and delay. 26.1-51-07. Determination of privilege - Procedure. 1. If a person seeks from an insurer communications involving an insurance compliance audit or any insurance compliance self-critical analysis audit document during the course of a pending civil or criminal proceeding, the insurer may assert the self-critical analysis privilege and provide the information set forth in subsection 6 during the course of those proceedings just as any other privilege is asserted in the courts of this state. If the court is required to make a determination as to the privilege, the court shall follow the procedure and conditions set forth in subsection 5. 2. If there is a pending administrative proceeding, or there is no pending civil or criminal proceeding, the commissioner, state's attorney, or attorney general may serve on an insurer a written request by certified mail for disclosure of an insurance compliance self-critical analysis audit document. Within thirty days after the commissioner, state's attorney, or attorney general serves on an insurer a written request by certified mail for disclosure of an insurance compliance self-critical analysis audit document, the insurer that prepared or caused the document to be prepared may file with the appropriate court a petition requesting an in-camera hearing on whether the insurance compliance self-critical analysis audit document or portions of the document are privileged under this chapter or subject to disclosure. The court has jurisdiction over a petition filed by an insurer under this subsection requesting an in-camera hearing on whether the insurance compliance self-critical analysis document or portions of the document are privileged or subject to disclosure. Failure by the insurer to file a petition waives the privilege for only the specific request made. 3. An insurer asserting the insurance compliance self-critical analysis privilege in response to a request for disclosure under this section shall include in its request for an in-camera hearing all of the information set forth in subsection 6. 4. Upon the filing of a petition under this section, the court shall issue an order scheduling, within forty-five days after the filing of the petition, an in-camera hearing to determine whether the insurance compliance self-critical analysis audit document or portions of the document are privileged under this chapter or subject to disclosure. 5. The court, after an in-camera review, may require disclosure of material for which the privilege is asserted if the court determines, based upon its in-camera review, that any one of the conditions set forth in subsection 2 of section 26.1-51-06 is applicable as to a civil or administrative proceeding or that any one of the conditions set forth in subsection 3 of section 26.1-51-06 is applicable as to a criminal proceeding. Upon making such determination, the court may only compel the disclosure of those portions of an insurance compliance self-critical analysis document relevant to issues in dispute in the underlying proceeding. A compelled disclosure may 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. An insurer unsuccessfully opposing disclosure may apply to the court for an appropriate order protecting the document from further disclosure. Page No. 3 6. An insurer asserting the insurance compliance self-critical analysis privilege in response to a request for disclosure under this section shall provide at the time of making and filing any objection to the disclosure all of the following information: a. The date of the insurance compliance self-critical analysis audit document; b. The identity of the entity conducting the audit; c. The general nature of the activities covered by the insurance compliance audit; and d. An identification of the portions of the insurance compliance self-critical analysis audit document for which the privilege is being asserted. 26.1-51-08. Privilege - Burden of proof - Stipulation. An insurer asserting the insurance compliance self-critical analysis privilege set forth in this chapter has the burden of demonstrating the applicability of the privilege. Once an insurer has established the applicability of the privilege, a party seeking disclosure has the burden of proving that the privilege is asserted for a fraudulent purpose. The commissioner, state's attorney, or attorney general seeking disclosure of the privilege has the burden of proving the elements set forth in subdivisions a and c of subsection 3 of section 26.1-51-06. The parties may at any time stipulate in proceedings under section 26.1-51-06 or 26.1-51-07 to entry of an order directing whether the specific information contained in an insurance compliance self-critical analysis audit document is or is not subject to the privilege provided under this chapter. Any such stipulation may be limited to the instant proceeding and, absent specific language to the contrary, is not applicable to any other proceeding. 26.1-51-09. Nonapplication of privilege. The self-critical analysis privilege set forth in this chapter does not extend to: 1. Documents, communications, data, reports, or other information expressly required to be collected, developed, maintained, or reported to a regulatory agency pursuant to this title, or other federal or state law; 2. Information obtained by observation or monitoring by any regulatory agency; or 3. Information obtained from a source independent of the insurance compliance audit. Page No. 4

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