26.1-51 Self-Critical Insurance Analysis Privilege

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CHAPTER 26.1-51SELF-CRITICAL INSURANCE ANALYSIS PRIVILEGE26.1-51-01. Definitions. In this chapter, unless the context or subject matter otherwiserequires:1.&quot;Commissioner&quot; means the insurance commissioner.2.&quot;Insurance compliance audit&quot; means a voluntary, internal evaluation, review,<br>assessment, audit, or investigation for the purpose of identifying or preventing<br>noncompliance with, or promoting compliance with, laws, regulations, orders, or<br>industry or professional standards, which is conducted by or on behalf of an insurer<br>licensed or regulated under this title, or which involves an activity regulated under<br>this title.3.&quot;Insurance compliance self-critical analysis audit document&quot; means a document<br>prepared as a result of or in connection with an insurance compliance audit. An<br>insurance compliance self-critical analysis audit document may include a written<br>response to the findings of an insurance compliance audit.An insurancecompliance self-critical analysis audit document may include, as applicable, field<br>notes and records of observations, workpapers, findings, opinions, suggestions,<br>conclusions,drafts,memoranda,drawings,photographs,exhibits,computer-generated or electronically recorded information, telephone records,<br>maps, charts, graphs, and surveys, provided this supporting information is collected<br>or developed for the primary purpose and in the course of an insurance compliance<br>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<br>employee of the insurer or an independent contractor, which may include the<br>scope of the audit, the information gained in the audit, and conclusions and<br>recommendations, with exhibits and appendices;b.Memoranda and documents analyzing portions or all of the insurance<br>compliance audit report and discussing potential implementation issues;c.An implementation plan that addresses correcting past noncompliance,<br>improving current compliance, and preventing future noncompliance; ord.Analytic data generated in the course of conducting the insurance compliance<br>audit.4.&quot;Insurer&quot; means an insurance company, nonprofit service corporation, or health<br>maintenance organization organized under the laws of this state or a foreign<br>insurancecompany,nonprofitservicecorporation,orhealthmaintenanceorganization authorized to do business in this state.26.1-51-02. Self-critical analysis privilege created - Scope. An insurance complianceself-critical analysis privilege is created to protect the confidentiality of insurance compliance<br>self-critical analysis documents or communications in regard to their content relating to voluntary<br>internal compliance audits conducted by insurers and persons in regard to activities regulated<br>under this title, both to conduct voluntary internal audits of its compliance programs and<br>management systems, and to assess and improve compliance with state and federal statutes,<br>rules, and orders. The insurance compliance self-critical analysis privilege applies to all litigation<br>or administrative proceedings pending on August 1, 1999.26.1-51-03. Insurance compliance self-critical analysis document not discoverableor admissible.Except as provided in sections 26.1-51-05, 26.1-51-06, and 26.1-51-07, aninsurance compliance self-critical analysis audit document is privileged information and is notPage No. 1discoverable or admissible evidence in any legal action in any civil, criminal, or administrative<br>proceeding.The privilege is a matter of substantive law of this state and is not merely aprocedural matter governing administrative, civil, or criminal procedures in the courts of this<br>state.26.1-51-04. Application of privilege. If an insurer, person, or entity performs or directsthe performance of an insurance compliance audit, an officer, employee, or agent involved with<br>the insurance compliance audit, or any consultant who is hired for the purpose of performing the<br>insurance compliance audit, may not be examined in any civil, criminal, or administrative<br>proceeding as to the insurance compliance audit or any insurance compliance self-critical<br>analysis audit document. This section does not apply if it is determined under section 26.1-51-06<br>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<br>self-critical analysis audit document to the commissioner, or the commissioner's<br>designee, as a confidential document under the provisions of section 26.1-03-19.4<br>without waiving the privilege set forth in this chapter to which the insurer would<br>otherwise be entitled.However, the provisions of sections 26.1-03-19.3 and26.1-03-19.4 permitting the commissioner to make confidential documents public<br>and accessible to the national association of insurance commissioners does not<br>apply to the insurance compliance self-critical analysis audit documents voluntarily<br>submitted.To the extent the commissioner has the authority to compel thedisclosure of an insurance compliance self-critical analysis audit document under<br>other provisions of applicable law, any report furnished to the commissioner may not<br>be provided to any other person or entity and must be accorded the same<br>confidentiality and other protections as provided above for voluntarily submitted<br>documents.Any use of an insurance compliance self-critical analysis auditdocument furnished as a result of a request of the commissioner, whether under a<br>claim of authority to compel disclosure or not, is limited to determining whether any<br>disclosed defects in an insurer's policies or procedures or inappropriate treatment of<br>customers has been remedied or that an appropriate plan for their remedy is in<br>place. The commissioner may not impose any type of administrative fine or penalty<br>as to any area addressed or matter covered in an insurance compliance self-critical<br>analysis audit document furnished at the commissioner's request, except when there<br>is clear and convincing evidence that the insurer failed to undertake reasonable<br>corrective action, eliminate inappropriate treatment of customers, or failed to<br>implement an appropriate plan to rectify any noncompliance with state and federal<br>statutes, rules, and orders.2.An insurer's insurance compliance self-critical analysis audit document submitted to<br>the commissioner remains subject to all applicable statutory or common-law<br>privileges, including the work product doctrine, attorney-client privilege, or the<br>subsequent remedial measures exclusion.An insurance compliance self-criticalanalysis audit document submitted to and in the possession of the commissioner<br>remains the property of the insurer and is not subject to any disclosure or production<br>under section 44-04-18.3.Disclosure of an insurance compliance self-critical analysis audit document to a<br>governmental agency, whether voluntary or pursuant to compulsion of law, does not<br>constitute a waiver of the privilege with respect to any other person or any other<br>governmental agency.26.1-51-06. Waiver of privilege by insurer - Grounds for determination of privilege -Civil, administrative, or criminal proceedings.Page No. 21.The self-critical analysis privilege does not apply to the extent that it is expressly<br>waived by the insurer that prepared or caused to be prepared the insurance<br>compliance self-critical analysis audit document.2.In a civil or administrative proceeding, a court of record, after an in-camera review,<br>may require disclosure of material for which the privilege is asserted, if the court<br>determines one of the following:a.The privilege is asserted for a fraudulent purpose; orb.The material is not subject to the privilege.3.In a criminal proceeding, a court of record, after an in-camera review, may require<br>disclosure of material for which the privilege is asserted, if the court determines one<br>of the following:a.The privilege is asserted for a fraudulent purpose;b.The material is not subject to the privilege; orc.The material contains evidence relevant to commission of a criminal offense,<br>and all three of the following factors are present:(1)The commissioner, state's attorney, or attorney general has a compelling<br>need for the information;(2)The information is not otherwise available; and(3)The commissioner, state's attorney, or attorney general is unable to<br>obtain the substantial equivalent of the information by any other means<br>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<br>compliance audit or any insurance compliance self-critical analysis audit document<br>during the course of a pending civil or criminal proceeding, the insurer may assert<br>the self-critical analysis privilege and provide the information set forth in<br>subsection 6 during the course of those proceedings just as any other privilege is<br>asserted in the courts of this state. If the court is required to make a determination<br>as to the privilege, the court shall follow the procedure and conditions set forth in<br>subsection 5.2.If there is a pending administrative proceeding, or there is no pending civil or<br>criminal proceeding, the commissioner, state's attorney, or attorney general may<br>serve on an insurer a written request by certified mail for disclosure of an insurance<br>compliance self-critical analysis audit document.Within thirty days after thecommissioner, state's attorney, or attorney general serves on an insurer a written<br>request by certified mail for disclosure of an insurance compliance self-critical<br>analysis audit document, the insurer that prepared or caused the document to be<br>prepared may file with the appropriate court a petition requesting an in-camera<br>hearing on whether the insurance compliance self-critical analysis audit document or<br>portions of the document are privileged under this chapter or subject to disclosure.<br>The court has jurisdiction over a petition filed by an insurer under this subsection<br>requesting an in-camera hearing on whether the insurance compliance self-critical<br>analysis document or portions of the document are privileged or subject to<br>disclosure. Failure by the insurer to file a petition waives the privilege for only the<br>specific request made.Page No. 33.An insurer asserting the insurance compliance self-critical analysis privilege in<br>response to a request for disclosure under this section shall include in its request for<br>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<br>scheduling, within forty-five days after the filing of the petition, an in-camera hearing<br>to determine whether the insurance compliance self-critical analysis audit document<br>or portions of the document are privileged under this chapter or subject to<br>disclosure.5.The court, after an in-camera review, may require disclosure of material for which<br>the privilege is asserted if the court determines, based upon its in-camera review,<br>that any one of the conditions set forth in subsection 2 of section 26.1-51-06 is<br>applicable as to a civil or administrative proceeding or that any one of the conditions<br>set forth in subsection 3 of section 26.1-51-06 is applicable as to a criminal<br>proceeding.Upon making such determination, the court may only compel thedisclosure of those portions of an insurance compliance self-critical analysis<br>document relevant to issues in dispute in the underlying proceeding. A compelled<br>disclosure may not be considered to be a public document or be deemed to be a<br>waiver of the privilege for any other civil, criminal, or administrative proceeding. An<br>insurer unsuccessfully opposing disclosure may apply to the court for an appropriate<br>order protecting the document from further disclosure.6.An insurer asserting the insurance compliance self-critical analysis privilege in<br>response to a request for disclosure under this section shall provide at the time of<br>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;<br>andd.An identification of the portions of the insurance compliance self-critical<br>analysis audit document for which the privilege is being asserted.26.1-51-08.Privilege - Burden of proof - Stipulation.An insurer asserting theinsurance compliance self-critical analysis privilege set forth in this chapter has the burden of<br>demonstrating the applicability of the privilege. Once an insurer has established the applicability<br>of the privilege, a party seeking disclosure has the burden of proving that the privilege is asserted<br>for a fraudulent purpose.The commissioner, state's attorney, or attorney general seekingdisclosure of the privilege has the burden of proving the elements set forth in subdivisions a<br>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 or26.1-51-07 to entry of an order directing whether the specific information contained in an<br>insurance compliance self-critical analysis audit document is or is not subject to the privilege<br>provided under this chapter. Any such stipulation may be limited to the instant proceeding and,<br>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 inthis chapter does not extend to:1.Documents, communications, data, reports, or other information expressly required<br>to be collected, developed, maintained, or reported to a regulatory agency pursuant<br>to this title, or other federal or state law;2.Information obtained by observation or monitoring by any regulatory agency; orPage No. 43.Information obtained from a source independent of the insurance compliance audit.Page No. 5Document Outlinechapter 26.1-51 self-critical insurance analysis privilege