Arkansas Administrative Code
Agency 003 - DEPARTMENT OF COMMERCE
Division 22 - Insurance Department
Rule 003.22.23-004 - Arkansas Insurance Department Rule of Practice and Procedures
Universal Citation: AR Admin Rules 003.22.23-004
Current through Register Vol. 49, No. 9, September, 2024
I. AUTHORITY
This Rule is issued pursuant to Ark. Code Ann. § 25-15-203(a) which requires state agencies to adopt a rule of practice setting forth the nature and requirements of all formal and informal procedures available, including a description of forms and instructions used by the agency. In addition, Ark. Code Ann. § 25-15-203(a) requires state agencies to issue a rule describing its organization, method of operations and public access to information it provides. This Rule is also issued under the authority of Ark. Code Ann. § 23-61-108(a)(1) which permits the Arkansas Insurance Commissioner ("Commissioner") to issue rules necessary for or as an aid to the effectuation of any provision of the Arkansas Insurance Code ("AIC").
II. APPLICATION OF INSURANCE CODE & RULES
Unless more specifically addressed in this Rule, the AIC or other Arkansas Insurance Department ("AID") administrative rules ("AIDR") that pertain to a specific administrative action or procedure shall apply to the administrative activity at the AID. In the event of a conflict between a provision in this Rule with the AIC, AIDR, or the Arkansas Administrative Procedures Act ("APA") (Ark. Code Ann. §§ 25-15-201 et seq.), then the provisions in the latter statutory or rule-based requirements shall apply.
IIl. ADMINISTRATIVE ADJUDICATIVE PROCEEDINGS
A. An administrative adjudication proceeding
("adjudicative proceeding") at AID shall be a proceeding qualifying as an
adjudication under Ark. Code Ann. §
25-15-202(1)(A).
Unless specifically exempted under this Rule, adjudicative proceedings at AID
include but are not limited to any proceedings initiated by AID against
licensees for violations of the AIC or AIDR resulting or culminating in an
administrative order.
1.
Exemption For Financially Related Transactions Or
Reviews. Financially related reviews by AID or administrative
actions undertaken by AID pertaining to the financial solvency, ownership,
condition, or affairs of an insurer or business organization licensee that may
ultimately result in an administrative order shall be exempt from the
provisions of this Rule; instead, the specific, pertinent provisions of the AIC
or AIDR pertaining to the activity under review shall apply to provide the
procedures, forms, or practices related to the financial activities. This
exemption applies, by example and without limitation, to mergers and
acquisitions, holding company transactions, financial examinations and adoption
orders of such reports, risk-based capital requirements, changes of ownership,
hazardous condition situations, rehabilitations,, receiverships, liquidations,
material business modifications, and any other matter pertaining to the
financial affairs of an insurer or licensed business organization. AID
maintains that there already exist adequate and unique statutory or rule-based
requirements supplying the AID practices or procedures required for such
activities in Chapters 62, 63 and 69 of the AIC.
2.
Notices of Public
Hearing(s). An adjudicative proceeding by AID shall begin from its
issuance of a written Notice of Public Hearing ("NOPH") mailed to a licensee
that sets out the date, time and location of an administrative hearing and
provides sufficient facts and notice of allegations of violations of AIC or
AIDR, allegedly committed by the licensee. The content of the NOPH shall
otherwise comply with Ark. Code Ann. §
25-15-208 and shall be mailed by
certified mail, return receipt requested to the licensee at its last reported
address at AID. AID advises licensees to maintain a current and accurate
working address with AID to receive notices from AID; otherwise, AID shall
consider that adequate notice was provided to the licensee of the NOPH at the
licensee's last known address as reported to AID. A licensee subject to a NOPH
shall be identified as a Respondent.
a.
Timing of Hearing. No hearing shall be conducted in
less than ten (10) days from the Respondent's receipt of the NOPH unless there
exists a public emergency as set out in Section III(A)(12) of this Rule.
Although it is not statutorily required to provide the following time frame,
AID, generally, sets nonemergency hearings to occur within thirty (30) to
forty-five (45) days of the anticipated receipt of the NOPH by the Respondent.
In the absence of statutory language explicitly referencing the time periods to
be calculated upon working days, the timing of the hearing shall be provided
upon a calendar day basis.
i. Following
receipt of the NOPH by Respondent, Respondent and AID may mutually agree to a
rescheduled hearing date.
b.
Replies or Responses to a
NOPH. A Respondent may, but is not required to, respond to a NOPH,
either orally or in writing. AID however strongly encourages licensees
receiving a NOPH to respond in writing to AID's NOPH in order to provide an
adequate record for acknowledgment that Respondent was notified of an
administrative hearing and, in addition, such oral or written response may
provide for a consideration by AID as to the nature of any plausible or
meritorious defenses to the allegations raised against the Respondent by a
complainant. Any such response to the NOPH should be submitted to AID within
fifteen (15) working days of the Respondent's receipt of the NOPH. Formal rules
of pleading are not required in any written reply to a NOPH. A written reply
may be made in general narrative form, or it may admit or deny the averments or
paragraphs in the NOPH. A Respondent shall not be prejudiced by failing to
respond to a NOPH.
c.
Hearing Officer. In the NOPH, AID shall identify the
hearing officer to preside over the adjudicative proceeding who may be the
Arkansas Insurance Commissioner ("Commissioner") or other duly appointed
person. Within fifteen (15) days of receipt of the NOPH, a Respondent may
request the appointment of a substitute hearing officer in the event of
conflict, bias, appearance of impropriety, or upon any other basis of
disqualification that is sufficiently described and justified. In the event of
conflict, AID may designate a hearing officer not employed by AID or by the
Arkansas Department of Commerce ("ADOC") to act as hearing officer under Ark.
Code Ann. §
23-61-303(a)(3).
In the event of a scheduling conflict with the originally designated hearing
officer, the Commissioner may appoint a substitute hearing officer, and AID
shall promptly notify Respondent in writing of this change,
3.
Continuances. In
the event of a conflict or hardship with the date and time of the
administrative hearing as set out in the NOPH, a Respondent may request a
rescheduled date and time for the administrative hearing within fifteen (15)
days of receipt of the NOPH. The request under this Section shall be made to,
reviewed and decided by the hearing officer designated in this matter. The
conflict needs to detail a legitimate hardship upon the Respondent to attend
the initially scheduled hearing and shall not be granted in the event that the
Respondent has demonstrated a pattern or history of requesting multiple
continuances.
4.
Pre-hearing Evidence Notices, Discovery and Access to AID
Information. If the Respondent chooses to request the items listed
in Ark. Code Ann. §
25-15-208(a)(3),
then, upon such a request, AID shall provide the information to the Respondent
no later than ten (10) days from the date of the scheduled hearing. AID and
Respondent may however mutually agree as to a different timing for submission
of the items under Ark. Code Ann. §
25-15-208(a)(3).
In the absence of statutory language explicitly referencing the time periods to
be calculated upon working days, the information shall be supplied, upon
request, on the basis of calendar days,
a.
Access to AID File(s). Upon request and after issuance
of a NOPH, Respondent may access or copy the file and records constituting the
basis of the adjudicative proceeding against the Respondent as detailed in the
NOPH under the same time periods required by a state agency to respond to an
Arkansas Freedom of Information Act ("FOIA") request; however, AID and
Respondent may mutually agree to an extended time period. The information
provided however shall not disclose any information related to other AID files
under active and open investigation or examination under Ark. Code Ann.
§§
23-61-107,
23-61-207, nor to any other
records exempt from disclosure under FOIA. A decision by AID denying the
records either in full or in part due to the above FOIA exemptions shall detail
in writing the nature of exemption relied upon. The Respondent may challenge
any such denials by petitioning the appointed hearing officer for the
information under a protective order, or other appropriate limitations
(assuming it is legally feasible to disclose such information in a limited
fashion) if the Respondent shows an imperative need for such information that
is critical to its defense to a NOPH.
b.
Pre-Hearing
Discovery. The provisions of Ark. Code Ann. §§
23-61-301 and
23-61-302 shall apply to a
Respondent's pre-hearing discovery rights under an adjudicative proceeding. The
Commissioner's issuance of subpoenas for witnesses or the production of
documents from persons, business organizations, or other entities under this
Rule shall be ministerial in nature. A party's request for a subpoena shall not
be denied unless the requested subpoena:
(1)
seeks information or testimony from persons or organizations that is
substantially irrelevant, or not substantially probative, of any issue raised
in the NOFH; or
(2) reasonably
appears to be intended to harass or overly burden the person or organization
with excessive information requests that are substantially not relevant to the
proceeding at issue. There is not a form required for use for a request for a
Commissioner's subpoena other than the request must be a request that details
and identifies the individuals needed to testify in an administrative
proceeding or sufficiently describes the documents to be produced. Requests for
a subpoena from the Commissioner shall be made to the investigator assigned to
review the complaint. Depositions of witnesses are permitted with an
appropriately described subpoena detailing the date, time and location of the
deposition for such person's testimony, with any described production of
documents. AlD and Respondent may however mutually agree as to the date, time
and location of the deposition. Although AID is not required to abide by other
pre-hearing discovery provisions or actions as permitted under the Arkansas
Rules of Civil Procedure, the parties to an adjudicative proceeding may however
mutually agree to other forms of pre-hearing discovery if it is permitted by
the appointed hearing officer.
5.
Conduct of Administrative
Hearing. The conduct of any hearing for an adjudicative proceeding
under this Rule shall follow the provisions of Ark. Code Ann. §§
23-61-301 to
23-61-306 and any of the
requirements described under the Arkansas Administrative Procedures Act in Ark.
Code Ann. §
25-15-208. The Arkansas Rules of
Evidence do not apply to the admission or rejection of evidence submitted in
the proceeding; however, the hearing officer may loosely apply such standards
in the proceeding. The hearing officer may admit or deny oral or documentary
evidence on the basis of whether the information is relevant to the allegations
or defenses raised or alleged.
a. The
Commissioner, or his or her appointed hearing officer, may temporarily close an
administrative hearing from the public subject to Ark. Code Ann, §
23-61-305(a).
b. The appointed hearing officer may
sequester witnesses for good cause upon request of any party in the
adjudicative proceeding.
c. The
appointed hearing officer has full power to maintain order, decorum and
organization of the proceeding, to make rulings on the admission or rejection
of evidence, to require adherence to his or her rulings as to all parties,
witnesses, or to the public in attendance, as well as other powers described in
Ark. Code Ann. §
25-15-213(3)(A).
These powers include:
(i) To issue subpoenas
if the agency is authorized by law to issue them;
(ii) To administer oaths and
affirmations;
(iii) To maintain
order;
(iv) To rule upon all
questions arising during the course of a hearing or proceeding;
(v) To permit discovery by deposition or
otherwise;
(vi) To hold conferences
for the settlement or simplification of issues;
(vii) To make or recommend decisions;
and
(viii) Generally, to regulate
and guide the course of the pending proceeding.
d. The appointed hearing officer may issue
preliminary rulings and orders during the course of an administrative
proceeding, governing the administration of the proceeding, prior to a final
order, without such orders requiring ratification or approval by the
Commissioner under Section III (9) of this Rule.
e.
Interventions.
Following issuance of the NOPH, interested persons may file a petition, motion
or request to intervene in writing to the Commissioner, under Ark. Code Ann.
§
23-61-305(c)
setting forth its qualifications for intervention. An Intervenor's financial or
economic interests must be directly or immediately impacted by a Commissioner's
order on the issue(s) raised in the NOPH to qualify as Intervenors. The
Commissioner, or appointed hearing officer, may grant or deny a request for
intervention by written order with or without a separate administrative
hearing. Interveners granted participation in the proceeding shall be
identified as Interveners and shall be accorded the same rights as a party in
the administrative proceeding. There is no AID required form or format for a
petition, motion or request to intervene in a proceeding, other than, in
general, it should be in writing and set out its qualifications in satisfying
the above standards in this Section.
7.
Style Heading & Font
Requirements. The style headings or format for documents, replies,
motions, written requests or responses related to an administrative proceeding
subject to this Section should follow the heading or format of the initial NOPH
stating the subject matter described, the name of the licensee, which shall be
identified as Respondent, and the AID tracking number. AID will not reject any
document failing to conform to these technical style requirements, however AID
strongly encourages Respondents with attorneys to comply with this requirement.
In addition, AID encourages Respondents when filing written documents in a
proceeding with AID to use a 12 (twelve) point typeface, double-spaced on eight
and 1/2 by eleven (11) inch paper.
8.
Time Limit for Orders
Following Hearing. The time limit upon AID for the issuance of an
order, following an adjudicative hearing, shall follow the requirement in Ark.
Code Ann. §
23-61-306(b) that
states an order must be entered within thirty (30) days from the termination of
the hearing or any rehearing thereon. The Commissioner or hearing officer may
keep the adjudicative hearing record open to receive items requested by the
hearing officer after a hearing, and, therefore, the hearing shall be
considered terminated when the record actually closes for purposes of the
thirty (30) day period under this Section. Pursuant to Ark. Code Ann. §
23-61-306 and Ark. Code Ann.
§
25-15-210, the Commissioner shall
mail a copy of the order to the same persons given notice of the hearing and to
all parties of the hearing with the content of the order complying with Section
III (A)(ll) of this Rule. A party may agree in advance to accept receipt or
delivery of the order by electronic means. In the absence of statutory language
explicitly referencing the time periods to be calculated upon working days, the
order shall be issued on the basis of calendar days.
9.
Review and Ratification of
Hearing Officer Findings and Recommendations. For adjudicative
proceedings or hearings in which the Commissioner does not preside over the
matter as a hearing officer, the Commissioner shall review the record and
recommendations of the appointed hearing officer and may accept or reject such
recommendations, or make modifications thereof, and such actions shall be
reflected in writing in a final order.
10.
Request for
Rehearing. The Respondent in an adjudicative proceeding or hearing
may request a rehearing with the Commissioner under Ark. Code Ann. §
23-61-305(f)
within thirty (30) days after Respondent's receipt of the order by Respondent.
The Commissioner in his or her discretion may grant a rehearing or re-argument
of the matters involved. The Commissioner's discretion to grant a rehearing or
re-argument is guided by whether the order lacked substantial evidence under
Ark. Code Ann. §
23-61-307(g)(2)
or violated the standards under Ark. Code Ann. §
25-15-212(h). AID
does not require a specific form or format of a rehearing petition, rehearing
motion or request for a rehearing other than it should be a written request
describing such errors meeting the above described and cited statutory
standards. In the absence of statutory language explicitly referencing the time
periods to be calculated upon working days, the request for a rehearing shall
be made on the basis of calendar days.
11.
Content of the
Order. The content of an adjudicative order subject to this
Section shall comply with Ark Code Ann. §
23-61-306(c) and
(d) as well as Ark. Code Ann. §
25-15-210. AID does not require a
specific form or format of a final order, other than, in general, it should
meet the above cited statutory standards.
12.
Emergency Suspension Orders
on a Public Emergency Basis. Following the issuance of an AID
issued emergency order on the basis of a public, health, safety and welfare
emergency, pursuant to Ark. Code Ann. §
23-64-216(e), a
hearing shall be promptly instituted. A hearing shall be considered promptly
instituted under Ark. Code Ann. §
23-64-216(e) if
the hearing is held within ten (10) days of receipt by the Respondent of the
NOPH or emergency order issued, whichever is the earliest received by the
Respondent. By mutual agreement, AID and Respondent may agree to a different
time and date of the hearing. In the absence of statutory language explicitly
referencing the time periods to be calculated upon working days, the hearing
shall be set on the basis of calendar days.
13.
Petitions For Declaratory
Rulings Under Ark. Code Ann. §
23-61-303(b)
. At his or her discretion/ the Insurance Commissioner may
interpret or decide an insurance issue in a written declaratory order issued
following the requirements of AID Rule 121 resolving a question or controversy
concerning the applicability of statutory provisions, rules or orders over
which AID has authority. The time period of such adjudication shall follow the
requirements of AID Rule 121 which requires an order within ninety (90) days
from the filing of the petition. The discretion of the Commissioner to consider
issuing a declaratory order shall include the evaluation of whether:
(1) there is an issue of sufficient
state-wide magnitude over an ambiguity, interpretation or conflict requiring an
interpretation for the public consumers involved or a substantial number of
third parties servicing those consumers; and
(2) rulemaking procedures would not be timely
in alleviating any irreparable harm to insureds or affected third parties
needing an interpretation. The Commissioner may in his or her discretion grant
or deny a request for a declaratory order with or without a hearing. If
granted, the Commissioner may set a request for a declaratory order for an
administrative hearing to consider legal argument(s) related to such requested
interpretations. AID does not have a specific form or required format for a
petition for a declaratory ruling other than it be a request in writing to the
Commissioner detailing the standards above.
14.
Aggrieved Person Demand for
Hearing. The Commissioner shall hold a hearing under Ark. Code
Ann. §
23-61-303(b) on
written demand for a hearing by any person aggrieved by any act, threatened
act, or failure of Commissioner to act or by any report, rule, regulation or
order of the Commissioner. A person shall be considered aggrieved in the event
of an order, act or failure to act by the Commissioner if:
(1) Such action or inaction substantially and
directly impacts a person's or business organization's insurance rights or
benefits; and
(2) AID has
substantially demonstrated no intent to investigate or review such claim(s) or
complaint. Upon written demand for a hearing made by an aggrieved person, the
hearing shall be held within thirty (30) days after receipt by the Commissioner
of the demand. In the absence of statutory language explicitly referencing the
time periods to be calculated upon working days, a hearing shall be held on the
basis of calendar days.
15.
Consent Orders.
Upon mutual agreement, AID and the Respondent may resolve an administrative
adjudication by written stipulation or through a written consent order as
approved by the Commissioner. The order shall be equivalent to any final order
issued under this Rule. There is no AID required form or format of a consent
order other than, in general, it should meet the previously cited statutory
standards of the required content in a final order. AID may supply a licensee
with a previously issued, or a historically issued consent order form, to
facilitate an agreed format for a consent order.
16.
Electronic Communications and
Filings. Any requirement under this Section of the Rule
necessitating a document in writing may be satisfied if such communication is
submitted through electronic means, except for Notices Of Public Hearings or
final orders which shall be physically mailed. However, a Respondent may agree
in writing to accept service of a NOPH or a final order via email.
17.
Appeals of AID
Orders. A Respondent or Intervener may appeal a final order issued
by the Commissioner as an administrative adjudication order under either Ark.
Code Ann. §
23-61-307 or Ark. Code Ann. §
25-15-202.
18.
Ex Parte Communications Are
Prohibited. For administrative adjudications in which there has
been issued a NOPH, no AID personnel involved with an investigation or hearing
shall communicate with the appointed hearing officer or Commissioner about the
matter outside the presence of the Respondent or Respondent's attorney, and
this same limitation applies to communications to the hearing officer or
Commissioner by the Respondent, or Respondent's attorney, outside the presence
of an AID attorney or investigator assigned to the file. However, AID personnel
may disclose to a hearing officer, or Commissioner, status report activities of
the file, if it is a required job duty of such person to provide status reports
of his or her activities to the hearing officer or Commissioner.
19.
Telephonic or Live Video
Based Testimony. In the event of a significant hardship upon a
witness to attend an administrative adjudicative hearing, and, upon approval by
AID, the Respondent and the appointed hearing officer, a witness in a
proceeding may testify under oath during an in person hearing via telephone or
on a live video basis.
20.
Live Video-Based Adjudicative Proceedings. Upon
approval of the appointed hearing officer, AID and the Respondent, adjudicative
proceedings may be conducted by live video conferencing. AID shall
appropriately arrange for a court reporter to participate and to swear in
witnesses and to transcribe testimony.
21.
Preferred Filing
Requirements. For adjudicative proceedings in which a NOPH has
been issued, AID does not, at this time, maintain any formal filing, or system
requirements for it to receive and process filings, communications or other
documents from parties during the course of an administration proceeding.
Therefore, AID strongly advises Respondents represented by an attorney to
notify or copy by regular mail, or electronic mail, the director of
administrative legal services at AID with any replies to a NOPH, pre-hearing
motions, discovery requests, briefs, or other formal and substantially
important filings related to the administrative hearing. The Respondent should
identify the AID tracking number and style of the matter in order for AID to
maintain an accurate, chronological administrative record of such activities
for purposes of tracking and appeal. AID should provide the appropriate contact
information of the AID Legal Division administrative director in the AID cover
letter accompanying a NOPH. Licensees not represented by attorneys are strongly
advised to also copy the AID Legal Division administrative director, as
identified in the NOPH cover letter, with copies of significant communications
related to the administrative proceeding, although it is not a violation of the
Rule for failure of any licensee to do so. AID simply requests these practices
or procedures be encouraged to help facilitate its regulatory obligation to
maintain an accurate and complete chronological record of activities related to
the proceeding in the event that the licensee later appeals a ruling or order
of the Commissioner.
22.
Administrative Actions Following a Limited Scope Market Conduct
Examination. The provisions of Section III of this Rule shall
apply to administrative actions undertaken by AID against licensees arising
from findings pursuant to a limited scope market conduct report, unless such
action pertains to a hearing under Ark. Code Ann. §
23-61-205(a)(3)(C)
in which case the procedures under that Section shall apply.
23.
Denials of Insurance Producer
Licensing or Renewals. Although a denial by the Commissioner or
AID related to an insurance producer's application or renewal for a license is
not typically formulated into an administrative order, a producer, or person
seeking a license as a producer, may request an administrative hearing over the
denial. In such event, the administrative actions, practices and procedures
after such a request shall follow Section III of this Rule.
24.
Denials of Insurer, HMO or
Other Business Organization Licensing or Renewals. Other than
actions relating to denials of licensing or renewals by AID or the Commissioner
pertaining to matters described in Section III(A)(1) of this Rule, the
Commissioner or AID may set an administrative hearing for a review of a denial
of licensing or renewal of a business organization, upon a request in writing
by the organization. In such event, the administrative actions, practices and
procedures after such a request shall follow Section III of this
Rule.
25.
Settlement
Conferences. In his or her discretion, the Commissioner, or
appointed hearing officer, is authorized to require parties in an adjudicative
proceeding under Section III of this Rule to participate in a settlement
conference at a date, time or location specified by the Commissioner or hearing
officer, unless the parties mutually agree to a different time, date and
location. No statements made during the conference, or prepared for purposes of
this conference, shall be admissible in any adjudicative hearing. A conference
under this Section, if requested, shall be attended by the identified parties,
and attorneys if any, and may be required to occur as a condition before an
adjudicative hearing is held on the matter. The conference may be held in
person, over the phone, or through live video conferencing.
IV. INVESTIGATIONS
A. The
requirements under this Section shall govern the practices and procedures of
AID in conducting investigations against licensees for insurance matters or
violations of the AlC or AIDR. Pursuant to Ark. Code Ann. §
23-61-103(d), the
Commissioner may conduct such examinations and investigations of insurance
matters, in addition to examinations or investigations expressly authorized, as
he or she may deem proper to determine whether any person has violated any
provision of the AIC or to secure information useful in the lawful
administration of such provision.
1.
Statutory Examinations & Limited Scope
Examinations. Statutory or limited scope examinations conducted by
AID under Ark. Code Ann. §§
23-61-201 et seq. shall not be
subject to the provisions under Section IV of this Rule but shall instead
comply with the procedures, practices or requirements of the statutory
subchapter governing such examinations.
2.
Exemption For Financially
Related Investigations Reviews & for Other AID Division
Activities. Financially related investigations or reviews
pertaining to matters described in Section III (A)(1) shall not be subject to
the provisions of Section IV of this Rule. Please see Section VIll(D) of this
Rule for additional exceptions.
3.
Complaints. Upon receipt of a complaint from AID, a
licensee insurance producer shall respond to AID in writing within thirty (30)
days, and a licensee, non-insurance producer shall respond within fifteen (15)
working days, unless such time period has been extended by AID upon request. A
complaint shall include a copy of the complaint along with a notice cover
letter from AID. The AID cover letter shall ask for a written response and may
ask for copies of documents or records relevant to the complaint. Time
extensions for a response shall be granted if the nature of the complaint is
complex, involves multiple claims or files, requires significant research that
may reasonably take longer than the allowed working days to complete, or
necessitates the production of documents or records that may justify the need
for an extension. Additional reasons for time extensions may be granted on a
good cause basis.
4.
Ongoing Requirement To Respond To AID Inquiries. A
licensee shall have an obligation to respond to additional inquiries pertaining
to an active complaint under the same timing restriction under Section
(IV)(A)(3) from the licensee's receipt of the inquiry. Time extensions shall be
governed under the same standards under Section IV(A)(3).
5.
Notice Of Investigative
Conference. In the event that a licensee's response to a complaint
or inquiry fails to sufficiently respond to the complaint or inquiry, or there
is a need for additional information from the licensee by AID to adequately
evaluate the complaint or inquiry, a licensee may receive a written Notice of
Investigative Conference ("NOIC") from AID. A NOIC shall be a written request
from AID for the licensee to attend a recorded conference at AID to discuss
matters pertaining to the complaint. The NOIC notice shall set the time, date
and location of the conference. A licensee is entitled in the NOIC to be
represented by counsel. The NOIC may be transcribed and the licensee's
statements shall be taken under oath. A NOIC may additionally request from the
licensee that the licensee produce records or files as identified in the NOIC
notice at the time of the NOIC. In the event of conflict, hardship, or good
cause, AID may reschedule a NOIC, or AID and the licensee may mutually agree as
to a different date of the NOIC conference. The NOIC shall consist of AID
personnel, the licensee, and counsel for the licensee. The NOIC shall be
considered an active, investigatory action that is confidential under Ark. Code
Ann. §
23-61-103(d).
Upon request, a licensee may obtain a copy of any statements of the licensee
obtained during a NOIC within a reasonable time from AID after such statements
are transcribed. If permitted by AID, the conference required under the NOIC
may take place through live video conferencing.
a.
Failure to Attend a
NOIC. AID strongly encourages all licensees to attend a requested
NOIC. For insurance producers, a failure to attend a NOIC may be grounds for
sanctions under Ark. Code Ann. §
23-64-512(a)(16)
which involves refusing to be examined or to produce any accounts, records, or
files for examination-in addition to Ark. Code Ann. §
23-64-512(a)(17),
for failing to cooperate with the Commissioner in an investigation when
required by the Commissioner. The above sanctions may be imposed for failure to
attend a NOIC regardless of the ultimate outcome of the
investigation.
6.
Subpoenas from AID & On-site Inspections with Subpoenas from
AID. Licensees are strongly encouraged to voluntarily supply AID
with requested records or files during an investigation to avoid being served
an AID subpoena. In the event requested files or records are not timely
supplied to AID, pursuant to Ark. Code Ann. §
23-61-301(a), the
Commissioner may issue subpoenas to examine any individual under oath and may
require and compel production of records, books, papers, contracts, and other
documents. Subpoenas for records or files, including on-site requests for such
information with a subpoena, shall provide reasonable advance notice for
compliance with the request(s) in the subpoena unless there is an AID
documented, emergency, investigative need and justification for immediate
access to such records.
7.
Confidentiality of Investigations. Investigations of
licensees and documents, statements or records obtained during an
investigation, under this Section, shall be confidential while the complaint or
file(s) pertaining to the complaint are under active investigation under Ark.
Code Ann. §
23-61-103. Exceptions to the
confidentiality requirements shall follow the exemptions and exceptions listed
under Ark. Code Ann.
23-61-103 which include and are
not limited to disclosure(s) to state, federal or local law
enforcement.
8.
Closing
a Complaint File or Referral(s) for Enforcement. Within a
reasonable time after review by AID of the complaint and investigative records,
AID shall advise the licensee, or other party, in writing of whether it has
closed or dismissed the complaint, or whether the matter has been transferred
to the AID Legal Division for additional review or enforcement.
9.
Complaints Referred to the AID
Legal Division. The requirements, practices and procedures
pertaining to investigations by AID, shall continue to apply after referral of
a complaint to the AID Legal Division and after the issuance by AID of a NOPH
under Section IV(A)(2) of this rule.
10.
Complaint
Form(s). For complaints filed at AID against licensees, AID
strongly encourages that the complaint be submitted to AID under the form
available at
https://insurance.arkansas.gov/consumer-services/consumerservices/file-a-complaint/ .
However, AID shall accept a complaint in any format or manner which
sufficiently details and answers similar fields as those listed in the
complaint form. Complaints should be filed by the named insured or authorized
representative or attorney of the insured.
11.
Electronic Communications and
Filings. Any requirement under this Section of the Rule
necessitating a document in writing may be satisfied if such communication is
submitted through electronic means. However, AID may send by mail a complaint
or NOIC to a licensee at his or her last reported address, or may send a
complaint to the AID reported or filed email address of the licensee.
V. RULEMAKING PROCEEDINGS.
A. The rulemaking
procedures of AID shall follow the rulemaking provisions or requirements in
Ark. Code Ann. §
23-61-108, Ark. Code Ann. §
25-15-204, and all other
legislative requirements in the Arkansas Code necessary to effectuate
rulemaking, state legislative review, and approval of rules issued by AID.
1.
Requirement of A Public
Hearing. Pursuant to Ark. Code Arm. §
23-61-108(a)(3),
AID shall hold a public hearing on all of its proposed rules without the
limitation provided in Ark Code Arm. §
25-15-204(a)(2)(b)
relating to at least twenty-five (25) persons requesting an oral
hearing.
2.
Persons
Requesting Advance Notice or Rulemaking Proceedings. AID shall
provide advance notice to persons requesting notice as to rulemaking
proceedings under Ark Code Aim. §
25-15-204(a)(1)(C),
relating to advance notice to interested persons, or stakeholders, by
permitting such persons to receive such notices through an AID email
publication system in which such persons may register, located at
https://insurance.arkansas.gov/industry-regulation/legal/.
In addition, AID reasonably strives to separately and independently provide
such advance notice to potentially interested persons or affected stakeholders
that it may be aware of by estimation of the issue(s) raised by the proposed
rule. However, AID strongly encourages interested persons to register for such
advance notices in the email blast system located at the site
https://usll.list-manage.com/subscribe?u=90b015c22a84c9a6c44025d8d&:id=36c33fb0a5
in this Section.
4.
Proposed Rule Website Publication(s). AID maintains a
dedicated website at
https://insurance.arkansas.gov/industry-reguIation/legal/proposed-rules/
for proposed rules and activities which may be reviewed by the public or
interested persons.
5.
Transcripts & Public Comments. AID shall provide
on its dedicated website page for proposed rules a transcript of the public
hearing with all of the required Arkansas Legislative Council forms, rule
drafts and markups, if any, and public comments in response to the rule, within
a reasonable time following completion of the transcript by the court
reporter.
6.
Telephonic
Based Public Comments During a Rulemaking Hearing. AID reasonably
strives to permit public comments to be submitted by phone into the
administrative record during a rulemaking proceeding by providing a call-in
number for such purposes sufficiently in advance of a public hearing that
intends to receive public comments related to a proposed AID rule.
7.
Conduct of a Rulemaking
Hearing. The Commissioner or his or her appointed hearing officer
shall have full authority to control the admission of any administrative
documents, public comments or testimony to be entered into the public record of
a rulemaking hearing, and to otherwise maintain order, decorum, organization of
the hearing itself as well as authority to close or keep the public record open
for an additionally stated time period.
8.
Adoption of Rule Following a
Rulemaking Hearing. The Commissioner is not required to formally
adopt or approve a proposed rule in writing after a rulemaking hearing but may
simply permit the promulgation process to continue onto the next steps of
legislative review and approval of the proposed rule. On the other hand, the
Commissioner, in his or her discretion, may withdraw a proposed rule following
a hearing, or re-notice a proposed rule for re-hearing, due to public comments,
or lack of public comments, or in the event there exist defects in the proposed
rule related to APA or other legislatively required procedures or filings. AID
shall communicate a withdrawal of a rule to the Arkansas Bureau of Legislative
Research and Arkansas Legislative Council, and shall notify interested parties
of a withdrawal or re-hearing of a rule, in its email distribution system
described in Section V(2) of this Rule.
9.
Rulemaking
Notebook. At the time of a rulemaking hearing, AID creates and
maintains a notebook providing a list of contents, any cabinet-level approvals,
public notices, copies of the proposed final rule with any markup drafts, any
legislative filings of the proposed rule and any public comments received prior
to the beginning of the rulemaking proceeding. Persons may request a copy of
the proposed rule notebook from AID following the close of the rulemaking
hearing.
10.
AID
Bulletins and Directives. From time to time, AID issues
administrative bulletins or directives that provide AID advisories or informal
interpretations of insurance or licensing matters, notices of rulemaking
activities, notices as to forms and updates to forms, information related to
activities in various regulated markets, or which addresses various other
matters. A bulletin or directive is not in and of itself legally binding;
however, any laws or rules, as referenced and analyzed in a bulletin or
advisory, may form the underlying basis of an alleged violation as explained in
the publication. These announcements may be viewed at
https://insurance.arkansas.gov/indu5try-regulation/legal/ .
Interested persons may request that the Commissioner issue a bulletin or
directive related to an issue or activity under AID jurisdiction, but it shall
be under the discretion of the Commissioner whether to grant or deny such a
request.
11.
AID
Authority to Issue Rule(s) to Implement Legislation. AID shall
timely issue rules when expressly mandated to do so by the legislature to
implement legislation. However, if the authority granted to the Commissioner
under the law to issue rules is permissive or discretionary in nature, the
Commissioner is not automatically required to implement such legislation by
rule for such laws to apply. In such cases, the law and requirements under the
provisions of the law itself shall apply and go into effect upon subject
licensees or organizations on the effective date of the law without the need
for AID to preliminarily issue a promulgated rule. For laws providing
discretionary rule-making powers to the Commissioner to implement enacted
legislation under his or her enforcement purview, the Commissioner has
discretion to issue or not issue a rule, and such discretion shall be guided by
factors which consider:
(1) whether the law
itself is already sufficiently clear and comprehensive enough in design,
requirements and implementation that there is no substantial need for an
implementational rule at this time;
(2) whether there is a significant ambiguity,
conflict or vagueness issue of a significant magnitude pertaining to the law,
or section thereof, as raised from AID complaints or AID enforcement concerns,
that necessitates an explanation or interpretation of an issue under a rule;
or
(3) whether a rule is needed for
promulgation to implement needed updates to conform with subsequently enacted
legislation. National Association of Insurance Commissioners ("NAIC") models.
National Conference of Insurance Legislators ("NCOIL") models, or the need to
adjust to modern practices of the affected industry.
12.
AID Rules Conforming with
NAIC or NCOIL Rule Models or Legislation. AID may promulgate
rules, and amendments to such rules from time to time, if a state law or rule
is based on a NAIC or NCOIL model. The Commissioner has discretion to
promulgate such rules or amendments to model rules and adopt them either in
their entirety or on a provision by provision basis. AID reasonably strives to
update NAIC or NCOIL model rules once every five (5) years. The provisions or
requirements of Section V of this Rule shall apply to the issuance by AID of
model rules, or amendments thereof, in the same manner as any other
administrative rule.
13.
AID Adoption of NAIC Forms, Requirements and Manuals.
From time to time, AID may adopt NAIC forms, manuals, guides, filing
requirements, changes to such forms or guides, and other NAIC requirements or
standards. Depending upon the magnitude of the change or requirement, AID shall
adopt such actions through the issuance of an administrative
bulletin.
VI. FORMS
A. The number of forms
formally required by AID related to licensing, various transactions and
required filings under its jurisdiction is too abundant to list or attach to
this Rule. For licensees and interested persons, such forms are available on
the AID website located at https://insurance.arkansas.gov/.
VII. NOTICE OF AID TO LICENSEES CONCERNING THIS RULE.
A. For
licensees subject to Section III and IV of this Rule relating to administrative
adjudications or investigations, such licensees shall be advised of the
practices and procedures of AID announced in this Rule. AID may provide written
notice to the licensee with a link to access the contents of this Rule on the
AID website.
VIII. MISCELLANEOUS PRACTICES AND PROCEDURES
A.
Attorneys Representing
Licensees not Licensed in Arkansas. Attorneys representing
licensees in AID administrative actions who are not licensed to practice law in
Arkansas, but who are licensed to practice law in another state, may represent
a licensee on a pro hac vice basis upon the filing of a
motion/ petition or request for such status with the Commissioner.
B.
Foreign Language
Interpreters. If given sufficient advance notice, AID may arrange
for a foreign language interpreter to assist persons desiring to testify in
adjudicative and rulemaking proceedings as described in this Rule.
C.
Data or Information Requests
to Licensees Relating to Governor Declared Public Emergencies, Disasters or
Catastrophes. In order for AID to evaluate the magnitude of
losses, patterns or practices related to coverages and claims that affect
insurance matters, licensees shall respond to AID requests for information
related to state-wide public emergencies, disasters or catastrophes. Such
requests shall be considered investigations under Ark. Code Ann. §
23-61-103(d) and
Section IV of this Rule. AID may however make an accelerated demand for
information or data that requires an earlier response than otherwise permitted
under this Rule if there is an imperative and immediate need for the
information due to the magnitude of the public emergency or
catastrophe.
D.
Additional Exceptions. The requirements in Sections
III and IV of this Rule pertaining to adjudicative actions and investigations
shall not apply to the activities or practices of the Arkansas Public Employee
Claims Division, Criminal Investigation Division of AID, the Government Bonding
Board, and the Liquidation Division of AID; instead, the specific statute(s) or
rule(s) governing the activities or practices of those divisions or boards
shall apply.
E.
Approval of Hinting or Advertising Publications.
Although AID may-provide helpful guidance, AID shall not be required to review
and approve marketing programs, advertising, or illustrations that are proposed
to be used by licensees unless specifically required to approve such materials
under the AIC or AIDR.
F.
Informal Legal Opinions & Surveys. Licensees and
interested persons may request or engage in discussions or correspondence with
AID staff involving interpretations of various AID rules or AIC provisions.
However, such opinions or interpretations should not be considered officially
binding upon AID or the Commissioner unless or until they are approved in an
administrative order. Licensees and interested persons making such inquiries
are encouraged to first review the AID laws, rules, bulletins, directives and
announcements for such information that are available on the official AID
website.
G.
Certificates of Compliance. Upon request of an insurer
or other licensed organization or individuals, and to assist such licensees
with licensure and registration in other states or with federal programs, AID
may issue certificates of compliance ("COCs") for licensees. The issuance or
denial by AID of a COC shall not be considered an adjudicative proceeding under
this Rule and shall be granted or denied based upon whether the licensee is
under good standing with AID Accounting, Finance and Legal Divisions. Good
standing shall mean that the licensee is current as to all required payment of
fees or taxes imposed by AID, the licensee is not delinquent as to required
financial and licensure filings, and the licensee has not shown a history
within the last five (5) years of violations of the AIC or AIDR as reflected in
AID issued orders.
H.
Sharing of Confidential Information with State Agencies Jointly
Administering Programs with AID. For purposes of Ark. Code Ann.
§
23-61-103(d), a
state law enforcement agency shall include state agencies jointly administering
programs with AID. AID may share with such agencies confidential information
gathered through the program if there is a substantial need for such
information to be received by the state agency to implement or evaluate a
program, and such agencies agree in writing with AID for it to adhere to the
same confidentiality restrictions related to disclosures that apply to
AID.
IX. STATEMENT OF ORGANIZATION AND OPERATIONS
AID is an agency of state government created under Act No. 148 of 1959 as codified under Ark. Code Ann. § 23-63-101 et seq. Pursuant to Ark. Code Ann. § 23-61-101(c)(2), the primary mission of AID is consumer protection through insurer solvency and market conduct regulation and fraud prosecution and deterrence. Specifically, under the direction and supervision of the Commissioner, pursuant to Ark. Code Ann, § 23-61-103(c), AID regulates:
(1) the licensing of
insurance companies;
(2) the
licensing of insurance producers;
(3) regulation of premium rates and policy
forms;
(4) regulation of insurer
solvency and receiverships; and
(5)
any other matters relating to the effective regulation of the business of
insurance. The individual in charge of day to day operations is the
Commissioner who is appointed by the Governor under Ark. Code Ann. §
23-61-102. From time to time, AID
issues administrative orders, rules, bulletins and directives pertaining to the
business of insurance or other regulation of business organizations subject to
the jurisdiction of AID. For administrative purposes, AID is comprised of
divisions which include but are not limited to licensing, financial regulation,
accounting regulation, legal services, general administration, public employee
claims, risk management for state owned properties, consumer services or
affairs, and liquidation and receiverships. A current organizational chart
reflecting the organization and operations of divisions shall be available from
the AID website at the following link:
https://www.LLtsurance.arkansas.gov/administration/organization-chart2 .
X. INFORMATION FOR PUBLIC GUIDANCE AND FOIA REQUESTS
AID employs persons holding certain responsibilities for
handling FOIA requests, licensing questions and complaints against licensees so
that the public may obtain information about the agency or make submissions or
requests. FOIA requests may be submitted to; aiLl.foi@arkansas.gov.
Descriptions of AID Divisions and contact information for specific AID
Divisions may be found at the following link:
XI. PUBLIC MEETINGS
Neither the Commissioner nor AID is a commission or governing board that holds regular or special meetings. However, AID holds publicly accessible hearings on all administrative and rulemaking matters.
XII. LICENSING
All AID actions regarding licensure are governed by the
provisions of Chapter 64 of the AIC (for insurance producers) codified at Ark.
Code Ann. §
23-64-101 et seq. and Chapter 63
of the AIC (for insurers) codified at Ark. Code Ann. §
23-63-101 et seq. However, AID
regulates and licenses many other business organizations and individuals
throughout the AIC or AIDR that are not insurance producers or insurers.
Additional licensure regulations and forms are available for review at the
following AID website at:
XIII. WEBSITE LINKS TO AID FORMS & DOCUMENTS
Internet locations to various AID forms, documents or publications, as previously cited in this Rule, may change from time to time. Interested persons should consult the official AID website for the current internet location of the documents or publications or contact AID for assistance in locating a particular document or form,
XIV. EFFECTIV E DATE
This Rule shall be effective upon approval by the Arkansas Legislative Council and shall go into effect ten (10) days after filing a final rule with the Secretary of State. Unless excepted under this Rule, this Rule shall apply to all administrative actions, investigations, rules, orders, complaints and policies that are undertaken, reviewed or issued by the Commissioner or AID after the effective date of this Rule.
Disclaimer: These regulations may not be the most recent version. Arkansas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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