Effective 28 Aug 2006

374.049. Classification of violations — orders, penalties — enhancement of penalties — reduction of penalties — deposit and use of penalties — effective date. — 1. Violations of the laws of this state relating to insurance in this chapter, chapter 354 and chapters 375 to 385, or a rule adopted or order issued by the director, are classified for the purpose of civil penalties and forfeitures into the following five classifications:

(1) Level one violations;

(2) Level two violations;

(3) Level three violations;

(4) Level four violations; and

(5) Level five violations.

2. An order to impose a civil penalty or forfeiture, when imposed by the director in an administrative proceeding under section 374.046 on a person for any violation of the laws of this state relating to insurance in this chapter, chapter 354 and chapters 375 to 385, or a rule adopted or order issued by the director, shall be an order to pay an amount not exceeding the following:

(1) No civil penalty or forfeiture for a level one violation;

(2) One thousand dollars per each level two violation, up to an aggregate civil penalty or forfeiture of fifty thousand dollars per annum for multiple violations;

(3) Five thousand dollars per each level three violation, up to an aggregate civil penalty or forfeiture of one hundred thousand dollars per annum for multiple violations;

(4) Ten thousand dollars per each level four violation, up to an aggregate civil penalty or forfeiture of two hundred fifty thousand dollars per annum for multiple violations;

(5) Fifty thousand dollars per each level five violation, up to an aggregate civil penalty or forfeiture of two hundred fifty thousand dollars per annum for multiple violations.

3. An order to impose a civil penalty or forfeiture, when imposed by the court in an enforcement proceeding under section 374.048 on a person for any violation of the laws of this state relating to insurance in this chapter, chapter 354 and chapters 375 to 385, or a rule adopted or order issued by the director, shall be an order to pay an amount not exceeding the following:

(1) No civil penalty or forfeiture for a level one violation;

(2) One thousand dollars per each level two violation, up to an aggregate civil penalty or forfeiture of fifty thousand dollars per annum for multiple violations;

(3) Five thousand dollars per each level three violation, up to an aggregate civil penalty or forfeiture of two hundred thousand dollars per annum for multiple violations;

(4) Twenty thousand dollars per each level four violation, up to an aggregate civil penalty or forfeiture of one million dollars per annum for multiple violations;

(5) One million dollars per each level five violation, with no limit to civil penalties or forfeitures for multiple violations.

4. No civil penalty or forfeiture may be imposed against a person, unless the person has engaged in the act, practice, omission or course of business constituting the violation.

5. Any violation of the laws of this state relating to insurance in this chapter, chapter 354 and chapters 375 to 385, which is not classified or does not authorize a specific range for a civil penalty or forfeiture for violations, shall be classified as a level one violation. In bringing an action to enforce a rule adopted by the director, unless the conduct that violates the rule also violates the enabling statute, the violation shall be classified as a level one violation and shall not be subject to any provision in this section regarding the enhancement of a civil penalty or forfeiture.

6. The civil penalties or forfeitures set forth in this section establish a maximum range. The court, or the director in administrative enforcement, shall consider all of the circumstances, including the nature of violations to determine whether, and to any extent, a civil penalty or forfeiture is justified.

7. In any enforcement proceeding, the court, or director in administrative enforcement, may enhance the civil penalty or forfeiture with a one-classification step increase under this section, if the violation was knowing. The court, or director in administrative enforcement, may enhance the civil penalty or forfeiture with a two-level increase if the violation was knowingly committed in conscious disregard of the law.

8. In any enforcement proceeding, the court, or director in administrative enforcement, may, after consideration of the factors specified in subsection 2 of section 374.046, enhance the civil penalty or forfeiture with a one-classification step increase under this section, if the violations resulted in actual financial loss to consumers.

9. In any enforcement proceeding, the court, or director in administrative enforcement, shall reduce the civil penalty or forfeiture on that person with up to a two-classification step reduction under this section, if prior to receiving notice of the violation from the department, the person detects the violation through a self-audit or internal compliance program reasonably designed to detect and prevent insurance law violations and immediately reports the violation to the director.

10. If more than one error is caused by a single act or omission in the use of data processing equipment and such errors are not known by the violator at the time the error occurs, then any such errors shall be regarded as a single violation under this section.

11. Any civil penalty or forfeiture recovered by the director shall be paid to the treasurer and then distributed to the public schools as required by Article IX, Section 7 of the Missouri Constitution.

12. The penalties and forfeitures authorized by this section govern all actions and proceedings that are instituted on the basis of conduct occurring after August 28, 2006.

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(L. 2006 H.B. 1837)