DAR File No. 38350

Insurance, Title and Escrow Commission

Rule R592-2

Title Insurance Administrative Hearings and Penalty Imposition

Notice of Proposed Rule

(Amendment)

DAR File No.: 38350
Filed: 03/14/2014 09:42:34 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being changed to clarify the need for concurrence between the Commission and insurance commissioner before imposing a penalty, change fees in the fee table, and distinguish between formal and informal adjudicative proceedings.

Summary of the rule or change:

Section R592-2-1 of the rule provides additional authority citations related to the process of concurrence and the imposition of a penalty. Section R592-2-4 eliminates reference to a Stipulation and Order and distinguishes between formal and informal proceeding. Section R592-2-5 changes the fee table: failure to complete continuing education fee is eliminated; two fees added, one for failure to provide a current email and another for doing business with lapsed license for 30 days or less; and two fees have been increased, one for failure to charge or collect correct premium and the other for failure to pay the assessment. Section R592-2-3 sets the procedure for an informal adjudicative proceeding that allows the Commission to receive a draft stipulation of facts and the need for the Commission and commissioner to concur before penalty is imposed. It also specifies that a party may request a formal hearing at any time. Section R592-2-6 specifies that the Commission must be advised of a matter before a hearing is scheduled. In such matters the administrative law judge will conduct the hearing unless the party requests the Commission to do so. Section R592-2-6 specifies that the Commission sets the date, time, and place of the hearing if the Commission conduct a formal hearing. Section R592-2-7 emphasizes the requirement of concurrence between Commission and commissioner before a penalty is imposed. Throughout this rule, code and rule citations have been changed to clarify the authority of the rule.

State statutory or constitutional authorization for this rule:

• Subsections 31A-2-404(2)(e), (g), (h)
• Subsection 31A-2-404(6)

Anticipated cost or savings to:

the state budget:

Those changes affecting the table of penalties in Section R592-2-5 of the rule will have a fiscal impact on the department and state revenues. One penalty was eliminated, three penalties were increased, and there were four new penalties added. If these penalties had been in effect in 2013 the department estimates revenues from penalties would have been increased by $12,000.

local governments:

This rule will have no impact on local government since it deals solely with the relationship between the department and their licensees and those violating the insurance code.

small businesses:

This rule will impacts title producers and agencies violating those areas of the law where fees have been added or increased, as noted in Section R592-2-5 of the rule. Violations include charging or collecting incorrect premiums, not paying the title assessment on time, failing to provide and maintain with the department a current email, and conducting business without a license for up to 30 days. If these changes had been in effect in 2013, it is estimated that penalties assessed in eleven cases against title producers and agencies would have totaled an additional $12,000.

persons other than small businesses, businesses, or local governmental entities:

This rule will impact title agencies, some of which are large employers, violating those areas of the law where fees have been added or increased, as noted in Section R592-2-5 of the rule. Violations include charging or collecting incorrect premiums, not paying the title assessment on time, failing to provide and maintain with the department a current email, and conducting business without a license for up to 30 days. If these changes had been in effect in 2013, penalties assessed in eleven cases against title producers and agencies would have totaled an estimated additional $12,000. These changes will have no fiscal impact on consumers.

Compliance costs for affected persons:

This rule will impact title agencies, some of which are large employers, violating those areas of the law where fees have been added or increased, as noted in Section R592-2-5 of the rule. If these changes had been in effect in 2013, penalties assessed in eleven cases against title producers and agencies would have totaled an estimated additional $12,000. These changes will have no fiscal impact on consumers.

Comments by the department head on the fiscal impact the rule may have on businesses:

Changes to this rule will have a fiscal impact against those who violate the law where penalties have been added or increased as in Section R592-2-5 of this rule. The changes in this law have all been discussed and agreed upon by the Title and Escrow Commission, as well as other members of the industry attending the Commission's meetings.

Todd E. Kiser, Insurance Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Title and Escrow Commission
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/01/2014

Interested persons may attend a public hearing regarding this rule:

• 04/14/2014 09:00 AM, Senate Building, Copper Room, 420 N State Street, Salt Lake City, UT

This rule may become effective on:

05/08/2014

Authorized by:

Todd Kiser, Commissioner

R592. Insurance, Title and Escrow Commission.

R592-2. Title Insurance Administrative Hearings and Penalty Imposition.

R592-2-1. Authority.

This rule is promulgated pursuant to Subsections 31A-2-404(2)(e), (g), [and ](h), and (6) to provide the process for conducting or delegating an administrative hearing in a title [administrative hearing]insurance matter and imposing a penalty for a violation of statute or rule.

 

R592-2-2. Purpose and Scope.

(1) The purposes of this rule are:

(a) to establish procedures for the [c]Commission:

(i) to delegate to the commissioner's administrative law judge the conduct of an administrative hearing to resolve a title insurance matter; or

(ii) to conduct an administrative hearing to resolve a title insurance matter; and

(b) to establish procedures for the [c]Commission,

(i) to impose penalties; and

(ii) for the commissioner to concur with the penalties imposed.

(2) This rule applies to all title licensees, applicants for a title insurance license, unlicensed persons doing the business of title insurance, and continuing education providers submitting title continuing education programs for approval.

 

R592-2-3. Definitions.

For purposes of this rule, the [c]Commission adopts the definitions set forth in [Utah Code Annotated (U.C.A.) ]Title 31A and the following:

(1) "Commission" means the Title and Escrow Commission.

(2) "Commissioner" means the Utah['s] insurance commissioner.

(3) "Title insurance matter" means a matter related to:

(a) title insurance; and

(b) an escrow conducted by an individual title insurance producer.

 

R592-2-4. Title Insurance Matters Referred for Enforcement.

(1) A title insurance matter referred for enforcement will be resolved by:

([i]a) an informal adjudicative [action]proceeding pursuant to R592-2-5; or

[(ii) a stipulation and order issued by the commissioner; or

]([iii]b) [an administrative hearing]a formal adjudicative proceeding conducted either by the [c]Commission or the commissioner's administrative law judge pursuant to R592-2-6.

 

R592-2-5. Imposition of a Penalty When an Informal Adjudicative Proceeding Is Used to Resolve a Title Insurance Matter.

(1) If the commissioner uses an informal adjudicative proceeding as set forth in 63G-4-203 and R590-160 to resolve a violation listed in Table 1 below, the commissioner shall use the penalties imposed by the [c]Commission in this Section.

(2) The [c]Commission shall impose the following penalties on title licensees for the violations listed in Table 1 below when resolved through an informal adjudicative proceeding.

 

TABLE 1

     Violation             1st Proceeding         2nd Proceeding
 [Failure to complete     Individual: $1,000;   Individual: $2,000:
 required continuing     Agency: n/a           Agency: n/a
 education hours.]

 Failure to respond      Individual: $500;     Individual: $1,000;
 to an inquiry of        Agency: $750          Agency: $1,500
 the commissioner.

 Failure to file a       Individual: n/a       Individual: n/a;
 required rate, form,    Agency: $1,000        Agency: $2,000
 or report.

 Late filing of a        Individual: n/a;      Individual: n/a;
 required rate,          Agency: $750          Agency: $1,500
 form, or report.

 [Failure to charge or    Individual: $1,000;   Individual: $2,000;]
 Failure to charge or    Individual: $1,250;   Individual: $2,500;
 collect a correct       Agency: $2,500        Agency: $5,000
 premium or a correct
 filed fee.

 Failure to provide      Individual: $100
 a current email.        Agency: $250

 Charging or             Individual: $1,000;   Individual: $2,000;
 collecting a non-       Agency: $2,500        Agency: $5,000
 filed required fee.

[Failure to pay          Individual: $500;   Individual: $1,000;
 assessment when due.    Agency: $750        Agency: $1,500]
 Failure to pay           Individual: $1,000;    Individual: $2,000;
 Assessment when due.    Agency: $1,500        Agency: $3,000

 Conducting title ins-   Individual: $250
 urance business on a    Agency: $1,500 
 license that has lapsed 
 for 30 days or less.

  (3) If an informal adjudicative proceeding in a title
insurance matter is proposed to be resolved through settlement
and negotiation, prior to entering into a stipulation and
order, the commissioner shall present to and discuss with the
Commission a proposed resolution of the title insurance matter
based on the following procedures:
  (a) the commissioner shall provide the parties involved with
a draft stipulation of facts, which may include aggravating
and mitigating factors, and conclusions of law pertaining to
the title insurance matter with a recommended penalty;
  (b) if the parties involved agree to the stipulation of
facts and conclusions of law, the stipulation of facts and
conclusions of law together with the commissioner's
recommended penalty will be presented to the Commission for
the imposition of the penalty, which penalty will be imposed
if the Commission concurs with the recommended penalty;
  (c) if the Commission does not concur with the commissioner's
recommended penalty, the Commission will provide the
commissioner a recommended penalty, which penalty will be
imposed upon the concurrence of the commissioner;
  (d) a party involved in an informal hearing may at any time
request that the title insurance matter be resolved by a Formal
Adjudicative Proceeding pursuant to R592-2-6.

 

R592-2-6. Use of [an Administrative Hearing]a Formal Adjudicative Proceeding to Resolve a Title Insurance Matter.

(1) [When the commissioner sets a date for an administrative hearing to resolve a title insurance matter,]Before the commissioner sets a date for a hearing, the commissioner shall inform the [c]Commission of the title insurance matter and the request for a hearing[ date].

(2) After being informed of [a]the request for a hearing[ date], the [c]Commission shall, in accordance with Section 31A-2-404(2)(e), either:

(a) delegate the conduct of the [administrative ]hearing to the commissioner's administrative law judge;[ or]

(b) conduct the [administrative ]hearing[.]; or

(c) unless requested by a party that the Commission conduct the hearing, any title insurance matter that has been presented to the Commission per R592-2-5(3) shall be delegated to the commissioner's administrative law judge.

(3) [For an administrative]In hearing a formal adjudicative proceeding conducted by the [c]Commission, the [c]Commission shall:

(a) [accept]set the date, time and place [set by the commissioner or set a different date, time, and place ]for the [administrative ]hearing;

(b) cause notification to be sent to the respondent(s), the commissioner's administrative law judge, and the commissioner's enforcement attorney of the date, time, and place of the [administrative ]hearing;

(c) conduct the hearing pursuant to 63G-4-206 and R590-160;

(d) impose penalties in accordance with Sections 31A-2-308, 31A-2-404, 31A-23a-111, 31A-23a-112, 31A-26-213, and 31A-26-214, subject to the concurrence of the commissioner; and

(e) issue an Order[ on Hearing].

(4) The commissioner's administrative law judge shall assist the [c]Commission in its conduct of [an administrative]a hearing.

 

R592-2-7. Imposition of Penalties.

The [c]Commission shall impose a penalty as follows:

(1) [f]For an informal adjudicative proceeding pursuant to R592-2-5(1), a penalty shall be imposed in accordance with Table 1 in R592-2-5 (2).[;]

(2) For a stipulation and order pursuant to R592-2-5(3), the Commission shall impose a penalty subject to the concurrence of the commissioner.

(3) [f]For [an administrative]a hearing on a formal adjudicative proceeding conducted by the commissioner's administrative law judge[ pursuant to R592-2-6 (2)(a)], the [c]Commission shall impose the recommended penalty or a different penalty, subject to the concurrence of the commissioner; or

(4) [f]For [an administrative]a hearing on a formal adjudicative proceeding conducted by the [c]Commission, the [c]Commission shall impose a penalty, subject to the concurrence of the commissioner.

 

R592-2-8. Severability.

If any provision or clause of this rule or its application to any person or situation is held invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

 

R592-2-9. Enforcement Date.

The commissioner will begin enforcing this rule upon the rule's effective date.

 

KEY: title insurance

Date of Enactment or Last Substantive Amendment: [May 1, 2013]2014

Notice of Continuation: September 15, 2010

Authorizing, and Implemented or Interpreted Law: 31A-2-402