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AN ACT relating to reorganization of the Department of Law and declaring an 1
emergency. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 15.010 (Effective until March 15, 2024) is amended to read as 4
follows: 5
(1) The Attorney General is the head of the Department of Law. 6
(2) The Department of Law shall include the following major organizational units: 7
(a) Department of Criminal Investigations[Litigation]; 8
1. Office of Counter-Exploitation[Department of Criminal Investigations]; 9
a. Special Victims Division[Public Corruption Division]; 10
b. Cyber Crimes Division[Special Victims Division]; and 11
c. Trafficking and Abuse Prevention and Prosecution 12
Division[Special Investigations Division; and 13
d. Protective Intelligence Division]; 14
2. Office of Investigative Operations[Special Prosecutions]; 15
a. Public Corruption Division; 16
b. Special Investigations Division; and 17
c. Protective Intelligence Division; 18
(b) Department of Criminal Litigation; 19
1. Office of Special Prosecutions; 20
2[3]. Office of Medicaid Fraud and Abuse Control; 21
3[4.] [Office of Trafficking and Abuse Prevention and Prosecution; 22
5. ]Office of Prosecutors Advisory Council; and 23
4[6]. Office of Victims Advocacy; 24
(c)[(b)] Department of Civil Litigation; 25
1. Office of Consumer Protection; 26
2. Office of Civil and Environmental Law; 27 UNOFFICIAL COPY 24 RS BR 2283
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a. Open Records and Meetings Division; and 1
b. Civil Litigation[Administrative Hearings] Division; 2
3. Office of Rate Intervention;[ and] 3
4. Office of Senior Protection; and 4
5. Office of Administrative Hearings; 5
a. Family and Children Division; 6
b. Health Services Division; and 7
c. General Government Division; 8
(d)[(c)] Office of the Solicitor General; 9
1. Criminal Appeals Division; and 10
2. Civil Appeals Division; 11
(e)[(d)] Office of Legal Counsel; 12
(f)[(e)] Office of Communications;[ and] 13
(g)[(f)] Office of Management and Budget[Administrative Services]; and 14
(h) Kentucky Office of Regulatory Relief. 15
Section 2. KRS 15.010 (Effective March 15, 2024) is amended to read as 16
follows: 17
(1) The Attorney General is the head of the Department of Law. 18
(2) The Department of Law shall include the following major organizational units: 19
(a) Department of Criminal Investigations[Litigation]; 20
1. Office of Counter-Exploitation[Department of Criminal Investigations]; 21
a. Special Victims Division[Public Corruption Division]; 22
b. Cyber Crimes Division[Special Victims Division]; and 23
c. Trafficking and Abuse Prevention and Prosecution 24
Division[Special Investigations Division; and 25
d. Protective Intelligence Division]; 26
2. Office of Investigative Operations[Special Prosecutions]; 27 UNOFFICIAL COPY 24 RS BR 2283
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a. Public Corruption Division; 1
b. Special Investigations Division; and 2
c. Protective Intelligence Division; 3
(b) Department of Criminal Litigation; 4
1. Office of Special Prosecutions; 5
2[3]. Office of Medicaid Fraud and Abuse Control; 6
3[4]. [Office of Trafficking and Abuse Prevention and Prosecution; 7
5. ]Office of Prosecutors Advisory Council; and 8
4[6]. Office of Victims Advocacy; 9
(c)[(b)] Department of Civil Litigation; 10
1. Office of Consumer Protection; 11
2. Office of Civil and Environmental Law; 12
a. Open Records and Meetings Division; and 13
b. Civil Litigation[Administrative Hearings] Division; 14
3. Office of Rate Intervention; [and] 15
4. Office of Senior Protection; and 16
5. Office of Administrative Hearings; 17
a. Family and Children Division; 18
b. Health Services Division; and 19
c. General Government Division; 20
(d)[(c)] Office of the Solicitor General; 21
1. Criminal Appeals Division; and 22
2. Civil Appeals Division; 23
(e)[(d)] Office of Legal Counsel; 24
(f)[(e)] Office of Communications; 25
(g)[(f)] Office of Management and Budget[Administrative Services]; and 26
(h)[(g)] Kentucky Office of Regulatory Relief. 27 UNOFFICIAL COPY 24 RS BR 2283
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Section 3. KRS 13B.010 is amended to read as follows: 1
As used in this chapter, unless the context requires otherwise: 2
(1) "Administrative agency" or "agency" means each state board, bureau, cabinet, 3
commission, department, authority, officer, or other entity in the executive branch 4
of state government authorized by law to conduct administrative hearings. 5
(2) "Administrative hearing" or "hearing" means any type of formal adjudicatory 6
proceeding conducted by an agency as required or permitted by statute or regulation 7
to adjudicate the legal rights, duties, privileges, or immunities of a named person. 8
(3) "Party" means: 9
(a) The named person whose legal rights, duties, privileges, or immunities are 10
being adjudicated in the administrative hearing; 11
(b) Any other person who is duly granted intervention in an administrative 12
hearing; and 13
(c) Any agency named as a party to the adjudicatory proceeding or entitled or 14
permitted by the law being enforced to participate fully in the administrative 15
hearing. 16
(4) "Agency head" means the individual or collegial body in an agency that is 17
responsible for entry of a final order. 18
(5) "Recommended order" means the whole or part of a preliminary hearing report to 19
an agency head for the disposition of an administrative hearing. 20
(6) "Final order" means the whole or part of the final disposition of an administrative 21
hearing, whenever made effective by an agency head, whether affirmative, 22
negative, injunctive, declaratory, agreed, or imperative in form. 23
(7) "Hearing officer" means the individual, duly qualified and employed pursuant to 24
this chapter, assigned by an agency head as presiding officer for an administrative 25
hearing or the presiding member of the agency head. 26
(8) "Office"["Division"] means the Office[Division] of Administrative Hearings in the 27 UNOFFICIAL COPY 24 RS BR 2283
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Office of the Attorney General created pursuant to KRS 15.111. 1
Section 4. KRS 13B.030 is amended to read as follows: 2
(1) An agency head may exercise all powers conferred on an agency relating to the 3
conduct of administrative hearings, and he may delegate conferred powers to a 4
hearing officer or a member of a collegial body that serves as an agency head, or he 5
may delegate conferred powers to a hearing officer to conduct an administrative 6
hearing before a hearing panel, reserving the authority to render a recommended 7
order to that panel. An agency head may not, however, delegate the power to issue a 8
final order unless specifically authorized by statute, or unless disqualified in 9
accordance with KRS 13B.040(2). 10
(2) (a) In securing hearing officers as necessary to conduct administrative hearings 11
under the jurisdiction of the agency, an agency may: 12
1. Employ hearing officers; 13
2. Contract with another agency for hearing officers; or 14
3. Contract with private attorneys through personal service contract. 15
(b) An agency may secure hearing officers pursuant to subsection (2)(a)3. of this 16
section only if the Attorney General has first determined that the Attorney 17
General's Office cannot provide the needed hearing officers to the agency. If 18
the Attorney General determines that the Attorney General's Office can 19
provide the needed hearing officers to the agency, the agency shall use the 20
hearing officers provided by the Attorney General's Office. The expenses 21
incurred by the Attorney General's Office in providing the hearing officers to 22
the agency shall be paid to the Attorney General's Office by the agency in the 23
following manner: 24
1. The amount to be paid by the agency to the Attorney General's Office 25
shall be established by vouchers submitted by the Attorney General's 26
Office to the agency which shall be promptly paid by the agency, at the 27 UNOFFICIAL COPY 24 RS BR 2283
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beginning of, at the end of, or at any time during the provision of the 1
hearing officers by the Attorney General's Office. 2
2. The expenses to be paid to the Attorney General's Office shall be 3
calculated according to the amount of time spent by the salaried hearing 4
officers of the Attorney General's Office in providing the services. The 5
charge for time spent shall not exceed twenty-five percent (25%) more 6
than the amount allowed for a sole practitioner under personal service 7
contract. The Attorney General may require payment in advance of the 8
provision of the requested services based on his calculation of the 9
amount of time that will be spent by the salaried hearing officers of the 10
Attorney General's Office in providing the services. The agency shall be 11
reimbursed for any overpayment at the conclusion of the provision of 12
services by the Attorney General's Office. 13
(3) A hearing officer shall possess and meet qualifications as the Personnel Cabinet and 14
the employing agency, with the advice of the office[division], may find necessary to 15
assure competency in the conduct of an administrative hearing. The qualifications 16
in this subsection shall not, however, apply to a member of a board, commission, or 17
other collegial body who may serve as a hearing officer in his capacity as a member 18
of the collegial body. 19
(4) All hearing officers, including members of collegial bodies who serve as hearing 20
officers, shall receive training necessary to prepare them to conduct a competent 21
administrative hearing. The training shall pertain to the conduct of administrative 22
hearings generally and to the applications of the provisions of this chapter, 23
specifically. The office[division] shall establish by administrative regulation 24
minimum standards concerning the length of training, course content, and instructor 25
qualifications. Required training shall not exceed eighteen (18) classroom hours for 26
initial training and six (6) classroom hours per year for continuing training. Actual 27 UNOFFICIAL COPY 24 RS BR 2283
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training may be conducted by an agency or any other organization, if the training 1
program offered has been approved by the office[division] as meeting minimum 2
standards. 3
Section 5. KRS 15.111 (Effective until July 1, 2024) is amended to read as 4
follows: 5
(1) The Office[Division] of Administrative Hearings is created in the Office of 6
Attorney General. 7
(2) This office[division] shall have the following responsibilities: 8
(a) Employing and maintaining a pool of hearing officers for assignment to the 9
individual agencies at their request, for the conduct of administrative hearings. 10
The Attorney General's office may also employ other staff as necessary to 11
carry out functions and responsibilities assigned by KRS Chapter 13B; 12
(b) Reviewing and approving or disapproving requests from agencies for waivers 13
from provisions of KRS Chapter 13B; 14
(c) Providing training in administrative hearing procedures for hearing officers as 15
required in KRS 13B.030, either by developing and offering the training, or 16
by contracting with appropriate organizations for the provision of training, or 17
by approving training developed and submitted by the agencies; 18
(d) Consulting with the Personnel Cabinet and employing agencies in the 19
establishment of relevant and appropriate qualifications for classes of hearing 20
officers; 21
(e) Establishing, in cooperation with the Office[Division] of Consumer 22
Protection, a clearinghouse for complaints concerning the administrative 23
hearing process in Kentucky. Each complaint received shall be referred to the 24
agency that is the subject of the complaint, and the action of the agency to 25
resolve the complaint shall be noted and reported to the office[division]; and 26
(f) Reporting to the Legislative Research Commission by July 1 of each odd-27 UNOFFICIAL COPY 24 RS BR 2283
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numbered year, the status of the administrative hearing process in Kentucky. 1
The report shall include a compilation of statistical data and other information 2
necessary to assess the effectiveness and efficiency of hearing procedures and 3
recommendations for making improvements to the system. Agencies shall 4
provide the information requested by the Office[Division] of Administrative 5
Hearings necessary to complete the report. 6
Section 6. KRS 15.111 (Effective July 1, 2024) is amended to read as follows: 7
(1) The Office[Division] of Administrative Hearings is created in the Office of 8
Attorney General. 9
(2) This office[division] shall have the following responsibilities: 10
(a) Employing and maintaining a pool of hearing officers for assignment to the 11
individual agencies at their request, for the conduct of administrative hearings. 12
The Attorney General's office may also employ other staff as necessary to 13
carry out functions and responsibilities assigned by KRS Chapter 13B; 14
(b) Reviewing and approving or disapproving requests from agencies for waivers 15
from provisions of KRS Chapter 13B; 16
(c) Providing training in administrative hearing procedures for hearing officers as 17
required in KRS 13B.030, either by developing and offering the training, or 18
by contracting with appropriate organizations for the provision of training, or 19
by approving training developed and submitted by the agencies; 20
(d) Consulting with the Personnel Cabinet and employing agencies in the 21
establishment of relevant and appropriate qualifications for classes of hearing 22
officers; 23
(e) Establishing, in cooperation with the Office[Division] of Consumer 24
Protection, a clearinghouse for complaints concerning the administrative 25
hearing process in Kentucky. Each complaint received shall be referred to the 26
agency that is the subject of the complaint, and the action of the agency to 27 UNOFFICIAL COPY 24 RS BR 2283
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resolve the complaint shall be noted and reported to the office[division]; 1
(f) Reporting to the Legislative Research Commission by July 1 of each odd-2
numbered year, the status of the administrative hearing process in Kentucky. 3
The report shall include a compilation of statistical data and other information 4
necessary to assess the effectiveness and efficiency of hearing procedures and 5
recommendations for making improvements to the system. Agencies shall 6
provide the information requested by the Office[Division] of Administrative 7
Hearings necessary to complete the report; 8
(g) Reporting to the Cabinet for Health and Family Services, Office of Inspector 9
General, for review and investigation: 10
1. Any charge or case against any employee of the Cabinet for Health and 11
Family Services where it has cause to believe the employee has engaged 12
in dishonest, unethical, or illegal conduct or practices related to his or 13
her job duties; or 14
2. Any violation of state law or administrative regulation by any 15
organization or individual regulated by, or contracted with, the Cabinet 16
for Health and Family Services; and 17
(h) Conducting and providing oversight of administrative hearings as it relates to 18
the Cabinet for Health and Family Services. 19
Section 7. KRS 15.753 is amended to read as follows: 20
(1) This section shall apply to: 21
(a) The Attorney General and his or her staff; 22
(b) A county attorney and his or her staff; and 23
(c) A Commonwealth's attorney and his or her staff. 24
(2) A person named in subsection (1) of this section who is sued for any act or 25
omission in the course of his or her duties and who suffers actual financial loss, 26
unreimbursed from any source, including any costs or attorney's fees awarded as a 27 UNOFFICIAL COPY 24 RS BR 2283
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result of the action, or any costs or reasonable attorney's fees incurred in defending 1
the action, shall be indemnified by the Commonwealth from funds appropriated to 2
the Finance and Administration Cabinet for the payment of judgments, to the extent 3
of his or her actual financial loss. 4
(3) The indemnification shall be contingent upon an express determination by the 5
Prosecutors[Prosecutor's] Advisory Council that the act or omission which resulted 6
in liability or financial loss was within the scope and course of the officer's 7
employment and occurred during the performance of duty and was committed or 8
omitted in the good faith belief that the act or omission was lawful and proper. 9
(4) If the officer seeking indemnification is the Attorney General, the determination 10
referred to in subsection (3) of this section shall be made by the Governor. 11
(5) The indemnification shall not be construed to abrogate or limit any privilege, 12
immunity, or matter of defense otherwise available to the person claiming 13
indemnification and shall not constitute a waiver of any privilege, immunity, or 14
matter or defense including the sovereign immunity of the Commonwealth. 15
(6) The indemnification shall not be the subject of comment, directly or indirectly, 16
before any jury hearing any cause of action in which the Attorney General, a county 17
or Commonwealth's attorney, or a member of their staff is a party, and any 18
comment before the jury shall result in an immediate mistrial. 19
Section 8. KRS 189A.050 is amended to read as follows: 20
(1) All persons convicted of violation of KRS 189A.010(1)(a), (b), (c), (d), or (e) shall 21
be sentenced to pay a service fee of four hundred twenty-five dollars ($425), which 22
shall be in addition to all other penalties authorized by law. 23
(2) The fee shall be imposed in all cases but shall be subject to the provisions of KRS 24
534.020 and KRS 534.060. 25
(3) The first fifty dollars ($50) of each service fee imposed by this section shall be paid 26
into the general fund, the second fifty dollars ($50) of each service fee imposed by 27 UNOFFICIAL COPY 24 RS BR 2283
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this section shall be paid to the ignition interlock administration fund established in 1
KRS 189A.380, and the remainder of the revenue collected from the service fee 2
imposed by this section shall be utilized as follows: 3
(a) Twelve percent (12%) shall be transferred to the Department of Kentucky 4
State Police forensic laboratory for the acquisition, maintenance, testing, and 5
calibration of alcohol concentration testing instruments and the training of 6
laboratory personnel to perform these tasks; 7
(b) Twenty percent (20%) shall be allocated to the Department of Public 8
Advocacy; 9
(c) One percent (1%) shall be transferred to the Prosecutors[Prosecutor's] 10
Advisory Council for training of prosecutors for the prosecution of persons 11
charged with violations of this chapter and for obtaining expert witnesses in 12
cases involving the prosecution of persons charged with violations of this 13
chapter or any other offense in which driving under the influence is a factor in 14
the commission of the offense charged; 15
(d) Sixteen percent (16%) shall be transferred as follows: 16
1. Fifty percent (50%) shall be credited to the traumatic brain injury trust 17
fund established under KRS 211.476; and 18
2. Fifty percent (50%) shall be credited to the Cabinet for Health and 19
Family Services, Department for Behavioral Health, Developmental and 20
Intellectual Disabilities, for the purposes of providing direct services to 21
individuals with brain injuries that may include long-term supportive 22
services and training and consultation to professionals working with 23
individuals with brain injuries. As funding becomes available under this 24
subparagraph, the cabinet may promulgate administrative regulations 25
pursuant to KRS Chapter 13A to implement the services permitted by 26
this subparagraph; 27 UNOFFICIAL COPY 24 RS BR 2283
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(e) Any amount specified by a specific statute shall be transferred as provided in 1
that statute; 2
(f) Forty-six percent (46%) shall be transferred to be utilized to fund enforcement 3
of this chapter and for the support of jails, recordkeeping, treatment, and 4
educational programs authorized by this chapter and by the Department of 5
Public Advocacy; and 6
(g) The remainder shall be transferred to the general fund. 7
(4) The amounts specified in subsection (3)(a), (b), (c), and (d) of this section shall be 8
placed in trust and agency accounts that shall not lapse. 9
Section 9. KRS 205.8465 is amended to read as follows: 10
(1) Any person who knows or has reasonable cause to believe that a violation of this 11
chapter has been or is being committed by any person, corporation, or entity, shall 12
report or cause to be reported to the Office of Medicaid Fraud and Abuse Control 13
in the Office of the Attorney General[state Medicaid Fraud Control Unit], or the 14
Medicaid Fraud and Abuse hotline, the following information, if known: 15
(a) The name and address of the offender; 16
(b) The offender's place of employment; 17
(c) The nature and extent of the violation; 18
(d) The identity of the complainant; and 19
(e) Any other information that the receiving person reasonably believes might be 20
helpful in investigation of the alleged fraud, abuse, or misappropriation. 21
The Office of Medicaid Fraud and Abuse Control[state Medicaid Fraud Control 22
Unit] shall periodically publicize the provisions of this subsection. 23
(2) The identity of any person making a report under this section shall be considered 24
confidential by the receiving party. Any person making a report under this section 25
regarding the offenses of another shall not be liable in any civil or criminal action 26
based on the report if it was made in good faith. 27 UNOFFICIAL COPY 24 RS BR 2283
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(3) No employer shall, without just cause, discharge or in any manner discriminate or 1
retaliate against any person who in good faith makes a report required or permitted 2
by KRS 205.8451 to 205.8483, testifies, or is about to testify, in any proceeding 3
with regard to any report or investigation. Any individual injured by any act in 4
violation of the provisions of this subsection shall have a civil cause of action in 5
Circuit Court to enjoin further violations, and to recover the actual damages 6
sustained, together with the costs of the lawsuit, including a reasonable fee for the 7
individual's attorney of record. 8
(4) No employee of the state Office of Medicaid Fraud and Abuse Control 9
in[Medicaid Fraud Control Unit,] the Office of the Attorney General, the Office of 10
the Inspector General, or the Cabinet for Health and Family Services shall notify 11
the alleged offender of the identity of the person who in good faith makes a report 12
required or permitted by KRS 205.8451 to 205.8483 nor shall the employee notify 13
the alleged offender that a report has been made alleging a violation of KRS 14
205.8451 to 205.8483 until such time as civil or criminal proceedings have been 15
initiated or a formal investigation has been initiated. Any information or report 16
concerning an alleged offender shall be considered confidential in accordance with 17
the Kentucky Open Records Law, KRS 61.870 to 61.884. 18
Section 10. KRS 205.8483 is amended to read as follows: 19
(1) The Office of the Inspector General in the Cabinet for Health and Family Services 20
shall establish, maintain, and publicize a twenty-four (24) hour toll-free hotline for 21
the purpose of receiving reports of alleged fraud and abuse by Medical Assistance 22
Program recipients and participating providers. 23
(2) The Office of the Inspector General in the Cabinet for Health and Family Services 24
shall develop and implement procedures for screening alleged fraud and abuse of 25
the Medical Assistance Program to ensure that appropriate written referrals are 26
made to: 27 UNOFFICIAL COPY 24 RS BR 2283
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(a) The Office of Medicaid Fraud and Abuse Control in[state Medicaid Fraud 1
Control Unit and to] the Office of the Attorney General of credible allegations 2
of fraud and abuse by providers participating in the Medical Assistance 3
Program; and 4
(b) Other agencies and licensure boards of all allegations received on the hotline 5
that are relevant to their jurisdiction. 6
(3) The Office of the Inspector General in the Cabinet for Health and Family Services 7
shall provide, upon request, a Medicaid fraud and abuse report that shall include but 8
not be limited to the following information from the prior fiscal year: 9
(a) The number and type of reports received in the Office of the Inspector 10
General in the Cabinet for Health and Family Services, from the Medicaid 11
fraud and abuse hotline categorized by recipient and provider groups; and 12
(b) The number and type of alleged Medicaid recipient fraud and abuse reports 13
which were opened for investigation by the Office of Inspector General and 14
their disposition. 15
Section 11. KRS 217.896 is amended to read as follows: 16
The Office[Division] of Consumer Protection of the Office of the Attorney General shall 17
develop and distribute to licensed pharmacies without charge a pamphlet for citizens of 18
the Commonwealth which explains the provisions of KRS 217.815 to 217.826 and 19
217.895. Pharmacists shall display such distributed pamphlets in a prominent place and 20
make them available without charge. Pharmacies shall maintain a sufficient stock of the 21
distributed pamphlets to assure that the supply will not become exhausted for any lengthy 22
time. 23
Section 12. KRS 248.353 is amended to read as follows: 24
(1) Compliance with the provisions of KRS 248.350 shall be monitored by the 25
department with enforcement assistance provided by the Office of Special 26
Prosecutions in[Unit of] the Office of the Attorney General. 27 UNOFFICIAL COPY 24 RS BR 2283
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(2) The Attorney General at the request of the commissioner: 1
(a) May make such public or private investigations within or outside of this state 2
as he deems necessary to determine if any person has violated or is about to 3
violate KRS 248.350 or any administrative regulation or order thereunder, or 4
to aid in the enforcement of KRS 248.350 or in the prescribing of 5
administrative regulations and forms thereunder; 6
(b) May require or permit any person to file a statement in writing, under oath or 7
otherwise as the Attorney General may determine, as to all the facts and 8
circumstances concerning the matter to be investigated; and 9
(c) May publish information concerning any violation of KRS 248.350 or any 10
administrative regulation or order thereunder. 11
(3) For the purpose of any investigation or proceeding under KRS 248.350, the 12
Attorney General or any officer designated by him may administer oaths and 13
affirmations, subpoena witnesses, compel their attendance, take evidence, and 14
require production of any books, papers, correspondence, memoranda, agreements, 15
or other documents or records which the Attorney General deems relevant or 16
material to the inquiry. 17
(4) In case of contumacy by, or refusal to obey a subpoena issued to, any person, any 18
court of competent jurisdiction, upon application by the Attorney General, may 19
issue to that person an order requiring him to appear before the Attorney General, 20
or the officer designated by him, there to produce documentary evidence if so 21
ordered or to give evidence touching the matter under investigation or in question; 22
and any failure to obey the order of the court may be punished by the court as a 23
contempt of court. 24
(5) No person is excused from attending and testifying or from producing any 25
document or record before the Attorney General, or in obedience to the subpoena of 26
the Attorney General or any officer designated by him, or in any proceeding 27 UNOFFICIAL COPY 24 RS BR 2283
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instituted by the Attorney General, on the ground that the testimony or evidence 1
(documentary or otherwise) required of him may tend to incriminate him or subject 2
him to a penalty or forfeiture; but no individual may be prosecuted or subjected to 3
any penalty or forfeiture for or on account of any transaction, matter, or thing 4
concerning which he is compelled, after claiming his privilege against self-5
incrimination, to testify or produce evidence (documentary or otherwise), except 6
that the individual so testifying shall not be exempt from prosecution and 7
punishment for perjury committed in so testifying. 8
Section 13. KRS 304.1-120 is amended to read as follows: 9
No provision of this code shall apply to: 10
(1) Fraternal benefit societies (as identified in Subtitle 29), except as stated in Subtitle 11
29. 12
(2) Nonprofit hospital, medical-surgical, dental, and health service corporations (as 13
identified in Subtitle 32) except as stated in Subtitle 32. 14
(3) Burial associations (as identified in KRS Chapter 303), except as stated in Subtitle 15
31. 16
(4) Assessment or cooperative insurers (as identified in KRS Chapter 299), except as 17
stated in KRS Chapter 299. 18
(5) Insurance premium finance companies (as identified in Subtitle 30), except as stated 19
in Subtitle 30. 20
(6) Qualified organizations which issue charitable gift annuities within the 21
Commonwealth of Kentucky. For the purposes of this subsection: 22
(a) A "qualified organization" means one which is: 23
1. Exempt from taxation under Section 501(c)(3) of the Internal Revenue 24
Code as a charitable organization, if it files a copy of federal form 990 25
with the Office[Division] of Consumer Protection in the Office of the 26
Attorney General; or 27 UNOFFICIAL COPY 24 RS BR 2283
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2. Exempt from taxation under Section 501(c)(3) of the Internal Revenue 1
Code as a religious organization; or 2
3. Exempt as a publicly owned or nonprofit, privately endowed educational 3
institution approved or licensed by the State Board of Education, the 4
Southern Association of Colleges and Schools, or an equivalent public 5
authority of the jurisdiction where the institution is located; and 6
(b) A "charitable gift annuity" means a giving plan or method by which a gift of 7
cash or other property is made to a qualified organization in exchange for its 8
agreement to pay an annuity. 9
(7) A religious organization, as identified in this subsection, or its participants, that: 10
(a) Is a nonprofit religious organization; 11
(b) Is limited to participants who are members of the same denomination or 12
religion; 13
(c) Matches its participants who have financial, physical, or medical needs with 14
participants who choose to assist with those needs; 15
(d) 1. Includes the following notice for delivery to all participants, printed in 16
not less than ten (10) point, bold-faced type on or accompanying all 17
applications, guideline materials, or any similar documents: 18
"NOTICE: UNDER KENTUCKY LAW, THE RELIGIOUS 19
ORGANIZATION FACILITATING THE SHARING OF MEDICAL 20
EXPENSES IS NOT AN INSURANCE COMPANY, AND ITS 21
GUIDELINES, PLAN OF OPERATION, OR ANY OTHER 22
DOCUMENT OF THE RELIGIOUS ORGANIZATION DO NOT 23
CONSTITUTE OR CREAT E AN INSURANCE POLICY. 24
PARTICIPATION IN THE RELIGIOUS ORGANIZATION OR A 25
SUBSCRIPTION TO ANY OF ITS DOCUMENTS SHALL NOT BE 26
CONSIDERED INSURANCE. ANY ASSISTANCE YOU RECEIVE 27 UNOFFICIAL COPY 24 RS BR 2283
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WITH YOUR MEDICAL BILLS WILL BE TOTALLY 1
VOLUNTARY. NEITHER THE ORGANIZATION OR ANY 2
PARTICIPANT SHALL BE COMPELLED BY LAW TO 3
CONTRIBUTE TOWARD YOUR MEDICAL BILLS. WHETHER OR 4
NOT YOU RECEIVE ANY PAYMENTS FOR MEDICAL 5
EXPENSES, AND WHETHER OR NOT THIS ORGANIZATION 6
CONTINUES TO OPERATE, YOU SHALL BE PERSONALLY 7
RESPONSIBLE FOR THE PAYMENT OF YOU R MEDICAL 8
BILLS." 9
2. A participant shall acknowledge receipt of the "Notice" by signing 10
below the "Notice" on the application; 11
(e) Suggests amounts to give that are voluntary among the participants, with no 12
assumption of risk or promise to pay either among the participants or between 13
the participants and the organization. 14
(8) A public or private ambulance service licensed and regulated by the Cabinet for 15
Health and Family Services to the extent that it solicits membership subscriptions, 16
accepts membership applications, charges membership fees, and furnishes prepaid 17
or discounted ambulance services to subscription members and designated members 18
of their households. 19
(9) A direct primary care agreement established under KRS 311.6201, 311.6202, 20
314.198, and 314.199. 21
Section 14. KRS 367.120 is amended to read as follows: 22
(1) The General Assembly finds that the public health, welfare and interest require a 23
strong and effective consumer protection program to protect the public interest and 24
the well-being of both the consumer public and the ethical sellers of goods and 25
services; toward this end, a Consumers' Advisory Council and the Office[a 26
Division] of Consumer Protection in[of] the Office of the Attorney 27 UNOFFICIAL COPY 24 RS BR 2283
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General[Department of Law] are hereby created for the purpose of aiding in the 1
development of preventive and remedial consumer protection programs and 2
enforcing consumer protection statutes. 3
(2) KRS 367.110 to 367.300 may be cited as the "Consumer Protection Act." 4
Section 15. KRS 367.46951 is amended to read as follows: 5
As used in KRS 367.46951 to 367.46999 and 367.990, unless the context otherwise 6
requires: 7
(1) "Telephone solicitation" means: 8
(a) A live or recorded communication sent by a telephone or message sent by a 9
facsimile machine to a residential, mobile, or telephone paging device 10
telephone number, including a call made by an automatic dialing or recorded 11
message device, for the purpose of: 12
1. Soliciting a sale of consumer goods or services, offering an investment, 13
business, or employment opportunity, or offering a consumer loan to the 14
person called; 15
2. Obtaining information that will or may be used for the solicitation of a 16
sale of consumer goods or services, the offering of an investment, 17
business, or employment opportunity, or the offering of a consumer loan 18
to the person called; 19
3. Offering the person called a prize, gift, or anything else of value, if 20
payment of money or other consideration is required in order to receive 21
the prize or gift, including the purchase of other merchandise or services 22
or the payment of any processing fees, delivery charges, shipping and 23
handling fees, or other fees or charges; or 24
4. Offering the person called a prize, gift, or other incentive to attend a 25
sales presentation for consumer goods or services, an investment or 26
business opportunity, or a consumer loan; or 27 UNOFFICIAL COPY 24 RS BR 2283
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(b) A live or recorded communication sent by telephone, facsimile machine, 1
mobile telephone, or telephone paging device in response to inquiries 2
generated by unrequested notifications sent by the merchant to persons who 3
have not previously purchased goods or services from the merchant or 4
telemarketer or who have not previously requested credit from the merchant, 5
to a prospective purchaser if the merchant or telemarketer represents or 6
implies to the recipient of the notification that any of the following applies: 7
1. That the recipient has in any manner been specially selected to receive 8
the notification or the offer contained in the notification; 9
2. That the recipient will receive a prize or gift if the recipient calls the 10
merchant or telemarketer; or 11
3. That if the recipient buys one (1) or more items from the merchant or 12
telemarketer, the recipient will also receive additional or other items of 13
the same or a different type at no additional cost or for less than the 14
regular price of the items; 15
(2) "Telephone solicitation" does not mean the following: 16
(a) A telephone call made in response to an express request of a person called, 17
unless the request was made during a prior telephone solicitation; 18
(b) A telephone call made to the debtor or a party to the contract in connection 19
with the payment or performance of an existing debt or contract, the payment 20
or performance of which has not been completed at the time of the call; 21
(c) A telephone call to any person with whom the telemarketer or merchant has a 22
prior or existing business relationship, including but not limited to the 23
solicitation of contracts for the maintenance or repair of items previously 24
purchased from the person making the solicitation or on whose behalf the 25
solicitation is made; 26
(d) A telephone call made by the following: 27 UNOFFICIAL COPY 24 RS BR 2283
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1. A merchant or telemarketer located in Kentucky to a location outside of 1
the Commonwealth of Kentucky; 2
2. A telephone call made by one (1) merchant to another; 3
(3) "Consumer goods or services" means goods, services, or interests in real property 4
used by natural persons primarily for personal, family, or household purposes; 5
(4) "Consumer loan" means any extension of credit, including credit cards and other 6
forms of revolving credit, to a natural person primarily for the purposes of 7
purchasing consumer goods or services or for paying existing personal, family, or 8
household debts; 9
(5) "Consumer" means a natural person who receives a telephone solicitation; 10
(6) "Legal name of the merchant" means the real name of the merchant, as defined in 11
KRS 365.015(1), or the assumed name of the merchant for which all proper 12
certificates have been filed pursuant to KRS 365.015; 13
(7) "Merchant" means the individual or business entity offering the consumer goods or 14
services, an investment, business, or employment opportunity, or a consumer loan; 15
(8) "Caller" or "sales person" means the individual making the call or operating the 16
automatic dialing or recorded message device and causing the call to be made; 17
(9) "Office"["Division"] means the Office of Consumer Protection in[Division of] the 18
Office of the Attorney General; 19
(10) "Automated calling equipment" means any device or combination of devices used 20
to select or dial telephone numbers and to deliver recorded messages to those 21
numbers without the use of a live operator; 22
(11) "Telemarketer" means any person who under contract with a merchant or in 23
connection with a telephone solicitation initiates or receives telephone calls to or 24
from a consumer of goods and services. A telemarketer includes but is not limited 25
to any such person that is an owner, operator, officer, director, or partner to the 26
management activities of a business; 27 UNOFFICIAL COPY 24 RS BR 2283
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(12) "Publicly traded corporation" means an issuer or subsidiary of an issuer that has a 1
class of securities which is: 2
(a) Subject to Section 12 of the Securities Exchange Act of 1934 (15 U.S.C. sec. 3
78l) and which is registered or exempt from registration under paragraph (A), 4
(B), (C), (E), (F), (G), or (H) of subsection (g)(2) of that section; 5
(b) Listed on the New York Stock Exchange, the American Stock Exchange, or 6
the NASDAQ National Market System; or 7
(c) A reported security within the meaning of subparagraph (4) of Regulation 8
Section 240.11Aa3-1.(a) under the Securities Exchange Act of 1934. A 9
subsidiary of an issuer that qualifies for exemption under this paragraph shall 10
not itself be exempt unless at least sixty percent (60%) of the voting power of 11
its shares is owned by the qualifying issuer; 12
(13) "Telemarketing company" means a company whose primary business is to engage 13
in telephone solicitation; and 14
(14) "Zero call list" means the national Do Not Call Registry maintained by the United 15
States Federal Trade Commission containing the residential or wireless telephone 16
numbers of the individuals that indicate their preference not to receive telephone 17
solicitations. 18
Section 16. KRS 367.46971 is amended to read as follows: 19
(1) At least ten (10) days prior to doing business in this state, a telemarketing company 20
shall register with the office[division] by filing the information described below and 21
paying a filing fee of three hundred dollars ($300). A telemarketing company shall 22
be deemed to do business in this state if the telemarketing company solicits 23
prospective purchasers from locations in this state or solicits prospective purchasers 24
who are located in this state. The information required by this section shall be 25
submitted on a form provided by the Attorney General and shall be verified by a 26
declaration signed by each principal of the telemarketing company, under penalty of 27 UNOFFICIAL COPY 24 RS BR 2283
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perjury. The declaration shall specify the date and location of signing. Information 1
submitted pursuant to KRS 367.46951 to 367.46999 shall be clearly identified and 2
appended to the filing. 3
(2) Registration of a telemarketing company shall be valid for one (1) year from the 4
effective date thereof and may be renewed annually by making the filing required 5
by this section and paying a filing fee of fifty dollars ($50). 6
(3) If, prior to expiration of a telemarketing company's annual registration, there is a 7
material change in the information required by KRS 367.46951 to 367.46999, the 8
telemarketing company shall, within ten (10) days, file an addendum updating the 9
information with the office[division]. However, changes in salespersons soliciting 10
on behalf of a telemarketing company shall be updated by filing addenda, if 11
necessary, in quarterly intervals computed from the effective date of registration. 12
The addendum shall include the required information for all salespersons currently 13
soliciting or having solicited on behalf of the telemarketing company at any time 14
during the period between the filing of the registration, or the last addendum, and 15
the current addendum, and shall include information on salespersons no longer 16
soliciting for the telemarketing company as of the date of the filing of the current 17
addendum. 18
(4) Upon receiving the filing and the filing fee pursuant to this section, the 19
office[division] shall send the telemarketing company a written confirmation of 20
receipt of the filing. If the telemarketing company has more than one (1) business 21
location, the written confirmation shall be sent to the telemarketing company's 22
principal business location as identified in the telemarketing company's filing in 23
sufficient numbers so that the telemarketing company can meet the requirements of 24
this subsection. Within ten (10) days of receipt of the confirmation, the 25
telemarketing company shall post in a conspicuous place at each of the 26
telemarketing company's business locations within this state a copy of the entire 27 UNOFFICIAL COPY 24 RS BR 2283
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registration statement which has been filed with the office[division]. Until 1
confirmation of receipt of filing is received and posted, the telemarketing company 2
shall post in a conspicuous place at each of the telemarketing company's business 3
locations within this state a copy of the first page of the registration form sent to the 4
department. The telemarketing company shall also post in close proximity to either 5
the confirmation of receipt of filing or the first page of the submitted registration 6
form the name of the individual in charge of each location from which the 7
telemarketing company does business in this state. 8
Section 17. KRS 367.46981 is amended to read as follows: 9
(1) Every telemarketing company shall maintain a bond issued by a surety company 10
admitted to do business in this state. The bond shall be in the amount of fifty 11
thousand dollars ($50,000) in favor of the Attorney General for the benefit of any 12
person suffering injury or loss by reason of any violation of KRS 367.46951 to 13
367.46999 to be paid under the terms of any order of a court of competent 14
jurisdiction obtained by the Attorney General, as a result of any violation of KRS 15
367.46951 to 367.46999. A copy of the bond shall be filed with the office[division]. 16
(2) At least ten (10) days prior to the inception of any promotion offering a premium 17
with an actual market value or advertised value of five hundred dollars ($500) or 18
more, the telemarketing company shall notify the Attorney General in writing of the 19
details of the promotion, describing the premium and its current market value, the 20
value at which it is advertised or held out to the customer, the date the premium 21
shall be awarded, and the conditions under which the award shall be made. The 22
telemarketing company shall maintain an additional bond for the greater of the 23
current total market value or the advertised value of the premiums held out or 24
advertised to be available to a purchaser or recipient. A copy of the bond shall be 25
filed with the office[division]. The bond, or a portion of it necessary to cover the 26
cost of the award, shall be forfeited if the premium is not awarded to a bona fide 27 UNOFFICIAL COPY 24 RS BR 2283
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customer within thirty (30) days of the date disclosed as the time of award or the 1
time otherwise required by law. The proceeds of the bond shall be paid to any 2
person suffering injury or loss by reason of any violation of KRS 367.46951 to 3
367.46999 or shall be paid pursuant to the terms of any order of a court of 4
competent jurisdiction obtained by the Attorney General, Commonwealth's 5
attorney, or county attorney as a result of any violation of KRS 367.46951 to 6
367.46999. The bond shall be maintained until the telemarketing company files 7
with the Attorney General proof that the premium was awarded. 8
Section 18. KRS 367.801 is amended to read as follows: 9
As used in KRS 367.801 to 367.819 and KRS 367.990, unless the context requires 10
otherwise: 11
(1) "Office"["Division"] means the Office[Division] of Consumer Protection in[of] the 12
Office of the Attorney General. 13
(2) "Person" means natural persons, corporations, trusts, partnerships, incorporated or 14
unincorporated associations, or any other legal entity. 15
(3) "Offeror" means a person who is engaged in the business of selling business 16
opportunities including any subsidiary business which affiliates with the offeror for 17
goods or services or locations. 18
(4) "Consumer/investor" means a person who has purchased or is solicited for the 19
purchase of a business opportunity. 20
(5) "Business opportunity" means the sale or lease, or offer to sell or lease, of any 21
products, equipment, supplies, or services for the purpose of enabling the consumer 22
investor to start a business when: 23
(a) The offeror obtains an initial required consideration of not less than five 24
hundred dollars ($500) from the purchase or lease of the business opportunity 25
or inventory associated therewith; and 26
(b) The offeror has represented, directly or indirectly, that the consumer/investor 27 UNOFFICIAL COPY 24 RS BR 2283
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will earn, can earn, or is likely to earn a gross or net profit in excess of the 1
initial required investment paid by the consumer/investor for the business 2
opportunity; or 3
(c) 1. The offeror has represented that he has knowledge of the relevant 4
market and that the market demand will enable the consumer/investor to 5
earn a profit from the business opportunity; or 6
2. The offeror has represented that locations will be provided or assistance 7
will be given directly or indirectly to the consumer/investor in finding 8
locations for the use or operation of the business opportunity including, 9
but not limited to, supplying the consumer/investor with names of 10
locator companies, contracting with the consumer/investor to provide 11
assistance with or supply names of or collect a fee on behalf of or for a 12
locator company; or 13
3. The offeror has represented that there is a guaranteed market or that the 14
offeror will buy back or is likely to buy back any product made, 15
manufactured, produced, fabricated, grown, or bred by the 16
consumer/investor using, in whole or in part, the products, supplies, 17
equipment, or services which were initially sold or offered for sale to the 18
consumer/investor by the offeror. 19
Section 19. KRS 367.805 is amended to read as follows: 20
(1) It is unlawful for any person to engage in the sale of business opportunities unless 21
prior to the offering the offeror has registered with the office[division] and has 22
furnished a bond pursuant to KRS 367.815(2) and provided all of the following: 23
(a) All trade names, assumed names, and all trademarks by which the offeror or 24
the prospective consumer/investor of the business opportunity will be doing 25
business. 26
(b) The names, home addresses, and home telephone numbers of the persons and 27 UNOFFICIAL COPY 24 RS BR 2283
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company offering the business opportunity, and the company's directors and 1
chief executive officers, and the names, home addresses, and home telephone 2
numbers of all representatives selling business opportunities in Kentucky. 3
(c) A statement as to the length of time the person and company offering the 4
business opportunity has conducted a business of the type being offered both 5
within and without Kentucky. 6
(d) A statement as to whether the person or company offering the business 7
opportunity or any of its directors or chief executive officers or sales 8
representatives operating in Kentucky is currently involved in litigation or has 9
been held liable in a civil action by final judgment for having engaged in 10
unfair, false, misleading, or deceptive practices or is currently charged with or 11
has been convicted of or pleaded nolo contendere to a felony involving fraud, 12
embezzlement, fraudulent conversion, or misappropriation of property during 13
the most recent seven (7) year period, or has entered into any agreed 14
settlements or is currently in any bankruptcy proceeding or has been declared 15
bankrupt in any judicial proceeding during the most recent seven (7) year 16
period. 17
(e) A statement as to whether the person or the company offering the business 18
opportunity or its officers, directors, or agents making the offering of the 19
business opportunity has been a party to any legal cause of action brought by 20
a consumer/investor of the business opportunity within the last seven (7) year 21
period and, if so, the name and address of such individual who has brought the 22
legal action. 23
(f) A statement disclosing the names, addresses, and telephone numbers of all 24
persons who have been sold a business opportunity by the offeror within the 25
last two (2) year period. 26
(g) A statement listing the names and addresses of any consumer/investor who 27 UNOFFICIAL COPY 24 RS BR 2283
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has requested within the preceding three (3) years that the offeror return his 1
money. 2
(h) A current audited financial statement of the offeror. 3
(i) A specimen of each contract proposed for use in connection with the business 4
opportunity. 5
(j) A full and detailed description of the actual services that the offeror of the 6
business opportunity undertakes to perform for the consumer/investor. 7
(k) If training is promised by the offeror, a complete description of the training, 8
including length of the training and costs. 9
(2) The offeror shall immediately notify the office[division] of any material change in 10
information contained in the application for registration and shall make appropriate 11
amendment of the disclosure statement. 12
(3) The division shall collect, from any offeror required to comply with this section, an 13
initial fee of one hundred fifty dollars ($150), and an annual renewal fee of fifty 14
dollars ($50), and an update fee of twenty-five dollars ($25) for the administration 15
and enforcement of KRS 367.801 to 367.819. Funds so collected shall be credited 16
to a trust or agency account for the administrative purpose of the Attorney General's 17
Office[office, Division] of Consumer Protection. 18
(4) The Attorney General may promulgate administrative regulations as needed to 19
provide for: a hearing, to be conducted in accordance with KRS Chapter 13B, for 20
any business opportunity which the Attorney General initially determines should 21
not be registered or should have registration revoked or suspended; for the 22
establishment of specific standards for the form and content of the disclosure 23
document; and for registration procedures including fee schedules. 24
Section 20. KRS 367.807 is amended to read as follows: 25
(1) An offeror is exempt from the provisions of KRS 367.801 to 367.819 and KRS 26
367.990 when the offeror: 27 UNOFFICIAL COPY 24 RS BR 2283
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(a) Meets the definition of a franchise as defined in the Federal Trade 1
Commission's Regulation on Disclosure Requirements and Prohibitions 2
Concerning Franchising and Business Opportunity Ventures, as set forth in 16 3
C.F.R. 436 et seq., and has complied with these and filed written notice so 4
stating with the office[division]; or 5
(b) Offers a security pursuant to KRS 292.313; 6
(c) Offers an ongoing business for sale; or 7
(d) Offers a not-for-profit sale of sales demonstration equipment, materials, or 8
samples for use in making sales and not for resale for a total price of $500 or 9
less. 10
(2) The Attorney General may promulgate administrative regulations as needed to 11
provide for additional exemptions.[ Is offering to sell or selling a package franchise 12
as described in KRS 367.801(7).] 13
Section 21. KRS 367.809 is amended to read as follows: 14
(1) The office[division], after ascertaining that the applicant has complied with KRS 15
367.805, shall issue a registration number. 16
(2) It shall be unlawful for the registrant to fail to include the registration number in 17
any advertising. 18
Section 22. KRS 367.811 is amended to read as follows: 19
It shall be unlawful for any offeror to make any oral or written representation, actual or 20
hypothetical, regarding the business opportunity's potential sales, income, gross or net 21
profit unless such sales, income, or profits are examples based upon the actual earnings 22
made by existing consumer/investors of the business opportunity. Upon request by the 23
office[division], names and addresses of the consumer/investors shall be made available 24
for verification of the earnings claims. If such actual or hypothetical earnings examples 25
are in excess of the average net earnings realized by all of the consumer/investors of the 26
business opportunity, then there must be a full and complete disclosure of the average net 27 UNOFFICIAL COPY 24 RS BR 2283
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earnings actually realized by all of these consumer/investors. 1
Section 23. KRS 367.813 is amended to read as follows: 2
(1) Prior to the solicitation of potential consumer/investors the offeror shall furnish and 3
display to the potential consumer/investor a copy of the material required to be 4
furnished the office[division] when registering pursuant to KRS 367.805. 5
(2) When furnishing the information required by subsection (1) of this section, the 6
offeror shall furnish the prospective consumer/investor with a notice in at least ten 7
(10) point bold-face type, stating that registration with the office[division] does not 8
directly or indirectly imply approval by the office[division] or the Commonwealth 9
of Kentucky of the business opportunity or any of the activities of representatives 10
selling such business opportunities. 11
Section 24. KRS 367.815 is amended to read as follows: 12
(1) Any person who offers a business opportunity and makes representations that are 13
false, misleading, or deceptive shall be liable to the consumer/investor of such 14
business opportunity in an amount equal to the sum of his actual damages or fifteen 15
hundred dollars ($1,500), whichever is greater, as well as the cost of the action 16
together with reasonable attorney's fees, as determined by the court. 17
(2) (a) All persons registering pursuant to KRS 367.805 shall either furnish a bond 18
by a surety company authorized to do business in the Commonwealth or 19
establish a full cash certificate of deposit with a licensed and insured bank or 20
savings institution located in the Commonwealth to insure the veracity of all 21
statements contained in the registration. The amount of the bond or certificate 22
of deposit shall be in an amount equal to the total amount of the initial 23
payments under all business opportunity agreements the offeror has entered 24
into in the Commonwealth during the previous year but in no case shall the 25
amount be less than seventy-five thousand dollars ($75,000). The bond or 26
certificate of deposit shall be in the favor of the Attorney General of 27 UNOFFICIAL COPY 24 RS BR 2283
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Kentucky. 1
(b) Any person who is damaged by any violation of KRS 367.801 to 367.819, or 2
by the offeror's breach of contract for the business opportunity sale, or of any 3
obligation arising therefrom may bring an action against the bond or 4
certificate of deposit to recover damages suffered, provided that the aggregate 5
liability of the surety or trustee shall be only for the actual damages and shall 6
not exceed the amount of the bond or trust account. 7
(3) A person who has furnished a bond described in subsection (2) of this section may 8
petition the office[division] for release of the bond by submitting a verified 9
statement that such person has not offered business opportunities in the state for the 10
last five (5) years. 11
(4) Any offeror of a business opportunity who has offered or sold in this state shall 12
maintain a complete set of books, records, and accounts of its business opportunity 13
sales. The sale documents shall be maintained on each transaction for a period of 14
four (4) years after the date of agreement. The offeror shall make the books and 15
records available to the office[division] upon demand at a location within the state. 16
Section 25. KRS 367.905 is amended to read as follows: 17
(1) Any person, corporation, partnership, association, or group intending to open or 18
operate a health spa within the Commonwealth, shall: 19
(a) File a registration statement, accompanied by a one hundred dollar ($100) 20
initial registration fee, with the Attorney General's Office[Division] of 21
Consumer Protection prior to the sale of any memberships in the 22
Commonwealth of Kentucky. Such a registration statement shall contain the 23
name and address of the health spa; the names and addresses of the officers, 24
directors, and stockholders of the health spa and its parent corporation, if such 25
an entity exists; the type of available facilities; approximate size of the health 26
spa measured in square feet; whether or not a shower area is provided; the 27 UNOFFICIAL COPY 24 RS BR 2283
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names and addresses of employees and their respective qualifications for 1
employment in the health spa field; type of membership plans to be offered 2
and their cost; and a full and complete disclosure of any completed or pending 3
litigation initiated against the health spa and any of its officers or directors 4
within the last three (3) years. 5
(b) Prior to the sale of any memberships in the Commonwealth of Kentucky, 6
provide the Attorney General's Office[Division] of Consumer Protection with 7
a surety bond meeting the requirements of KRS 367.906. 8
(2) A new registration statement, accompanied by an annual registration fee of fifty 9
dollars ($50), shall be filed with the Attorney General's Office[Division] of 10
Consumer Protection on or before July 1 of each year following the opening of the 11
health spa. 12
(3) Each health spa selling contracts on a prepayment basis shall deposit all funds 13
received from such contracts in an escrow account until the health spa has remained 14
open for a period of thirty (30) days. At the end of this thirty (30) day period, such 15
prepayment funds shall be eligible for withdrawal at the depositor's discretion. 16
(4) Each health spa registering pursuant to this statute shall maintain in the files of the 17
health spa, a copy of its registration statement filed pursuant to this section. This 18
registration statement shall be made available for inspection by current health spa 19
members or prospective purchasers of health spa memberships. 20
(5) The registration fees required by this section shall be credited to a trust or agency 21
account for the administrative purposes of the Attorney General's Office[Division] 22
of Consumer Protection, as set forth in KRS 367.900 to 367.930. 23
(6) Each separate location where health spa services are offered shall be considered a 24
separate health spa and shall file a separate registration statement and surety bond, 25
even though the separate locations are owned or operated by the same owner. 26
Section 26. KRS 367.906 is amended to read as follows: 27 UNOFFICIAL COPY 24 RS BR 2283
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(1) The surety bond required by KRS 367.905(1)(b) shall be in favor of the Attorney 1
General's Office[Division] of Consumer Protection and shall be held for 2
compensation to any member who suffers loss of money paid due to the insolvency 3
of the health spa, cessation of operation of the health spa, or failure of the health spa 4
to open for business within ninety (90) days from the sale of the first contract. 5
(2) The bond shall be in a form prescribed by the Attorney General's Office[Division] 6
of Consumer Protection and shall be issued by a company authorized to transact 7
business in the Commonwealth of Kentucky. 8
(3) The amount of the bond shall be computed as follows: 9
Number of 10
unexpired contracts Amount of bond 11
150 or fewer $10,000 12
151 to 300 $25,000 13
301 or more $50,000 14
(4) The Attorney General's Office[Division] of Consumer Protection shall exempt a spa 15
from the bonding requirement if all of its unexpired contracts and present 16
membership plans meet the following criteria: 17
(a) No initiation fee, or similar nonrecurring fee, is charged at or near the 18
beginning of the contract term or renewal period, and 19
(b) At no time is any member charged for use of facilities or services more than 20
thirty-one (31) days in advance. 21
(5) If, because of an increase in membership or change in membership plans, a spa is 22
required to file a bond or increase the amount of its bond, it shall notify the 23
Attorney General's Office[Division] of Consumer Protection in writing at least 24
thirty (30) days prior to the expected change. No contract in excess of the limits 25
stated in subsection (3) of this section or not in compliance with subsection (4) of 26
this section shall be sold until a new bond in the required amount has been 27 UNOFFICIAL COPY 24 RS BR 2283
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provided. 1
(6) A change in ownership shall not release, cancel or terminate liability under any 2
bond previously filed unless the Attorney General's Office of Consumer Protection 3
[Division ]agrees in writing to the release, cancellation or termination because the 4
new owner has filed a new bond for the benefit of the previous owner's members, or 5
because the former owner has paid the required refunds to its members. 6
Section 27. KRS 367.932 is amended to read as follows: 7
As used in KRS 367.934 to 367.974 and 367.991[, unless the context requires otherwise]: 8
(1) "Attorney General" means the Office[Division] of Consumer Protection in the 9
office of the Attorney General;[.] 10
(2) "Financial institution" means a bank, trust company, federally chartered credit 11
union, or savings and loan association authorized by law to do business in this 12
state;[.] 13
(3) "Preneed burial contract" means a contract, which has for a purpose the furnishing 14
or performance of funeral services, or the furnishing or delivery of personal 15
property, merchandise, or services of any nature in connection with the final 16
disposition of a dead human body, for future use at a time determinable by the death 17
of the person whose body is to be disposed of; but does not mean the furnishing of a 18
cemetery lot or mausoleum;[.] 19
(4) "Agent" means the licensee who is the person, partnership, association or 20
corporation receiving any payments on a preneed funeral contract;[.] 21
(5) "Trustee" means the financial institution;[.] 22
(6) "Person" means an individual, corporation, partnership, joint venture, association, 23
business trust, or any other form of business organization; provided, however, that 24
an individual employee of an entity registered pursuant to KRS 367.934 to 367.974 25
and 367.991 shall not be required to comply with the registration requirement 26
herein;[.] 27 UNOFFICIAL COPY 24 RS BR 2283
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(7) "Remains" means the bodies of deceased persons, in whatever stage of 1
decomposition, and cremated remains;[.] 2
(8) "Cemetery" means any one (1) or combination of more than one (1) of the 3
following in a place used or to be used and dedicated or designated for such 4
purposes: 5
(a) A burial park, for earth interment;[.] 6
(b) A mausoleum, for entombment;[.] 7
(c) A columbarium, for inurnment;[.] 8
(9) "Mausoleum" means a building or structure substantially exposed above ground 9
used or intended to be used for the entombment of human remains, which is sold or 10
offered for sale to the public;[.] 11
(10) "Columbarium" means a structure or building substantially exposed above ground 12
intended to be used for the inurnment of cremated remains and sold or offered for 13
sale to the public;[.] 14
(11) "Columbarium niche" means an inurnment space in a columbarium as defined 15
herein;[.] 16
(12) "Cemetery company" means any person who conducts the business of a cemetery. 17
Excepted are small community cemeteries, their agents, lessees and otherwise that 18
operate nonprofit; have no salaried employees, directors, officers or managers other 19
than maintenance caretakers; are owned, controlled by lot owners; and do not sell 20
any preneed merchandise or services;[.] 21
(13) "Grave space" means a space of ground in a cemetery intended to be used for the 22
interment in the ground of the remains of one (1) human being;[.] 23
(14) "Underground crypt" means a single unit entombment space in preplaced chambers 24
below ground and also known as lawn crypt, westminister turftop mausoleum or 25
below ground crypt;[.] 26
(15) "Bank of underground crypts" means any construction unit of twenty (20) or more 27 UNOFFICIAL COPY 24 RS BR 2283
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underground crypts designed as a part of a below ground crypt program, whether 1
physically connected or not, having a common drainage system;[.] 2
(16) "Mausoleum crypt" means an entombment space in a mausoleum as defined 3
herein;[.] 4
(17) "Cemetery merchandise" means urns, memorials, monuments, markers, vases, 5
foundations, memorial bases, and other similar personal property commonly sold by 6
or used in cemeteries; and[.] 7
(18) "Preneed cemetery merchandise contract" means any agreement or contract, or any 8
series or combination of agreements or contracts, which has for a purpose the 9
furnishing or delivery of cemetery merchandise, which within six (6) months of the 10
date of the contract is not attached to the realty and permanently installed or which 11
is not stored in a bonded warehouse with the receipt of ownership issued by the 12
manufacturer in the name of the purchaser and transmitted to the purchaser. 13
Section 28. KRS 367.954 is amended to read as follows: 14
(1) Forty percent (40%), not including interest or finance charges, of all payments of 15
money made to any person, partnership, association, or corporation upon any 16
agreement or contract, or any series or combination of agreements or contracts, 17
which has for a purpose the furnishing or delivery of cemetery merchandise, which 18
within six (6) months of the date of the contract is not delivered by attachment to 19
the realty and permanent installation or which is not stored in a bonded warehouse 20
with the receipt of ownership issued by the manufacturer in the name of the 21
purchaser and transmitted to the purchaser are held to be trust funds. The person, 22
partnership, association, or corporation receiving the payments shall deposit forty 23
percent (40%) of all payments received on a preneed cemetery merchandise 24
contract in a trust fund account within six (6) months of the date of contract, and 25
forty percent (40%) of all payments received thereafter on said contract shall be 26
deposited in the trust fund account within thirty (30) days after each calendar 27 UNOFFICIAL COPY 24 RS BR 2283
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quarter of operation. The trustee shall be the financial institution holding said funds. 1
All of the interest, dividends, increases, or accretions of whatever nature earned by 2
the funds deposited in a trust account shall remain with the principal of such 3
account and become a part thereof, subject to all of the regulations concerning the 4
principal of said fund herein contained. 5
(2) All trust funds mentioned in this section shall be deposited in the name of the 6
person making said deposits, with the financial institution as trustee, and shall be 7
held together with the interest, dividends, or accretions thereon, in trust, subject to 8
the provisions of KRS 367.932 to 367.974 and 367.991. The person at the time of 9
making deposit or investment shall furnish to the financial institution the name of 10
each payor, and the amount of payment on each account for which the deposit or 11
investment is being made. 12
(3) Forty percent (40%) of all payments, not including interest or finance charges, 13
made under the agreement, contract, or plan are and shall remain trust funds with 14
the financial institution, until the financial institution receives a sworn affidavit 15
from the depositor stating one of the following: 16
(a) That the delivery of all merchandise by attachment to the realty, or permanent 17
installation of the merchandise has been completed and that there has been 18
full performance of all services called for by the agreement, contract or plan; 19
or 20
(b) That there has been delivery of all of the merchandise called for by the 21
agreement by storing the same in a bonded warehouse with the receipt of 22
ownership issued by the manufacturer in the name of the purchaser and 23
transmitted to the purchaser. 24
Upon receiving said affidavit, the financial institution shall remit the funds on 25
deposit for the performed contract, plus interest, to the depositor. Release of funds 26
may also be made pursuant to a request for a refund or cancellation under KRS 27 UNOFFICIAL COPY 24 RS BR 2283
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367.932 to 367.974 and 367.991. 1
(4) In the event that a purchaser is in default of a preneed cemetery merchandise 2
contract, the financial institution shall release to the depositor the funds, plus 3
interest, deposited on behalf of the defaulted contract upon receiving from the 4
depositor a sworn affidavit stating that the purchaser is in default of the preneed 5
cemetery merchandise agreement, the date of the default, an explanation of the 6
default, and that the depositor has mailed a copy of the affidavit to the purchaser's 7
last known address at least thirty (30) days prior to said request for release. 8
(5) Deposits to such funds and the amounts deposited may be commingled, but the 9
accounting records shall establish a separate account for each prepaid contract and 10
shall show amounts deposited and the income and loss occurring thereon with 11
respect to each contract. 12
(6) The trustee may rely upon all certifications and affidavits made pursuant to or 13
required by the provisions of KRS 367.932 to 367.974 and 367.991, and shall not 14
be liable to any person for such reliance. 15
(7) In lieu of the trust fund deposits required herein, the person may post with the 16
Attorney General's Office[General, Division] of Consumer Protection, a good and 17
sufficient bond by a surety company licensed to do business in Kentucky and in an 18
amount sufficient to cover all payments made by or on account of purchasers who 19
have not received the purchased property and services. This bond shall be held for 20
the benefit of a purchaser, or his or her heir or assign or duly authorized 21
representative, who suffers a loss of money paid pursuant to a preneed cemetery 22
merchandise contract entered into after July 13, 1984, due to the insolvency of the 23
registrant, or failure to provide the cemetery merchandise called for by contract that 24
has been paid in full and not provided after a ninety (90) day request in writing to 25
do so. If a bond is posted, the Attorney General's office shall receive sixty (60) 26
days' written notice in the event of cancellation. On or before the cancellation date, 27 UNOFFICIAL COPY 24 RS BR 2283
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the person shall comply with the trust fund requirements herein or post another 1
good and sufficient bond. 2
(8) Any person selling a preneed cemetery merchandise contract shall pay to the 3
Attorney General five dollars ($5), for each said contract entered into and all of 4
which fees shall be remitted by the person collecting them to the Attorney General 5
at least once each month, and such funds shall be used by the Attorney General in 6
administering this chapter. 7
Section 29. KRS 367.958 is amended to read as follows: 8
(1) Every person before engaging in a sale, contract for sale, reservation for sale or 9
agreement for sale of a mausoleum crypt within a mausoleum, underground crypt 10
within a crypt section, or columbarium niche within a mausoleum prior to the 11
completion of the construction thereof, shall give notice in writing to the Attorney 12
General of the commencement of such sale at least thirty (30) days prior thereto and 13
register with the Attorney General. Such registration shall be on forms provided by 14
the Attorney General. 15
(2) Every person engaged in the sale of a mausoleum crypt, underground crypt or 16
columbarium niche shall commence construction thereof within twenty-four (24) 17
months of the date of such sale and shall complete such construction within sixty 18
(60) months of the date of such sale. A delay caused by strike, national emergency, 19
shortage of materials, civil disorder, natural disaster or any like occurrence beyond 20
the control of such person shall extend the time of such commencement and 21
completion by the length of such delay. This subsection shall not apply to the sale 22
of mausoleum crypts, underground crypts or columbarium niches if there has been 23
any sale in the same project prior to July 13, 1984. Prior projects shall have 24
commenced construction thereof within thirty-six (36) months of the date of such 25
sale and shall complete construction within seventy-two (72) months of the date of 26
such sale. 27 UNOFFICIAL COPY 24 RS BR 2283
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(3) Every person who plans to offer for sale space in a section of a mausoleum or bank 1
of underground crypts prior to its construction shall establish a preconstruction trust 2
account. The trust account shall be administered and operated in the same manner 3
as the merchandise trust account provided for in this chapter and shall be exclusive 4
of the merchandise trust account or such other trust accounts or funds that may be 5
required by law. 6
(4) Every person shall place thirty-six percent (36%), not including interest or finance 7
charges, of all payments of money made to any person pursuant to any agreement, 8
contract or any series or combination of agreements or contracts which are for the 9
purchase of sections in a mausoleum, columbarium, or any kind of underground 10
crypt which at the time of the payment of money have not been completely and 11
totally constructed, in a trust fund account in a financial institution within thirty 12
(30) days after each calendar quarter of operations. Excepted therefrom, however, 13
are persons who have constructed in the past their own mausoleum using primarily 14
equipment owned by the self-constructing person and their own personnel with a 15
minimum of subcontracting, and in that event there shall be deposited a minimum 16
of twenty percent (20%) of all payments of money, subject, however, to the actual 17
cost. If, from project to project, their actual cost is in excess of twenty percent 18
(20%), the full cost percentage shall be deposited from project to project, not to 19
exceed thirty-six percent (36%). At the time of notification to the Attorney 20
General's office the self-constructing mausoleum person shall also notify the 21
Attorney General that he intends to self-construct and the percentage of 22
contribution of trust that is required. 23
(5) All trust funds mentioned in this section shall be deposited in the name of the 24
person depositing said funds, with the financial institution as trustee, and shall be 25
held together with the interest, dividends, or accretions thereon, in trust, subject to 26
the provisions of KRS 367.932 to 367.974 and 367.991. The person at the time of 27 UNOFFICIAL COPY 24 RS BR 2283
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making deposit or investment shall furnish to the financial institution the name of 1
each payor, and the amount of payment on each account for which the deposit or 2
investment is being made. 3
(6) Deposits to such funds and the amounts deposited may be commingled, but the 4
accounting records shall establish a separate account for each prepaid contract and 5
shall show amounts deposited and the income and loss occurring thereon with 6
respect to each contract. 7
(7) All payments made to the preconstruction trust fund account shall remain in the 8
trust fund with the financial institution until the financial institution receives a 9
certified statement from the depositor stating that the particular project for which 10
the preconstruction trust fund has been established is totally completed. During the 11
construction stage, trust funds may be withdrawn by presenting the trustee with 12
appropriate evidence of expenditure for construction cost. The trustee shall 13
thereupon disburse moneys from the trust fund to pay for the expenses of 14
construction presented for payment. 15
(8) A trustee may rely upon all certifications and affidavits made pursuant to or 16
required by the provisions of KRS 367.932 to 367.974 and 367.991, and shall not 17
be liable to any person for such reliance. 18
(9) If a mausoleum section or bank of underground crypts is not completed within the 19
time limits set out in KRS 367.932 to 367.974 and 367.991, the financial institution 20
acting as trustee, if any, may contract for and cause said project to be completed 21
and paid therefor from the trust account funds deposited to the project's account, 22
paying any balance, less cost and expenses, to the depositor. In the event there is no 23
corporate trustee, or the trustee chooses not to serve in the capacity to complete 24
construction, the Attorney General shall appoint a committee to serve as trustees to 25
trust account funds deposited to the project's account, paying any balance, less cost 26
and expenses, to the cemetery company. 27 UNOFFICIAL COPY 24 RS BR 2283
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(10) If it is determined by the trustee after the expiration of the time of construction set 1
out above that there is not enough money in the trust fund account to complete the 2
project, the trustee shall make a refund of all moneys held to all purchasers, or his 3
heirs or assigns, in the amount of the deposit to the credit of their particular contract 4
and all income those funds have earned. The purchasers shall be entitled to receive 5
any remainder of the purchase price paid from the depositor. However, nothing 6
herein contained shall relieve any person from any liability for nonperformance of 7
the contract terms. 8
(11) If temporary entombment or inurnment is not used, upon written notification to the 9
seller, the personal representative or any purchaser of such space who dies before 10
completion of construction shall be entitled to a refund of all moneys paid into the 11
preconstruction trust fund for such space, including any income earned thereon, and 12
from the seller, the remainder of the purchase price paid. 13
(12) In lieu of the trust fund deposits required herein, the person may post with the 14
Attorney General's Office[General, Division] of Consumer Protection, a good and 15
sufficient bond by a surety company licensed to do business in Kentucky and in an 16
amount sufficient to cover all payments made by or on account of purchasers who 17
have not received the purchased property and services. This bond shall be held for 18
the benefit of any purchaser, or his or her heir or assign or duly authorized 19
representative, who suffers a loss of money paid for a preconstructed mausoleum 20
crypt or niche or underground crypt after July 13, 1984, due to the insolvency of the 21
registrant, or failure to construct within the time limits set out herein. If a bond is 22
posted, the Attorney General's office shall receive sixty (60) days' written notice in 23
the event of cancellation. On or before the cancellation date, the person shall 24
comply with the trust fund requirements herein or post another good and sufficient 25
bond. 26
(13) Any person selling preconstruction mausoleum, columbarium or underground crypt 27 UNOFFICIAL COPY 24 RS BR 2283
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contracts shall pay to the Attorney General five dollars ($5) for each sale of said 1
contract and all of which fees shall be remitted by the person collecting them to the 2
Attorney General at least once each month, and such funds shall be used by the 3
Attorney General in administering this chapter. 4
Section 30. KRS 367.976 is amended to read as follows: 5
As used in KRS 367.976 to 367.985[, unless the context otherwise requires]: 6
(1) "Advertisement" means a commercial message in any medium that aids, promotes, 7
or assists directly or indirectly a rental-purchase agreement, excluding in-store 8
merchandising aids;[.] 9
(2) "Cash price" means the price at which the lessor would have sold the property to 10
the consumer for cash on the date of the rental-purchase agreement;[.] 11
(3) "Consumer" means a natural person who rents personal property under a rental-12
purchase agreement;[.] 13
(4) "Consummation" means the time a consumer becomes contractually obligated on a 14
rental-purchase agreement;[.] 15
(5) "Office"["Division"] means the Office[Division] of Consumer Protection in the 16
Office of the Attorney General;[.] 17
(6) "Lessor" means a person who, in the ordinary course of business, regularly leases, 18
offers to lease, or arranges for the leasing of property under a rental-purchase 19
agreement; and[.] 20
(7) "Rental-purchase agreement" means an agreement for the use of personal property 21
by a natural person primarily for personal, family, or household purposes, for an 22
initial period of four (4) months or less, whether or not there is any obligation 23
beyond the initial period, that is automatically renewable with each payment and 24
that permits the consumer to become the owner of the property. The term rental-25
purchase agreement shall not be construed to be, nor be governed by, any of the 26
following: 27 UNOFFICIAL COPY 24 RS BR 2283
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(a) A lease or agreement which constitutes a credit sale as defined in 12 C.F.R. 1
part 226.2(a)(16) and Section 1602(g) of the Truth in Lending Act, 15 U.S.C. 2
secs. 1601 et seq.; 3
(b) A lease which constitutes a consumer lease as defined in 12 C.F.R. part 4
213.2(a)(6); 5
(c) Any lease for agricultural, business, or commercial purposes; 6
(d) Any lease made to an organization; 7
(e) A lease or agreement which constitutes a retail installment transaction or retail 8
installment contract as defined in KRS 371.210; 9
(f) A security interest as defined in KRS 355.1-201(37); or 10
(g) A home solicitation sale as that term is defined in KRS 367.410. 11
Section 31. KRS 367.981 is amended to read as follows: 12
(1) A renegotiation shall occur when an existing rental-purchase agreement is satisfied 13
and replaced by a new lease agreement undertaken by the same consumer. A 14
renegotiation shall be a new agreement covered by KRS 367.976 to 367.985. 15
However, events such as the following shall not be treated as a renegotiation: 16
(a) The addition or return of property in a multiple item agreement or the 17
substitution of lease property, if in either case the average payment allocable 18
to a payment period is not changed by more than twenty-five percent (25%); 19
(b) A deferral or extension of one (1) or more periodic payments, or portions of a 20
periodic payment; 21
(c) A reduction in charges in the agreement; 22
(d) An agreement involving a court proceeding; or 23
(e) Any other event described in administrative regulations prescribed by the 24
office[division]. 25
(2) No disclosures shall be required for any extension of a rental-purchase agreement. 26
Section 32. KRS 367.985 is amended to read as follows: 27 UNOFFICIAL COPY 24 RS BR 2283
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(1) A lessor shall not be liable under KRS 367.983 for a violation of KRS 367.976 to 1
367.985 if the lessor shows by a preponderance of the evidence that the violation 2
was not intentional and resulted from a bona fide error, such as a clerical 3
miscalculation, computer malfunctions, programming error, or printing error, even 4
though the lessor maintained procedures reasonably adapted to avoid such an error. 5
An error of legal judgment with respect to requirements of this title shall not be 6
considered a bona fide error. 7
(2) A lessor shall not be liable under KRS 367.983 for any act done or omitted in good 8
faith in conformity with any administrative regulation or interpretation promulgated 9
by the Attorney General or by the office[division] or by an official duly authorized 10
by the Attorney General or by the office[division]. This rule shall apply even if, 11
after the act or omission has occurred, the regulation or interpretation is amended, 12
rescinded, or determined by judicial or other authority to be invalid for any reason. 13
(3) A lessor shall not be liable under KRS 367.983 for any error if, before the thirty-14
first day after the date the merchant discovers the error and before an action against 15
the lessor has been filed or written notice of the error received by the lessor, the 16
lessor gives the consumer written notice of the error and makes adjustments in the 17
consumer's account as necessary to assure that the consumer will not be required to 18
pay an amount in excess of the amount disclosed and that the agreement otherwise 19
complies with KRS 367.976 to 367.985. 20
Section 33. KRS 367.990 is amended to read as follows: 21
(1) Any person who violates the terms of a temporary or permanent injunction issued 22
under KRS 367.190 shall forfeit and pay to the Commonwealth a civil penalty of 23
not more than twenty-five thousand dollars ($25,000) per violation. For the 24
purposes of this section, the Circuit Court issuing an injunction shall retain 25
jurisdiction, and the cause shall be continued, and in such cases the Attorney 26
General acting in the name of the Commonwealth may petition for recovery of civil 27 UNOFFICIAL COPY 24 RS BR 2283
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penalties. 1
(2) In any action brought under KRS 367.190, if the court finds that a person is 2
willfully using or has willfully used a method, act, or practice declared unlawful by 3
KRS 367.170, the Attorney General, upon petition to the court, may recover, on 4
behalf of the Commonwealth, a civil penalty of not more than two thousand dollars 5
($2,000) per violation, or where the defendant's conduct is directed at a person aged 6
sixty (60) or older, a civil penalty of not more than ten thousand dollars ($10,000) 7
per violation, if the trier of fact determines that the defendant knew or should have 8
known that the person aged sixty (60) or older is substantially more vulnerable than 9
other members of the public. 10
(3) Any person with actual notice that an investigation has begun or is about to begin 11
pursuant to KRS 367.240 and 367.250 who intentionally conceals, alters, destroys, 12
or falsifies documentary material is guilty of a Class A misdemeanor. 13
(4) Any person who, in response to a subpoena or demand as provided in KRS 367.240 14
or 367.250, intentionally falsifies or withholds documents, records, or pertinent 15
materials that are not privileged shall be subject to a fine as provided in subsection 16
(3) of this section. 17
(5) The Circuit Court of any county in which any plan described in KRS 367.350 is 18
proposed, operated, or promoted may grant an injunction without bond, upon 19
complaint filed by the Attorney General to enjoin the further operation thereof, and 20
the Attorney General may ask for and the court may assess civil penalties against 21
the defendant in an amount not to exceed the sum of five thousand dollars ($5,000) 22
which shall be for the benefit of the Commonwealth of Kentucky. 23
(6) Any person, business, or corporation who knowingly violates the provisions of 24
KRS 367.540 shall be guilty of a violation. It shall be considered a separate offense 25
each time a magazine is mailed into the state; but it shall be considered only one (1) 26
offense for any quantity of the same issue of a magazine mailed into Kentucky. 27 UNOFFICIAL COPY 24 RS BR 2283
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(7) Any solicitor who violates the provisions of KRS 367.513 or 367.515 shall be 1
guilty of a Class A misdemeanor. 2
(8) In addition to the penalties contained in this section, the Attorney General, upon 3
petition to the court, may recover, on behalf of the Commonwealth a civil penalty 4
of not more than the greater of five thousand dollars ($5,000) or two hundred 5
dollars ($200) per day for each and every violation of KRS 367.175. 6
(9) Any person who shall willfully and intentionally violate any provision of KRS 7
367.976 to 367.985 shall be guilty of a Class B misdemeanor. 8
(10) (a) Any person who violates the terms of a temporary or permanent injunction 9
issued under KRS 367.665 shall forfeit and pay to the Commonwealth a 10
penalty of not more than five thousand dollars ($5,000) per violation. For the 11
purposes of this section, the Circuit Court issuing an injunction shall retain 12
jurisdiction, and the cause shall be continued, and in such cases the Attorney 13
General acting in the name of the Commonwealth may petition for recovery 14
of civil penalties. 15
(b) 1. The Attorney General may, upon petition to a court having jurisdiction 16
under KRS 367.190, recover on behalf of the Commonwealth from any 17
person found to have willfully committed an act declared unlawful by 18
KRS 367.667 a penalty of not more than five thousand dollars ($5,000) 19
per violation. 20
2. In addition to any other penalties provided for the commission of the 21
offense, any person found guilty of violating KRS 367.667(1)(c): 22
a. Shall be punished by a fine of no less than five hundred dollars 23
($500) for the first offense and no less than five thousand dollars 24
($5,000) for any subsequent offense; and 25
b. Pay restitution of any financial benefit secured through conduct 26
proscribed by KRS 367.667(1)(c). 27 UNOFFICIAL COPY 24 RS BR 2283
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3. The Office of the Attorney General or the appropriate Commonwealth's 1
attorney shall have concurrent enforcement powers as to fines, felonies, 2
and misdemeanors under this paragraph. 3
(c) Any person who knowingly violates any provision of KRS 367.652, 367.653, 4
367.656, 367.657, 367.658, 367.666, or 367.668 or who knowingly gives false 5
or incorrect information to the Attorney General in filing statements or reports 6
required by KRS 367.650 to 367.670 shall be guilty of a Class D felony. 7
(11) Any dealer who fails to provide a statement under KRS 367.760 or a notice under 8
KRS 367.765 shall be liable for a penalty of one hundred dollars ($100) per 9
violation to be collected in the name of the Commonwealth upon action of the 10
Attorney General. 11
(12) Any dealer or manufacturer who falsifies a statement under KRS 367.760 shall be 12
liable for a penalty not exceeding one thousand dollars ($1,000) to be collected in 13
the name of the Commonwealth upon action by the Attorney General. 14
(13) Any person who violates KRS 367.805, 367.809(2), 367.811, 367.813(1), or 15
367.816 shall be guilty of a Class C felony. 16
(14) Either the Attorney General or the appropriate Commonwealth's attorney shall have 17
authority to prosecute violations of KRS 367.801 to 367.819. 18
(15) A violation of KRS 367.474 to 367.478 and 367.482 is a Class C felony. Either the 19
Attorney General or the appropriate Commonwealth's attorney shall have authority 20
to prosecute violators of KRS 367.474 to 367.478 and 367.482. 21
(16) Any person who violates KRS 367.310 shall be guilty of a violation. 22
(17) Any person, partnership, or corporation who violates the provisions of KRS 23
367.850 shall be guilty of a Class A misdemeanor. 24
(18) Any dealer in motor vehicles or any other person who fraudulently changes, sets 25
back, disconnects, fails to connect, or causes to be changed, set back, or 26
disconnected, the speedometer or odometer of any motor vehicle, to effect the sale 27 UNOFFICIAL COPY 24 RS BR 2283
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of the motor vehicle shall be guilty of a Class D felony. 1
(19) Any person who negotiates a contract of membership on behalf of a club without 2
having previously fulfilled the bonding requirement of KRS 367.403 shall be guilty 3
of a Class D felony. 4
(20) Any person or corporation who operates or attempts to operate a health spa in 5
violation of KRS 367.905(1) shall be guilty of a Class A misdemeanor. 6
(21) (a) Any person who violates KRS 367.832 shall be guilty of a Class C felony; 7
and 8
(b) The appropriate Commonwealth's attorney shall have authority to prosecute 9
felony violations of KRS 367.832. 10
(22) (a) Any person who violates the provisions of KRS 367.855 or 367.857 shall be 11
guilty of a violation. Either the Attorney General or the appropriate county 12
health department may prosecute violators of KRS 367.855 or 367.857. 13
(b) The provisions of this subsection shall not apply to any retail establishment if 14
the wholesaler, distributor, or processor fails to comply with the provisions of 15
KRS 367.857. 16
(23) Notwithstanding any other provision of law, any telemarketing company, 17
telemarketer, caller, or merchant shall be guilty of a Class D felony when that 18
telemarketing company, telemarketer, caller, or merchant three (3) times in one (1) 19
calendar year knowingly and willfully violates KRS 367.46955(15) by making or 20
causing to be made an unsolicited telephone solicitation call to a telephone number 21
that appears in the current publication of the zero call list maintained by the Office 22
of the Attorney General's Office[General, Division] of Consumer Protection. 23
(24) Notwithstanding any other provision of law, any telemarketing company, 24
telemarketer, caller, or merchant shall be guilty of a Class A misdemeanor when 25
that telemarketing company, telemarketer, caller, or merchant uses a zero call list 26
identified in KRS 367.46955(15) for any purpose other than complying with the 27 UNOFFICIAL COPY 24 RS BR 2283
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provisions of KRS 367.46951 to 367.46999. 1
(25) (a) Notwithstanding any other provision of law, any telemarketing company, 2
telemarketer, caller, or merchant that violates KRS 367.46951 to 367.46999 3
shall be assessed a civil penalty of not more than five thousand dollars 4
($5,000) for each offense. 5
(b) The Attorney General, or any person authorized to act in his or her behalf, 6
shall initiate enforcement of a civil penalty imposed under paragraph (a) of 7
this subsection. 8
(c) Any civil penalty imposed under paragraph (a) of this subsection may be 9
compromised by the Attorney General or his or her designated representative. 10
In determining the amount of the penalty or the amount agreed upon in 11
compromise, the Attorney General, or his or her designated representative, 12
shall consider the appropriateness of the penalty to the financial resources of 13
the telemarketing company, telemarketer, caller, or merchant charged, the 14
gravity of the violation, the number of times the telemarketing company, 15
telemarketer, caller, or merchant charged has been cited, and the good faith of 16
the telemarketing company, telemarketer, caller, or merchant charged in 17
attempting to achieve compliance, after notification of the violation. 18
(d) If a civil penalty is imposed under this subsection, a citation shall be issued 19
which describes the violation which has occurred and states the penalty for the 20
violation. If, within fifteen (15) working days from the receipt of the citation, 21
the affected party fails to pay the penalty imposed, the Attorney General, or 22
any person authorized to act in his or her behalf, shall initiate a civil action to 23
collect the penalty. The civil action shall be taken in the court which has 24
jurisdiction over the location in which the violation occurred. 25
(26) Any person who violates KRS 367.500 shall be liable for a penalty of two thousand 26
five hundred dollars ($2,500) per violation. Either the Attorney General or the 27 UNOFFICIAL COPY 24 RS BR 2283
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appropriate Commonwealth's attorney may prosecute violations of KRS 367.500. 1
Section 34. KRS 380.040 is amended to read as follows: 2
(1) Subject to subsection (3) of this section, a person, whether or not located in this 3
state, who is engaged in debt adjusting and actually or constructively receives any 4
money or other thing of value, other than the fees permitted by this chapter, for the 5
purpose of disbursing the money or thing of value to the debtor's creditors, shall do 6
both of the following: 7
(a) Unless specifically instructed otherwise by a debtor, disburse to the 8
appropriate creditors all funds received from the debtor, less any contributions 9
or fees not prohibited by subsection (2) of this section, within thirty (30) days 10
of receipt of the funds from the debtor; and 11
(b) Maintain a separate trust account for the receipt of any funds from debtors and 12
the disbursement of the funds to creditors on behalf of the debtors. 13
(2) If a fee, contribution, or other consideration for engaging in debt adjusting is 14
accepted, directly or indirectly, a person engaged in debt adjusting shall not do any 15
of the following: 16
(a) Accept a fee, contribution, or other consideration exceeding seventy-five 17
dollars ($75) from a debtor residing in this state for an initial set up; 18
(b) Accept a fee, contribution, or other consideration exceeding fifty dollars ($50) 19
per calendar year from a debtor residing in this state for consultation; 20
(c) If money or anything else of value is received and held by the person engaged 21
in debt adjusting for the purpose of disbursing the money or thing of value to 22
the debtor's unsecured creditors, accept a periodic fee, contribution, or other 23
consideration from a debtor who resides in this state that exceeds the greater 24
of eight and one-half percent (8.5%) of the amount paid by the debtor each 25
month for distribution to the debtor's creditors or thirty dollars ($30); or 26
(d) Accept any other fee, contribution, or other consideration in advance of the 27 UNOFFICIAL COPY 24 RS BR 2283
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complete performance of all promised services in relation to secured debt. 1
Acceptance of a fee, contribution, or other consideration in advance of the 2
complete performance of all promised services in relation to secured debt, 3
including the placement of the fee, contribution, or other consideration into an 4
escrow account to be paid upon completion of the services, is specifically 5
prohibited. For purposes of this paragraph, "secured debt" means any debt 6
primarily for personal, family, or household use that is secured by a mortgage, 7
deed of trust, other equivalent consensual security interest on residential real 8
property, or collateral that has a mortgage lien interest in residential real 9
property. 10
(3) Subsections (1) and (2) of this section shall not prohibit a person engaged in debt 11
adjusting for a debtor who resides in this state from charging the debtor a bad check 12
charge of twenty dollars ($20) or the amount passed on from the debt adjuster's 13
bank, whichever is greater, in addition to fees, contributions, or other consideration 14
not prohibited by subsection (2) of this section. 15
(4) Fees, contributions, or other consideration permitted in subsections (1), (2), and (3) 16
of this section may be adjusted on an annual basis by the amount equivalent to any 17
increase in the consumer price index, published by the United States Department of 18
Labor, Bureau of Labor Statistics. 19
(5) Any person that engages in debt adjusting shall file an initial registration form, 20
accompanied by an initial registration fee of two hundred fifty dollars ($250), and 21
the registration shall be renewed each year thereafter for a fee of two hundred fifty 22
dollars ($250) to cover the actual cost of filing the registration, in accordance with 23
administrative regulations promulgated by the Attorney General. 24
(6) Any person that engages in debt adjusting shall arrange for and undergo an annual 25
audit of the person's business, including any trust funds deposited and distributed to 26
creditors on behalf of debtors, which shall be conducted by an independent, third-27 UNOFFICIAL COPY 24 RS BR 2283
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party certified public accountant. Both of the following shall apply to an audit 1
performed under this subsection: 2
(a) The person shall file the results of the audit and the auditor's opinion with the 3
Office of Consumer Protection in[Division of] the Office of the Attorney 4
General within thirty (30) days of the anniversary date of filing the initial 5
registration; and 6
(b) The Attorney General shall make available a summary of the results of the 7
audit and the auditor's opinion upon written request of any person and 8
payment of a fee not to exceed the cost of copying the summary and opinion. 9
(7) (a) A person engaged in debt adjusting shall obtain and at all times maintain 10
insurance coverage for errors and omissions, employee dishonesty, depositor's 11
forgery, computer fraud, and violations of this chapter in the amount of ten 12
percent (10%) of the monthly average for the immediately preceding six (6) 13
months of the aggregate amount of all deposits made with the person by all 14
debtors. The insurance coverage shall comply with all of the following: 15
1. The minimum limit of the insurance coverage shall not be less than one 16
hundred thousand dollars ($100,000), and the maximum limit of the 17
insurance coverage shall not be more than two hundred fifty thousand 18
dollars ($250,000); 19
2. The insurance coverage shall not include a deductible in excess of ten 20
percent (10%) of the face amount of the policy coverage; 21
3. The insurance coverage shall be issued by an insurer and rated at least 22
A-, or its equivalent, by a nationally recognized rating organization; and 23
4. The insurance coverage shall provide that the Office of Consumer 24
Protection in[Division of] the Office of the Attorney General shall be 25
named as an additional interested party. 26
(b) If the debt adjuster engages in debt adjusting in relation to any debt that is 27 UNOFFICIAL COPY 24 RS BR 2283
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primarily for personal, family, or household use that is secured by a mortgage, 1
deed of trust, other equivalent consensual security interest on residential real 2
property, or collateral that has a mortgage lien interest in residential real 3
property, the amount of insurance coverage required in paragraph (a) of this 4
subsection shall be increased by two hundred fifty thousand dollars 5
($250,000). 6
(8) (a) A debt adjuster shall maintain a bond issued by a surety company admitted to 7
do business in this Commonwealth. The bond shall be in the amount of 8
twenty-five thousand dollars ($25,000) in favor of the Attorney General for 9
the benefit of the Commonwealth for any violation of this chapter or any 10
person suffering injury or loss by reason of any violation of this chapter. A 11
copy of the bond shall be filed with the Attorney General. 12
(b) The bond required by paragraph (a) of this subsection shall be in effect during 13
the period of the debt adjuster's registration as well as for two (2) years after 14
the debt adjuster ceases to provide debt-adjusting services to debtors. 15
(c) A change in ownership of a debt adjuster shall not release, cancel, or 16
terminate liability under any bond previously filed unless the Attorney 17
General agrees in writing to the release, cancellation, or termination because 18
the debt adjuster has filed a new bond meeting the requirements of paragraph 19
(a) of this subsection. 20
(d) The proceeds of the bond required by paragraph (a) of this subsection shall be 21
paid to any person suffering injury or loss by reason of any violation of this 22
chapter or to the Attorney General for any violation of this chapter or shall be 23
paid pursuant to the terms of any order of a court of competent jurisdiction. 24
Any person who is damaged by any violation of this chapter may bring an 25
action against the bond to recover damages pursuant to this paragraph, 26
provided the aggregate liability of the surety shall not exceed the amount of 27 UNOFFICIAL COPY 24 RS BR 2283
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the bond. 1
(e) In lieu of the bond required by paragraph (a) of this subsection, a debt adjuster 2
may, with the written approval of the Attorney General, deliver to the 3
Attorney General an irrevocable letter of credit issued or confirmed by a 4
financial institution authorized by law to transact business in the 5
Commonwealth. The irrevocable letter of credit shall be in the amount of 6
twenty-five thousand dollars ($25,000) in favor of the Attorney General for 7
the benefit of the Commonwealth or any person suffering injury or loss by 8
reason of any violation of this chapter. 9
(f) If the debt adjuster engages in debt adjusting in relation to any debt that is 10
primarily for personal, family, or household use that is secured by a mortgage, 11
deed of trust, other equivalent consensual security interest on residential real 12
property, or collateral that has a mortgage lien interest in residential real 13
property, the amount of the bond required in paragraph (a) of this subsection 14
or the irrevocable letter of credit approved pursuant to paragraph (e) of this 15
subsection shall be increased by fifty thousand dollars ($50,000). 16
(9) A debt adjuster may not, directly or indirectly: 17
(a) Misappropriate or misapply money held in trust; 18
(b) Settle a debtor's debt if the amount the debtor will owe after settlement is 19
equal to or more than fifty percent (50%) of the amount of the debt prior to 20
settlement unless, after the creditor has assented, the debtor assents to a 21
settlement for which the amount the debtor will owe after settlement is equal 22
to or more than fifty percent (50%) of the amount of the debt prior to 23
settlement; 24
(c) Take a power of attorney that authorizes the debt adjuster to settle a debt, 25
unless the power of attorney is expressly limited to the debtor's debts and 26
grants authority to settle debts only if the amount the debtor will owe after 27 UNOFFICIAL COPY 24 RS BR 2283
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settlement is less than fifty percent (50%) of the amount of the debt prior to 1
settlement. However, in no event shall an agreement confer on a debt adjuster 2
a power of attorney to negotiate or settle any of the debtor's debt that is 3
primarily for personal, family, or household use that is secured by a mortgage, 4
deed of trust, other equivalent consensual security interest on residential real 5
property, or collateral that has a mortgage lien interest in residential real 6
property; 7
(d) Exercise or attempt to exercise a power of attorney after a debtor has 8
terminated an agreement; 9
(e) Initiate a transfer from a debtor's account at a bank or with another person 10
unless the transfer is: 11
1. A return of money to the debtor; or 12
2. Before termination of an agreement, properly authorized by the 13
agreement and this chapter, and for payment to one (1) or more creditors 14
pursuant to a plan or payment of a fee; 15
(f) Structure a plan in a manner that would result in a negative amortization of 16
any of a debtor's debts, unless a creditor that is owed a negatively amortizing 17
debt agrees to refund or waive the finance charge upon payment of the 18
principal amount of the debt; 19
(g) Settle a debt or lead a debtor to believe that a payment to a creditor is in 20
settlement of a debt to the creditor unless, at the time of settlement, the debtor 21
receives a certification by the creditor that the payment is in full settlement of 22
the debt or is part of a payment plan, the terms of which are included in the 23
certification, that upon completion will lead to full settlement of the debt; 24
(h) Make a representation that: 25
1. The debt adjuster will furnish money to pay bills or prevent attachments; 26
2. Payment of a certain amount will permit satisfaction of a certain amount 27 UNOFFICIAL COPY 24 RS BR 2283
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or range of indebtedness; 1
3. Participation in a plan will or may prevent litigation, garnishment, 2
attachment, repossession, foreclosure, eviction, or loss of employment, 3
and will or may stop efforts to collect a debt from the debtor; 4
4. Failure to make required minimum payments to creditors will not or 5
may not break the terms of agreements with creditors, will not or may 6
not lead creditors to increase finance charges and pursue litigation, will 7
not or may not be reported to consumer reporting agencies, or will not or 8
may not have an adverse effect on the debtor's credit report and credit 9
score; or 10
5. Fees paid to a debt adjuster will be used to pay creditors; 11
(i) Misrepresent that it is authorized or competent to furnish legal advice or 12
perform legal services; 13
(j) Take a confession of judgment or power of attorney to confess judgment 14
against a debtor; 15
(k) Purchase a debt or obligation of the debtor; 16
(l) Receive from or on behalf of the debtor: 17
1. A promissory note or other negotiable instrument other than a check or a 18
demand draft; or 19
2. A postdated check or demand draft; 20
(m) Lend money or provide credit to the debtor, except as a deferral of a 21
settlement fee at no additional expense to the debtor; 22
(n) Obtain a mortgage or other security interest from any person in connection 23
with the services provided to the debtor; 24
(o) Provide the debtor less than the full benefit of a compromise of a debt 25
arranged by the debt adjuster; or 26
(p) Charge the debtor for or provide credit or other insurance, coupons for goods 27 UNOFFICIAL COPY 24 RS BR 2283
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or services, membership in a club, access to computers or the Internet, or any 1
other matter not directly related to debt adjusting services or educational 2
services concerning personal finance. 3
(10) Any unfair, false, misleading, or deceptive act or practice in the conduct of debt 4
adjusting is prohibited. For purposes of this subsection, "unfair" shall be construed 5
to mean unconscionable. 6
Section 35. KRS 403.707 is amended to read as follows: 7
(1) The Sexual Assault Response Team Advisory Committee is established. 8
(2) The Sexual Assault Response Team Advisory Committee shall be co-chaired by the 9
executive director of the Kentucky Association of Sexual Assault Programs and the 10
commissioner of the Department of Kentucky State Police or the commissioner's 11
designee. 12
(3) The membership of the Sexual Assault Response Team Advisory Committee shall 13
consist of the following: 14
(a) The executive director of the Kentucky Board of Nursing or the executive 15
director's designee; 16
(b) The executive director of the Kentucky Nurses Association or the executive 17
director's designee; 18
(c) The executive director of the Kentucky Hospital Association or the executive 19
director's designee; 20
(d) The executive director of the Kentucky Association of Children's Advocacy 21
Centers; 22
(e) The director of the Department of Kentucky State Police Crime Lab; 23
(f) The commissioner of the Department for Community Based Services or the 24
commissioner's designee; 25
(g) The director of the Office of Victims[Victims'] Advocacy in[Division of] the 26
Office of the Attorney General or the director's designee; 27 UNOFFICIAL COPY 24 RS BR 2283
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(h) A sexual assault nurse examiner appointed by the secretary of the Cabinet for 1
Health and Family Services; 2
(i) A representative from a sexual assault response team appointed by the 3
executive director of the Kentucky Association of Sexual Assault Programs; 4
(j) A physician appointed by the secretary of the Cabinet for Health and Family 5
Services; and 6
(k) A Commonwealth's attorney or an assistant Commonwealth's attorney 7
appointed by the Attorney General. 8
(4) Members appointed under subsection (3)(h) to (k) of this section shall serve at the 9
pleasure of the appointing authority and shall not serve longer than four (4) years 10
without reappointment. 11
(5) The Sexual Assault Response Team Advisory Committee shall: 12
(a) Serve in an advisory capacity to the Kentucky Board of Nursing in 13
accomplishing the duties set forth under KRS 314.142; 14
(b) Serve in an advisory capacity to the Justice and Public Safety Cabinet in the 15
development of the statewide sexual assault protocol required under KRS 16
216B.400(4); 17
(c) Develop a model protocol for the operation of sexual assault response teams 18
which shall include the roles of sexual assault nurse examiners, physicians, 19
law enforcement, prosecutors, and victim advocates; 20
(d) Provide assistance to each regional rape crisis center, as designated by the 21
Cabinet for Health and Family Services, in establishing a regional sexual 22
assault response team; 23
(e) Develop model policies for law enforcement agencies related to handling 24
sexual assault examination kits and investigating sexual assaults with a 25
victim-centered, evidence-based approach; 26
(f) By January 1, 2018, report to the General Assembly on the results of the 27 UNOFFICIAL COPY 24 RS BR 2283
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analysis of previously untested sexual assault examination kits submitted to 1
the Department of Kentucky State Police forensic laboratory pursuant to 2016 2
Ky. Acts ch. 58, sec. 1, including whether analysis of those kits led to the 3
identification and prosecution of suspects and the cost to society of the 4
offenses committed by the suspects identified; 5
(g) By July 1, 2018, and by each July 1 thereafter, report to the General Assembly 6
and to the secretary of the Justice and Public Safety Cabinet on the number of 7
sexual assaults reported, the number of sexual assault examination kits 8
submitted to the Department of Kentucky State Police forensic laboratory, the 9
number of kits tested, and the number of charges filed and convictions 10
obtained in sexual assault cases in the previous calendar year; 11
(h) Provide information and recommendations concerning the activities of the 12
agency or organization represented by each individual committee member as 13
related to sexual assault issues and programs within the purview of the agency 14
or organization; and 15
(i) Recommend to the appropriate state agency any changes in statute, 16
administrative regulation, training, policy, and budget to promote a 17
multidisciplinary response to sexual assault. 18
Section 36. Whereas it is critical to the proper management and administration 19
of the Department of Law that reorganization take place as soon as possible, an 20
emergency is declared to exist, and this Act takes effect upon its passage and approval by 21
the Governor or upon its otherwise becoming a law. 22