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Regular Session, 2012 ENROLLED
SENATE BILL NO. 394
BY SENATOR GARY SMITH
AN ACT1
To amend and reenact the heading of R.S. 22:2005 and R.S. 22:2008(B), 2009(E)(3),2
2028(D)(3), and 2036(A) and to enact R.S. 22:2005.1 and 2043.1, relative to3
rehabilitation and liquidation of insurers; to comply with the federal Dodd-Frank4
Act; to provide for notice by mail when the receiver allows or disallows a claim; to5
provide for actions by and against a receiver; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. The heading of R.S. 22:2005 and R.S. 22:2008(B), 2009(E)(3),8
2028(D)(3), and 2036(A) are hereby amended and reenacted and R.S. 22:2005.1 and 2043.19
are hereby enacted to read as follows:10
§2005. Grounds for rehabilitation and liquidation11
* * *12
§ 2005.1. Compliance with certain federal provisions13
A. The provisions of this Section apply in accordance with Title II of the14
federal Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L.15
111-203 with respect to each insurance company that is a covered financial16
company, or a subsidiary or affiliate of a covered financial company, as defined17
under 12 U.S.C. 5381.18
B. The commissioner of insurance may file a petition for an order of19
rehabilitation or liquidation pursuant to this Section on any of the following20
grounds:21
(1) Upon determination and notification given by the Secretary of the22
Treasury of the United States in consultation with the president of the United23
States that the insurance company is a financial company satisfying the24
requirements of 12 U.S.C. 5383(b), and the board of directors, or any body25
performing similar functions, of the insurance company acquiesces or consents26
ACT No. 468 SB NO. 394 ENROLLED
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to the appointment of a receiver pursuant to 12 U.S.C. 5382(a)(1)(A)(i), with1
such consent to be considered as consent to an order of rehabilitation or2
liquidation.3
(2) Upon an order of the United States District Court for the District of4
Columbia under 12 U.S.C. 5382(a)(1)(A)(iv)(I) granting the petition of the5
Secretary of the Treasury of the United States concerning the insurance6
company under 12 U.S.C. 5382(a)(1)(A)(i).7
(3) A petition by the Secretary of the Treasury of the United States8
concerning the insurance company is granted by operation of law under 129
U.S.C. 5382(a)(1)(A)(v).10
C. Notwithstanding any other provision of law to the contrary, after11
notice to the insurance company, the receivership court may grant an order on12
the petition of the commissioner for rehabilitation or liquidation within twenty-13
four hours after the filing of the petition pursuant to this Section.14
D. If the receivership court does not make a determination on a petition15
for rehabilitation or liquidation filed by the commissioner pursuant to this16
Section within twenty-four hours after its filing, then the petition shall be17
deemed granted by operation of law upon the expiration of the twenty-four18
hour period. At the time that an order is deemed granted pursuant to this19
Section, the provisions of this Chapter shall be deemed to be in effect, and the20
commissioner or his designee shall be deemed to be affirmed as receiver and21
have all of the applicable powers provided by this Code, regardless of whether22
an order has been entered. The receivership court shall, within ten days, enter23
an order of rehabilitation or liquidation that does both of the following:24
(1) Becomes effective as of the date that it is deemed granted by25
operation of law.26
(2) Conforms to provisions for rehabilitation or liquidation contained27
in this Chapter, as applicable.28
E. The court may hold a hearing within ten days after granting of such29
an order of liquidation or rehabilitation pursuant to this Section at which30 SB NO. 394 ENROLLED
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hearing the court may sustain or revoke the order of rehabilitation or1
liquidation or grant such other relief as the nature of the case and the interest2
of the insurer's policyholders, creditors, or the public may require.3
F. Any order of rehabilitation or liquidation granted pursuant to this4
Section or any part thereof shall not be subject to any stay or injunction5
pending appeal.6
G. Nothing in this Section shall be construed to supersede or impair any7
other power or authority of the commissioner or the court under this Code.8
H. There shall be no liability on the part of, and no cause of action of9
any nature shall arise against, the department or its employees, or the10
commissioner or his designee in his capacity as receiver, rehabilitator,11
liquidator, or conservator, or otherwise, or a special deputy, or the receiver's12
assistants or the receiver's contractors for any action taken by them in the13
performance of their powers and duties pursuant to this Section or their duties14
under this Chapter.15
* * *16
§2008. Order of rehabilitation or liquidation17
* * *18
B. Notwithstanding any law to the contrary, the filing of a suit by the19
commissioner of insurance seeking an order of conservation or rehabilitation shall20
suspend the running of prescription and peremption as to all claims in favor of the21
subject insurer during the pendency of such proceeding. The filing of a suit by the22
commissioner of insurance seeking an order of liquidation shall interrupt the running23
of prescription and peremption as to such claims from the date of the filing of such24
proceeding for a period of two years, if an order of liquidation is granted.25
* * *26
§2009. Duties of commissioner of insurance as rehabilitator; termination27
* * *28
E. The rehabilitator, in addition to other powers, shall have the following29
powers:30 SB NO. 394 ENROLLED
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* * *1
(3) To use assets of the estate of an insurer under a liquidation or2
rehabilitation order to transfer policy obligations to a solvent assuming insurer.3
* * *4
§2028. Proof and allowance of claims5
* * *6
D.(1) * * *7
(3) When the receiver allows or disallows a claim in a lesser amount than8
claimed, he shall notify the person making the claim by petition in the receivership9
proceedings letter addressed to the last known address of the claimant, allowing10
ten days after receipt of said notice in which to file objections to the action of the11
receiver. The objections shall be filed with the receiver and in the receivership12
court and shall be heard in the receivership proceedings in a summary manner.13
* * *14
§2036. Provisions for conservation of assets of domestic company15
A. Upon the filing by the commissioner of insurance of a verified petition16
alleging that with respect to a domestic company, a condition exists that would17
justify a court order for proceedings under R.S. 22:2006 this Chapter, and that the18
interests of creditors, policyholders, or the public will probably be endangered by19
delay, then the court of Nineteenth Judicial District Court for the parish Parish20
of East Baton Rouge or the court of the parish in which such company has or last had21
its principal office, shall issue forthwith without a hearing its order directing the22
commissioner of insurance to take possession and control of the property, business,23
books, records, and accounts of the company and of the premises occupied by it for24
the transaction of its business, or such part of each as the petition shall specify, and25
enjoining the company and its officers, directors, agents, servants, and employees26
from disposition of its property and from transaction of its business except with the27
concurrence of the commissioner of insurance until the further order of the court.28
* * *29
§2043.1. Actions by and against the receiver30 SB NO. 394 ENROLLED
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A. No prior wrongful or negligent actions of any present or former1
officer, manager, director, trustee, owner, employee, or agent of the insurer may2
be asserted as a defense to a claim by the receiver under a theory of estoppel,3
comparative fault, intervening cause, proximate cause, reliance, mitigation of4
damages, or otherwise. However, the affirmative defense of fraud in the5
inducement may be asserted against the receiver in a claim based on a contract.6
A principal under a surety bond or a surety undertaking shall be entitled to7
credit against any reimbursement obligation to the receiver for the value of any8
property pledged to secure the reimbursement obligation to the extent that the9
receiver has possession or control of the property or the insurer or its agents10
misappropriated or commingled such property. Evidence of fraud in the11
inducement shall be admissible only if it is contained in the records of the12
insurer.13
B. No action or inaction by the insurance regulatory authorities may be14
asserted as a defense to a claim by the receiver.15
C. There shall be no liability on the part of, and no cause of action of any16
nature shall arise against, the department or its employees, or the commissioner17
or his designee in his capacity as receiver, liquidator, rehabilitator or18
conservator, or otherwise, or any special deputy, the receiver's assistants or19
contractors, or the attorney general's office for any action taken by them in20
performance of their powers and duties under this Code.21
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: