26.1-04-03. Unfair methods of competition and unfair or deceptive acts or practices defined

26.1-04-03. Unfair methods of competition and unfair or deceptive acts or practices

defined.

The following are unfair methods of competition and unfair and deceptive acts or practices

in the business of insurance:

1. Misrepresentations and false advertising of policy contracts. Making, issuing,

circulating, or causing to be made, issued, or circulated, any estimate, illustration,

circular, statement, sales presentation, omission, or comparison misrepresenting the

terms of any policy issued or to be issued or the benefits or advantages promised

thereby or the dividends or share of the surplus to be received thereon, or making any

false or misleading statements as to the dividends or share of surplus previously paid

on any insurance policies, or making any misleading representation or any

misrepresentation as to the financial condition of any person, or as to the legal reserve

system upon which any life insurance company operates, or using any name or title of

any policy or class of policies misrepresenting the true nature thereof, or making any

misrepresentation tending to induce the lapse, forfeiture, exchange, conversion, or

surrender of any insurance policy or for the purpose of effecting a pledge or

assignment of or effecting a loan against any insurance.

2. False information and advertising generally. Making, publishing, disseminating,

circulating, or placing before the public, or causing, directly or indirectly, to be made,

published, disseminated, circulated, or placed before the public, in a newspaper,

magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or

poster, or over any radio station, or in any other way, an advertisement,

announcement, or statement containing any assertion, representation, or statement

with respect to the business of insurance or with respect to any person in the conduct

of that person's insurance business, which is untrue, deceptive, or misleading.

3. Defamation. Making, publishing, disseminating, or circulating, directly or indirectly, or

aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of

any oral or written statement or any pamphlet, circular, article, or literature which is

false, or maliciously critical of or derogatory to the financial condition of any person,

and which is calculated to injure any person engaged in the business of insurance.

4. Boycott, coercion, and intimidation. Entering into any agreement to commit, or by any

concerted action committing, any act of boycott, coercion, or intimidation resulting in or

tending to result in unreasonable restraint of, or monopoly in, the business of

insurance.

5. False financial statements. Filing with any supervisory or other public official, or

making, publishing, disseminating, circulating, or delivering to any person, or placing

before the public, or causing directly or indirectly, to be made, published,

disseminated, circulated, delivered to any person, or placed before the public, any

false statement of financial condition of any person with intent to deceive.

Making any false entry in any book, report, or statement of any person with intent

to deceive any agent or examiner lawfully appointed to examine into its condition or

into any of its affairs, or any public official to whom the person is required by law to

report, or who has authority by law to examine into its condition or into any of its

affairs, or, with like intent, willfully omitting to make a true entry of any material fact

pertaining to the business of the person in any book, report, or statement of the

person.

6. Stock operations and advisory board contracts. Issuing or delivering or permitting

agents, officers, or employees to issue or deliver, agency company stock or other

capital stock, or benefit certificates or shares in any common-law corporation, or

securities or any special or advisory board contracts or other contracts of any kind

the person in any book, report, or statement of the

person.

6. Stock operations and advisory board contracts. Issuing or delivering or permitting

agents, officers, or employees to issue or deliver, agency company stock or other

capital stock, or benefit certificates or shares in any common-law corporation, or

securities or any special or advisory board contracts or other contracts of any kind

promising returns and profits as an inducement to insurance.

7. Unfair discrimination.

a. Making or permitting any unfair discrimination between individuals of the same

class and equal expectation of life in the rates charged for any contract of life

insurance or of life annuity or in the dividends or other benefits payable thereon,

or in any other of the terms and conditions of such contract.

b. Making or permitting any unfair discrimination, including consideration of an

individual's history or status as a subject of domestic abuse, between individuals

of the same class and of essentially the same hazard in the amount of premium,

policy fees, or rates charged for any policy or contract of accident or health

insurance or in the benefits payable thereunder, or in any of the terms or

conditions of such contract, or in any other manner whatsoever.

c. Refusing to insure, or refusing to continue to insure, or limiting the amount,

extent, or kind of life insurance, accident and sickness insurance, health services,

or health care protection insurance available to an individual, or charging an

individual a different rate for the same coverage solely because of blindness or

partial blindness. Refusal to insure includes denial by an insurer of disability

insurance coverage on the grounds that the policy defines "disability" as being

presumed in the event that the insured loses the insured's eyesight; however, an

insurer may exclude from coverage disabilities consisting solely of blindness or

partial blindness when such condition existed at the time the policy was issued.

With respect to all other conditions, including the underlying cause of the

blindness or partial blindness, persons who are blind or partially blind shall be

subject to the same standards of sound actuarial principles or actual or

reasonably anticipated experience as are sighted persons.

d. Making or permitting any unfair discrimination between individuals or risks of the

same class and of essentially the same hazard by refusing to insure, refusing to

renew, canceling, or limiting the amount of insurance coverage on a property or

casualty risk solely because of the geographic location of the risk, unless the

action is the result of the application of sound underwriting and actuarial

principles related to actual or reasonably anticipated loss experience.

e. Refusing to insure or charging a different rate solely in consideration of the risk's

environmental, social, and governance criteria; diversity, equity, and inclusion

policies; or political and ideological factors, unless the refusal or different rate is

the result of the application of sound underwriting and actuarial principles related

to actual or reasonably anticipated loss experience.

8. Rebates.

a. Except as otherwise expressly provided by law, knowingly permitting or offering to

make or making any contract of life insurance, life annuity, or accident and health

insurance, or agreement as to such contract other than as plainly expressed in

the contract issued thereon, or paying or allowing, or giving or offering to pay,

allow, or give, directly or indirectly, as inducement to the insurance or annuity any

rebate of premiums payable on the contract, or any special favor or advantage in

the dividends or other benefits thereon, or any valuable consideration or

inducement whatsoever not specified in the contract; or giving, selling, or

purchasing, or offering to give, sell, or purchase as inducement to the insurance

low, or give, directly or indirectly, as inducement to the insurance or annuity any

rebate of premiums payable on the contract, or any special favor or advantage in

the dividends or other benefits thereon, or any valuable consideration or

inducement whatsoever not specified in the contract; or giving, selling, or

purchasing, or offering to give, sell, or purchase as inducement to the insurance

or annuity or in connection therewith, any stocks, bonds, or other securities of any

insurance company or other corporation, association, or partnership, or any

dividends or profits accrued thereon, or anything of value whatsoever not

specified in the contract.

b. Subsection 7 or subdivision a of this subsection do not prohibit the following

practices:

(1) In the case of any contract of life insurance or life annuity, paying bonuses

to policyholders or otherwise abating their premiums in whole or in part out

of surplus accumulated from nonparticipating insurance, provided that any

such bonuses or abatement of premiums are fair and equitable to

policyholders and for the best interests of the company and its

policyholders;

(2) In the case of life insurance policies issued on the industrial debit plan,

making allowance to policyholders who have continuously for a specified

period made premium payments directly to an office of the insurer in an

amount which fairly represents the saving in collection expenses; and

(3) Readjusting the rate of premium for a group insurance policy based on the

loss or expense experience thereunder, at the end of the first or any

subsequent policy year of insurance thereunder, which may be made

retroactive only for the policy year.

c. Notwithstanding any other provision in this subsection, if the cost does not

exceed an aggregate retail value of one hundred dollars per person per year, an

insurance producer may give a gift, prize, promotional article, logo merchandise,

meal, or entertainment activity directly or indirectly to a person in connection with

marketing, promoting, or advertising the business. As used in this subdivision,

"person" means the named insured, policy owner, or prospective client or the

spouse of any of these individuals, but the term does not include a certificate

holder, child, or employee of the named insured, policy owner, or prospective

client. Subject to the limits of this subdivision, an insurance producer may give a

gift card for specific merchandise or services such as a meal, gasoline, or car

wash but may not give cash, a cash card, any form of currency, or any refund or

discount in premium. An insurance producer may not condition the giving of a gift,

prize, promotion article, logo merchandise, meal, or entertainment activity on

obtaining a quote or a contract of insurance. Notwithstanding the limitation in this

subdivision, an insurance producer may conduct raffles or drawings, if there is no

financial cost to an entrant to participate, the drawing or raffle does not obligate a

participant to purchase insurance, the prizes are not valued in excess of a

reasonable amount determined by the commissioner, and the drawing or raffle is

open to the public. The raffle or drawing must be offered in a manner that is not

unfairly discriminatory and may not be contingent on the purchase, continued

purchase, or renewal of a policy. Notwithstanding the limitation in this subdivision,

an insurance producer may make a donation to a nonprofit organization that is

exempt from federal taxation under Internal Revenue Code section 501(c)(3)

[26 U.S.C. 501(c)(3)] in any amount as long as the donation is not given as an

inducement to obtain a contract of insurance.

d. The provisions in this subsection may not be construed as including within the

definition of discrimination or rebates any of the following practices:

ation to a nonprofit organization that is

exempt from federal taxation under Internal Revenue Code section 501(c)(3)

[26 U.S.C. 501(c)(3)] in any amount as long as the donation is not given as an

inducement to obtain a contract of insurance.

d. The provisions in this subsection may not be construed as including within the

definition of discrimination or rebates any of the following practices:

(1) The offer or provision by an insurer or producer, by or through an employee,

an affiliate, or a third-party representative, of value-added products or

services at no or reduced cost if such products or services are not specified

in the policy of insurance if the product or service:

(a) Relates to the insurance coverage and is designed to satisfy one or

more of the following:

[1] Provide loss mitigation or loss control;

[2] Reduce claims costs or claim settlement costs;

[3] Provide education about liability risk or risk of loss to persons or

property;

[4] Monitor or assess risk, identify sources of risk, or develop

strategies for eliminating or reducing risk;

[5] Enhance health;

[6] Enhance financial wellness through items such as education of

financial planning services;

[7] Provide post-loss services;

[8] Incent behavioral changes to improve the health or reduce the

risk of death or disability of an individual defined as policyholder,

potential policyholder, certificate holder, potential certificate

holder, insured, potential insured, or applicant; or

[9] Assist in the administration of the employee or retiree benefit

insurance coverage.

(b) If offered by the insurer or producer, the insurer or producer, upon

request, shall ensure the person is provided with contact information

to assist the person with questions regarding the product or service.

(c) Is based on documented objective criteria and offered in a manner not

unfairly discriminatory. The documented criteria must be maintained

by the insurer or producer and produced at the request of the

commissioner.

(d) Is reasonable in comparison to that person's premiums or insurance

coverage for the policy class.

(2) If an insurer or producer does not have sufficient evidence, but has a good-

faith belief the product or service meets the criteria in paragraph 1 of

subdivision d of subsection 8, the insurer or producer may provide the

product or service in a manner that is not unfairly discriminatory as part of a

pilot or testing program for no longer than one year. An insurer or producer

shall notify the department of the pilot or testing program offered to

consumers in this state before launching and may proceed with the program

unless the department objects within twenty-one days of notice.

e. An insurer, producer, or representative of an insurer or producer may not offer or

provide insurance as an inducement to the purchase of another policy or

otherwise use of the words "free" or "no cost" or words of similar import in an

advertisement.

f. The commissioner may adopt regulations when implementing the permitted

practices set forth in this subsection to ensure consumer protection. Consistent

with applicable law, the topics addressed by the regulations may include

consumer data protections and privacy, consumer disclosure, and unfair

discrimination.

9. Unfair claim settlement practices. Committing any of the following acts, if done without

just cause and if performed with a frequency indicating a general business practice:

a. Knowingly misrepresenting to claimants pertinent facts or policy provisions

relating to coverages at issue.

b. Failing to acknowledge with reasonable promptness pertinent communications

with respect to claims arising under insurance policies.

c. Failing to adopt and implement reasonable standards for the prompt investigation

of claims arising under insurance policies.

d. Not attempting in good faith to effectuate prompt, fair, and equitable settlements

cy provisions

relating to coverages at issue.

b. Failing to acknowledge with reasonable promptness pertinent communications

with respect to claims arising under insurance policies.

c. Failing to adopt and implement reasonable standards for the prompt investigation

of claims arising under insurance policies.

d. Not attempting in good faith to effectuate prompt, fair, and equitable settlements

of claims submitted in which liability has become reasonably clear.

e. Compelling insureds to institute suits to recover amounts due under its policies by

offering substantially less than the amounts ultimately recovered in suits brought

by them when the insureds have made claims for amounts reasonably similar to

the amounts ultimately recovered.

f. Making known to insureds or claimants a policy of appealing from arbitration

awards in favor of insureds or claimants for the purpose of compelling them to

accept settlements or compromises less than the amount awarded in arbitration.

g. Attempting settlement or compromise of claims on the basis of applications which

were altered without notice to, or knowledge or consent of, insureds.

h. Attempting to settle a claim for less than the amount to which a reasonable

person would have believed one was entitled by reference to written or printed

advertising material accompanying or made a part of an application.

i. Attempting to delay the investigation or payment of claims by requiring an insured

and the insured's physician to submit a preliminary claim report and then

requiring the subsequent submission of formal proof of loss forms, both of which

submissions contain substantially the same information.

j. Failing to affirm or deny coverage of claims within a reasonable time after proof of

loss has been completed.

k. Refusing payment of claims solely on the basis of the insured's request to do so

without making an independent evaluation of the insured's liability based upon all

available information.

l. Providing coverage under a policy issued under chapter 26.1-45 or 26.1-36.1 for

confinement to a nursing home and refusing to pay a claim when a person is

covered by such a policy and the person's physician ordered confinement

pursuant to the terms of the policy for care other than custodial care. Custodial

care means care which is primarily for the purpose of meeting personal needs

without supervision by a registered nurse or a licensed practical nurse.

m. Failure to use the standard health insurance proof of loss and claim form or

failure to pay a health insurance claim as required by section 26.1-36-37.1.

It is not a prohibited practice for a health insurance company with participating provider

agreements to require that a subscriber or member using a nonparticipating provider

be responsible for providing the insurer a copy of medical records used for claims

processing.

10. Unfair handling of communications by insurance company. Failing to adopt and

implement reasonable standards for the prompt handling of written communications,

primarily expressing grievances, received by the insurance company from insureds or

claimants.

11. Refusing to insure risks. Refusing to insure risks solely because of race, color, creed,

sex, or national origin, or refusing to continue to insure risks solely because an

employer chooses to offer a health maintenance organization option to employees in

its health benefit plan.

12. Misrepresentation in insurance applications. Making false or fraudulent statements or

representations on or relative to an application for an insurance policy, for the purpose

of obtaining a fee, commission, money, or other benefit from any insurer, insurance

producer, or individual.

13. Failure to refund unearned premiums. Failing to refund within thirty days of the

cancellation of an insured's policy the unearned premium paid for that insurance

policy. However, for commercial lines of insurance policies which are audited by the

n insurance policy, for the purpose

of obtaining a fee, commission, money, or other benefit from any insurer, insurance

producer, or individual.

13. Failure to refund unearned premiums. Failing to refund within thirty days of the

cancellation of an insured's policy the unearned premium paid for that insurance

policy. However, for commercial lines of insurance policies which are audited by the

insurer to determine premium, the refund of premium must be made within thirty days

from the date the insurer receives from the insured that information which is

reasonably necessary for the insurer to audit the insured's business to determine the

premium due to the insurer.

14. As used in subsections 15, 16, 17, 18, and 19, unless the context otherwise requires:

a. "Entity" includes a third-party administrator, an insurance company as defined in

section 26.1-02-01, a health maintenance organization, or any other entity

providing a plan of health insurance subject to state insurance regulation.

b. "Health care provider" means a person that delivers, administers, or supervises

health care products or services, for profit or otherwise, in the ordinary course of

business or professional practice.

c. "Health plan" means any public or private plan or arrangement that provides or

pays the cost of health benefits, including any organization of health care

providers that furnishes health services under a contract or agreement with this

type of plan.

d. "Medical communication" means any communication, other than a knowing and

willful misrepresentation, made by a health care provider to a patient regarding

the health care needs or treatment options of the patient and the applicability of

the health plan to the patient's needs or treatment. The term includes

communications concerning:

(1) Tests, consultations, and treatment options;

(2) Risks or benefits associated with tests, consultations, and options;

(3) Variation in experience, quality, or outcome among any health care

providers or health care facilities providing any medical service;

(4) The process, basis, or standard used by an entity to determine whether to

authorize or deny health care services or benefits; and

(5) Financial incentives or disincentives based on service utilization provided by

an entity to a health care provider.

e. "Patient" includes a former, current, or prospective patient or the guardian or legal

representative of any former, current, or prospective patient.

15. a. Interference with certain medical communications. An entity offering a health plan

may not restrict or interfere with any medical communication and may not take

any of the following actions against a health care provider solely on the basis of a

medical communication:

(1) Refusal to contract with the health care provider;

(2) Termination of or refusal to renew a contract with the health care provider;

(3) Refusal to refer patients to or allow others to refer patients to the health care

provider; or

ere with any medical communication and may not take

any of the following actions against a health care provider solely on the basis of a

medical communication:

(1) Refusal to contract with the health care provider;

(2) Termination of or refusal to renew a contract with the health care provider;

(3) Refusal to refer patients to or allow others to refer patients to the health care

provider; or

(4) Refusal to compensate the health care provider for covered services that

are medically necessary.

b. This subsection does not prohibit an entity from enforcing, as part of a contract or

agreement to which a health care provider is a party, any mutually agreed-upon

terms and conditions, including terms and conditions requiring a health care

provider to participate in and cooperate with all programs, policies, and

procedures developed or operated by a health plan to assure, review, or improve

the quality and effective utilization of health care services, if the utilization is

according to guidelines or protocols that are based on clinical or scientific

evidence and only if the guidelines or protocols under the utilization do not

prohibit or restrict medical communications between providers and their patients.

16. Unfair indemnification. A contract between an entity and a health care provider may

not require the health care provider to indemnify the entity for the entity's negligence,

willful misconduct, or breach of contract, and may not require a health care provider as

a condition of participation to waive any right to seek legal redress against the entity. In

addition to the proceedings and penalties provided in this chapter, a contract provision

violating this subsection is void.

17. Incentives to withhold medically necessary care. An entity may not offer a health care

provider, and a contract with a health care provider under a health plan may not

contain, an incentive plan that includes a specific payment made to, or withheld from,

the provider as an inducement to deny, reduce, limit, or delay medically necessary

care covered by the health plan and provided with respect to a patient. This subsection

does not prohibit incentive plans, including capitation payments or shared-risk

arrangements, that are not tied to specific medical decisions with respect to a patient.

In addition to the proceedings and penalties provided in this chapter, a contract

provision violating this subsection is void. As used in this subsection, "medically

necessary care" means health care services, supplies, or treatments that a reasonably

prudent physician or other health care provider would provide to a patient for the

prevention, diagnosis, or treatment of illness, injury, disease, or its symptoms which

are in accordance with generally accepted standards of medical practice, clinically

appropriate in terms of type, frequency, extent, site, and duration, and not primarily for

the convenience of the patient, physician, or other health care provider. This definition

does not preclude an entity from establishing a definition of "medically necessary care"

for determining which services are covered by the health plan.

18. Retaliation for patient advocacy. An entity may not take any of the following actions

against a health care provider solely because the provider, in good faith, reports to

state or federal authorities an act or practice by the entity that jeopardizes patient

health or welfare, or advocates on behalf of a patient in a utilization review program or

grievance procedure:

a. Refusal to contract with the health care provider;

b. Termination of or refusal to renew a contract with the health care provider;

c. Refusal to refer patients to or allow others to refer patients to the health care

provider; or

d. Refusal to compensate the health care provider for covered services that are

medically necessary.

19. Unfair reimbursement. An entity may not require that a health care provider receive

h the health care provider;

b. Termination of or refusal to renew a contract with the health care provider;

c. Refusal to refer patients to or allow others to refer patients to the health care

provider; or

d. Refusal to compensate the health care provider for covered services that are

medically necessary.

19. Unfair reimbursement. An entity may not require that a health care provider receive

under a health plan, pursuant to policies of the entity or a contract with the health care

provider, the lowest payment for services and items that the health care provider

charges or receives from any other entity. In addition to the proceedings and penalties

provided in this chapter, a contract provision violating this subsection is void.

20. Unfair referral. An insurer, insurance producer, or third-party administrator referring an

individual employee to the association, or arranging for an individual employee to

apply to the association for the purpose of separating that employee from group health

insurance coverage provided in connection with the employee's employment.

21. Unfair compensation. Basing the compensation, including performance bonuses or

incentives, of claims employees or contracted claims personnel on the following:

a. The number of policies canceled.

b. The number of times coverage is denied.

c. Use of a quota limiting or restricting the number or volume of claims.

d. Use of an arbitrary quota or cap limiting or restricting the amount of claims

payments without due consideration to the merits of the claim.