Obligation to Report Arrests

Section 2110(j) of the New York Insurance Laws, which became effective in 2004, requires an insurance producer to report any criminal prosecution of the licensee in any jurisdiction, “within thirty days of the initial pretrial hearing date.” Although enacted 6 years ago, Section 2210(j) is the subject of numerous disciplinary actions in the Department’s most recently Released Disciplinary Actions, dated March 7, 2011, nearly 15 licensees were either fined or revoked in connection with failure to report felony or misdemeanor charges. The New York State Legislature modeled Section 2110(j) after the National Association of Insurance Com m i s s i on e r s’ (NAIC) Producer Licensing Model Act, to “promot[e] uniformity in state licensing procedures,” to “formaliz[ e] information sharing among regulators and establishing protocols for . . .

prompt reporting of disciplinary actions.” However, the Legislature did not define the term “initial pretrial hearing” in the Insurance Laws or other New York statutes. This ambiguity has apparently resulted in confusion by licensees as to what triggers the time to report, as many licensees may believe that there is no obligation to report until 30 days from the date of plea or conviction. According to an Office of General Counsel Opinion issued by the State of New York Insurance Department on May 8, 2007, the term “initial pretrial hearing” encompasses a defendant’s arraignment, or first time that a defendant accused of a crime appears before a court in a criminal action in any jurisdiction.

Thus, although “pre-trial hearing” may be subject to differing interpretations, the Department’s view is that an arraignment or first court appearance constitutes the “initial pretrial hearing” that triggers the 30 day reporting requirement under Insurance Law § 2110(j).

The Department issued another opinion on December 21, 2007 explaining the procedure for notification has also opined that all criminal prosecutions, including non-insurance related misdemeanors and felonies, must be reported to the Department (the Licensing Bureau), and the report shall include a copy of the initial complaint filed, the order resulting from the hearing and any other relevant legal documents.

Of course, all licensees should remember to disclose any felony or misdemeanor conviction or current charges on renewal and new applications.