N.J. Stat. tit. 17, ch. 23C

in effect

N.J. Stat. § 17:23C-1 Findings, declarations relative to compliance review of insurance carriers

1. a. The Legislature finds and declares that it is in the public interest for insurance carriers in this State to conduct voluntary internal reviews and audits of their operations, practices and procedures for the purpose of discovering and correcting any operations, practices or procedures which do not comply with applicable law or regulation or which do not comply with recognized industry standards or with the insurance carrier's own standards and for the purpose of preventing continuing and more serious violations. However, if studies and reports beyond those legally required are available to third parties other than regulators and potentially can result in the insurance carrier's liability to such third parties, the insurance carrier may be discouraged from making these additional efforts and from sharing these results with regulators. A legal structure that promotes self-policing programs can achieve improved compliance effectively at less cost to the State and to the insurance carriers. Voluntary compliance review, when properly conducted and implemented, results not only in improved compliance with law, but in the adoption of procedures and policies by the insurance carriers that exceed minimum legal requirements, and that save money by benefiting customers, lowering costs and reducing potential liabilities. b. The Legislature therefore determines that it is the public policy of the State to encourage insurance carriers to undertake voluntary compliance reviews and corrective action programs by protecting the results of voluntary compliance reviews from third parties other than regulators. Voluntary compliance reviews shall be privileged and shall not be considered public records or public documents subject to inspection or examination under any statutory or common-law right to know request. This privilege is intended to apply only to protect reports created for the express purpose of testing and monitoring compliance, which otherwise might not be undertaken because they are not legally required. Information required to be maintained pursuant to any federal or State law or regulation will not become privileged just because it is utilized or incorporated in a voluntary compliance review report. L.1999,c.183,s.1.

N.J. Stat. § 17:23C-2 Definitions relative to compliance reviews of insurance carriers

2. As used in this act: "Department" means the Department of Banking and Insurance. "Enforcement action" means a criminal investigation or prosecution, or an administrative proceeding, civil action or order by a governmental unit, agency or authority which is intended to ensure the safe and sound operation of an insurance carrier. "Insurance carrier" means: (1) Any corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society or other person engaged in the business of insurance pursuant to Subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.), or Subtitle 3 of Title 17B of the New Jersey Statutes (N.J.S.17B:17-1 et seq.); (2) Any medical service corporation operating pursuant to P.L.1940, c.74 (C.17:48A-1 et seq.); (3) Any hospital service corporation operating pursuant to P.L.1938, c.366 (C.17:48-1 et seq.); (4) Any health service corporation operating pursuant to P.L.1985, c.236 (C.17:48E-1 et seq.); (5) Any dental service corporation operating pursuant to P.L.1968, c.305 (C.17:48C-1 et seq.); (6) Any dental plan organization operating pursuant to P.L.1979, c.478 (C.17:48D-1 et seq.); (7) Any insurance plan operating pursuant to P.L.1970, c.215 (C.17:29D-1 et seq.); (8) The New Jersey Insurance Underwriting Association operating pursuant to P.L.1968, c.129 (C.17:37A-1 et seq.); (9) Any risk retention group or purchasing group operating pursuant to the "Liability Risk Retention Act of 1986," 15 U.S.C. ss. 3901 et seq.; (10) Any health maintenance organization operating pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.); and (11) Any joint insurance fund operating pursuant to P.L.1983, c.108 (C.18A:18B-1 et seq.), P.L.1983, c.372 (C.40A:10-36 et seq.), P.L.1985, c.204 (C.18A:64A-25.33 et seq.) or P.L.1987, c.431 (C.17:49A-1 et seq.). "Timely discloses" or "timely disclosure" means the voluntary disclosure of the findings of a voluntary compliance review to the department within 90 days of the completion of a voluntary compliance review report or the delivery of or access to a voluntary compliance review report within 20 days of a request by the department. "Voluntary compliance review" means review, project, testing program, assessment, audit or evaluation instituted by an insurance carrier to collect information or prepare analyses, not required by statute, regulation, bulletin or order and which would otherwise not be collected, maintained or prepared, for the purposes of identifying and correcting problems of compliance with applicable laws and regulations. "Voluntary compliance review report" means any document or documents prepared or assembled by any person or group of persons, committee or entity conducting a voluntary compliance review, including without limitation, supporting information and documents such as notes, records of observations, findings, conclusions, drafts, memoranda, drawings, photographs, electronic or computerized mail, audio or video recordings or transcriptions or depictions of any type, stored computer data, including floppy or other disks, hard drives, printer memory, software or other data compilations from which information can be obtained, charts, graphs and surveys, provided, however, that the documents and supporting information are developed for the purpose of and in the course of a voluntary compliance review. L.1999,c.183,s.2.

N.J. Stat. § 17:23C-3 Voluntary compliance review report privileged

3. A voluntary compliance review report shall be privileged and neither it nor its existence shall be discoverable or admissible as evidence in any legal action or administrative proceeding of any nature involving the insurance carrier, except as provided in section 5 of this act. L.1999,c.183,s.3.

N.J. Stat. § 17:23C-4 Privilege regarding preparation of report

4. Persons involved in the preparation of a voluntary compliance review report shall not be required to give answers to any questions or provide testimony regarding the existence, contents or conclusions of any voluntary compliance review report, except as provided in section 5 of this act. L.1999,c.183,s.4.

N.J. Stat. § 17:23C-5 Limited disclosure, circumstances

5. a. The provisions of sections 3 and 4 of this act shall not apply if: (1) an enforcement action is taken, that enforcement action is contested, and an administrative law judge or a court of competent jurisdiction determines that a voluntary compliance review report is relevant to that enforcement action; provided however, that disclosure of a voluntary compliance review report shall be made under seal, with no disclosure beyond the department, the administrative law judge or court of competent jurisdiction, and resulting in no waiver of the privilege to any other individuals or entities seeking disclosure; or (2) there is a statutory requirement that the violation identified or discovered as a result of the voluntary compliance review be reported; provided however, that a court may order disclosure only in accordance with the terms of this act. b. The disclosure authorized under paragraphs (1) and (2) of subsection a. of this section shall apply only to those sections and portions of the voluntary compliance review report that pertain to the specific violation which is the subject of the enforcement action. All other sections and portions of the voluntary compliance review report shall remain privileged. c. If there is a dispute concerning the sections or portions of the voluntary compliance review report subject to disclosure, an administrative law judge or a court of competent jurisdiction, upon petition of either party, shall conduct an in camera review of those sections or portions subject to dispute. L.1999,c.183,s.5.

N.J. Stat. § 17:23C-6 Reports placed under seal at conclusion of enforcement action

6. At the conclusion of an enforcement action in which a court or administrative law judge determines that an insurance carrier has committed no statutory or regulatory violation, all voluntary compliance review reports contained within the case file of the proceeding shall be placed under seal and the department shall treat that material as confidential, as if no enforcement action had been taken. L.1999,c.183,s.6.

N.J. Stat. § 17:23C-7 Materials not considered privileged

7. The following materials described in this section shall not become privileged pursuant to the provisions of sections 3 and 4 of this act because they are utilized or incorporated in a voluntary compliance review report: (1) documents, communications, data, reports or other information required to be collected, developed, maintained, reported or made available to a regulatory agency pursuant to any federal or State law, regulation, permit, bulletin or order or in the normal processing of customer transactions; (2) information obtained by observation, sampling, examining, auditing or monitoring by any regulatory agency; (3) information obtained from a source independent of the voluntary compliance review; and (4) information exchanged by and among the department and other appropriate regulators pursuant to an agreement between or among the regulatory agencies; provided, however, that notwithstanding this permitted exchange of information by the regulatory agencies, sections 3 and 4 of this act shall continue to apply with respect to a person who is not a regulatory agency. L.1999,c.183,s.7.

N.J. Stat. § 17:23C-8 Inadmissibility of privileged information

8. No person shall use any information privileged pursuant to this act to discover any other information and any information so discovered shall be inadmissible in any action or proceeding. If an administrative law judge or a court of competent jurisdiction determines that any information is not privileged, it shall, by the entry of appropriate protective orders, ensure that information is disclosed only to the extent required for the proper conduct of the subject action or proceeding. L.1999,c.183,s.8.

N.J. Stat. § 17:23C-9 Privileges unaffected

9. Nothing in this act shall limit, waive or abrogate the scope or nature of any statutory or common law privilege, including, without limitation, the work product doctrine and the attorney-client privilege. L.1999,c.183,s.9.

N.J. Stat. § 17:23C-10 Circumvention prohibited

10. No regulatory agency shall adopt a rule for the purpose of circumventing the privilege established in this act by requiring disclosure of a voluntary compliance review report. L.1999,c.183,s.10.

N.J. Stat. § 17:23C-11 Continuing privilege of disclosed information

11. a. If an insurance carrier timely discloses information it obtained from a voluntary compliance review to the department or to another appropriate regulatory agency, that information and the voluntary compliance review which resulted in the information shall remain subject to sections 3 and 4 of this act, except that the agency receiving the information may use it with respect to an enforcement action. b. The regulatory agency, in deciding on the appropriate penalty or sanction, if any, for a violation shall consider the timely disclosure as a mitigating factor if the violation is disclosed and the insurance carrier responsible for the violation demonstrates, and the regulator determines, that the violation is not the result of knowing, purposeful, reckless or criminally negligent conduct, that reasonable corrective action has been or is being taken to rectify and eliminate any detected violation and that the insurance carrier has made or is making a good-faith effort to prevent similar violations. L.1999,c.183,s.11.

N.J. Stat. § 17:23C-12 Construction of act relative to third party access

12. Nothing in this act shall be construed to permit any third party access to any voluntary compliance review report subject to the provisions of this act. For the purpose of this section, "third party" means a person other than a federal, State or local governmental agency; however, those agencies shall only be provided access to voluntary compliance review reports if they agree in writing to be bound by the terms of this act. L.1999,c.183,s.12.

N.J. Stat. § 17:23C-13 Production of documents not a waiver of privilege; penalty

13. a. The department may require production of any document from an insurance carrier through timely disclosure or pursuant to compulsion of law, for its review. This production shall not constitute a waiver of the privilege established by this act. b. The privilege provided by this act shall not be waived if the department or an employee of the department discloses a document provided to the department to a third-party. For the purpose of this section, "third party" means a person other than a federal, State or local governmental agency; however, those agencies shall only be provided access to voluntary compliance reports if they agree in writing to be bound by the terms of this act. c. Any person who is found to have intentionally or recklessly disclosed any document to a third party in violation of this act shall be guilty of a crime of the third degree. L.1999,c.183,s.13.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026