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Uniform Debt-Management Services Act - Page 17

SECTION 33. ADMINISTRATIVE REMEDIES.

(a) The administrator may enforce this [act] and rules adopted under this [act] by taking one or more of the following actions:

(1) ordering a provider or a director, employee, or other agent of a provider to cease and desist from any violations;

(2) ordering a provider or a person that has caused a violation to correct the violation, including making restitution of money or property to a person aggrieved by a violation;

(3) subject to adjustment of the dollar amount pursuant to Section 32(f), imposing on a provider or a person that has caused a violation a civil penalty not exceeding $10,000 for each violation;

(4) prosecuting a civil action to:

(A) enforce an order; or

(B) obtain restitution or an injunction or other equitable relief, or both;

(5) intervening in an action brought under Section 35.

(b) Subject to adjustment of the dollar amount pursuant to Section 32(f), if a person violates or knowingly authorizes, directs, or aids in the violation of a final order issued under subsection (a)(1) or (2), the administrator may impose a civil penalty not exceeding $20,000 for each violation.

(c) The administrator may maintain an action to enforce this [act] in any [county].

(d) The administrator may recover the reasonable costs of enforcing the [act] under subsections (a) through (c), including attorney’s fees based on the hours reasonably expended and the hourly rates for attorneys of comparable experience in the community.

(e) In determining the amount of a civil penalty to impose under subsection (a) or

(b), the administrator shall consider the seriousness of the violation, the good faith of the violator, any previous violations by the violator, the deleterious effect of the violation on the public, the net worth of the violator, and any other factor the administrator considers relevant to the determination of the civil penalty.

Comment

1. Paragraphs (1) and (2) of subsection (a) authorize the administrator to take action against providers, their directors or employees (including officers), and any other person that has caused the provider to violate the Act. Paragraph (3) authorizes imposition of civil penalties against any of these persons. The law governing administrative agencies governs the procedure to be used.

2. Paragraph (4) authorizes the administrator to commence civil actions. Hence, the administrator may proceed either by administrative proceeding under paragraphs (1)-(3) or by civil action under paragraph (4). Furthermore, section 32(a) authorizes the administrator and, if different from the administrator, the attorney general to refer cases to the attorney general for prosecution. Enforcement of the Act therefore is the responsibility of both the administrator and, if different from the administrator, the attorney general.

3. Subsection (b) speaks of “a person,” which is defined in section 2(12). If a provider violates a final order, it is subject to the civil penalty of this subsection. If a director, employee (including officers), agent, etc., commits or directs commission of the act that constitutes the provider’s violation, that person also is subject to the civil penalty of this subsection.

4. Subsection (d) places on the person violating this Act the costs of enforcing the Act against that person. To the extent those costs are attorney’s fees, they are to be determined by looking to rates in the private-practice sector. This subsection complements section 32(b)(1), which authorizes the administrator to assess a provider or its delegee with the costs of investigation, but permits the recovery of costs against other persons who are found to violated the Act. See subsection (a)(3) (liability of a person that has caused a violation).

SECTION 34. SUSPENSION, REVOCATION, OR NONRENEWAL OF REGISTRATION.

(a) In this section, “insolvent” means:

(1) having generally ceased to pay debts in the ordinary course of business other than as a result of good-faith dispute;

(2) being unable to pay debts as they become due; or

(3) being insolvent within the meaning of the federal bankruptcy law, 11 U.S.C. Section 101 et seq.[, as amended].

(b) The administrator may suspend, revoke, or deny renewal of a provider’s registration if:

(1) a fact or condition exists that, if it had existed when the registrant applied for registration as a provider, would have been a reason for denying registration;

(2) the provider has committed a material violation of this [act] or a rule or order of the administrator under this [act];

(3) the provider is insolvent;

(4) the provider or an employee or affiliate of the provider has refused to permit the administrator to make an examination authorized by this [act], failed to comply with Section 32(b)(2) within 15 days after request, or made a material misrepresentation or omission in complying with Section 32(b)(2); or

(5) the provider has not responded within a reasonable time and in an appropriate manner to communications from the administrator.

(c) If a provider does not comply with Section 22(f) or if the administrator otherwise finds that the public health or safety or general welfare requires emergency action, the administrator may order a summary suspension of the provider’s registration, effective on the date specified in the order.

(d) If the administrator suspends, revokes, or denies renewal of the registration of a provider, the administrator may seek a court order authorizing seizure of any or all of the money in a trust account required by Section 22, books, records, accounts, and other property of the provider which are located in this state.

(e) If the administrator suspends or revokes a provider’s registration, the provider may appeal and request a hearing pursuant to [insert the citation to the appropriate section of the administrative procedure act or other statute governing administrative procedure].

Legislative Note: In states in which the constitution does not permit the phrase, “as amended,” when federal statutes are incorporated into state law, the phrase should be deleted in subsection (a)(3).

Comment

1. Subsection (b) gives the power to suspend or revoke a registration. Subsection (e) gives recourse under the administrative law of the state to a provider whose registration has been suspended or revoked.

2. Section 22(e) requires a trust account at all times to have a balance in an amount equal to the sum of the balances in each individual’s account, and section 22(f) requires a monthly reconciliation of the trust account. If money is missing, or in other proper circumstances, subsection (c) authorizes the administrator to take summary action. Subsection (e) contemplates prompt judicial review.

3. As with section 32(b)(3) (authorizing seizure of money and records from the bank holding a provider’s trust account), subsection (d) does not specify the procedure to be used. If other law authorizes ex parte relief, the administrator may seek that relief under this subsection.