Title of Regulation: 1VAC20-80. Recounts and Contested Elections (adding 1VAC20-80-10, 1VAC20-80-20).

Statutory Authority: § 24.2-103 of the Code of Virginia.

Effective Date: Effective upon the filing of the notice of the U.S. Attorney General's preclearance with Registrar of Regulations.

Agency Contact: Peter J. Goldin, Policy Analyst, State Board of Elections, 1100 Bank Street, 1st Floor, Richmond, VA 23219, telephone (804) 864-8930, or email peter.goldin@sbe.virginia.gov.

Summary:

This final regulation details standards to assist local election officials and courts in conducting recounts for contested elections.

CHAPTER 80
RECOUNTS AND CONTESTED ELECTIONS

1VAC20-80-10. (Reserved.)

1VAC20-80-20. Recounts and [ Contested Elections contested elections ].

A. Standards for any recounts or contests requested in the Commonwealth of Virginia shall be governed by Chapter 8 (§ 24.2-800 et seq.) of Title 24.2 of the Code of Virginia.

B. Upon notification by the court that a recount [ requested request ] has been filed pursuant to § 24.2-801 of the Code of Virginia, the State Board of Elections shall promptly transmit to the appropriate court and electoral board or boards copies of the instructions corresponding to the types of ballots and equipment used in each county or city involved in the recount.

C. In preparation for the recount and pursuant to § 24.2-802 A of the Code of Virginia, the clerks of the circuit courts shall:

1. Secure all paper ballots and other election materials in sealed boxes;

2. Place all of the sealed boxes in a vault or room not open to the public or to anyone other than the clerk and his staff;

3. Cause such vault or room to be securely locked except when access is necessary for the clerk and his staff; and

4. Certify that these security measures have been taken in whatever form is deemed appropriate by the chief judge.

D. After a recount has been requested pursuant to § 24.2-801 of the Code of Virginia, and prior to the preliminary hearing specified in § 24.2-802 B of the Code of Virginia, the electoral board of each county or city in which the recount is to be held shall provide the court and all parties to the recount with:

1. The recommended location and number of recount teams needed to recount paper ballots and to redetermine the votes cast on direct recording electronic devices of the type that prints returns for the election district at large in which the recount is being held.

2. The recommended location and number of recount teams needed to insert the ballots read by an electronic counting device into one or more counting devices that have been programmed to count only votes cast for parties to the recount or for or against the question in a referendum recount. Such machines shall also be programmed to reject all undervoted and overvoted ballots as required by § 24.2-802 D of the Code of Virginia. The examination of undervoted and overvoted ballots may take place at the same location before the votes are totaled for that precinct, if so directed by the court. If a different team of officers would be used to examine the undervoted and overvoted ballots, such teams shall be included in the total number recommended for this item.

3. A complete list of all officers of election who served at the election to be recounted, with the political party they represented at that election listed beside their names, the precinct where each officer served, each officer's address and phone number or numbers, and an indication of which officers served as chief or assistant chief officers. Such list shall note recommended recount officials who the court may appoint if the officials and alternates recommended by the parties to the recount are not of sufficient number to conduct the recount within a reasonable period. Such list shall be provided by the local electoral boards for both parties to the recount, or by the Secretary of the State Board of Elections in the case of a recount for federal or statewide office or a statewide ballot issue, prior to the preliminary hearing, or as soon thereafter as possible, to assist them in preparing their selections of officers to be recount officials or alternates.

4. A list of the members of the electoral board and the political parties they represent. Such list shall be provided by the local electoral boards to both parties to the recount or by the Secretary of the State Board of Elections in the case of a recount for federal or statewide office or a statewide ballot issue.

E. To facilitate the conduct of any pending or expected recount for a federal or statewide office or statewide ballot issue, the Secretary of the State Board of Elections may coordinate the gathering of the recommendations and information from the electoral boards and provide such recommendations and information to the court prior to the preliminary hearing specified in § 24.2-802 B of the Code of Virginia on behalf of the electoral boards. The electoral board of each county or city in which the recount is to be held shall provide the requested information to the Secretary of the State Board of Elections.

F. Pursuant to § 24.2-802 A of the Code of Virginia, the procedures issued by the State Board of Elections, and any other procedures directed by the court, shall be as uniform as possible throughout the entire district in which the recount is being conducted, given the differences in types of equipment and ballots used in the election.

G. For any paper ballot that is to be counted manually and can be counted manually, the guidelines adopted by the State Board of Elections for hand-counting shall be used in determining the voter's intent ("Ballot Examples for Handcounting Paper or Paper-Based Ballots for Virginia Elections or Recounts").

H. The State Board of Elections and the appropriate electoral boards shall provide any other assistance requested by the court.

DOCUMENTS INCORPORATED BY REFERENCE (1VAC20-80)

Ballot Examples for Handcounting Paper or Paper-Based Ballots for Virginia Elections or Recounts, adopted August 2001, revised May 2002, November 2005, and June 2007, State Board of Elections.

Title of Regulation: 2VAC5-600. Regulations Pertaining to Food for Human Consumption (amending 2VAC5-600-10).

Statutory Authority: § 3.2-5101 of the Code of Virginia.

Effective Date: February 22, 2011.

Agency Contact: Ryan Davis, Program Manager, Office of Dairy and Foods, Department of Agriculture and Consumer Services, P. O. Box 1163, Richmond, VA 23218, telephone (804) 786-8910, FAX (804) 371-7792, TTY (800) 828-1120, or email ryan.davis@vdacs.virginia.gov.

Summary:

The final regulation adopts by reference revised and new sections of Title 21, Chapter 1 of the Code of Federal Regulations to reflect updated food safety standards and address concerns relating to juice and seafood production and distribution.

2VAC5-600-10. Adoption by reference.

A. Regulations from Title 21, Chapter 1, Subchapter A, Code of Federal Regulations. The Board of Agriculture and Consumer Services hereby adopts the following provisions of Chapter 1 of Title 21, Subchapter A of the Code of Federal Regulations (Rev. April 1, 1999) 2010) as regulations applicable in the enforcement of the Virginia Food Act by reference:

Part 73, Listing of color additives exempt from certification, Subpart A - Foods.

Part 74, Listing of color additives subject to certification, Subpart A - Foods.

Part 81, General specifications and general restrictions for provisional color additives for use in foods, drugs and cosmetics.

Part 82, Listing of certified provisionally listed colors and specifications, Subpart B—Foods, Drugs and Cosmetics.

B. Regulations from Title 21, Chapter 1, Subchapter B, Code of Federal Regulations. The Board of Agriculture and Consumer Services hereby adopts the following provisions of Chapter 1 of Title 21, Subchapter B of the Code of Federal Regulations (Rev. April 1, 1999) 2010) as regulations applicable in the enforcement of the Virginia Food Act by reference:

Part 100, General.

Part 101, Food labeling.

Part 102, Common or usual name for nonstandardized foods.

Part 104, Nutritional quality guidelines for foods.

Part 105, Foods for special dietary use.

Part 109, Unavoidable contaminants in food for human consumption and food-packaging material.

Part 110, Current good manufacturing practice in manufacturing, packing, or holding human food.

Part 111, Current good manufacturing practice in manufacturing, packaging, labeling, or holding operations for dietary supplements.

Part 113, Thermally processed low-acid foods packaged in hermetically sealed containers.

Part 114, Acidified foods.

Part 120, Hazard analysis and critical control point (HACCP) systems.

Part 123, Fish and fishery products.

Part 129, Processing and bottling of bottled drinking water.

Part 133, Cheeses and related cheese products.

Part 136, Bakery products.

Part 137, Cereal flours and related products.

Part 139, Macaroni and noodle products.

Part 145, Canned fruits.

Part 146, Canned fruit juices.

Part 150, Fruit butters, jellies, preserves, and related products.

Part 152, Fruit pies.

Part 155, Canned vegetables.

Part 156, Vegetable juices.

Part 158, Frozen vegetables.

Part 160, Eggs and egg products.

Part 161, Fish and shellfish.

Part 163, Cacao products.

Part 164, Tree nut and peanut products.

Part 165, Beverages.

Part 166, Margarine.

Part 168, Sweeteners and table sirups.

Part 169, Food dressings and flavorings.

§ 170.19, Pesticide chemicals in processed foods.

Part 172, Food additives permitted for direct addition to food for human consumption.

Part 173, Secondary direct food additives permitted in food for human consumption.

Part 174, Indirect food additives: General.

Part 175, Indirect food additives: Adhesives and components of coatings.

Part 176, Indirect food additives: Paper and paperboard components.

Part 177, Indirect food additives: Polymers.

Part 178, Indirect food additives: Adjuvants, production aids, and sanitizers.

Part 179, Irradiation in the production, processing and handling of food.

Part 180, Food additives permitted in food or in contact with food on an interim basis pending additional study, Subpart B—Specific requirements for certain food additives.

Part 181, Prior-sanctioned food ingredients.

Part 182, Substances generally recognized as safe.

Part 184, Direct food substances affirmed as generally recognized as safe.

Part 186, Indirect food substances affirmed as generally recognized as safe.

Part 189, Substances prohibited from use in human food.

C. Regulations from Title 21, Chapter 1, Subchapter L, Code of Federal Regulations. The Board of Agriculture and Consumer Services hereby adopts the following provisions of Chapter 1 of Title 21, Subchapter L of the Code of Federal Regulations (Rev. April 1, 1999) 2010) as regulations applicable in the enforcement of the Virginia Food Act by reference:

§ 1240.61, Mandatory pasteurization for all milk and milk products in final package form intended for direct human consumption.

D. Regulations from Title 40, Chapter 1, Subchapter E, Code of Federal Regulations. The Board of Agriculture and Consumer Services hereby adopts the following provisions of Chapter 1 of Title 40, Subchapter E of the Code of Federal Regulations (Rev. July 1, 1999) 2010) as regulations applicable to the enforcement of the Virginia Food Act by reference:

Part 180, Tolerances and exemptions from tolerances for pesticide chemicals chemical residues in foods food.

Part 185, Tolerances for pesticides in food.

FORMS (2VAC5-600)

Inspection Report, Form VDACS-06017.

Inspection Report, Form VDACS (undated).

Sample Collection Report (undated).

Form FDA 481(A)—CG (rev. 10/96).

FDA/State Contract Inspection Form 481 and Instructions (rev. 7/04).

Form FDA 481(C)—CG (rev. 9/84).

Form FDA 481(E)—CG (rev. 11/95).

Title of Regulation: 4VAC20-530. Pertaining to American Shad (amending 4VAC20-530-30, 4VAC20-530-31).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: March 1, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

The amendments extend the 2010 provisions for an American shad commercial bycatch fishery to provide for a limited bycatch fishery in 2011 and remove references to an obsolete administrative code section.

4VAC20-530-30. Moratorium.

A. It shall be unlawful for any person to catch and retain possession of American shad from the Chesapeake Bay, except as described in 4VAC20-530-31 and 4VAC20-530-32.

B. It shall be unlawful for any person to possess aboard a vessel or land in Virginia any American shad harvested from the coastal area.

C. It shall be unlawful for any person to possess any American shad taken from the coastal area or the Chesapeake Bay, except as described in 4VAC20-530-31 and 4VAC20-530-32, or the coastal area.

4VAC20-530-31. Bycatch fishery.

A. Any registered commercial fisherman meeting the conditions described in this subsection shall be eligible to participate in the American shad bycatch fishery in 2010 2011:

1. The registered commercial fisherman shall apply for a VMRC American Shad Bycatch Permit and possess that permit while fishing, landing, or selling his catch of American shad.

2. The registered commercial fisherman shall complete the VMRC American Shad Bycatch Survey form to describe his pending fishing activity.

B. It shall be unlawful for any person to possess aboard a vessel more than 10 American shad. When more than one registered and permitted fisherman is fishing on the same vessel, it shall be unlawful to possess more than 10 American shad aboard that vessel.

C. It shall be unlawful for any person to possess aboard a vessel or land any American shad unless that person possesses at least an equal number of fish of only the following food-grade species: spot, croaker, bluefish, catfish, striped bass or white perch.

D. Possession of American shad by any person permitted in accordance with this section shall be lawful only when those American shad were harvested from the bycatch area. Possession of any American shad harvested in Virginia waters that are outside of the bycatch area shall constitute a violation of this regulation, except as described in 4VAC20-530-32.

E. American shad harvested only as bycatch by anchored gill nets and staked gill nets may be possessed or retained for sale in accordance with the provisions of this regulation. It shall be unlawful for any person to harvest, land, or possess any American shad taken by any recreational gear or by any commercial gear, except anchored gill net or staked gill net, or any recreational gear.

F. Every fisherman permitted for the American shad bycatch fishery shall contact the commission's interactive voice response system once weekly to report the following for the preceding weekly period: name, registration number, number of fishing trips taken, water body fished, number of nets set, number of American shad caught, and number retained.

Title of Regulation: 4VAC20-620. Pertaining to Summer Flounder (amending 4VAC20-620-50, 4VAC20-620-70, 4VAC20-620-75).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: March 1, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

The amendments establish the recreational fishery minimum size limit as 17-1/2 inches for Summer Flounder harvested by recreational fishing gear.

4VAC20-620-50. Minimum size limits.

A. The minimum size for Summer Flounder harvested by commercial fishing gear shall be 14 inches, total length.

B. The minimum size of Summer Flounder harvested by recreational fishing gear, including but not limited to hook and line, rod and reel, spear and gig, shall be 18-1/2 17-1/2 inches, total length, except that the minimum size of Summer Flounder harvested in the Potomac River tributaries shall be the same as established by the Potomac River Fisheries Commission for the mainstem Potomac River.

C. Length shall be measured in a straight line from tip of nose to tip of tail.

D. It shall be unlawful for any person to possess any Summer Flounder smaller than the designated minimum size limit.

E. Nothing in this chapter shall prohibit the landing of Summer Flounder in Virginia that were legally harvested in the Potomac River.

4VAC20-620-70. Recreational fishing season.

A. The recreational fishing season for the Chesapeake Bay and its tributaries, and the coastal area any tidal waters of Virginia, except the Potomac River tributaries, shall be open year-round.

B. The recreational fishing season for the Potomac River tributaries shall be the same as established by the Potomac River Fisheries Commission for the mainstem Potomac River.

C. It shall be unlawful for any person fishing recreationally to take, catch, or possess any Summer Flounder during any closed recreational fishing season.

D. Nothing in this chapter shall prohibit the landing of Summer Flounder in Virginia that were legally harvested in the Potomac River.

4VAC20-620-75. Research exemptions to possession and size limits.

Nothing in this chapter shall preclude any person who is legally eligible to fish from possessing any Summer Flounder tagged by the Virginia Institute of Marine Science (VIMS) with two different types of tags in each of 260 Summer Flounder. One tag is a white data recording tag of 1/2-inch diameter and 1-1/2 inches in length that VIMS affixed to the Summer Flounder. That tag is inscribed with "VIMS $200 reward" and the VIMS telephone contact number. The second tag is a yellow "T-bar" or "spaghetti" type tag that VIMS affixed to the dorsal area of these double-tagged Summer Flounder. The yellow T-bar tag is inscribed with "reward" and the VIMS contact telephone number. Possession of these VIMS-tagged Summer Flounder shall not count towards the personal recreational possession limit of four Summer Flounder, 18-1/2 17-1/2 inches or greater in total length. Possession of any undersized flounder that has any affixed VIMS tag, as described above, shall not constitute a violation of the minimum size limit of 18-1/2 17-1/2 inches in total length. It shall be unlawful for any person to remove either type of tag from any caught or harvested Summer Flounder without having contacted VIMS. It shall be unlawful for any person to retain any of these VIMS-tagged Summer Flounder for a period of time that is longer than necessary to provide the VIMS-tagged Summer Flounder to a VIMS representative. Under no circumstances shall any VIMS-tagged flounder be stored for future use or sale or delivered to any person who is not a VIMS representative.

Title of Regulation: 4VAC20-950. Pertaining to Black Sea Bass (amending 4VAC20-950-20, 4VAC20-950-47, 4VAC20-950-48, 4VAC20-950-48.2).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: February 24, 2011.

Agency Contact: Jane Warren, Agency Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248, FAX (757) 247-2002, or email betty.warren@mrc.virginia.gov.

Summary:

This amendment (i) establishes the 2011 commercial black sea bass directed fishery quota as 302,216 pounds, and the 2011 commercial black sea bass bycatch fishery quota as 40,000 pounds; (ii) establishes the criteria for individual fishery quota for 2011; and (iii) defines "land" or "landing" as entering the port, beginning to offload, or offloading finfish, shellfish, crustaceans, or other marine seafood.

4VAC20-950-20. Definitions.

The following words and terms when used in this chapter shall have the following meaning unless the context clearly indicates otherwise.

"Black sea bass" means any fish of the species Centropristis striata.

"Land" or "landing" means to (i) enter port with finfish, shellfish, crustaceans, or other marine seafood on board any boat or vessel; (ii) begin offloading finfish, shellfish, crustaceans, or other marine seafood; or (iii) offload finfish, shellfish, crustaceans, or other marine seafood.

4VAC20-950-47. Commercial harvest quotas.

A. The 2010 2011 commercial black sea bass directed fishery quota is 311,722 302,216 pounds. When it has been announced that the directed fishery quota has been projected as reached and the directed fishery has been closed, it shall be unlawful for any directed commercial black sea bass fishery permittee to possess aboard any vessel or land in Virginia any black sea bass.

B. The 2010 2011 commercial black sea bass bycatch fishery quota is 40,000 pounds from January 1 through April 30. From May 1 through December 31, 2010, the commercial black sea bass bycatch fishery quota is the lesser of 10,000 pounds or the remaining amount of black sea bass bycatch fishery quota as of May 1, 2010. When it has been announced that the bycatch fishery quota has been projected as reached and the bycatch fishery has been closed, it shall be unlawful for any bycatch commercial black sea bass fishery permittee to possess aboard any vessel or land in Virginia any black sea bass. In the event the bycatch fishery quota is exceeded, the amount the quota overage shall be deducted from the following year's bycatch fishing quota.

4VAC20-950-48. Individual fishery quotas; bycatch limit; at sea harvesters; exceptions.

A. Each person possessing a directed fishery permit shall be assigned an individual fishery quota, in pounds, for each calendar year. Except as provided in subsection F of this section, a person's individual fishery quota shall be equal to that person's percentage of the total landings of black sea bass in Virginia from July 1, 1997, through December 31, 2001, multiplied by the directed commercial fishery black sea bass quota for the calendar year. Any directed fishery permittee shall be limited to landings in the amount of his individual fishery quota, in pounds, in any calendar year and it shall be unlawful for any permittee to exceed his individual fishery quota. In addition to the penalties prescribed by law, any overages of an individual's fishery quota shall be deducted from that permittee's individual fishery quota for the following year.

B. In the determination of a person's percentage of total landings, the commission shall use the greater amount of landings from either the National Marine Fisheries Service Dealer Weigh-out Reports or National Marine Fisheries Service Vessel Trip Reports that have been reported and filed as of November 26, 2002. If a person's percentage of the total landings of black sea bass is determined by using the Vessel Trip Reports as the greater amount, then the person shall provide documentation to the Marine Resources Commission to verify the Vessel Trip Reports as accurate. This documentation may include dealer receipts of sales or other pertinent documentation, and such documentation shall be submitted to the commission by December 1, 2004. In the event the commission is not able to verify the full amount of the person's Vessel Trip Reports for the qualifying period, the commission shall use the greater amount of landings, from either the Dealer Weigh-Out Reports or the verified portion of the Vessel Trip Reports to establish that person's share of the quota.

C. It shall be unlawful for any person permitted for the bycatch fishery to possess aboard a vessel, or to land in Virginia, in any one day, more than 200 pounds of black sea bass, except that any person permitted in the bycatch fishery may possess aboard a vessel, or land in Virginia, more than 200 pounds of black sea bass, in any one day, provided the total weight of black sea bass on board the vessel does not exceed 10%, by weight, of the total weight of summer flounder, scup, Loligo squid and Atlantic mackerel on board the vessel. When it is projected and announced that 75% of the bycatch fishery quota has been be taken, it shall be unlawful for any person permitted for the bycatch fishery to possess aboard a vessel, or to land in Virginia, more than 100 pounds of black sea bass do any of the following:

1. Possess aboard a vessel or land in Virginia more than 200 pounds of black sea bass, in any one day, except as provided in subdivision 2 of this subsection;

2. Possess aboard a vessel or land in Virginia more than 1,000 pounds of black sea bass, in any one day, provided that the total weight of black sea bass on board the vessel does not exceed 10%, by weight, of the total weight of summer flounder, scup, Loligo squid, and Atlantic mackerel on board the vessel; or

3. Possess aboard a vessel or land in Virginia more than 100 pounds of black sea bass, when it is projected and announced that 75% of the bycatch fishery quota has been taken.

D. It shall be unlawful for any person to transfer black sea bass from one vessel to another while at sea.

E. Any hardship exception quota granted by the commission prior to October 27, 2009, shall be converted to a percentage of the directed fishery quota based on the year in which that hardship exception quota was originally granted. The hardship exception quota shall not be transferred for a period of five years from the date the commission granted that hardship exception quota.

F. An individual fishery quota, as described in subsection A of this section, shall be equal to an individual's current percentage share of the directed fishery quota, as described in 4VAC20-950-47 A. As of May 1, 2010, should the remaining amount of black sea bass bycatch fishery quota exceed 10,000 pounds, that excess quota shall be allocated to commercial black sea bass directed fishery permit holders who have landed at least 500 pounds of black sea bass in at least two of three years, starting in 2006 and ending in 2008. The basis for that allocation shall be the same as used to determine an individual directed fishery quota as described in subsection A of this section.

4VAC20-950-48.2. Alternate vessel authorization requirements.

A. Any person possessing a directed fishery permit may authorize an alternate vessel to harvest, possess and land any portion of his individual fishery quota, provided the following conditions are met:

1. The directed fishery permit holder has submitted a completed and notarized alternate vessel authorization form to the commission.

2. The alternate vessel named on the authorization form holds a federal Black Sea Bass Moratorium Permit and that alternate vessel either holds a Virginia Seafood Landing License or the that alternate vessel's owner and operator holds a Commercial Fisherman Registration License.

3. The alternate vessel authorization has been accepted and approved by the commissioner.

4. The alternate vessel maintains copies of the alternate vessel authorization form and the permit of the directed fishery quota owner at all times while serving as the alternate vessel.

B. No authorization for an alternate vessel to land black sea bass shall extend for more than 60 days from the date the commissioner approves the authorization. After 60 days, any unused portion of quota authorized for the alternate vessel shall revert to its directed fishery permit holder.

Title of Regulation: 13VAC5-51. Virginia Statewide Fire Prevention Code (amending 13VAC5-51-31).

Statutory Authority: § 27-97 of the Code of Virginia.

Effective Date: April 13, 2011.

Agency Contact: Stephen W. Calhoun, Regulatory Coordinator, Department of Housing and Community Development, Main Street Center, 600 East Main Street, Suite 300, Richmond, VA 23219, telephone (804) 371-7000, FAX (804) 371-7090, TTY (804) 371-7089, or email steve.calhoun@dhcd.virginia.gov.

Summary:

The Board of Housing and Community Development approved final regulations on July 26, 2010, to incorporate by reference the 2009 edition of the International Fire Code (IFC) as the basis for the technical requirements of 13VAC5-51, Statewide Fire Prevention Code, after completing a full regulatory process. Formerly, the regulation used the 2006 edition of the IFC. After publication of the final regulations, it was discovered that a provision had been inadvertently omitted from the proposed and final regulations and therefore still listed the 2006 edition of the IFC, rather than the 2009 edition. This action corrects that technical error by amending 13VAC5-51-31 A to stipulate that the 2009 edition of the IFC, rather than the 2006 edition, was approved by the Board of Housing and Community Development.

13VAC5-51-31. Section 103.0. Incorporation by reference.

A. 103.1. General: The following document is adopted and incorporated by reference to be an enforceable part of the SFPC:

The International Fire Code -- 2006 2009 Edition, hereinafter referred to as "IFC," published by the International Code Council, Inc., 500 New Jersey Avenue, NW, 6th Floor, Washington, DC 20001-2070, 1-888 422-7233.

B. 103.1.1. Deletion: Delete IFC Chapter 1.

C. 103.1.2. Appendices: The appendices in the IFC are not considered part of the IFC for the purposes of Section 103.1.

Note: Section 101.5 references authority contained in the Code of Virginia for local fire prevention regulations that may be evaluated by localities to determine whether provisions in the IFC appendices may be considered for local fire prevention regulations.

D. 103.2. Amendments: All requirements of the referenced codes and standards that relate to fees, permits, unsafe notices, disputes, condemnation, inspections, scope of enforcement and all other procedural, and administrative matters are deleted and replaced by the provisions of Chapter 1 of the SFPC.

E. 103.2.1. Other amendments: The SFPC contains provisions adopted by the Virginia Board of Housing and Community Development (BHCD), some of which delete, change or amend provisions of the IFC and referenced standards. Where conflicts occur between such changed provisions and the unchanged provisions of the IFC and referenced standards, the provisions changed by the BHCD shall govern.

Note: The IFC and its referenced standards contain some areas of regulation outside of the scope of the SFPC, as established by the BHCD and under state law. Where conflicts have been readily noted, changes have been made to the IFC and its referenced standards to bring it within the scope of authority; however, in some areas, judgment will have to be made as to whether the provisions of the IFC and its referenced standards are fully applicable.

F. 103.3. International Fire Code. Retroactive fire protection system requirements contained in the IFC shall not be enforced unless specified by the USBC.

Titles of Regulations: 14VAC5-40. Rules Governing Life Insurance and Annuity Marketing Practices (repealing 14VAC5-40-10 through 14VAC5-40-80).

14VAC5-41. Rules Governing Advertisement of Life Insurance and Annuities (adding 14VAC5-41-10 through 14VAC5-41-160).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: July 1, 2011.

Agency Contact: Weldon Hazlewood, Principal Market Examiner, Bureau of Insurance, State Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804) 371-9047, FAX (804) 371-9944, or email weldon.hazlewood@scc.virginia.gov.

Summary:

The repeal of 14VAC5-40 is necessary because the rules are outdated and many provisions are no longer applicable to current advertisement practices. The final new rules in 14VAC5-41 address and clarify many of the advertisement requirements found in the Code of Virginia, retain some of the provisions from 14VAC5-40, and more closely follow the National Association of Insurance Commissioners' (NAIC) Model Regulation on this subject.

The final rules (i) establish the form and content of advertisements; (ii) establish general disclosure requirements; (iii) set standards for advertisements that include information on premiums, nonguaranteed policy elements and benefits, policy costs and cost comparison, insurer identity, testimonials, and introductory or special offers; and (iv) set requirements for policies sold to students, licensing, approval, and records maintenance.

In response to public comment, the proposed rules are amended to (i) clarify use of misleading terms by adding language to 14VAC5-41-30 E from Section 4B of the NAIC Model Regulations; (ii) address policies pertaining to graded or modified benefits in 14VAC5-41-40 D by substituting the language in Section 5 G of the NAIC Model Regulations; (iii) require a disclosure in advertisements pertaining to universal life insurance premiums, but no longer require specific disclosure language to be used (14VAC5-41-40 E); (iv) clarify 14VAC5-41-60 D by adding language addressing what an insurer may say with regard to dividends; (v) delete outdated language (14VAC5-41-60 G) and unnecessary language (14VAC5-41-80-D); and (vi) increase the limit on a gift of substantial value from $5.00 to $25 in 14VAC5-41-90 M for consistency with other states' regulations on this subject.

AT RICHMOND, FEBRUARY 15, 2011

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. INS-2010-00214

Ex Parte: In the matter of Repealing and
Adopting New Rules Governing
Advertisement of Life Insurance and Annuities

ORDER REPEALING AND ADOPTING RULES

By Order entered herein October 20, 2010, all interested persons were ordered to take notice that subsequent to December 17, 2010, the State Corporation Commission ("Commission") would consider the entry of an order repealing the Commission's Rules Governing Life Insurance and Annuity Marketing Practices ("Rules"), set forth in Chapter 40 of Title 14 of the Virginia Administrative Code at 14VAC5-40-10 through 14VAC5-40-80, and adopting new rules proposed by the Bureau of Insurance ("Bureau") entitled Rules Governing Advertisement of Life Insurance and Annuities ("New Rules"), set forth in Chapter 41 of Title 14 of the Virginia Administrative Code at 14VAC5-41-10 through 14VAC5-41-160, unless on or before December 17, 2010, any person objecting to the repeal of the Rules and adoption of the New Rules filed a request for hearing with the Clerk of the Commission ("Clerk").

The Order to Take Notice also required all interested persons to file their comments in support of or in opposition to the repeal of Rules and adoption of New Rules on or before December 17, 2010.

Comments were timely filed by the American Council of Life Insurers ("ACLI") by letter dated December 15, 2010. No request for a hearing was filed with the Clerk.

The Bureau considered the comments filed by the ACLI, and responded to these comments in a Statement of Position, a copy of which was filed in the case file on February 2, 2011. The Bureau recommends that the proposed New Rules be amended as follows in response to these comments:

14VAC5-41-30 E: The remainder of the sentence contained in Section 4 B of the National Association of Insurance Commissioners ("NAIC") Model regulations be added to this subsection to clarify use of misleading terms;

14VAC5-41-40 D: The provision as proposed be deleted, and the subsection amended using the language in the NAIC Model, Section 5 G to address policies containing graded or modified benefits;

14VAC5-41-40 E: The requirement that certain mandatory language pertaining to universal life policies be changed to an advertisement disclosure;

14VAC5-41-60 D: A sentence added to this subsection clarifying what an insurer may say with regard to dividends;

14VAC5-41-60 G: This subsection be deleted as the language is outdated;

14VAC5-41-80 D: This subsection be deleted as the section is unnecessary; and

14VAC5-41-90 M: Change the limit on a gift of substantial value from $5.00 to $25.00, keeping in line with other states' regulations on this subject. The Bureau recommends that all other sections of the New Rules remain as proposed.

The repeal of Chapter 40 is necessary because the Rules are old and outdated, and many provisions are no longer applicable to current advertisement practices.

The New Rules in Chapter 41 address and clarify many of the advertisement requirements found in the Code of Virginia, retain some of the provisions from Chapter 40, and more closely follow the NAIC Model Regulation on this subject. The New Rules establish the form and content of advertisements and general disclosure requirements, set standards for advertisements that include information on premiums, nonguaranteed policy elements, and benefits, address policy costs and cost comparison requirements, insurer identity, advertisements using testimonials or offering introductory or special offers, requirements for policies sold to students, licensing, as well as approval and records maintenance requirements.

THE COMMISSION, having considered the repeal of the Rules, the proposed New Rules, the filed comments, the Bureau's Statement of Position response, and the Bureau's recommendation for additional amendments to the New Rules, is of the opinion that the attached New Rules in Chapter 41 be adopted, and the Rules in Chapter 40 be repealed.

Accordingly, IT IS ORDERED THAT:

(1) The Rules in Chapter 40 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Life Insurance and Annuity Marketing Practices" at 14VAC5-40-10 through 14VAC5-40-80, which are attached hereto and made a part hereof, should be, and they are hereby, REPEALED effective on July 1, 2011;

(2) The New Rules in Chapter 41 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Advertisement of Life Insurance and Annuities" at 14VAC5-41-10 through 14VAC5-41-160, which are attached hereto and made a part hereof, should be, and they are hereby, ADOPTED, to be effective July 1, 2011;

(3) AN ATTESTED COPY hereof, together with a copy of the repealed Rules and adopted New Rules, shall be sent by the Clerk of the Commission to Althelia Battle, Deputy Commissioner, Bureau of Insurance, State Corporation Commission, who forthwith shall give further notice of the repeal of Rules and adoption of New Rules by mailing a copy of this Order, including a clean copy of the final New Rules, to all insurers licensed by the Commission to write life insurance and annuity contracts in the Commonwealth of Virginia, as well as all interested parties;

(4) The Commission's Division of Information Resources shall cause a copy of this Order, together with repealed Rules and adopted New Rules, to be forwarded to the Virginia Registrar of the Regulations for appropriate publication in the Virginia Register of Regulations;

(5) The Commission's Division of Information Resources shall make available this Order and the attached Rules on the Commission's website: http://www.scc.virginia.gov/case; and

(6) The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (3) above.

CHAPTER 41
RULES GOVERNING ADVERTISEMENT OF LIFE INSURANCE AND ANNUITIES

14VAC5-41-10. Purpose and applicability.

A. The purpose of this chapter is to set forth minimum standards and guidelines to assure a full and truthful disclosure to the public of all material and relevant information in the advertising of life insurance policies and annuity contracts.

B. All advertisements, regardless of by whom written, created, designed, or presented, shall be the responsibility of the insurer or the agent who created or presented the advertisement.

C. This chapter shall apply to any life insurance or annuity advertisement intended for dissemination in this Commonwealth. In variable contracts where disclosure requirements are established pursuant to federal regulation, this chapter shall be interpreted to eliminate any conflict with federal regulation.

14VAC5-41-20. Definitions.

The following words and terms when used in this chapter shall have the following meaning unless the context clearly indicates otherwise:

"Advertisement" means any marketing communication that is oral, printed, written, or other material of any type from any source that is used by an agent or insurer and that is designed to create or has the effect of creating public interest in life insurance or annuities, or induces or tends to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy including, but not limited to:

1. Printed or published material, audiovisual material, mailing envelopes, or descriptive literature of an insurer or agent used in direct mail, newspapers, magazines, radio, telephone and television scripts, billboards or similar displays, websites and other Internet displays or communications, social media, or other forms of electronic communications;

2. Descriptive literature and sales aids of all kinds, authored by the insurer, its agents, or third parties, issued, distributed, or used by an insurer or agent including but not limited to circulars, booklets, illustrations, form letters, pamphlets, brochures, and books or portions thereof;

3. Materials, statements, or communications of any type used for the recruitment, training, and education of an insurer's sales personnel and agents that are designed to be used or are used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy; or

4. Prepared or extemporaneous sales talks, presentations, and material for use or used by agents.

"Advertisement" does not include:

1. Communications or materials used within an insurer's own organization, not used as a sales aid, and not intended to be disseminated to the public;

2. Communications with policyholders other than material urging them to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy; or

3. A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a policy or program has been written or arranged; provided the announcement clearly indicates that it is preliminary to the issuance of a booklet explaining the proposed coverage.

"Agent" means a person defined in § 38.2-1800 of the Code of Virginia.

"Commission" means the State Corporation Commission.

"Contribution principle" means the dividend determination principle wherein aggregate divisible surplus is distributed or illustrated to be distributed among participating policies in the same proportion as the policies are considered to have contributed to divisible surplus.

"Determinable policy elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable policy elements only, or from both determinable and guaranteed policy elements.

"Guaranteed policy elements" means the premiums, benefits, values, credits or charges under a policy, or elements of formulas used to determine any of these that are guaranteed and determined at issue.

"Home office" means either the insurer's home office or the principal executive or administrative office of the insurer from which policyholder services available to the citizens of this Commonwealth are directed or administered.

"Insurer" means any person, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's, fraternal benefit society, or any other legal entity that is defined as an "insurer" in the Code of Virginia.

"Nonguaranteed policy elements" means the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

"Policy" means any policy, plan, certificate including a fraternal benefit certificate, contract, agreement, statement of coverage, rider, or endorsement that provides for life insurance or annuity benefits unless otherwise specifically defined in this chapter.

"Preneed funeral contract" means any agreement where payment is made by the consumer prior to the receipt of services or supplies contracted for, that evidences arrangements prior to death for (i) the providing of funeral services or (ii) the sale of funeral supplies.

14VAC5-41-30. Form and content of advertisements.

A. An advertisement shall not be combined or included with an advertisement of a product or service that is not life insurance or an annuity that disguises, misleads, misinforms or otherwise minimizes the nature of the advertisement.

B. An advertisement shall be truthful and not misleading in fact or by implication. The form and content of an advertisement shall be sufficiently accurate, complete, and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the commission from the overall impression that the advertisement may be reasonably expected to create within the segment of the public to which it is directed.

C. An advertisement shall not omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving purchasers, prospective purchasers or policyowners as to the nature of their relationship with the insurer, or the nature or extent of any policy benefit, loss covered, premium payable, or state or federal tax consequences. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale, or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.

D. An advertisement shall not make unfair, inaccurate, or incomplete comparisons of policies, benefits, dividends, or rates of other insurers. An advertisement shall not disparage or falsely or unfairly describe other insurers, agents, policies, services, or methods of marketing.

E. An advertisement shall not use the terms "investment," "investment plan," "founder's plan," "charter plan," "expansion plan," "profit," "profits," "profit sharing," "deposit," "interest plan," "savings," "savings plan," "retirement plan," "private pension plan," or other similar terms in connection with a policy in a context or under circumstances or conditions as to have the capacity or tendency to mislead [ a purchaser or prospective purchaser of such policy to believe that he will receive, or that it is possible that he will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life ].

F. An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class, group or quasi-group and as such enjoy special rates, dividends, or underwriting privileges, unless that is fact.

14VAC5-41-40. General disclosure requirements.

A. The information required to be disclosed by this chapter shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of an advertisement so as to confuse or mislead.

B. If an advertisement uses the terms "nonmedical," "no medical examination required," or similar terms where issue is not guaranteed, these terms shall be accompanied by a further disclosure of equal prominence and juxtaposition to the effect that issuance of the policy may depend upon the answers to the health questions contained in the application.

C. An advertisement shall not contain figures, dollar amounts, or statistical information unless it accurately reflects recent and relevant facts. The source of any figures, dollar amounts, or statistics used in advertisements shall be identified therein.

D. An advertisement [ that relates to a policy under which the death benefit varies with the length of time the policy has been in force shall clearly call attention to the amount of minimum death benefit under the policy. If the death benefit during a specified period following the policy date of issue is limited to an amount equal to the sum of the premiums paid on the policy (with or without interest at a stated rate and regardless of whether the premiums are assumed to have always been paid annually), then any advertisement of the policy by an insurer shall prominently and clearly disclose the nature of the limited benefit. For the purposes of this subdivision only, the term "death benefit" does not include amounts payable because of accidental death, and exclusions applicable to death caused by suicide, occupational hazard, or aviation hazard are not to be considered in deriving the "death benefit." for a life insurance policy containing graded or modified benefits shall prominently display any limitation of benefits. If the premium is level and coverage decreases or increases with age or duration, that fact shall be commonly disclosed. An advertisement of or for a life insurance policy under which the death benefit varies with the length of time the policy has been in force shall accurately describe and clearly call attention to the amount of minimum death benefit under the policy. ]

E. Any advertisement that mentions or refers to universal life insurance premiums shall [ include the following disclosure: "It indicate that it ] is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage [ .", if true. ]

F. An insurer or agent shall advise a prospective applicant who is considering replacing a policy that under the existing policy the period of time during which the existing insurer could contest the policy or deny coverage for death caused by suicide may have expired or may expire earlier than it will under the proposed policy.

G. An advertisement for life insurance or an annuity that is to be used to fund a preneed funeral contract shall disclose that fact.

H. An advertisement for life insurance or an annuity in which the face amount or any part of the face amount is based on the actual or estimated cost of funeral goods or services shall contain the following disclosure:

"This is (life insurance or an annuity). This (life insurance or annuity) does not specifically cover funeral goods or services. The beneficiary of this (life insurance or annuity) may use the proceeds of this (life insurance or annuity) for any purpose, unless otherwise directed. The face amount of this (life insurance or annuity) is not guaranteed to increase at the same rate as the costs of a funeral increase."

14VAC5-41-50. Premiums.

A. An amount that is a premium for a policy shall be referred to in any advertisement only as a premium. The use of words such as "deposit," "deposit premium," "investment," or other misleading or confusing terminology to refer to a premium is prohibited.

B. An advertisement shall not contain a statement or representation that premiums paid for a policy can be withdrawn under the terms of the policy. Reference may be made to amounts paid into an advance premium fund, which are intended to pay premiums at a future time, to the effect that they may be withdrawn under the conditions of the prepayment agreement. Reference also may be made to withdrawal rights under any unconditional premium refund offer.

C. An advertisement for a policy with nonlevel premiums shall prominently describe the premium changes.

D. An advertisement in which the insurer describes a policy that reserves the right to change the amount of the premium during the policy term shall prominently describe this feature.

E. An advertisement for a policy with pure endowment benefits payable within the premium paying period shall contain information regarding the premium charged in a clearly identified separate amount. The specific amount of each separate endowment shall be shown in dollar amounts only. An advertisement shall not represent a pure endowment benefit as a "profit" or "return" on the premium paid, rather than a policy benefit for which a specified premium is paid.

F. An advertisement shall not imply the existence of an actuarial relationship between a specific premium or portion thereof, and a specific benefit or portion thereof, provided under a policy where, in fact, none exists. No premium or a portion of a premium shall be represented as an "additional," "separate," or "special" premium unless there is an actuarial relationship between the premium or portion thereof, and some specifically identifiable benefit or portion thereof.

G. No artificial relationships among premiums, interest rates, and benefits or portions thereof shall be implied or created.

H. An advertisement shall not represent that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact.

I. An advertisement shall not use the term "vanish," "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan using nonguaranteed elements to pay a portion of future premiums.

14VAC5-41-60. Nonguaranteed policy elements.

A. An advertisement shall not utilize or describe nonguaranteed policy elements in a manner that is misleading or has the capacity or tendency to mislead. In this connection, analogies and comparisons between dividends payable on shares of stock and dividends payable under a policy are prohibited unless the advertisement fully, clearly, and accurately describes the differences.

B. An advertisement shall not state or imply that the payment or amount of nonguaranteed policy elements is guaranteed. If nonguaranteed policy elements are illustrated, they shall be based on the insurer's current scale, and the illustration shall contain a prominent statement to the effect that the nonguaranteed policy elements are not to be construed as guarantees of amounts to be paid in the future.

C. An advertisement shall not state or imply that illustrated dividends or other nonguaranteed policy elements under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur.

D. An advertisement shall not state or imply that dividends are other than mainly a refund or return of part of the premium paid or that dividends are guaranteed. [ An advertisement may if true state or imply that dividends are dependent on the investment earnings, lapse experience, mortality experience, and expense experience of the insurer. ]

E. An advertisement shall not state or imply that a prospective policyholder will receive dividends or other nonguaranteed benefits, or special or favored treatment in the allowance or payment of amounts or other monetary benefits not expressly provided in the policy.

F. An advertisement shall not refer to dividends as "tax free" or use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

[ G. An advertisement shall show dividends in dollar amount form only.

H. G. ] If a dividend illustration is determined in a manner involving substantial deviation from the contribution principle, an advertisement showing illustrated dividends shall prominently display the following caution: "The illustrated dividends for this policy were determined in a manner inconsistent with generally accepted practices."

14VAC5-41-70. Policies and benefits.

A. An advertisement shall not use as the name or title of a policy any phrase which omits the words "life insurance" or "annuity," as appropriate, unless accompanied by other language clearly indicating it is life insurance or an annuity.

B. An advertisement shall clearly and prominently describe the true nature or type of policy advertised.

C. An advertisement shall not state, represent or imply that a prospective or current policyholder will receive the right to benefits that are not a part of the policy itself, or made an effective part of the policy by rider or other instrument approved by and on file with the commission.

D. An advertisement shall not represent, directly or indirectly, that a policy may be sold only to certain persons because of their occupation, association, age, sex, or other condition unless it can be shown that the policy advertised is, in fact, sold only to those persons.

E. An advertisement shall not contain statements indicating that because a prospect has agreed to furnish names of potential purchasers, he is entitled to any specific benefits not available to all policyholders generally.

F. An advertisement shall not represent an increasing or other term insurance provision as a return of premium, a cash surrender value, or anything other than a guaranteed insurance benefit for which a premium is charged.

G. An advertisement shall not state or imply that a policy contains features or benefits that are not found in other policies, unless that is true.

H. In any advertisement, the basic death benefit shall be shown as a single amount, not arbitrarily or deceptively split into two or more parts, implying that there is a relationship between some part of a premium or other policy amount and some part of the death benefit, unless that is the fact, and provided the relationship is not for the purpose of, or may likely have the effect of, misleading or deceiving.

I. If nonforfeiture values are shown in any advertisement, the values must be shown either for the entire amount of the basic death benefit or for each $1,000 of initial death benefit.

J. An advertisement shall not state or imply that on the death of an insured, the beneficiary will receive, or should have received, the cash value of a policy in addition to the face amount, unless the policy so provides.

K. An advertisement shall not state or imply in any way that interest charged on a policy loan or the reduction of death benefits by the amount of outstanding policy loans is unfair, inequitable, or in any manner an incorrect or improper practice.

L. The use of savings "passbooks" and similar misleading techniques to show a policy's cash value is prohibited.

M. Analogies between a policy's cash values and savings accounts or other investments, and between premium payments and contributions to savings accounts or other investments shall be complete and accurate. The analogy shall make clear that the representation is an analogy only and that cash values and premium payments are not identical to a savings account or other investments and contributions.

N. An advertisment shall not represent a pure endowment benefit as earnings on premiums paid or represent that a pure endowment benefit in a policy is other than a guaranteed benefit for which a specific part or all of the premium is being paid by the policyholder. For the purpose of this section, coupons or other devices for periodic payment of endowment benefits are included within the phrase "a pure endowment benefit."

14VAC5-41-80. Policy costs and cost comparisons.

A. The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, then the identity of the payor and the amount of the payment shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language.

B. An advertisement of a particular policy shall not use the phrase "inexpensive," "low cost" or any similar term unless that fact is capable of being demonstrated to the satisfaction of the commission.

C. An advertisement shall not imply or state that all older policies are more or less costly than newer policies.

[ D. A system or presentation that does not recognize the time value of money through the use of appropriate interest adjustments shall not be used for comparing the costs of two or more policies. The system may be used for the purpose of providing accounting information on a single policy owned by a business or for the purpose of showing the income tax implications of ownership of a single policy provided (i) it is accompanied by a statement disclosing that the presentation does not recognize that, because of interest, a dollar in the future has less value than a dollar today, and (ii) it is not used, directly or by implication, for purposes of illustrating the cost of the policy.

E. D. ] An advertisement of two or more policies sold as a "package" or other combination shall not direct attention improperly at the cost competitiveness of one part of the "package" when the cost competitiveness of that part is not indicative of the cost competitiveness of the "package" as a whole.

[ F. E. ] An advertisement of a single policy shall not direct attention improperly at the cost competitiveness of a part of the policy when the cost competitiveness of that part is not indicative of the cost competitiveness of the entire policy.

[ G. F. ] An advertisement of a policy at a particular issue age, sex, or amount shall not lead prospective policyholders to believe that the cost competitiveness of the policy is similar at other issue ages, sex, or amounts unless that is a fact.

[ H. G. ] An advertisement containing a cost comparison of two or more policies with nonguaranteed policy elements in which the method of investment income allocation differs between or among the policies shall state that fact and shall contain a brief explanation of the implications of the cost comparison.

14VAC5-41-90. Insurer identity and representations.

A. An advertisement shall not contain statements, pictures, comparative financial ratios, or illustrations that are false, misleading, or irrelevant in fact or by implication, with respect to the assets, liabilities, insurance in force, corporate structure, financial condition, age, or relative position of the insurer in the insurance business or with regard to affiliates or subsidiaries of the insurer. An advertisement shall not contain a recommendation by any commercial rating service unless it clearly defines the scope and extent of the recommendation.

B. An advertisement shall not state or imply that a purchaser of a policy will share in or receive a stated percentage or portion of the earnings on the general account assets of the insurer unless that is a fact.

C. The name of the insurer shall be clearly identified in all advertisements about the insurer or its products, and if any specific policy is advertised it shall be identified either by its form number or other appropriate description. If an application is a part of the advertisement, the name of the insurer shall be shown on the application.

D. An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, a reinsurer of the insurer, service mark, slogan, symbol, or other device or reference without disclosing the name of the insurer if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the insurer, or create the impression that a company other than the insurer would have any responsibility for the financial obligations under a policy.

E. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a governmental program or agency or otherwise appear to be of a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.

F. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a noninsurance company with whom the prospective insured has a financial relationship or otherwise appear to be of a nature that it tends to mislead or deceive the prospective insured into believing that the purchase of insurance is required by the company.

G. An advertisement shall not represent that the mere size of an insurer or its total insurance in force necessarily affects either the solvency of the insurer or the reliability of the policies issued by the insurer.

H. An advertisement shall not contain any statement that would lead a prospective buyer or policyholder of life insurance or annuity to believe that he is acquiring stock in an insurer by purchasing the life insurance or annuity.

I. An advertisement shall not contain any statement that creates an inference that policyholders are entitled to benefits or profits on the same basis as stockholders.

J. An insurer or agent shall not use the terms "financial planner," "investment advisor," "financial consultant," "financial counseling" or other similar terms in a way that implies that the person who is engaged in the business of insurance, is generally engaged in an advisory business in which compensation is unrelated to sales unless that is actually a fact. No person engaged in the business of insurance shall hold himself out, directly or indirectly, to the public as a "financial planner," "investment advisor," "financial consultant," "financial counselor" or any other specialist engaged in the business of giving complete financial planning advice relating to investments, insurance, real estate, tax matters, and trust and estate matters unless that person in fact is engaged in that business and renders those services. Not included in "services" is the presentation of computer printouts that fall into the category of advanced programming for the purpose of selling a policy.

K. An advertisement of a policy marketed by direct response techniques shall not state or imply that because there is no insurance agent or commission involved there will be a cost savings to prospective purchasers unless that is the fact.

L. An insurer or agent shall not use materials, statements, or communications of any kind that when used alone are not misleading, but become deceptive or misleading when combined.

M. An insurer or agent shall not offer or provide to a proposed insured or other person a gift of substantial value if an application, inquiry card, or reinstatement application is returned within a specified period of time. For purposes of this subsection, a [ nonmonetary ] gift valued at [ $5.00 $25 ] or less shall not be considered [ a gift ] of substantial value.

14VAC5-41-100. Testimonials, appraisals, analyses and endorsements.

A. A testimonial, appraisal, analysis, or endorsement used in an advertisement shall be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective insureds as to the nature or scope of the testimonial, appraisal, analysis, or endorsement. In using testimonials, appraisals, analyses, or endorsements the insurer or agent makes as its own all the statements contained therein, and these statements are subject to all provisions of this chapter.

B. If the individual making a testimonial, appraisal, analysis, or endorsement has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee, or otherwise, that fact shall be clearly and prominently disclosed in the advertisement. If an individual receives any financial benefit directly or indirectly, greater than required union scale wages, that fact shall be clearly and prominently disclosed in the advertisement by language identical or substantially similar to the following: "THIS IS A PAID ENDORSEMENT."

C. An advertisement shall not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association, or other organization unless that is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial is owned, controlled, or managed by the insurer or receives any payment or other consideration from the insurer for making the endorsement or testimonial, that fact shall be disclosed in the advertisement.

14VAC5-41-110. Introductory, initial or special offers.

A. An advertisement of one policy or combination of policies shall not state or imply that the policy or combination of policies is an introductory, initial, or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement shall not describe an enrollment period as "special" or "limited" or use similar words or phrases in describing it when the insurer uses successive enrollment periods as its usual method of marketing its policies.

B. An advertisement shall not state or imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of a particular policy because of special advantages available in the policy.

C. An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium. When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy.

D. An enrollment period during which a particular policy may be purchased on an individual basis shall not be offered within this Commonwealth unless there has been a lapse of not less than six months between the close of the immediately preceding enrollment period for the same or substantially similar policy and the opening of a new enrollment period. The advertisement shall specify the date by which the applicant must mail the application, that shall be not less than 10 days and not more than 40 days from the date on which the enrollment period is presented for the first time in the advertisement. This section applies to all the affiliated companies of a group of insurance companies under common management or control. This section does not apply to the use of a termination or cutoff date beyond which an individual application for a guaranteed issue policy will not be accepted by an insurer in those instances where the application has been sent to the applicant in response to his request. It is also inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specific provisions of the Code of Virginia for group, blanket, or franchise insurance. In cases where a policy is marketed on a direct response basis to prospective insureds by reason of some common relationship with a sponsoring organization, this section shall be applied separately to each sponsoring organization.

14VAC5-41-120. Policies sold to students.

A. The envelope in which advertisement material is contained may be addressed to the parents of students. The address shall not include any combination of words that imply that the correspondence is from a school, college, university, or other education or training institution nor shall it imply that the institution has endorsed the material or supplied the insurer with information about the student unless that is a fact.

B. All advertisements including, but not limited to, informational flyers shall be clearly identified as coming from an insurer or agent, if that is the case, and these entities shall be clearly marked as such.

C. The return address on the envelope shall not imply that the soliciting insurer or agent is affiliated with a university, college, school, or other educational or training institution unless that is a fact.

14VAC5-41-130. Individual deferred annuity contracts or deposit funds.

A. Any illustrations or statements containing or based upon nonguaranteed interest rates shall likewise set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation rates. The nonguaranteed interest rate shall not be greater than those currently being credited by the company unless the nonguaranteed rates have been publicly declared by the company with an effective date for new issues not more than three months subsequent to the date of declaration.

B. If an advertisement for a particular annuity or advance premium fund states the accumulation interest rate based on net contributions, it shall also disclose in close proximity and with equal prominence, the accumulation interest rate based on gross contribution and the relationship between gross and net contributions.

C. An advertisement shall not state or imply that annuities or advance premium funds are accorded preferential tax treatment unless the advertisement describes the tax consequences of purchasing an annuity or making payments into an advance premium fund, including tax consequences on surrender and on death.

D. If the contract does not provide a cash surrender benefit prior to commencement of payment of annuity benefits, an illustration or statement concerning the contract shall prominently state that cash surrender benefits are not provided.

E. Any illustrations, depictions, or statements containing or based on determinable policy elements shall set forth with equal prominence comparable illustrations, depictions, or statements containing or based on guaranteed policy elements.

14VAC5-41-140. Jurisdictional licensing.

A. An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer or agent is licensed shall not imply licensing beyond those limits.

B. An advertisement may state that an insurer or agent is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that competing insurers or agents may not be so licensed.

C. An advertisement shall not create the impression that the insurer, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are recommended or endorsed by any governmental entity. However, where a governmental entity has recommended or endorsed a policy form or plan, that fact may be stated if the entity authorizes its recommendation or endorsement to be used in an advertisement.

D. An advertisement shall not represent or imply that any financial ratio, illustrative material or advertisement, including pictures, diagrams, charts, projections, or other material, has been approved or sanctioned by the commission, unless that is a fact.

14VAC5-41-150. Approval and records maintenance requirements.

A. All advertisements written, created, designed, or presented by an agent or other party responsible for advertisement shall be approved by the insurer.

B. Each insurer shall establish and at all times maintain a system of control over the method of dissemination, content, and form of all advertisements of its policies. A system of control shall include regular and routine notification to agents, brokers, and others authorized by the insurer to disseminate advertisements of the requirement and procedures for company approval prior to the use of any advertisement that is not furnished by the insurer.

C. Each insurer shall maintain at its home or principal office a complete file containing a specimen copy of every printed, published, or prepared advertisement of its individual policies and specimen copies of typical printed, published, or prepared advertisements of its blanket, franchise, and group policies, disseminated in this Commonwealth, with a notation indicating the manner and extent of distribution and the form number of any policy referred to in any advertisement. The file shall be subject to inspection by the commission. All advertisements shall be maintained in the file for a period of five years after discontinuance of their use or publication.

D. Each insurer shall inform its agents of the requirements of this regulation.

E. If the commission finds that it may be in the best interests of the public, at the commission's specific request, it may require particular insurers or agents to submit all or any part of their advertisements to the commission for review or approval prior to use.

14VAC5-41-160. Severability.

If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid by a court, the remainder of this chapter and the application of the provisions to other persons or circumstances shall not be affected.

Titles of Regulations: 14VAC5-40. Rules Governing Life Insurance and Annuity Marketing Practices (repealing 14VAC5-40-10 through 14VAC5-40-80).

14VAC5-41. Rules Governing Advertisement of Life Insurance and Annuities (adding 14VAC5-41-10 through 14VAC5-41-160).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: July 1, 2011.

Agency Contact: Weldon Hazlewood, Principal Market Examiner, Bureau of Insurance, State Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804) 371-9047, FAX (804) 371-9944, or email weldon.hazlewood@scc.virginia.gov.

Summary:

The repeal of 14VAC5-40 is necessary because the rules are outdated and many provisions are no longer applicable to current advertisement practices. The final new rules in 14VAC5-41 address and clarify many of the advertisement requirements found in the Code of Virginia, retain some of the provisions from 14VAC5-40, and more closely follow the National Association of Insurance Commissioners' (NAIC) Model Regulation on this subject.

The final rules (i) establish the form and content of advertisements; (ii) establish general disclosure requirements; (iii) set standards for advertisements that include information on premiums, nonguaranteed policy elements and benefits, policy costs and cost comparison, insurer identity, testimonials, and introductory or special offers; and (iv) set requirements for policies sold to students, licensing, approval, and records maintenance.

In response to public comment, the proposed rules are amended to (i) clarify use of misleading terms by adding language to 14VAC5-41-30 E from Section 4B of the NAIC Model Regulations; (ii) address policies pertaining to graded or modified benefits in 14VAC5-41-40 D by substituting the language in Section 5 G of the NAIC Model Regulations; (iii) require a disclosure in advertisements pertaining to universal life insurance premiums, but no longer require specific disclosure language to be used (14VAC5-41-40 E); (iv) clarify 14VAC5-41-60 D by adding language addressing what an insurer may say with regard to dividends; (v) delete outdated language (14VAC5-41-60 G) and unnecessary language (14VAC5-41-80-D); and (vi) increase the limit on a gift of substantial value from $5.00 to $25 in 14VAC5-41-90 M for consistency with other states' regulations on this subject.

AT RICHMOND, FEBRUARY 15, 2011

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. INS-2010-00214

Ex Parte: In the matter of Repealing and
Adopting New Rules Governing
Advertisement of Life Insurance and Annuities

ORDER REPEALING AND ADOPTING RULES

By Order entered herein October 20, 2010, all interested persons were ordered to take notice that subsequent to December 17, 2010, the State Corporation Commission ("Commission") would consider the entry of an order repealing the Commission's Rules Governing Life Insurance and Annuity Marketing Practices ("Rules"), set forth in Chapter 40 of Title 14 of the Virginia Administrative Code at 14VAC5-40-10 through 14VAC5-40-80, and adopting new rules proposed by the Bureau of Insurance ("Bureau") entitled Rules Governing Advertisement of Life Insurance and Annuities ("New Rules"), set forth in Chapter 41 of Title 14 of the Virginia Administrative Code at 14VAC5-41-10 through 14VAC5-41-160, unless on or before December 17, 2010, any person objecting to the repeal of the Rules and adoption of the New Rules filed a request for hearing with the Clerk of the Commission ("Clerk").

The Order to Take Notice also required all interested persons to file their comments in support of or in opposition to the repeal of Rules and adoption of New Rules on or before December 17, 2010.

Comments were timely filed by the American Council of Life Insurers ("ACLI") by letter dated December 15, 2010. No request for a hearing was filed with the Clerk.

The Bureau considered the comments filed by the ACLI, and responded to these comments in a Statement of Position, a copy of which was filed in the case file on February 2, 2011. The Bureau recommends that the proposed New Rules be amended as follows in response to these comments:

14VAC5-41-30 E: The remainder of the sentence contained in Section 4 B of the National Association of Insurance Commissioners ("NAIC") Model regulations be added to this subsection to clarify use of misleading terms;

14VAC5-41-40 D: The provision as proposed be deleted, and the subsection amended using the language in the NAIC Model, Section 5 G to address policies containing graded or modified benefits;

14VAC5-41-40 E: The requirement that certain mandatory language pertaining to universal life policies be changed to an advertisement disclosure;

14VAC5-41-60 D: A sentence added to this subsection clarifying what an insurer may say with regard to dividends;

14VAC5-41-60 G: This subsection be deleted as the language is outdated;

14VAC5-41-80 D: This subsection be deleted as the section is unnecessary; and

14VAC5-41-90 M: Change the limit on a gift of substantial value from $5.00 to $25.00, keeping in line with other states' regulations on this subject. The Bureau recommends that all other sections of the New Rules remain as proposed.

The repeal of Chapter 40 is necessary because the Rules are old and outdated, and many provisions are no longer applicable to current advertisement practices.

The New Rules in Chapter 41 address and clarify many of the advertisement requirements found in the Code of Virginia, retain some of the provisions from Chapter 40, and more closely follow the NAIC Model Regulation on this subject. The New Rules establish the form and content of advertisements and general disclosure requirements, set standards for advertisements that include information on premiums, nonguaranteed policy elements, and benefits, address policy costs and cost comparison requirements, insurer identity, advertisements using testimonials or offering introductory or special offers, requirements for policies sold to students, licensing, as well as approval and records maintenance requirements.

THE COMMISSION, having considered the repeal of the Rules, the proposed New Rules, the filed comments, the Bureau's Statement of Position response, and the Bureau's recommendation for additional amendments to the New Rules, is of the opinion that the attached New Rules in Chapter 41 be adopted, and the Rules in Chapter 40 be repealed.

Accordingly, IT IS ORDERED THAT:

(1) The Rules in Chapter 40 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Life Insurance and Annuity Marketing Practices" at 14VAC5-40-10 through 14VAC5-40-80, which are attached hereto and made a part hereof, should be, and they are hereby, REPEALED effective on July 1, 2011;

(2) The New Rules in Chapter 41 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Advertisement of Life Insurance and Annuities" at 14VAC5-41-10 through 14VAC5-41-160, which are attached hereto and made a part hereof, should be, and they are hereby, ADOPTED, to be effective July 1, 2011;

(3) AN ATTESTED COPY hereof, together with a copy of the repealed Rules and adopted New Rules, shall be sent by the Clerk of the Commission to Althelia Battle, Deputy Commissioner, Bureau of Insurance, State Corporation Commission, who forthwith shall give further notice of the repeal of Rules and adoption of New Rules by mailing a copy of this Order, including a clean copy of the final New Rules, to all insurers licensed by the Commission to write life insurance and annuity contracts in the Commonwealth of Virginia, as well as all interested parties;

(4) The Commission's Division of Information Resources shall cause a copy of this Order, together with repealed Rules and adopted New Rules, to be forwarded to the Virginia Registrar of the Regulations for appropriate publication in the Virginia Register of Regulations;

(5) The Commission's Division of Information Resources shall make available this Order and the attached Rules on the Commission's website: http://www.scc.virginia.gov/case; and

(6) The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (3) above.

CHAPTER 41
RULES GOVERNING ADVERTISEMENT OF LIFE INSURANCE AND ANNUITIES

14VAC5-41-10. Purpose and applicability.

A. The purpose of this chapter is to set forth minimum standards and guidelines to assure a full and truthful disclosure to the public of all material and relevant information in the advertising of life insurance policies and annuity contracts.

B. All advertisements, regardless of by whom written, created, designed, or presented, shall be the responsibility of the insurer or the agent who created or presented the advertisement.

C. This chapter shall apply to any life insurance or annuity advertisement intended for dissemination in this Commonwealth. In variable contracts where disclosure requirements are established pursuant to federal regulation, this chapter shall be interpreted to eliminate any conflict with federal regulation.

14VAC5-41-20. Definitions.

The following words and terms when used in this chapter shall have the following meaning unless the context clearly indicates otherwise:

"Advertisement" means any marketing communication that is oral, printed, written, or other material of any type from any source that is used by an agent or insurer and that is designed to create or has the effect of creating public interest in life insurance or annuities, or induces or tends to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy including, but not limited to:

1. Printed or published material, audiovisual material, mailing envelopes, or descriptive literature of an insurer or agent used in direct mail, newspapers, magazines, radio, telephone and television scripts, billboards or similar displays, websites and other Internet displays or communications, social media, or other forms of electronic communications;

2. Descriptive literature and sales aids of all kinds, authored by the insurer, its agents, or third parties, issued, distributed, or used by an insurer or agent including but not limited to circulars, booklets, illustrations, form letters, pamphlets, brochures, and books or portions thereof;

3. Materials, statements, or communications of any type used for the recruitment, training, and education of an insurer's sales personnel and agents that are designed to be used or are used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy; or

4. Prepared or extemporaneous sales talks, presentations, and material for use or used by agents.

"Advertisement" does not include:

1. Communications or materials used within an insurer's own organization, not used as a sales aid, and not intended to be disseminated to the public;

2. Communications with policyholders other than material urging them to purchase, increase, modify, reinstate, borrow on, surrender, replace, or retain a policy; or

3. A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a policy or program has been written or arranged; provided the announcement clearly indicates that it is preliminary to the issuance of a booklet explaining the proposed coverage.

"Agent" means a person defined in § 38.2-1800 of the Code of Virginia.

"Commission" means the State Corporation Commission.

"Contribution principle" means the dividend determination principle wherein aggregate divisible surplus is distributed or illustrated to be distributed among participating policies in the same proportion as the policies are considered to have contributed to divisible surplus.

"Determinable policy elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable policy elements only, or from both determinable and guaranteed policy elements.

"Guaranteed policy elements" means the premiums, benefits, values, credits or charges under a policy, or elements of formulas used to determine any of these that are guaranteed and determined at issue.

"Home office" means either the insurer's home office or the principal executive or administrative office of the insurer from which policyholder services available to the citizens of this Commonwealth are directed or administered.

"Insurer" means any person, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyd's, fraternal benefit society, or any other legal entity that is defined as an "insurer" in the Code of Virginia.

"Nonguaranteed policy elements" means the premiums, credited interest rates (including any bonus), benefits, values, noninterest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

"Policy" means any policy, plan, certificate including a fraternal benefit certificate, contract, agreement, statement of coverage, rider, or endorsement that provides for life insurance or annuity benefits unless otherwise specifically defined in this chapter.

"Preneed funeral contract" means any agreement where payment is made by the consumer prior to the receipt of services or supplies contracted for, that evidences arrangements prior to death for (i) the providing of funeral services or (ii) the sale of funeral supplies.

14VAC5-41-30. Form and content of advertisements.

A. An advertisement shall not be combined or included with an advertisement of a product or service that is not life insurance or an annuity that disguises, misleads, misinforms or otherwise minimizes the nature of the advertisement.

B. An advertisement shall be truthful and not misleading in fact or by implication. The form and content of an advertisement shall be sufficiently accurate, complete, and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the commission from the overall impression that the advertisement may be reasonably expected to create within the segment of the public to which it is directed.

C. An advertisement shall not omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving purchasers, prospective purchasers or policyowners as to the nature of their relationship with the insurer, or the nature or extent of any policy benefit, loss covered, premium payable, or state or federal tax consequences. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale, or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.

D. An advertisement shall not make unfair, inaccurate, or incomplete comparisons of policies, benefits, dividends, or rates of other insurers. An advertisement shall not disparage or falsely or unfairly describe other insurers, agents, policies, services, or methods of marketing.

E. An advertisement shall not use the terms "investment," "investment plan," "founder's plan," "charter plan," "expansion plan," "profit," "profits," "profit sharing," "deposit," "interest plan," "savings," "savings plan," "retirement plan," "private pension plan," or other similar terms in connection with a policy in a context or under circumstances or conditions as to have the capacity or tendency to mislead [ a purchaser or prospective purchaser of such policy to believe that he will receive, or that it is possible that he will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life ].

F. An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class, group or quasi-group and as such enjoy special rates, dividends, or underwriting privileges, unless that is fact.

14VAC5-41-40. General disclosure requirements.

A. The information required to be disclosed by this chapter shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of an advertisement so as to confuse or mislead.

B. If an advertisement uses the terms "nonmedical," "no medical examination required," or similar terms where issue is not guaranteed, these terms shall be accompanied by a further disclosure of equal prominence and juxtaposition to the effect that issuance of the policy may depend upon the answers to the health questions contained in the application.

C. An advertisement shall not contain figures, dollar amounts, or statistical information unless it accurately reflects recent and relevant facts. The source of any figures, dollar amounts, or statistics used in advertisements shall be identified therein.

D. An advertisement [ that relates to a policy under which the death benefit varies with the length of time the policy has been in force shall clearly call attention to the amount of minimum death benefit under the policy. If the death benefit during a specified period following the policy date of issue is limited to an amount equal to the sum of the premiums paid on the policy (with or without interest at a stated rate and regardless of whether the premiums are assumed to have always been paid annually), then any advertisement of the policy by an insurer shall prominently and clearly disclose the nature of the limited benefit. For the purposes of this subdivision only, the term "death benefit" does not include amounts payable because of accidental death, and exclusions applicable to death caused by suicide, occupational hazard, or aviation hazard are not to be considered in deriving the "death benefit." for a life insurance policy containing graded or modified benefits shall prominently display any limitation of benefits. If the premium is level and coverage decreases or increases with age or duration, that fact shall be commonly disclosed. An advertisement of or for a life insurance policy under which the death benefit varies with the length of time the policy has been in force shall accurately describe and clearly call attention to the amount of minimum death benefit under the policy. ]

E. Any advertisement that mentions or refers to universal life insurance premiums shall [ include the following disclosure: "It indicate that it ] is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage [ .", if true. ]

F. An insurer or agent shall advise a prospective applicant who is considering replacing a policy that under the existing policy the period of time during which the existing insurer could contest the policy or deny coverage for death caused by suicide may have expired or may expire earlier than it will under the proposed policy.

G. An advertisement for life insurance or an annuity that is to be used to fund a preneed funeral contract shall disclose that fact.

H. An advertisement for life insurance or an annuity in which the face amount or any part of the face amount is based on the actual or estimated cost of funeral goods or services shall contain the following disclosure:

"This is (life insurance or an annuity). This (life insurance or annuity) does not specifically cover funeral goods or services. The beneficiary of this (life insurance or annuity) may use the proceeds of this (life insurance or annuity) for any purpose, unless otherwise directed. The face amount of this (life insurance or annuity) is not guaranteed to increase at the same rate as the costs of a funeral increase."

14VAC5-41-50. Premiums.

A. An amount that is a premium for a policy shall be referred to in any advertisement only as a premium. The use of words such as "deposit," "deposit premium," "investment," or other misleading or confusing terminology to refer to a premium is prohibited.

B. An advertisement shall not contain a statement or representation that premiums paid for a policy can be withdrawn under the terms of the policy. Reference may be made to amounts paid into an advance premium fund, which are intended to pay premiums at a future time, to the effect that they may be withdrawn under the conditions of the prepayment agreement. Reference also may be made to withdrawal rights under any unconditional premium refund offer.

C. An advertisement for a policy with nonlevel premiums shall prominently describe the premium changes.

D. An advertisement in which the insurer describes a policy that reserves the right to change the amount of the premium during the policy term shall prominently describe this feature.

E. An advertisement for a policy with pure endowment benefits payable within the premium paying period shall contain information regarding the premium charged in a clearly identified separate amount. The specific amount of each separate endowment shall be shown in dollar amounts only. An advertisement shall not represent a pure endowment benefit as a "profit" or "return" on the premium paid, rather than a policy benefit for which a specified premium is paid.

F. An advertisement shall not imply the existence of an actuarial relationship between a specific premium or portion thereof, and a specific benefit or portion thereof, provided under a policy where, in fact, none exists. No premium or a portion of a premium shall be represented as an "additional," "separate," or "special" premium unless there is an actuarial relationship between the premium or portion thereof, and some specifically identifiable benefit or portion thereof.

G. No artificial relationships among premiums, interest rates, and benefits or portions thereof shall be implied or created.

H. An advertisement shall not represent that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact.

I. An advertisement shall not use the term "vanish," "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan using nonguaranteed elements to pay a portion of future premiums.

14VAC5-41-60. Nonguaranteed policy elements.

A. An advertisement shall not utilize or describe nonguaranteed policy elements in a manner that is misleading or has the capacity or tendency to mislead. In this connection, analogies and comparisons between dividends payable on shares of stock and dividends payable under a policy are prohibited unless the advertisement fully, clearly, and accurately describes the differences.

B. An advertisement shall not state or imply that the payment or amount of nonguaranteed policy elements is guaranteed. If nonguaranteed policy elements are illustrated, they shall be based on the insurer's current scale, and the illustration shall contain a prominent statement to the effect that the nonguaranteed policy elements are not to be construed as guarantees of amounts to be paid in the future.

C. An advertisement shall not state or imply that illustrated dividends or other nonguaranteed policy elements under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur.

D. An advertisement shall not state or imply that dividends are other than mainly a refund or return of part of the premium paid or that dividends are guaranteed. [ An advertisement may if true state or imply that dividends are dependent on the investment earnings, lapse experience, mortality experience, and expense experience of the insurer. ]

E. An advertisement shall not state or imply that a prospective policyholder will receive dividends or other nonguaranteed benefits, or special or favored treatment in the allowance or payment of amounts or other monetary benefits not expressly provided in the policy.

F. An advertisement shall not refer to dividends as "tax free" or use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

[ G. An advertisement shall show dividends in dollar amount form only.

H. G. ] If a dividend illustration is determined in a manner involving substantial deviation from the contribution principle, an advertisement showing illustrated dividends shall prominently display the following caution: "The illustrated dividends for this policy were determined in a manner inconsistent with generally accepted practices."

14VAC5-41-70. Policies and benefits.

A. An advertisement shall not use as the name or title of a policy any phrase which omits the words "life insurance" or "annuity," as appropriate, unless accompanied by other language clearly indicating it is life insurance or an annuity.

B. An advertisement shall clearly and prominently describe the true nature or type of policy advertised.

C. An advertisement shall not state, represent or imply that a prospective or current policyholder will receive the right to benefits that are not a part of the policy itself, or made an effective part of the policy by rider or other instrument approved by and on file with the commission.

D. An advertisement shall not represent, directly or indirectly, that a policy may be sold only to certain persons because of their occupation, association, age, sex, or other condition unless it can be shown that the policy advertised is, in fact, sold only to those persons.

E. An advertisement shall not contain statements indicating that because a prospect has agreed to furnish names of potential purchasers, he is entitled to any specific benefits not available to all policyholders generally.

F. An advertisement shall not represent an increasing or other term insurance provision as a return of premium, a cash surrender value, or anything other than a guaranteed insurance benefit for which a premium is charged.

G. An advertisement shall not state or imply that a policy contains features or benefits that are not found in other policies, unless that is true.

H. In any advertisement, the basic death benefit shall be shown as a single amount, not arbitrarily or deceptively split into two or more parts, implying that there is a relationship between some part of a premium or other policy amount and some part of the death benefit, unless that is the fact, and provided the relationship is not for the purpose of, or may likely have the effect of, misleading or deceiving.

I. If nonforfeiture values are shown in any advertisement, the values must be shown either for the entire amount of the basic death benefit or for each $1,000 of initial death benefit.

J. An advertisement shall not state or imply that on the death of an insured, the beneficiary will receive, or should have received, the cash value of a policy in addition to the face amount, unless the policy so provides.

K. An advertisement shall not state or imply in any way that interest charged on a policy loan or the reduction of death benefits by the amount of outstanding policy loans is unfair, inequitable, or in any manner an incorrect or improper practice.

L. The use of savings "passbooks" and similar misleading techniques to show a policy's cash value is prohibited.

M. Analogies between a policy's cash values and savings accounts or other investments, and between premium payments and contributions to savings accounts or other investments shall be complete and accurate. The analogy shall make clear that the representation is an analogy only and that cash values and premium payments are not identical to a savings account or other investments and contributions.

N. An advertisment shall not represent a pure endowment benefit as earnings on premiums paid or represent that a pure endowment benefit in a policy is other than a guaranteed benefit for which a specific part or all of the premium is being paid by the policyholder. For the purpose of this section, coupons or other devices for periodic payment of endowment benefits are included within the phrase "a pure endowment benefit."

14VAC5-41-80. Policy costs and cost comparisons.

A. The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, then the identity of the payor and the amount of the payment shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language.

B. An advertisement of a particular policy shall not use the phrase "inexpensive," "low cost" or any similar term unless that fact is capable of being demonstrated to the satisfaction of the commission.

C. An advertisement shall not imply or state that all older policies are more or less costly than newer policies.

[ D. A system or presentation that does not recognize the time value of money through the use of appropriate interest adjustments shall not be used for comparing the costs of two or more policies. The system may be used for the purpose of providing accounting information on a single policy owned by a business or for the purpose of showing the income tax implications of ownership of a single policy provided (i) it is accompanied by a statement disclosing that the presentation does not recognize that, because of interest, a dollar in the future has less value than a dollar today, and (ii) it is not used, directly or by implication, for purposes of illustrating the cost of the policy.

E. D. ] An advertisement of two or more policies sold as a "package" or other combination shall not direct attention improperly at the cost competitiveness of one part of the "package" when the cost competitiveness of that part is not indicative of the cost competitiveness of the "package" as a whole.

[ F. E. ] An advertisement of a single policy shall not direct attention improperly at the cost competitiveness of a part of the policy when the cost competitiveness of that part is not indicative of the cost competitiveness of the entire policy.

[ G. F. ] An advertisement of a policy at a particular issue age, sex, or amount shall not lead prospective policyholders to believe that the cost competitiveness of the policy is similar at other issue ages, sex, or amounts unless that is a fact.

[ H. G. ] An advertisement containing a cost comparison of two or more policies with nonguaranteed policy elements in which the method of investment income allocation differs between or among the policies shall state that fact and shall contain a brief explanation of the implications of the cost comparison.

14VAC5-41-90. Insurer identity and representations.

A. An advertisement shall not contain statements, pictures, comparative financial ratios, or illustrations that are false, misleading, or irrelevant in fact or by implication, with respect to the assets, liabilities, insurance in force, corporate structure, financial condition, age, or relative position of the insurer in the insurance business or with regard to affiliates or subsidiaries of the insurer. An advertisement shall not contain a recommendation by any commercial rating service unless it clearly defines the scope and extent of the recommendation.

B. An advertisement shall not state or imply that a purchaser of a policy will share in or receive a stated percentage or portion of the earnings on the general account assets of the insurer unless that is a fact.

C. The name of the insurer shall be clearly identified in all advertisements about the insurer or its products, and if any specific policy is advertised it shall be identified either by its form number or other appropriate description. If an application is a part of the advertisement, the name of the insurer shall be shown on the application.

D. An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, a reinsurer of the insurer, service mark, slogan, symbol, or other device or reference without disclosing the name of the insurer if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the insurer, or create the impression that a company other than the insurer would have any responsibility for the financial obligations under a policy.

E. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a governmental program or agency or otherwise appear to be of a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.

F. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a noninsurance company with whom the prospective insured has a financial relationship or otherwise appear to be of a nature that it tends to mislead or deceive the prospective insured into believing that the purchase of insurance is required by the company.

G. An advertisement shall not represent that the mere size of an insurer or its total insurance in force necessarily affects either the solvency of the insurer or the reliability of the policies issued by the insurer.

H. An advertisement shall not contain any statement that would lead a prospective buyer or policyholder of life insurance or annuity to believe that he is acquiring stock in an insurer by purchasing the life insurance or annuity.

I. An advertisement shall not contain any statement that creates an inference that policyholders are entitled to benefits or profits on the same basis as stockholders.

J. An insurer or agent shall not use the terms "financial planner," "investment advisor," "financial consultant," "financial counseling" or other similar terms in a way that implies that the person who is engaged in the business of insurance, is generally engaged in an advisory business in which compensation is unrelated to sales unless that is actually a fact. No person engaged in the business of insurance shall hold himself out, directly or indirectly, to the public as a "financial planner," "investment advisor," "financial consultant," "financial counselor" or any other specialist engaged in the business of giving complete financial planning advice relating to investments, insurance, real estate, tax matters, and trust and estate matters unless that person in fact is engaged in that business and renders those services. Not included in "services" is the presentation of computer printouts that fall into the category of advanced programming for the purpose of selling a policy.

K. An advertisement of a policy marketed by direct response techniques shall not state or imply that because there is no insurance agent or commission involved there will be a cost savings to prospective purchasers unless that is the fact.

L. An insurer or agent shall not use materials, statements, or communications of any kind that when used alone are not misleading, but become deceptive or misleading when combined.

M. An insurer or agent shall not offer or provide to a proposed insured or other person a gift of substantial value if an application, inquiry card, or reinstatement application is returned within a specified period of time. For purposes of this subsection, a [ nonmonetary ] gift valued at [ $5.00 $25 ] or less shall not be considered [ a gift ] of substantial value.

14VAC5-41-100. Testimonials, appraisals, analyses and endorsements.

A. A testimonial, appraisal, analysis, or endorsement used in an advertisement shall be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective insureds as to the nature or scope of the testimonial, appraisal, analysis, or endorsement. In using testimonials, appraisals, analyses, or endorsements the insurer or agent makes as its own all the statements contained therein, and these statements are subject to all provisions of this chapter.

B. If the individual making a testimonial, appraisal, analysis, or endorsement has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee, or otherwise, that fact shall be clearly and prominently disclosed in the advertisement. If an individual receives any financial benefit directly or indirectly, greater than required union scale wages, that fact shall be clearly and prominently disclosed in the advertisement by language identical or substantially similar to the following: "THIS IS A PAID ENDORSEMENT."

C. An advertisement shall not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association, or other organization unless that is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial is owned, controlled, or managed by the insurer or receives any payment or other consideration from the insurer for making the endorsement or testimonial, that fact shall be disclosed in the advertisement.

14VAC5-41-110. Introductory, initial or special offers.

A. An advertisement of one policy or combination of policies shall not state or imply that the policy or combination of policies is an introductory, initial, or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement shall not describe an enrollment period as "special" or "limited" or use similar words or phrases in describing it when the insurer uses successive enrollment periods as its usual method of marketing its policies.

B. An advertisement shall not state or imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of a particular policy because of special advantages available in the policy.

C. An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium. When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy.

D. An enrollment period during which a particular policy may be purchased on an individual basis shall not be offered within this Commonwealth unless there has been a lapse of not less than six months between the close of the immediately preceding enrollment period for the same or substantially similar policy and the opening of a new enrollment period. The advertisement shall specify the date by which the applicant must mail the application, that shall be not less than 10 days and not more than 40 days from the date on which the enrollment period is presented for the first time in the advertisement. This section applies to all the affiliated companies of a group of insurance companies under common management or control. This section does not apply to the use of a termination or cutoff date beyond which an individual application for a guaranteed issue policy will not be accepted by an insurer in those instances where the application has been sent to the applicant in response to his request. It is also inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specific provisions of the Code of Virginia for group, blanket, or franchise insurance. In cases where a policy is marketed on a direct response basis to prospective insureds by reason of some common relationship with a sponsoring organization, this section shall be applied separately to each sponsoring organization.

14VAC5-41-120. Policies sold to students.

A. The envelope in which advertisement material is contained may be addressed to the parents of students. The address shall not include any combination of words that imply that the correspondence is from a school, college, university, or other education or training institution nor shall it imply that the institution has endorsed the material or supplied the insurer with information about the student unless that is a fact.

B. All advertisements including, but not limited to, informational flyers shall be clearly identified as coming from an insurer or agent, if that is the case, and these entities shall be clearly marked as such.

C. The return address on the envelope shall not imply that the soliciting insurer or agent is affiliated with a university, college, school, or other educational or training institution unless that is a fact.

14VAC5-41-130. Individual deferred annuity contracts or deposit funds.

A. Any illustrations or statements containing or based upon nonguaranteed interest rates shall likewise set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation rates. The nonguaranteed interest rate shall not be greater than those currently being credited by the company unless the nonguaranteed rates have been publicly declared by the company with an effective date for new issues not more than three months subsequent to the date of declaration.

B. If an advertisement for a particular annuity or advance premium fund states the accumulation interest rate based on net contributions, it shall also disclose in close proximity and with equal prominence, the accumulation interest rate based on gross contribution and the relationship between gross and net contributions.

C. An advertisement shall not state or imply that annuities or advance premium funds are accorded preferential tax treatment unless the advertisement describes the tax consequences of purchasing an annuity or making payments into an advance premium fund, including tax consequences on surrender and on death.

D. If the contract does not provide a cash surrender benefit prior to commencement of payment of annuity benefits, an illustration or statement concerning the contract shall prominently state that cash surrender benefits are not provided.

E. Any illustrations, depictions, or statements containing or based on determinable policy elements shall set forth with equal prominence comparable illustrations, depictions, or statements containing or based on guaranteed policy elements.

14VAC5-41-140. Jurisdictional licensing.

A. An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer or agent is licensed shall not imply licensing beyond those limits.

B. An advertisement may state that an insurer or agent is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that competing insurers or agents may not be so licensed.

C. An advertisement shall not create the impression that the insurer, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are recommended or endorsed by any governmental entity. However, where a governmental entity has recommended or endorsed a policy form or plan, that fact may be stated if the entity authorizes its recommendation or endorsement to be used in an advertisement.

D. An advertisement shall not represent or imply that any financial ratio, illustrative material or advertisement, including pictures, diagrams, charts, projections, or other material, has been approved or sanctioned by the commission, unless that is a fact.

14VAC5-41-150. Approval and records maintenance requirements.

A. All advertisements written, created, designed, or presented by an agent or other party responsible for advertisement shall be approved by the insurer.

B. Each insurer shall establish and at all times maintain a system of control over the method of dissemination, content, and form of all advertisements of its policies. A system of control shall include regular and routine notification to agents, brokers, and others authorized by the insurer to disseminate advertisements of the requirement and procedures for company approval prior to the use of any advertisement that is not furnished by the insurer.

C. Each insurer shall maintain at its home or principal office a complete file containing a specimen copy of every printed, published, or prepared advertisement of its individual policies and specimen copies of typical printed, published, or prepared advertisements of its blanket, franchise, and group policies, disseminated in this Commonwealth, with a notation indicating the manner and extent of distribution and the form number of any policy referred to in any advertisement. The file shall be subject to inspection by the commission. All advertisements shall be maintained in the file for a period of five years after discontinuance of their use or publication.

D. Each insurer shall inform its agents of the requirements of this regulation.

E. If the commission finds that it may be in the best interests of the public, at the commission's specific request, it may require particular insurers or agents to submit all or any part of their advertisements to the commission for review or approval prior to use.

14VAC5-41-160. Severability.

If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid by a court, the remainder of this chapter and the application of the provisions to other persons or circumstances shall not be affected.

Title of Regulation: 18VAC76-20. Regulations Governing the Prescription Monitoring Program (amending 18VAC76-20-40).

Statutory Authority: §§ 54.1-2505 and 54.1-2520 of the Code of Virginia.

Effective Date: October 1, 2011.

Agency Contact: Ralph Orr, Program Manager, Department of Health Professions, 9960 Mayland Drive, Suite 300, Richmond, VA 23233-1463, telephone (804) 367-4523, FAX (804) 527-4470, or email ralph.orr@dhp.virginia.gov.

Summary:

The amendments to the standards for the manner and format of reports to the Prescription Monitoring Program are adopted pursuant to §§ 54.1-2520 and 54.1-2521 of the Code of Virginia, which grant authority to the Director of the Department of Health Professions to promulgate regulations necessary to implement the Prescription Monitoring Program and require information necessary for the Prescription Monitoring Program to be eligible to receive federal funds.

The National All Schedules Prescription Electronic Reporting Act of 2005 (NASPER) created a formula grant program under the authority of the U.S. Secretary for Health and Human Services (Secretary). To qualify for federal funding available since 2010, Virginia’s Prescription Monitoring Program is required to include certain information. States receiving NASPER grants must adopt the 4.1 or higher version of the American Society of Automation in Pharmacy (ASAP) reporting standard to ensure that gross formatting errors are minimized. In 42 USC 280g-3, the Secretary is required to "specify a uniform electronic format for the reporting, sharing and disclosure of information under this section." To that end, the Secretary has identified the ASAP 4.1 reporting standard; therefore, subsection A of 18VAC76-20-40 is amended to identify that standard as the format pharmacies must use for reporting data.

Data elements of the required report, set out in 42 USC 280g-3, are already listed in § 54.1-2521 of the Code of Virginia or are added in new subsection E of 18VAC76-20-40, several of which are already included on the current reporting format.

The standards for federal funding in 42 USC 280g-3 further require that the dispenser report to the state after each dispensing of a covered controlled substance not later than one week after the date of dispensing. The timetable for reporting simply will require a pharmacy to program reporting weekly instead of semi-monthly.

18VAC76-20-40. Standards for the manner and format of reports and a schedule for reporting.

A. Data shall be transmitted to the department or its agent on a semi-monthly basis within seven days of dispensing as provided in the Telecommunication Format for Controlled Substances (, May 1995,) Electronic Reporting Standard for Prescription Monitoring Programs, Version 4.1 (November 2009) of the American Society of Automation in Pharmacy (ASAP), which are hereby incorporated by reference into this chapter.

B. Data shall be transmitted in a file layout provided by the department and shall be transmitted by a media acceptable to the vendor contracted by the director for the program. Such transmission shall begin on a date specified by the director, no less than 30 days from notification by the director to dispensers required to report.

C. Under extraordinary circumstances, an alternative means of reporting may be approved by the director.

D. Data not accepted by the vendor due to a substantial number of errors or omissions shall be corrected and resubmitted to the vendor within five business days of receiving notification that the submitted data had an unacceptable number of errors or problems.

E. Required data elements shall include those listed in subsection B of § 54.1-2521 of the Code of Virginia and the following:

1. The Drug Enforcement Administration (DEA) registration number of the dispenser;

2. The total number of refills ordered;

3. Whether the prescription is a new prescription or a refill; and

4. The date the prescription was written by the prescriber.

DOCUMENTS INCORPORATED BY REFERENCE (18VAC76-20)

Telecommunication Format for Controlled Substances, May 1995, American Society for Automation in Pharmacy (ASAP).

Implementation Guide ASAP Standard (Electronic Reporting Standard) for Prescription Monitoring Programs, Version 4, Release 1, November 2009, American Society for Automation in Pharmacy, 492 Norristown Road, Suite 160, Blue Bell, PA 19422 (http://www.asapnet.org).