44-10,101. Domestic society; violations of law; director; powers.

(1) When the Director of Insurance upon investigation finds that a domestic society (a) has exceeded its powers, (b) has failed to comply with any provision of sections 44-1072 to 44-10,109, (c) is not fulfilling its contracts in good faith, (d) has a membership of less than four hundred after an existence of one year or more, or (e) is conducting business fraudulently or in a manner hazardous to its members, its creditors, the public, or the business, the director shall notify the society of such deficiency or deficiencies and state in writing the reasons for his or her dissatisfaction. The director shall at once issue a written notice to the society requiring that the deficiency or deficiencies which exist are corrected. After such notice the society shall have a thirty-day period in which to comply with the director's request for correction and if the society fails to comply, the director shall notify the society of such findings of noncompliance and require the society to show cause on a date named why it should not be enjoined from carrying on any business until the violation complained of shall have been corrected or why an action in quo warranto should not be commenced against the society.

(2) If on such date the society does not present good and sufficient reasons why it should not be so enjoined or why such action should not be commenced, the Director of Insurance may present the facts relating thereto to the Attorney General who shall, if he or she deems the circumstances warrant, commence an action to enjoin the society from transacting business or in quo warranto.

(3) The court shall notify the officers of the society of a hearing. If after a full hearing it appears that the society should be so enjoined or liquidated or a receiver appointed, the court shall enter the necessary order. No society so enjoined shall have the authority to do business until (a) the Director of Insurance finds that the violation complained of has been corrected, (b) the costs of such action shall have been paid by the society if the court finds that the society was in default as charged, (c) the court has dissolved its injunction, and (d) the Director of Insurance has reinstated the certificate of authority.

(4) If the court orders the society liquidated, it shall be enjoined from carrying on any further business and the receiver of the society shall proceed at once to take possession of the books, papers, money, and other assets of the society and, under the direction of the court, proceed to close the affairs of the society and to distribute its funds to those entitled to such funds.

(5) No action under this section shall be recognized in any court of this state unless brought by the Attorney General upon request of the Director of Insurance. Whenever a receiver is to be appointed for a domestic society, the court shall appoint the director as the receiver.

(6) This section shall also be applicable to a society which shall voluntarily determine to discontinue business.

Source:Laws 1985, LB 508, ยง 30.