Owners of Unlicensed Florida Firm Face Felony Counts in Insurance Scam

15 April 2003
Best's Insurance News

  TALLAHASSEE, Fla. (BestWire) - The owners of an unlicensed entity selling health insurance in Florida are facing felony charges after allegedly refusing to pay millions of dollars in claims to more than 7,200 people in the state.  

The Florida Department of Financial Services has charged Carmelo Zanfei and William Paul Crouse, who operated TRG Marketing, LLC, with racketeering and selling insurance without a license. Their bond has been set at $1 million each, and they could face as long as 60 years in prison in addition to fines and restitution if they're convicted of all charges, said Bob Lotane, a spokesman for the Department of Financial Services.  

Regulators began receiving complaints from consumers and agents about the company in November 2001, he said. In one case, TRG owed former Nascar-circuit driver Pete Orr more than $250,000 for health-care bills when he died in 2002 of cancer, the department said.  

Twenty-five Florida agents are facing disciplinary action for selling TRG's products and could lose their licenses. Miami-based Dardick Agency was among the largest promoters of TRG, the department said. Its principal, Anthony Frank Merlino, has been charged with 42 violations of state law governing his license.  

More than 30,000 people in Florida have reported being left with unpaid claims after buying coverage from unlicensed entities, the department said.  

Senate Bill 1680, named the "Pete Orr Bill," will be merged into the Senate's anti-fraud bill, Senate Bill 1694. Sponsored by Sen. Bill Posey, R-Rockledge, the bill would slap unlicensed plans with first-, second- or third-degree felony charges of insurance fraud based on the amount of premiums collected, according to the department's statement. Policyholders also would be able to sue unlicensed entities and their owners in civil court.  

Two other bills moving through the Florida House and Senate would close a loophole in Florida law that allows out-of-state individual health plans to market products through associations, avoiding having to comply with state law (BestWire, April 7, 2003).  

In 2002, the Florida Legislature increased the penalty for a licensed agent selling unlicensed insurance from a first-degree misdemeanor to a third-degree felony, punishable by as long as five years in prison. In addition, Florida law might make agents who sold the unlicensed coverage responsible for unpaid claims if the insurer fails to pay, the department said.  

In a separate announcement in March, the Financial Service Commission, which is made up of the governor and the Cabinet, said it unanimously approved the appointment of Kevin McCarty as director of the Office of Insurance Regulation. He'll be responsible for regulating insurance companies, including rates, licensing, policy forms, market conduct, adjusters, certificates of authority, solvency, viatical settlements and premium financing.  

McCarty had been the temporary insurance regulator while the commission was coming to agreement on the permanent appointment.