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Volume 2, No. 5 - June 2013

Case Notes

Bureau of Investigation

The following are instances in which licensees or other persons violated the Florida Insurance Code and the administrative action the Department has taken against them. Note: All administrative investigations are subject to referral to the Division of Insurance Fraud for criminal investigation.

Case: A complaint was received about a life & health agent, who was also a certified instructor and school official for a CE provider, which alleged that he was providing answers to class tests for a fee and not requiring individuals to take the required classes. During the investigation, many instances were found where identical answer keys were submitted, answer keys were submitted with different numbers of questions for the same course (some of which were allegedly taken on the same day), exam answers were faxed giving the appearance that the individual did not attend the course and take the test in person, incomplete answer sheets had passing grades, required signatures were missing on tests and forms, no signature of the person administering the test, no exam location noted, and in some cases totally blank answer keys with those individuals still receiving passing grades. These instances occurred in more than 20 different continuing education classes during a period of less than 6 months.
Disposition: Fined $5,000, agent license placed on probation for one year, and his authority to act as an education course provider, school official, supervising instructor, instructor, speaker, lecturer, or monitor was revoked.

Case: An investigation of a life & health agent alleged that he conspired with a business owner in order to list fictitious individuals as employees in order to qualify for disability coverage. He then submitted disability paperwork to the insurance company in order to help the business owner get paid disability insurance payments. The agent was arrested by the Division of Insurance Fraud and charged with three counts of filing false/fraudulent insurance claims and one count of scheme to defraud. He was sentenced to 15 years in prison, 15 years probation, and was ordered to repay $119,000 to the insurance company.
Disposition: License revoked and permanently barred.

Case: An investigation was conducted where it was alleged that a general lines agent allowed an employee to transact a variety of personal lines insurance though the employee had had their customer representative license revoked and was permanently barred from the industry. In one instance, the revoked individual collected a $1,200 cash payment from a consumer earmarked for his auto insurance and then pocketed the premium. In another instance, a consumer made a series of cash payments for her auto insurance over a two-year period to both the revoked individual and the agent totaling more than $1,100, and the same happened to those funds. Coverage was never placed and the premiums were pocketed. Compounding matters, the diverted premium payments led to cancellation of the consumer's auto insurance and the suspension of her driver's license.
Disposition: License revoked.

Case: An investigation of a life & health agent alleged she submitted a fraudulent life insurance application on herself. The agent made material misrepresentation on her application for life insurance and then submitted it to the insurer. The investigation further alleged that her supervisor, a general lines agent, signed off on the life insurance application completed by her and that he was aware of the material misrepresentation.
Disposition: Her license was suspended for 12 months. He was fined $1,500 and his license placed on probation for one year.

Case: An investigation of a public adjuster alleged that she entered into a contract with an insured for damages arising out of a tropical storm that was declared by an order as a State of Emergency. Up to a year after order, only a cap fee of 10% can be charged by public adjusters; however, the subject charged the insured a 20% fee. In addition, the subject's business address on the contract was determined to be a UPS Mail Box Store.
Disposition: Fined $2,500 and placed on probation for one year.

Case: An investigation of a public adjuster alleged he failed to timely communicate with the insured who entered into a contract with the adjuster. Additionally, the public adjuster's contract did not contain the verbiage of the anti-fraud statement nor did the contract contain the public adjuster's license number. Additional contracts were also discovered that did not contain the anti-fraud statement and did not contain the date the public adjusting contract was signed.
Disposition: Fined $3,500 and placed on probation for one year.

Case: An investigation of a life, health, and variable annuity agent alleged that his license had been previously placed on probation for representing NFOA, an unauthorized insurer. Before and during the time his license was on probation, the agent obtained the trust of an elderly couple. Then over a period of time wrote numerous annuities with different companies. Of the annuities, about half were placed while he was on probation. He managed this by taking penalty free withdrawals from one company and writing a new annuity with another company. The consumers trusted him so much that they would sign blank papers and send them back to him for processing. Because they trusted him, one consumer agreed (without anything ever being explained) to a Roth IRA at age 78, which cost him more than $20,000 in tax penalties.
Disposition: License revoked and permanently barred.

Case: An investigation of a general lines, life, health, and variable annuity agent who was suspended alleged that the agent was still managing the agency, representing himself as an agent, and actually transacting insurance away from the agency premises. He was transacting insurance with several parties, and then submitting or transmitting the application documents under the license credentials of agency employees. The agent additionally concealed his suspension status from customers by disseminating business cards that changed the title of his agency position from "agent" to "marketing representative", even though he continued to engage in activities that required licensure and appointments. The agent removed his name from the corporate filings but remained on the agency bank account in order to control the operation of the agency. When the Department got involved he had his name removed from the bank accounts the very next day. His request to reinstate his license was denied and his license suspension extended.
Disposition: License suspended for 18 months. Must retake and pass the general lines licensing examination before his license will be eligible for reinstatement.