Volume 3, No. 9 - December 2014

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: An investigation of a life & health and general lines agent alleged that she convinced an elderly consumer to write her personal check in the amount of $4,825.75 payable to the agent under the guise that she would then make payments for the consumer's property, auto insurance and other bills for medical expenses incurred as a result of an auto accident. Because the consumer was elderly and felt like she needed help with her bills, she wrote a check made payable to the agent, which she cashed and used for her personal use. The consumer's homeowner, rental dwelling and automobile policies were already in a paid status at the time and no premium was due on any policy. The elderly consumer's son questioned the check when reviewing her bills and filed a complaint with the Department.
Disposition: License revoked and permanently barred from the insurance industry. She was arrested by the Division of Insurance Fraud and pled to felony theft from a person 65 years or older. She was ordered to pay restitution and placed on felony probation for four years.

Case: An investigation of a general lines agent revealed that he had devised a multifaceted scheme to defraud consumers. The first phase involved his systematic practice of pocketing premiums that were paid in full by unsuspecting consumers. In numerous cases, the agent would then finance the premiums with a premium finance company, and use his agency address on the finance contracts to conceal his scheme from the consumers. In other instances, he would send invoices to various lenders requesting they send him escrow checks made payable to his agency. He would then cash the checks and divert the premiums to feed his lavish lifestyle while he left countless consumers in the dark without homeowner's insurance. At times, the agent's methods were less sophisticated, and he simply pocketed consumer premiums, and provided bogus insurance binders to the consumers. However, things began to unravel when he was arrested by the Division of Insurance Fraud and charged with Grand Theft and issuing a false Workers' Compensation certificate. Subsequently he was rearrested and charged with Misappropriation of Insurance Funds. It was around that time that the Department suspended his license under an Emergency Order of Suspension and Prohibition. The Department's Division of Agent & Agency Services helped recover $61,780.22 in restitution for the insurance victims.
Disposition: License revoked and permanently barred from the insurance industry. He pled guilty to the False Certificate of Insurance and Misappropriation charges and sentenced to three years of felony probation.

Case: An investigation of a general lines agent revealed that she wrote a commercial policy with a premium of more than $68,000 that was paid in full by the insured but was premium financed by the agent using a post office box that the agent owned as the consumer's address. The post office box was in the name of a law firm that the agent was not a member of nor did she have any association with other than she was previously their agent. The policy later canceled and the agent received a credit of more than $30,000 but failed to return the money to the consumer alleging that the consumer owed her money on a different account. An attorney for the insured made a formal request to the insurer who then returned the money directly to the insured.
Disposition: License revoked. The Division of Insurance Fraud arrested the agent who pled to Misappropriation of Insurance Premium. She was sentenced to felony probation and ordered to pay restitution. Additionally, she surrendered the license of her insurance agency.

Case: The Department was notified by an insurance company that they had terminated the appointment of a life & health agent for cause. This was done due to allegations that he represented himself as applicants during verification calls on electronic applications, which were submitted by him. He allegedly also posed as applicants to move their policy effective dates and request cancellations as though he was the insured. The investigation revealed that these applicants did not exist. A former employee of the agent contacted the company and questioned why her bank account had been drafted when she didn't even have a policy with them. Further, the unauthorized draft was done with the same bank account that the agent used to direct deposit her pay when she worked for him. It was this call that prompted the insurance company to perform their internal investigation. It was determined that there were six bogus applications that were placed using the phone or work phone of the agent. On three applications he used the banking information of previous applicants. The policies that were mailed to proposed insureds were returned by the post office as undeliverable.
Disposition: License revoked. He was arrested by the Division of Insurance Fraud and charged with one count of scheme to defraud, four counts of identity theft and seven counts of false and fraudulent insurance application fraud. His criminal case is still ongoing.

Case: An investigation was conducted based on a referral from the Florida Workers' Compensation Joint Underwriting Association (FWCJUA). The referral indicated that a general lines agent issued a fraudulent certificate of insurance to a consumer who happened to be the agent's father, which stated that they had workers' compensation insurance coverage with the FWCJUA. However, the coverage was never purchased, placed or issued. The agent did not have binding authority with the FWCJUA to issue certificates of insurance. An inspection conducted of the agency records revealed two additional certificates of insurance had been issued prior to the actual effective dates of coverage with Citizens Property Insurance Corporation.
Disposition: License of the agent surrendered and permanently barred from the insurance industry. The insurance agency involved was fined $7,500 and its license placed on probation for two years.

Case: An investigation of a customer representative alleged while working at an agency she quoted auto policies, collected premiums totaling $2,690.00, and issued generic auto insurance ID cards. However, the applications and premiums collected were never forwarded to the insurance company. The total premium collected was refunded to the consumers once the Department was involved.
Disposition: License suspended for six months and her application for a personal lines agent license was not approved.

Case: A referral received regarding a general lines agent alleged that she submitted fraudulent Uniform Mitigation Verification Inspection (UMVI) reports to two different insurance companies on seven different insureds. On all seven insureds either a valid UMVI was completed and then altered or the agent completed the UMVI and forged the signature of an inspector. According to one insurance company the falsified UMVI forms resulted in a decrease of premiums of between $3,500 and $78,000.
Disposition: License suspended 12 months and fined $7,500. The Division of Insurance Fraud arrested the agent on charges of grand theft and obtaining property by fraud.

Case: An investigation of a life, health & variable annuity agent was opened when the Department became aware of an administrative action taken against the agent by the Securities Exchange Commission (SEC). It was alleged the agent allowed forms for 12 deferred variable annuities to be submitted that overstated the investment periods and time horizons. This caused the annuities to be approved on false terms. Had any of the annuities been submitted with the correct investment periods and time horizons, they would have never passed the review resulting in them being denied. This resulted in the agent agreeing to pay a total of $185,794.09 in disgorgement, interest, and penalties to the United States Treasury. The agent failed to report the administrative action taken by the SEC to the Department.
Disposition: License surrendered and can not apply for a license for two years.

Case: An investigation of a bail bond agent was opened when the Department received copies of three judgments against the agent along with certificates of non-payment. The judgments were satisfied six months after the payment was due to the courts. The Department subsequently discovered another judgment that was one month late being paid. It was determined that the bail bond agent executed multiple bonds while final judgments remained unpaid for more than 35 days without depositing the amount of the judgment with the Clerks of Court.
Disposition: Fined $3,000.