Volume 5, No. 4 - April 2016

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: The Department's Division of Insurance Fraud notified investigators that the SIU of an insurance company filed a complaint against an agent indicating he had submitted fraudulent information on 38 applications. Investigators established the life and health agent, who was also licensed as an all-lines adjuster, had received more than $17,000 in commissions for the fraudulent policies. The Division of Insurance Fraud's investigation resulted in the agent pleading guilty to several felony charges. The agent was required to repay the commissions earned from the fraudulent sales, investigative costs and 100 hours of public service.
Disposition: License revoked.

Case: A complaint was received by investigators from an insurance company indicating it had issues with a Public Adjuster who interfered in claims handling by the company. At the time, the public adjuster was not properly appointed. During an inspection of the adjusting firm the public adjuster was affiliated with, investigators identified 58 public adjusting contracts that were executed by the public adjuster without the signatures of all named insureds for which the public adjuster did not obtain the required affidavit from the insured who signed the contract. The public adjuster also failed to include required verbiage on a number of contracts.
Disposition: Fined $2,500 and placed on probation for one year.

Case: The Florida Office of Financial Regulation alleged a life, health and variable annuity agent was involved in the marketing and sale of unregistered securities. The transactions involved at least two unregistered securities which involved the purchase of federal pension plans and the subsequent re-selling of the income streams produced by the plans to investors.
Disposition: Fined $5,000 and placed on probation for one year.

Case: Investigators opened an investigation after reviewing a complaint referral from the Division of Consumer Services. The consumer alleged the general lines agent had been her auto insurance agent for many years. Because of the long-standing relationship, the consumer said the agent was well aware that she was disabled and confined to a wheelchair. The issue arose when the consumer traded in her handicapped-equipped van for a new one with a handicapped package. Shortly after the purchase, the vehicle was involved in an accident and declared a total loss. According to documents obtained during an agency inspection, investigators determined the new vehicle was insured as a regular van without mention of the handicapped package it was equipped with. Investigators found that the previous van had also been insured as a van with only standard equipment. Evidence proved that the agent inspected the vehicle and should have known how the van was equipped, but failed to apply for the appropriate coverage. Through the efforts of the investigator, the consumer was fully compensated by the insurance company for the loss.
Disposition: Fined $3,000 and placed on probation for one year.

Case: Investigators became aware of felony charges against a health insurance agent and opened an investigation. The agent was charged with Conspiracy to Commit Health Care Fraud and Wire Fraud, two counts of Health Care Fraud, Conspiracy to Defraud the United States, Make False Statements Related to Health Care and two counts of False Statements Related to Health Care Matters. The agent was adjudicated guilty on one count of Conspiracy to Commit Health Care Fraud and Wire Fraud.
Disposition: License revoked.

Case: The Department received a complaint from a local bail bondsman that a former temporary bail bond agent was hiring himself out as an illegal "bounty hunter" to locate and detain defendants for remand to jail. The temporary bail bond agent offered to perform these activities for bail bond agents appointed with surety companies he was not appointed with. Investigators determined a bail bond agent who was also a Managing General Agent for a surety company hired the so-called "bounty hunter" to find and retain a defendant until she could remand him to the county jail.

According to the arrest report for the defendant, who had been bonded out of jail by the bail bond agent that enlisted the "bounty hunter's" services, police officers were dispatched to a restaurant responding to a call that the defendant was being held by an armed person. The arrest report stated the temporary bail bond agent/"bounty hunter" identified himself to the officer as a bail bondsman by presenting his identification and a surety badge while the defendant sat handcuffed on a curb.

The Division of Insurance Fraud (DIF) conducted a parallel investigation on the bail bond agent and the "bounty hunter" she hired. The bail bond agent surrendered herself on an arrest warrant issued by the DIF for Unlicensed Bail Bond Activity, False Imprisonment and Furnishing Supplies to an Unlicensed Bail Bond Agent.

The "bounty hunter" was arrested for kidnapping with a deadly weapon, aggravated assault with a deadly weapon and unlicensed bail bond activity and entered a guilty plea to aggravated assault with a deadly weapon and unlicensed bail bond activity. He was adjudicated guilty and sentenced to three years in prison.

Case: An investigation was conducted into the activities of a general lines agent after investigators received complaints from the Department's Division of Consumer Services and the Division of Insurance Fraud.

Over a period of years, the agent systematically failed to place insurance business and pocketed the insurance premiums of unsuspecting consumers. The diverted premiums included funds earmarked for automobile insurance and commercial liability policies. Investigators conducted an agency inspection, agent and staff interviews and obtained affidavits from numerous consumers who had complained to the Department and others identified through the investigators' efforts. To conceal the scheme, the agent created fraudulent insurance binders and certificates with fabricated policy numbers. Compounding matters, the agent obstructed Department investigators who attempted to obtain documents from his agency. Access to the agency required service of a subpoena, which is enforceable in circuit court.

The circuit court in the county where the agency was located entered a final judgment directing the agent to produce the subpoenaed records or be held in contempt of court.
Disposition: License suspended for two years.

Case: Three senior consumers filed complaints against two agents alleging misrepresentation during the sale of annuities. Investigators learned that in each instance, the consumers had attended seminars put on by one of the agents. The consumers all said the agents did not disclose surrender charges, and in another case the consumer was not told that death benefits would be annuitized and not paid in a lump sum to the designated beneficiary.

The agent holding the seminars worked for the other agent, and after the seminars, consumers would meet with the second agent at the time. The second agent signed the applications, but the agent who held the seminars was the person who met with the consumers and discussed the terms and benefits of the annuities.

Investigators determined that the "junior" agent had met with the consumers more than three months prior to becoming licensed and appointed.
Disposition: The agent holding the seminars was fined $50,000 and the agent who signed the applications was fined $15,000.

Case: Investigators looking into the appointment termination for cause of a life, health and variable annuity agent learned the agent had allegedly completed a life insurance application for an individual who was confined to a nursing home with serious health issues. Investigators determined the agent made material misrepresentations on the application by failing to disclose the proposed insured's medical history and status. The agent completed the application at the request of the insured's brother, and allowed him to fraudulently sign the application as the insured.
Disposition: License suspended for 12 months.

Case: An investigation was conducted after investigators received an anonymous call about a title insurance agency unlawfully sharing insurance premiums, fees and charges with Realtors® as a "marketing" fee for each closing referred to the agency. During the course of the investigation, it was discovered that the agency had engaged in other illegal inducements for the purchase of title insurance policies by offering a discounted rate to first time buyers and other groups, and using a fictitious name in an advertisement without notifying the Department of the name change as required.
Disposition: The agency title agent in charge was fined $5,000 and placed on probation for one year.