Volume 5, No. 5 - May 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: Investigators opened a case after a life, health and annuity agent's appointment was terminated for cause by a life insurance company. The agent, who was also the owner of an agency, was accused of misappropriating a portion of premium given to him by a consumer for a life insurance policy.

In the affidavit taken by consumers, the consumer stated she gave the agent a partial, or "down payment" check payable to his agency for $40,000 for a policy valued at nearly $7 million. The agent had developed a "financial plan" for the consumer's business and was to be used to fund a pension plan. The consumer stated in addition to the $40,000, she gave the agent additional checks for policy contributions totaling $1 million. Bank records obtained during the investigation confirmed the agent was the sole owner and authorized signor of the bank account the funds were deposited.

Documents requested from the insurance company established the agent forwarded only $240,000.00 of the premiums paid to him by the consumer to apply to her policy. To conceal the premium theft, the agent changed the mailing address for policy correspondence to his address. Notices were sent that reflected the policy's cash value was being used to pay premiums. The consumer did not realize her premiums were not being submitted until her policy lapsed for non-payment of premium.

Investigators looked into the agents transactions with other insurance companies he was appointed to determine if complaints had been filed against him. Investigators obtained an affidavit from another consumer who also filed a complaint alleging the agent failed to forward all premiums she paid to his agency. In her statement to investigators, the consumer said the agent deposited two premium checks she gave him into his agency account, but failed to forward $20,000 of the premium to the insurance company. Investigators proved the misappropriation/diversion of the premium funds by auditing the agent's bank records.

At the conclusion of the investigation, investigators referred the case findings to the Department's Division of Insurance Fraud, and the agent was arrested on fraud charges. After the agent's arrest a third victim came forward and additional charges were filed. In all, the agent was charged with stealing more than $1 million in insurance premium payments, and was convicted of schemes to defraud, sentenced to seven years in prison and ordered to pay back nearly $1.3 million in restitution to the victims of his crimes, followed by three years' probation.
Disposition: Permanently barred from the business of insurance in Florida.

Case: Investigators discovered that a suspended Customer Representative was working while suspended in an insurance agency during a suspension follow-up by investigators. The Customer Representative was further disciplined for violating the terms of her suspension by working in an insurance agency.

The general lines agent designated as the agency's Agent in Charge was charged with Aiding and Abetting another licensee in violating her Order of Suspension. Customer Representatives must be supervised at all times by a general lines agent. Had the general lines agent attempted to properly appoint the Customer Representative, he would have been made aware of her suspension.
Disposition: Fined $5,000 and placed on probation for one year.

Case: An insurance company contacted the Department and alleged that a public adjuster was acting as both a public adjuster and contractor on claims. The ensuing investigation revealed numerous consumers entered into contracts with the public adjuster to provide adjusting services on sinkhole losses. Subsequent to entering into the public adjusting contracts, the adjuster contracted with the consumers to provide restoration services to the damaged properties that were the subject of the claim.
Disposition: Fined $10,000 and placed on probation for one year.

Case: Investigators looked into the activities of a health insurance agent after receiving three complaints alleging the agent used their identifies to purchase health insurance through the Affordable Care Act Marketplace. In all three cases, the consumer became aware that health insurance policies were applied for using their personal identification without their knowledge or consent.

During the investigation, the agent met with investigators and provided a list of all applications she submitted in 2015. The agent provided a list of 77 policy enrollments, and said she was unaware of the thousands of additional enrollments the insurance companies reported as being written by the agent.

The agent was also surprised to learn that according to the National Association of Insurance Commissioners' records, she was licensed to sell insurance in Alabama, California, Georgia, New York, South Carolina, Tennessee and Texas.

In her statement to investigators, the agent admitted she had a verbal agreement with the agency she worked for to receive about 5% of the commission on health insurance enrollments completed by tax preparers. The agent explained that the tax preparer assigned a tax credit to the consumer when preparing their taxes, the tax payer preselected a plan, and that information was sent to the agency and the agency submitted the enrollment to the Marketplace using the agent's license number as the agent of record. The agent denied ever meeting any of the customers.
Disposition: Suspended 18 months, followed by two years' probation if license is reinstated.

Case: Investigators received a referral from the Department's Division of Consumer Services from a consumer who alleged a general lines agent forged her signature on a Florida Selection/Rejection of Uninsured Motorist form after the insurance company denied her claim for benefits. Investigators determined there were discrepancies in a number of other policy forms submitted for other customers as well.

Investigators learned during the course of the investigation that the general lines agent allowed her daughter, a suspended Customer Representative, to transact insurance at the agency without a license.
Disposition: Suspended one year.

Case: Investigators received a referral from the Florida Office of Financial Regulation alleging that a life, health and annuity agent was involved in the marketing and sale of unregistered securities. During the course of the investigation, evidence was obtained to prove the agent was involved in the unlawful purchase of federal pension plans and the subsequent resale of the plans' income streams to investors.
Disposition: Fined $5,000.

Case: A real estate agent contacted the Department to allege that a title insurance agency was charging Homeowner Association (HOA) and attorney fees on a closing when neither was actually due. Investigators reviewed five files during an agency inspection and found the consumers were unlawfully charged fees totaling $197.50 that weren't due, and the fees had been recorded on the HUD-1 forms. The title insurance agent admitted to charging extra fees in the event “something came up”. The title insurance agent also prepared a document to be signed by the buyer and seller agreeing to forfeit any overpayment of fees to the agency. As a result of the Department's investigation, the agency has been ordered to audit its files and return any other funds that were overcharged.

The agency was also charged with unlawful inducement to purchase title insurance after investigators reviewed the agency's Facebook page and found the agency was posting property listings for real estate agents and sponsoring events for their benefit.
Disposition: Fined $2,500.

Case: The source of this investigation was a referral from the Division of Insurance Fraud. An insurer alleged that an all lines adjuster falsified insurance company claims and diverted the payments to herself.

Investigators obtained affidavits and insurer documentation and determined the adjuster had systematically and fraudulently changed the payee information to her benefit on claim payments she issued, and then deposited the payments into her personal credit union account. The diverted claim payments totaled nearly $40,000.
Disposition: License revoked.