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Volume 4, No. 9 - September 2015

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 general lines agent allowed a customer representative (CR) to defraud an insurance company. The CR submitted an auto insurance application for relatives misrepresenting that the vehicles were for private use only, but they were actually being used for commercial purposes. The plan began to unravel when a claim was submitted and an adjuster observed that the trucks bore business insignia, and were in fact, commercial vehicles.
Disposition: The CR's license was suspended for six months. The general lines agent was ordered to pay a $2,500 penalty and was placed on probation for one year.

Case: Investigators initiated an investigation against a general lines agent after receiving a termination for cause from an appointing entity. The property and casualty insurer conducted an audit that revealed a pattern of premium mishandling, submission of altered or falsified records, failure to provide payment records, failure to maintain adequate procedures to safeguard insurer data and the personal financial information of applicants and policyholders. When the insurer asked for proof of payment, the agency provided altered copies of checks and bank statements and falsified receipts for five of the policies. Documentation from the consumers, closing agents and mortgage companies confirmed the fabrications. The agent also allowed the deposit of six premium checks to be negotiated through an agency bank account that was not approved by the insurer. The Bureau of Investigation conducted an agency inspection and the seven transactions were reviewed. Investigators found all payment information had been purged from the files.
Disposition: Suspended for 18 months. The agent will be placed on probation for one year if his application for reinstatement is granted. Subsequent to the agent's suspension, the Division of Insurance Fraud arrested and charged the agent with two counts each of Claims-False or Fraudulent and Diversion of Insurance funds, both third-degree felonies. Due to the criminal charges, the agent's license has been suspended indefinitely pending the disposition of the charges.

Case: Consumers notified the Department that their mortgage lender paid their general lines agent more than $5,000 for homeowners’ insurance. The consumers filed a claim for $20,000 in damages from a broken pipe and learned no policy was in force. The consumers contacted a public adjuster to assist them with the water damage claim and provided a copy of the evidence of insurance they obtained from the mortgage lender. The agent never provided the insureds evidence of an in-force policy. Investigators obtained a copy of the mortgage lender's check for the insurance premium paid to and negotiated by the agency. Additional documentation was obtained from another insurer detailing its termination of the agent's appointment after discovering she had mishandled/misappropriated premium received from five additional insureds.
Disposition: Permanently removed and barred from the insurance industry.

Case: Investigators learned that a Customer Representative was arrested on federal felony charges of Racketeering/Conspiring, and Organized Fraud/Scheme to Defraud, $50,000 or more; Arson First Degree; Arson Second Degree; Insurance Claims/False/Fraudulent $100,000 or more; False and Fraudulent Insurance Claims; Grand Theft First Degree; Grand Theft Second Degree, three counts; Grand Theft Third Degree, two counts.
Disposition: Suspended indefinitely pending disposition of criminal charges.

Case:. While conducting a routine follow-up, investigators found a suspended agent working at an agency in violation of a Department order. Investigators determined she was transacting general lines insurance by signing certificates of insurance and submitting applications. The agent had been suspended by the Department for misappropriation/diversion of premium funds.
Disposition: Both the agent and agency licenses were revoked. As a result of the investigation, the former agent was arrested by the Division of Insurance Fraud and charged with multiple felonies - Organized Scheme to Defraud, Forgery, Acting as an Insurer and Transacting Insurance without a License.

Case: A Consumer contacted a public adjuster seeking help with his homeowners' claim. The public adjuster was also a licensed contractor and instead of working with the consumer as a public adjuster steered the consumer to his construction company for the repairs. In lieu of contracting with the consumer as a public adjuster and charging the typical fee, the public adjuster had the consumer sign a contract charging nothing for the public adjusting services and a second contract with the public adjuster's construction company to do the repairs. The arrangement created a conflict of interest, a violation of public adjuster laws. The public adjuster filed a property damage claim, and later tried to avoid the appearance of a conflict of interest by having another public adjuster contract with the consumer, again charging the consumer no fee for adjusting services.
Disposition: Fined $5,000, and placed on probation for nine months.

Case: The investigation was initiated after a title insurer notified the Department it terminated a title agent and her agency due to shortages in several escrow accounts. Investigators determined the title agent had failed to pay off existing mortgages and property liens, and disbursed funds to the agency for recording fees but failed to record the documents. In addition, the title agent issued checks to people unrelated to any closing transaction, and also used the misappropriated funds to pay the office rent and her personal property taxes.
Disposition: License revoked.

Case: Investigators looking into a complaint determined that as a stipulation for issuing a bail bond, a bail bond agent required defendants to wear ankle monitors that were not court ordered, and billed and monitored the defendants through a company he owned. Requiring a defendant to wear an ankle monitor is not a violation, however, charging for the ankle monitoring, unless court ordered, is a violation of Florida Statutes. An agency inspection was conducted and in addition to the fees being charged for the ankle monitors, multiple records violations were found by investigators.
Disposition: Required to pay $2,000 in Department costs, $2,906 in restitution to multiple defendants charged for the monitoring, and to attend a five-hour Bail Bond Law and Ethics course.