Consumer eViews

Volume 1, Number 19, May 10, 2004


CFO Gallagher highlights new legislation to increase availability and affordability of health insurance

The Department of Financial Services is participating in several events around the state in recognition of “Cover the Uninsured Week,” according to Florida’s Chief Financial Officer Tom Gallagher. Gallagher also highlighted new legislation recently passed that will help reduce the costs of coverage and make health insurance more available for Floridians, especially small businesses.

“Covering the more than two million uninsured Floridians is an important challenge for state leaders,” said Gallagher, who served as co-chair of the governor’s task force on health insurance, which made recommendations to lawmakers. “I applaud legislators for taking steps this year to provide more and better access to health insurance coverage for Floridians and their families.”

According to Gallagher, the legislation would make it easier for small businesses to provide coverage to employees and provide increased protections for consumers purchasing “medical discount card” plans for health services and prescription drugs.

The legislation (HB1629), when signed by the governor, will assist Floridians searching for health benefits by:

      § Expanding the state’s Health Flex program statewide. This program will help lower-income Floridians gain access to health plans covering basic medical needs and offering preventative care.

      § Creating the Small Employers Access Program to allow certain small businesses, rural employers and nursing homes to band together to purchase more affordable healthcare plans.

      § Requiring “medical discount card” plans to be licensed by the Office of Insurance Regulation with prior approval of enrollment dues if the cost of the plan is greater than $30 per month or $360 annually. Advertisements are also required to prominently disclose that products offered are not health insurance.

      § Promoting increased access to healthcare information to help consumers make informed decisions about medical services.

      § Encouraging hospitals to shift non-emergency care from high-cost acute care units, decreasing hospital costs due to over-utilization of emergency room services.

The department is recognizing “Cover the Uninsured Week” statewide, with participation in events in several cities, including Pensacola, Jacksonville, Tampa, St. Petersburg, Miami and Ft. Myers. Representatives from the department will be on hand this week to answer questions on a variety of financial services topics, including health insurance and to highlight the many services offered by the department. For more detailed information on this week’s schedule of events, or for those who are unable to attend, please call the department’s toll free consumer helpline at 1-800-342-2762 or log on to

“I extend my appreciation to the local community groups doing their part to provide health services and insurance information to Floridians,” Gallagher said. “We must continue to support these local efforts, and at the state level, continue to search for innovative solutions to our uninsured problem.”

“Cover the Uninsured Week” is a national initiative co-chaired by former Presidents Jimmy Carter and Gerald Ford, with the goal of bringing local, state and national leaders together to discuss the growing uninsured problem. During this week, there are more than 1,500 events scheduled in all 50 states. The group estimates that more than 20 million working Americans do not have health insurance. More information on this national effort is available at                               


Florida’s Chief Financial Officer Tom Gallagher joined law enforcement officers from around the state at the 22nd Annual Law Enforcement Officers Memorial Service. The event is a precursor to Law Enforcement Officer Memorial Week, May 14-20.

Hundreds of law enforcement officers packed into the plaza near the Old Capitol in Tallahassee to honor officers who have died in the line of duty.

“Every law enforcement officer makes a conscious decision every day he or she leaves for work to accept the risks involved,” Gallagher said.  “For that reason I am deeply honored to take part in this annual program to remember them and their families.”

As CFO, Gallagher oversees the Department of Financial Services, which includes two fully sworn law enforcement units --- the Bureau of Fire and Arson Investigations, which investigates fires of suspicious origin, and the Division of Insurance Fraud, which investigates fraud in all lines of insurance.


State officials announced today that nearly 40,000 Florida homeowners will get refunds for fees improperly charged by Fairbanks Capital Corporation.  The Utah-based mortgage-servicing company was ordered to pay $1.65 million in refunds under a settlement with the Economic Crimes Division of the Office of the Attorney General and the Office of Financial Regulation, part of the Florida Department of Financial Services.

The settlement follows an extensive review of Fairbanks' records by state examiners.  The state alleges that the company was making improper charges, including fees for releasing borrowers from mortgages that were paid off and unwarranted payments for appraisals.

In the settlement, Fairbanks also agrees to improve customer-service procedures, stop charging unjustified late fees and establish proper procedures to prevent unwarranted lender-placed insurance

Fairbanks will review its Florida loan files to determine eligible accounts and make appropriate reimbursement.  The state agencies will oversee Fairbanks' payment of refunds, which will take place over the next six months.

"The purchase of a home may be a consumer's most important transaction," said Attorney General Charlie Crist.  "We will protect Floridians from those who deceptively profit by threatening the security of homeowners who are just trying to keep a roof over their heads."

"The selling of mortgage loans has made it possible to turn more people into homeowners and that's good for the economy. But bad business practices destroy consumer confidence," said state Chief Financial Officer Tom Gallagher, who oversees the Florida Department of Financial Services.

"Companies who seek to take advantage of unsuspecting homeowners will be tracked down and held accountable."

"Our goal is to protect the financial interests of Florida consumers," said Don Saxon, director of the Office of Financial Regulation. "And we will continue to aggressively investigate and demand compensation from companies who prey on unknowing consumers."

Fairbanks is based in Salt Lake City, Utah, with a regional processing center in Jacksonville.  At the time the investigation was initiated, the company was servicing approximately 550,000 loans, including nearly 56,000 in Florida.

Consumers with questions should contact the Department of Financial Services' consumer helpline at 1-800-342-2762, or the Office of Attorney General's fraud hotline at 1-866-9NO-SCAM.

In November 2003, Fairbanks signed an agreement with the Federal Trade Commission (FTC) in which borrowers will receive refunds for other improper fees, including unjustified late fees and lender-placed insurance.

The FTC has also issued a consumer brochure, "Mortgage Servicing: Making Sure Your Payments Count," to help consumers understand their rights. The brochure explains mortgage servicers' responsibilities and urges consumers to keep records of their payments, insurance coverage and other information. The brochure can be found at:


Federal and state regulators today stepped in to shut down and suspend the license of the nation’s largest viatical settlement company, Mutual Benefits Corporation, for violations of Florida and federal laws involving securities violations, fraud and misrepresentation. 

The action follows lengthy investigations by the Florida Office of Insurance Regulation (OIR) and the Securities and Exchange Commission (SEC).  OIR issued an order immediately suspending Mutual Benefits’ license to act as a viatical settlement provider in Florida.  Additionally, the U.S. District Court, for the Southern District of Florida, authorized the SEC to seize the assets of the Ft. Lauderdale-based company and place it in federal receivership. 

Also today, the Office of Statewide Prosecution has charged the company with racketeering and 15 counts of investor fraud based on an investigation by the Division of Insurance Fraud, housed in the Department of Financial Services. 

Mutual Benefits has raised more than $600 million through the sale of discounted life insurance policies.  These policies are generally purchased from terminally ill policyholders at less than face value. 

“This company has shown a flagrant disregard of this office, the laws of this state and for its investors,” said Kevin McCarty, director of the OIR.  “The dangers posed by letting it continue to operate are grave and I needed to act immediately to salvage what we can for Mutual Benefits’ investors and creditors. Buying their way out of trouble is not an option.”  McCarty also praised the work of the SEC in the case.

OIR’s investigation revealed that Mutual Benefits did not escrow adequate funds to pay future policy premiums, did not honor contractual obligations, issued improper viatical settlement contracts, used unlicensed sales agents, failed to adequately disclose information to investors,

and dealt in fraudulently obtained policies.  The exam looked at Mutual Benefits’ operations for the period of January 1, 1999, to March 31, 2003.

A review by an independent certified public accounting firm, hired by OIR, found that Mutual Benefits’ premium escrow account for approximately 6,000 policies is dangerously under funded, with an estimated deficit of $3.4 million by September 2004.  The accounting firm also determined that 74 percent of Mutual Benefits’ 7,368 active policies are carrying a zero or negative balance. 

OIR investigators also discovered that Mutual Benefits had transferred a total of $7.6 million between accounts to cover premiums.  McCarty said, “This is a glorified Ponzi scheme.”   Mutual Benefits is currently a defendant in various federal and state actions brought by investors, beneficiaries and viators (those who sell their policies at a discount).

Florida Chief Financial Officer Tom Gallagher, who oversees the Florida Department of Financial Services (DFS) which houses the Office of Insurance Regulation (OIR) and Office of Financial Regulation (OFR), expressed his concern for Mutual Benefits’ investors and voiced his disappointment with recent legislative action to strip enforcement tools from state regulators, including DFS and OFR, who help oversee the viatical industry.

“We are fortunate to have partnered with federal regulators to step in and help us save what is left for investors, many of whom invested their life savings,” said Gallagher, who warned state lawmakers against easing regulations on the viatical industry.  “But federal intervention is not always available and I would hope in light of today’s action against Mutual Benefits that state lawmakers would strengthen the laws that protect investors, not weaken them.”

Any investor inquiries should be directed to the receiver for MBC, Roberto Martinez, at (305) 476-7400.


More than $100,000 in restitution available for victims

Attorney General Charlie Crist and Chief Financial Officer Tom Gallagher today announced the settlement of a case brought against two Jacksonville collection agencies and four individuals accused of deceptive business practices.

Alex Ruibal, Debbie Barrows, Aaron Manning and Kimberly Wilson, acting individually and on behalf of Barrows, Manning & Associates and Ditore, Ruibal & Associates, allegedly impersonated law enforcement officers and falsely threatened criminal charges in order to scam debtors into sending payment.  Representatives of the companies made these calls knowing that no actions, civil or criminal, would ever be brought against any of the victims.

The settlement is the result of a joint investigation conducted by the Economic Crimes Division of the Office of the Attorney General and the Office of Financial Regulation (OFR), part of the Florida Department of Financial Services.

“All Floridians, regardless of their financial situation, deserve to be treated fairly and with respect,” said Gallagher, who oversees the Florida Department of Financial Services.  “Agencies that use misleading and abusive practices will not be tolerated.”

 “These people were using cruel and forceful tactics to take advantage of citizens already down on their luck,” said Crist.  “By pretending to be law enforcement authorities, these businesses played on their victims worst fears.  We will continue to fight and seek restitution for Floridians who have been scammed.”

“It's unfortunate that legislation that would have given regulators additional enforcement tools did not pass this session,” said Don Saxon, Director of OFR.  “However, we'll use the full authority of our office to pursue any company that engages in this type of behavior.”

The settlement calls for more than $101,000 in restitution to victims and harmed businesses.  Barrows, Manning & Associates will also be required to tape record all future outgoing calls, and the agency will be shut down if more than five complaints are made against it in a 12 month period. The other agency involved in the settlement, Ditore, Ruibal & Associates, was administratively dissolved in August 2003.

Those who may have been victimized by these companies should submit supporting paperwork, such as invoices or cancelled checks, by July 6, 2004, to:  Office of Attorney General, Ditore, Ruibal Restitution Request, Economic Crimes Division, The Capitol PL-01, Tallahassee, FL 32301-1050.

Under Florida law, collection agencies that act as third party collectors of debt are required to register with the Office of Financial Regulation.  In addition, collectors must follow the guidelines set out in the federal Fair Debt Collection Practices Act. Under the law, collection agencies are prohibited from several kinds of abusive practices, including: 

  • Threatening violence or harm against you.

  • Misrepresenting the amount of your debt.

  • Using profane language.

  • Phoning without identifying themselves.

  • Using false or misleading statements, including implying that they are attorneys, government representatives, or employees of a credit bureau.

  • Using harassing tactics, including saying that you will be arrested if you do not pay your debt or threatening to garnish your wages or sell your property without having taken legal action to do so.

Consumers with questions or complaints regarding debt collectors can get more information by calling the Department of Financial Services toll-free hotline at 1-800-342-2762.  The Federal Trade Commission can also be reached at (202) 326-3222.


Florida Department of Financial Services'
Consumer Services HelpLine