Consumer eViews

Volume 1, Number 21, May 24, 2004

When you consider making a living and building a future, Florida is truly a place where opportunity abounds - the opportunity for every child to learn to reach their full potential, the opportunity to feel safe at work and in our neighborhoods, and the opportunity to thrive and grow as a business. It is these opportunities that bring nearly 900 new people a day to live in Florida.

Today, Florida continues to lead the nation in job growth, a position we have held for the last two years. In fact, our unemployment rate has again dropped to 4.6 percent in April from 4.9 percent in March and down from 5.3 percent a year ago. These numbers mean that Florida’s job market has expanded by more than 168,000 jobs in the last year.

New job growth is a sign of Florida’s improving economy. An improving economy brings growth and opportunity across the spectrum - from tourism and the service sector to construction, financial activities, health and education.

Our current tax structure, and our governor and legislature’s commitment to tax relief, have helped foster economic growth and job creation. Our expanding economy demands that we devote our resources to help educate and train hard-working Floridians to fill the jobs.

These are important challenges for state leaders as we continue to develop Florida’s economic growth, and I’m committed to the principles which will lead to future success.

                                                                                                              -- Tom Gallagher


This coverage can be beneficial, but be sure to read the fine print

As Floridians are preparing for summer vacations, with many planning to travel during the Memorial Day weekend, Florida’s Chief Financial Officer Tom Gallagher is reminding consumers to consider options for ensuring your trip won’t be rained out. 

“Travel insurance can act as a parachute, bringing you and your pocketbook in for a safe landing if things go wrong on your trip,” Gallagher said.  “However, Floridians should choose carefully.  Many plans may contain exclusions which can still leave you stranded.” 

Floridians can purchase insurance policies to protect their travel plans from unforeseeable circumstances, including trip cancellation, early return and emergency medical needs.  Some plans may pay in the event of baggage loss or delay, or evacuation due to a natural disaster. 

“A good travel policy should reimburse you for deposits for a cruise, or other trip, if it turns out you won’t be able to go or if you have to leave early,” Gallagher said.  Gallagher also advised consumers to read the fine print before making a purchase as the policies often contain exclusions for coverage.  Consumers should also obtain a schedule of benefits and a certificate of coverage, which outline coverage and limitations of the policy. 

According to Gallagher, travel insurance makes the most sense for individuals going on an adventure vacation or to an area far from medical facilities.    

Travel insurance may be sold as part of a trip package; however, consumers should determine the name of the insurance company underwriting the policy and verify that it is licensed in Florida.  Consumers can verify the license of the insurance company or agent by calling the Department of Financial Services toll free at 1-800-342-2762.


Florida’s Chief Financial Officer Tom Gallagher was honored by the Florida Council on Economic Education (FCEE) with their prestigious President’s Award. Gallagher was recognized for his years of advocating increased financial literacy of Florida’s students, working families and seniors. The President’s Award is presented to Floridians demonstrating leadership in promoting financial education and free-market principles.

“I am truly honored to accept this award,” Gallagher said. “Preparing our citizens for financial challenges is one of my most important tasks, and I will continue to provide Floridians, especially students and seniors, with the tools needed for financial success.”

Gallagher, recognized as having helped create the FCEE and provide crucial funding while serving as a state lawmaker, was honored with an award for his leadership in initiating several statewide financial education efforts. Gallagher was instrumental in the success of programs such as Florida Stock Market Simulation, Financial Freedom and Strive to Drive, which provides teens with information and instruction related to car-buying.

“CFO Gallagher richly deserves this award. His service to the FCEE and Florida’s students has been exemplary,” said Don Fell, President of the FCEE.

“It is vital that students graduate from Florida schools with an understanding of personal finance and the free enterprise system,” said Dr. Zachariah P. Zachariah, Chairman of the FCEE. “No one in our state has done more to promote that understanding than CFO Gallagher.”

Gallagher also sponsored a resolution proclaiming April 2003, Financial Literacy Month. The resolution was passed at a recent meeting of the governor and Cabinet, on which Gallagher serves.

Gallagher served three terms as Treasurer and Insurance Commissioner and was sworn in as Chief Financial Officer in 2003.

Established in 1975, the Florida Council on Economic Education is a non-profit, statewide agency that teaches students and teachers business basics. In addition to developing educational programs, the Council recognizes individuals who are leaders in promoting a greater understanding of the free enterprise system. The Council is funded by the Florida Department of Education and leading businesses throughout the state, and is an affiliate of the National Council on Economic Education.


As part of an ongoing effort to improve the state’s financial literacy and provide information to consumers making important investment decisions, Florida’s Chief Financial Officer Tom Gallagher is warning Floridians about the risks involved in playing the stock market with the equity in your home.  

“Taking out a mortgage on your home to make an investment means you must rely on investment returns to make your mortgage payments.   You could end up defaulting on your home loan if the investment declines,” said Gallagher, who oversees the Department of Financial Services. “Investors who bet the ranch could lose it.”

With a rising stock market, record low interest rates, and large gains in home value, some investors have taken out new mortgages, refinanced, or obtained lines-of-credit secured by their homes for the specific purpose of investing in securities. The hope is that the investment will not only pay the mortgage, but also generate additional income. Unfortunately, it doesn't always work out that way.

Taking money out of your house to buy securities compounds your risk for the following reasons:

  • Unlike investing with savings, when you invest with mortgage money, you stand to lose more than your principal if the investment goes sour. You can lose the collateral supporting the loan -- namely your house.  

  • You may put your money in higher risk investments than you might normally select, in an effort not only to match the rate of your home loan but in the hopes of surpassing this rate. Furthermore, with so much at stake, if a given investment does poorly, you may feel compelled to move your investment into even more risky investments to make up the difference, further jeopardizing your home, credit standing, and overall financial health.

“If you don’t have a secure salary or reserve funds to make mortgage payments in the event your investments lose value, you are taking a chance on losing your home,” said Don Saxon, Director of the Office of Financial Regulation which regulates state-chartered banks and securities in Florida. 

Consumers can contact the Florida Department of Financial Services’ toll-free helpline 1-800-342-2762 or visit the Department’s web site at for additional information or assistance.


The owner of a towing company with local government contracts has been charged with failing to provide workers’ compensation for his employees, according to Chief Financial Officer Tom Gallagher.

“Employers who avoid paying workers’ compensation premiums contribute to the rise in workers’ compensation rates and gain an unfair advantage over competitors,” said Gallagher, who oversees the Department of Financial Services.  “We will continue to aggressively investigate instances of fraud and abuse of the workers’ compensation system.”

Investigators with the department’s Division of Insurance Fraud say Michael Mucha, 42, of 14761 Madison Place in Davie, and owner of Bob’s Towing Inc., failed to provide required workers’ compensation coverage for his employees, including at least 20 drivers.  Mucha allegedly provided a fraudulent certificate of coverage to Town of Davie employees, with which the company had a contract for services.  The Davie municipal employees then contacted the Davie Police Department.

State insurance fraud investigators were contacted to assist, and Michael Mucha was arrested and charged with two counts of workers’ compensation fraud.  Mucha was booked into the Broward County jail.  If convicted, Mucha faces up to ten years in prison.

Under Florida law, employers in non-agriculture or construction-related industries, who have four or more employees, must maintain workers’ compensation coverage for their employees. 

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers’ compensation insurance.  Anyone with information about this case or another possible fraud scheme should call the department's Fraud Hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to a conviction.



A Miami man who posed as a mortgage broker in order to steal mortgage funds from a local resident has been ordered to pay more than $42,000 in restitution and serve 10 years of probation.

Gary E. Stys, 37, of 20210 SW 83rd Ave., pleaded guilty to two counts of grand theft after he misrepresented himself as a mortgage broker in order to convince an area resident to apply for mortgage funds to refinance her home.  After helping her complete the forms, Stys informed the homeowner that her loan had been declined, when in fact it had been funded and diverted to an account controlled by Stys. The case was investigated by the Office of Financial Regulation.  

Stys was also ordered not to participate in the mortgage business for the duration of his probation.

"This is another example of why consumers should thoroughly research the background and licensing status of mortgage brokers and lenders they utilize," said Don Saxon, Director of the Office of Financial Regulation.

Consumers seeking mortgage loans are encouraged to verify that they are dealing with a licensed mortgage broker or lender.  The Department of Financial Services' toll-free consumer help line is available at 1-800-342-2762 from 8:00 a.m. to 7:00 p.m. E.S.T., Monday-Friday.


In response to numerous calls from seniors who have a home health care policy with Conseco Senior Health Insurance Company, the Florida Department of Financial Services is alerting them that notices are now arriving in their mailboxes with options regarding their policies.  Conseco Senior has approximately 18,650 policies in force.

On April 20, the Office of Insurance Regulation denied a rate increase request of  212 percent and ordered the company to continue honoring the policies, along with offering the following options to policyholders who had a policy in force as of February 22, 2004.

Option 1 - Retain the current policy with no benefit changes but be subject to a maximum
50 percent rate increase the first year with no caps on increases in future years.  The rate increase would take effect on the next premium due date after receiving a notice from the company. 

Option 2 - Choose a replacement policy.  The policy will have a maximum 25 percent increase the first year with a 15 percent maximum increase per year for the lifetime of the policy.  There will be four changes on the replacement policy:  1) the removal of the restoration of benefits; 2) eligibility of benefits will require a Licensed Health Care Practitioner to certify the insured is unable to perform at least two activities of daily living (ADLs) for a period of 90 days or suffers from severe cognitive impairment; 3) minimum 20-day elimination period, and 4) lifetime benefit period policies will be converted to seven years.

Option 3 - Select the contingent non-forfeiture benefit option, which is a “paid up” policy that equals 100 percent of the sum of all premiums paid.  This option is a set dollar amount held by Conseco Senior to pay an individual policyholder’s future claims.  It is not a cash refund of premiums paid. Claims will be paid until the insured’s pool of benefits have been exhausted.  The policyholder will no longer be obligated to pay any premiums for their home health care policy.

If a policyholder fails to make an election by the deadline, the default election will be Option 1.  If the policyholder fails to make an election by the deadline and the home health care policy thereafter lapses for any reason, the policyholder will be entitled to a contingent non-forfeiture benefit.  

Conseco Senior was also ordered by the Office of Insurance Regulation to address claims handling concerns after the company admitted during a public hearing that there has been poor management of finances and claims.  Conseco Senior Health Insurance Company has experienced $510.8 million in operating losses and reserve increases since 1999.  The home health care policies currently involved have generated losses of $337 million in Florida.  

Consumers with additional questions can contact the Department of Financial Services at 1-800-342-2762.  Consumers can also call Conseco’s customer service line at 1-800-493-3286.

Florida Department of Financial Services'
Consumer Services HelpLine