A Division of Insurance hearing officer entered an Order under General Laws Chapter 175, § 166B against Keely Grimes of Des Moines, Iowa, on December 17, 2015. The order revoked her Massachusetts non-resident individual insurance producer license as well as requiring her to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer. In addition, she was fined $1,000 pursuant to General Laws Chapter 176D § 7.
Division sought revocation alleging three statutory grounds
The Division relied upon two of the fourteen grounds contained in G.L. c. 175, §162R(a) that permit the Commissioner to revoke a producer’s license. These provisions were §§162(a)(1), 162(a)(7), and 162(a)(8) that state as grounds for license denial that:
- The applicant has provided “incorrect, misleading incomplete or materially untrue in-formation on the application.” (§162(a)(1)); and
- The applicant has been “found to have committed any insurance unfair trade practice or fraud” (§162R(a)(3))…
Additionally, the Division alleged that Ms. Grimes’ actions constituted, as related by the Hearing Officer, “an unfair or deceptive act or practice in the business of insurance, a basis for discipline under Chapter 176D, § 2.
Question’s definitions included a license denial as being “involved as a party in an administrative proceeding”
Ms. Grimes problems arose with the producer license application she submitted to the Division dated May 23, 2014.
On the application form used by the Division, the “Uniform Application for Individual Producer License”, Background Question 2 asks:
2. Have you ever been named or involved as a party in an administrative proceeding, including FINRA sanction or arbitration proceeding regarding any professional or occupational license or registration?
Below it, this question has three separate definitions of what the word “involved” means in relation to properly answering Question 2. The third definition states that:
‘Involved’ also means having a license, or registration application denied or the act of withdrawing an application to avoid a denial.
Ms. Grimes answered “No” to Question 2, and the Division issued here a non-resident producer license on July 10, 2014.
Wisconsin application denial not disclosed on Massachusetts non-resident producer application
Shortly more than a year after issuing Ms. Grimes her producer license, the Division commenced a show cause proceeding against Ms. Grimes. The Division’s complaint alleged that in obtaining her license in Massachusetts, Ms. Grimes provided incorrect, misleading, incomplete, or materially untrue information in her license application.
The factual allegation in the Division’s complaint related to a Wisconsin Division of Insurance administrative action in 2011 where Ms. Grimes application for a non-resident surplus lines license was denied for her failure to respond to the Wisconsin Division of Insurance.
The published grounds for the denial that appeared in the Office of the Commissioner of Insurance’s “Administrative Actions Taken by OCI” for October 2011 to March 2012, along with about 150 other license related administrative actions. This report simply stated that “Keely Grimes:”
Had her application for an insurance license denied. This action was taken based on allegations of failing to respond promptly to inquiries from OCI and failing to provide evidence of a resident surplus lines license. January 2012.
Apparently, this denial had no effect on the non-resident Accident & Health and non-resident Life producer licenses that Ms. Grimes continued to hold in Wisconsin. These licenses remained in force until they expired in July 2015.
Likewise, Ms. Grimes home state of Iowa also apparently did not take any action based upon the Wisconsin denial of a surplus lines license application. Ms. Grimes still holds resident Accident & Health producer and resident Life producer licenses that do not expire until 2017.
Failure to respond results in default
The Hearing Officer issued an Order and Notice of Hearing that the Division sent by certified mail, return receipt requested, and by regular mail to Ms. Grimes at her current address appearing on the DOI’s records.
The certified envelope was returned as “…Unclaimed – Unable to Forward.” The Post Office did not return the envelope sent regular mail and containing the Notice of Hearing and Order originally mailed. The Post Office, however, did not return the envelope containing the copy of the Order that was sent to Grimes’s address by regular mail.
When Ms. Grimes did not file a response or attend the hearing scheduled by the Hearing Of-ficer’s Order, the Division requested a default and summary action on the show cause order. The Hearing Officer granted the Division’s request.
Hearing Officer finds one underlying violation decision
The Hearing Officer found based on a show cause complaint and its exhibits that:
By failing to disclose the Wisconsin administrative action in her answer to Background Question 2 on her application, Grimes thereby:
- provided incorrect, misleading, incomplete or materially untrue information in the license application and subjected herself to discipline pursuant to Chapter 175, § 162R(a)(1);
- obtained a license through misrepresentation or fraud and subjected herself to discipline pursuant to Chapter 175, §162R(a)(3); and
- committed an unfair or deceptive act or practice in the business of insurance and subjected herself to discipline pursuant to Chapter 176D, § 2.
The Hearing Officer revoked “any and all insurance licenses issued to Keely Grimes”, ordered her to return any such licenses to the Division. It also prohibited her from “directly or indirectly trans-acting any insurance business or acquiring, in any capacity whatsoever, any insurance business in the Commonwealth”, and to “dispose of any and all interests in Massachusetts as proprietor, partner, stockholder, officer or employee of any licensed insurance producer…”
The Hearing Officer did, however, rule that although she had found that Ms. Grimes action’s had made her subject to discipline under the above three statutory provisions, she really had committed only one act, that of “…not telling the truth on her application filed with the Division.” Therefore, the Hearing Officer ruled that she would not impose cumulative discipline under each statutory section.
As a result, the Hearing Officer imposed only one civil penalty ordering that:
“Keely Grimes shall pay to the Massachusetts Division of Insurance within 30 days of the entry of this Order a civil penalty of one Thousand ($1,000) pursuant to Chapter 175, § 162R(a)(1) and § 162R(a)(3), and Chapter 176D, § 2 and § 7.”