In a Summary Decision issued yesterday, the Massachusetts Division of Insurance Hearing Officer revoked all insurance producer licenses issued to James Timothy Shelnut in Massachusetts. The Division of Insurance also fined Mr. Shelnut $3,000 and prohibited him from directly or indirectly transacting or acquiring any insurance business in the Commonwealth of Massachusetts and that he must also dispose of “…any and all interests in Massachusetts as proprietor, partner, stockholder, officer or employee of any licensed insurance producer.
The facts of the case are as follows: Mr. Shelnut, a Georgia resident, was first licensed in Massachusetts as a non-resident individual insurance agent of March 17, 1999. That license was then converted to a non-resident producer license around May 16, 2003 in accordance with Massachusetts General Laws Chapter 175 § 162G.
In June of 2003, the Massachusetts of Division of Insurance canceled Shelnut’s producer license for a failure to renew, but then later re-licensed him as a producer in 2004.
In April of 2008, Mr. Shelnut entered into a consent order with the State Ethics Commission in the State of Georgia as a result of violations of that state’s laws. In particular, he violated the Ethics in Government Act, for making campaign contributions through proxies and in excess of the state law limit. As a result, Mr. Shelnut agreed to pay $40,000 in civil penalties.
Mr. Shelnut, however, failed to report the actions taken and penalty paid to the Georgia State Ethics Commission within 30 days of its final disposition and as a result had his Georgia producer license put on probationary status for one year by the Georgia Commissioner of Insurance. This action was taken because “The Georgia Commissioner of Insurance concluded that Shelnut had committed fraudulent or dishonest practices and shown a lack of trustworthiness or competence to act as an insurance licensee.”
In February of 2009, Shelnut then submitted an application for an insurance producer’s license to the Colorado Division of Insurance. Shortly thereafter he was notified that he could either withdraw or resubmit his application based on his failure to disclose actions that had been taken against his insurance licenses in Alabama, New York and Washington. The Colorado Division of Insurance informed Mr. Shelnut that if he failed to exercise either of these options his application would be denied. In response, Mr Shelnut decided to withdraw his Colorado insurance producer license application and agreed that his withdrawal would be reported to the National Association of Insurance Commissioners as part of the agreement.
In January of 2010, Mr. Shelnut decided to electronically renew his Massachusetts insurance producer’s license with the Division of Insurance. In completing the electronic application, Mr. Shelnut chose to answer “No” to Question Two on the renewal form. Question Two asks the applicant if “…since the last renewal date, he or she has been involved in an administrative proceeding regarding any professional or occupational license.” “Involved’ is defined in the application as including, among other things, being placed on probation or withdrawing an application to avoid a denial of that application.” The law requires a Massachusetts licensed producer “to report to the Commissioner any administrative action taken by another state within 30 days of the final disposition.”
As a result of Mr. Shelnut’s actions, the Massachusetts Division of Insurance filed an Order to Show Cause (“OTSC”) against Mr. Shelnut for failure to notify the Division of Insurance of the administrative actions against him in the other states and requesting that his failure to report these actions result in the revocation of his license and the disposal of any or all insurance-related interests in the Commonwealth of Massachusetts. Pursuant to Massachusetts law, the Commissioner of Insurance in Massachusetts may suspend or revoke a producer’s license generally on one of these three grounds:
- For “providing incorrect, misleading, incomplete or materially untrue information in the license application;
- For violating any insurance laws or regulations, subpoena or order of the Commissioner or of another state’s insurance commissioner; and
- For “obtaining or attempting to obtain a license through misrepresentation or fraud.”
Mr. Shelnut never responded to any of the Division’s correspondence nor communicated to the Division in any other manner and did not appear at any of the hearings scheduled for his case in March and April of 2011. As a result of Mr. Shelnut’s failure to answer, the Hearing Officer found him to be in default and granted the Division’s motion for summary decision. Under Massachusetts law, when an agent comes before the Division of Insurance either party may filed a motion for summary decision if “he or she is of the opinion that there is no genuine issue of fact relating to a claim, and that he or she is entitled to prevail as a matter of law.”
If you have more questions regarding renewal and disclosure issues for insurance producers and agents in Massachusetts, contact the lawyers of Agency Checklists here or call us at 617.598.3800.
