12 year wait to reapply for a public adjuster’s license was to no avail
In a recent decision published by the Division of Insurance, the DOI hearing officer heard the appeal of Demetrius Economou, formerly known as James Economou. On January 9, 2013, Mr. Economou filed a notice of claim for an adjudicatory proceeding with the Division of Insurance to review the Division’s Director of Producer Licensing’s December 11, 2013 denial of his application for a public adjuster license. Under G.L. c. 175, § 172, the Director of Producer Licensing may issue a public adjuster license on behalf of the Commissioner:
“If …. the applicant is trustworthy and competent, he shall issue the license which shall expire in 3 years from its date, unless sooner revoked or suspended as provided herein.”
In 1992, Mr. Economou, then known as James Economou, was convicted in Worcester Superior Court for insurance fraud relating to his assistance in having his employees at his Worcester Doughnut Shop file for fraudulent workers’ compensation benefits. He pled guilty and was sentenced to 2½ months in the Worcester County House of Corrections.
However, according to the Division’s 2001 decision, James Economou v. Division of Insurance, DOI Docket E2001-09, Mr. Economou apparently received his first license as a public fire loss adjuster subsequent to this conviction in January 1993. He then held the license without any apparent problem until ultimately June 2001, when the Division refused to renew his license because of his 1992 insurance fraud conviction.
Mr. Economou appealed the refusal of the Division of Insurance to issue a renewal but that denial was upheld on appeal.
Division denies 2012 application based on 1992 insurance fraud conviction
Eleven years later and almost twenty years after his conviction, Mr. Economou reapplied for a public adjuster license, albeit this time as Demetrius Economou. Notwithstanding the passage of time, the Director of Producer Licensing elected to non-renew his license based upon his 1992 conviction for insurance fraud. The Director concluded that he was an “unsuitable person” based upon this prior criminal record. In appealing this decision, however, Mr. Economou contended that the Director of Producer Licensing’s decision was arbitrary and capricious because of the weight that had been given to his prior criminal history. He argued that he had not been given an opportunity to present evidence at a hearing demonstrating his complete rehabilitation.
Mr. Economou appealed the Director of Licensing’s decision to a Division Hearing Officer requesting a full adjudicatory hearing that is allowed to persons under the state’s Administrative Procedure Act. The Division’s position was that the right to an adjudicatory hearing can only be exercised by a person whose license is being revoked or whose existing license is being refused renewal by the Division.
In this case, Mr. Economou had had the right to that hearing in 2001 when Division refused to renew Mr. Economou’s license. Now 12 years later, when he was claiming that he had the right to have a license issued because of his “rehabilitation” there was no requirement for a full hearing.
The hearing officer entered a summary finding against Mr. Economou based upon the fact that there was no legal error on the part of the Director because the relevant evidence of the criminal conviction established his unsuitability and that there was no claim that the Director had applied the wrong legal standard in denying the issuance of a license.
Appeal from Hearing officer to Commissioner of Insurance
Massachusetts law allows an appeal to the Insurance Commissioner when a decision has been made by a deputy or other authorized official at the Division of Insurance. While authorized by G.L. c. 26, § 7, the statute only allows three days to file an appeal to the Commissioner of Insurance after a decision.
Mr. Economou filed a timely appeal to the Commissioner for reconsideration. Based upon the standard of review, however, the Commissioner does not hold a separate hearing but simply reviews the proceedings by his deputies or hearing officers similar to the way an appeals court reviews the decision of a trial court. The review simply determines whether the applicable legal standards have been applied correctly.
The Commissioner reviewed the record and the standards and reached the conclusion that the denial of Mr. Economou’s license was appropriate. The fact that Mr. Economou disputed the Director of Producer Licensing’s finding that he was not a suitable person to be licensed as a public adjuster and was not “trustworthy and competent” as required by G.L. c. 175, § 172 was not warranted.
Appeal Filed to the Worcester Superior Court
On October 15, 2013, the Commissioner affirmed the August 6, 2013 decision of the hearing officer. Under the provisions of the Administrative Procedure Act Mr. Economou could file a further appeal to a superior court within 30 days. Beating that date by 15 days, he filed an administrative appeal in Worcester Superior Court on November 1, 2013. The appeal is similar to the inter-agency appeal to the Commissioner of Insurance that Mr. Economou made under G.L. c. 26, § 7.
In this case, however, the Superior Court only looks at the administrative record to determine whether that record establishes that the agency made its decision: (a) In violation of constitutional provisions; or (b) In excess of the statutory authority or jurisdiction of the agency; or (c) Based upon an error of law; or (d) Made upon unlawful procedure; or (e) Unsupported by substantial evidence; or (f) Unwarranted by facts found by the court … where the court is constitutionally required to make independent findings of fact; or (g) Arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law. See G.L. c. 30A, §14(7).
While the above grounds present a veritable laundry lists of reasons the Superior Court might use to remand or reverse the agency decision, the reality is that the Superior Court upholds most agency decisions. The legal standard the Superior Court must apply states:
“The court shall give due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it.”
As a result, unless the agency has really gone off the reservation, the statutorily required deference to the agency’s discretion and expertise carries the day for the agency on these types of administrative appeals. Based upon this record, Mr. Economou may have a very tough row to hoe to get the Superior Court to reverse the Commissioner’s decision.