A Division of Insurance hearing officer entered an Order under General Laws Chapter 175, § 166B against Edna Duvall of Charlestown, Indiana to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer and fined Ms. Duvall $4,000 pursuant to General Laws Chapter 176D § 7, on June 4, 2014.
Ms. Duvall’s case is interesting because the Division hearing officer fined her $4,000 on the same day that an order entered against one Richard Hayward for similar, but more serious, violations with a fine of only $2000.
As reported in Agency Checklist’s recent article, (Fined For Failure To Report Criminal Proceeding To Commissioner), Mr . Hayward had not reported as required by statute criminal charges against him for fraud that resulted in his conviction and a minimal jail sentence. As a result, five states other than Massachusetts revoked his non-resident producer licenses. One state, Indiana, find him $3500 for his failure to report the criminal charges and the initial license revocation in the state of Kentucky.
Call center employment in Indiana placing health insurance in other states
The records reviewed by Agency Checklist evidence that Ms. Duvall had worked for a call center company, Connextions, Inc. A large segment of this company’s business involved inbound sales management for the healthcare insurance industry. The company’s literature advertised that it employed “more than 4,000 licensed health agents and relationship experts.”
One of the seven call centers operated by Connextions was located approximately 13 miles from Ms. Duvall’s home in Indiana. While working for Connextions Ms. Duvall applied for and obtained non-resident producer licenses in several states, including Washington, South Dakota, Utah, and Massachusetts. The licenses showed that she was acting as an agent for United Healthcare Insurance Company.
Administrative revocations following failure to furnish fingerprints
The Washington State Office of the Insurance Commissioner revoked. Ms. Duvall’s non-resident producer license effective March 4, 2009, stating:
The Commissioner sent you written inquiries dated November 5, 2009, and December 16, 2009. A certified letter was sent by US Postal Service to your mailing address on January 20, 2010 and you signed the return receipt showing you received the letter. These numerous attempts to communicate with you were related to the business of insurance, requesting replacement fingerprint cards. You did not respond to any of them. Each such failure to respond promptly violated RCW 48.17.475.
After the state of Washington revoked her license, administrative actions revoking her non-resident licenses followed in the states of South Dakota and Utah on September 29, 2010 and July 19, 2011, respectively. Both of these revocations related to her failure to report that revocation of her license in the state of Washington, and her failure to respond to communications from these departments of insurance.
These states had in force statutes or rules similar to the Massachusetts statute that require
a producer [to report]…to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in the commonwealth within 30 days of the final disposition of the matter.” See G.L. c. 175, §162V(a).
Massachusetts waits until 2014 to take action
Massachusetts did not commence any proceeding against Ms. Duvall until April 7, 2014. She had been originally licensed in Massachusetts on October 16, 2009, and had not renewed her license when it terminated on August 9, 2012.
On April 7, 2014, the Division of Insurance filed its order to show cause against Ms. Duvall arising out of her failure to report to the Division of Insurance the revocations of her non-resident producer licenses in Washington, South Dakota, and Utah.
True to form, Ms. Duvall neither contacted the Division nor appeared at the hearing although the hearing officer found that she had received sufficient notice. The hearing officer entered a default and summary judgment against her stating:
I find that the evidence supports a finding that Duvall failed on four occasions to report an administrative action to the Division and will therefore impose a fine for four statutory violations. Because Duvall’s acts were serious violations of the laws relating to the transaction of insurance business, I impose the maximum fine for each of those violations.
Under G.L. c. 176D, § 7, those maximum fines were $1000 per violation. Additionally, the hearing officer entered orders against Ms. Duvall requiring her to return any licenses, prohibiting her from transacting directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in the Commonwealth of Massachusetts; and to dispose of any and all interests in Massachusetts as proprietor, partner, stockholder, officer or employee of any licensed insurance producer.
Finally, the hearing officer ordered: “Edna D. Duvall shall pay a fine of Four Thousand ($4,000) to the Division within 30 days of the entry of this order.”
Lesson learned
The Division of Insurance’s proceeding against Ms. Duvall present an abject lesson in what can happen when someone obtains non-resident producer licenses as part of their employment, let them lapse for whatever reason, and then ignores communications from the states where the licenses issued.
Ms. Duvall’s violations seem far less serious than those of Ms. Duvall described above. She committed no crime and no state fined her for any violations, so it is difficult to see why her fine should have been twice as large as the fine imposed on Mr. Hayward.
The Massachusetts Division of Insurance decision can be found here: Division of Insurance v. Edna E. Duvall.
