DOI assessed fines totaling $35,100 in the fourth quarter of 2015
The fourth quarter of 2015 saw an impressive increase in fines levied against licensed Massachusetts producers. According to documents from the Division of Insurance, the Special Investigations Unit imposed fines totaling $35,100 dollars during the last quarter of 2015, as opposed to $5,450 during the third quarter.[pullquote]The DOI Special Investigations Unit was involved with 21 investigations this quarter[/pullquote]
For those unfamiliar with our Agent Enforcement articles, the Division of Insurance publishes a list of the enforcement actions it has taken against licensees including, but not limited to, producers, agencies and insurance companies. The total fines assessed vary depending upon the circumstances and actions taken against an individual producer or other licensee. The actions taken by the Special Investigations Unit are released on a three-month basis after the end of each quarter.
In the report for this quarter, that includes actions taking during the months of October, November and December 2015, the DOI Special Investigations Unit was involved in 21 different cases that resulted in the assessment of fines totaling $35,100.
Interestingly, the fines levied in the final quarter of the year exceeded the total fines assessed in the first three quarters of 2015. In those three quarters, the fines levied were $3,250, $8,600, and $5,450 for the first, second, and third quarter, respectively, with a combined total of $14,400 for the first nine months of 2015.
The largest single fine assessed this quarter was for $17,000. This amount was assessed against a Resident Producer and included a Permanent license revocation as well as a cease and desist from all insurance activity.
As Agency Checklists reported in an earlier article, in October 28, 2015, the Division of Insurance entered an order revoking all insurance producer’s license of Gary Wayne Fravel of South Hamilton, Massachusetts. Mr. Fravel had been licensed by the Division since 1991, and had done business in Massachusetts under the name Fravel Insurance Agency, Fravel & Associates Insurance Agency Fravel & Associates Insurance, and Fravel Insurance at 183 Highland Street, South Hamilton, Massachusetts.
What the DOI fined Mass. agents for during this quarter
The following is a summary of the other fines assessed during this quarter. Overall, the Division conducted investigations and enforcement actions against 12 Non-Resident Producers and 9 Resident Producers. A short summary of the results of those enforcement actions is as follows:
- Placing or Renewing Policies while Unlicensed: There were seven cases this quarter involving producers engaging in this conduct. The seven cases involved Producers and Non-Resident Producers alike, and fines ranged from $500 to $2,500.
- Placing or Renewing Policies While Unlicensed: There were three cases involving this allegation. One of the cases, in particular, involved the allegation of a Non-Resident Producer being unlicensed in their Home State. This case, however, did not result in a fine but rather a Cease & Desist from violation. The other two cases, which involved Cease & Desist violations also included fines of $100 and $200, respectively.
- Failure to Report Administrative Actions: This quarter saw three cases involving failure to report administrative actions allegations. The cases all involving Non-Resident Producers had varying results. While all three case dispositions included License Revocations, only one of the cases involved a monetary fine. That case, involving Cassandra Ott, is discussed more fully in Agency Checklists’ January 19th article entitled “DOI Fines Another Agent $7000 For Failure to Report License Revocations and Suspensions.”
- Termination for Cause: Two cases this quarter had this allegation. Both involved Massachusetts Producers, but with very different outcomes. One resulted in the Producer entering a Settlement Agreement along with a $2,500 fine and a Cease & Desist from Violation, while the other ended with a Settlement Agreement involving no fine but a License Revocation and a Cease and Desist from Violation.
- Impersonation; False Advertising: While not a common occurrence, one case this quarter involved this allegation in which an employee was listed as a producer on an agency’s website without actually ever having been licensed. Ultimately the case was settled with a $500 fine and a Cease & Desist from Violation.
- Late Notice of Criminal Prosecution: This case involved a Non-Resident Producer who had failed to notify the DOI of having previously pled guilty to a a misdemeanor offense for the possession of marijuana with intent to sell within the required 30 day period as outlined in M.G.L. c. 175 § 162V(b). As a result, the DOI issued a fine pursuant to M.G.L. c. 175, § 194 of $250 along with a Cease & Desist from Violation.
- Misrepresentation on License Application: There was only one case involving this allegation this quarter. This case involving the Non-Resident Producer Keeley Grimes is discussed more fully in the January 12, 2016 Agency Checklists article “DOI Revokes Producer License & Fines Agent $1000 for Application Misstatement.”
- Failure to Remit: This last case is the one involving the Licensed Producer, Gary Wayne Fravel, in which the DOI imposed a $17,000 fine, Permanent License Revocation and a Cease & Desist from all insurance activity. The case is discussed in depth in the November 9, 2015 Agency Checklists entitled, “A $17,000 Fine and License Loss for Premium Conversions.”
Each quarter the Division publishes a list enforcement actions taken against licensees
While the primary mission of the Division of Insurance is “…to monitor the solvency of its licensees in order to promote a healthy, responsive and willing marketplace for consumers who purchase insurance products” a major part of that mission involves insurance enforcement. The DOI engages in a variety of administrative actions throughout the year in order to ensure that the insurance industry and its representatives maintain a just and healthy marketplace.[pullquote]To learn more about avoiding enforcement issues, you may be interested in Agency Checklists’ article “One Way to Avoid Large Fines for You & Your Agency”[/pullquote]
That said, during the course of regulating the Massachusetts insurance industry, the Division’s Special Investigation Unit will pursue allegations of misconduct against any persons licensed by the DOI including insurance producers, insurance advisers, public adjusters, reinsurance intermediaries, viatical loan brokers and providers, viatical settlement brokers and providers, insurance companies, health maintenance organizations and self-insurance groups.
As part of its investigation into a case, the Enforcement Division may interview witness, question licensees, demand and review documentary evidence supporting allegations of unfair methods of competition or unfair trade practices or any other violation of the insurance law.
If a specific investigation warrants further action, an investigation may result in a referral to the Attorney General’s office in egregious cases or in less serious cases the Division independently may negotiate settlements or request the Commissioner or his deputies to initiate an administrative proceeding before a hearing officer, agree to assist in cease and desist order and a written compliance programs. In more egregious cases, a licensee’s conduct may warrant the sanctioning of that producer’s license including revocation or suspension along with restitution.
