The DOI assessed fines totaling $15,900 in the First Quarter of 2016
On a quarterly basis, the Division of Insurance publishes a list of the enforcement actions it has taken against licensed Resident and Non-Resident Producers. The total fines assessed often vary depending upon the circumstances and actions alleged.
In the report for the first quarter of 2016, which includes special investigations and enforcement hearings during the months of January, February, and March, the DOI Special Investigations Unit were involved in a total of 11 different cases. The disposition of these 11 actions resulted in the Enforcement Division assessing fines totaling $15,900. This is as steep increase in fines as compared to the first quarter of 2015 in which the DOI levied a total of $3,250 in fines. [pullquote]The DOI Special Investigations Unit was involved with 11 investigations during the First Quarter of 2016[/pullquote]
The largest fine imposed this quarter was against a Non-Resident Producer
The largest single fine assessed this quarter was for $3500 against Non-Resident Producer Redonda Russell. On February 28, 2016, the Massachusetts Division of Insurance became the ninth regulatory agency to revoke insurance and investment advisor licenses issued to Redonda Russell, 68, of Fort Worth, Texas. As required by law, Mrs. Russell failed to report, to the Division, a criminal proceeding against her for wire fraud and administrative actions revoking her nonresident producer licenses as well as FINRA sanctions.
As a result of Ms. Redonda’s actions, the Division of Insurance Hearing Officer, Jean F. Farrington, entered an Order against Mrs. Russell revoking her insurance licenses in Massachusetts and ordering her to dispose of any interests in the Commonwealth as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer. Additionally, Hearing Officer Farrington fined Ms. Russell $3,500, citing G.L. c. 175 § 194, a statute that allows a $500 fine when a violation of an insurance law occurs, as the statute Mrs. Russell violated does not provide for a specific penalty.
Read Agency Checklists’ article about Ms. Russell’s unfortunate end to her insurance career in the article entitled, “Agent Serves A Year and A Day and Loses Licenses For Forging and Converting Policy Loans.”
Another case involving a Massachusetts producer results in a $2000 fine
On January 7, 2016, the Division of Insurance Hearing Officer Jean F. Farrington entered an Order revoking the resident individual insurance producer license of Betty Burgos (“Ms. Burgos”), of Boston. The DOI also fined Ms. Burgos $2000 as outlined in Agency Checklists’ January 26, 2016 article “MA Resident Producer Loses License For Conspiracy To Intimidate Witness.”
Ms. Burgos’ actions in conspiring with her recently-released-from-jail fiancé to intimidate a hit-and-run victim through the use of the claim information accessed through her employer’s agency system pre-dates the January DOI decision as detailed in the prior Agency Checklists December 22, 2014 article, “Agency’s Loyalty To Employee Results In Lawsuit.”
In total there were 11 special investigations and enforcement hearing in this quarter
The following is a summary of the other fines assessed during this quarter. Overall, the Division conducted 11 investigations and enforcement actions against seven Producers and four Non-Resident Producers. Among these actions:
Placing or Renewing Policies While Unlicensed
- Four cases involved allegations of Placing or Renewing Policies While Unlicensed.
- All of the cases resulted in a Settlement Agreement, with one case imposing a $1000 fine while another no fine. The remaining two cases resulted in minor fines of $250 and $150, respectively.
Misrepresentation on License Application
- There were three cases involving the issue of Misrepresentation on License Application. The first case involving a Producer resulted in a Settlement Agreement and a $2,500 fine. An examination of Mr. Derek Siewert’s case can be found in the Agency Checklists March 15, 2016 article “Life Insurance Trust Scheme Causes Producer To Lose License.“
- The second case resulted in a Settlement Agreement with no fine, but a Permanent License Revocation along with a Cease and Desist from All Massachusetts Insurance Activity.
- The third case involving this allegation involved another producer which resulted in a Settlement Agreement along with a $2,500 fine.
Violation of Another States Insurance Laws; Conviction of a Felony
- The case involving these allegations concerned Grace Smith, a Non-Resident Insurance Producer. On February 2, 2016, the Division of Insurance Hearing Officer Jean F. Farrington entered an Order under General Laws Chapter 175, § 166D against Grace W. Smith, of Charlotte, North Carolina, revoking her insurance licenses in Massachusetts and ordering to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer. Additionally, Hearing Officer Farrington fined Ms. Smith $3,000.00 pursuant to General Laws Chapter 176D § 7. Mr. Smith’s case is the subject of the Agency Checklists February 18, 2016 article, “Agent Loses License For Cashing Dead Mother’s Social Security Checks For 14 Years.“
Incompetence in the Conduct of Business
- The last case involves a Producer investigation for Incompetence in the Conduct of Business. The case resulted in a Settlement Agreement along with a $500 fine as well as a Cease and Desist from Violations.
The Division’s Special Investigation Unit is in charge of investigating producers
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.
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.
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.”
