On January 27, 2017, a Division of Insurance hearing officer entered an order under General Laws Chapter 175, § 166B against Christopher J. Kopatz of Middleton, Wisconsin, revoking and ordering the return of any and all producer licenses, to cease transacting any insurance business in Massachusetts, and to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer. The Division also fined Mr. Kopatz $500 for each of ten violations, for a total fine of $5,000, for failing to report administrative actions from other states as required by G.L. c. 175, § 162V(a).
California issues restricted license for multiple DUI convictions in administrative action
Mr. Kopatz worked for CUNA Mutual in Wisconsin selling accident, health and life insurance from October 2012 until March 2014.
In Mr. Kopatz’ case, during the course of his employment with CUNA Mutual, he applied for and obtained nonresident licenses in a number of states including Arkansas, California, Delaware, Indiana, Iowa, Kansas, Maine, South Dakota, Utah, Virginia, West Virginia, Wisconsin, and, of course, Massachusetts.
In January 2013, Mr. Kopatz filed an application with the Insurance Commissioner of the State of California for a nonresident license to act as a life-only agent and an accident and health agent in that state.
Between February 12, 2007 and July 1, 2010, the California Department conducted an administrative proceeding over issuing Mr. Kopatz a nonresident license after being notified that Mr. Kopatz had been convicted on pleas of “no contest” for four separate offenses of driving under the influence. The position of the California Department was that Mr. Kopatz’ convictions “demonstrate[d] a pattern of repeated and willful disregard for the law which is substantially related to the qualifications, functions, or duties of an insurance licensee.”
In September 2013, Mr. Kopatz was denied an unrestricted nonresident license, but was granted a “restricted” license, after admitting in writing that grounds existed “for the denial of his pending application to act as a life-only agent and accident and health agent.” Under California law, a restricted license is essentially a probationary license, subject to any reasonable conditions imposed by the Commissioner. A restricted license also grants no property rights and can be revoked without a hearing by the Commissioner.
Mr. Kopatz soon after leaves CUNA Mutual’s employ, stops answering mail, and has licenses revoked.
Apparently sometime after Mr. Kopatz obtained his California restricted license, he was again convicted of an unspecified criminal offense. Adding to that, Mr. Kopatz also did not report to any of the states that he was licensed by, that California had taken administrative action in denying him an unrestricted license.
On February 7, 2014, the Commonwealth of Virginia’s Corporation Commission (“Commission”), that Commonwealth’s division that regulates producer licenses, sent a letter to Mr. Kopatz asking him to respond regarding his failure to notify the Commission within 30 calendar days of the final disposition of the matter of an administrative action taken against him by the State of California, namely, the denial of an unrestricted license.
In March, Mr. Kopatz left CUNA Mutual and eventually took another job as a salesman for a telecommunications company.
Even though he left the insurance business, Mr. Kopatz took no actions to respond to the Commission’s February letter. As a result, the Commission initiated license revocation proceedings leading to a chain reaction involving all of his nonresident and resident licenses.
Virginia’s license action, based on failure to report California proceeding, starts cascade of revocations.
The first state to take action was the Commonwealth of Virginia which revoked Mr. Kopatz’ insurance producer license on April 14, 2014, for “failing to report to the Commission within 30 calendar days an administrative action that was taken against him by the State of California.”
On June 24, 2014, the Arkansas Insurance Commissioner revoked Kopatz’ Arkansas insurance producer license based upon his failure to report within 30 days the Virginia revocation.
The Utah Insurance Department assessed against Mr. Kopatz an administrative forfeiture of $500 for failure to respond to inquiries on July 11, 2014.
The Iowa Insurance Commissioner revoked Mr. Kopatz’ Iowa insurance producer license September 4, 2014, for his failure to report Virginia’s revocation and fined him $1,000.
On November 25, 2014, the Kansas Department of Insurance revoked Mr. Kopatz’ Kansas insurance producer license for failing to report the California, Virginia, Utah, and Iowa administrative actions and because the “Respondent [Mr. Kopatz] did not disclose criminal history to [the Kansas Insurance Department] on his application and has not reported a subsequent criminal conviction as would be required by K.A.R. §40-7-9(d).”
Soon, based on Mr. Kopatz’ failure to report any of the administrative actions or the additional criminal conviction, other states followed suit:
- On December 9, 2014, the Delaware Department of Insurance revoked Mr. Kopatz’ Delaware insurance producer license.
- On March 6, 2015, the Indiana Commissioner of Insurance suspended Kopatz’ Indiana insurance producer license.
- On April 20, 2015, the South Dakota Division of Insurance revoked Kopatz’ South Dakota insurance producer license.
- On February 17, 2015, the Maine Superintendent of Insurance issued an order revoking Kopatz’ Maine insurance producer license effective March 24, 2015.
- On July 2, 2015, the West Virginia Insurance Commissioner revoked Kopatz’ West Virginia insurance producer license.
Finally, in August 2015, Mr. Kopatz’ home state, Wisconsin, revoked his resident producer’s license and ordered him to pay a forfeiture of $1,000.00. Wisconsin’s actions were taken based on allegations of Mr. Kopatz failing to timely report administrative actions taken by the states of California, Virginia, Utah, Iowa, Arkansas, Kansas, Delaware, and Indiana.
Massachusetts waits until April 2016 to take action
Massachusetts did not commence any proceeding against Mr. Kopatz until April 6, 2016. He had been originally licensed in Massachusetts on January 30, 2013, as a nonresident producer.
On April 6, 2016, the Division of Insurance filed its order to show cause (“OTSC”) against Mr. Kopatz arising out of his failure to report to the Division of Insurance that nine states, Iowa, Kansas, Delaware, Indiana, South Dakota, Maine, Arkansas, West Virginia and the Commonwealth of Virginia, had previously revoked or suspended his insurance producer licenses. Additionally, The Division alleged that Mr. Kopatz failed to timely to report to the Division the administrative action taken against him by a tenth state, Utah.
The Division also sought fines against Mr. Kopatz for his failure to make these reports as required by G.L. c. 175, § 162V(a) and, as is usual in these types of license hearings, the revocation of Mr. Kopatz’ licenses and orders that require Mr. Kopatz to dispose of any insurance-related interests in Massachusetts and prohibit him from conducting any insurance-related business in the Commonwealth.
Mr. Kopatz’ failure to appear results in default and a summary decision against him
True to form, Mr. Kopatz neither contacted the Division nor appeared at the scheduled hearing. The hearing officer found that he had received sufficient notice after the Division had obtained from his former employer, CUNA Mutual, a current residential address. The notice mailed to this address had been sent both by regular mail and certified mail and not returned.
The hearing officer summarily entered a default and proceeded to enter judgment stating:
I find that [Mr.] Kopatz’ failure to answer the OTSC or to respond to the Motion, and his failure to appear at the hearing warrant a finding that he is in default. By his default, Kopatz has waived his right to proceed further with an evidentiary hearing in this case and I may consider the Division’s Motion based on the record.”
Hearing officer finds violations warrant fines under the General Penalty Statute
The Division’s OTSC sought fines for what the Division termed “violations” of G. L. c. 175, §162R (a)(2) and (a)(9). The hearing officer ruled that § 162R (a) permits the Commissioner to levy a civil penalty in accordance with G.L. c. 176D, §7 (Unfair Insurance Practice Act) for reasons that support disciplinary action under that statute.
However, the hearing officer pointed out that past decisions in administrative hearings seeking license revocation have distinguished reasons for disciplinary action that arise from affirmative acts committed by the licensee from those that arise from administrative or judicial actions by third parties against the licensee. Additionally, the hearing officer pointed out that “it has been found that imposing fines for violations of another state’s statutes that were resolved in that jurisdiction would unfairly penalize the Massachusetts licensee.”
As a result of these prior rulings, the hearing officer held: “Because the grounds for disciplining Kopatz under §162R (a) are based entirely on administrative actions against him by other jurisdictions, I find no basis for imposing fines on him.”
The finding that fines were not warranted under the statutes cited by the Division did not ultimately avoid Mr. Kopatz being fined.
The hearing officer noted that there was no dispute that Mr. Kopatz had failed to report ten administrative proceedings in other states to Massachusetts as required by G.L. c. 175, § 162V(a) which states:
A producer shall 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. This report shall include a copy of the order, consent to order or other relevant legal documents.
This particular statute does not contain as part of its provisions any penalty. But, the hearing officer ruled:
Because that section does not specify a penalty for non-compliance with its requirements, violations of the section are therefore subject to fines authorized under G. L. c. 175, §194. The maximum fine allowed under that section is $500 per violation. I find that [Mr.] Kopatz committed ten violations of G. L. c. 175, §162V (a) and impose the maximum fine of $500 for each.”
The provision cited, § 194, is the catch-all provision of the insurance statutes that provides: “Whoever violates any provision of this chapter, the penalty whereof is not specifically provided for herein, shall be punished by a fine of not more than five hundred dollars.”
Final Orders entered by hearing officer
In addition to the $5,000 fine payable within 30 days, the hearing officer entered orders against Mr. Kopatz requiring his return of any licenses to the Division, prohibiting his from 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.
