DOI Special Investigations & Enforcement Actions During The First Quarter of 2017

The First Quarter includes actions during the months of January, February, and March

Each quarter, 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.

The following is a review of the First Quarter of 2017, which includes special investigations and enforcement hearings during the months of January, February, and March.

What was the total amount of actions and fines during the 1st quarter of 2017?

The First Quarter of 2017 far surpassed both the number of administrative actions as well as the total number of fines as compared to the First Quarter of 2016. According to the Division of Insurance documents, the Division’s Special Investigations Unit was involved in a total of 29 different Administrative Actions during the first three months of 2017.

As for fines, the first quarter of 2017 imposed a total of $96,695 in fines. In order to gain some perspective, the total fines for the entire year of 2016 were $72, 315. [pullquote]The DOI Special Investigations Unit was involved with 29 investigations during the First Quarter of 2017[/pullquote]

The largest fine imposed this quarter was for $75,000

The largest single fines assessed this quarter was against American Pet Insurance. While no formal decision was issued in this case, a letter from the Division of Insurance alleged that through its agencies, Trupanion USA and PetPartners Inc., American Pet Insurance (APIC) “…wrote, placed, renewed and/or negotiated more than 7,500 policies from January 2009 to July 2016 with Massachusetts consumers while using unlicensed individuals.” As a result the DOI said that the insurer had committed more than “…7,500 violations of M.G.L. c. 175 §175 and M.G.L. c. 175 §177 in paying unlicensed employees…”

The DOI did note that once advised of these issues and licensing violations the company took internal remedial measures. The $75,000 fine part of the Settlement Agreement the Division offered to APIC.

Fines involving Hearing Officer Decisions

The following are cases that did not terminate with a Settlement Agreement, but rather involved Hearing Officer Decisions. Each of the case excerpts here are from articles Agency Checklists did previously on these cases.

Producer’s Driving Under Pleas Eventually Lead to $5,000 Fine And License Revocation (February 14, 2017 article in Agency Checklists)

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).

Producer’s Unreported Criminal Case Leads to $1,500 Fine And License Revocation (February 25, 2017 article in Agency Checklists)

On January 27, 2017, a Division of Insurance hearing officer entered an order under General Laws Chapter 175, § 166B against Blenda V. Gamez of Arlington, Texas, 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 Ms. Gamez $500 for each of three violations, for a total fine of $1500, for failing to report administrative actions from other states as required by G.L. c. 175, § 162V(a).

A Fraudulent Bond Scheme Leads To A Producer’s License Revocation And Fine (March 7, 2017 article in Agency Checklists)

On February 1, 2017, a Division of Insurance hearing officer revoked the Massachusetts producer’s license of Mr. Steve Stokeling of Augusta, Georgia and fined him $3,500.

Besides the final order revoking his license, the Division of Insurance’s hearing officer also ordered him to cease transacting any insurance business in the state and to divest himself of any insurance businesses operating in the Commonwealth.

The hearing officer’s decision mentioned that two insurance companies had filed a civil complaint against Mr. Stokeling alleging that he had sold forged surety bonds bearing the names of [Chubb] companies.” The decision itself, however, did not elaborate on the details of the insurance company’s allegations.

Now, a look at the individual cases…

The following a list of the Administrative Actions this quarter includes:

Licensee & Type of Case: A Non-Resident Producer
- Date: 03/20/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $500 Fine; Cease & Desist
Licensee & Type of Case: American Pet Insurance, Non-Resident Producer
- Date: 01/31/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $75,000 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer (Agent)
- Date: 01/18/2017
- Allegations: Misrepresentation on License Application; Failure to Report Administrative Action
- Disposition: Settlement Agreement, $750 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer (Agent)
- Date: 01/15/2017
- Allegations: Trustworthiness; Failure to Report; Misrepresentation on Application
- Disposition: Settlement Agreement; $100 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 01/03/2017
- Allegations: Trustworthiness; Unfair Trade Practice
- Disposition: Settlement Agreement; $1,500 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 01/04/2017
- Allegations: Misrepresentation on License Application; Trustworthiness
- Disposition: Settlement Agreement; Revocation; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 02/02/207
- Allegations: Failure to Report Criminal Matter
- Disposition: Settlement Agreement; $500 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 02/23/2017
- Allegations: Trustworthiness; Unfair Trade Practice
- Disposition: Settlement Agreement: Revocation; Cease & Desist
Licensee & Type of Case: Non-Resident Producer
- Date: 03/30/2017
- Allegations: Misrepresentation on License Application
- Disposition: Settlement Agreement: $100 Fine; Cease & Desist
Licensee & Type of Case: Resident Adjuster
- Date: 03/20/2017
- Allegations: Violation of Insurance Laws
- Disposition: Settlement Agreement: Revocation; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 02/02/2017
- Allegations: Trustworthiness; Failure to Report Administrative Action
- Disposition: Settlement Agreement: Revocation; Cease & Desist
Licensee & Type of Case: Blenda Gamez, Non-Resident Producer
- Date: 01/26/2017
- Allegations: Failure to Report Administrative Actions
- Disposition: Hearing Officer Decision: $1,500 Fine; Cease and Desist
Licensee & Type of Case: Non-Resident Producer
- Date: 03/16/2017
- Allegations: Misrepresentation on License Application; Trustworthiness
- Disposition: Settlement Agreement: Revocation; $100 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer (Insurance Agency)
- Date: 03/17/2017
- Allegations: Misrepresentation on License Application
- Disposition: Settlement Agreement: $100 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer
- Date: 03/24/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $210 Fine; Cease & Desist
Licensee & Type of Case: Christopher Kopatz, Non-Resident Producer
- Date: 01/27/2017
- Allegations: Trustworthiness; Violation of Insurance Laws
- Disposition: Hearing Officer Decision; $5,000 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer
- Date: 03/31/2017
- Allegations: Improperly Withholding or Misappropriating Monies Received in the Course of Doing Business; Trustworthiness; Unfair or Deceptive Business Practice
- Disposition: Settlement Agreement; Permanent License Revocation, Cease & Desist
Licensee & Type of Case: Non-Resident Producer
- Date: 02/14/2017
- Allegations: Failure to Report Administrative Action; Trustworthiness
- Disposition: Settlement Agreement: $1,00 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer (Insurance Agency)
- Date: 03/15/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $1,695 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer (Agent)
- Date: 01/26/2017
- Allegations: Trustworthiness
- Disposition: Settlement Agreement: Revocation; Cease & Desist
Licensee & Type of Case: Jeanette Louise Mix, Non-Resident Producer (Agent)
- Date: 02/01/2017
- Allegations: Failure to Report Administrative Action
- Disposition: Hearing Officer Decision; $3,000 Fine; Revocation
Licensee & Type of Case: Non-Resident Producer (Agent)
- Date: 03/20/2017
- Allegations: Misrepresentation on License Application
- Disposition: Settlement Agreement; $100 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer (Insurance Agency)
- Date: 01/26/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $100 Fine; Cease & Desist
Licensee & Type of Case: Resident Producer (Insurance Agency)
- Date: 02/23/2017
- Allegations: Unlicensed Activity
- Disposition: Settlement Agreement: $1,140 Fine; Cease & Desist
Licensee & Type of Case: Steve Stokeling, Non-Resident Producer (Agent)
- Date: 02/03/2017
- Allegations: Trustworthiness; Failure to Report Administrative Action
- Disposition: Hearing Officer Decision; $3,500 Fine; Revocation
Licensee & Type of Case: Non-Resident Producer (Agent)
- Date: 02/21/2017
- Allegations: Failure to Report Criminal Action; Misrepresentation on License Application
- Disposition: Settlement Agreement; Revocation; Cease & Desist
Licensee & Type of Case: Resident Producer (Agent)
- Date: 02/10/2017
- Allegations: Trustworthiness
- Disposition: Settlement Agreement; $1,500 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer (Agent)
- Date: 03/13/2017
- Allegations: Misrepresentation on License Application
- Disposition: Settlement Agreement; $100 Fine; Cease & Desist
Licensee & Type of Case: Non-Resident Producer (Agent)
- Date: 03/13/2017
- Allegations: Misrepresentation on License Application
- Disposition: Settlement Agreement; $100 Fine; Cease & Desist

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.