On August 31 2017, the Governing Committee Review Panel of Commonwealth Automobile Reinsurers (“CAR”) heard the appeal of Patriot PLC Insurance (“Patriot”) from the June 21 decision of the Market Review Committee affirming the cancellation by Safety Insurance (“Safety Insurance”) of Patriot’s exclusive representative producer (“ERP”) commercial auto and taxi, limousine, car service contract. See Agency Checklists’ article of June 26, 2017, “Market Review Committee Upholds Cancellations Of Patriot Agency’s Contracts.
Patriot admits all of Safety’s allegation of CAR Rule violations
At the Market Review Committee hearing in June, Patriot’s owner and president, Ricardo De Oliveira appeared without an attorney. After Safety had made its presentation of the agency’s failures to comply with Safety’s contract and CAR Rules, Mr. De Oliveira admitted Safety’s allegations. He acknowledged the agency’s failures. However, he blamed these failures on the rapid growth of the agency’s book of business, his own poor management and decision making, and the alleged dishonesty of a former employee.
At the end of Mr. De Oliveira‘s statement there were no questions from the committee. Instead, a member moved to uphold the cancellation by Safety. The motion was quickly seconded and followed by a unanimous vote to uphold the cancellation.
Mr. De Oliveira appealed the Market Review Committee decision to the Governing Committee Review Panel.
Continuance request based on claim “attorney unavailable” denied
At the hearing before the Governing Committee Review Panel, Mr. De Oliveira began by moving for a continuance. He advised the panel he was represented by counsel but his attorney could not be present and that he did not wish to proceed without representation.
Apparently, Mr. De Oliveira had engaged an attorney, Andrew Lattarulo, after the Market Review Committee upheld Safety’s cancellation.
However, CAR’s Counsel, Attorney Steven Torres, informed the panel Attorney Lattarulo had advised him on August 28, 2017, three days before the hearing, he had withdrawn his representation of Patriot. When Mr. De Oliveira claimed that he had not been notified by his attorney his representation had been withdrawn, Attorney Torres produced an email from Attorney Lattarulo advising of his withdrawal. Attorney Torres also produced a verbal phone confirmation from Attorney Lattarulo confirming notification of his withdrawal to his client.
The panel denied Mr. De Oliveira’s request for a continuance and heard Safety’s case against Patriot.
Violations continued while Patriot’s appeal pending
Safety’s Corporate Counsel and Director of Legal & Regulatory Compliance, Elizabeth B. Brodeur, presented Safety’s position.
She urged the panel to uphold the decision of the Market Review Committee and restated the evidence submitted against the agency at the Market Review Committee hearing.
Besides the violations before Safety’s termination issued, Attorney Brodeur advised the panel since issuing the termination letter, there had been no change in the agency’s behavior. The pattern of violations supporting the termination had continued to occur and would likely continue until the panel affirmed Safety’s termination.
Per Attorney Brodeur, Patriot had continued to submit insufficient down payments or no down payments, make late submissions of new business, and issue agency checks to Safety for insurance placed that were dishonored when presented for payment by Safety.
Attorney Brodeur dismissed as “not credible” that the agency, in its submission to the Governing Committee Review Panel, defended itself by placing the blame for noncompliance either on late payments made by its premium finance company or on policy limit changes made by the Safety underwriters.
Mr. De Oliveira leaving the insurance business and selling the agency
Mr. De Oliveira responded to Safety’s presentation by stating he was planning on leaving the insurance business and anticipated the imminent sale of his agency. Also, he stated the intent of his appeal and his continuance request was to maintain his honor and respect within his community, not to buy himself additional time to remain in business or for financial gain.
Governing Committee Review Panel denies Patriot’s appeal and upholds Safety’s grounds
The panel discussed the comments made by the parties and voted on each ground specified in Safety’s termination letter dated May 3, 2017. The votes were unanimous and found:
- Safety established that by failing to collect, process and remit payment due Safety under the CAR Rules of Operation, Patriot had violated CAR Rule 14.B.1.b. (“Collect, process and remit premium due a Servicing Carrier in accordance with the provisions of the Rules of Operation”).
- Safety established that by failing to submit to Safety for all applicants, a new business application for insurance completed in its entirety within two business days, Patriot had violated CAR Rule 14.B.1.d. (“Submit for all applicants a new business application for insurance, completed in its entirety, and a signed premium finance application/agreement, if applicable within two business days”).
- Safety established that by failing to report all coverage bound and all registrations certified to Safety within two business days after binding coverage or certifying a registration, Patriot had violated CAR Rule 14.B.1.f. (“Report all coverage bound and all registrations certified to the Servicing Carrier within two business days after binding coverage or certifying a registration”).
- Safety established that by violating written procedures supplied by Safety for processing claims, remitting premiums and requesting coverage, Patriot had violated CAR Rule 14.B.1.h. (“Comply with written procedures supplied by the Servicing Carrier for processing claims, remitting premiums and requesting coverage”).
- Safety established that by failing to forward all premium payments to Safety within two business days of receipt, Patriot had violated CAR Rule 14.B.1.j. (“Forward all premium payments to a Servicing Carrier within two business days of receipt…”).
- Safety established that by failing to conduct all monetary transactions with Safety as required by the CAR Rules of Operation and the Commercial and Taxi/Limo Agreements between Safety and Patriot, Patriot had violated CAR Rule 14.B.1.p. (“Conduct all monetary transactions with the insured and the Servicing Carrier as required by the Rules of Operation and the ERP contract”).
- Safety established that by violating all the conditions in the Commercial and Taxi/Limo Agreements between the agency and Safety, Patriot had violated CAR Rule 14.B.1.x. (“Comply with all of the conditions set forth in the contract between the ERP and the Servicing Carrier”).
- Safety established that by violating all the Rules of Operation and Manual of Administrative Procedures, Patriot had violated CAR Rule 14.B.1.y. (“Comply with all of the provisions of the Rules of Operation and the Manual of Administrative Procedures”).
Finally, the panel unanimously approved a motion agreeing that these violations, individually and as a group, constitute a valid basis for affirming Safety’s termination of Patriot PCL Insurance’s commercial automobile and taxi and limousine ERP appointments based upon the grounds stated in the Notice of Termination.
Patriot has until September 30, 2017 to appeal to the Division of Insurance
Under CAR Rules, the decision of the Governing Committee Review Panel is the formal ruling of the Governing Committee, and may be appealed to the Division of Insurance by filing a notice of appeal with CAR and the Commissioner within 30 days after the ruling’s issuance.