On November 24, 2017, Division of Insurance hearing officer, Jean F. Farrington, entered orders and fines on Orders to Show Cause filed by the Division of Insurance against Michael S. Lainsey, of Jacksonville Beach, Florida, Lester G. Sherman, Jr., of Bloomfield Hills, Michigan, and Nadine A. Petrarca, of Warwick, Rhode Island (“Respondents”). The decisions were published on the Division’s website after the three day appeal period under G.L. c. 26, § 7, for the Respondents to appeal to the commissioner of insurance expired.
In each of these case, the hearing officer also entered orders on each Order to Show Cause:
- revoking any licenses, including their nonresident producer licenses issued to the Respondents:
- ordering the return to the Division any license in their possession, custody or control;
- prohibiting the Respondents from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in Massachusetts; and
- ordering the Respondents to comply with the provisions of M.G.L. c. 175, §166B and dispose of any and all interests in Massachusetts as proprietor, partner, stockholder, officer or employee of any licensed insurance producer.
The hearing officer also fined each of the Respondents varying amounts. The hearing officer fined Mr. Lainsey $3,000, Mr. Sherman $1,000, and Ms. Petrarca $2500. All fines were ordered paid to the Division within 30 days.
All of the Respondents defaulted on the Order to Show Cause filed by the Division against them. The allegations in the Order to Show Cause that the hearing officer accepted regarding each of the Respondents were the following:
Michael S. Lainsey—Drug conviction starts producer license revocations
Mr. Lainsey was a licensed Massachusetts non-resident insurance producer on February 19, 2013. The Division’s Order to Show Cause alleged Mr. Lainsey failed to report the revocation of his resident producer license, on June 30, 2014, by the Florida Department of Financial Services.
The Division also alleged he failed to report subsequent revocations of his nonresident producer licenses by the Insurance Commissioner of the State of Washington on September 11, 2014, the Vermont Department of Financial Regulation on November 6, 2014, the Wyoming Insurance Department on April 2, 2015, the West Virginia Insurance Commissioner on June 4, 2015, and the Delaware Insurance Commissioner on August 25, 2015.
The Division’s Order to Show Cause alleged Mr. Lainsey, by failing to timely report those administrative actions, Mr. Lainsey violated M.G.L. c. 175, §162V(a) and that this violation supported revocation of Mr. Lainsey’s Massachusetts producer license pursuant to the provisions of M.G.L. c. 175, §162R (a)(2) and (a)(9).
The hearing officer’s decision granting a summary decision on Mr. Lainsey’s default did not elaborate on the basis for referenced the Florida revocation that started the process for other states revoking Mr. Lainsey’s nonresident licenses.
Mr. Lainsey did appear at the hearing on his license being revoked in Florida. However, there was no dispute that on October 24, 2013, he had pleaded nolo contendere to a third-degree felony for the possession of morphine in a Florida circuit court. A rule of the Florida Administrative Code provided that “While licensed by the Department, if a licensee has…pled…nolo contendere (no contest) to, a felony…the penalty shall be revocation of all licenses and appointments held by the licensee. ” Under the same rule, Mr. Lainsey cannot reapply for an agent’s license in Florida for seven years.
Lester G. Sherman—42 fraudulent policies to get commission
Mr. Sherman obtained a non-resident producer’s license in Massachusetts on April 26, 2016. The Order to Show Cause against Mr. Sherman’s alleged he failed to report the revocation of his resident producer license on November 21, 2016, by the Michigan Department of Insurance and Financial Services.
The Division also alleged he failed to report the subsequent revocations of his nonresident producer license by the Idaho Division of Insurance on December 5, 2016. The Division apparently ignored or missed the Mississippi Division of Insurance revoking his nonresident producer license on December 14, 2016.
In Mr. Sherman’s case, the hearing officer’s decision granting a summary decision after Mr. Sherman failed to appear provide any background on the basis for Mr. Sherman losing his Michigan resident producer’s licenses.
The Michigan decision found in 2013 and 2014, while Mr. Sherman had an agency appointment with Bankers Life & Casualty Company (Bankers), he submitted 42 applications for insurance that the Special Investigations Unit of Bankers determined to be fraudulent. The Special Investigations Unit specifically found:
- The social security numbers listed on the applications either belonged to someone other than the purported applicant or were completely fraudulent;
- Ten bank account numbers were used for all of the policies; attempts to withdraw premium funds from the listed accounts failed;
- The policyholders contacted did not know that they were being insured and did not authorize the application; and
- Twenty-two of the policies listed Respondent’s home address.
Mr. Sherman had collected commissions for the fraudulent policies from Bankers and owed $5,342.29 to Bankers for the return of the improper commissions.
Nadine Petrarca—Fraudulent claims information for sales bonus
Ms. Petrarca was a licensed Massachusetts non-resident insurance producer on March 30, 2009. The Division’s Order to Show Cause alleged Ms. Petrarca failed to report the revocation of her resident producer license on June 21, 2015 by the Kentucky Division of Insurance.
The Division also alleged she failed to report subsequent revocations of her nonresident producer licenses by the Insurance Commissioner of the State of Washington on February 9, 2016, the Georgia commissioner of insurance on July 8, 2016, the Commonwealth of Virginia on June 27, 2016, and the South Dakota Division of Insurance on December 28, 2016. The Division apparently ignored or missed the Indiana Division of Insurance suspension of Ms. Petrarca’ nonresident producer license on November 4, 2015, the Minnesota Division of Insurance revocation of her nonresident producer license on December 18, 2015, and the Maine Bureau of Insurance revocation of March 11, 2016, and the South Carolina Division of Insurance on June 15, 2016..
The Division’s Order to Show Cause alleged Mr. Lainsey, by failing to timely report those administrative actions, Ms. Petrarca violated M.G.L. c. 175, §162V(a) and that this violation supported revocation of Ms. Petrarca’s Massachusetts producer license pursuant to the provisions of M.G.L. c. 175, §162R (a)(9).
The hearing officer’s decision granting a summary decision after Ms. Petrarca’s default on answering the Division’s Order to Show Cause did not elaborate on the basis for referenced the Kentucky decision that triggered the subsequent revocations and her fine in Massachusetts.
Kentucky’s Division of Insurance revoked Ms. Petrarca’s nonresident producer license because she had been terminated for cause from AMICA Mutual Insurance Company for “fraudulent, coercive, or dishonest practices.”
According to the Kentucky decision, AMICA’s investigation found that Ms. Petrarca had entered incorrect information in a customer’s claims history in the company’s rating system to generate a sales bonus.
Interestingly, as of the date of this article, an article praising Mr. Petrarca’s customer service to an AMICA insured still appears on the AMICACONNECTIONS website.