DOI Special Investigations & Enforcement Actions For 2017 Including the Fourth Quarter & Kilgore Consent Agreement

The Fourth Quarter includes enforcement actions during the months of October, November & December of this year.

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 on the circumstances and actions alleged.

The following is a review of the Fourth Quarter as well as a look back at the entire year of 2017, which includes special investigations and enforcement hearings during the months of October, November & December of 2017.

What was the total amount of actions and fines during the 4th  quarter of 2017?

The Fourth Quarter of 2017 saw an increase in the number of administrative actions as well as fines imposed by the Division of Insurance, relative to the Third Quarter, although the number is still far less than the First & Second Quarters of 2017. In this most recent quarter, which ended on December 31, 2017, the Division had a total of 10 enforcement actions.

Looking at the year in total, the Division of Insurance engaged in actions resulting in the issuance of $122,095 in fines.

Fines imposed during this Quarter totaled $10,000

As stated above, the total fines imposed this Quarter totaled $10,000. The following is a breakdown of the dollar amount of fines imposed during each quarter.

• First Quarter: $96,695
• Second Quarter: $15,370
• Third Quarter: $30
• Fourth Quarter: $10,000

As a result, the total fines for the entire year of 2017 still surpass the total dollar amount of fines imposed in 2016, which was $72,315.

What was the largest fine imposed 2017?

The largest fine imposed by the Division of Insurance occurred during the First Quarter of 2017. It was a $75,000 fine imposed against America Pet Insurance for Unlicensed Activity.

A look at the Kilgore Insurance Agency case in response to our readers’ requests

In response to various readers requests on the outcome of the Division’s Enforcement Action against the Kilgore Insurance Agency, Agency Checklists has obtained the results of the final resolution of the Division of Insurance proceedings involving this agency and its principals.

On August 16, 2012, the Division filed an Order to Show Cause against the Kilgore Insurance Agency, Cyrus Kilgores, Jeffrey Kilgore, Kathleen J. Burke, and Andrew W. Crowther. The Order to Show Cause as amended alleged, in part, that by signing insurance documents on behalf of clients without authority, the Kilgores used dishonest practices in the conduct of business in the Commonwealth.

The Division stayed its proceedings on the Order to Show Cause because of an ongoing lawsuit brought by the Attorney General alleging civil claims based on some of the same acts and conduct alleged by the Division in its Order to Show Cause.

On April 29, 2015, an amended final judgment was entered in the Civil Action against the Kilgores and their Agency in the amount of $2,183,637.30 plus statutory prejudgment interest at 12% per annum from December 22, 2009. See Agency Checklists’ article of May 4, 2015, “Court Orders $3.5 Million Restitution From Producer And Agency For Fees Exceeding 20% Of Premiums.”

Following the entry of judgment on the Attorney General’s civil suit, the Division lifted its stay on the Order to Show Cause and the Kilgores and the Agency together filed Answers to the Order to Show Cause on February 1, 2016 “…denying the allegations in the Order to Show Cause”.

In June 2017, the Division executed a Consent Agreement and Order with the Kilgores and the Agency. Under the terms of the Consent Agreement and Order, the parties stipulated the settlement agreement, “…is not an admission of wrongdoing, liability, or the truth of any of the disputed factual and legal allegations and claims asserted by the Division in this Consent Agreement or in the Order to Show Cause…”

As part of the Consent Agreement And Order entered into by the parties, the Agency, along with its proprietors Cyrus and Jeffrey Kilgore, agreed to pay a $20,000 fine which allowed the agency to settle the matter “…without admitting any wrongdoing or violation of insurance laws”. These fines were the second largest fines imposed in 2017 by the Division of Insurance.

The consent agreement and order only related to the Kilgores and the Kilgore Insurance Agency. As found in the above Agency Checklists article and the attached Superior Court judgment, the Superior Court judge found no direct liability against the Kilgores. Their liability was entirely vicarious based on the actions of their employee, Andrew Crowther.

The Order to Show Cause against Andrew Crother is open and active. The Division has scheduled hearings for April 11, April 12, and April 13 on the allegations against Mr. Crowther.

No Division proceedings appear to be active against the fourth individual, Kathleen J. Burke. In the civil action brought by the Attorney General, the Superior Court judge hearing the suit found no liability against Ms. Burke and specifically declared Ms. Burke was “not liable for any actions which she performed for [Andrew] Crowther.”

Any readers wishing to obtain a copy of the Consent Agreement and Order between the Division of Insurance and the Kilgores and the Kilgore Insurance Agency, may request a copy by contacting Agency Checklists.

Fines involving Hearing Officer Decisions

During the last quarter of 2017, there were a few hearing decisions published by the Division of Insurance. On October 17, 2017, for example, the Division issued an order under General Laws Chapter 175, § 166B against Massachusetts Resident Producer, Carmen Chase Hunter, as well as fining her $2,000. For a detailed analysis of that case, please refer to Agency Checklists’ November 14, 2017, article entitled, “Mass. DOI Revokes Producer’s Licenses Rejecting Criminal Conspiracy Claim“.

In November of 2017, the Division issued an additional three hearing decisions involving producers in Massachusetts. The cases involved actions and fines against Michael S. Lainsey, of Jacksonville Beach, Florida, Lester G. Sherman, Jr., of Bloomfield Hills, Michigan, and Nadine A. Petrarca, of Warwick, Rhode Island resulting in various fines for each of these individuals. For an in-depth analysis of these decisions, please refer to Agency Checklists’ December 12, 2017, article entitled, “Mass. DOI Hearing Officer Revokes Three Producers’ Licenses And Fines Licensees Total Of $6,500“.

A look at the cases published during the Fourth Quarter

In addition to the cases highlighted above, the following is a complete list of the Administrative Actions conducted and reported during the Fourth Quarter 2017:

1. Licensee & Type of Case: Resident Producer
   • Date: November 17, 2017
   • Allegations: Violation of Insurance Laws; Trustworthiness
   • Disposition: Settlement Agreement
   • Fine: N/A
   • Licensing Action: Revocation; Cease & Desist
2. Licensee & Type of Case: Sherika Brantley, Non-Resident Producer
   • Date: December 6, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $1,000
   • Licensing Action: Revocation; Cease & Desist
3. Licensee & Type of Case: Non-Resident Producer
   • Date: December 6, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $500
   • Licensing Action: Revocation; Cease & Desist
4. Licensee & Type of Case: Carmen Chase Hunter, Resident Producer
   • Date: October 17, 2017
   • Allegations: Trustworthiness; Failure to Report Administrative Action; Violation of Insurance Laws; Misrepresentation on License Application
   • Disposition: Hearing Officer Decision
   • Fine: $2000
   • Licensing Action: Revocation; Cease & Desist
5. Licensee & Type of Case: Rodolfo Jimenez, Non-Resident Producer
   • Date: December 6, 2017
   • Allegations: Violation of Insurance Laws; License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $3,000
   • Licensing Action: Revocation; Cease & Desist
6. Licensee & Type of Case: Michael Laisney, Non-Resident Producer
   • Date: November 24, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: N/A
   • Licensing Action: Revocation; Cease & Desist
7. Licensee & Type of Case: Nadine Petrarca, Non-Resident Producer
   • Date: November 30, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $2,500
   • Licensing Action: Revocation; Cease & Desist
8. Licensee & Type of Case: Valenzia Ramsey, Non-Resident Producer
   • Date: December 6, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $1000
   • Licensing Action: Revocation; Cease & Desist
9. Licensee & Type of Case: Sherman Lester, Non-Resident Producer
   • Date: November 30, 2017
   • Allegations: License Revoked in Another State; Failure to Report Administrative Action
   • Disposition: Hearing Officer Decision
   • Fine: $1000
   • Licensing Action: Revocation; Cease & Desist
10. Licensee & Type of Case: Resident Producer
    • Date: December 18, 2017
    • Allegations: Misrepresentation on License Application; Violation of Insurance Laws; Trustworthiness; Unfair or Deceptive Act in Business of Insurance
    • Disposition: Settlement Agreement
    • Fine: N/A
    • Licensing Action: Revocation; Cease & Desist
11. Licensee & Type of Case: Non-Resident Producer
    • Date: December 6, 2017
    • Allegations: Violation of Insurance Laws; License Revoked in Another State; Failure to Report Administrative Action
    • Disposition: Hearing Officer Decision
    • Fine: $1,500
    • Licensing Action: Revocation; 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.

In the ordinary course of the Division of Insurance 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, the Division’s Special Investigation Unit may interview witnesses, 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, egregious cases may result in a referral to the Attorney General’s office. 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, issue a cease and desist order or compel written compliance programs.  In more egregious cases, a licensee’s conduct may warrant sanctions including license revocations or suspensions along with restitution and possible fines.

To learn more about avoiding enforcement issues, you may be interested in Agency Checklists’ May 2, 2011 article “One Way to Avoid Large Fines for You & Your Agency.”