On September 12, 2018, a Division of Insurance hearing officer, Kristina A. Gasson, revoked the resident insurance producer license of Richard R. Coscia (“Mr. Coscia”), the sole proprietor of the Richard Coscia Insurance Agency (“Coscia Insurance”) in Winthrop. The hearing officer found that Mr. Coscia continued to employ his son, Richard Coscia Jr. (“Richard Jr.”), at his insurance business in violation of The Federal Violent Crime Control and Law Enforcement Act of 1994.
Under this law, it is a federal crime for a person to engage or participate in the business of insurance if that person has ever been convicted of a state or federal felony involving dishonesty or breach of trust. Also, any agency, insurer or person involved in the business of insurance commits a separate crime by knowingly allows or permits “the participation of such a person in the business of insurance.”
A person convicted under the 1994 Act, can obtain permission from the commissioner of insurance, and work in the insurance. However, in this case, the hearing officer found Mr. Coscia had “since at least 2015, has been advised that he cannot employ his son without obtaining permission from the commissioner.” In the hearing officer’s opinion, Mr. Coscia had deliberately violated Massachusetts insurance laws and ignored his obligation to either obtain the commissioner’s permission or prohibit his son from working in the agency.
For a more detailed explanation of how Title 18, § 1033 applies, and some of the anomalous results in the application of the statute see Agency Checklists’ article of September 26, 2017, “Insurers and Agents Cannot Be Good Samaritans in Hiring under Federal Law.”
Additional orders to dispose of agency and pay $3 thousand fine
In addition to revoking Mr. Coscia’s insurance license, the hearing officer also entered orders prohibiting Mr. Coscia from transacting any insurance business in Massachusetts and requiring him to dispose of any interests in any Massachusetts insurance business as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer. The Division also fined Mr. Coscia $3,000.
Richard, Jr.’s insurance fraud convictions barring him from working for Coscia Insurance
In January 2011, the Attorney General announced the indictment of Mr. Coscia’s son, Richard Coscia, Jr., then age 32, for motor vehicle insurance fraud (11 counts), larceny Over $250 (11 counts), and larceny Under $250 (3 counts).
The indictment charged Richard, Jr. while working at his father’s insurance agency, Coscia Insurance, in Winthrop, with defrauding insurance companies and policyholders of more than $43,000.
When agency customers made payments for their motor vehicle insurance through Coscia Insurance, Richard Jr. kept some or all of this money instead of passing it on to the insurers. To hide his thefts, Richard Jr. created and submitted fraudulent records to insurers to make it appear that consumers owed less money to the insurers. In some of these instances, the agency’s customers’ insurance policies were canceled and they were unknowingly left uninsured. In other instances, consumers paid Richard, Jr. money to obtain insurance policies for them, but Richard, Jr. retained the funds and never obtained insurance policies for the customers.
At his arraignment in Superior Court, Richard, Jr., pleaded guilty and received a sentence of two years’ probation with a restitution order.
As a result of his conviction for insurance fraud, Richard, Jr. became unemployable in the business of insurance without first obtaining permission from the commissioner of insurance. Neither Richard, Jr. nor his father ever sought any such permission even though Richard, Jr. continued to work at Coscia Insurance.
Division files order to show cause against Mr. Coscia for employing son in violation of federal law
On May 30, 2018, the Division of Insurance (“Division”) filed an order to show cause Mr. Coscia alleging that Mr. Coscia continued to employ his son, Richard Coscia Jr. (“Richard Jr.”),1 at his insurance business in violation of The Federal Violent Crime Control and Law Enforcement Act of 1994.
The Division’s order to show cause also alleged that Mr. Coscia had violated the provisions of the Massachusetts insurance laws, including M.G.L. c. 175, §§162R (a)(1), (a)(2) and (a)(8).
For all these alleged violations the Division requests the revocation of Mr. Coscia’s license, the imposition of fines, and orders prohibiting him from engaging in the insurance business in Massachusetts and directing him to dispose of his interests in any insurance businesses in Massachusetts.
Mr. Coscia fails to answer Divisions’ order to show cause
The Division served Mr. Coscia with the order to show cause at his home and business addresses on file in the Division’s licensing records. Mr. Coscia filed no answer or other response to the order to show cause, and on July 9, 2018, the Division filed a motion for summary decision in its favor against Mr. Coscia for failure to answer the order to show cause.
The hearing officer issued an order on July 9, 2018, instructing Mr. Coscia to file any written response to the Division’s motion by July 20, 2018, and scheduling a hearing on the motion for July 24, 2018.
When neither he nor any person claiming to represent him appeared at the hearing on July 24, 2018, the hearing officer summarily entered a default and proceeded to enter judgment stating:
By his default, Mr. Coscia has waived his right to proceed further with an evidentiary hearing in this case, and I may consider the Division’s motion for summary decision based on the record.
Facts before hearing officer show violation of the federal prohibition on employing certain felons
The record presented by the Division for the hearing included s eleven exhibits showing the following facts:
- The Division first licensed Mr. Coscia as an insurance agent on July 13, 1981, and he, at the time of the hearing, had two agent appointments with the Foremost Insurance Company and the Stillwater Property and Casualty Insurance Company.
- He owns and operates Richard Coscia Insurance Agency (“Coscia Insurance”), which is located in Winthrop, Massachusetts.
- Coscia’s son, Richard Jr. had pleaded guilty in 2011 on eleven felony counts of Motor Vehicle Insurance Fraud among other charges and was sentenced to two years’ probation and was ordered to pay restitution to his victims.
- Beginning on January 18, 2011, Richard Jr. was barred from engaging or participating in the business of insurance due to his felony convictions for larceny and Motor Vehicle Insurance
- Beginning on January 18, 2011, Mr. Coscia was prohibited from willfully permitting Richard Jr.’s participation in the business of insurance without his son first obtaining written consent from the commissioner.
- Richard Jr. had neither applied for nor has been granted written consent from the commissioner to engage or participate in the business of insurance.
- On April 20, 2015, Mr. Coscia executed a settlement agreement with the Division by which he agreed to pay a $5,000 fine in to resolve an SIU investigation no. 8996. In this matter, the Division alleged that Mr. Coscia allowed Richard Jr. to work at Coscia Insurance after his 2011 insurance fraud and larceny felony convictions. The administrative action also resolved allegations related to Mr. Coscia’s failure to report the 2011 settlement agreement when he renewed his license on August 24, 2013. Mr. Coscia agreed to cease and desist from employing Richard Jr. at his insurance business and to report the settlement agreement as an administrative action on his next Massachusetts license renewal application. Mr. Coscia subsequently paid the $5,000 fine to the Division.
- On August 14, 2015, a fraud allegation was referred to the Insurance Fraud Bureau of Massachusetts (“IFB”) (Case File Number 2015-08-031). On October 13, 2015, the investigation concluded that Richard, Jr. did not remit insurance premium payments received from a business in Peabody, Massachusetts.
- On January 26, 2017, Richard Jr. plead guilty to two felony counts of Larceny Over $250 (M.G.L. c. 266, §30) and one felony count of Fraud by Insurance Agent/Broker (M.G.L. c. 175 §170) (Commonwealth v. Coscia, Richard, 1586-CR-000439).7 Richard Jr. was sentenced to three months in the house of corrections for each conviction and was ordered to pay $6,000 in restitution to the owners of the defrauded Peabody, Massachusetts business.
- Following Richard Jr.’s convictions, Mr. Coscia continued to allow Richard Jr. to participate in the insurance business at Coscia Insurance.
- On September 1, 2017, a Massachusetts consumer filed a complaint with the Division alleging that Mr. Coscia was allowing Richard Jr. to work at Mr. Coscia insurance and that Richard Jr. failed to process her car insurance paperwork properly.
- On September 21, 2017, Mr. Coscia admitted to the Division’s SIU that Richard Jr. was still working at Coscia Insurance.
Hearing officer finds violations of federal law and prior settlements with the Division
Along with employing his son in violation of law, Mr. Coscia had also entered into a settlement agreement August 2, 2011, with the Division by which he agreed to pay a $3,000 fine in order to resolve allegations of changing the garaging address or license date on automobile insurance policies without the knowledge of the policyholders.
Again, in April 2015, Mr. Coscia executed another settlement agreement with the Division by which he paid a $5,000 fine in to resolve his allowing Richard Jr. to work at Coscia Insurance after his 2011 insurance fraud and larceny felony convictions. In this settlement agreement, Mr. Coscia agreed to cease and desist from employing Richard Jr. at his insurance business and to report the settlement agreement as an administrative action on his next Massachusetts license renewal application.
Although he was required to report these settlements on his subsequent license applications, Mr. Coscia never did so.
On the main issue of the employment of a prohibited person, the hearing officer found:
In willfully permitting his son to continue to participate in the insurance business on multiple instances following his criminal convictions, Mr. Coscia placed Massachusetts insurance consumers at risk and has demonstrated incompetence, untrustworthiness, and financial irresponsibility in the conduct of business.”
The hearing officer found that given the serious nature of Mr. Coscia’s infractions, the pattern of willful misconduct, and the resulting negative effects on Massachusetts insurance consumers, the hearing officer stated: “For that reason, I will impose the maximum penalty of $1,000 for each the three grounds upon which Mr. Coscia’s license is revoked.”
Final orders entered against Mr. Coscia
Based on her findings, the hearing officer ordered:
- That the insurance producer license issued to Richard R. Coscia by the Division is hereby revoked;
- within ten (10) days of this decision, Richard R. Coscia shall return to the Division any license in his possession, custody or control;
- Richard R. Coscia is, from the date of this order, prohibited from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in Massachusetts;
- Richard R. Coscia shall promptly 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, including the Richard Coscia Insurance Agency at 157 Veterans Rd, Winthrop, MA 02152, within sixty (60) days of the date of this order.
- Richard R. Coscia shall pay a fine of Three Thousand Dollars ($3,000) to the Division within thirty (30) days of the date of this decision and order.