On December 27, 2018, a Division of Insurance hearing officer entered an order against Jordan McKittrick of Bloomington, Minnesota, revoking his nonresident insurance producer license, ordering him to cease transacting any insurance business in Massachusetts, and, under Massachusetts General Laws Chapter (“M.G.L. c.”) 175, § 166B, to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer.
The license revocation and orders against Mr. McKittrick resulted from his failure to report administrative actions taken against him in other states as required by M.G.L. c. 175, § 162V(a).
Failure to report “administrative action” leads to fines in addition to license loss
Sections 162V (a) of the Massachusetts General Laws requires that any insurance producer licensed in the commonwealth to sell, solicit or negotiate insurance must report to the commissioner of insurance within thirty days of the final disposition of any administrative action:
- taken against that producer in another jurisdiction or
- taken by another governmental agency in the commonwealth.
To properly make such a report the producer must send the commissioner all the relevant legal documents including a copy of any orders, stipulations or consents.
While almost all states have a similar law, since it is part of the National Association of Insurance Commissioner’s Producer Licensing Model Act, some insurance producers who have administrative actions fail to report. As a result, they often have a cascade of revocations as successive jurisdictions revoke their licenses.
In most states, the revocation is the end of the matter, however, in Massachusetts, as opposed to most states, the failure to report out-of-state administrative actions results in fines as well as loss of their nonresident producer licenses.
In Mr. McKittrick’s case, he consented to the loss of his license in his home state. Five other states, revoked his nonresident producer licenses without notice or hearing because he no longer met the requirements for holding a nonresident producer’s license.
Massachusetts, as opposed to most states, in such cases schedules a hearing and when the former insurance producer fails to appear, revokes the nonresident producer license and fines the individual for failure to report each state’s administrative action.
In Mr. McKittrick’s case, Massachusetts fined him $3,000 for his failure to report six states’ administrative actions.
Mr. McKittrick consents to surrender of license in his home state of Minnesota
Mr. McKittrick had a State Farm agency in Minnesota that had grown to 1100 accounts in a little over four years. However, in 2015, the Minnesota commissioner of insurance investigated allegations that Mr. McKittrick on at least thirty-six automobile insurance applications had submitted false prior carrier declarations to qualify his customers for a lower premium.
After the commissioner notified Mr. McKittrick that he intended to commence formal proceedings against Mr. McKittrick’s insurance producer license, Mr. McKittrick entered into an informal disposition agreement.
The January 11, 2016 disposition agreement revoked Mr. McKittrick’s Minnesota’s insurance producer license without a hearing and required him to pay the costs of the insurance commissioner’s investigation.
First license revocation starts a chain reaction of five more revocations
Following the Minnesota disposition agreement revoking Mr. McKittrick’s resident producer license, five other states followed in revoking his nonresident producer license in that state. These revocations included:
- a January 28, 2016 summary order from the Idaho Department of Insurance revoking his Idaho nonresident insurance producer license;
- a March 4, 2016 order from North Dakota Department of Insurance revoking his North Dakota nonresident insurance producer license;
- an August 20, 2016 order from the Oregon Department of Consumer and Business Services Division of Financial Regulation revoking his Oregon nonresident insurance producer license;
- a December 1, 2016 order from the Nevada Division f Insurance revoking his Nevada nonresident insurance producer license; and
- a February 3, 2017 order from the Mississippi Department of Insurance revoking his Mississippi nonresident insurance producer license.
Massachusetts moves for revocation and fines for Mr. McKittrick’s failure to report
Massachusetts commenced its proceedings against Mr. McKittrick on January 19, 2018. The Division of Insurance sought the revocation of Mr. McKittrick’ Massachusetts nonresident producer license, his ceasing to do any insurance business in Massachusetts, and fines for his failure to report to the Division administrative actions taken by other states against him as required by Massachusetts law.
The Division’s order to show cause alleged that Mr. McKittrick failed to report, as required, to the Massachusetts commissioner the revocation of his resident and nonresident producer licenses by regulators in Minnesota, Mississippi, Oregon, North Dakota, Nevada, and Idaho as required by G.L. c. 175, § 162V(a). Additionally, the Division sought fines.
Mr. McKittrick’ failure to appear results in default and a summary decision against him
The Division served its order to show cause on Mr. McKittrick by certified mail and regular mail at the addresses he used in obtaining his nonresident producer license. Mr. McKittrick did sign the certified mail receipt for the delivery to his residential address. However, he neither contacted the Division about the order to show cause nor appeared at the scheduled hearing.
Based on Mr. McKittrick’s failure to respond, the hearing officer entered a default, finding McKittrick had waived his right to an evidentiary hearing and proceed to decide the matter based on the record contained in the Division’s motion for summary decision.
Hearing officer finds violations warrant fines under the general penalty statute
The hearing officer accepted as evidence copies of the orders issued by Minnesota, Idaho, North Dakota, Oregon, Nevada, and Mississippi revoking Mr. McKittrick’s insurance producer licenses to prove Mr. McKittrick’ violations of G.L. c. 175, § 162R(a)(9) (Allowing the Commissioner to revoke a producer’s Massachusetts licenses where another jurisdiction has revoked that producer’s license) and G.L. c. 175, § 162V(a) (Failure to report out-of-state administrative proceedings)
In its order to show cause, the Division also requested the commissioner to levy a civil penalty as allowed by M.G.L. c. 176D, §7. This section allows the commissioner to assess up to a $1,000 fine for any “unfair and deceptive acts and practices in the business of insurance.” The Division claimed that Mr. McKittrick’s failure to report his license revocation warranted the constituted violations of Chapter 176D and the imposition of $6,000 in fines.
The hearing officer, however, denied the Division’s request for the imposition of fines under M.G.L. c. 176D. She ruled:
I am not persuaded that it is appropriate to impose Section 7 fines on [Mr. McKittrick] on the ground upon which McKittrick’s license is revoked: namely, M.G.L. c.175, §162R (a)(9).”
The hearing officer noted that prior decisions of the commissioner distinguished between disciplinary actions that arose from affirmative acts taken by the licensee and those that arose in Massachusetts because of out-of-state administrative or judicial actions revoking or suspending a license. The hearing officer ruled that since Mr. McKittrick violations of M.G.L. c. 175, §162R (a)(9), were entirely based on administrative actions against him by other jurisdictions, she would not levy any fines under G.L. c. 176D, § 7.
However, the Division order to show cause also allowed the hearing officer to impose the lesser fines allowed under M.G.L. c.175, §194. This statute is the catch-all provision of the insurance statutes that provides: “Whoever violates any provision of this chapter, the penalty which is not specifically provided for herein, shall be punished by a fine of not more than five hundred dollars.”
The hearing officer, in this case, found Mr. McKittrick’s failure to report these administrative actions effectively enabled him to avoid prompt enforcement action in the commonwealth. For that reason, she decided to impose the maximum penalty of five hundred dollars under § 194, for each of McKittrick’s six failures to report an administrative action as required by M.G.L. c. 175, §162V(a).
Final Orders entered and $3,000 fine assessed by the hearing officer
Based on her rulings, the hearing officer entered the following final orders against Mr. McKittrick:
ORDERED: That any insurance producer license issued to Jordan McKittrick by the Division is hereby revoked; and it is
FURTHER ORDERED: That, within ten (10) days of this decision, Jordan McKittrick shall return to the Division any license in his possession, custody or control; and it is
FURTHER ORDERED: That Jordan McKittrick 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; and it is
FURTHER ORDERED: That Jordan McKittrick shall 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; and it is
FURTHER ORDERED: That McKittrick shall pay a fine of Three Thousand Dollars ($3,000) to the Division within 30 days of the date of this decision and order.