On March 29, 2019, the Division of Insurance hearing officer, Kristina A. Gasson, entered an order against Kotera Heard (“Ms. Heard”) of Chicago, Illinois. The order revoked Ms. Heard’s nonresident insurance producer license, and further ordered her 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. Finally, the order imposed a fine against her of $2,000 for four violations of the Massachusetts insurance laws.
The license revocation and orders against Ms. Heard resulted, in part, from her failure to report administrative actions taken against her in other states as required by G.L. c. 175, § 162V(a).
Failure to report “administrative action” leads to fines in addition to license loss
M.G.L. c. § 162V(a) 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.
In most states, the revocation is the end of the matter, however, in Massachusetts, as opposed to other states, the failure to report out-of-state administrative actions usually results in fines as well as loss of any nonresident producer licenses.
In Ms. Heard’s case, Massachusetts fined her a total of $2,000: $500 for each of her four failures to report administrative actions against her in other states arising from license revocations or suspensions.
Ms. Heard’s problems began when she decided to assist in an identity fraud scheme by accessing customer information from her employer so another employee could use the stolen identities to make fraudulent benefit claims.
Arrest for insurance fraud scheme leads to license revocations.
Ms. Heard worked as a benefits advisor at the Lincolnshire, Illinois office of Aon Hewitt Health Market Insurance Solutions. This California company doing business under the trade name “Aon Retiree Health Exchange” operates a private health insurance exchange for retirees offering plans from more than one hundred carriers nationwide depending on the state and county where its retiree customers reside.
Aon Hewitt terminated Ms. Heard, on September 18, 2015, for cause. Aon Hewitt had found during an investigation of false medical reimbursement requests submitted to another Aon company that the misappropriated customer data used to make the claims had come from Aon Hewitt’s database. Further investigation found that Ms. Heard had accessed and misappropriated the personal identification data on January 27, 2015, for five customers that she then gave to another agent who had used the purloined identity data to make the false claims for benefits.
Aon reported Ms. Heard’s termination for cause to the various divisions of insurance where she held nonresident producer licenses. Also, Aon Hewitt reported the fraud to the Lincolnshire police department.
After a short investigation, the police charged Ms. Heard with ten felonies consisting of five counts of aggravated identity theft and five counts of computer fraud in the Circuit Court. After her arrest, Ms. Heard spent twelve days in the county jail before making her $1,000 cash bail.
In July 2016, Ms. Heard agreed to a plea bargain where the state’s attorney entered a nolle prosequi on the felony charge but submitted an amended indictment charging the ten counts as misdemeanor “attempts.” Ms. Heard pleaded guilty to all ten counts of the amended indictment and received an eighteen-month sentence of probation and the forfeiture of her cash bail for court costs.
Failure to report four states revoking or suspending her producer licenses
While Ms. Heard’s criminal charges were pending four states took administrative actions against her nonresident producer licenses. Each state based its decision on Aon Hewitt’s advice at to her termination for misappropriating customer information.
- On January 25, 2016, the State of Maine Department of Professional and Financial Regulation Bureau of Insurance revoked Heard’s Maine insurance producer license, effective as of February 29, 2016;
- On January 26, 2016, the State of Florida Department of Financial Services suspended Heard’s nonresident life, health, and variable annuity agent’s license;
- On February 29, 2016, the Wyoming Department of Insurance revoked Heard’s nonresident producer license;
- On April 11, 2016, the Arkansas Insurance Department revoked Heard’s nonresident producer license.
Ms. Heard did not report any of the administrative actions against her insurance licenses by Arkansas, Florida, Maine, or Wyoming to the Massachusetts Division of Insurance within the thirty days allowed by statute.
Massachusetts moves for revocation and fines for Ms. Heard’s failure to report actions on her licenses
The Massachusetts Division of Insurance commenced its proceedings against Ms. Heard on February 7, 2018, with an order to show cause. The Division sought the revocation of her Massachusetts nonresident producer license, her ceasing to do any insurance business in Massachusetts, and fines for her failure to report to the Division administrative actions taken by other states against her as required by Massachusetts law.
The Division’s order to show cause identified as the statutory grounds for revoking Ms. Heard’s Massachusetts license violations of:
- G.L. c.175 § 162R (a)(2)—violating any insurance laws or regulation;
- G.L. c.175 § 162R (a)(8)—fraudulent, coercive or dishonest practices in insurance; and
- G.L. c.175 § 162R (a)(9)—having an insurance producer license, or its equivalent, denied, suspended or revoked.
Also, the Division also alleged that Ms. Heard had failed to comply with M.G.L. c.175, §162V (a), a statute requiring a producer to report to the commissioner any administrative actions taken against her by another jurisdiction within thirty days of the final disposition of the matter.
However, although aware of the criminal proceedings filed against Ms. Heard in Illinois as a result of her joining in the scheme to defraud her employer. by the Lin
The Division’s order to show cause alleged that Ms. Heard failed to report, as required, to the Massachusetts commissioner an administrative action in her home state of Georgia and subsequent administrative actions in California, Indiana, Maine, North Dakota, Louisiana, and Virginia as required by G.L. c. 175, § 162V(a). Additionally, the Division sought fines.
Ms. Heard’s failure to appear results in default and a summary decision against her
Although the hearing officer found the Division had properly served Ms. Heard with the order to show cause, Ms. Heard did not file any response or contact the Division.
On May 30, 2018, the Division filed a motion for summary decision with the hearing officer. On June 1, 2018, the hearing officer issued an order notifying Ms. Heard to file a written response to the Division’s motion and scheduling a hearing on the motion for June 15, 2018.
Ms. Heard did not respond in writing to the Division’s motion for summary decision. Neither she nor any person purporting to represent her appeared at the hearing on June 15, 2018.
Based on Ms. Heard’s failure to respond, the hearing officer entered a default, finding Ms. Heard had waived her right to an evidentiary hearing and proceed to decide the matter based on the record contained in the Division’s motion for summary decision.
I am not persuaded that it is appropriate to impose Section 7 fines
The hearing officer accepted as evidence copies of the orders issued by Arkansas, Maine, and Wyoming revoking Ms. Heard’s insurance producer licenses and the order from Florida suspending her license. Based on these uncontested documents the hearing officer found the Division had proven Ms. Heard’s violations of M.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), M.G.L. c. 175, §162R (a)(2) (Violating any insurance laws or regulation, subpoena or order of the commissioner or another state’s insurance commissioner), and G.L. c. 175, § 162V(a) (Failure to report out-of-state administrative proceedings).
The hearing officer noted in her decision the criminal proceedings against Ms. Heard referenced in the Division’s submissions. Under M.G.L. c. 175, §162V (b) Ms. Heard had to report to the commissioner any criminal prosecution taken against her in any jurisdiction. However, since the Division had not charged this violation in its order to show cause, she declined to take any action on Ms. Heard’s failure to report these criminal charges to the commissioner as required.
Hearing officer declines to impose exemplary fines under M.G.L. c 176D, § 7
In its order to show cause, the Division also requested the hearing officer to levy a civil penalty as allowed by 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 Ms. Heard should be fined $1,000 for each of four grounds for which the Division sought the revocation of her nonresident producer license.
However, the hearing officer, not finding any affirmative unfair or deceptive acts committed by Ms. Heard in Massachusetts, denied the Division’s request, stating:
I am not persuaded that it is appropriate to impose Section 7 fines on [Ms. Heard]. Decisions in administrative proceedings seeking license revocation distinguish grounds for disciplinary action that arise from the [producer’s] affirmative acts from grounds arising from administrative or judicial actions initiated by third parties to revoke or suspend the [producer’s] license.”
Hearing officer finds charges warrant fines under the general penalty statute
The Division order to show cause, besides requesting fines under M.G.L. c. 176D also requested the hearing officer to impose the lesser fines allowed under 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 Ms. Heard’s failure to report these administrative actions effectively enabled her 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 Ms. Heard’s four failures to report an administrative action as required by G.L. c. 175, §162V(a).
Final Orders entered and $2,000 in fines assessed by the hearing officer
The final decision entered by the hearing officer made the following orders:
ORDERED: That any insurance producer license issued to Kotera Heard by the Division is hereby revoked; and it is
FURTHER ORDERED: That, within ten (10) days of this decision, Kotera Heard shall return to the Division any license in her possession, custody or control; and it is
FURTHER ORDERED: That Kotera Heard 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 Kotera Heard 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 Kotera Heard shall pay a fine of Two Thousand Dollars ($2,000) to the Division within 30 days of the date of this decision and order.