A look at the latest hearing decisions issued by the Massachusetts Division of Insurance
In June, the Division of Insurance (“Division”) hearing officer, Jean F. Farrington, entered orders and imposed fines on Orders to Show Cause filed by the Division against Deandre Maze-Carter of Phoenix, Arizona and Christopher Todd Horn of Tampa, Florida.
However, she dismissed the third Order to Show Cause filed by the Division against Pankaj Chatwani, of St. Paul, Minnesota. The dismissal of the Order to Show Cause against Mr. Chatwani was even more surprising because when Attorney Farrington dismissed the Division’s Order to Show Cause, Mr. Chatwani had not appeared to contest the Division’s charges.
Fines and Orders on two of the three Orders to Show Cause filed by the Division
In the cases of Messrs. Maze-Carter and Horn (“Licensees”), the hearing officer also entered Orders against them:
- Revoking any licenses, including their nonresident producer licenses issued to the Licensees.
- Ordering the return to the Division any license in their possession, custody, or control.
- Prohibiting the Licensees from directly or indirectly transacting any insurance business or acquiring, in any capacity whatsoever, any insurance business in Massachusetts; and
- Ordering the Licensees to comply with the provisions of G. L. c. 175, §166B, and dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer.
The hearing officer also fined Mr. Maze-Carter $250.00, and Mr. Horn $1,000.00 The Orders entered require these fines paid to the Division within 30 days.
The third producer against whom the Division filed Order to Show Cause, Pankaj Chatwani, as more fully described below, had the Order to Show Cause against him dismissed by the hearing officer.
All three Licensees defaulted on the Orders to Show Cause filed by the Division against them.
The allegations in the Orders to Show Cause that the hearing officer accepted regarding each of the Licensees, on the Division’s Motions for Summary Decision, were the following:
Mr. Maze-Carter became a licensed Massachusetts nonresident insurance producer on May 5, 2016.
The Division’s Order to Show Cause alleged that Mr. Maze-Carter failed to report to the Division administrative actions suspending or revoking producer licenses issued to him by Utah, Indiana, North Dakota, Maine, and Nebraska, as required by G. L. c. 175, §162V(a).
The Division alleged Mr. Maze-Carter, by failing to timely report those actions, violated G. L. c. 175, §162V(a) and that these allegations supported the revocation of Mr. Maze-Carter’s Massachusetts producer license under the provisions of G. L. c. 175, §162R (a)(2) and (a)(9).
The Division’s Order to Show Cause focused on the administrative proceedings that had occurred in five states where Mr. Maze-Carter had nonresident producer licenses: Utah, Indiana, North Dakota, Maine, and Nebraska. Mr. Maze-Carter did not respond to these states because his main problem resided in his home state of Arizona, where he maintained his resident producer license status.
On July 09, 2018, Mr. Maze-Carter’s former employer, QBE Insurance, notified the Arizona Department of Insurance that it had terminated his employment for “cause.” QBE report stated that Mr. Maze-Carter, while employed as a customer service associate and licensed agent, had falsified a proof-of-insurance document by modifying it to name himself as the insured party and a client of the producer when he was neither. QBE advised that when confronted, Mr. Maze-Carter admitted his fraud and stated that he had done so to satisfy his auto lender’s requirement on carrying insurance that he could not afford.
The Arizona Department issued a notice to Mr. Maze-Carter about the QBE report. After he did not respond, the Department referred the complaint to the Arizona Office of Administrative Hearings, which held a hearing. By the time of that hearing on November 6, 2019, the hearing officer noted that four states had already revoked Mr. Maze-Carter’s nonresident producer licenses. The hearing officer in Arizona recommended revocation of Mr. Maze-Carter’s resident producer license. The Arizona Director of Insurance concurred and revoked Mr. Maze-Carter’s insurance license.
In Massachusetts, Mr. Maze-Carter did not appear, and the hearing officer proceeded on the Division’s Motion for a Summary Decision on its Order to Show Cause.
First, the hearing officer noted that Mr. Maze-Carter had not renewed his license in Massachusetts, and the license terminated effective December 13, 2018, a matter of law. Under G. L. c. 175, §162R (e), the commissioner of insurance does have the authority to enforce producer licensing laws, G.L. c. 175, §§162H through 162X, after a licensee is no longer licensed. However, that authority only extends to actions against a person who was under investigation or charged with violating those sections while still licensed.
In this case, the hearing officer found that Nebraska’s revocation occurred five days after Mr. Maze-Carter’s Massachusetts license had lapsed in Massachusetts. Thus, the Division had no jurisdiction to enforce a reporting violation. Likewise, the Maine order became final on December 6, 2019, six days before Mr. Maze-Carter’s license terminated in Massachusetts. Since the thirty-day reporting period extended beyond December 13, 2019, when his Massachusetts license terminated, Mr. Maze-Carter had no legal obligation to report the Maine revocation. The Division’s Order to Show Cause had no request for relief on the failure to report the North Dakota revocation, so the hearing officer took no action on that allegation.
On the Division’s two remaining claims of Mr. Maze-Carter failing to report the Indiana suspension and the North Dakota revocation, the hearing officer found that only the North Dakota failure to report applied, The Indiana order, the hearing officer found, was a contingent suspension dependent upon compliance with a particular condition. Since the documents submitted by the Division did not show the final disposition of the Indiana action, the hearing officer declined to impose any sanction for Mr. Maze-Carter’s failure to report.
The one violation the hearing officer did find applied was the Utah revocation. Utah’s revocation occurred well before Mr. Maze-Carter’s Massachusetts nonresident producer license terminated, and Mr. Maze-Carter did not report it to the Massachusetts Division. On this reporting violation, Hearing Officer Farrington imposed a $250.00 fine.
Christopher Todd Horn
Mr. Horn was a licensed Massachusetts nonresident insurance producer who had renewed his nonresident producer license in Massachusetts on April 27, 2017. However, on June 8, 2016, the State of Florida had charged him with the manufacture of marijuana, possession of drug paraphernalia, possession of marijuana, and possession with intent to sell marijuana. On November 15, 2016, Mr. Horn pleaded guilty in a District Court for Hillsborough County, Florida, to the three charges that excluded possession with intent to sell.
Two of the charges to which Mr. Horn pleaded guilty were third-degree felonies under Florida law. Florida law also requires the Insurance Department to revoke any licenses of a licensee who pleads guilty to a felony crime involving moral turpitude punishable by imprisonment of one year or more.
On March 8, 2017, the Florida Department issued an Administrative Complaint against Mr. Horn for his guilty pleas to one count of Manufacture of Cannabis and one count of Possession of Cannabis, both third-degree felonies. Based on Mr. Horn filing a motion on April 21, 2017, to withdraw his guilty pleas with the Hillsborough Circuit County, the Florida Department stayed proceedings.
After the Circuit Court denied Mr. Horn’s motion to vacate, the Florida Department held an administrative hearing at which Mr. Horn testified. After the hearing, the Florida Department revoked Mr. Horn’s resident producer license based on his unvacated guilty pleas to two felonies.
Based on his home state’s revocation of his producer license to sell health and life insurance, the states of Arkansas, on May 24, 2018, suspended his nonresident producer license. Soon after, on October 18, 2018, and December 5, 2018, South Carolina, and South Dakota, respectively, revoked his nonresident producer licenses in those states for the same reason.
On the Division’s Motion for Summary Decision, the hearing officer found that Mr. Horn’s failure to report the Florida, South Carolina, and South Dakota proceedings violated the Massachusetts law that required the report of final administrative actions against a licensee within thirty days. G. L. c. 175, § 162V(a). The hearing officer, however, refused to find a violation on the Arkansas suspension as the Division did not present any evidence that the suspension had become a final suspension order that Mr. Horn had to report to the Massachusetts Division.
The hearing officer did find that Mr. Horn’s failure to report the Florida revocation effectively enabled him to retain his status as a nonresident Massachusetts licensed producer for well over a year after he was ineligible to hold that license. For that violation, she fined him $500.00 for his failure to timely report the revocation. However, she found the South Carolina and South Dakota revocations did not have a similar effect on his status as a Massachusetts licensee, and, therefore, she imposed lesser fines of $250.00 each for the failures to report the South Carolina and South Dakota administrative actions within the statutorily allowed time.
In the first case that Agency Checklists has seen since it began publishing in 2011, the Division’s hearing officer dismissed the Division’s Show Cause Order against a nonresident producer who had not reported multiple suspensions or revocations in other states to the Division. This decision was unusual because the hearing officer dismissed the case even though the nonresident producer did not file an answer to the Division’s Show Cause Order nor appear at the hearing on the Division’s Motion for a Summary Decision.
In this case, Pankaj Chatwani had been licensed in Massachusetts since March 26, 2014, as a nonresident insurance producer. Mr. Chatwani held a resident producer license issued by the state of Minnesota and worked as an insurance agent risk advisor in St. Paul.
On April 10, 2017, the Minnesota Department of Commerce, which regulates insurance producers in Minnesota, suspended without a hearing, Mr. Chatwani’s producer license after receiving notice from the Minnesota Department of Revenue that Mr. Chatwani had unpaid delinquent taxes.
Based on notices from the National Association of Insurance Commissioner’s producer database of Minnesota’s action, the states of Idaho and Maryland revoked Mr. Chatwani’s nonresident producer licenses: Idaho, on July 19, 2017, and Maryland on November 1, 2017.
On March 28, 2019, the Division of Insurance filed its Order to Show Cause against Mr. Chatwani. As of that date, he was still validly licensed in Massachusetts as a nonresident insurance producer.
The Order to Show Cause alleged that Mr. Chatwani violated G. L. c. 175, §162V(a) by failing timely to report the administrative actions against his licenses in Minnesota, Idaho, and Maryland promptly to Massachusetts. This statute obligated Mr. Chatwani to report these administrative actions to the Division within 30 days. Based on this violation, the Division sought the revocation of Mr. Chatwani’s Massachusetts producer license by the commissioner under the provisions of G. L. c. 175, §162R (a)(2) and (a)(9), the imposition of fines, and orders that, among other things, require him to dispose of any insurance-related interests in Massachusetts and prohibit him from conducting any insurance business in the Commonwealth.
Mr. Chatwani filed no answer or other response to the Order to Show Cause. On May 24, 2019, the Division moved for entry of default and filed a Motion for Summary Decision. The hearing officer on October 23, 2019, set a hearing on the Motion for a Summary Decision for November 12, 2019.
When Mr. Chatwani failed to respond or appear at the November 12 hearing, the hearing officer found that he was in default and had waived his right to proceed with an evidentiary hearing. However, the hearing officer then considered the Division’s case against Mr. Chatwani solely upon the Order to Show Cause and the Division’s supporting evidence.
At the hearing, the Division advised the hearing officer that Minnesota had reinstated Mr. Chatwani’s resident producer license on October 12, 2017, after he had resolved his unpaid back taxes with the Minnesota Department of Revenue.
The hearing officer found the fact that Minnesota had reinstated Mr. Chatwani’s resident producer license some eighteen months before the Division initiated its Order to Show Cause (October 12, 2017-March 28, 2019) determinative. She ruled that Division had had insufficient grounds to initiate its Order to Show Cause action against Mr. Chatwani based on a suspension resolved eighteen months earlier “in the licensee’s favor.”
The hearing officer also refused to accept the follow-on administrative actions in Maryland and Idaho because the Minnesota suspension order had established specific conditions for reinstatement. The Idaho revocation occurred automatically without a hearing on Chatwani’s license status, and the Maryland revocation occurred after the reinstatement of his Minnesota license.
Also, the hearing officer implied the Division should have inquired into whether those conditions on the Minnesota order were satisfied before relying on such a suspension as a basis for disciplinary action in Massachusetts. The hearing officer’s final statement and Order dismissing the Division’s Show Cause Order stated:
“The fact that the Minnesota suspension was lifted in October 2017 effectively mooted the basis for the allegations and claims in the [Order to Show Cause]. In these circumstances, I conclude that the documents do not support the Division’s claims. The [Order to Show Cause] is hereby dismissed.”