On August 6, 2014, Division of Insurance Hearing Officer Jean F. Farrington entered an Order under General Laws Chapter 175, § 166D against Jorge A. Pena to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer and fined Mr. Pena $8,000.00 pursuant to General Laws Chapter 176D § 7.
Settlements and license revocations result from failure to disclose non-insurance related criminal charges
The case involving Mr. Pena is interesting because it exemplifies the different results of administrative actions in different states along with what can happen to a producer who runs afoul of criminal laws independent of any insurance laws and fails to disclose those charges on license applications.
In the instant case, the order entered by Hearing Officer Farrington resulted from a series of prior orders entered in 2010 against Mr. Pena by various states including Missouri, New York, North Dakota, Virginia, Maine, and Vermont. The administrative actions in each of these states arose under statutes or regulations similar to the Massachusetts statutes involved in Mr. Pena’s case, G.L. c. 175, § 162R (a)(1), (a)(6) and (a)(9) that allow the Commissioner to, “…place on probation, suspend, revoke or refuse to issue or renew an insurance producer’s license or … levy a civil penalty…for…:
(1) providing incorrect, misleading, incomplete or materially untrue information in the license application;
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(6) having been convicted of a felony;
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(9) having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory;
Additionally, under G.L. c. 175, §162V(a), insurance producers must:
… [report]…to the Commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in the Commonwealth within 30 days of the final disposition of the matter.”
Administrative license revocations and fines from failing to report criminal proceedings
Mr. Pena’s right to licensure began to unravel with the discovery by the state of Missouri that he had failed to disclose prior criminal charges against him on his original 2008 application for a nonresident producer license in that state.
Apparently, the Division of Insurance’s Consumer Affairs Division determined that on his original application Mr. Pena had answered — “no” to the question: “Have you ever been convicted of a crime, had a judgment withheld or deferred or are you currently charged with committing a crime?”
However, in 1998, Mr. Pena had, in fact, pleaded nolo contendere to felony charges of forgery, uttering, and the fraudulent use of a credit card as well as to misdemeanor charges of petty larceny, possession of marijuana, and operating a motor vehicle with a suspended license. Additionally, in 2006, Mr. Pena also had pleaded nolo contendere to a misdemeanor charging him with resisting arrest without violence.
Generally, a plea of ‘nolo contendere’ admits the facts alleged, but only for purposes of the case in which the plea is made. While the law treats a plea of nolo contendere as a guilty plea for purpose of the case in which it is made, such a plea cannot be used in a later civil or criminal trial. This legal definition is outlined in Massachusetts law in Mass. R. Crim. P. 12 (f), 378 Mass. 866 (1979). White v. Creamer, 175 Mass. 567, 568-569 (1900).
Whatever the fine points of criminal law might have been with regard to such a plea to criminal charges, all the states involved with Mr. Pena, including Massachusetts, treated the failure to disclose the nolo contendere plea as a violation of their respective insurance laws.
Mr. Pena maintains his Missouri non-resident license upon payment of a $500 forfeiture
What makes Mr. Pena’s case unusual is that the original administrative action in Missouri that started a chain-reaction of other state administrative actions against him did not result in his losing his non-resident license in Missouri. The Missouri Division of Insurance agreed to a settlement in which Mr. Pena paid the Department $500.00 as a “voluntary forfeiture” for his misstatements. As a result, the Missouri Department of Insurance took no further action and in fact maintained his license in force until it expired of its own course on August 19, 2012.
However, that stipulation in Missouri triggered a series of other administrative actions that ultimately resulted in Massachusetts Division of Insurance’s final decision to fine Mr. Pena $8,000.00.
Other states act on Missouri agreement with Mr. Pena
Not surprisingly, once the Missouri stipulation entered on March 12, 2012, other states where Mr. Pena held non-resident licenses followed suit by bringing their own administrative actions.
• On May 25, 2010, the North Dakota Insurance Department revoked Pena’s insurance producer license for his false answer to his 2008 application on his North Dakota insurance producer license application.
• On July 19, 2010, the New York State Insurance Department and Mr. Pena entered into a stipulation where Mr. Pena agreed to pay a $1,000 fine for his failure to report his prior criminal cases to the NYID. However, it appears that in the end the New York Department did not revoke Mr. Pena’s non-resident license.
• On September 10, 2010, the Vermont Department of Insurance revoked Mr. Pena’s Vermont insurance producer license according to the hearing officer’s decision. The Vermont Division of Insurance site shows the expiration date for Mr. Pena’s non-resident license but does not otherwise explain the termination.
• On October 22, 2010, the Commonwealth of Virginia settled an administrative action it had taken against Pena for failing to report the Missouri administrative action and providing materially incorrect information on his Virginia insurance producer license application. Virginia’s Department, like New York and Missouri, did not revoke Mr. Pena’s non-resident license, but instead entered into a stipulation where Mr. Pena paid a $1,500.00 fine. Upon the payment of the fine, the Virginia Department of Insurance allowed Mr. Pena to retain his non-resident producer health license in addition to issuing him an additional life and annuity license.
• On November 15, 2010, the Maine Bureau of Insurance notified Pena that it had denied his request to add an additional authority to his Maine insurance producer license. The Bureau also warned Mr. Pena that unless he requested a hearing, it also would revoke his Main insurance producer license, effective December 28, 2010, for failure to disclose his criminal history on his original application as well as for failure to report the North Dakota and New York administrative actions.
Notwithstanding these administrative actions by various departments of insurance, it appears that Mr. Pena still holds valid licenses in at least two states, Nevada and Florida. In fact, the address used by the Massachusetts Division of Insurance in order to give him notice of the proceeding to take place at the Massachusetts DOI was, according to the decision, apparently “obtained from a National Association of Insurance Commissioner’s licensing report dated June 18, 2014.” As such, it appears that neither Nevada nor Florida have taken any administrative actions against Mr. Pena’s producer licenses as of yet.
Massachusetts waits until 2014 to take action
While six departments of insurance took action against Mr. Pena in 201o, Massachusetts did not initiate any administrative action against him until April of 2014. In the administrative proceeding brought by the Massachusetts Division this year, Mr. Pena did not appear.
The hearing officer found that Mr. Pena had received sufficient notice of the proceeding and that his failure to respond nor appear in person resulted in the entering of a default. The hearing officer then found that the evidence provided supported a finding that Mr. Pena had failed to report the administrative actions in Missouri, North Dakota, Virginia, New York, Vermont, and Maine to the Massachusetts Division of Insurance as required by law. As a result, the hearing office further found that Mr. Pena had committed six separate violations of §162V (a) of Chapter 175.
Additionally, according to the hearing decision, Hearing Officer Farrington found that Mr. Pena, by providing incorrect and materially untrue information to the Commissioner had committed two violations of §162R of Chapter 175. This evidence used to support this finding was Mr. Pena’s failure to report his criminal history on his 2008 insurance producer license application and the administrative actions against him on his 2010 renewal application. She then stated based upon these findings:
I will, therefore, impose a fine for eight statutory violations. Because Pena’s acts were serious violations of the laws relating to the regulation of insurance, I impose the maximum fine for each of those violations.
The hearing officer’s final order required the payment of the $8000 in fines within 30 days, along with the return of any licenses to the Division, along with an order prohibiting him from directly or indirectly transacting any insurance business, or acquiring, in any capacity, any insurance business in the Commonwealth.
Lessons learned
It is the law that an applicant for an insurance license has a duty to disclose criminal proceedings in which they have been involved and that insurance license holders have the duty to report any administrative actions taken against them to the Commissioner of Insurance. The fines imposed on Mr. Pena for his infractions demonstrate that the Massachusetts Division of Insurance takes an extremely hardline on any licensed producer’s failure to properly report such proceedings.
The sanctions imposed in Massachusetts for this type of statutory violation may be among the most punitive in the country. In order to avoid such sanctions, holders of both non-resident producer licenses and domestic producer licenses would be well advised to insure that any administrative actions in any jurisdiction are reported in a timely manner to the Massachusetts DOI.
View the Massachusetts Division of Insurance decision against Mr. Pena here: Docket No. E2014-07, Division of Insurance v. Pena
