On October 25, 2015, Division of Insurance Hearing Officer Jean F. Farrington entered a Decision on the Division’s Motion for Summary Judgement in regards to an action involving a Non-Resident Licensed Producer named Edward L. Austin III. The decision comes more than a year after the Division filed its initial Order to Show Cause that sought the revocation of Mr. Austin’s Massachusetts producer’s license for failure to report two prior administrative actions within a timely manner to the Division, as well as for answering “No,” with respect to Question 27(a), that asks whether the applicant has been a party to an administrative proceeding, involving an occupational license, that has not been reported to the Division.
Based on the findings of fact in this particular case, Hearing Officer Farrington found that revocation and fines were not warranted with respect to the Division’s allegations that Mr. Austin had violated Chapter 175, §162R (a)(1), (a)(2), (a)(3) nor Chapter 175, §162V. Instead, Officer Farrington suspended Mr. Austin’s license until such time as he satisfied the conditions for licensure as a non-resident producer in the Commonwealth.
Findings of Fact
Officer Farrington made the following findings of fact in the instant case:
- The Division first licensed Austin as a non-resident insurance producer on or about June 18, 1993.
- At that time, Austin was a resident of Vermont, where he had been licensed to sell insurance since 1981.
- In 2007 Austin joined TD Insurance, Inc. as executive vice president.
- In September 2012, TD Insurance, Inc. was sold to USI Insurance Services and Austin became USI’s president for the State of Maine.
- Throughout this time, Austin was a resident of Vermont.
- On April 14, 2014 Austin became vice-president of underwriting for the Maine Employers Mutual Insurance Company (“MEMIC”).
- On July 11, 2014 Austin relocated to Bonita Springs, Florida to manage MEMIC’s southeast territory.
- On or about November 16, 2011, the Vermont Department of Banking, Insurance,Securities and Health Care Administration fined Austin for failure to complete that state’s continuing education requirements within the extension period allowed under Vermont law.
- Austin promptly completed the continuing education requirement.
- On or about May 31, 2012, the Delaware Insurance Commissioner fined Austin for failure to report the Vermont action to Delaware.
- On June 21, 2012, TD Insurance, Inc. located in Portland, Maine notified the Division of the stipulation orders Austin entered into with Vermont and Delaware, andsupplied copies of both stipulations and orders.
- On November 21, 2013, Austin submitted an application to renew his non-resident Massachusetts insurance producer license.
- Austin answered “no” to question 27 (2) on that application, that asks if the applicant has ever “been named or involved as a party in an administrative proceeding…regarding any professional or occupational license or registration, which has not previously been reported to this insurance department”.
The Division files an Initial Order to Show Cause
On September 5, 2014, the Division filed its Initial Order to Show Cause (OTSC) against Edward L. Austin, III, a licensed non-resident Massachusetts producer. In that filing, the Division sought the revocation of Mr. Austin’s license for failure to report prior administrative actions against him in two states, Delaware and Vermont, within 30 days of the disposition of those actions. In Massachusetts, a failure to report an administrative action within a timely manner is a violation of Chapter 175, §162V(a).
The first of the two administrative proceedings at issue in this case involves the State of Vermont. On November 17, 2011, the State of Vermont issued a Stipulation and Consent Order with respect to Mr. Austin’s non-compliance with that state’s continuing education requirements. Under Vermont law, the Vermont Commissioner of Insurance is authorized to suspend the producer’s license for failure to comply with this continuing education requirement. In this particular case, however, Hearing Officer Farrington found that it did not appear that the Vermont Commissioner ever actually initiated a formal administrative action against Mr. Austin.
A year later, Mr. Austin executed a Stipulation and Consent Order with the Delaware Insurance Department for failure “…to report an administrative action taken by another jurisdiction.” The Delaware Department of Insurance, however, never actually identifies “the other jurisdiction.” Ultimately, while the Delaware Stipulation and Consent order indicates that Mr. Austin admitted to the violation, the Delaware documents note that the matter was “…resolved without recourse to a formal hearing.”
As a result of these chain of events beginning in Vermont, the Division filed the OTSC against Mr. Austin requesting that his license be revoked for failure to report these prior administrative actions to the Division within a timely manner. The Division also alleged that Mr. Austin then subsequently made a misrepresentation on November 21, 2013 when he submitted a renewal application for his Massachusetts insurance producer license. On that application he answered “No” in response to Question 27 “(a) that asks if he was a party to an administrative proceeding relating to an occupational license that was not previously reported to the Division.”
The Division files an Amended Order to Show Cause
The Division ultimately filed an amended OTSC with an additional count against Mr. Austin. The allegation was that Mr. Austin was no longer eligible for a non-resident Massachusetts producer license when he relocated from Vermont to Flordia without providing subsequent evidence of licensure in Florida. According to the Division, only after Mr. Austin’s response to the Division Initial OTSC, did the Division learn that he had relocated to Florida after submitting his Massachusetts renewal application in 2013.
The Division Hearing Officer’s Conclusions
The violations of Vermont and Delaware law both consist of non-compliance with state- specific licensing requirements relating, respectively, to continuing education requirements and to timely reporting an action in another state. Each matter was resolved without a formal hearing and with no suspension or revocation of Austin’s license or other restriction on his ability to conduct business. Principles of comity persuade me that Massachusetts should not now revoke Austin’s license on the basis of violations in Vermont and Delaware that did not result in formal administrative proceedings in either state. I also find that imposing a second fine for violations of another state’s statutes that were satisfactorily resolved in that jurisdiction would unfairly penalize Austin.
Additionally the Hearing Officer made an interesting comment about the Division’s practice regarding seeking fines from certain non-resident licensees:
… a practice of relying on Chapter 175, §162R (a)(2) to impose fines on non-resident Massachusetts licensees for no reason other than violation of another state’s insurance laws could be viewed by the licensee’s home state as an attempt to increase revenue at the expense of their resident producers and might have the undesirable result of leading to similar actions against Massachusetts resident producers.
Lessons learned
It is the law that an applicant for an insurance license has a duty to report any administrative actions taken against them to the Commissioner of Insurance within a timely manner. In this particular case, however, since no official administrative actions had actually taken place in other states, the Hearing Officer felt that it would have been too punitive to revoke Mr. Austin’s licenses for a violation of Chapter 175, §162R (a)(1), (a)(2), (a)(3) or Chapter 175, §162V. Moreover, the Hearing Officer wisely surmised that the revocation of Mr. Austin’s license by the Massachusetts Division of Insurance could be seen by other states as “…an attempt to increase revenue at the expense of their resident producers” thereby creating a situation in which similar actions might be taken against Massachusetts resident producers.
View the Massachusetts Division of Insurance decision against Mr. Austin here: Docket No. E2014-11, Division of Insurance v. Edward L. Austin, III.
