On August 22, 2016, the Division of Insurance Hearing Officer Jean F. Farrington entered an order under General Laws Chapter 175, § 166D against Robert G. Draper to dispose of any interests in Massachusetts as a proprietor, partner, stockholder, officer, or employee of any licensed insurance producer and fined Mr. Draper $2,000.
The order entered by Hearing Officer Farrington resulted from Mr. Draper’s failure to report the surrender with prejudice of his nonresident producer licenses in North Carolina in 2013, and Ohio, in 2014, along with the revocation of his producer license in Delaware and Virginia in 2014 and his nonresident producer license in West Virginia in 2016.
Mr. Draper’s case shows once again that Massachusetts takes a very hard line on its licensed producers, whether resident or nonresident, for failing to report administrative actions involving their producer licenses in other states.
Local agency with licenses in several states
Mister Draper apparently had the Sandbridge Agency in Virginia Beach, Virginia where he sold personal lines, life and annuity, and health insurance in several states.
Five of the states where Mr. Draper obtained nonresident producer licenses were North Carolina, Delaware Massachusetts, Ohio, and West Virginia. He also had a resident producer license in his home state of Virginia.
Licenses surrendered for cause in North Carolina and Ohio, revoked in Delaware
On October 13, 2013, Mr. Draper surrendered his nonresident producer license to the North Carolina Division of Insurance for ten years according to the hearing officer’s decision.
The reason he first surrendered his nonresident producer license in North Carolina is not clear. The hearing officer notes that the North Carolina documents submitted into the record in Massachusetts do not specify any grounds. The North Carolina Division of Insurance website lists for Mr. Draper’s license history only notes: “Regulatory Action Taken.” However, the website states that with regard to the the regulatory action taken that, “This information is available upon request to the North Carolina Department of Insurance – Agent Services Division.”
Agency Checklists did contact the Agent Services Division at the North Carolina Department but was told that the Department would not give out any information.
On June 9, 2014, the Delaware Insurance Department entered a final order revoking Mr. Draper’s Delaware producer license.
On July 17, 2014, the Ohio Superintendent of Insurance accepted Mr. Draper’s “Request to Surrender for Cause” his nonresident producer license. The box on the Ohio form indicated that the surrender resulted from “Action on another Insurance (sic) license.” Presumably, the Ohio surrender resulted from North Carolina’s prior action.
Ohio imposed no other sanctions except for barring Mr. Draper from reapplying for a license for five years.
Virginia Corporation Commission license application evidences failure to disclose nolo contendere plea
While North Carolina would not disclose the basis for Mr. Draper’s license surrender, the record of the Virginia Department relating to the revocation of Mr. Draper’s license in 2014, provides a likely cause.
Mr. Draper’s Virginia application had a question on the application that asked: “Have you ever been convicted of a crime, had a judgment withheld or deferred, or are you currently charged with committing a crime?” apparently, Mr. Draper answered, “No.”
On August 21, 2014, a supervisor of the P&C Agent Investigation Section of the Virginia Corporation Commission wrote to Mr. Draper and advised Mr. Draper that he had violated § 38.2-1831 (1) of the Code of Virginia that punishes, “Providing materially incorrect, misleading, incomplete or untrue information in the license application or any other document filed with the Commission.
The supervisor specified that this violation occurred:
when you failed to disclose on your license application that you had entered a plea of nolo contendere to crime as a condition for having adjudication withheld.
In many states, including Massachusetts, a plea of nolo contendere only admits the facts alleged in a criminal case, but only for that case. The nolo contendere plea cannot be used in a later civil or criminal trial. However, under a Virginia statute, a nolo contendere plea in a criminal proceeding is the same as a guilty plea.
Although the investigator requested Mr. Draper give a response and that he could be fined for his actions, Mr. Draper never responded.
On October 8, 2014, the Virginia Corporation Commission entered an order revoking Mr. Draper’s nonresident producer license finding that he had violated Virginia law “by providing untrue information in his license application.”
Although, the Commission had the power, it took no other action to otherwise sanction or fine Mr. Draper for this misstatements.
On January 12, 2016, the State of West Virginia advised Mr. Draper’s that his producer license in West Virginia had been revoked based on the prior revocations and surrenders of his nonresident producer licenses in North Carolina and Ohio and the revocations in Delaware and Virginia.
Massachusetts takes action in April 2016 on Mr. Draper’s license
On April 7, 2016, the Division of Insurance filed an order to show cause against Mr. Draper seeking revocation of his Massachusetts producer licenses, and seeking orders requiring Mr. Draper to cease any insurance business activities in Massachusetts and to divest himself of any interests in Massachusetts insurance businesses. Additionally, the Division sought for the hearing officer to impose fines against Mr. Draper for a number of alleged violations arising out of his failure to report the administrative actions against his producer licenses in the states of Virginia, North Carolina, Ohio, Delaware, and West Virginia.[pullquote]Mr. Draper’s case shows once again that Massachusetts takes a very hard line on its licensed producers, whether resident or nonresident, for failing to report administrative actions involving their producer licenses in other states[/pullquote]
The Division alleged a number of statutory violations, however, the main grounds related to Mr. Draper violating c. 175, §162V(a) by failing to report, as required by this statute administrative actions “taken against the producer in another jurisdiction” to the Division.
Summary judgment for Division when Mr. Draper fails to contest Order to Show Cause
Mr. Draper, did not appear although the hearing officer found that he had received sufficient notice. She entered a default and summary judgment against him revoking his nonresident producer license finding that:
… Failure to report administrative actions by other jurisdictions limits the Division’s capacity effectively to protect Massachusetts consumers through oversight of its licensees. Approximately five months after obtaining a Massachusetts producer license in May 2013, Draper surrendered his license in North Carolina. In June and July 2014, he became disqualified in two other jurisdictions. Draper’s failure to report …allowed him to remain fully qualified for many months to sell insurance in Massachusetts and deprived the Division of an opportunity promptly to reassess his qualifications for licensure….
The hearing officer found that the evidence only supported Mr. Draper’s failure to report, as required, administrative actions against his license in North Carolina, Delaware, Virginia, and West Virginia. The Ohio surrender documents did not evidence that any official administrative action had been involved in Mr. Draper’s surrender even though it had been labeled, “for cause.”
However, the hearing officer found that the number and seriousness of those four grounds were fully supported by the evidence and warranted revocation of Mr. Draper’s license.
Also, the hearing officer ordered that based on the record in case, that in addition to revocation of his license, Mr. Draper should be prohibited from transacting any insurance business, directly or indirectly, in Massachusetts, and should be required to dispose of any interest he may have in any insurance business in Massachusetts.
Fine of $2,000 for failure to report license surrenders and revocations
Additionally, the hearing officer entered an order fining Mr. Draper $2,000 in total. The $2,000 total amount of the fine consisted of four individual fines of $500.00. The hearing officer imposed each of these $500 fines for Mr. Draper’s failure to report his nonresident producer license being either surrendered or revoked in four states: Virginia, North Carolina, Ohio and West Virginia.
