Law & Ethics Update

Disciplinary and Industry Trends

 

Recent Violations and Enforcement Actions of Licensed Florida Insurance Professionals

 

Not everyone feels compelled to follow the rules. Whether desperate, hopeless, greedy, or simply believing the rules don’t apply to you … or at least the way you conduct business. Here’s the thing: There are a boatload of people, from our CFO, to dissatisfied customers, to our Strike Force, with which you don’t want to conduct business regarding the enforcement of violations against you. The following are cases from the DFS, Miami and Tallahassee newspapers. Names have been altered and brevity used, but these real cases should discourage you from dancing with the devil.

 

The following are instances in which licensees or other persons violated the Florida Insurance Code and the administrative action the department has taken against them. Note: All administrative investigations are subject to referral to the Division of Investigative and Forensic Services for criminal investigation.

Case: This investigation involved health agent accused of submitting an application to the Federally Facilitated Marketplace (FFM) on a consumer without her knowledge and consent. A Marketplace investigation identified the agent for investigation due to a pattern of complaints from individuals reporting that they were enrolled into Marketplace plans without their authorization.

Investigators obtained an investigative report from the Marketplace indicating the agent was associated with 4,147 unique policies. This was an increase of 1,589% over Plan Year 2020, when 261 unique policies were created. The agent's FFM User ID was recorded on a significant percentage of applications using common email addresses

In Policy Year 2021, 93% of the agent's consumers were enrolled with a $0 IRA, meaning 100% of their premium was subsidized by an Advance Premium Tax Credit (APTC). Consumers with 100% of their monthly premium covered by an APTC did not have to make a monthly premium payment and may not realize they were enrolled in Marketplace coverage until they receive a 1095-A tax form or a letter from the IRS when they file their 2021 federal income taxes.

The agent's FFM User ID submitted an abnormally large number of applications resulting in policies on multiple days. For example, the ID created 395 policies on 12/15/2020. This number represents more consumers than an agent could realistically work with in a single day. The FFM identified the agent as the submitting agent associated with eighty-one (81) complaints. Forty-nine (49) of these complaints were associated with health insurance policies that CMS or the issuer confirmed were Unauthorized Enrollments and subsequently cancelled the policies.

Of the ten consumers interviewed by the FFM, three consumers reported financial harm as a result of the unauthorized application and/or enrollment transactions, two of these reported difficulties with their tax returns as a result of the unauthorized enrollments, resulting in wage garnishment by the IRS for one consumer.
Of the ten consumers, seven reported that they were already enrolled in employer-sponsored coverage, Medicare, or Medicaid when they were enrolled in Marketplace coverage. Consumers eligible for these other types of coverage should generally not be APTC-eligible.
Disposition: License revoked.

Insurance Insights Vol. 12, No. 1 - Summer 2023

 

 

UNLICENSED ENTITIES

Since July 2014, the Division of Investigative and Forensic Services has made hundreds of  arrests of individuals who were licensed by the Department or who were required to be licensed but were operating without one. These arrests represent $4.47 million in fraud and involved insurance agents, bail bond agents and public adjusters. [Florida CFO, Division of Investigative and Forensic Services, Insurance Fraud Press Releases]

Customers responding to a TV or radio ad, phone call, piece of mail, email (in this case “spam”), etc., may not have the know-how or inclination to check as to whether the company is authorized to conduct business in Florida. You do. At the very least you have access to the Active Company Search provided by the OIR. (www.FLOIR.com)
Keeping ALL your customers aware of the potential for contact by a bogus entity is beneficial to all. Even clients to whom you do not provide health coverage can be educated by the knowledge of the state, OIR, you and your agency.

If you DO solicit or sell for an unauthorized entity you are violating the Representing or Aiding Unauthorized Insurer Prohibited statute, which could cause you to be liable for repayment of any losses suffered by a client when the unauthorized entity fails to pay claims. You may also be charged with a third degree felony for violating the Penalty for Representing Unauthorized Insurer statute, punishable by up to five years in prison and a fine of up to $5000 (first offense).

As our CFO, DFS, OIR, Fraud Strike Force and others work to maintain or improve the integrity of the insurance industry, technology continues to improve with them. As it turns out, fraudulent agents, agencies and products don’t usually lag too far behind. It’s our job to ensure we stay one step ahead of these criminals. [Source: Florida CFO, Division of Investigative and Forensic Services , Insurance Fraud Press Releases]

Unauthorized Products and Entities Involved in Florida Commerce

With the ACA in motion and implementation of the Health Insurance Marketplace in full swing, it will be interesting to monitor how long it takes before “bogus entities” wiggle their ways into “effective” commerce. If they haven’t already, they will need to find a way to make their corrupt living by continuing to provide consumers with useless healthcare policies. Most often this is accomplished by simply offering a screaming hot deal – costs and coverage too good to be true. Once interpreted, “if it sounds too good to be true, it is.”

 

 

New and Important Terminology Applicable to Licensed Florida Insurance Professionals

Definitions
Agent In Charge: The licensed and appointed agent who is responsible for the supervision of all individuals within an insurance agency location.

Chief Financial Officer (CFO): An independently elected official and a member of the governor’s cabinet who serves as head of the Department of Financial Services (DFS) and as a member of the Financial Services Commission. The CFO directly oversees the Division of Insurance Agents and Agency Services, Division of Investigative and Forensic Services, Division of Consumer Services, and the Office of the Insurance Consumer Advocate.

Controlled Business: Insurance contracts covering the agent or members of the agent’s family; officers, directors, stockholders, partners, or employees of a business in which the agent or a member of the agent’s family is engaged; or the debtors of a firm, association, or corporation of which the agent is an officer, director, stockholder, partner, or employee.

Department of Financial Services: State agency headed by the chief financial officer and the Commissioner of the Office of Insurance Regulation that oversees the insurance industry in accordance with the provisions of the Insurance Code. The CFO and the Commissioner have broad administrative, quasi-legislative (rule-making) and quasi-judicial powers in order to carry out their responsibilities.

Insurance Agency: Any business location at which an individual, firm, partnership, corporation, association, or other entity (other than an insurer or an adjuster) engages in any activity or employs individuals to engage in any activity that by law may be performed only by a licensed insurance agent.

Insurance Insights: Monthly online newsletter published by the DFS’s Division of Agent and Agency Services that provides valuable information for agents, adjusters, and agencies about what’s happening in Florida’s insurance market and industry trends.

MyProfile: Online portal created by the Florida Department of Financial Services’ Bureau of Licensing that allows licensees to perform various license-related tasks online.

 

 

Florida’s OIR recognizes that each state has its own terminology among licensed insurance professionals. It provides the NAIC’s complete list for every state at www.FLOIR.com.

You may need to use the website to secure terms and codes when you are required to complete a transaction with another state.

AM Best, an insurance rating service, offers a glossary of insurance terms for those looking for anything not already made available in this table, within the Florida Office of Insurance Regulation, or by the compliance representative affiliated with your office.  http://www.ambest.com/resource/glossary.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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