September 22, 2015
OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler disciplined and issued fines in August totaling $39,750 against insurance companies, producers and others who violated state insurance regulations.
Bankers Standard Insurance Co., Philadelphia; fined $25,000
Bankers used a national insurance scoring model for auto and homeowner policy rates, instead of the Washington-specific model, from 2010 to 2014. As a result, the company undercharged more than 1,600 policies by more than $419,000 and overcharged 26 policyholders more than $20,000. In May, Bankers refunded the overcharges plus 8 percent annual interest totaling more than $5,700.
Undercharging policyholders can damage the company’s financial solvency, which can later harm consumers if the company can’t pay claims or goes out of business.
Comfort Dental Gold Plan, LLC, Columbia, Mo.; cease and desist order
A consumer contacted the Insurance Commissioner to find out why Comfort Dental would not allow him to renew his membership for one of its seven Puget Sound-area clinics. Comfort Dental is not licensed to sell dental insurance memberships in Washington state; despite that, it sold nearly 2,600 memberships worth more than $257,000 in premiums from 2011 to2014. The company reported it stopped selling memberships to Washington consumers in August 2014 and instead is offering discounted price specials. The Insurance Commissioner ordered the clinic to stop selling memberships in Washington until it chooses to obtain a license.
MEGA Life and Health Insurance Co., Oklahoma City, Okla.; fined $5,000
MEGA improperly denied 17 health and disability insurance claims that Washington policyholders submitted between 30 and 365 days from the accident dates. The company identified a computer error that caused denials of nine claims filed more than 30 days, rather than 365 days, from the accident date. The eight remaining denials were the result of claims examiners who violated company policy and did a manual override to deny the claims. MEGA reprocessed and paid all 17 claims. The company has since counseled its employees regarding its manual override policy and Washington state law.
Nationwide Life Insurance Co., Columbus, Ohio; consent order to fix student health care plans
Nationwide filed health insurance rates and plans to sell to students at six Washington state universities and all state community colleges for the 2015-16 school year that did not comply with state requirements. Rather than disapprove the plans and leave thousands of students without health insurance just before the start of the school year, the Insurance Commissioner agreed to temporarily approve the plans and refrain from issuing an enforcement action against the company. Nationwide agreed to bring the plans in line with state insurance requirements by Sept. 30 and refile them with the Insurance Commissioner, communicate to students that their plans are changing with agreed-upon language, adjust the rates appropriately, distribute updated policies to all students by Oct. 30 and file its rates and forms properly for the following school year by Jan. 1, 2016. Nationwide has complied in full with the terms of the order.
United of Omaha Life Insurance Co., Omaha, Neb.; fined $5,000
United of Omaha did not adequately track the continuing education required for its producers -- the people who sell its products. It later filed with the Insurance Commissioner documentation that indicated its producers had all met the continuing education requirements for long-term care insurance products, even though it did not know that for a fact.
Agents and brokers
Andrew T. Brooks, Bothell; license revoked
Brooks provided a quote to a consumer for a renter’s insurance policy; the consumer declined to purchase the policy. Brooks later submitted the application for the policy and paid the $26 premium with his personal credit card, which violates state insurance laws. The consumer complained to the Insurance Commissioner when the company mailed a letter with information about the new policy.
Cascade Title Co. of Benton Franklin Counties, Kennewick; fined $500
A competitor complained to the Insurance Commissioner that Cascade Title paid nearly $400 to serve lunch to 60 employees of a local real estate agency as part of its community service day. The competitor had been approached to offer the lunch, but declined because it violates state insurance law. Title insurance companies are not allowed to give financial incentives to people who sell its products and also may not contribute financially to promotions or activities outside of its premises.
James Dennis, North Bend; license revoked
In April 2014, the insurance company Dennis was appointed with reported to the Insurance Commissioner that it canceled his appointment for participating in fraudulent insurance sales tactics. In July 2014, the Insurance Commissioner received a complaint that Dennis applied for two annuities worth $4 million each without the consumers’ knowledge; the applications were accompanied by falsified documents, including a falsified $4 million check. Dennis is no longer allowed to sell insurance in Washington state.
John C. Hanson, Spokane; license revoked
An insurance company reported to the Insurance Commissioner that it canceled Hanson’s appointments to sell insurance after he solicited a client to invest in fake investments, misused client funds, and mixed a client's money with his own personal money. The Insurance Commissioner investigated, without Hanson’s cooperation, and substantiated what the insurance company reported. The Insurance Commissioner also found that Hanson sold fake investments and made fake loan arrangements with at least six people, including family members and clients, totaling more than $1.3 million. One investor paid approximately more than $546,000 in taxes after withdrawing money from an individual retirement account to pay for the fake investments. Hanson is no longer allowed to sell insurance in Washington state.
Michael J. Prophet, Sandpoint, Idaho; fined $250
Prophet improperly enrolled a Washington consumer who was less than 65 years old in a Medicare supplemental plan, which resulted in the consumer incurring medical expenses that were initially not covered by insurance. Prophet also ignored letters from the Insurance Commissioner about this matter.
Tracy Simmons, Suwanee, Ga.; fined $250
Simmons failed to disclose her criminal history to the Insurance Commissioner on her license application.
Muscular Dystrophy Association, Inc., Tucson; fined $1,250
The Association filed the required annual report and actuarial certification two months after the deadline set in state law.
Student Conservation Association, Inc., Charlestown, N.H.; fined $2,500
The company failed to file its annual report and actuarial certification on time, pay its annual filing fee and respond timely to inquiries by the Insurance Commissioner.
Kreidler’s office oversees Washington’s insurance industry to ensure that companies, agents and brokers follow state laws. Since 2001, Kreidler's office has assessed more than $18 million in fines, which are deposited in the state's general fund to pay for other state services.
For an insurance question or complaint, contact the Insurance Commissioner’s consumer advocates at 800-562-6900 or online.
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Release No. 15-41