For Consumers

Kreidler fines Kaiser $100,000 for violating consumer appeal rules

Kreidler disciplined, fined insurance industry in May for law violations

Contact Public Affairs: 360-725-7055

June 29, 2018

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler disciplined and issued fines in May, totaling $172,900, against insurance companies, agents and brokers who violated state insurance regulations.

Insurance companies    

Kaiser Foundation Health Plan of Washington, Seattle; fined $100,000, order 18-0148

A consumer filed a complaint with the insurance commissioner stating that Kaiser failed to notify him that he had five days to provide supporting information to an Independent Review Organization (IRO), one of consumers’ health insurance appeal rights. 

The insurance commissioner looked at Kaiser’s IRO files from January 2016 through March 2017 and found the company violated several rules related to IRO appeals: 

  • All but one consumer were not told of their right to provide additional information to the IRO within five business days.
  • Kaiser failed to send files to the IRO within three business days. 
  • All but one of the expedited files took longer than 72 hours to complete. 
  • Half of the consumers who filed were not given the IRO name and contact information within one business day. 

The insurance commissioner suspended $30,000 of the fine as long as Kaiser complies with the terms of the compliance plan and doesn’t commit additional law violations within two years. 

Cypress Insurance Co., Phoenix, Ariz.
Ordered to cease and desist, order 18-0220
Notice of intent to collect premium tax, order 18-0221

Cypress is an insurer in Arizona and its sole insured is the Microsoft Corp., headquartered in Redmond, Wash., and its subsidiaries. Cypress does not have a certificate of authority or a surplus line broker license to sell insurance in Washington state. The insurance commissioner is ordering the company to cease and desist from selling insurance in Washington state until it becomes properly registered and/or licensed. 

Cypress has collected more than $71 million in premiums from Microsoft and its subsidiaries since 2013 and has not paid a 2 percent premium tax, as required by state law. The insurance commissioner estimates the company owes $1.4 million in premium tax. Premium taxes are sent to the state general fund.

Cypress has 90 days from May 9, 2018 to request a hearing for both orders. 

Omni Insurance Co., Springfield, Ill.; fined $20,000, order 18-0079

The commissioner’s market conduct examination found the company was not handling consumer complaints timely, thoroughly or in compliance with state insurance regulations. The commissioner suspended $10,000 of the fine as long as the company follows the terms of the compliance plan to rectify its practices and doesn’t commit additional violations in the next two years. 

Athene Annuity and Life Co., West Des Moines, Iowa; fined $10,000, order 18-0098

The insurance commissioner’s market conduct exam of the company found that its consumer complaints had increased after it transferred the administration of its annuities to a third-party administrator, Alliance-One. During the transfer, which affected 847 annuities in Washington state, consumers experienced lengthy delays in accessing their account balances, statements and surrender information. Under Washington state law, insurers are responsible for the actions of third-party administrators they contract with. 

Metropolitan Life Insurance Co., New York, NY; fined $7,000, order 18-0086

The company won the contract with the state of Washington to provide life insurance for public employees. Part of the contract included, at the state’s request, implementation credits to help the state offset the costs of implementing a new life insurance program. While the state did request the credits, it is illegal in Washington state for an insurance company to offer a rebate or monetary gift in exchange for purchasing insurance. The insurance commissioner has advised state agencies that asking insurance companies for implementation credits will result in insurance companies violating state law. 

Indemnity Co. of California, Irvine, Calif.; fined $1,500, order 18-0155

The company allowed 237 insurance producers’ appointments to lapse for 27 days in 2017 and allowed four producers to conduct six transactions totaling $9,351 in premiums. State law requires insurers to file a notice and pay a fee to the insurance commissioner for each licensed producer who will act as an agent of an insurer.

Companion Life Insurance Co., Columbia, S.C.; fined $3,000, order 18-0164

The company allowed 319 insurance producers’ appointments to lapse for 22 days in 2018 and allowed five producers to conduct nine transactions totaling $5,476 in premiums. In addition, the company allowed one producer who was never appointed to write a group policy in January 2016 totaling $78,113 in premiums. The company appointed the producer in August 2017, 20 months after it was required to. State law requires insurers to file a notice and pay a fee to the insurance commissioner for each licensed producer who will act as an agent of an insurer.

New South Insurance Co., Winston-Salem, N.C.; fined $4,000, order 18-0165

The company allowed 80 insurance producers who were not appointed to conduct 138 transactions totaling $111,646 in premiums for 28 days in 2016. Some of the producers’ appointments had lapsed and some were never appointed to begin with. Three of the producers were working with expired Washington state licenses. State law requires insurers to file a notice and pay a fee to the insurance commissioner for each licensed producer who will act as an agent of an insurer.

American Strategic Insurance Corp., St. Petersburg, Fla.; fined $10,000, order 18-0184

The company accepted flood insurance applications in 2016 and 2017 from nine insurance producers who had not completed the required National Flood Insurance Program training. The company issued 116 policies and collected $71,601 in premiums. The company paid the untrained producers $10,059 in commissions.

Privilege Underwriters Reciprocal Exchange, Ft. Lauderdale, Fla.; fined $2,500, order 18-0187

The company accepted flood insurance applications in 2016 and 2017 from six insurance producers who had not completed the required National Flood Insurance Program training. The company issued nine policies and collected $2,937 in premiums. The company paid the untrained producers $455 in commissions.

My Health Pass, Addison, Texas; ordered to cease and desist, order 18-0262

My Health Pass sold health services to consumers, billing itself as “your alternative to health insurance.” It sold one health membership to a Washington consumer. The insurance commissioner orders the company to cease and desist from advertising, seeking, soliciting, selling insurance or acting as a health service contractor or discount plan. 

Insurance producers          

Brian J. Hanson, Camano Island, Wash.; fined $500, order 18-0060

Hanson let his insurance producer license expire from Aug. 23 until Nov. 16, 2016. During that time, he wrote one insurance policy and earned $982 in commissions without an insurance producer license. His license is now in good standing.

Song Woon Yi, Tacoma.; fined $1,000, order 18-0139
Cheol Keun (Mark) Kim, Tacoma.; fined $1,000, order 18-0136 
Jozette Ann Dizon Gutierrez, Tacoma.; fined $1,000, order 18-0135
Thalia C. Moran, Puyallup; fined $1,000, order 18-0137
Zachariah Johns, Lacey; fined $1,000, order 18-0138

Yi owns Joe Yi Insurance Agency in Tacoma, which employed four insurance producers: Kim, Johns, Moran and Gutierrez. State Farm terminated the appointments of all four of the producers employed by the agency after it determined they falsified information on hundreds of auto insurance policies in order to lower the premiums. State Farm referred the matter to the insurance commissioner, as required by law. 

Clark Permann, Yakima; fined $4,000, order 18-0131

Permann sold an annuity to a consumer and didn’t deliver the policy in a timely manner. The consumer didn’t receive the policy for more than a month after he started receiving annuity payments. 

Zoe Clerico, Arlington, Wash.; fined $500, order 18-0147

A consumer filed a complaint with the insurance commissioner stating that Clerico misrepresented the benefits of a whole life insurance policy she purchased. Clerico told the consumer that the interest rate was 6.5 percent and that interest-free loans were available from the policy. When the consumer got the policy, it listed a 4.9 percent interest rate and charged 7.4 percent interest for loans. The consumer canceled the policy. The consumer filed the complaint because she had to wait a year to purchase another life insurance policy through her employer using a payroll deduction and was no longer eligible for an under-35 discount on a new policy.

Adrianna K. Rose, Bonney Lake; fined $500, order 18-0162

A mortgage broker contacted Rose to get insurance for a client’s home. The first company Rose contacted, Travelers, declined to offer a policy for the consumer. Rose left the temporary policy in place while she sought a quote from another company, but failed to inform her client in a timely manner that she had to seek a new policy. 

Alendon LLC dba FCI Self Storage, North Bend, Wash.; fined $1,000, order 18-0242

Alendon, a self-storage facility, and three of its employees sold 14 tenant insurance policies from 2012 through 2017. Neither Alendon nor its employees had insurance producer licenses. Alendon reported earning $1,351 in commissions on the policies.

Victoria Velazquez, Wenatchee, Wash.; fined $250, order 18-0206

Velazquez applied for a Washington state insurance producer license in March 2018 and failed to disclose two misdemeanor convictions. 

Leon Brooks, Cheney, Wash.; probationary license issued, order 18-0263

Brooks applied for an insurance producer license and disclosed a court debt in connection to a misdemeanor conviction. The insurance commissioner issued Brooks a probationary license for two years or until he pays off his court debt, whichever is later. Brooks must provide proof of payment on the court debt to the insurance commissioner every three months.

Lone Rock Capital Partners LLC, Madison, Wisc.; license suspended, order 18-0188
Desiderio Ramos, Madison, Wisc., license suspended, order 18-0200

The agency, domiciled in Wisconsin, is a nonresident licensed insurance producer and licensed surplus line broker in Washington state. Ramos is the designated person responsible for the agency. In February 2018, the agency notified the insurance commissioner that its chief operating officer admitted to embezzling consumers’ premiums, later determined to be more than $500,000. The theft left the agency insolvent. The insurance commissioner also learned that the state of Wisconsin’s insurance commissioner had conducted a preliminary investigation and suspended Lone Rock’s and Ramos’ licenses. As a result, the Washington insurance commissioner also suspended Lone Rock’s and Ramos’ Washington licenses for one year, pending the outcome of Wisconsin’s enforcement action against the agency and Ramos.

Insurance Care Direct, Deerfield Beach, Fla.; ordered to cease and desist, order 18-0241

Insurance Care Direct is an agency and is not licensed to sell insurance in Washington state. Insurance Care Direct was an unregistered “doing business as” of Washington licensed producer Health Option One. An insurance producer who works for the agency sold two policies to a Washington consumer. The insurance commissioner ordered the agency to cease and desist from selling insurance until licensed or registered as a dba of a licensed Washington insurance producer. 

Sean Stewart, Palm Bay, Fla.; license revoked, order 18-0166

Stewart failed to report to the insurance commissioner within 30 days that Virginia revoked his insurance producer license. The insurance commissioner revoked his Washington license. 

Ricky Marion, Memphis, Tenn.; license revoked, order 18-0167

Marion failed to report to the insurance commissioner within 30 days that South Dakota denied his insurance producer license application. The insurance commissioner revoked his Washington license.

Walter Ringfield, Phoenix; license revoked, order 18-0168

Ringfield failed to report to the insurance commissioner within 30 days that Indiana suspended his insurance producer license. The insurance commissioner revoked his Washington license. 

Nicholas Barney, West Des Moines, Iowa; license revoked, order 18-0173

Barney failed to report an administrative action against him by California within 30 days, as required by state law. The insurance commissioner revoked his insurance producer license in Washington state. 

Allan Robert Kleckner, Minneapolis; license revoked, order 18-0204

Kleckner failed to report to the insurance commissioner within 30 days that South Dakota revoked his insurance producer license. The insurance commissioner revoked his Washington license.

Christopher Todd Horn, Clearwater, Fla.; license revoked, order 18-0205

Horn failed to report to the insurance commissioner within 30 days that the state of Florida revoked his insurance producer license. The insurance commissioner revoked his Washington license.

Ayesha Renee Cannon, Las Vegas; license revoked, order 18-0207

Cannon failed to report to the insurance commissioner within 30 days that the state of California revoked her insurance producer license. The insurance commissioner revoked her Washington license.

Foundershield, New York City; ordered to cease and desist, order 18-0179

Foundershield is a licensed insurance producer and was soliciting business in Washington state under a different name, AlphaRoot. Foundershield is ordered to cease and desist from using the name AlphaRoot in marketing or solicitations until it is licensed, as required by state law. 

Paul Manchester, Tampa, Fla.; fined $500, order 18-0201

Manchester failed to report administrative actions against him by the states of Virginia and New York within 30 days, as required by state law.  

Stephen Marc Tucker, Boca Raton, Fla.; fined $250, order 18-0202

Tucker failed to report an administrative action against him by the state of Louisiana within 30 days, as required by state law. T 

Whitmore Group LTD, Garden City, N.Y.; fined $250, order 18-0234

The agency failed to report an administrative action against it by the state of New York within 30 days, as required by state law.  

Multifunding Agency, Inc., Lighthouse Point, Fla.; fined $250, order 18-0235

The agency failed to report an administrative action against it by the state of New York within 30 days, as required by state law.  

Curtis Biersch, Los Angeles; fined $250, order 18-0169

Biersch failed to report an administrative action against him by the state of New York within 30 days, as required by state law.  

Adjusters

Nationwide Appraisals, LLC, Elgin, Ill.; ordered to cease and desist, order 18-0174

The insurance commissioner ordered Nationwide Appraisals to cease and desist from acting as an adjuster in Washington state without having an adjuster license. In the past two years, it has completed 751 assignments, generating approximately $15,000 in revenue. 

Continuing education providers

Asuris Northwest Health, Seattle; fined $400, order 18-0094

Asuris, a continuing education provider for insurance producers, failed to provide records to the insurance commissioner in a timely manner and was unable to locate some of the required documentation. Continuing education providers are required to document attendance and report it to the insurance commissioner. 

Puget Sound Marine Claims Association #17897, Seattle; fined $300, order 18-0177

The association offers continuing education for insurance producers. It did not adequately monitor attendance rosters and gave continuing education credit to producers whom they did not verify completed the courses.  

Kaplan Financial Education, La Crosse, Wisc.; fined $200, order 18-0216

Kaplan, a continuing education provider for insurance producers, submitted attendance rosters late 13 times in 12 months.  

About the Office 

Kreidler’s office oversees Washington’s insurance industry to ensure that companies, agents and brokers follow state laws. Since 2001, Kreidler has assessed more than $23 million in fines, which are deposited in the state's general fund to pay for other state services. 

The Office of the Insurance Commissioner publishes disciplinary orders against companies, agents and brokers. Consumers can also look up complaints against insurance companies. 

For an insurance question or complaint, contact Kreidler’s consumer advocates online or by phone at 800-562-6900.