TOM GALLAGHER IN THE MATTER OF: SARAH FERNANDEZ THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE TO: SARAH FERNANDEZ 6325 SW 147 Ct. Miami, FL 33193-2417 SARAH FERNANDEZ 540 E. 65" Street Hialeah, FL 33013 ADMINISTRATIVE COMPLAINT rPFILED «| AUG 22 2002 TREASURER AND INSURANCE C ISSIONEA CASE NO.: 61760-02-AG om ] r w mod my “3 ~~ exon [ae) - we led ie Foie > — Seat my _ ron) You, SARAH FERNANDEZ, are hereby notified that the Insurance Commissioner of the State of Florida has caused to be made an investigation of your activities while licensed as an insurance agent in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statues, you, SARAH FERNANDEZ, are currently licensed in this state as a resident life and health (2-18) and health (2-40) agent. Your license identification number is A083005. 2. At all times pertinent to the dates and occurrences referred to herein, you, SARAH FERNANDEZ, were licensed in this state as a resident insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, and the Florida Insurance Code, the Florida Department of Insurance has jurisdiction over your resident insurance licenses and appointments. 4. At all times material to the dates and occurrences herein, TRG was the acronym or pseudonym for a multitude of entities that engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements (hereafter, “MEWAs”) in Florida, including, but not limited to: (a) T.R.G. Marketing, LLC (b) T.R.G. Administration, LLC (c) The Redwood Group, LLC 5. Section 624.02, Florida Statutes, defines “Insurance” as: “Insurance” is a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies. Section 624.603, Florida Statutes, defines “Health Insurance” as: “Health Insurance” is insurance of human beings against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement or expense resulting from sickness, and every insurance appertaining thereto. 6. Section 624.03, Florida Statutes, defines “Insurer” as: “Insurer” includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity. 7. At all times material to the dates and occurrences herein, TRG did engage itself as an unauthorized insurer or MEWA in the State of Florida. 8. Section 624.09, Florida Statutes, defines “Authorized”, “Unauthorized insurer” as: (1) An “authorized” insurer is one duly authorized by a subsisting certificate of authority issued by the department to transact insurance in this state. (2) An “unauthorized” insurer is one not so authorized. 9. Section 624.437(1), Florida Statutes, defines “MEWA” as: [a] n employee welfare benefit plan or any other arrangement which is established or maintains for the purpose of offering or providing health insurance benefits or any other benefits, described in s. 624.33, [Florida Statutes,] other than life insurance benefits, to the employees of two or more employers, or to their beneficiaries. 10. All insurers and MEWAs are required by Florida Insurance Code to possess a Certificate of Authority from the Department in order to conduct business in this State. [Chapter 624, Florida Statutes, including Sections 624.401 or 624.437] lk. In order to transact insurance in the State of Florida, an insurer or MEWA must hold a subsisting certificate of authority issued by the Department of Insurance, pursuant to Sections 624.401 or 624.437, Florida Statues, and otherwise comply with other provisions of the Florida Insurance Code, including: (a) As to an Insurer: (i) Section 624.401, Florida Statutes — requirement of a Florida Department of Insurance issued certificate of authority in order to transact insurance. (ii.) Section 624.404, Florida Statutes — general eligibility requirements an insurer must satisfy in order to receive and maintain a certificate of authority. (iii.) Section 624.407, Florida Statutes — capital funds required for an insurer to receive a certificate of authority. (iv.) Section 624.408, Florida Statutes — surplus funds requirement an insurer must have in order to maintain a certificate of authority. (v.) Section 624.4095, Florida Statutes — financial ratios an insurer must meet in order to maintain a certificate of authority. (vi.) Section 624.411, Florida Statutes ~ insurer funds that must be deposited in trust for the protection of insureds and creditors in order for the insurer to receive and maintain a certificate of authority. (vii.) Section 624.424, Florida Statutes — requirement that an insurer must file annual and quarterly financial statements, and an annual actuarial opinion with the Department of Insurance in order to maintain a certificate of authority. (viii.) Section 627.062, Florida Statutes — requirement that an insurer must file its insurance premium rates for approval with the Department of Insurance. (ix.) Section 627.410, Florida Statutes ~ requirement that an insurer must file its insurance policy forms for approval with the Department of Insurance. (x.) Chapter 631, Florida Statutes - statutory and financial protection for insureds and creditors against the financial impairment or insolvency of an insurer authorized to transact insurance in Florida. (b) As to a Multiple Employer Welfare Arrangement (MEWA);: (i) Section 624.437, Florida Statutes — requirement of a Florida Department of Insurance issued certificate of authority in order for the MEWA to operate, be maintained or be established. (ii) Section 624.438, Florida Statutes — general eligibility requirements a MEWA must satisfy in order to receive and maintain a certificate of authority. (iii.) Section 624.439, Florida Statutes - MEWA application requirements including filing with the Department of Insurance: (1) A copy of its policies; (2) actuarial certifications as to its premium rates; (3) a copy of its fidelity bond; and (4) a copy of its excess insurance agreement. (iv.) Section 624.4392, Florida Statutes — requirement that the MEWA maintain certain minimum financial fund balances. (v.) Section 624.441, Florida Statutes — requirement that the MEWA deposit certain amounts of cash or securities with the Department of Insurance to assure the faithful performance of obligations. (vi.) Section 624.442, Florida Statutes — requirement that the MEWA must file annual and quarterly financial statements, and an actuarial certification with the Department of Insurance in order to maintain a certificate of authority. 12. On or about January 15, 2002, the Florida Department of Insurance, in the Matter of: T.R.G. Marketing, LLC, et al., Case No.: 43160-01-CO, stated: WHEREFORE, TRG, [et al.]... are hereby notified that the Department intends to enter a permanent Cease and Desist Order pursuant to Section 626.9581, Florida Statutes prohibiting the transaction by you and all related entities of insurance in the State of Florida, or relative to a subject of insurance resident, located, or to be performed in this state, without being licensed. 13. At no time material to the dates and occurrences herein, did TRG possess a Certificate of Authority from the Florida Department of Insurance to engage in the business of insurance as an insurer or to operate as a MEWA, in Florida. [Chapter 624, Florida Statutes, including Sections 624.401 or 624.437] 14. TRG is not subject to any exception to the licensure requirement of the Florida Insurance Code in order to lawfully engage in the business of insurance or to operate as a MEWA, in Florida. [Chapters 624 and 626, Florida Statutes, including Sections 624.402 and 626.901] 15. Section 624.10, Florida Statutes, defines “Transacting Insurance” as: “Transact” with respect to insurance including any of the following, in addition to other applicable provisions of the code: (1) Solicitation or inducement. (2) Preliminary negotiations. (3) Effectuation of a contract of insurance. (4) Transaction of matter subsequent to the effectuation of a contract of insurance and arising out of it. 16. At all times material to the dates and occurrences herein, TRG did transact insurance as an insurer or as a MEWA in the State of Florida. [Sections 624.10 and 624.437, Florida Statutes] 17. At all times material to the dates and occurrences herein, you, SARAH FERNANDEZ, did represent or aid TRG, which was an unauthorized insurer or MEWA transacting insurance in State of Florida. [Sections 626.901, 624.02, 624.03, 624.09, 624.10, 624.401, and 624.437, Florida Statutes] 18. Directly or indirectly aiding or representing an unauthorized insurer which has not satisfied the above-cited statutory safeguards poses a great risk of financial harm to the residents of Florida. 19. The particularized harm resulting from you, SARAH FERNANDEZ, aiding or abetting TRG in Florida is that insurance premium dollars may be misused and reserve and surplus funds may be unavailable such that the insurer may not be able to meet its contractual and statutory obligations toward medical providers and residents of the State of Florida. Furthermore, pursuant to Chapter 631, Florida Statutes, no state guarantee fund may be used to pay unpaid claims and creditors. This may cause Floridians irreparable financial injury. 20. The Florida insurance buying public must depend on the integrity, competence, honesty, and obedience to the law of an insurer, its agents, representatives, and administrators when applying for and purchasing insurance. Current and prospective Florida insurance consumers are faced with the possibility that their coverage with TRG, which was an unlicensed insurer or MEWA, will be: (1) cancelled; (2) the insurance coverage is non-existent; (3) insurance claims and medical providers will not be paid; and (4) insurance premium taxes will not be paid. These insureds, medical providers, and the State of Florida may incur serious losses, which may remain uncompensated due to the solicitation, sales, and administration of insurance by you, SARAH FERNANDEZ. COUNT I 21. All statements, claims, and allegations of Paragraph 1 through 20, inclusive, are incorporated herein by reference. 22. On or about February 20, 2001, you, SARAH FERNANDEZ, solicited and induced Manuel Montenegro of Coral Springs, Florida, to enter into a health benefit contract with TRG. Mr. Montenegro’s coverage with the TRG health benefit plan was from February 2001 through November 30, 2001. 23. Asadirect or indirect result of you, SARAH FERNANDEZ , representing or aiding an unauthorized insurer or MEWA, Mr. Montenegro has alleged that he has incurred some $7,555 worth of unpaid medical bills. At the present time, Mr. Montenegro is being sued in civil court for unpaid medical bills that were incurred during the time he was covered by the TRG health benefit plan. [South Broward Hospital District D/B/A Memorial Regional Hospital v. Manuel H. Montenegro, County Court in and for Broward County, Florida, Case No. COWE 02009571} 24, In addition, on or about May 23, 2002, you, SARAH FERNANDEZ, did provide the Department a voluntary affidavit wherein you admitted to writing 100, more or less, applications for clients who purchased the TRG health benefit plan. In a subsequent letter, dated May 31, 2002, to the Department, you, SARAH FERNANDEZ, provided the names of some of your TRG clients, including: a. b. j. Adela Migram — Hollywood, FL Rogelio de Leon — Miami, FL Manuel Martinez — Miami, FL Jose Asqueri — Miami, FL Sergio Abreu — Miami, FL Eliecer Machado — Miami, FL Fernando Moreno -- Sunny Island Beach, FL Ramiro A. Celaya — Miami, FL Zoilo Oropesa — Miami, FL Freddy Melero — Miami, FL 25. At the time of your [SARAH FERNANDEZ] solicitation, inducement, and representations concerning the aforementioned TRG health benefit plan to Mr. Montenegro and others, and all times thereafter, TRG, was unauthorized to transact insurance or MEWA business in Florida, and was not subject to any exception to the Florida Insurance Code licensure requirements. IT IS THEREFORE CHARGED that you, SARAH FERNANDEZ, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Insurance, which constitute grounds for the suspension or revocation of your licenses and appointments as a resident insurance agent: (a) No person shall transact in this State, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this code. [Section 624.11, Florida Statutes]; (6) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]; (c) Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment. [Section 626.611(8), Florida Statutes]; (d) Violation of any provision of this Code or any law applicable to the business of insurance in the course of dealing under the licensure or appointment. [Section 626.621(2), Florida Statutes]; (e) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X [redesignated as part IX] of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (fp) No person shall, from offices or by personnel or facilities located in this state... directly or indirectly act as an agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state. [Section 626.901(1), Florida Statutes]; (g) Ifan unauthorized insurer fails to pay in full or in part any claim or loss within the provisions of any insurance contract which is entered into in violation of this section, any person who knew or reasonably should have known that such contract was entered into in violation of this section and who solicited, negotiated, took application for, or effectuated such insurance contract is liable to the insured for the full amount of the claim or loss not paid. [Section 626.901(2), Florida Statutes] WHEREFORE, you, SARAH FERNANDEZ, are hereby notified that the Treasurer and Insurance Commissioner intends to enter an Order suspending or revoking your licenses and appointments as a nonresident insurance agent or to impose such penalties as may provided under the provisions of Sections 626.611, 626.621, 626.681, 626.691, and 626.901, Florida Statutes, under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint, and under the provisions of Rule Chapter 4-231, Florida Administrative Code. You are further notified that any order entered in this case revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code. NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department pursuant to sections 120.569 and 120.57, Florida Statutes, and Rule 28-107, Florida Administrative Code. “The proceeding request must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this notice. Completion of the attached Election of Proceeding form and/or a petition for administrative hearing will suffice as a written request. The request must be filed with the General Counsel as acting Agency Clerk, at the Florida Department of Insurance, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. The Department must receive your written response no later than 5:00 p.m. on the twenty-first day after your receipt of this notice. Mailing the response on the twenty-first day will not preserve your right to a hearing. YOUR FAILURE TO RESPOND IN WRITING WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THIS NOTICE WILL CONSTITUTE A WAIVER OF YOUR RIGHT TO REQUEST A PROCEEDING ON THE MATTERS ALLEGED HEREIN AND AN ORDER OF REVOCATION WILL BE ENTERED AGAINST YOU. If you request a proceeding, you must provide information that complies with the requirements of Rule 28-107.004, Florida Administrative Code. As noted above, completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: (a) The name and address of the party making the request, for purpose of service; (b) A statement that the party is requesting a hearing involving disputed issues of material fact, or a hearing not involving disputed issues of material fact; and (c) A reference to the notice, order to show cause, administrative complaint, or other communication that the party has received from the agency. Ifa hearing of any type is requested, you have the right to be represented by counsel or other qualified representative at your expense, to present evidence and argument, to call and cross-examine witnesses, and to compel the attendance of witnesses and the production of documents by subpoena. If a proceeding is requested and there is no dispute of material fact, the provisions of section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However, if you dispute material facts, which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State administrative law judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. Mediation of this matter pursuant to section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the Department of Insurance. DATED this 22> day of _ AUGUST , 2002 k fe pl. KENNEY SHIPLE J Deputy Insurance Commissioner CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy of the foregoing has been furnished to SARAH FERNANEZ by restricted U.S. Certified Mail this 22N® day of AUGUST , 2002. William W., Tharpe, Jr: Fla. Bar No.: 0312411 Florida Department of Insurance Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 (850) 413-4110 STATE OF FLORIDA DEPARTMENT OF INSURANCE IN THE MATTER OF: SARAH FERNANDEZ Case No: 61760-02- 4 | ELECTION OF PROCEEDING I have received and have read the Notice of the ADMINISTRATIVE COMPLAINT filed against me, including the Notice of Rights contained therein, and I understand my options. I am requesting disposition of this matter as indicated below. (Choose one) 1. [] I do not dispute any of the Department’s factual allegations and I do not desire a hearing. I understand that by waiving my right to a hearing, the Department may enter a final order that adopts the Administrative Complaint and imposes the sanctions sought, including revoking my licenses and appointments as may be appropriate. 2. I do not dispute any of the Department's factual allegations and I hereby elect a proceeding to be conducted in accordance with section 120.57(2), Florida Statutes. In this regard, I desire to (Choose one): [ ] Submit a written statement and documentary evidence in lieu of a hearing; or [ ] Personally attend a hearing conducted by a department hearing officer in Tallahassee; or { ] Attend that same hearing by way of a telephone conference call. 3. £] I do dispute one or more of the Department's factual allegations. I hereby request a hearing pursuant to section 120.57(1), Florida Statutes, to be held before the Division of Administrative Hearings. TO PRESERVE YOUR RIGHT TO A HEARING, YOU MUST FILE YOUR RESPONSE WITH THE DEPARTMENT OF INSURANCE WITHIN TWENTY-ONE (21) DAYS OF YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. THE RESPONSE MUST BE RECEIVED BY THE DEPARTMENT NO LATER THAN 5:00 P.M. ON THE TWENTY-FIRST DAY AFTER YOUR RECEIPT OF THE ADMINISTRATIVE COMPLAINT. The address for filing is: General Counsel as acting agency clerk, Florida Department of Insurance, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Signature Print Name Date: Address: Phone No.:

Docket for Case No: 02-003621PL