CHIEF FINANCIAL OFFICER

JEFF ATWATER

STATE Of FLORIDA

f FILED

'

MAR 31 2011

Docketed by ,,._.S =>--

IN THE MATTER OF:

LATRELLA FLUCAS-SMITH

                                 I

CASE NO.: 114567-11-AG

ADMINISTRATIVE COMPLAINT

TO: LATRELLA FLUCAS-SMTTH

5004 Southwest 104th Loop Oc,tla, Florida 34476-8911

YOU, LATRELLA FLUCAS-SMITH, license number E088323, are hereby notified that the Chief Financial Officer, as agency head of the Department of Financial Services ("the Department"), 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 Statutes, you, LATRELLA FLUCAS-SMTTH, are currently licensed in this state as a life and health including variable annuity (2-15) insurance agent, and have an insurance agency (21-05) license. You were licensed as an insurance agent by the Department on December 5, 2003.

2. At all times pertinent to the dates and occurrences referred to herein, you, LATRELLA FLUCAS-SMITH, were licensed in this state as a life and health including variable annuity insutance agent pursuant to Chapter 626, Florida Statutes.

   
   

3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your, LATRELLA FLUCAS-SMITH, insurance license(s) and appointments.

4. Section 624.40 I, Florida Statutes, provides that no person shall act as an insurer, and no insurer or its agents, attorneys, si1bscribers, or representatives shall directly or indirectly transact insurance in this state except as authorized by a subsisting Certificate of Authority issued to the insurer by the Florida Office oflnsurance Regulation(" the OFFICE").

5. Section 624.03, Florida Statutes, defines "insurer" to include every person engaged as indemnilor, surety, or contractor in. the business of entering into contracts of insurance or of annui ly,

6 Section 624.04, Florida Statutes, defines "person" and includes "company", "corporation", and "every legal entity" in the definition.

1. Section 624.09, Florida Statutes, provides that an "unauthorized insurer" is an

   
   

   insurer which is not duly authorized by a subsisting certificate of a ithority issued by the OFFICE to transact insurance in this state.

2. Section 624.10, Florida Statues, provides that transacting insurance includes any

   
   

   ol'the following:!) solicitation or inducement; 2) preliminary negotiations; 3) effectuation ofa contract of insurance; and 4) transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.

3. On August 26, 2009, the OFFICE issued an Immediate Final Order ("IFO") In the

   
   

   Matter of: Peck & Peck,.. Inc., Green Cross Managed Health .,Sxstem and Depawix Hg_alth

   
   

   Re8ources, Inc., Case No. 106257-09. The IFO contains the following findings;

   
   

   1. As a result of an OFFICE investigation it has been determined that PECK

      & PECK, GREEN CROSS and DEPAWIX are engaged in the unauthorized

      
      

      business of marketing, . ule, und distribution of health insurance. These companies market group and individual health i11surance plans to small businesses and individuals, both directly and through licensed and unlicensed insurance agents under the guise of selling an employment opportunity with DEPAWIX that provides medical benefits. Groups ,md Individuals who wish to participate in the GREEN CROSS program ure, in addition to any existing employment with a Florida business, required to be "dually employed" by DEPA WIX. [Exhibit BJ [Puragruph 10 of the IFO.J

      
      

   2. During its investigation, the OFFICE determined thut PECK & PECK, GREEN CROSS and DEPAWIX are marketing its Sirus Program to small and medium siz'c'd busino:sses desiring insurnnce coverage for its employees. As part of the Sirus Program, the business seeking insurance coverage is required to "sponsor" its employees into the Green Cross Managed Health System and puy un agreed upon monthly contribution on behalf of each employee. Additionally, each insured employee must pay u portion of the monthly premium directly to PECK & PECK for coverage. Buch insured employee "sponsored" by the small business is req\lired to enter into a dual employment arrangement whereby the employee continues working for his or her existing employer, but is required to become a part time employee with DEPAWIX. The employee must accept this part time employment with DEPA WIX as a tester or the GREEN CkOSS system of health care and agree to complete the duties as further describe in the OEPA WIX job description and employee implementation agreement to qualify for coverage. In return, the small businesses' employees will receive medical coverage for themselves and their covered dependents through his part-time employment with DEPA WIX. [Composite Exhibit C] [Paragraph 11 of the IFO.]

      
      

   3. GREEN CROSS also provides individual coverage through its Genesis Program in a similar manner that requires part-time employment with DEPAWIX. [Paragraph 12 of the IFO.]

      
      

   4. The work performed by the part-time employees is minimal at best and amounts to nothing more than studying the interaction between the insured and the patient advocate by requiring the insured to participate in annual health assessments, establishing u health management plan, agreeing to work with a patient advocate when utilizing health care and providing copies of medical bills

      to the patient advocate when treatment is complete. [Composite Exhibit CJ [Paragraph 16 of the IFO.l

   5. Regardless of the insureds placement us a part-time employee with DEPAWIX and the illusion of dual employment, the main goal of PECK & PECK, GREEN CROSS and DEPAWIX is to market and sell health insurance coverage. The product being promoted by GREEN CROSS is sold and marketed to Florida citizens as individual or grcmp health insurance. Florida citizens enter into this agreemenl as a way to obtain low cost health insurance for their employees, families or themselves. None are specifically looking for a part-time

      
      

      job. The dual employment scheme utilized by PECK & PECK, GREEN CROSS and DEPAWIX is a subterfuge to avoid regulation as a legitimate health insurance company in the State of Florida. [Paragraph 17 of the IFO.]

      
      

   6. Records maintained hy the Florida Department of Financial Services, Office of Consumer Services reflect that PECK & PECK, GREEN CROSS and DEPA WIX Health Resources have been actively recruiting agents and brokers. More importantly, these companies either directly or through insurance agents engaged in marketing activities to induce Florida consumers to purchase health insurance .... [Composite Exhibit E, agent/broker recruiting materials and June, 2009 GREEN CROSS underwriting guidelines, website home page and frequently asked questions] [Paragraph 18 of the IPO.J

      
      

   7. OFFICE records reveal that none of the above referenced entities [PECK & PECK, GREEN CROSS and DEPAWIX] currently hnld or have ever been granted a license or Certificate of Authority by the OFFICE authorizing the entity or individual to transact business as a health insurer, business or insurance business in any capacity, nor are the following entities registered as eligible surplus lines insurance carriers: Pl2CK & P8CK, GREEN CROSS and DEPAWIX. [Certificates of Non-Authority are Attached as Composite Exhibit G] [Paragraph 20 of the IFO.J

      
      

   8. Despite the absence of any Certificate of Authority or any other authorization to transact insurance business in Florida, PECK & PECK, GREEN CROSS and DEPA WIX are currently engaging in the unlicensed, unauthorized, transaction of insurance covering consumers located in Florida, .in violation of the Florida Code including, Sections 624.40 I and 626.901, Florida Statutes. [Paragraph 21 of the IFO.]

      
      

   9. In State v. Knott, 166 So, 835 (Pia. I 936), the Florida Supreme Court found that "the business of insurance so directly affects the public that i! is generally considered to he affected with a public interest, and, being so, is subject to regulation and control by the Legislature, which includes the power to license and regulate the agents through whom such business is conducted." Id. at 837. The court further states that "It would be difficult to find a business that more vitally affects the public interest...." Id. In Natelson v. Department of Insurance, 454 So. 2d 31 (Fla. l" DCA 1984), the court stated that the business of insurance is "greatly affected by the public trust." Id. at 31. [Paragraph 25 of the IFO.J

   
   

   (i) As a result of the foregoing, the OFFICE ("OIR") finds that the continued transaction of insurance without proper licensure by PECK & PECK, GREEN CROSS and DEPAWIX, and their agents and representative who solicit and/or enroll employers and employees into unauthorized health insurance plans in violation of the Florida Insurance Code, poses an immediate danger to the public welfare. [Paragraph 26 of the lFO.]

   
   

4. On October 7, 2009, the aforementioned IFO was appealed by PECK & PECK, INC. and DEPAWIX HEALTI-I RESOURCES, INC., to the District Court of Appeal First District, State ofFiorida. The Court dismissed the appeal on March 25, 2010.

COUNTI

11, The above general allegations numbered one (1) through ten (10) are hereby re- alleged and fully incorporated herein by reference.

12. On or about .June 30, 2009, you, LATRELLA FLUCAS-SMITH, directly or indirectly, solicited and induced Gayle Gardner Kinyon of Ocala, Florida, to purchase the unauthorized Depawix health insurance plan. The effective date of Ms. Kinyon's coverage with Depawix was to be July 15, 2009.

1. In taking advantage of your insurance agent fiduciary relationship with Ms.

   
   

   Kinyon, you, LATRELLA FLUCAS-SMITH, directly or indirectly, represented or aided Depawix, an unauthorized insurer, and you have otherwise demonstrated a lack of fitness or trustwo1thiness to engage in the business of insurance when you cm1sed Ms. Kinyon to purchase health insurance from an unauthorized insurer.

   IT IS THEREFORE CHARGED that, you, LATRELLA FLUCAS-SMITH, have violated or are accountable under one or more of the following provisions of the Florida Statutes or Florida Administrative Code, which constitute grounds for the suspension or revocation of your licenses as a Florida insurance agent:

   1. Section 626.901 (1), Florida Statutes, which provides that no person shall directly or indirectly represent or aid any insurer not then authorized to transact such insurance in this state in the solicitation, negotiation, procurement, or effectuation of insurance or annuity contracts with respect to subjects of insurance resident, located, or to be perfo,mcd in this state;

      
      

   2. Section 626.611(7), Florida Statutes, which provides that it is a violation for any applicant, agent, title agency, adjuster, customer representative, service representative, or managing general agent to demonstrate a lack of fitness or trustworthiness to engage in the business of insurance;

   3. Section 626,62 l(2), Florida Statutes, which provides that violating any provision of this Code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment is, in itself, a violation oflaw.

      CO{J.NT II

      
      

2. The above general allegations numbered one (I) through ten (IO) are hereby re- alleged and fully incorporated herein by reference.

3. On or about July 22, 2009, pursuant to the Department's investigation of this

   
   

   matter, a list was obtained from the .Jacksonville, Florida office of Depawil\'. which evidences that you, LATRELLA FLUCAS-SMITH, directly or indirectly, solicited and induced at least one additional Florida consumer to purchase the Depawi" health insurance plan.

4. In taking advantage of your insurance agent fiduciary relationship with these Florida consumers, you, LATRELLA FLUCAS-SMITH, directly or indirectly, represented or aided Depawix, an unauthorized insurer, and you, LA'l'RELLA FLUCAS-SMITH, have therefore demonstrated a lack of fitness or trustworthiness to engage in the business of insurance.

   IT IS Tl-IEREFORE CHARGED that, you, LATRELLA FLUCAS-SMITH, have violated or are accountable under one or more of the following provisions of the Florida Statutes or Florida Administrative Code, which constitute grounds for the suspension or revocation of your licenses as a Florida insurance a.gent:

   
   

   1. Section 626.901(1), Florida Statutes, which provides that no person shall directly or indirectly represent or aid any insurer not then authorized to transact such insurance in this state in the solicitation, negotiation, procurement, or effoctuati011 of insurance or annuity contracts with respect to subjects of insurance resident, located, or to be performed in this state;

   2. Section 626.901(2), Florida Statutes, which provides that if an 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 ofthc claim or loss not paid;

   3. Section 626.611(7), Florida Statutes, which provides that it is a violation for any applicant, agent, title agency, adjuster, customer representative, service representative, or managing general agent to demonstrate a lack of fitness or trustworthiness to engage in !he business of insurance;

   4. Section 626,621(2), Florida Statutes, which provides that violating any provision of this Code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment is, in itself, a violation of law;

   5. Section 626.621(6), Florida Statutes, provides that it is a violation for the licensee or appointee to engage in unfair or deceptive practices, as prohibited under part IX of Chapter 626, Florida Statutes, or to have otherwise shown himself or herself to be a source of injury or loss to the public.

WHEREFORE, yo ,, LATRELLA FLUCAS-SMITH, are hereby notified that the Chief Financial Officer, through his dcsignee, intends to enter an Order suspendh1g or revoking your

7

licenses and appointments as an insurance agent or to impose such penalties as may be provided under the provisions of Sections 626,611, 626,621, 626.641, 626,651, 626.681, 626.691, 626.692, Florida Statutes, Rule Chapter 69B-231 of the l/Jorida Administrative Code, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. You are further notified that any order entered in this ca. e revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and cligihility 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 of Financial Services ("Department") pursuant to Sections 120.569 and 120,57, Florida Statutes, and Rule 28- l 06, Florida Administrative Code. .The proceeding reque t must be in writing, signed by you, and must be filed with the Department within twenty-one (21) days of your receipt of this 11otice. Completion of the attached Election of Proceeding fi.)rm and/or a petition for administnitive hearing will suffice as a written request. The request must be filed with Julie Jones, Department Agency Clerk, at the Florida Department or Financial Services, 612 Larson Building, 200 Rast Gaines Street, Tallahassee, Florida 32399-0333. Your written response must

be r.i:ceived by the Department 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 OJ<' 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 SUSPENSION OR REVOCATION WILL BE ENTERED AGAINST YOU,

If you request a proceeding, you must provide information that complies with the requirements of Rule 28-106.2015, Florida Administrative Code. Fm purposes of requesting a hearing in this matter, you are the "Respondent." Completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain:

1. Your name, address, and telephone number, and facsimile number (if any).

   
   

2. The name, address, telephone number, facsimile number of your attorney or qualified representative (if any) upon whom service of pleadings and other papers shall be made.

3. A statement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate.

4. A statement ofwhe11 you received notice orthc administrative complaint.

(c) A statement including the file number to the administrative complaint.

If a 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 document 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 foci 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

()

Stattites. These proceedings arc 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 pwcedure outlined with regard to your response to this notice may result in the request being denied. A II prior oral communication or correspondence in this matter shall be considered frecform 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. .,.- /- -

DATED and SIGNED thi /QJ da 1f , 2011.

au! Whitfield, Jr Deputy Chief Fin

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING have been furnished to: LATRELLA

/J_u -

FLUCAS-SMITH, at the following addresses: 5004 Southwest 104th Loop, Ocala, Florida 34476, by restricted U.S. Certified Mail this _lj     day of M,A,,,.C,'1, 2011.

Doug )lan. Esquire Florida Bar Number: 0011121 Division of Legal Services 200 East Gaines Street

Tallahassee, Florida 32399-0333

(850) 413-4114

Fax (850) 487-4907

Attorney fr1r Department

' '

STATE OF FLORIDA DEPARTMENT OF FINANCIAL SERVICES

DJVISTON OF LEGAL SERVICES

IN THE MATTER OF

LATRELLA FLUCAS-SMITH CASE NO.: l 14567-11-AG

ELECTION OF PROCEEDING

I have received ur1d have re .d the: Administrative Complaint filed by the Florida Depmtmcnt of Finnncial Services

)

(' 1 Dcparrm i::n1.'1 against me, including the Notice of Rigtlrs contained the1·eitl, and I understand t'r'ly options. 1 am requesU11g

disposition ofthi< matter as indicated heJnw. (CHOOSE ONE)

I. [ l

2.

3. I. J

I QlLJlO,\ dispute any of the Department's factual allegations and I do not oesire a hearing. I un<:lerstanll that by waiving my right to a hearin , the Depa1tment may enter a final ord r that ndop( the Administrative Complaint and li·11p\i;-;c.:, tf11;; :mrn.:lion.:'I soLiglH, ii1i,.iudit1g su.spi.;nJiug t'ii• fi;;voking n1y 1ii.;t11:-;t:1"o !:l.nd 1µpoi11Lmcni:s !iS muy Lt approp1·iate,

l d.9. not dispute any of the Dcpa1tment's l' lctlial allegations arid I hereby elect a proceeding lo be conducted in accordance with S ction 120.57(2), Flt">rid l Slalutcs. In thii:: reg \rd, I desire to (CHOOSF. ONE):

[ J Submit a written slatcmcnt and documentary evidence in lieu of a heating; or

[ 'I Pe1·sonally attend a hca!'ing condutted by a department ht::11,ring officer in Tailahast.cr;; or

[ J Attend thM- lam< hearing by way of ,nelephonc conference call.

I do disput one or more of th Dcpartmcnt1s factual nllegat.ions. I hereby t·equc:st u hearing pur a1at1t 1.0 Section 120.57( I), l'lorida Statutes, to bo held before the Division of Administrative Hearings. I have attached to this election form the inforrn!ltion required by Rule 28-106.2015, Flol'ida Administrative Code, a., specified in ubµaragraph (c) of the Notice of Rights. Spedficallyi I have identified the disputed issues of material fa.ct.

TO PRESERVE YOUR RIGHT TO A IIEARING, YOU MUST FILE YOUR RESPONSE WITH THE DEPARTMENT OF FINANCIAL SERVICES WITHIN TWP,NTY-ONE (21) DAYS ()F YOUR RECEll'T or THE AMENDED ADMINISTRATIVE COMPLAINT. THE RESPONSE MUST BE RJ::CEIVEQ BY THE DEf'ARTMlsNT ND LATER Tl-JAN 1:00 P.M. ON TII[' TWENTY-FIRST DAY AFTER YOUR RECEIPT OF THE AMENDED ADMINISTRATIVI:\ COMPLAINT,

The address for filing is: General Counsel acting tlS. Ageru.:y Clerk, Florida Department of Financial Services, 612 Larson

Iluilding, 200 East Gaines Street, Tallahassee, Plorld,> 32399"0333.

Print No.me

•<.

Dale:   _                                             

Addre!:ls:                _                                                 

Date Administralive

C,lmplaint Received:                                    ..-·--

If' you ar i' presented by an attorn y or ,iualil'ied

1' prt!'1 ntntive, please attach to tMs election forrn hi,i

or her nn1i1e, atl"r(!!!S, telephone 11nd fax number!'!

Phone No                                                                                             

Fax No.. ------------- ·-

Docket for Case No: 11-002529PL