DA-/OF3 PL THE TREASURER OF THE STATE OF FLOBIDAY, |: 39 F I L E D DEPARTMENT OF INSURANCE ToM GALLAGHER nes FEB 21 2002 ° Treasurer and Insurance Com er IN THE MATTER OF: Dooketed by: THOMAS JEROME DAUGHERTY CASE NO.: 60347-02-AG / ADMINISTRATIVE COMPLAINT TO: THOMAS JEROME DAUGHERTY 30 Ridgeway Avenue, Suite 5 Cocoa, Florida 32922-7753 THOMAS JEROME DAUGHERTY 815 New Hampton Way Merritt Island, Florida 32953-3222 You, THOMAS JEROME DAUGHERTY, 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, THOMAS JEROME DAUGHERTY, are currently licensed in this state as a life (0216) agent, a life and health (0218) agent, a health (0240) agent, and a legal expense (0256) agent. Your license identification number is # A061836. 2. At all times pertinent to the dates and occurrences referred to herein, you, THOMAS JEROME DAUGHERTY, were licensed in this state as an insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, and the Florida Insurance Code, the Florida Department of Insurance has jurisdiction over your insurance licenses and appointments. 4. Section 624.02, Florida Statutes, defines “Insurance” as 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” 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. 5. Section 624.03, Florida Statutes, defines “Insurer” every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity. 6. Section 624.09, Florida Statutes, defines “Authorized” and “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. 7. Section 624.437(1), Florida Statutes, defines Multiple Employer Welfare Arrangement (hereinafter referred to as “MEWA”) as: [a]n employee welfare benefit plan or any other arrangement which is established or maintained 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. 8. 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] 9. 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. ii.) 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) AstoaMEWA: (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. Gi.) 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. 10. 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. COUNT I 11. All statements, claims, and allegations of Paragraph 1 through 10, inclusive, are incorporated herein by reference. 12. At all times material to the dates and occurrences herein, T.R.G. was the acronym or pseudonym for entities that engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements (hereafter, “MEWAs”) in Florida, including: (a) T.R.G.; (b) T.R.G. Marketing, LLC; (c) T.R.G. Administration, LLC; (d) The Redwood Group, Inc. 13. At all times material to the dates and occurrences herein, T.R.G., or one or more of the entities for which it was the acronym or pseudonym, did provide insurance to Florida consumers in the form of a health benefit contract. 14. At all times material to the dates and occurrences herein, T.R.G., or one or more of the entities for which it was the acronym or pseudonym, did engage themselves as Insurers or MEWAs in the State of Florida. 15. At no time material to the dates and occurrences herein, did T.R.G., or one or more of the entities for which it was the acronym or pseudonym, possess a Certificate of Authority from the Florida Department of Insurance to engage in the business of insurance, or to operate as a MEWA, in Florida. [Chapter 624, Florida Statutes, including Sections 624.401 or 624.437] 16. Neither T.R.G., nor one or more of the entities for which it was the acronym or pseudonym, were subject to any exception to the licensure requirements 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] 17. At all times material to the dates and occurrences herein, T.R.G., or one or more of the entities for which it was the acronym or pseudonym, did transact insurance in the State of Florida. [Section 624.10, Florida Statutes] 18. In 2000 and 2001, you, THOMAS JEROME DAUGHERTY, by and through offices, personnel, and facilities located in Florida, or through one or more licensed insurance agents, including Alvin Gipson (A298156) of Melbourne Florida, with whom you have contracted and from whose sales you have profited, have: (a). solicited, negotiated, procured, or effectuated insurance contracts; (b). disseminated information as to coverage and rates; (c). forwarded applications; (d). delivered policies or contracts; (e). collected or forwarded premiums; or (f). otherwise represented and assisted in the placement of consumers in unauthorized health insurance plans through “T.R.G.”, “T.R.G. Marketing, LLC”, T.R.G. Administration, LLC”, and/or “The Redwood Group, Inc.”, none of which is or has ever been authorized or licensed as an entity to engage in the business of insurance in Florida. Florida consumers who were placed in unauthorized insurance plans with one or more of these entities included: Velocity, Inc., located in Sebastian, Florida; Travel Lynx, Inc., located in Cocoa, Florida; Access Photographics, Inc., located in Cocoa, Florida; Clay Stephens Interiors, Inc., located in Cocoa Beach, Florida; Total Communications Services Inc., located in Melbourne, Florida; and Gordon Plumbing located in Rockledge, Florida. All or some of the unauthorized insurer/MEWA entities have also defaulted on claims, leaving consumers and health care providers with unpaid claims. Further, with little or no advanced notice to Florida consumers, the entities abruptly cancelled all policies then in force, leaving consumers effectively uninsured. In contrast, if a licensed insurer or MEWA desired to cease Florida operations, any such cessation of operation or withdrawal from Florida would have been subject to Department supervision and control to maximize protections to Florida consumers. 19, At all times material to the dates and occurrences herein, you, THOMAS JEROME DAUGHERTY, individually or through one or more licensed insurance agents, did represent or aid T.R.G., by way of one or more of the entities for which it was the acronym or pseudonym, an unauthorized insurer or MEWA, in transacting insurance in the State of Florida. 20. Aiding or representing an unauthorized insurer or MEWA which has not satisfied the above-cited statutory safeguards poses a great risk of financial harm to Florida consumers. 21. The particularized harm resulting from you, THOMAS JEROME DAUGHERTY aiding or representing T.R.G., or one or more of the entities for which it was an acronym or pseudonym, and their activities 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, including the Florida Life and Health Insurance Guaranty Association (FLAHIGA), may be used to pay unpaid claims and creditors. This may cause Floridians irreparable financial injury. 22. 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 T.R.G., or any of the entities for which it was the acronym or pseudonym, 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, THOMAS JEROME DAUGHERTY. IT IS THEREFORE CHARGED that you, THOMAS JEROME DAUGHERTY, have violated or are accountable under one or more of 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 an 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, including one or more of the following: Sections 626.611(7), 626.61 1(8), 626.611(9), 626.621(2), 626.621(6), 626.901(1), 626.901(2), and 626.9541(1)(a)1., Florida Statutes. [Section 624.11, Florida Statutes]; (b) | 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) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (e) 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, including one or more of the following: Sections 624.11, 626.611(7), 626.611(8), 626.611(9), 626.621(6), 626.901(1), 626.901(2), and 626.9541(1)(a)1., [Section 626.621(2), Florida Statutes]; (63) 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 to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (g) | 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]. (h) 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 of the claim or loss not paid. [Section 626.901(2), Florida Statutes]. (i) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9541(1)(a)1., Florida Statutes]. COUNT II 23. All statements, claims, and allegations of Paragraph 1 through 22, inclusive, are incorporated herein by reference. 24. In or about December 2001, you, THOMAS JEROME DAUGHERTY, by and through offices, personnel, and facilities located in Florida, directly or through one or more licensed insurance agents, including Alvin Gipson, with whom you have contracted and from whose sales you have profited, have: (a). solicited, negotiated, procured, or effectuated insurance contracts; (b). disseminated information as to coverage and rates; (c). forwarded applications; (d). delivered policies or contracts; (e). collected or forwarded premiums; or (f). otherwise represented and assisted in the attempted placement of consumers into an unauthorized health insurance plan through one or more entities known as “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)”, none of which is or has ever been authorized or licensed in Florida to engage in the business of insurance. Florida consumers who were placed in unauthorized insurance plans with one or more of these entities included: Access Photographics, Inc., located in Cocoa, Florida; Clay Stephens Interiors, Inc., located in Cocoa = SS et Sesame Beach, Florida; Total Communications Services Inc., located in Melbourne, F lorida; Gordon Plumbing located in Rockledge, Florida; Velocity Inc. located in Sebastian, F lorida; and Travel Lynx Inc., located in Cocoa, Florida. The persons and small employer groups involved and affected by the actions of you, THOMAS JEROME DAUGHERTY, consisted of or included persons and small employer groups that, in some instances, may have been previously enrolled in “T.R.G.” by you and/or the insurance agents with whom you associated and from whose sales you profited. 25. Atall times material to the dates and occurrences herein, “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” were entities that engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements (hereafter, “MEWAs’) in Florida. 26. At all time material to the dates and occurrences “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)”, did attempt to provide insurance to Florida consumers in the form of a health benefit contract. 27. Atall times material to the dates and occurrences herein “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” engaged themselves as Insurers or MEWAs in the State of Florida. 28. At no time material to the dates and occurrences herein did “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” possess a Certificate of Authority from the Florida Department of Insurance to engage in the business of insurance, or to operate as a MEWA, in Florida. [Chapter 624, Florida Statutes, including Sections 624.401 or 624.437] 29. Neither “Benefits of America (BOA)”, “EOSHealth, LLC”, nor “Consumer Health Education Association (CHEA)” were subject to any exception to the licensure requirements 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] 30. Atall times material to the dates and occurrences herein “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” did transact insurance in the State of Florida. [Section 624.10, Florida Statutes] 31. At all times material to the dates and occurrences herein, you, THOMAS JEROME DAUGHERTY, individually or through other licensed insurance agents, did represent oraid “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)”, in transacting insurance in the State of Florida. [Sections 626.901, 624.02, 624.03, 624.09, 624.10, 624.401, and 624.437, Florida Statutes] 32. Aiding or representing an unauthorized insurer or MEWA which has not satisfied the above-cited statutory safeguards poses a great risk of financial harm to Florida consumers. 33, The particularized harm resulting from you, THOMAS JEROME DAUGHERTY, aiding or representing as “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” in their activities 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, including the Florida Life and Health Insurance Guaranty Association (FLAHIGA), may be used to pay unpaid claims and creditors. This may cause Floridians irreparable financial injury. 34. 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 “Benefits of America (BOA)”, “EOSHealth, LLC”, and “Consumer Health Education Association (CHEA)” 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, THOMAS JEROME DAUGHERTY. IT IS THEREFORE CHARGED that you, have violated or are accountable under one or more of 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 an 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, including one or more of the following: Sections 626.611(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), 626.901(1), 626.901(2), and 626.9541(1)(a)1., Florida Statutes. [Section 624.11, Florida Statutes]; (b) 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) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (e) 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, including one or more of the following: Sections 624.11, 626.61 1(7), 626.611(8), 626.611(9), 626.621(6), 626.901(1), 626.901(2), and 626.9541(1)(a)1., [Section 626.621(2), Florida Statutes]; (63) 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 to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (g) 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]. (h) 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 of the claim or loss not paid. [Section 626.901(2), Florida Statutes]. (i) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9541(1)(a)1., Florida Statutes]. COUNT III 35. All statements, claims, and allegations of Paragraph 1 through 35, inclusive, are incorporated herein by reference. 36. In or about December 2001, you, THOMAS JEROME DAUGHERTY, by and through offices, personnel, and facilities located in Florida, directly or through one or more licensed insurance agents with whom you have contracted and from whose sales you have profited, have: (a). solicited, negotiated, procured, or effectuated insurance contracts; (b). disseminated information as to coverage and rates; (c). forwarded applications; (d). delivered policies or contracts; (e). collected or forwarded premiums; or (f). otherwise represented and assisted in the attempted placement of consumers into an unauthorized health insurance plan through one of more entities known as BAFTAL; American Benefit Plans; National Association of Working Americans Voluntary Employees’ Beneficiary Association; and United Employers Voluntary Employee Benefit Association, none of which is not nor has ever been authorized or licensed in Florida to engage in the business of insurance. Florida consumers who were placed in unauthorized insurance plans with one or more of these entities included: Access Photographics, Inc., located in Cocoa, Florida; Clay Stephens Interiors, Inc., located in Cocoa Beach, Florida; Total Communications Services Inc., located in Melbourne, F lorida; and Gordon Plumbing located in Rockledge, Florida. The persons and small employer groups involved and affected by the actions of you, THOMAS JEROME DAUGHERTY, consisted of or included persons and small employer groups that, in some instances, may have been previously enrolled in “T.R.G.” and/or “Benefits of America” by you and/or the insurance agents with whom you associated and from whose sales you profited. 37. Atall times material to the dates and occurrences herein, BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, were entities that engaged in the business of insurance, or operated as a Multiple Employer Welfare Arrangements (hereafter, “MEWAs”) in Florida. 38. At all time material to the dates and occurrences herein BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, did attempt to provide insurance to Florida consumers in the form of a health benefit contract. 39. At all times material to the dates and occurrences herein, BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, were engaged as an Insurers or MEWAs in the State of Florida. 40. Atno time material to the dates and occurrences herein did BAF TAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, possess a Certificate of Authority from the Florida Department of Insurance to engage in the business of insurance, or to operate as a MEWA, in Florida. [Chapter 624, Florida Statutes, including Sections 624.401 or 624.437] 41. | Neither BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, nor United Employers Voluntary Employee Benefit Association, were subject to any exception to the licensure requirements 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] . 42. Atall times material to the dates and occurrences herein BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, did transact insurance in the State of Florida. [Section 624.10, Florida Statutes] 43. At all times material to the dates and occurrences herein, you, THOMAS JEROME DAUGHERTY, individually or through other licensed insurance agents, did represent or aid BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, or United Employers Voluntary Employee Benefit Association, in transacting insurance in the State of Florida. [Sections 626.901, 624.02, 624.03, 624.09, 624.10, 624.401, and 624.437, Florida Statutes] 44. Aiding or representing an unauthorized insurer or MEWA which has not satisfied the above-cited statutory safeguards poses a great risk of financial harm to the residents of Florida. 45. The particularized harm resulting from you, THOMAS JEROME DAUGHERTY aiding or representing BAFTAL, American Benefit Plans, National Association of Working Americans Voluntary Employees’ Beneficiary Association, or United Employers Voluntary Employee Benefit Association, in its activities 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, including the Florida Life and Health Insurance Guaranty Association (FLAHIGA), may be used to pay unpaid claims and creditors. This may cause Floridians irreparable financial injury. 46. 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 BAFTAL, American Benefit Plans; National Association of Working Americans Voluntary Employees’ Beneficiary Association, and United Employers Voluntary Employee Benefit Association, 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, THOMAS JEROME DAUGHERTY. IT IS THEREFORE CHARGED that you, have violated or are accountable under one or more of 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 an 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, including one or more of the following: Sections 626.611(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), and 626.901(1), Florida Statutes. [Section 624.11, Florida Statutes]; (b) | 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) Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]; (e) 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, including one or more of the following: Sections 624.11, 626.61 1(7), 626.611(8), 626.611(9), 626.621(6), and 626.901(1), Florida Statutes. [Section 626.621(2), Florida Statutes]; # 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 to be a source of injury or loss to the public. [Section 626.621(6), Florida Statutes]; (g) 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). (h) 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 of the claim or loss not paid. [Section 626.901(2), Florida Statutes]. (i) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9541(1)(a)1., Florida Statutes]. WHEREFORE, you, THOMAS JEROME DAUGHERTY, are hereby notified that the Treasurer and Insurance Commissioner intends to enter an Order suspending or revoking your licenses and appointments as an insurance agent, directing that you cease and desist from representing or aiding any unauthorized insurers or MEWAs, holding you liable for any unpaid claims, and to impose such penalties as may provided under the provisions of Sections 626.611, 626.621, 626.681, 626.691, 626.901, 626.910, and 626.9521, 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 20 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. Your written response must be received 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 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 21 (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. 22 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 2/£ day of bts , 2002 MWD Wap Fr / 0 if ta Ve KENNEY SHIPLEY Deputy Insurance Commissioner CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy of the foregoing has been furnished to THOMAS JEROME DAUGHERTY, 30 Ridgeway Avenue, Suite 5, Cocoa, Florida 32922; and THOMAS JEROME DAUGHERTY, 815 New Hampton Way,Merritt Island, Florida 32953-3222 by US. Certified Mail this Al L day of 4 ae fe , 2002. Florida Department of Insurance Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 (850) 413-4188 23

Docket for Case No: 02-001093PL