DEPARTMENT OF FINANCIAL SERVICES FILED Tom Gallagher \ , JAN 32 2005 Chief Financial Officer IN THE MATTER OF: Docietes we CASE NO.: 61520-03-AG / > O56 PL DAVID BARSKY ADMINISTRATIVE COMPLAINT TO: DAVID BARSKY DA-CAR Insurance Agency P.O. Box 540361 Lake Worth, FL 33454-0361 DAVID BARSKY 10303 N Andover Coach Lane #B1 Lake Worth, FL 33467-8161 glzitid 61 8340 You, DAVID BARSKY, license I.D. #A014992, are hereby notified that the Chief Financial Officer 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 Statutes, you, DAVID BARSKY, are currently licensed in this state as a Health agent (2-40), Life agent (2-16), Life and Health agent (2-18), Life Including Variable Annuity & Health agent (2-15), and Life Including Variable Annuity agent (2-14). 2. At all times pertinent to the dates and occurrences referenced herein, you, DAVID BARSKY, were licensed in this state as an insurance agent. 3. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your 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 which engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements (hereinafter “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. An unauthorized insurer is one not duly authorized by a subsisting certificate of authority issued by the Department of Financial Services (hereinafter referred to as the “Department”) to transact business in the State of Florida. [Section 624.09, Florida Statutes] 6. A Multiple Employee Welfare Arrangement, or “MEWA” is an 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. [Section 624.437, Florida Statutes] 7. 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 Financial Services, pursuant to Sections 624.401 or 624.437, Florida Statutes, 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 Financial Services issued certificate of authority in order to transact insurance. ‘ ii. Section 624.404, Florida Statues: general eligibility requirements an insurer must satisfy in order to receive and maintain a certificate of authority. ili. 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 which 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 Financial Services 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 Financial Services. ix. Section 627.410, Florida Statutes: requirement that an insurer must file its policy forms for approval with the Department of Financial Services. 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 in Florida. b. As to Multiple Employer Welfare Arrangements (“MEWAs”): xi. Section 624.437, Florida Statutes: requirement of a Florida Department of Financial Services issued certificate of authority in order for the MEWA to operate, be maintained, or established. xii. Section 624.438, Florida Statues: general eligibility requirements a MEWA must satisfy in order to receive and maintain a certificate of authority. xiii. Section 624.439, Florida Statutes: MEWA application requirements including filing with the Department of Financial Services (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. xiv, Section 624.4392, Florida Statutes: requirement that the MEWA maintain certain minimum fund balances. xv. Section 624.441, Florida Statutes: requirement that the MEWA deposit certain amounts of cash or securities with the Department of Financial Services to assure the faithful performance of obligations. XV1. Section 624.442, Florida Statutes: requirement that the MEWA must file annual and quarterly financial statements, and an actuarial certification with the Department of Financial Services in order to maintain a certificate of authority. 8. At no time relevant hereto did TRG possess a certificate of authority from the Florida Department of Financial Services to engage in the business of insurance as an insurer or to operate as a MEWA in the State of Florida. 9. At no time relevant to the dates and occurrences herein was TRG 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. 10. Atall times material to the dates and occurrences herein, TRG did engage itself as an unauthorized insurer, or “MEWA”, in the State of Florida. 11. Onor about January 15, 2002, the Florida Department of Insurance, in the Matter of TRG 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.” 12. At all times relevant hereto, EOSHealth or “CHEA” (also known as Consumer Health Education Association) was the acronym for an entity or entities which engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements (MEWAs) in Florida. 13. At all times relevant hereto, “UEVEBA” (also known as United Vendors of America Voluntary Employees Beneficiary Association and United Employers Voluntary Employee Benefit Association) was the acronym for an entity or entities which engaged in the business of insurance, or operated as one or more Multiple Employer Welfare Arrangements. 14. At no time relevant hereto did “EOSHealth”, “Consumer Health Education Association” (CHEA), or “United Vendors of America Voluntary Beneficiary Association” (UEVEBA) possess a certificate of authority from the Florida Department of Financial Services to engage in the business of insurance or to operate as a MEWA in Florida. 15. At no time relevant to the dates and occurrences herein were “EOSHealth”, “Consumer Health Education Association” (CHEA), or “UEVEBA” 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. 16. At all times material to the dates and occurrences herein, “EOSHealth, LLC”, “Consumer Health Education Association” (CHEA), and “United Vendors of America Voluntary Employees Beneficiary Association”, or “United Employers Voluntary Employee Benefit Association” (UEVEBA) were engaged as unauthorized insurers, or “MEWAs”, in the state of Florida. 17. 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. COUNT] 18. The above general allegations are hereby realleged and fully incorporated herein by reference. 19. On or about July 13th, 2001, you, DAVID BARSKY, met with consumer Kathy Wendt of West Palm Beach for the purpose of soliciting her to purchase a health insurance policy for herself and her family. At that time you, DAVID BARSKY, did in fact solicit and induce Mrs. Wendt to enter into a health benefit plan through TRG, which Mrs. Wendt believed was to provide health and dental insurance for herself, her husband, and their son. 20. | Mrs. Wendt paid to you, DAVID BARSKY, an initial premium of $492.00, in addition to also authorizing subsequent monthly premium payment deductions to be withdrawn by TRG directly from her family’s bank account. 21. During the months of October, November, and December 2001, Mrs. Wendt and her family had occasion to incur medical and dental expenses which, according to the terms of the TRG health benefit plan they had purchased through you, DAVID BARSKY, should have been covered benefits. 22. On or about October 23rd, 2001, Mrs. Wendt submitted to TRG a dental claim for services performed on or about September 14th, 2001, in the amount of $600. This claim for payment of benefits was ignored by TRG. 23. Also during this time, Mrs. Wendt consulted with an orthodontist to discuss orthodontic treatment for her son, who needed braces. The orthodontist’s office contacted TRG/Healthsmart, and was informed that orthodontic treatment was a covered benefit under the Wendt’s policy, and that TRG would pay $1,000 per calendar year for braces for Mrs. Wendt’s son. 24. Based on TRG’s promise to pay, Mrs. Wendt scheduled for her son to begin orthodontic treatment during November, 2001. Two days before her son was scheduled to begin treatment, Mrs. Wendt discovered that TRG would in fact not pay the benefits for the treatment as promised. 25. Although Mrs. Wendt made the decision at that time to still continue with the treatment at her own expense, it was a substantial expense she might not have otherwise scheduled had it not been for TRG’s promise to honor their benefits of $1,000 annually according to the terms of her policy. ‘ 26. On or about December 28th, 2001, Mrs. Wendt wrote to TRG and included copies of approximately $1,800 of unpaid claims for payment of benefits. Although that letter was delivered and signed for, her claims were ignored. Mrs. Wendt was unaware that the benefit plan you, DAVID BARSKY, sold to her was through an unauthorized entity. 27. During this time, you, DAVID BARSKY, discussed with Mrs. Wendt a “rollover” option for continuing health coverage for herself and her family. On or about December 27th, 2001, you, DAVID BARSKY, wrote Mrs. Wendt with instructions to complete “rollover” forms for continued health benefit coverage and return them expeditiously. The accompanying paperwork regarding this “rollover” further emphasized that time was “of the essence”, and that Mrs. Wendt needed to complete and return the paperwork to BAFTAL/QUICK QUOTE INSURANCE BROKERS by January Sth, 2002, with “no exceptions”. 28. The paperwork accompanying the “rollover” forms stated that the Clarendon Insurance Company would be the insurance company providing benefits under this plan, which was available through a third party entity, Bertany Association for Travel and Leisure (hereinafter “BAFTAL”). The paperwork further stated that Clarendon was an “A” rated admitted carrier in the State of Florida, and that there would be a large network of physicians and hospitals from which to choose as providers. 29. In fact, Clarendon Insurance Company was in no way affiliated with this health benefit plan, which you, DAVID BARSKY, encouraged Mrs. Wendt to participate in through BAFTAL/QUICK QUOTE. 30. The entity behind the “rollover” benefit plan you, DAVID BARSKY, recommended to your client, Mrs. Wendt, was instead American Benefit Plan, an entity not duly authorized by a subsisting certificate of authority through the Florida Department of Financial Services. 31. Upon your, DAVID BARSKY’s, instruction, Mrs. Wendt completed the BAFTAL paperwork and issued a check in the amount of $1,187.52 for the initial premium payment for this plan. 32. On or about January 14th, 2002, Mrs. Wendt issued another check in the amount of $1,187.42, payable to BAFTAL . This check was subsequently returned to her, voided, with a letter stating that it had been voided due to clerical error. 33. In or about January 19th, 2002, Mrs. Wendt received another letter from you, DAVID BARSKY, indicating that she had the option of either canceling or discontinuing her coverage through BAFTAL. To cancel her coverage, you, DAVID BARSKY, indicated that Mrs. Wendt would have to write a letter to BAFTAL in Sunrise, Florida requesting a refund of her premiums. To continue her health coverage, your letter indicated that Mrs. Wendt would have to fill out a number of accompanying documents. 34. According to you, DAVID BARSKY, these accompanying documents, which were in the form of membership applications in the United Employers Voluntary Employee Benefit Association (hereinafter “UEVEBA”), were required, and were to be completed at the insistence of the State of Florida. 35. The membership documents which you, DAVID BARSKY, asked Mrs. Wendt to sign were in fact not required or endorsed by the State of Florida, but were documents required for membership in another benefit plan, UEVEBA, which was not duly authorized by a subsisting certificate of authority with the Florida Department of Financial Services. 36. You, DAVID BARSKY, knew or reasonably should have known that neither TRG nor UEVEBA possessed a subsisting certificate of authority issued by the Florida Department of Financial Services, were not otherwise subject to any exception to licensure requirements, and were operating as unauthorized entities or MEWAs in Florida. 37. As a result of you, DAVID BARSKY, aiding and representing the unauthorized insurers or MEWAs TRG, CHEA, and UEVEBA by endorsing and selling their health benefit plans to consumers, a particularized harm was suffered by Mrs. Wendt and her family, which included not only a loss from premium dollars spent, but also losses from medical and dental expenses incurred in excess of $2,000. 38. Additional harm resulting from you, DAVID BARSKY, aiding or representing TRG, CHEA, and UEVEBA in their activities in Florida is that insurance premium dollars may be misused, and reserve and surplus funds may be unavailable such that the provider 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. 39. 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, CHEA, and UEVEBA 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, due to the solicitation, sales, and administration of insurance by you, DAVID BARSKY, may incur serious losses, which may remain uncompensated. IT IS THEREFORE CHARGED that you, DAVID BARSKY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (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 626.11(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), 626.901(1), 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 626.61 1(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.]; (f) 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 part IX] of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. [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 duly 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 Statues.]; qd) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or 12 comparison, which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. [Section 626.9542(1)(a@)(1), Florida Statutes.] COUNT IH 40. The above statements, claims, .and allegations ate hereby realleged and fully incorporated herein by reference. 4}, On or about July 24th, 2001, you, DAVID BARSKY, met with Deanna Kuebel- Pike for the purpose of soliciting her to purchase a health benefit plan for herself and the company for which she worked, Talbot Painting. 42. On or about August 23, 2001, you met with Ms. Pike a second time for the purpose of soliciting her to purchase a health benefit plan through you, DAVID BARSKY. At that meeting, you, DAVID BARSKY, presented to Ms. Pike sales illustrations and literature regarding TRG. You, DAVID BARSKY, falsely represented to Ms. Pike that “TRG” was a pseudonym for a group of companies: Reliastar, Northern, and Trustmark. 43. At the time you met with Deanna Kuebel-Pike, Talbot Painting had in-force health coverage under COBRA benefits through another insurance carrier. As a result of your meeting with Ms. Kuebel-Pike, Talbot Painting cancelled its COBRA coverage and agreed to purchase a health benefits plan recommended by you, DAVID BARSKY, written through TRG. 44. On or about November 28th, 2001, Ms. Kuebel-Pike and Talbot Painting received a letter from TRG Marketing, LLC, which advised that as of November 30th, two days thereafter, health coverage for Talbot Painting employees and their dependents would terminate under the TRG Health Plan. 45, On or about that same day, November 28th, 2001, you, DAVID BARSKY, faxed to Ms. Kuebel-Pike and Talbot Painting a solicitation regarding an “improved plan”, which, 13 according to you, DAVID BARSKY, was a “takeover plan” not only affording more coverage than the previous TRG plan, but was also supported or “backed” by two other insurance companies which you claimed were “exceptionally strong” companies. You, DAVID BARSKY, further stated that these two companies, Great Republic and American National insurance companies, had “pledged to improve” the previously purchased coverage under the TRG health benefits plan which you sold to Talbot Painting. 46. You, DAVID BARSKY, fraudulently misrepresented that Great Republic and American National insurance companies had provided insurance and financial backing for the “improved” plan, called “EOSHealth” plan, which you sold to Ms. Kuebel-Pike and Talbot Painting. According to you, DAVID BARSKY, Great Republic Insurance and American National had acquired the aforementioned health benefits plan through TRG you previously sold to Talbot Painting. 47. In fact, neither Great Republic nor American National had endorsed, nor were they even affiliated with TRG, EOSHealth plan, or its known entities. Great Republic had its certificate of authority, which was for transacting as a property and casualty insurer, revoked by the Florida Department of Insurance in 1992. 48. According to you, DAVID BARSKY, to be eligible to participate in this “improved” EOSHealth plan, employees of Talbot Painting had to complete and return certain additional forms with their new paperwork. These additional forms were actually applications for membership in “Consumer Health Education Association”, or CHEA. 49. Because of your endorsement and at your request, company President Donald R. Talbot, on behalf of Talbot Painting, did in fact complete and return the paperwork you provided, including the CHEA membership application, to effectuate what you, DAVID BARSKY, termed a “takeover” plan to continue the company’s health coverage. 50. On or about December 27th, 2001, you, DAVID BARSKY, sent a letter to Talbot Painting via facsimile wherein you advised that the EOSHealth Plan was to be “rolled over” for continuing coverage through a new carrier. According to you, DAVID BARSKY, additional paperwork also sent via facsimile and accompanying your letter would need to be completed by the consumers to effectuate the continuation of their coverage through this new carrier. 51. | The accompanying paperwork regarding this “rollover” further emphasized that time was “of the essence”, and that Talbot Painting needed to complete and return the paperwork to BAFTAL/QUICK QUOTE INSURANCE BROKERS by January 5th, 2002, with “no exceptions”. 52. The paperwork accompanying the “rollover” forms stated that the Clarendon Insurance Company would be the insurance company providing benefits under this plan, which was available through a third party entity, Bertany Association for Travel and Leisure (hereinafter “BAFTAL”). The paperwork further stated that Clarendon was an “A” rated admitted carrier in the State of Florida, and that there would be a large network of physicians and hospitals from which to choose as providers. 53. In fact, Clarendon Insurance Company was in no way affiliated with this health benefit plan which you, DAVID BARSKY, encouraged Talbot Painting to participate in through BAFTAL/QUICK QUOTE. - 54. On or about January 19th, 2002, Talbot Painting received another letter from you, DAVID BARSKY, indicating that it had the option of either canceling or discontinuing her coverage through BAFTAL. To cancel their coverage, you, DAVID BARSKY, indicated that Talbot Painting would have to write a letter to BAFTAL in Sunrise, Florida requesting a refund of their premiums. To continue their health coverage, your letter indicated that Talbot Painting would have to fill out a number of accompanying documents. Once the documents were completed and returned, the health benefits plan was to be issued with a retroactive effective date of December 1, 2001. 55. According to you, DAVID BARSKY, these accompanying documents, which were in the form of membership applications in the United Employers Voluntary Employee Benefit Association (hereinafter “UEVEBA”), were required, and were to be completed at the insistence of the State of Florida. 56. The membership documents which you, DAVID BARSKY, asked Talbot Painting to sign were in fact not required or endorsed by the State of Florida, but were documents required for membership in another benefit plan, UEVEBA, which was not duly authorized by a subsisting certificate of authority with the Florida Department of Financial Services. 57. You, DAVID BARSKY, knew or reasonably should have known that neither TRG, CHEA, nor UEVEBA possessed a subsisting certificate of authority issued by the Florida Department of Financial Services, were not otherwise subject to any exception to licensure requirements, and were operating as unauthorized entities or MEWAs in Florida. 58. Talbot Painting complied with your request, and on January 22, 2002, Donald Talbot, Dianna Talbot, and Deanna Kuebel-Pike completed and returned the aforementioned forms. 59. As of February 11th, 2001, however, Talbot Painting had still received no policy or insurance cards. 60. On February 13th, 2001, Deanna Kuebel-Pike and Talbot Painting were informed via email that BAFTAL would not be able to offer them insurance as promised. The reason given was that BAFTAL had learned that the provider, American Benefit Plans, would not be providing the benefits as promised. . ‘ 61. Asa result of you, DAVID BARSKY, aiding and representing the unauthorized insurers or MEWAs TRG, CHEA, and UEVEBA by endorsing and selling their health benefit plans to consumers, a particularized harm was suffered by Talbot Painting and its employees and dependents, which included not only a loss from premium dollars spent, but any potential and actual losses from medical and dental expenses incurred. 62. Additional harm resulting from you, DAVID BARSKY, aiding or representing TRG, CHEA, and UEVEBA in their activities in Florida is that insurance premium dollars may be misused, and reserve and surplus funds may be unavailable such that the provider 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. 63. 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, CHEA, and UEVEBA 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 17 insureds, medical providers, and the State of Florida, due to the solicitation, sales, and administration of insurance by you, DAVID BARSKY, may incur serious losses which may remain uncompensated. IT IS THEREFORE CHARGED that you, DAVID BARSKY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (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 626.11(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), 626.901(1), 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), 18 626.611(9), 626.621(6), 626.901(1), 626.901(2), and 626.9541(1)(a)(1). [Section 626.621(2), Florida Statutes.}; (f) 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 part IX] of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. [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 duly 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 Statues.]; q@) 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 626.9542(1)(a)(1), Florida Statutes. } COUNT III 64. | The above statements, claims, and allegations are hereby realleged and fully incorporated herein by reference. 65. During the month of February, 2001, Ronald Peltz of Lake Worth, Florida, was solicited by telephone to purchase a health benefits plan. 66. Asa result of this telephone solicitation, you, DAVID BARSKY, met with Mr. Peltz for the purpose of soliciting him to buy a health benefits plan with TRG. 67. During your meeting with Mr. Peltz, the only health benefits plan you discussed with him and offered to him was TRG. Mr. Peltz expressed to you, DAVID BARSKY, his need for a health benefits plan, which would include his weekly allergy shots as a covered benefit. At that time, you, DAVID BARSKY, falsely represented to Mr. Peltz that the TRG plan would cover his allergy shots. 68. Based upon your representations, Mr. Peltz agreed to apply for the TRG health benefits plan you, DAVID BARSKY, recommended, endorsed, and presented to him. The effective date of Mr. Peltz’s policy was to be April Ist, 2001. 69. Subsequent to the commencement of his plan on April Ist, 2001, Mr. Peltz proceeded to visit his physician for a regularly scheduled allergy shot appointment. At this time, Mr. Peltz was informed that his allergy shots were not a covered benefit, contrary to the representations you, DAVID BARSKY, made to Mr. Peltz at the time you solicited him to purchase the TRG plan. - 70. During the months following the commencement of his TRG plan, Mr. Peltz and his wife, Linda, had occasion to visit their physicians for various medical reasons, believing that 20° their TRG policy was in force and their physicians’ visits and treatments were covered benefits according to the terms of their plan. 71. As a result of these physician visits, Mr. Peltz and his wife incurred substantial medical expenses, which should have been covered benefits under the TRG policy, but instead went unpaid by TRG. 72. On or about November 28th, 2001, Mr. Peltz received a letter from TRG Marketing, LLC, which advised that as of November 30th, 2001, two days thereafter, his _ coverage under the TRG plan would terminate. 73. On or about that same day, November 28th, 2001, Mr. Peltz received a solicitation letter from you, DAVID BARSKY, regarding an “improved plan”, which, according to you, was a “takeover plan” designed to replace the existing TRG plan. This plan, according to you, not only afforded more coverage than the previous TRG plan, but also was supported of “backed” by two other insurance companies which you claimed were “exceptionally strong” companies. You, DAVID BARSKY, further stated that these two companies, Great Republic and American National insurance companies, had “pledged to improve” the previously purchased coverage under the TRG health benefits plan which you sold to Mr. Peltz. 74, You, DAVID BARSKY, fraudulently misrepresented that Great Republic and American National insurance companies had provided insurance and financial backing for the “improved” plan, which was called “EOSHealth” plan, which you sold to Mr. Peltz. According to you, DAVID BARSKY, Great Republic Insurance and American National had acquired the aforementioned health benefits plan through TRG you previously sold to Mr. Peltz. 75. In fact, neither Great Republic nor American National had endorsed, nor were they even affiliated with TRG, “EOSHealth”, or its known entities. Great Republic had its 21 certificate of authority, which was for transacting as a property and casualty insurer, revoked by the Florida Department of Insurance in 1992. 76. According to you, DAVID BARSKY, to be eligible to participate in this “improved” EOSHealth plan, Mr. Peltz had to complete and return certain additional forms with their new paperwork. These additional forms were actually applications for membership in “Consumer Health Education Association”, or CHEA. 77. Because of your endorsement and at your request, Mr. Peltz, under his company’s name, Sav-On Lighting, did in fact complete and return the paperwork you provided, including the CHEA membership application, to effectuate what you, DAVID BARSKY, termed a “takeover” plan to continue the company’s health coverage. 78. On or about December 27th, 2001, you, DAVID BARSKY, sent a letter to Mr. Peltz wherein you advised that the EOSHealth Plan was to be “rolled over” for continuing coverage through a new carrier. According to you, DAVID BARSKY, additional accompanying paperwork would need to be filled out by the consumers to effectuate the continuation of their coverage through this new carrier. 79, The accompanying paperwork regarding this “rollover” further emphasized that time was “of the essence”, and that Mr. Peltz needed to complete and return the paperwork to BAFTAL/QUICK QUOTE INSURANCE BROKERS by January Sth, 2002, with “no exceptions”. 80. The paperwork accompanying the “rollover” forms stated that the Clarendon Insurance Company would be the insurance company providing benefits under this plan, which was available through a third party entity, Bertany Association for Travel and Leisure (herein “BAFTAL”). The paperwork further stated that Clarendon was an “A” rated admitted carrier in 22 the State of Florida, and that there would be a large network of physicians and hospitals from which to choose as providers. 81 In fact, Clarendon Insurance Company was in no way affiliated with this health benefit plan which you, DAVID BARSKY, encouraged Mr. Peltz to participate in through BAFTAL/QUICK QUOTE. 82. Based on your recommendation and endorsement, Mr. Peltz did complete and return the new and additional paperwork as requested by you, DAVID BARSKY, to effectuate a “rollover” for “continuing coverage” of his health benefits plan, with his premium check now to be paid to “Baftal Escrow Account”. 83. Meanwhile, during the months of April through December, 2001, Mr. Peltz and his wife, Sheila, had occasion to visit physicians and believed, based on the representations which you, DAVID BARSKY, made to them that they had continuing health benefits coverage through the various entities providing the health benefits plans which you sold to them. 84. After submitting his premium payment as directed to BAFTAL, Mr. Peltz received a reply from BAFTAL/QUICKQUOTE dated January 8th, 2002, which included his original premium payment check, voided, along with duplicate paperwork. The BAFTAL letter stated that due to a mistake, his check had been mistakenly voided, and requested that he send a new check to BAFTAL. Upon receiving this letter, Mr. Peltz complied and resent a check. 85 At some point thereafter, Mr. Peltz received correspondence from BAFTAL which informed him that, despite receiving his check, they were unable to provide him coverage because they did not receive his check before January 5th, 2002. Mr. Peltz decided at that point to go directly to the BAFTAL office, where he was informed that he was not insured and had not been since November 30th, 2001. He was told that because his check was not received in time, 23 he was not eligible for coverage, which would have been applied retroactively to the effective date of December 1, 2001. 86. Subsequent to this, on January 19th, 2002, you, DAVID BARSKY, sent Mr. Peltz a solicitation letter asking him to fill out additional forms for eligibility with still another health benefits provider, UEVEBA. Mr. Peltz declined to follow your recommendation and found insurance elsewhere. 87. You, DAVID BARSKY, knew or reasonably should have known that neither TRG, CHEA, nor UEVEBA possessed a subsisting certificate of authority issued by the Florida Department of Financial Services, were not otherwise subject to any exception to licensure requirements, and were operating as unauthorized entities or MEWAs in Florida. 88. Asa result of you, DAVID BARSKY, aiding and representing the unauthorized insurers or MEWAs “TRG”, “CHEA”, and “UEVEBA” by endorsing and selling their health benefit plans to consumers, a particularized harm was suffered by Mr. Peltz and his family, which included not only a loss from premium dollars spent, but also losses from actual medical expenses incurred in excess of $6,000. 89. Additional harm resulting from you, DAVID BARSKY, aiding or representing TRG, CHEA, and UEVEBA in their activities in Florida is that insurance premium dollars may be misused, and reserve and surplus funds may be unavailable such that the provider 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. 90. 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, CHEA, and UEVEBA 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, due to the solicitation, sales, and administration of insurance by you, DAVID BARSKY, may incur serious losses which may remain uncompensated. IT IS THEREFORE CHARGED that you, DAVID BARSKY, have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department of Financial Services which constitute grounds for the suspension or revocation of your licenses and appointments: (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 626.1 1(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), 626.901(1), 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 626.61 1(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 626.61 1(8), Florida Statutes. ]; 25° (da) 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. ]; (3) 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 part IX] of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. [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 duly 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 Statues. ]; 26 (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 626.9542(1)(a)(1), Florida Statutes] WHEREFORE, you, DAVID BARSKY, are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your 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, 626.681, 626.691, and 626.9521, Florida Statutes, and under the other referenced sections of the Florida Statutes as set out in this Administrative Complaint. 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 Financial Services, 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. 27 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. 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 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. 28 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 Financial Services. DATED and SIGNED this_ 3/2 st day of Janwa ty 2 2003. KAREN dk Deputy Chief Financial Officer 29 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished to: DAVID BARSKY, DA-CAR Insurance Agency, P.O. Box 540361, Lake Worth, FL 33454-0361; DAVID BARSKY, 10303 N Andover Coach Lane #B1, Lake Worth, FL 33467-8161 by Certified Mail this. day of ‘ , 2003. Richard J. Santurri Division of Legal Services 200 East Gaines St. 612 Larson Building Tallahassee, Florida 32399-033 (850) 413-4188 Florida Bar Number 0318530 30 STATE OF FLORIDA CEE EER DEPARTMENT OF FINANCIAL SERVICES 20D Fa eB DIVISION OF LEGAL SERVICES OSFEBI9 PHI2: 10 IN THE MATTER OF: nik ive . fay Bd t CASE NO.: 61520-02:4G7 "G5 DAVID BARSKY / 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 | understand my options. Iam requesting disposition of this matter as indicated below. (Choose one) 1. £] 1 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. 1 do not dispute any of the Department's factual allegations and | 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 FINANCIAL SERVICES 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 Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0333. Signature Print Name . Date: Address: Phone No.:

Docket for Case No: 03-000566PL