FILED FEB 0 8 2010 REPRESENTING ALEX SINK 7 ONStATEOP FLORA Docketed by ky -jo~ 1619 IN THE MATTER OF: CINERGY HEALTH, INC. : CASE NO. 107384-10-AG / ADMINISTRATIVE COMPLAINT CINERGY HEALTH, INC. 3 10251 West Oakland Park Boulevard oo Sunrise, Florida 33351-6915 CINERGY HEALTH, INC. 19495 Biscayne Boulevard Suite 705 Aventura, Florida 33180 CINERGY HEALTH, INC. 17100 Collins Avenue Suite201 Sunny Isles Beach, Florida 33160 Daniel Touizer, President CINERGY HEALTH, INC 19495 Biscayne Boulevard, Suite 604 - Aventura, Florida 33180 You, CINERGY HEALTH, INC., 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 agency in this state, as a result of which it is alleged: GENERAL ALLEGATIONS 1. Pursuant to Chapter 626, Florida Statutes, CINERGY HEALTH, INC., currently holds two insurance agency licenses with the Department, License number L006881 was issued July 24, 2006 to Cinergy Health, Inc. at its 1025 1 W. Oakland Park Blvd. Sunrise, Florida, and location. License number L054788 was issued May 8, 2008 to Cinergy Health, Inc. at its 17100 Collins Ave, Suite 201, Sunny Isles Beach, Florida location. 2. At all times pertinent to the dates and occurrences referred to herein, CINERGY HEALTH, INC., was licensed in this state as an insutance agency. 3. Pursuant to Chapter 626, Florida Statutes and the Florida Insurance Code, the Florida Department of Financial Services (the “Department”) has jurisdiction over the licenses and eligibility for licensure of CINERGY HEALTH, INC. 4. Following receipt of complaints, the Department opened and conducted an ‘investigation of the insurance practices in this state of CINERGY HEALTH, INC. 5. At all times pertinent to the allegations contained within this administrative complaint, American and Medical Life Insurance Company (AMLI) was a life and health insurer licensed in this state by a certificate of authority issued by the State of Florida, Office of Insurance Regulation. 6. At all times pertinent to the allegations contained within this administrative complaint, the National Congress of Employers, Inc. (NCE) was.and is a not-for-profit corporation whose stated purpose was to provide its members with a variety of benefits including insurance products through insurers including AMLL. Enrollment into the National Congress of Employers, Inc. was required for a consumer to purchase the ALMI limited health insurance plans solicited and sold by CINERGY HEALTH, INC. 7. At all times pertinent to the allegations contained in this administrative complaint, CINERGY HEALTH, INC., produced and marketed television advertisements for AMLI limited health insurance plans, which advertisements were broadcasted with great frequency within and outside of the state of Florida. Interested consumers contacted CINERGY HEALTH, INC., by calling the toll free number indicated in the advertisement. 8. The advertisements invited viewers to contact CINERGY HEALTH, INC., by telephone or through its website, for more information about health insurance plans. Many consumers who saw the advertisements contacted CINERGY HEALTH, INC. for information regarding the advertised health insurance plans and ultimately purchased the plans. 9. At all times pertinent to the allegations contained in this administrative complaint and continuing until approximately August 17, 2009, CINERGY HEALTH, INC., representatives enrolled consumers into NCE and sold limited health insurance plans on behalf of AMLI to those consumers. 10. The purchase of the AMLI health insurance plans through CINERGY HEALTH, INC., along with the enrollment of members into NCE, was accomplished through individual telemarketers working for CINERGY HEALTH, INC. who solicited consumers who had contacted CINERGY HEALTH, INC. by calling the toll free number indicated in the television ads. 11. The advertisements produced, marketed and broadcasted by, or at the direction of, CINERGY HEALTH, INC., contained false and misleading information concerning the health insurance coverage to be provided by the AMLI health insurance plans. 12. Verbal representations to consumers during telephone solicitations by CINERGY HEALTH, INC.’s individual agents and telephone marketers were frequently deceptive or misleading. 13. On May 5, 2008, the discount medical plan organization (DMPO) license of CINERGY HEALTH, INC. was suspended by the Florida Office of Insurance Regulation (OIR); on August 5, 2008, the.OIR imposed fines and costs against CINERGY HEALTH, INC.; and on January 5, 2009, the DMPO license of CINERGY HEALTH, INC. was surrendered to the OIR. All three of these actions were based on violations of Florida insurance code provisions regulating discount medical plan organizations as provided in Chapter 636, Part I, Florida Statutes. 14. On or about July 28, 2009, AMLI was fined $700,000 in a stipulated agreement with the New York Insurance Department based primarily on the misleading television advertising created by CINERGY HEALTH, INC. 15. Following the sanctions imposed by the New York Department of Insurance, AMLI sent notice to CINERGY HEALTH, INC. on August 17, 2009, to immediately cease selling any AMLI products and to terminate any advertising related to ALMI products. COUNT I 16. The above General Allegations are hereby re-alleged and incorporated herein by reference. 17. CINERGY HEALTH, INC., did create, produce and broadcast television advertisements _ for the viewing public in Florida and other states. Those television advertisements were broadcasted with great frequency to television viewers. One of those television advertisements was the one minute television advertisement identified in this count as “Cinergy TV ad - “Real health insurance for about $6 per day.” 18. The audio voiceover for this advertisement is transcribed verbatim as follows: “We're all concerned about the sky-rocketing cost of health insurance, but now someone is doing something about it, Cinergy Health. We’ll give you real health insurance for about $6 a day, and all pre-existing medical conditions are accepted. That’s right: Real health insurance for about $6 a day, and about $10 a day for the whole family. It pays from day one and it covers doctors, hospitals, pregnancy, diagnostic, x-rays, emergencies, mammograms, and so much more. It even covers. surgeries — with no annual limits or deductibles and, best of all, Cinergy Health Preferred lets you choose your own doctors and hospitals. Enroll in Cinergy Health Preferred 1000 and we'll include dental and prescription programs for free! Call Cinergy Health right now to get the health insurance you deserve for just $6 a day. Call 1-800-634-2684, that’s 1-800-634-2684.” 19. The video of this advertisement coupled with the audio voiceover is misleading and in violation of Florida insurance laws based on the following false, deceptive and/or misleading statements contained in the advertisement: a. The ad gives the overall impression that the product being marketed is comprehensive coverage and includes coverage for “doctors, hospitals, accidents, pregnancies, diagnostics, X-rays, emergencies, mammograms and surgeries” when, in fact, it is a limited health insurance plan providing limited benefits. . . b. The ad represents that preexisting conditions are “accepted” which is misleading because it implies that waiting periods for preexisting medical conditions will not delay immediate insurance coverage and benefits for the purchaser when, in fact, waiting periods of up to six months would be applied. c. The ad fails to adequately identify American Medical and Life Insurance Company as the insurer and gives viewers the impression that CINERGY HEALTH, INC. is the insurer providing the described coverage. The audio contains no reference to American Medical and Life Insurance Company and the only video reference to American Medical and Life Insurance Company appears at the very end of the ad for only about three seconds and is in a smaller font than the other text. 20. This advertisement also attempts to induce prospective purchasers to purchase the “Preferred 1000 Plan” by promising a free discount prescription dental plan if the viewer purchases the Preferred 1000 Plan. This representation constitutes an unlawful inducement in violation of the Florida Insurance Code, section 626.9541(1)(h)1.b., Florida Statutes. IT IS THERFORE CHARGED THAT you, CINERGY HEALTH, INC., 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 such other penalties as are identified in the “Wherefore” section of this administrative complaint: (a) Any cause for which issuance of the license could have been refused had it then existed and been known to the department. [Section 626.6215(1), Florida Statutes}; (b) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Misrepresentation of any insurance policy or annuity contract, or deception with regard to any such policy or contract, done in person or by any form of dissemination of information or advertising. [Section 626.6215(5)(c), Florida Statutes]; (c) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Violation of any provision of the insurance code or of any other law applicable to the business of insurance in the course of dealing under the license. {Section 626.6215(5)(d), Florida Statutes]; (d) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Violation of any lawful order or rule of the department. [Section 626.6215(5)(e), Florida Statutes}; (e) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: In the conduct of business under the license, engaging in unfair methods of competition or in unfair or deceptive acts or practices as prohibited under part IX of Chapter 626, Florida Statutes. [Section 626.6215(5)(h), Florida Statutes]; () Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Fraudulent or dishonest practices in the conduct of business arising out of activities related to insurance or the insurance agency. [Section 626.6215(5)(j), Florida Statutes]; (g) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Demonstrated lack of fitness or trustworthiness to engage in the business of insurance arising out of activities related to insurance or the insurance agency. [Section 626.6215(5)(k), Florida Statutes]; (h) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Violation of the provision against twisting as defined in section 626.9541(1)(, Florida Statutes [Section 626.6215(5)(g), Florida Statutes]; q@ ‘No person shall engage in this state in any trade practice which is defined in the part as, or determined pursuant to s.626.951 or s. 626.9561 to be, an unfair method of competition or and unfair or deceptive act or practice involving the business of insurance. [Section 626.9521(1), Florida Statutes]; @) Knowingly making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular, statement, sales representation, omission, or comparison which: Misrepresents the benefits, advantages, conditions or terms of any insurance policy. [Section 626.9541(1)(a)1., Florida Statutes]; (k) Knowingly making, issuing, circulating, or causing to be made, issued or circulated, any estimate, illustration, circular, statement, sales representation, omission, or comparison which: Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy. [Section 626.9541(1)(a)6., Florida Statutes]; 0) Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made , published, disseminated, or circulated, or placed before the public: 1. In a newspaper, magazine, or other publication, 2. In the form of a notice, circular, pamphlet, letter, or poster, 3. Over any radio or television station, or 4, In any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive or misleading. [Section 626.9541(1)(b), Florida Statutes]; (m) Knowingly filing with any supervisory or other public official, making, publishing, disseminating, circulating, delivering to any person, placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. [Section 626.9541(1)(e), Florida Statutes]; (n) _ Paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance contract, any unlawful rebate of premiums payable on the contract, any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract. [Section 626.954 1(1)(h)1.b., Florida Statutes]; (0) | Knowingly making a material omission in the comparison of a life, health, or Medicare supplement insurance replacement policy with the policy it replaces for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. For purposes of this subparagraph, a material omission includes the failure to advise the insured of the existence and operation of a preexisting conditions clause in the replacement policy. [Section 626.9541 a y(k)2., Florida Statutes]; (p) Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omission of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. [Section 626.9541(1)(1), Florida Statutes]; (q) Advertisements shall be truthful and not misleading in fact or in implication. Words or phrases, whose meanings are clear only by implication or by the consumer’s familiarity with insurance terminology, shall not be used. [Rule 69B-150.005(2), F.A.C.]; ¢9] No insurer, agent, broker, producer, solicitor or other person shall solicit a resident of this State for the purchase of Health Insurance in connection with or as the result of the use of any advertisement which: . (1) Contains any misleading representations, misrepresentations, or is otherwise untrue, deceptive or misleading with regard to the information imparted, the status, character or representative capacity of such person or the true purpose of the advertisement; or (2) Otherwise violates the provisions of these rules; or (3) Otherwise violates the provisions of the Florida Insurance Code. [Rule 69B-150.005(4), F.A.C.]; (s) | No advertisement shall omit information or use words, phrases, references or illustrations if the omission of such information or use of such words, phrases, statements, references or illustrations has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered or premium payable. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements. [Rule 69B-150.006(1)(a), F.A.C.]; @® An advertisement shall not contain descriptions of a policy limitation, exception, or reduction, worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a “benefit builder” or stating “even pre-existing conditions are covered after a limited period of time.” Words and phrases used in an advisement to describe such policy limitations, exceptions and reductions shall fairly and accurately describe the negative features of such limitations, exceptions, and reductions of the policy offered. [Rule 69B-150.006(1)(d), F.A.C.]. . COUNT If 21. . The above General Allegations are hereby re-alleged and incorporated herein by reference. 22. Telephone representatives who solicited consumers and transacted insurance on behalf of CINERGY HEALTH, INC. were frequently neither licensed nor appointed to transact insurance in the State of Florida. 23, During the course of telephone solicitations of consumers, unlicensed and/or unappointed representatives of CINERGY HEALTH, INC. described the benefits of the AMLI insurance policies being offered, made recommendations with regard to the AMLI policies being offered, compared the AMLI insurance coverage and benefits to other insurance policy coverage, including the consumer’s existing insurance policy coverage and benefits, and/or advised consumers as to insurance matters. IT IS THERFORE CHARGED THAT you, CINERGY HEALTH, INC., have violated or are accountable under the following provisions of the Florida Insurance Code and Rules of the Department 10 of Financial Services which constitute grounds for the suspension or revocation of your insurance agency licenses and such other penalties as are identified in the “Wherefore” section of this administrative complaint: (a) Any cause for which issuance of the license could have been refused had it then existed and been known to the department. [Section 626.6215(1), Florida Statutes]; (6) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Violation of any provision of the insurance code or of any other law applicable to the business of insurance in the course of dealing under the license. [Section 626.6215(5)(d), Florida Statutes]; (c) No person may be, act as, or advertise or hold himself or herself out to be an insurance agent, insurance adjuster, or customer representative unless he or she is currently licensed by the department and appointed by an appropriate appointing entity or person. [Section 626.112(1)(a), Florida Statutes]; (d) _ Except as provided in subsection (6) or in applicable department rules, and in addition to other conduct described in this chapter with respect to particular types of agents, a license as an insurance agent, service representative, customer representative, or limited customer representative is required in order to engage in the solicitation of insurance. For purposes of this requirement, as applicable to any of the licenses types described in this section, the solicitation of insurance is the attempt to persuade any person to purchase an insurance product by: 1. Describing benefits or terms of insurance coverage, including premiums or rates ’ of return; 2. Distributing an invitation to contract to prospective purchasers; 3. Making general or specific recommendation as to insurance products; 8] 4. Comparing insurance products, advising as to insurance matters, or interpreting policies or coverages; or 5. Offering or attempting to negotiate on behalf of another person a viatical settlement contract as defined in s.626.9911. | [Section 626.112(1)(b), Florida Statutes]; (e) Unlawful Activities by Unlicensed Insurance Agency personnel. The following actions are never allowable by unlicensed personnel. (1) Comparing insurance products; advising as to insurance needs or insurance matters; or interpreting policies or coverages. (2) __ Binding new, additional or replacement coverage for new or existing customers, or binding coverage on or recording additional property under existing policies. (3) __ Soliciting the sale of insurance by telephone, in person, or by other communication. However, the unlicensed person may telephone persons to set appointments for licensed and obtain basic policy information as to existing insurance coverage. The unlicensed person may not engage in a substantive discussion of insurance products. [Rule 69B-222.060, Florida Administrative Code]; (f) Committing with such frequency as to have made the operation of the agency hazardous to the insurance-buying pubic or other person: Violation of any lawful order or rule of the department. [Section 626.62 15(5)(e), Florida Statutes]. WHEREFORE you, CINERGY HEALTH, INC., are hereby notified that the Chief Financial Officer intends to enter an Order suspending or revoking your licenses, appointments and your eligibility for licensure as an insurance agency in this state and/or to impose such penalties as may be provided under the provisions of Sections 626.6115, 626.6215, 626.681, 626.691, 626.692, and 12 626.9521, 626.9571, and 626.9581, Florida Statutes, 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 case revoking or suspending any license or eligibility for licensure held by you shall also apply to all other licenses and eligibility held by you under the Florida Insurance Code. _ NOTICE OF RIGHTS You have the right to request a proceeding to contest this action by the Department of Financial Services ("Department") pursuant to Sections 120.569 and 120.57, Florida Statutes, and Rule 28-106, 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 Agency Clerk, at the Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399-0390. 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 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. As noted above, completion of the attached Election of Proceeding form conforms to these requirements. Specifically, your response must contain: (a) Thename, address, and telephone number, and facsimile number (if any) of the respondent (for the purpose of requesting a hearing in this matter, you are the "respondent"). 13 (b) The name, address, telephone number, facsimile number of the attorney or qualified representative of the respondent (if any) upon whom service of pleadings and other papers shall be made. (c) _ Astatement requesting an administrative hearing identifying those material facts that are in dispute. If there are none, the petition must so indicate. (d) A statement of when the respondent received notice of the administrative complaint. (ec) A-statement including the file number to the administrative complaint. 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. Ifa proceeding is requested and there is no dispute of material fact, the provisions of Section 120.57(2), Florida Statutes, apply. In this regard, you may submit oral or written evidence in opposition to the action taken by the Department or a written statement challenging the grounds upon which the Department has relied. While a hearing is normally not required in the absence of a dispute of fact, if you feel that a hearing is necessary, one will be conducted in Tallahassee, Florida, or by telephonic conference call upon your request. However, if you dispute material facts which are the basis for the Department’s action, you must request an adversarial proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes. These proceedings are held before a State Administrative Law Judge of the Division of Administrative Hearings. Unless the majority of witnesses are located elsewhere, the Department will request that the hearing be conducted in Tallahassee, Florida. Failure to follow the procedure outlined with regard to your response to this notice may result in the request being denied. All prior oral communication or correspondence in this matter shall be considered freeform agency action, and no such oral communication or correspondence shall operate as a valid request for an administrative proceeding. Any request for an administrative proceeding received prior to the date of this notice shall be deemed abandoned unless timely renewed in compliance with the guidelines as set out above. . Mediation of this matter pursuant to Section 120.573, Florida Statutes, is not available. No Department attorney will discuss this matter with you until the response has been received by the ‘Department. — DATED and SIGNED this ( y de day of 2010. hy Cryyel NANCY ROWELL Division Director, Agent & Agency Services CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing ADMINISTRATIVE COMPLAINT and ELECTION OF PROCEEDING has been furnished by Certified Mail to: CINERGY HEALTH, INC. 10251 West Oakland Park Boulevard Sunrise, Florida 33351-6915 CINERGY HEALTH, INC. 19495 Biscayne Boulevard Suite 705 : Adventura, Florida 33180 CINERGY HEALTH, INC. 17100 Collins Avenue Suite 201 Sunny Isles Beach, Florida 33160 Daniel Touizer, President CINERGY HEALTH, INC 19495 Biscayne Blve. Suite 604 Aventura, Florida 33180 on this Br dey Jebrsory on William W. Tharpe Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 (850) 413-4124 STATE OF FLORIDA DEPARTMENT OF FINANCIAL SERVICES DIVISION OF LEGAL SERVICES. IN THE MATTER OF: CINERGY HEALTH, INC. / : CASE NO.: 107384-10-AG ELECTION OF PROCEEDING lhave received and have read the Administrative Complaint filed by the Florida Department of Financial Services ("Department") against me, including the Notice of Rights contained therein, and I understand my options. I am requesting disposition of this matter as indicated below. (CHOOSE ONE) 1] Ido 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 suspending or revoking my licenses and appointments as may be appropriate. 2. Tdo not dispute any of the Department's factual allegations and I hereby elect a proceeding to be conducted in accordance with Section 120.57(2), Florida Statutes. In this regard, I desire to (CHOOSE ONE): {1} 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 i] Attend that same hearing by way ofa telephone conference call. 3.0) I do dispute one or mote of the Department's factual allegations. 1 hereby request a hearing pursuant to Section 120.57(1), Florida Statutes, to be held before the Division of Administrative Hearings. I have attached to this election form the information required by Rule 28-106.2015, Florida Administrative Code, as specified in subparagraph (c) of the Notice of Rights. Specifically, I have identified the disputed issues of material fact. 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: DFS Agency Clerk, Florida Department of Financial Services, 612 Larson Building, 200 East Gaines Street, ‘Tallahassee, Florida 32399-0333. Signature Print Name Date: Address: Date Administrative Complaint Received: If you are represented by an atterney or qualified Phone No.: representative, please attach to this election form his or her name, address, telephone and fax numbers Fax No.: 17

Docket for Case No: 10-001819