The Issue The issue is whether Petitioner's request for an upgrade in her insurance coverage from individual to family status should be granted with a retro-active effective date of October 13, 1994; the date of birth of Respondent's son.
Findings Of Fact Stipulated Facts Petitioner was initially employed and covered under the State Employees' State Group Health Self Insurance Plan on July 1, 1993. Petitioner selected individual coverage and completed the appropriate forms indicating such coverage. Effective January 1, 1994, Petitioner's coverage for the 1994 Plan Year continued with individual coverage. Petitioner became pregnant in April, 1994, with an estimated due date of December 6, 1994. However, she went into premature labor on October 12, 1994, at 32 weeks gestation. Attempts to stop her labor were unsuccessful and she delivered a son, Gavon K. Brown, by caesarean delivery on October 13, 1994. On October 22, 1994, Petitioner completed the required forms to change from individual coverage to family coverage. Respondent changed Petitioner's coverage to family coverage effective December 1, 1994. Other Facts Petitioner did not inform the personnel office at her place of state employment, Columbia Correctional Facility in Lake City, Florida of her pregnancy. Petitioner saw a private physician in Gainesville, Florida. The physician was concerned about Petitioner's excessive weight and referred her to the Park Avenue Women's Center in Gainesville sometime near the end of April, 1994. The Park Avenue Women's Center, associated with the University of Florida College of Medicine, treats women with at risk pregnancies. Petitioner was seen there by Dr. Kenneth Kelner, also a professor of the Department of Obstetrics and Gynecology of the University of Florida College of Medicine. As a registered nurse, Petitioner was aware that she was at an increased general risk for difficulty with her pregnancy as a result of her excessive weight. On August 5, 1994, as a result of problems with getting a medical bill paid by the State Employees' State Group Health Self Insurance Plan, Petitioner called offices of the administrator of the Plan, Blue Cross and Blue Shield (BCBS) in Jacksonville, Florida. In the course of her telephone conversation, Petitioner maintains that she was told she could switch to family coverage in order to cover expenses of her unborn child as late as 30 days prior to the birth, estimated and expected to occur on December 6, 1994. Petitioner had previously received The Benefit Payment Schedule on July 13, 1994, which contained a warning to pregnant women policyholders that single or individual coverage did not include coverage for a child following its birth and that family coverage would need to be in effect prior to the month of the child's birth to afford coverage for the child. During the August 5, 1994 telephone conversation with the representative of BCBS in Jacksonville, Petitioner inquired regarding the amount of the monthly premium for family coverage. Petitioner was referred to the Division of State Employees' Insurance (DSEI) and provided with that telephone number in order to acquire coverage for her unborn child and get further detailed information. Petitioner did not call DSEI. On October 12, 1994, in the course of a routine check-up, it was determined that Petitioner's cervix was dilated. Subsequently, Petitioner gave birth to her son at 1 a.m. on October 13, 1994. On October 13, 1994, Petitioner called the personnel office at her place of employment with the Department of Corrections and informed that office of the birth of her son. Although Petitioner maintains that she was told at that time by someone in the personnel office that her son would immediately be afforded insurance coverage, Petitioner presented no direct admissible evidence in corroboration of this allegation and her testimony in this respect is not credited. On October 22, 1994, while sitting in the hospital lobby waiting to visit her son, who remained in hospital care following his premature birth, Petitioner signed the required papers and forms to change from individual to family coverage. The forms, bearing an effective date for coverage change of December 1, 1994, were returned to Petitioner's personnel office without an accompanying check or other payment for any employee premium co-payment which would have permitted a construction that an earlier coverage effective date should have been assigned the policy change. Based upon the timing of the election made by Petitioner, expenses attributable solely to medical services received by the child prior to December 1, 1994, were not covered by the State Employees' State Group Health Self Insurance Plan.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Employees' Insurance enter a Final Order dismissing Susie Simone Brown's petition in this matter. DONE and ENTERED in Tallahassee, Florida, this 6th day of September, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of September, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Respondent's Proposed Findings 1.-24. Adopted, not verbatim. 25.-28. Rejected, unnecessary. 29.-40. Adopted by reference. 41.-42. Rejected, unnecessary. Petitioner's Proposed Findings Petitioner's proposed findings consisted of one paragraph requesting that Respondent provide coverage for Petitioner's son effective on the date of his birth, October 13, 1994. The proposed finding is rejected as not supported by the greater weight of the evidence. COPIES FURNISHED: Augustus D. Aikens, Jr., Chief Department of Management Services Division of State Employees' Insurance 2002 Old St. Augustine Rd., B-12 Tallahassee, FL 32301-4876 Susie Simone Brown 2931 Bay Rd. Orange Park, FL 32065 William H. Linder Secretary Department of Management Services 2737 Centerview Dr., Ste. 307 Tallahassee, FL 32399-0950 Paul A. Rowell General Counsel Department of Management Services 2737 Centerview Dr., Ste. 312 Tallahassee, FL 32399-0950
The Issue Whether Petitioner, Nicole Demott Vugteveen (Petitioner), is entitled to reimbursement for a medical device that Respondent, Department of Management Services, Division of State Group Insurance (Department or Respondent), maintains is not covered under the State of Florida PPO self-insured medical plan.
Findings Of Fact At all times material to this case Petitioner was a participant in the State of Florida's Group Health Insurance Plan. This plan is managed by Florida Blue, formerly known as Blue Cross and Blue Shield of Florida. The plan is administered by Respondent. It is Respondent's duty to oversee the administration of the plan and to assure that it complies with all applicable regulatory and medical guidelines. As a participant of the plan, Petitioner was entitled to the benefits of the plan. Accordingly, medical services and certain durable medical equipment covered by the plan are reimbursable. Typically, individuals or companies who provide medical services or products for participants' illnesses are known as "providers." These providers may seek payment or reimbursement for their efforts, either directly from the insurance plan or from the patient to whom services are rendered. In the case of the latter situation, the patient is required to file the claim form for reimbursement from the plan. At all times material to this case, a company known as Mid-Florida Prosthetics and Orthotics (Mid-Florida) was a provider of medical devices. Mid-Florida files medical claims for its patients when the devices provided are covered by insurance but will not file claims for devices that are not. After doing extensive research into products offered by Mid- Florida, Petitioner approached the company with the notion of purchasing a device to assist her condition. Petitioner's long-term medical history has resulted in a profound weakness on one side of her body. Gait and ambulatory issues have impaired progress in recovery. Petitioner sought to purchase a medical device from Mid-Florida in order to provide stimulation to her muscles on the weak side. It is undisputed that Petitioner met all medical prerequisites for the purchase of the device. Petitioner was allowed to test the device to verify it would help. At the time of the purchase, Mid-Florida knew the device was not covered by Petitioner's insurance. Mid-Florida did not file for payment from Petitioner's insurance plan. Instead, Petitioner purchased the device from Mid-Florida and filed for reimbursement. Although Petitioner knew Mid-Florida would not file the claim, it is disputed whether Petitioner knew or should have known that the device would not be covered by insurance. At the heart of this dispute, is the device itself: a Bioness L300. This device is a neuromuscular stimulator that sends impulses to the area where it is attached (in this case the leg) to improve mobility. Petitioner maintains and Respondent does not dispute whether the device has been medically helpful. At all times material to the allegations of this case, however, the state's insurance plan did not cover the Bioness L300. The Bioness L300 is considered an experimental or investigative product by the insurance plan. Petitioner maintains that, if that were true, the claim should have been denied and that requests for additional information should not have been issued. Petitioner argues that it took an inordinate amount of time for the claim to be processed and then denied, if all along it could not be approved. To review this matter, the claims process must be described. In this (and all claims) a form is used to process claims for payment or reimbursement. That form describes the patient's medical condition and the types and amounts of services or the device intended to treat the medical condition. Whether or not the claim can be approved is governed by guidelines established by the insurance plan. The guidelines include claim codes that are assigned to each type of condition and service that might be rendered. For a given medical condition, treatment may be appropriate but the type of treatment requested may not be approved. In this case, had Petitioner's claim been correctly coded from the beginning, it would have been denied. Instead, Petitioner's claim had incorrect codes that required further explanation. In simplistic terms, Petitioner has a medical condition that warrants medical care, but the device she bought, the Bioness L300, is not an approved, reimbursable device for that care. Under the guidelines that govern this matter, the Bioness L300 is described as a functional neuromuscular stimulation that is experimental and investigational for all diagnosis codes. The state health insurance plan does not cover devices that are deemed experimental and investigational. Had the forms been correctly coded, Petitioner's claim for reimbursement would have been disallowed or denied at the time of its submission. The delay in resolving the claim resulted from the confusion and miscoding of the claim form. The request for additional information regarding the claim does not constitute an approval of the claim.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, enter a final order denying Petitioner's request for reimbursement for the Bioness L300, as it is not covered by the plan guidelines. DONE AND ENTERED this 26th day of September, 2012, in Tallahassee, Leon County, Florida. S J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of September, 2012. COPIES FURNISHED: Nicole Vugteveen 700 North Atlantic Avenue, No. 112 Cocoa Beach, Florida 32931 Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399 Jason Dimitris, General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950
The Issue The issue for determination is whether Petitioners’ Interim Rate Request (IRR) for an increase should be granted.
Findings Of Fact AHCA is the agency of state government responsible for the implementation and administration of the Medicaid Program in the State of Florida. AHCA is authorized to audit Medicaid Cost Reports submitted by Medicaid Providers participating in the Medicaid Program. Avante at Jacksonville and Avante at St. Cloud are licensed nursing homes in Florida that participate in the Medicaid Program as institutional Medicaid Providers. On May 23, 2007, Avante at Jacksonville entered into a settlement agreement with the representative of the estate of one of its former residents, D. P. The settlement agreement provided, among other things, that Avante at Jacksonville would pay $350,000.00 as settlement for all claims. Avante at Jacksonville paid the personal representative the sum of $350,000.00. By letter dated July 16, 2007, Avante at Jacksonville requested an IRR effective August 1, 2007, pursuant to the Plan Section IV J.2., for additional costs incurred from self-insured losses as a result of paying the $350,000.00 to settle the lawsuit. Avante at Jacksonville submitted supporting documentation, including a copy of the settlement agreement, and indicated, among other things, that the costs exceeded $5,000.00 and that the increase in cost was projected at $2.77/day, exceeding one percent of the current Medicaid per diem rate. At all times pertinent hereto, the policy held by Avante at Jacksonville was a commercial general and professional liability insurance policy. The policy had $10,000.00 per occurrence and $50,627.00 general aggregate liability limits. The policy was a typical insurance policy representative of what other facilities in the nursing home industry purchased in Florida. The policy limits were typical limits in the nursing home industry in Florida. By letter dated July 18, 2007, AHCA denied the IRR on the basis that the IRR failed to satisfy the requirements of Section IV J. of the Plan, necessary and proper for granting the request. Avante at Jacksonville contested the denial and timely requested a hearing. Subsequently, Avante at Jacksonville became concerned that, perhaps, the incorrect provision of the Plan had been cited in its IRR. As a result, a second IRR was submitted for the same costs. By letter dated October 22, 2007, Avante at Jacksonville made a second request for an IRR, this time pursuant to the Plan Section IV J.3., for the same additional costs incurred from the self-insured losses as a result of paying the $350,000.00 settlement. The same supporting documentation was included. Avante at Jacksonville was of the opinion that the Plan Section IV J.3. specifically dealt with the costs of general and professional liability insurance. By letter dated October 30, 2007, AHCA denied the second request for an IRR, indicating that the first request was denied based on “all sub-sections of Section IV J of the Plan”; that the second request failed to satisfy the requirements of the Plan Section IV J.3. and all sections and sub-sections of the Plan “necessary and proper for granting [the] request.” Avante at Jacksonville contested the denial and timely requested a hearing. On October 19, 2007, Avante at St. Cloud entered a settlement agreement with the personal representative of the estate of one of its former residents, G. M. The settlement agreement provided, among other things, that Avante at St. Cloud would pay $90,000.00 as settlement for all claims. Avante at St. Cloud paid the personal representative the sum of $90,000.00. By letter dated December 10, 2007, Avante at St. Cloud requested an IRR effective November 1, 2007, pursuant to the Plan Section IV J, for additional costs incurred as a result of paying the $90,000.00 to settle the lawsuit. Avante at St. Cloud submitted supporting documentation, including a copy of the settlement agreement, and indicated, among other things, that the increase in cost was projected at $2.02/day, exceeding one percent of the current Medicaid per diem rate. At all times pertinent hereto, the policy held by Avante at St. Cloud was a commercial general and professional liability insurance policy. The policy had $10,000.00 per occurrence and $50,000.00 general aggregate liability limits. The policy was a typical insurance policy representative of what other facilities in the nursing home industry purchased in Florida. The policy limits were typical limits in the nursing home industry in Florida. By letter dated December 12, 2007, AHCA denied the IRR on the basis that the IRR failed to satisfy the requirements of “Section IV J of the Plan necessary and proper for granting [the] request.” Avante at St. Cloud contested the denial and timely requested a hearing. Insurance Policies and the Nursing Home Industry in Florida Typically, nursing homes in Florida carry low limit general and professional liability insurance policies. The premiums of the policies exceed the policy limits. For example, the premium for a policy of Avante at Jacksonville to cover the $350,000.00 settlement would have been approximately $425,000.00 and for a policy of Avante at St. Cloud to cover the $90,000.00 settlement would have been approximately $200,000.00. Also, the policies have a funded reserve feature wherein, if the reserve is depleted through the payment of a claim, the nursing home is required to recapitalize the reserve or purchase a new policy. That is, if a policy paid a settlement up to the policy limits, the nursing home would have to recapitalize the policy for the amount of the claim paid under the policy and would have to fund the loss, which is the amount in excess of the policy limits, out-of-pocket. Florida’s Medicaid Reimbursement Plan for Nursing Homes The applicable version of the Plan is Version XXXI. AHCA has incorporated the Plan in Florida Administrative Code Rule 59G-6.010. AHCA uses the Plan in conjunction with the Provider Reimbursement Manual (CMS-PUB.15-1)3 to calculate reimbursement rates of nursing homes and long-term care facilities. The calculation of reimbursement rates uses a cost- based, prospective methodology, using the prior year’s costs to establish the current period per diem rates. Inflation factors, target ceilings, and limitations are applied to reach a per patient, per day per diem rate that is specific to each nursing home. Reimbursement rates for nursing homes and long-term care facilities are typically set semi-annually, effective on January 1 and July 1 of each year. The most recent Medicaid cost report is used to calculate a facility’s reimbursement rate and consists of various components, including operating costs, the direct patient care costs, the indirect patient care costs, and property costs. The Plan allows for the immediate inclusion of costs in the per diem rate to Medicaid Providers under very limited circumstances through the IRR process. The interim rate’s purpose is to compensate for the shortfalls of a prospective reimbursement system and to allow a Medicaid Provider to increase its rate for sudden, unforeseen, dramatic costs beyond the Provider’s control that are of an on-going nature. Importantly, the interim rate change adjusts the Medicaid Provider’s individual target rate ceiling to allow those costs to flow ultimately through to the per diem paid, which increases the amount of the Provider’s overall reimbursement. In order for a cost to qualify under an interim rate request, the cost must be an allowable cost and meet the criteria of Section IV J of the Plan. The Plan provides in pertinent part: IV. Standards * * * J. The following provisions apply to interim changes in component reimbursement rates, other than through the routine semi- annual rate setting process. * * * Interim rate changes reflecting increased costs occurring as a result of patient or operating changes shall be considered only if such changes were made to comply with existing State or Federal rules, laws, or standards, and if the change in cost to the provider is at least $5000 and would cause a change of 1 percent or more in the provider’s current total per diem rate. If new State or Federal laws, rules, regulations, licensure and certification requirements, or new interpretations of existing laws, rules, regulations, or licensure and certification requirements require providers to make changes that result in increased or decreased patient care, operating, or capital costs, requests for component interim rates shall be considered for each provider based on the budget submitted by the provider. All providers’ budgets submitted shall be reviewed by the Agency [AHCA] and shall be the basis for establishing reasonable cost parameters. In cases where new State or Federal requirements are imposed that affect all providers, appropriate adjustments shall be made to the class ceilings to account for changes in costs caused by the new requirements effective as of the date of the new requirements or implementation of the new requirements, whichever is later. Interim rate adjustments shall be granted to reflect increases in the cost of general or professional liability insurance for nursing homes if the change in cost to the provider is at least $5000 and would cause change of 1 percent or more in the provider’s current total per diem. CMS-PUB.15-1 provides in pertinent part: 2160. Losses Arising From Other Than Sale of Assets A. General.—A provider participating in the Medicare program is expected to follow sound and prudent management practices, including the maintenance of an adequate insurance program to protect itself against likely losses, particularly losses so great that the provider’s financial stability would be threatened. Where a provider chooses not to maintain adequate insurance protection against such losses, through the purchase of insurance, the maintenance of a self- insurance program described in §2161B, or other alternative programs described in §2162, it cannot expect the Medicare program to indemnify it for its failure to do so. Where a provider chooses not to file a claim for losses covered by insurance, the costs incurred by the provider as a result of such losses may not be included in allowable costs. * * * 2160.2 Liability Losses.—Liability damages paid by the provider, either imposed by law or assumed by contract, which should reasonably have been covered by liability insurance, are not allowable. Insurance against a provider’s liability for such payments to others would include, for example, automobile liability insurance; professional liability (malpractice, negligence, etc.); owners, landlord and tenants liability; and workers’ compensation. Any settlement negotiated by the provider or award resulting from a court or jury decision of damages paid by the provider in excess of the limits of the provider’s policy, as well as the reasonable cost of any legal assistance connected with the settlement or award are includable in allowable costs, provided the provider submits evidence to the satisfaction of the intermediary that the insurance coverage carried by the provider at the time of the loss reflected the decision of prudent management. Also, the reasonable cost of insurance protection, as well as any losses incurred because of the application of the customary deductible feature of the policy, are includable in allowable costs. As to whether a cost is allowable, the authority to which AHCA would look is first to the Plan, then to CMS-PUB.15- 1, and then to generally accepted accounting principles (GAAP). As to reimbursement issues, AHCA would look to the same sources in the same order for the answer. The insurance liability limit levels maintained by Avante at Jacksonville and Avante at St. Cloud reflect sound and prudent management practices. Claims that resulted in the settlements of Avante at Jacksonville and Avante at St. Cloud, i.e., wrongful death and/or negligence, are the type of claims covered under the general and professional liability policies carried by Avante at Jacksonville and Avante at St. Cloud. Avante at Jacksonville and Avante at St. Cloud both had a general and professional liability insurance policy in full force and effect at the time the wrongful death and/or negligence claims were made that resulted in the settlement agreements. Neither Avante at Jacksonville nor Avante at St. Cloud filed a claim with their insurance carrier, even though they could have, for the liability losses incurred as a result of the settlements. Avante at Jacksonville and Avante at St. Cloud both chose not to file a claim with their respective insurance carrier for the liability losses incurred as a result of the settlements. AHCA did not look beyond the Plan in making its determination that neither Avante at Jacksonville nor Avante at St. Cloud should be granted an IRR. Wesley Hagler, AHCA’s Regulatory Analyst Supervisor, testified as an expert in Medicaid cost reimbursement. He testified that settlement agreements are a one time cost and are not considered on-going operating costs for purposes of Section IV J.2. of the Plan. Mr. Hagler’s testimony is found to be credible. Mr. Hagler testified that settlement agreements and defense costs are not considered general and professional liability insurance for purposes of Section IV J.3. of the Plan. To the contrary, Stanley William Swindling, Jr., an expert in health care accounting and Medicare and Medicaid reimbursement, testified that general and professional liability insurance costs include premiums, settlements, losses, co-insurance, deductibles, and defense costs. Mr. Swindling’s testimony is found to be more credible than Mr. Hagler’s testimony, and, therefore, a finding of fact is made that general and professional liability insurance costs include premiums, settlements, losses, co-insurance, deductibles, and defense costs.4 Neither Avante at Jacksonville nor Avante at St. Cloud submitted any documentation with their IRRs to indicate a specific law, statute, or rule, either state or federal, with which they were required to comply, resulted in an increase in costs. Neither Avante at Jacksonville nor Avante at St. Cloud experienced an increase in the premiums for the general and professional liability insurance policies. Neither Avante at Jacksonville nor Avante at St. Cloud submitted documentation with its IRRs to indicate that the premiums of its general and professional liability insurance increased. Avante at Jacksonville and Avante at St. Cloud could only meet the $5,000.00 threshold and the one percent increase in total per diem under the Plan, Sections IV J.2. or J.3. by basing its calculations on the settlement costs. Looking to the Plan in conjunction with CMS-PUB.15-1 to determine reimbursement costs, CMS-PUB.15-1 at Section 2160A provides generally that, when a provider chooses not to file a claim for losses covered by insurance, the costs incurred by the provider, as a result of such losses, are not allowable costs; however, Section 2160.2 specifically includes settlement dollars in excess of the limits of the policy as allowable costs, provided the evidence submitted by the provider to the intermediary (AHCA) shows to the satisfaction of the intermediary that the insurance coverage at the time of the loss reflected the decision of prudent management. The policy coverage for Avante at Jacksonville and Avante at St. Cloud set the policy limits for each facility at $10,000.00 for each occurrence. Applying the specific section addressing settlement negotiations, the loss covered by insurance would have been $10,000.00 for each facility and the losses in excess of the policy limits--$340,000.00 for Avante at Jacksonville and $80,000.00 for Avante at St. Cloud—would have been allowable costs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying the interim rate requests for an increase for Avante at Jacksonville and Avante at St. Cloud. DONE AND ENTERED this 18th day of September 2008, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 2008. 1/ The corrected case-style.
Findings Of Fact Respondent is licensed in the state as a life and health insurance agent and as a health insurance agent. Respondent was employed by H.B. Barach and Associates during the month of April, 1991. Respondent and his employer began selling insurance policies for Farmers Health Trust ("Farmers") sometime in April, 1991. North American Life Insurance was the prospective underwriter for Farmers. Respondent was informed by Petitioner's West Palm Beach office that no complaints had ever been filed against Farmers but that no verification could be made as to whether Farmers was licensed to do business in the state. Respondent reviewed the policy and began selling policies to be issued by Farmers. Pursuant to the customary business practice in the community, Respondent included the paper work required to be licensed to sell policies for Farmers when Respondent submitted the first premiums. Farmers has never been licensed to do business in this state. North American Life Insurance never agreed to be the underwriter for Farmers. Respondent was never licensed to sell insurance policies to be issued by Farmers. On or about April 1 and 16, 1991, respectively, Respondent solicited and sold to Ms. Clarice Hunt and Mr. Milton Seagrave, separate health insurance policies to be issued by Farmers. Ms. Hunt and Mr. Seagrave each issued a check in the amount of $480 payable to Respondent's employer pursuant to Respondent's instructions. Respondent advised Ms. Hunt and Mr. Seagrave that their money would be refunded to them if Farmers declined to issue a policy. Ms. Hunt had difficulty obtaining health insurance due to a previous back injury for which she had filed a workers' compensation claim. Mr. Seagrave had been previously rejected by Mutual of Omaha. Ms. Hunt's check and Mr. Seagrave's check was deposited and negotiated by Respondent's employer. No policy was ever issued by Farmers to either Ms. Hunt or Mr. Seagrave, and neither was ever refunded their money. After April 16, 1991, Respondent was informed by his employer that Farmers did not have an underwriter. Respondent sold no other insurance policies to be issued by Farmers. Respondent made repeated, good faith attempts to obtain refunds for Ms. Hunt and Mr. Seagrave. Respondent was willing but financially unable to personally refund the moneys to Ms. Hunt and Mr. Seagrave. When it was apparent to Respondent that his employer would not refund the money to Ms. Hunt, Respondent assisted Ms. Hunt in filing a complaint with Petitioner. Respondent knowingly solicited insurance on behalf of Farmers without holding an agency appointment to do so. On June 5, 1992, a Consent Order was issued incorporating the terms of a Settlement Stipulation between Petitioner and Mr. Herbert Barach. Pursuant to the terms of the Settlement Stipulation, Mr. Barach agreed to reimburse Ms. Hunt and Mr. Seagrave for the premium paid by each in the amount of $480. Respondent has no other disciplinary history.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Sections 626.611(8) and (10), 626.561(1), 626.621(8), and 626.901, Florida Statutes, placing Respondent's licenses on probation for one year, and assessing a fine against Respondent in the amount of $500.00. RECOMMENDED this 14th day of January, 1993, in Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 1993.
Findings Of Fact Respondent, Mahmooud Hassan Salame, is currently eligible for licensure and is licensed as a life and variable annuity contract salesman; life, health and variable annuity contract salesman; and life and health insurance agent during times relevant herein. During times material, Respondent was an officer and a director of Florida Health Insurance Services, Inc., an incorporated insurance agency doing business in Largo, Florida. During times material, Respondent was a duly appointed agent representing Life and Health Insurance Company of America. On October 1, 1991, Respondent solicited and sold to Francis Bluhm of Punta Gorda, Florida, a health insurance policy. At the time, Respondent received a check from Bluhm in the amount of $1,613.00 in payment of the premium. The check was endorsed by Respondent and deposited in his business bank account at Sun Bank. At the time, Respondent used a general agent, CFA, for processing the Bluhm application and the premium payment was submitted to CFA. For some unexplained reason, the check from Respondent, which represented the premium payment, was not cashed by CFA and the policy was never issued. The funds received by Respondent from Bluhm remained in his possession for more than one (1) year. At no time pertinent herein did Life and Health Insurance Company receive Mrs. Bluhm's premium payment or an application for health insurance from either Respondent or CFA, nor was a policy issued to Mrs. Bluhm. Several months later, in February 1992, Respondent's accountant, Richard Rosseau, prepared Respondent's monthly financial statements for the months of October, November and December 1991. Those financial statements disclosed that the checks sent to CFA by Respondent, which were intended for the Bluhm premium payment, were outstanding. The financial statements were provided to Respondent by Rosseau. During times material, Life and Health Insurance Company of America had a policy whereby upon issuance of a policy, the issued policy was sent to the agent for delivery to the insured. Conversely, if the policy application was rejected and the policy was not issued, it was their practice to notify the agent who would inform the insured so that the agent could adjust his accounts concerning premiums and commissions. During the spring of 1992, Respondent received inquiries from Mrs. Bluhm's daughter regarding the policy which she (Bluhm) had applied for. Mrs. Bluhm advised Respondent that based on conversations with her daughter, she no longer wanted the policy that she applied for and requested a refund of the premiums she tendered. Respondent knew, or should have known, that the insurer did not receive the premium funds and that the Bluhm policy had not been issued as his own financial statements showed that the check in question had not been negotiated and he neither received the policy for delivery to Mrs. Bluhm nor did he notify her that the policy would not to be issued. Additionally, a review of Respondent's monthly agent's statement (received from the company) detailed all monthly transactions which would have divulged that no policy was issued for Mrs. Bluhm. During the summer of 1992, Petitioner made inquiries of Respondent concerning the Bluhm policy and the premium that he received. Respondent responded to the inquiry but did not account for Mrs. Bluhm's money or ascertain whether the policy which she applied for, had been issued. It was not until December 1992 that Respondent finally refunded Mrs. Bluhm's premium payment. Although Respondent maintained that the Bluhm mistake came about based on a snafu with the general agent, CFA's accounting procedures, Respondent's own records indicate that the Bluhm policy was never issued; that the company did not receive the application, and that Mrs. Bluhm should have been allowed to cancel her policy based on the company's 30 day "free look" policy wherein an insured is free to cancel a policy once issued within 30 days. In such instances, the applicant receives a full refund of monies tendered without payment of any commission to the agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Respondent's licenses and eligibility for licensure issued by Petitioner be suspended for a period of six (6) months. DONE AND ENTERED this 24th day of November, 1993, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 1993. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 612 Larson Building Tallahassee, Florida 32399-0333 Mahmooud Hassan Salame 2056 Diane Avenue Palm Harbor, Florida 34683 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
