The Issue The basic issue in this case concerns the scope of the coverage provided by the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The Petitioner incurred extensive expenses for medical treatment, some of which have been paid by the State Plan. The Petitioner contends that under the State Plan, specifically under the "extended coverage" portion of the State Plan, she is entitled to more than has already been paid. The Respondent contends that the correct amount has already been paid.
Findings Of Fact The State of Florida makes available to its officers and employees several group insurance programs. With regard to group health insurance, the available programs include the State of Florida Employees Group Health Self Insurance Plan ("State Plan") and a number of different HMO's, depending upon the county in which an employee resides. Upon commencement of employment, State employees may elect to participate in the State Plan, may elect to join one of the HMO's in their geographical region, or may elect not to participate in any of the voluntary group insurance programs offered by the State. Employees who choose to participate in the State Plan are charged a premium which is normally deducted from their paychecks. The State also contributes regular amounts to pay a portion of the premium for each participating employee. Roberta Rubin has been an employee of the State of Florida for twelve years. She is currently employed as a judicial assistant to Circuit Court Judge George Orr. Roberta Rubin is an insured under the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The basic terms and conditions of the State Plan are set forth in a document titled State of Florida Employees Group Health Self Insurance Plan Benefit Document ("Benefit Document"). The version of the Benefit Document applicable to this case is the version amended effective July 1, 1988. The Department of Administration, Division of State Employees' Insurance, distributes a brochure titled Group Health Self Insurance Plan Benefits which describes the benefits under the State Plan and is intended to assist State employees in deciding which health insurance plan to select. The Department of Administration, Division of State Employees' Insurance, also distributes a brochure titled Group Health Self Insurance Plan Brochure ("Plan Brochure") to individuals enrolled for coverage under the State Plan. At page 1, the Plan Brochure describes the State Plan as follows: "This is a self-insured group health insurance program belonging to those State officers, employees, retirees, and their eligible dependents who elect to participate in the Plan." At the first unnumbered page inside the front cover of the Plan Brochure is a statement of the brochure's purpose, which includes the following: This brochure is not a contract since it does not include all of the provisions, definitions, benefits, exclusions and limitations of the State Self Insured Health Plan's Benefit Document, a copy of which is on file in your agency's personnel office. The purpose of this brochure is to furnish State officers and employees with a summary of the benefits available under the State Self Insured Health Plan. It is hoped that this brochure will answer any questions that might arise about the Plan. The State of Florida Employees Group Health Self Insurance Plan is administered by Blue Cross Blue Shield of Florida, Inc. In December of 1990, the Petitioner, Roberta Rubin, was diagnosed as having cervical cancer. The prognosis and recommended treatment provided by her treating physicians in Miami were not acceptable to Petitioner and she sought another opinion. Petitioner was referred to and ultimately treated by Dr. Neil Rosenshein, a gynecological oncologist at Johns Hopkins Hospital in Baltimore, Maryland. Dr. Rosenshein and Johns Hopkins Hospital are both "non-preferred patient care providers" within the meaning of the definitions in the Benefit Document. Dr. Rosenshein performed the following surgical procedures: radical abdominal hysterectomy; radical pelvic node dissection; bilateral commoniliac node dissection; and periaortic node dissection. The Physician's Procedural Terminology published by the American Medical Association ("PPT Code Book") assigns procedure codes to various surgical procedures that are utilized by billing physicians and various insurers. The PPT Code Book does not contain procedure codes that accurately reflect the latest technology or the complexity, intricacy, or radical nature of the procedures being performed in gynecological cancer surgery. Since no single or multiple procedure codes accurately characterized the surgical procedures performed by Dr. Rosenshein, his bill was submitted to Blue Cross Blue Shield of Florida, Inc., reflecting only one procedure code, 58210, with amodifier, "-22." The modifier "-22" is described in the 1986 version of the Approved Fee Schedule, of the State Plan, as follows: -22 UNUSUAL SERVICES: WHEN THE SERVICES PROVIDED ARE GREATER THAN THOSE USUALLY REQUIRED FOR THE LISTED PROCEDURE, IDENTIFY BY ADDING THIS MODIFIER -22 TO THE USUAL PROCEDURE NUMBER. LIST MODIFIED VALUE. REPORT MAY BE REQUIRED. However, the Benefit Document, as amended effective July 1, 1988, does not provide for or allow the use of the modifier "-22" in determining the amount of payment due on a claim even when the services provided are greater than those usually required for the listed procedure. The modifier "-22" is used by Blue Cross Blue Shield in the administration of other group health insurance plans. The claim form submitted by Dr. Rosenshein went through a level three review by Blue Cross Blue Shield of Florida, Inc., and in response to a request for additional information, Dr. Rosenshein submitted a letter explaining the nature of the procedures performed and a copy of the operative report. Following its review, Blue Cross Blue Shield of Florida, Inc., allowed payment only for the approved fee schedule amount for a single procedure code 58210, or $3,726.00. Dr. Rosenshein's uncontradicted testimony established that the most accurate representation of the procedures he performed would require the following three procedure codes: Code # Description 58210 limited periaortic lymphadenectomy 49201 extensive excision or destruction by any method of intra-abdominal retroperitoneal tumors or cysts or endometriomas 38780 retroperitoneal transabdominal lymphade- nectomy, extensive, including pelvic, aortic and renal nodes. The approved fee schedule for these procedure codes allows the following amounts: Code # Amounts 58210 $3,726.00 49201 2,683.00 38780 2,764.00 Petitioner has incurred the following bills in 1991 which are in excess of the applicable deductible and $1,500.00 out-of-pocket amount provided for under the Extended Coverage provisions of the benefit Document: Provider Amount JHU Department of Radiology $ 159.30 JHU Pain Management Anesthesia 698.10 JHU Anesthesiology 507.70 John Hopkins Hospital Outpatient 50.00 JHU Department of Oncology 503.50 JHU Cardiology 90.00 JHU Pathology 230.00 Dr. Neil Rosenshein 9,904.50 Total $12,143.10 The amounts reflected above are exclusive of benefits already paid by Blue Cross Blue Shield of Florida, Inc., and other insurers and do not include any charges for room and board services or ambulance services. Section I of the Benefit Document contains definitions of numerous terms, including the following: D. "AFS" means the "Approved Fee Schedule," as approved or amended by the Department of Administration. "Covered provider" shall mean a person, institution, or facility as defined herein and who furnishes a covered service or supply. "Covered service or supply" shall mean a medically necessary service or supply furnished by a covered provider and which is covered by the Plan. Q. "Deductible" shall mean the dollar amount of covered services and supplies which each insured is required to pay before benefits are payable by the Plan. BA. "Preferred Patient Care Fee Schedule" or "PPC Fee Schedule" means a list of allowances for each service which has been set and agreed to by the preferred patient care providers. BB. "Preferred Patient Care Provider" or "PPC Provider" means a physician or hospital which has an agreement with the Administrator to provide health care services at set fees to individuals insured under the Plan. A non-preferred patient care provider does not have such an agreement. BJ. "Reasonable Charge" shall mean the following: an average of the amounts charged by the non-preferred patient care hospital, skilled nursing facility, hospice facility or birth center facility for services to individuals using such hospital or facility, as determined by the Administrator; or the charge set forth in the AFS for covered medical-surgical services. BS. "Usual, Customary and Reasonable" or "UCR" means a schedule of fees for covered services in a geographical area which is determined by the Administrator based upon the normal amount charged by the provider in his/her practice, (b) the range of fees for most providers in an area for the same service, and (c) any unusual circumstances or complications requiring additional time, skills and experience by the provider which can be documented. Section II of the Benefit Document contains the provisions regarding coverage for hospital and other facility services. That section reads as follows, in pertinent part: The following services shall be covered when ordered by a physician a nd are medically necessary for the treatment of an insured as a result of a covered accident or illness. Non-Preferred Patient Care Hospital Inpatient Room and Board Services: 1. When confined to a semi-private or private room or ward, 80% of the hospital's average semi-private room rate shall be paid but not to exceed an actual payment of one- hundred and fifty-two ($152.00) per day. Other Covered Non-Preferred Patient Care Inpatient Services: 80% of the actual charge for the following services will be paid by the Plan: Use of operating room, labor room, delivery room and recovery room; All drugs and medicines used by the patient while confined in the hospital, provided such drugs and medicines are listed in "New and Non-Official Remedies" or the "United States Pharmacopoeia"; Solutions (including glucose); Dressings; Anesthesia and related supplies; Oxygen therapy; Transfusion supplies and services including blood, blood plasma and serum albumin, if not replaced; Laboratory services; Electrocardiograms; Basal metabolism examinations; X-ray, including therapy; Electroencephalograms; Diathermy and physical therapy. Covered Outpatient Hospital, Ambulatory Surgical Center or Outpatient Health Care Facility Services: Ninety percent (90%) of the reasonable charge shall be paid for covered outpatient services provided by a Non-PPC provider. When such services are provided by a PPC provider, the plan shall pay ninety percent (90%) of the charge subject to the PPC fee schedule limits. Covered Clinical Laboratory Services: Ninety percent (90%) of the charge for covered clinical laboratory services shall be paid by the Plan not to exceed the maximum amount permitted under the AFS. Section III of the Benefit Document contains the provisions regarding coverage for medical-surgical services. That section reads as follows, in pertinent part: A. Ninety percent (90%) of the charge for medically necessary inpatient/outpatient services provided to an insured by a non- preferred patient care physician, physical therapist or nurse anesthetist for the treatment of the insured as a result of a covered accident or illness shall be paid by the Plan, subject to the provisions of Section VI and Section XXIII; however, such payment shall not exceed the maximum amount permitted under the AFS. C. If a covered procedure does not have a specified fee listed in the AFS, pricing will be performed by the Administrator in accordance with its normal procedures. Section V of the Benefit Document, titled "Extended Coverage," contains the provisions regarding what is commonly known as the "stop loss" feature of the plan. That section reads as follows, in pertinent part: If under individual or family coverage, the out-of-pocket expenses of an insured for covered services under Section II., Section III., Section IV and Section XXV amount to one thousand five hundred dollars ($1500.00) during a calendar year, all further covered charges for such services incurred by the insured during the remainder of the calendar year shall be paid by the Plan at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. If under family coverage, the out-of- pocket expenses of two or more insureds for covered services under Section II., Section III., Section IV. and Section XXV. amount to three thousand dollars ($3000.00) during a calendar year, all further covered charges for such services incurred by any insured during the remainder of the calendar year shall be paid at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. Maximum payments subject to Subsections A. and B. above shall apply only to room and board services under Subsection II A., Subsection II E., Subsection II G., and ambulance services under Section IV, as follows: One hundred and ninety dollars ($190.00) per day for hospital room and board; Ninety-five dollars ($95.00) per day for room and board in a skilled nursing facility; Three hundred and eighty dollars ($380.00) per day for an intensive care unit; Two hundred and eighty-five dollars ($285.00) per day for a progressive care unit; One hundred and twenty-five dollars ($125.00) per use for ambulance service; One thousand dollars ($1000.00) for ambulance transportation of a newborn child; One hundred and ninety dollars ($190) per day for room and board in a specialty institution or residential facility. Charges for covered services and supplies applicable to the deductible(s) under the Plan shall not be considered an out-of-pocket expense under the provisions of Section V. The brochure titled Group Health Self Insurance Plan Brochure contains the following language at page seven regarding the stop loss feature of the plan: Maximum Out-Of-Pocket Expense If, during a calendar year, the out-of-pocket expenses for one person insured under individual or family coverage amount to $1,500, or $3,000 for two or more persons insured under family coverage, all further charges will be paid at 100%, subject to the lifetime maximum, any allowance limits for room and board while confined to Non-PPC facilities, and ambulance transportation allowance limits for newborn children. This provision applies to all covered services except Hospice services; however, charges applicable to the deductible shall not be considered an out-of-pocket expense. The language of Section V of the Benefit Document regarding "Extended Coverage" is ambiguous with regard to the scope of the coverage provided by that section of the benefit document. The language of Section V of the Benefit Document regarding "Extended Coverage" also conflicts with the language at page seven of the Plan Brochure regarding "Maximum Out-Of-Pocket Expense. /1
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Department of Administration issue a Final Order to the following effect: (a) concluding that the "Extended Coverage" language of Section V of the Benefit Document is ambiguous; (b) concluding that the "Extended Coverage" language of Section V of the Benefit Document is in conflict with the language at page 7 of the Plan Brochure under the caption "Maximum Out-Of-Pocket Expense;" (c) concluding that after the Petitioner's out-of- pocket expenses for covered services reached $1,500, she was entitled to have "all further charges" for covered services paid at 100% of the amount of the charges except as specifically limited in paragraph C. of Section V of the Benefit Document; and (d) providing for payment in the total amount of $12,143.10 to the Petitioner or to the providers listed in paragraph 15 of the Findings of Fact. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22 of May 1992. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 22 day of May 1992.
The Issue Whether respondent is obligated to remit to petitioner, administrator of the State of Florida Employees Group Health Self-Insurance Program, an alleged underpayment of insurance premiums in the amount of $435.81, covering the period from October, 978,through June, 1983.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department enter a Final Order requiring respondent to remit $435.81, for total insurance premium underpayments, within 90 days, failing which respondent's insurance coverage under the State Employees Insurance Program should be cancelled and the underpayment obtained through certified payroll deductions from any salary due the respondent. DONE and ENTERED this 13th day of March, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1984. COPIES FURNISHED: Daniel C. Brown, General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Wyatt Wyatt Department of English University of Central Florida Post Office Box 25000 Orlando, Florida 32816 Nevin G. Smith, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
The Issue Whether the Respondent committed the violations alleged in the Amended Administrative Complaint filed with the Division of Administrative Hearings on September 15, 2000, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of Insurance is the state agency responsible for licensing insurance agents in Florida and with regulating their conduct. Section 624.307 and Chapter 626, Part I, Florida Statutes (1999). At the times material to this proceeding, Ingrid Machado was Florida-licensed insurance agent. In March 1999, Teresita Baldor was interested in purchasing health insurance. Ms. Baldor had previously owned a private school and had been insured through the school's group health insurance policy. After she sold the school and began teaching mathematics at Miami-Dade Community College and Saint Thomas University, she no longer had health insurance coverage. On or about March 10, 1999, Ms. Machado met with Ms. Baldor at Ms. Baldor's home. Ms. Baldor knew Ms. Machado only as an insurance agent and did not know whether Ms. Machado was affiliated with an insurance agency. Ms. Machado told Ms. Baldor during the March 10, 1999, visit that she would try to place Ms. Baldor in a group for health insurance purposes but that she did not know at that time the group Ms. Baldor would be placed in or the name of the insurance company that would provide the health insurance coverage. Ms. Machado told Ms. Baldor during the visit that she would let Ms. Baldor know the name of the company providing her coverage and that she would send Ms. Baldor the coverage information. During her March 10, 1999, visit to Ms. Baldor's home, Ms. Machado asked Ms. Baldor for general identification information, such as her name and social security number, and for other information, such as her weight. Ms. Baldor did not sign any document during this visit and cannot recall if Ms. Machado completed any form during their conversation. Ms. Machado asked Ms. Baldor to make out two checks, one in the amount of $175.00 and one in the amount of $100.00, but Ms. Baldor does not remember Ms. Machado's telling her the reason she needed two separate checks. Ms. Machado asked Ms. Baldor to leave the line for the name of the payee blank, again telling Ms. Baldor that she did not yet know which insurance company would ultimately provide health insurance coverage to Ms. Baldor. Ms. Machado told Ms. Baldor that the name of the company would be filled in on the checks at a later time. Ms. Machado told Ms. Baldor that she would have health insurance coverage effective March 15, 1999. On or about March 20, 1999, Ms. Baldor telephoned Ms. Machado because Ms. Baldor had not received any information regarding health insurance coverage. Ms. Machado told Ms. Baldor that she was having complications with her pregnancy and could no longer handle Ms. Baldor's insurance matters. Ms. Machado gave Ms. Baldor the telephone number of the "Durey Agency," told her that this agency would work with her to obtain health insurance coverage, and gave her Ray Gonzalez's name. Ms. Machado had no further contact with Ms. Baldor after the telephone conversation on or about March 20, 1999, during the times material to this proceeding. At some point, Ms. Baldor called the telephone number Ms. Machado had given her to find out why she had not received any information regarding her health insurance coverage. Ms. Baldor told the person who answered the phone, a woman named Maria, that she wanted her checks back if she could not give her any information "right then." Later the same day, Maria called Ms. Baldor and told her that she had been placed in a group for health insurance purposes. A Neighborhood Health Partnership Enrollment Form was submitted to the Neighborhood Health Partnership on behalf of Ms. Baldor. On the form, Ms. Baldor was identified as an employee of "International Marketing." A signature appeared on the bottom of the form purporting to be that of Ms. Baldor, and the date next to the signature was "5/10/99." Ms. Baldor never saw the Neighborhood Health Partnership Enrollment Form. A few weeks after Maria told Ms. Baldor that she had been placed in a group for health insurance purposes, Ms. Baldor received a package from the Neighborhood Health Partnership that contained an identification card indicating that she was enrolled in the "International Marketing Group" and indicating that her insurance coverage with the Neighborhood Health Partnership was effective as of June 15, 1999. During Ms. Baldor's conversations with Ms. Machado, Ms. Machado never mentioned the Neighborhood Health Partnership or International Marketing Group. The checks Ms. Baldor provided to Ms. Machado were made payable to the Durey Insurance Group and were processed by the bank on or about May 17, 1999. In addition, Ms. Baldor wrote checks to the Durey Insurance Group dated July 10, 1999, and August 9, 1999, as payment for her health insurance premiums. Ms. Baldor's insurance coverage with the Neighborhood Health Partnership was eventually cancelled. It was Ms. Baldor's understanding that it was cancelled because the Durey Insurance Group did not remit her premium to the Neighborhood Health Partnership and because the "International Marketing Group" in which she was placed by the Durey Insurance Group did not exist. Summary The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado's actions with respect to her dealings with Ms. Baldor demonstrated a lack of fitness or trustworthiness or demonstrated that Ms. Machado lacked reasonably adequate knowledge and technical competence to engage in the transaction of insurance. The Department presented no evidence to establish any standards of skill, ability, knowledge, or competence by which Ms. Machado's acts or omissions can be judged to determine if she committed any of the violations with which Ms. Machado is charged. It is not possible to determine from the evidence presented if Ms. Machado's actions deviated from a standard of fitness or trustworthiness which a reasonably prudent insurance agent would be expected to exhibit under the circumstances or if Ms. Machado's conduct fell below a standard establishing the degree of knowledge and technical competence which a reasonably prudent insurance agent would be expected to exhibit under the circumstances. 2/ The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado engaged in any unfair method of competition or deceptive practices or knowingly made any misrepresentations to Ms. Baldor regarding health insurance coverage. The uncontroverted evidence establishes that Ms. Machado took some minimal information from Ms. Baldor and told her she would place her in a group for health insurance coverage. The uncontroverted evidence further establishes that Ms. Machado did not represent to Ms. Baldor that she would place Ms. Baldor in any specific group, that she would place Ms. Baldor with any particular insurance company, 3/ or that Ms. Baldor would be provided with any specific coverage or benefits. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado knowingly collected from Ms. Baldor any sums in excess of premium because, at the time Ms. Machado collected the two checks from Ms. Baldor, Ms. Machado did not know which insurance company would write health insurance coverage for Ms. Baldor and, therefore, did not know what the premium would be. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado knowingly collected from Ms. Baldor any premium for insurance that was not, in due course, provided. The uncontroverted evidence establishes that Ms. Machado initially agreed to procure health insurance coverage for Ms. Baldor; however, because of her pregnancy, Ms. Machado referred Ms. Baldor to the Durey Insurance Group approximately ten days after Ms. Machado's only meeting with Ms. Baldor and advised Ms. Baldor that the Durey Insurance Group would assist Ms. Baldor in obtaining health insurance. There is no persuasive evidence establishing that Ms. Machado knew or should have known that Durey Insurance Group would not, in due course, provide legitimate health insurance coverage to Ms. Baldor. The evidence presented by the Department is not sufficient to establish that Ms. Machado had any involvement, directly or indirectly, in the transaction in which the Durey Insurance Group identified Ms. Baldor as an employee of "International Marketing" and obtained health insurance for Ms. Baldor with the Neighborhood Health Partnership as a member of the "International Marketing Group." 4/ Furthermore, the evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado's actions made her a source of injury to Ms. Baldor or anyone else. As noted above, the uncontroverted evidence establishes that, soon after Ms. Machado's visit with Ms. Baldor on March 10, 1999, Ms. Machado advised Ms. Baldor that she could not act as Ms. Baldor's agent in placing her with a health insurance company, that she had sent Ms. Baldor's information and checks to the Durey Insurance Group, and that Ms. Baldor should contact the Durey Insurance Group for further assistance. Ms. Baldor's contacts subsequent to the latter part of March 1999 with respect to her health insurance coverage were exclusively with personnel who purported to be affiliated with the Durey Insurance Group. A representative of the Durey Insurance Group notified Ms. Baldor that her health insurance would be provided by the Neighborhood Health Partnership, and Ms. Baldor's premium checks were made payable to the Durey Insurance Group. Finally, the Neighborhood Health Partnership Enrollment Form identifying Ms. Baldor as an employee of International Marketing is dated approximately two months after Ms. Machado's last contact with Ms. Baldor, and the Department failed to present any evidence tending to establish that Ms. Machado had any involvement in the preparation of this form.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance issue a final order dismissing the Amended Administrative Complaint against Ingrid Machado. DONE AND ENTERED this 15th day of November, 2000, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 15th day of November, 2000.
The Issue Whether the State of Florida through its Employees Group Health Self Insurance Plan is responsible for paying medical expenses incurred by Petitioner's newborn child where Petitioner had only individual coverage in effect at the time of that child's birth?
Findings Of Fact The State of Florida makes available to its employees several group insurance programs. In the area of health insurance, employees may choose to participate in the State of Florida Employees Group Health Self Insurance Plan, or they may enroll in a number of different HMOs depending upon the county in which each employee resides. The State of Florida Employees Group Health Self Insurance Plan (hereinafter "the Plan") is a plan of self insurance established by the State, specifically described in a Benefit Document, and administered by Blue Cross/Blue Shield. In addition to the provisions of the Plan embodied in the Benefit Document, the self insurance plan is regulated by those rules contained in Chapter 22K, Florida Administrative Code. If an employee voluntarily chooses to participate in the Plan, the State as the employer contributes to the employee's costs by paying a portion of the premium for each employee. HMOs wishing to capture a portion of the State employee insurance market may participate in bidding procedures whereby the winner(s) can offer insurance to State employees in particular geographical locations. Winning HMOs must comply with many of the rules and provisions involved in the Plan but are still able to establish additional benefits and requirements for coverage. If an employee voluntarily chooses to participate in an HMO insurance program, the State will assist with the employee's costs by contributing to that employee's insurance premium expense. At the time that they commence employment with the State, employees may elect to participate in the Plan, in one of the HMOs approved for that particular geographical location, or may choose to not participate in any of the voluntary insurance programs offered through the State. Thereafter, employees may only join one of the insurance programs or switch between programs during an annual open enrollment period. An employee may purchase individual coverage, insuring only himself or herself, or an employee may purchase family coverage, insuring that employee and one or more of his or her eligible dependents. During an open enrollment period, an employee may switch between individual coverage and family coverage for the following year. Under the State Plan, there is an exception to the restriction that employees may only change coverage and health plans during the open enrollment period. An employee having individual coverage may change to family coverage within 31 days after the date of acquisition of any eligible dependent. In that event, coverage for the eligible dependent does not relate back to the date of acquisition but rather will commence on some future date following the payment of the additional premium required for the additional family coverage. Similarly, an employee with only individual coverage may begin family coverage prior to acquiring eligible dependents and may obtain coverage for those dependents effective on the actual date the dependent is acquired by making application in time for a complete month's premium to be deducted prior to the first day of the month during which the dependent(s) will be acquired. In other words, payment must be made prior to the acquisition of an eligible dependent and the change to family coverage with its increased premium must be made prior to the acquisition of the dependent in order that coverage can be effective as of the date of acquisition. During open enrollment periods, all employees (even those not currently participating in any of the insurance programs offered by the State) are given summary information regarding the various programs in which they are being given an opportunity to participate. Brochures giving summarized comparisons of the Plan and the relevant HMOs are provided to all employees. Employees are advised, if they have questions regarding the Plan, to contact their personnel officer or the Division of State Employees' Insurance. After the employee makes a selection as to which health plan he or she wishes to participate in, if any, the employee will subsequently receive more detailed information about that plan. For example, an employee choosing to participate in the Plan will subsequently receive a copy of the State of Florida Employees Group Health Self Insurance Plan Brochure. The first page of that Brochure specifically advises the employee that the brochure does not include all of the provisions, definitions, benefits, exclusions, and limitations of the Plan. The Brochure specifically advises the employee that it is a summary of the benefits and that any questions the employee might have should be presented to the employee's agency personnel offices or the Office of State Employees' Insurance, and provides that latter office's address and telephone numbers. The Plan itself is a lengthy document which is not distributed to each individual employee but rather is made available to each agency's personnel office for reference by any interested employee. Under the Plan, a woman with individual coverage is entitled to maternity or pregnancy benefits. As part of those benefits, charges for "well baby care," i.e., the charges for the nursery for the baby, are covered under the Plan as part of the maternity benefit of the mother. In well-baby care, charges are not incurred by the baby as a separate patient. On the other hand, if a baby is ill and is admitted to the hospital as a patient in its own right, well-baby care coverage does not apply, and family coverage must be in effect or the infant will be an uninsured individual under the State Plan. The Dade County Public Defender's Office has approximately 265 employees. Faith Quincoses, an Administrative Assistant in that office, began her employment there in 1981 when the office had approximately 165 employees. As the number of office personnel increased, it was determined that someone within that Office should be responsible for employee benefits. That assignment was given to Quincoses, who at the time had duties related to payroll. Quincoses had no training in employee benefits, particularly employee insurance benefits, prior to her assuming responsibility for those duties at the Dade County Public Defender's Office. After she assumed those duties, the Public Defender's Office provided her with no training, and that office did not send her to any of the training sessions regularly conducted by Respondent for employees with and without personnel duties, including those seminars related to employee insurance benefits. When Quincoses would receive informational brochures and memoranda from Respondent regarding employee insurance benefits, she would read them but intentionally did not study them. She did not believe it was her responsibility to assist employees in selecting a particular insurance plan, or in advising employees as to which plan best met that employee's needs, or in answering any specific questions regarding coverage that any employee may have other than routine questions. Although many, if not most, of the informational brochures received from time to time by Quincoses advised employees (including Quincoses) to contact the Division of State Employees' Insurance with any questions regarding benefits and coverage, Quincoses did not contact that office when she had questions about the several insurance plans offered by the State to its employees. She very seldom contacted the Division of State Employees' Insurance to ask questions; rather, she discussed insurance benefits and coverage questions on an almost daily basis with a payroll clerk who worked for the Justice Administrative Commission, an agency belonging to the judicial branch of government with no responsibility or authority for administering the various insurance programs for state employees. Although Quincoses knew that she did not posses a copy of the State of Florida Employees Group Health Self Insurance Plan and had never read a copy, she made no effort to obtain a copy other than to once request a copy from the payroll clerk she daily contacted at the Justice Administrative Commission. When told by that payroll person that she did not have a copy of the Plan, Quincoses made no further efforts to obtain a copy and never requested a copy from the Division of State Employees' Insurance. Quincoses knew she was not an insurance expert and did not feel the need to become one. She believed that her responsibilities regarding the various insurance programs made available to employees by the State of Florida was to simply disseminate information provided to her, fill out the appropriate forms for payroll deductions, answer routine questions, and refer specific questions to the Division of State Employees' Insurance. She rightfully believed that each employee's decision as to which of the individual plans that employee should select was the employee's responsibility. Petitioner Annemarie Harris is an attorney employed as an Assistant Public Defender by the Dade County Public Defender's Office since October, 1983. As a new employee, she chose to enroll in one of the group health insurance programs approved by the State. She chose to join an approved HMO plan rather than enroll in the State of Florida Employees Group Health Self Insurance Plan. Thereafter, and up through December of 1987, each year during the open enrollment period, Petitioner chose to participate in one of the approved HMOs rather than the State's Self Insurance Plan. In December of 1987, the contract between the HMO of which Petitioner was a member and the State of Florida was being terminated, and Petitioner therefore had the option of selecting to participate in one of the other group health insurance programs offered through the State of Florida. In December of 1987, Petitioner was three months pregnant. Her baby was due to be born approximately June 20, 1988. Petitioner was, therefore, very interested in the most extensive coverage which she could obtain for her maternity benefits. Petitioner advised Quincoses that her expected delivery date was June 20, 1988, and that she wished her newborn to be covered by the insurance policy to be selected by Petitioner. Quincoses advised Petitioner that the baby's expenses would be covered if Petitioner added the newborn baby to Petitioner's coverage within 31 days after the date the baby was born. Quincoses did not advise Petitioner that waiting until after the baby's birth would mean that the baby would not be an individual insured until after Petitioner had paid the premium in time for the baby to be added as an insured by the first day of a month subsequent to the baby's birth, since Quincoses did not understand that distinction. The information Quincoses gave Petitioner was wrong and is not contained in any of the written materials describing the Plan which had been transmitted by the State to Quincoses or Petitioner, and is contrary to the information contained in Chapter 22K, Florida Administrative Code. Petitioner then conducted her own investigation of which health plan she wished to choose by asking her friends that worked in the Public Defender's Office about their personal experiences. Further, as Petitioner testified at the final hearing in this cause, Petitioner's husband strongly insisted that she choose the State's Self Insurance Plan in which Plan he had previously participated as a State employee and with which he therefore had some familiarity. Petitioner did not contact the Division of State Employees' Insurance regarding her specific questions and specific situation, did not consult the Benefit Document itself and did not--although both she and her husband are attorneys--consult the rules and regulations regarding coverage contained within Chapter 22K, Florida Administrative Code. Petitioner voluntarily selected the State's Self Insurance Plan and purchased only individual coverage, insuring herself at a lower premium than family coverage which would have covered the newborn infant as of the date of the baby's birth. It is unknown whether Petitioner relied solely on the advice of Quincoses in choosing to purchase individual coverage rather than family coverage, whether Petitioner relied instead on the advice she obtained from questioning her friends or whether she relied upon her husband's desires, in choosing to participate in the State Plan or in choosing to purchase only individual coverage. Although the basis for Petitioner's decision is unknown, her intentions at the time are clear. She planned to, and took steps to, initiate the paperwork necessary to switch to family coverage and pay the additional premium required early enough so that insurance for the baby would be in place on June 1, 1988, prior to the baby's expected arrival date. During April of 1988, Petitioner caused Quincoses to begin filling out the appropriate forms so that Petitioner would have family coverage in place as of June 1, 1988. Since Quincoses had earlier advised Petitioner that Petitioner could switch to family coverage after the baby's birth (which would make the baby's coverage effective subsequent to the baby's birth) but Petitioner chose instead to attempt to convert to family coverage prior to the baby's birth (which was contrary to Quincoses' advice and would have established coverage immediately upon the baby's birth), it can be reasonably inferred that Petitioner understood that the difference between converting to family coverage prior to the baby's birth rather than subsequent to the baby's birth involved the sole issue of the date on which the baby's coverage would become effective. Although Quincoses initiated the paperwork to have family coverage in place for Petitioner prior to the baby's birth expected to occur on June 20, 1988, Petitioner experienced complications with her pregnancy causing the baby to be delivered prematurely on April 24, 1988, prior to Petitioner signing and processing the paperwork started by Quincoses. Almost immediately after the baby's birth, the baby was transferred from the hospital in which her mother was a patient to another hospital where the baby was admitted as a separate patient. The baby remained in that hospital for some time, incurring medical expenses of approximately $180,000.00. Petitioner's medical expenses were paid by the Plan pursuant to her individual coverage. The baby's medical expenses were submitted to the Plan. Petitioner's claim for payment of the baby's medical expenses was denied for the reason that the baby was admitted to a different hospital than the mother as a separate patient but was not an insured under any insurance policy as of the date of the baby's birth, the date on which the baby commenced incurring her own personal medical expenses. When Petitioner converted her individual coverage to family coverage subsequent to the baby's birth, her claims for payment of the baby's medical expenses incurred subsequent to the date upon which the baby became an insured under the State Plan were denied since they arose from a condition pre-existing the date of commencement of insurance coverage. On April 24, 1988, Petitioner's newborn child was not an insured under the State Plan since Petitioner only had individual coverage on that date.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioner's claims for payment of medical expenses incurred by Petitioner's newborn baby which are the subject of this proceeding. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of October, 1989. LINDA M. RIGOT 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 27th day of October, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO 88-5519 Petitioner's proposed Findings of Fact numbered 1-4, 7-9, 15-18, 34, 35, 37, 38, and 40-42 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed Findings of Fact numbered 5, 6, 10-12, 21, and 33 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed Findings of Fact numbered 13, 14, 39, 44, and 45 have been rejected as being subordinate to the issues for determination herein. Petitioner's proposed Findings of Fact numbered 19 and 22-25 have been rejected as not constituting findings of fact but rather as constituting recitation of the testimony, argument of counsel, or conclusions of law. Petitioner's proposed Findings of Fact numbered 20, 26-31, and 43 have been rejected as being irrelevant to the issues under consideration herein. Petitioner's proposed Finding of Fact numbered 32 has been rejected as being contrary to the weight of the totality of the evidence in this cause. Petitioner's proposed Finding of Fact numbered 36 has been rejected as being unnecessary for determination of the issues involved herein. Respondent's proposed Findings of Fact numbered 1-5, 7-18, the second 19-24, the first 27, the second 26, the second 27, and 28 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed Findings of Fact numbered 6, the first 19, 25, and the first 26 have been rejected as being subordinate to the issues required to be determined in this proceeding. COPIES FURNISHED: James N. Hurley, Esquire William P. Harris, Jr., Esquire Mitchell, Harris, Horr & Associates 2650 Biscayne Boulevard Miami, Florida 33137-4590 William A. Frieder, Esquire Department of Administration Office of the General Counsel 440 Carlton Building Tallahassee, Florida 32399-1550 A. J. McMullian, III Interim Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
The Issue Whether Respondent committed the offenses set forth in the Administrative Complaint and, if so, the penalty that should be imposed.
Findings Of Fact At all times material hereto, Respondent was licensed by Petitioner as an insurance agent in the State of Florida licensed to sell health insurance. At all times material hereto, Respondent was not formally affiliated with Cleveland Insurance Agency. However, Cleveland Insurance Agency often referred clients to Respondent for health and Medicare supplement policies because Cleveland Insurance Agency did not handle those type policies. Prior to November 1987, Respondent, working in conjunction with Cleveland Insurance Company, sold to Irene Goldberg a health insurance policy issued through Provider's Fidelity Insurance Company (Provider's Fidelity). On November 29, 1987, Ms. Goldberg paid $1,504.56 as the annual renewal premium for this health insurance policy which extended her coverage through December 4, 1988. In March of 1988, Ms. Goldberg contacted Cleveland Insurance Agency and requested that someone review her health insurance coverage. Cleveland Insurance Agency referred Ms. Goldberg's request to Respondent. Respondent was familiar with the terms and conditions of the health insurance coverage Ms. Goldberg had in place and he knew that she had paid the premium for this policy through December 1988. Upon visiting with Irene Goldberg on or about March 10, 1988, Respondent presented Ms. Goldberg with a business card that intentionally misrepresented his status with Cleveland Insurance Company. Because Ms. Goldberg had placed most of her insurance needs through Cleveland Insurance Agency during the past few years, Respondent intentionally misled Ms. Goldberg into thinking that he was formally affiliated with Cleveland Insurance Agency. During that visit, Respondent recommended to Ms. Goldberg that she purchase a policy of insurance issued by First National Life Insurance Company (First National) to replace her Provider's Fidelity policy. Ms. Goldberg specifically discussed with Respondent a preexisting medical condition which required periodic medical treatment and the need for the treatment required by this condition to be covered by the new policy. Respondent assured Ms. Goldberg that the preexisting condition would be covered by the new policy. Respondent also told Ms. Goldberg that he would cancel the Provider's Fidelity policy and that he would secure on her behalf a pro rated refund of the premium she had paid to Provider's Fidelity. Based on Respondent's representations, Ms. Goldberg agreed to purchase the First National policy. On March 30, 1988, Ms. Goldberg gave to Respondent a check made payable to First National Life Insurance Company in the amount of $1,892.00, the amount Respondent had quoted as the full annual premium. A few days later, Respondent contacted Ms. Goldberg and advised her that there would be an additional premium in the amount of $1,360.00, which Ms. Goldberg paid on April 4, 1988. This additional premium was, according to Respondent, for skilled nursing care coverage which First National had added as a mandatory feature of the policy Ms. Goldberg had purchased. The skilled nursing care coverage was, in fact, a separate policy which was not a mandatory feature of the policy Ms. Goldberg thought she was purchasing from First National. Respondent misled Ms. Goldberg as to the terms of the policies he had sold her and as to the number of policies he had sold her. Respondent represented that the premiums he had collected on behalf of First National were in payment of a single health insurance policy. Respondent had sold Ms. Goldberg four separate policies, and he collected a commission for each of the policies. When Ms. Goldberg received her insurance documents from First National, she learned for the first time that Respondent had sold her four separate policies of insurance, including a cancer policy that she and Respondent had never discussed. In addition to the health and cancer policies, Respondent sold Ms. Goldberg a home convalescent care policy and a separate skilled nursing care policy. Respondent had sold Ms. Goldberg policies of insurance that Ms. Goldberg had not requested and that she did not know she was buying. Upon reading the health policy, Ms. Goldberg discovered that her new First National Life policy excluded her preexisting condition. Ms. Goldberg contacted Respondent who told her that he had not cancelled the Provider's Fidelity policy as he had agreed to do and that he had not tried to get the pro rated refund of the Provider's Fidelity premium. Respondent told her that any claim she might have for the preexisting condition should be filed under the Provider's Fidelity policy. Ms. Goldberg then complained to First National which, after an investigation, refunded to Ms. Goldberg the premiums she had paid for the three policies. Respondent had received a commission on the policies of insurance he had sold to Ms. Goldberg. As of the time of the hearing, Respondent had not reimbursed First National for the commission he had received based on the premiums that were subsequently refunded to Ms. Goldberg. In February 1988, Respondent met with Helen Krafft to discuss her health insurance needs. During the course of the meeting, Respondent presented to Ms. Krafft a business card which intentionally misrepresented his affiliation with Cleveland Insurance Agency. This business card misled Ms. Krafft into believing that Respondent was formally affiliated with Cleveland Insurance Agency. On February 18, 1988, Respondent sold to Ms. Krafft a health insurance policy through First National and a health insurance policy issued through American Sun Life, at which time he collected a premiums in the total amount of $519.80 for six months of coverage from each of the two policies. In July 1988, Respondent visited with Ms. Krafft at her place of work and told her that she should pay her renewal premiums for the health insurance policies on or before August 1, 1988, to avoid a premium increases. Respondent knew, or should have known, that there were no premium increases scheduled for those policies and that there were no discounts for early payment of the premiums The renewal premiums Respondent quoted Ms. Krafft for the two policies totaled $485.40. At Respondent's instructions Ms. Krafft delivered to Respondent her signed check dated July 18, 1988, in the amount of $485.40 with the payee's name left blank. Respondent accepted these trust funds from Ms. Krafft in a fiduciary capacity. Instead of using these funds to pay the premiums as he had agreed to do, Respondent filled his name in on Ms. Krafft's check and cashed it. Ms. Krafft learned that Respondent had not used the funds she had given him to renew her two policies when she started getting late payment notices from the two insurance companies with accompanying threats of cancellation if the premiums were not paid. In late September 1988, Respondent paid to Ms. Krafft the sum of $485.40 in cash. In June of 1988, Steven R. and Marilyn Hill applied, through Respondent, for a health policy with First National. The Hills paid the initial premium of $304.37 by check made payable to First National on June 26, 1988. Because of underwriting considerations, First National informed Respondent that the Hills would have to pay a higher premium to obtain the insurance they wanted. The Hills were not willing to pay the higher premium and requested a refund of the amount they had paid. First National made the refund check payable to Steven Hill and mailed the check to Respondent. There was no competent, substantial evidence as to what happened to the check other than First National Life stopped payment on the check and it never cleared banking channels. A second refund check was later delivered to Steven Hill. First National contended at the hearing that Respondent had accrued a debit balance in the amount of $2,692.45 as a result of his dealings as an agent of the company. Respondent contended that he is entitled to certain offsets against the amount First National claims it is owed based on commissions he contends that he had earned but had not been paid. First National had not, prior to the hearing, submitted to Respondent any type of accounting of sums due, nor had it explicitly demanded any specific sum from Respondent. Instead, First National had made a blanket demand that Respondent return all materials belonging to First National and advised that future commission checks would be held in escrow. From the evidence presented it could not be determined that Respondent was indebted to First National.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order which finds that Respondent committed the multiple violations of the Florida Insurance Code as set forth in the Conclusions of Law portion of this Recommended Order and which further revokes all licenses issued by the Department of Insurance and Treasurer to Respondent, John Richard Klee. DONE AND ENTERED this 30th day of November, 1989, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division Of Administrative Hearings this 30th day of November, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-3269 The following rulings are made on the proposed findings of fact submitted by Petitioner: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph 3 are rejected in part as being a conclusion of law. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 5 are adopted in material part by paragraph 3 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 4 of the Recommended Order. The proposed findings of fact in paragraph 7 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 8 are adopted in material part by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 9 are adopted in material part by paragraphs 5 and 6 of the Recommended Order. 10 are adopted in material part 11 are adopted in material part 12 are adopted in material part 13 are adopted in material part 14 are adopted in material part 15 are adopted in material part 16 are adopted in material part 17 are adopted in material part 18 are adopted in material part 19 are adopted in material part 20 are adopted in material part 21 are adopted in material part 22 are adopted in material part 23 are adopted in material part 24 are adopted in material part 25 are rejected as being The proposed findings of fact in paragraph by paragraphs 5 and 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph by paragraphs 5 and 7 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 10 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 2 and 10 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph unsubstantiated by the evidence. The proposed findings of fact in paragraph 26 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 27 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 28 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 29 are adopted in material part by paragraph 14 of the Recommended Order. The proposed findings of fact in paragraph 30 are adopted in material part by paragraph 14 of the Recommended Order. COPIES FURNISHED: Roy H. Schmidt, Esquire Office of the Treasurer Department of Insurance 412 Larson Building Tallahassee Florida 32399-0300 Greg Ross, Esquire 400 Southeast Eighth Street Fort Lauderdale, Florida 33316 Don Dowdell General Counsel The Capitol Plaza Level Tallahassee, Florida 32399-0300 Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact Respondent, Mark Alan Gable, is currently eligible for licensure and is licensed in Florida as a life and health insurance agent and was so licensed at all times relevant to these proceedings. Respondent at all times relevant to these proceedings was licensed in this state to solicit health insurance on behalf of National States Insurance Company (herein National). On or about September 28, 1988, Respondent visited the home of Mabel Bowmaster of Sarasota, Florida, for the purpose of soliciting health insurance. At the time, Ms. Bowmaster was insured under the provisions of a protective life medicare supplement insurance policy. Ms. Bowmaster was interested in purchasing a policy that offered custodial nursing care benefits as her protective life policy did not offer such coverage. Respondent was not a stranger to Ms. Bowmaster as he had sold her a medicare supplement policy in 1987 and had processed claims for Ms. Bowmaster during 1987, although she did not remember him. Although Ms. Bowmaster was interested in purchasing custodial care, when Respondent explained to her the cost of the coverage versus the benefits that she could receive, she was convinced that the premiums for a custodial care policy was too expensive and she declined to purchase the coverage. In fact, Respondent tendered a certification to Ms. Bowmaster which acknowledged that she had been explained the benefits, that she understood them and there is, in that medicare supplement policy, a specific exclusion of custodial care. (Respondent's Exhibit 18 and 3.) During August 1989, Ms. Bowmaster was visited by another insurance agent, a Chris Morrison, who was also soliciting insurance. At agent Morrison's urging, Ms. Bowmaster cancelled the medicare supplement policy that Respondent had sold her after he showed her a copy of a St. Petersburg Times article which was critical of Respondent and after Morrison suggested that Respondent was in trouble with the Petitioner. When Ms. Bowmaster cancelled her insurance policy that she purchased from Respondent, she wrote a letter to National States Insurance Company asking them not to honor the bank draft authorization that she had signed for the year 1989. Notwithstanding the letter Ms. Bowmaster sent to National, the bank draft was honored. As a result, Ms. Bowmaster filed an insurance consumer service complaint with Petitioner stating the reason for cancelling the policy was that she had duplicative coverage as a result of her purchase of the same coverage from Mr. Morrison and she therefore requested a refund of the National policy in light of her request that the bank draft be terminated. In none of Bowmaster's correspondence to National during August and November 1989, was there any reference of any misrepresentation of coverage by Respondent for custodial care coverage. On or about February 11, 1988, Respondent visited the home of Alice V. Bowling of Bradenton for the purpose of soliciting health insurance. Ms. Bowling is an 82 year-old widow whose primary source of income is social security. At the time, Ms. Bowling was insured under the provisions of a Prudential Insurance AARP (American's Association of Retired Persons) medicare supplement insurance policy and an Old Southern medicare supplement insurance policy. Respondent discussed with Ms. Bowling her existing insurance coverages. Ms. Bowling was interested in obtaining an insurance policy that would pay benefits for hearing aids, eyeglasses and dental care. Neither of her existing policies offered such benefits. Respondent's purpose in visiting Ms. Bowling during February of 1988 was to follow-up on a lapse of a National States Medical/Surgical policy. During the interview with Ms. Bowling, she informed Respondent that she had in effect a policy with AARP and the National policy that was soon to lapse. She did not tell him that she had a policy with Old Southern. While Ms. Bowling testified that she showed Respondent a copy of the Old Southern policy, the evidence adduced at hearing indicates otherwise. It was noted that when Respondent purchased the National States policy during 1987, she did not tell that agent about the existence of the Old Southern policy. (Respondent's Exhibit 7.) Additionally, when Ms. Bowling signed the notice to applicant regarding replacement of accident and sickness insurance form, she indicated that she was replacing a Prudential policy. The application for insurance also indicates her replacement for the Prudential policy. After Respondent reviewed with Ms. Bowling her AARP policy and the National States policy, he advised her that he could process some claims for her under the lapsed National States policy. As a result, Respondent submitted claims for Ms. Bowling and she was reimbursed for medical bills for which she had not previously sought payment. (Respondent's Composite Exhibit 8.) Respondent and Ms. Bowling discussed eyeglass and hearing aid coverage to determine if she should purchase it. However, based on Ms. Bowling's desire to hold the cost of insurance down, and after Respondent explained to her that under the eyeglass-hearing aid rider, it would cost her approximately $340 in premiums to get $500 in coverage, she declined such coverage. By way of example, Respondent explained that the premium for the rider was $125, deductible of $75 pays 80% with a maximum coverage of $500; so on a $700 bill, it would pay $500, indicating that the insurance payment of $340 was for $500 worth of benefits. Evidence of Ms. Bowling's rejection was noted in the outline of coverage which specifically excludes eye glasses and hearing aids. (Respondent's Exhibit 10.) Ms. Bowling acknowledged that the benefits of the policy was clearly explained to her. After Respondent's initial visit, Ms. Bowling decided to cancel the policy. Upon receiving notice of cancellation, Respondent called upon Ms. Bowling to determine her reason for cancelling the policy. Respondent again explained the coverage to Ms. Bowling in the presence of her son. Ms. Bowling acknowledges that Respondent explained to her at the second visit that eye glasses, dentures and hearing aids were not covered by the policy, that the rider would be required to provide that coverage; and she then again elected not to purchase the rider coverage but kept the policy in force. Evidence of this continuation of coverage is in Ms. Bowling's handwriting which reflects "After talking to my agent Mark Gable, I have decided to keep the UMS 1060437 in force." Thereafter, Ms. Bowling again decided to cancel the policy and in correspondence with National States, she related that after reviewing the policy with others, she concluded that she could not afford the coverage. Ms. Bowling, at the time, made no complaint about Respondent having misrepresented the existence of eyeglass or similar coverage, but simply requested a refund. After the company failed to forward a refund to Ms. Bowling, she filed a complaint with Petitioner asserting that she was entitled to a refund, but she made no reference to any claim of misrepresentation of coverage. At hearing, Ms. Bowling acknowledged that she cancelled the policy because the coverage was too expensive. Ms. Bowling made no mention of any misrepresentation by Respondent for coverage for eye glasses, dentures or hearing aids until the interviews by Petitioner's investigators. On or about July 19, 1990, Respondent visited the home of Fred V. Lively of Englewood for the purpose of discussing health insurance. At the time, Mr. Lively had recently purchased an American Traveler's Long-Term care insurance policy effective as of July 13, 1990, and offered custodial nursing care insurance benefits. It is alleged that Respondent sold a nursing home policy to Mr. Lively representing that the policy provided coverage for custodial care and he failed to advise Mr. Lively that the policy called for a three (3) day confinement in a hospital as a condition precedent to the payment of benefits. The policy that Respondent sold to Mr. Lively did not require such a waiting period as it included a rider eliminating the waiting period. This fact was confirmed by William J. O'Connor, the manager of policy services for National States. During July of 1990, Mr. Lively was running a lapse notice on the National States policy previously sold to him by Steve Daggett, a former employee of National States. Initially, Respondent showed the Livelys a Penn States policy and a Transport Life policy for nursing home care, both of which included custodial care. The premiums on both policies approached $5,000 a year and the Livelys determined that they were too expensive. As a result, they were rejected. Thereafter, Respondent explained the National States nursing care policy which provided skilled and intermediate care and the Livelys elected to purchase the nursing care policy. Prior to the Livelys purchase, Respondent reviewed the coverage provided and an outline of coverage was left with the Livelys as well as an outline prepared by Respondent. In addition, based on the pendency of administrative charges in this matter, Respondent had the Livelys acknowledge, in their own handwriting, that "all of the benefits of this outline has been explained to me in full and a signed copy of this outline has been left with me, by my agent, Agent is Mark Gable," followed by the signature of Fred Lively. (Respondent's Exhibits 15 and 16.) Additionally, the Livelys signed two further certifications and a customer survey report prepared by Respondent. This was done in an attempt by Respondent to avert claims generated by other agents by having new clients under certification to indicate that the coverage was explained. Shortly after the Respondent sold the insurance to the Livelys, Steve Daggett, the agent who had sold the Livelys their American Traveler's policy, arrived at the Livelys' home and convinced Mr. Lively that his policy was to have included custodial care; cited that Respondent had failed to reveal that and he (Daggett) related that Respondent had failed to reveal that he (Lively) suffered from diabetes for the purpose of suggesting that Respondent had "clean sheeted" the application which would thereafter result in a denial of coverage if a claim was made. A review of Respondent's application filed with the Lively deposition showed that Respondent revealed the existence of Mr. Lively's diabetes. Sometimes after August 21, 1990, Respondent again visited the Livelys and requested that they reconsider their decision to cancel the policy. Following Respondent's review of the policy and the coverages, Mr. Lively signed a letter which was submitted to National States requesting that the policy be kept in force. National States received the letter and the cancellation of the Lively policies was rescinded. On or about October 6, 1988, Respondent visited the home of Martha Roche for the purpose of soliciting health insurance. As a result of their discussion, Ms. Roche purchased two National States insurance policies. Although Ms. Roche testified that Respondent represented himself as an insurance adjuster for the purposes of gaining entry into her home, the testimony does not comport with the documentary evidence or her practice with respect to letting insurance agents into her home. At times, Ms. Roche has had as many as three insurance agents in her home at one time. Respondent was following up on a lapse notice with respect to prior National States policies which Ms. Roche had purchased from Respondent. At her front door, Respondent showed Ms. Roche his insurance license and she granted him entrance. On November 3, 1988, or less than thirty (30) days after the policy was originally written by Respondent, Respondent returned to Ms. Roche's home after receiving a notice of cancellation with respect to the policy in question. After discussing the matter with her, she decided to save the policy and wrote a handwritten note asking that the coverage be continued. During the November 3, 1988 meeting with Ms. Roche, which was well after the bank draft authorization had been submitted to National States, Ms. Roche indicated that she did not wish to stay on the draft plan in the following year. Respondent explained to Ms. Roche that she should write a letter to National States and to the bank to terminate the bank plan. In addition to this advice, Respondent was aware that National States would advise Ms. Roche of her right to terminate the bank plan and the procedure for termination as the bank plan is a contract between the insured and the bank. Respondent was without authority to terminate the bank plan that Ms. Roche authorized. Ms. Roche requested cancellation of the bank draft as Respondent instructed her, although the bank continued payment until she filed a complaint with Petitioner, complaining that National States insurance had failed to cancel her bank draft plan. Ms. Roche fails to allege in her complaint to Petitioner or otherwise suggest that Respondent used any false pretense to gain entry to her home. Ms. Roche's complaint was that National States did not refund her money after she wrote requesting a refund. Subsequently, a refund was given to Ms. Roche.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Petitioner enter a Final Order dismissing the Second Amended Administrative Complaint filed herein in its entirety. DONE and ENTERED this 28th day of February, 1991, 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 28th day of February, 1991. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Martin Errol Rice, Esquire 696 First Avenue North Post Office Box 205 St. Petersburg, Florida 33731 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue The issue is whether respondent's license as a health insurance agent should be disciplined for the reasons stated in the administrative complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Michael Halloran, was licensed and eligible for licensure as a health insurance agent by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed to solicit health insurance on behalf of National States Life Insurance Company (NSLIC) and Transport Life Insurance Company (TLIC). He was also under contract with Diversified Health Services of St. Petersburg, Florida until that firm terminated his agency appointment on May 5, 1989. This proceeding involves the sale by respondent of various health insurance policies to four customers in January and February 1989. In 1987, Raymond H. Koester, a Largo resident, purchased from respondent a supplemental Medicare policy for both him and his wife. Their first policy was issued by American Integrity. A year later, respondent persuaded the Koesters to replace that policy with one issued by Garden State Insurance Company on the ground the latter policy represented an "improvement" over their existing policy. On January 10, 1989 respondent met with the Koesters for the purpose of selling them new health insurance coverage. During their meeting, respondent advised the Koesters that a new NSLIC policy would provide unlimited custodial and home health care, a type of coverage desired by the Koesters. Relying upon respondent's representation, the Koesters agreed to purchase two new policies. They filled out an application and paid Halloran $2,628 which was the premium for the first year. When the application was completed, respondent answered "no" to the question of whether the new policies were intended to replace existing coverage. This was a false representation. In June 1989 the Koesters learned that they had a problem with their new policies. This advice was conveyed to them by petitioner's investigator who advised them that the policies sold by Halloran loran did not provide any custodial or home health care benefits. Had the Koesters known this, they would not have purchased the insurance. On January 18, 1989 respondent visited Grace Miller, an elderly resident of Venice, Florida, for the purpose of selling her a health insurance policy. At that time Miller had an existing policy in force since 1983 which provided supplemental Medicare coverage. Respondent advised Miller that her existing coverage was inadequate and that more coverage was needed. More specifically, Halloran represented that a new NSLIC policy would supplement her basic Medicare coverage and increase her overall health insurance coverage. Based on that representation, Miller agreed to purchase a replacement policy issued by NSLIC. As it turned out, the policy sold to Miller was of little or no value to a Medicare recipient, such as Miller, and simply filled in the gaps on a major medical policy. Had Miller known this to begin with, she would not have purchased the policy. Respondent also persuaded Miller to purchase a long-term care policy from TLIC. She allowed respondent to fill out the application using information from her old policy. Without telling Miller, respondent misrepresented on the application her date of birth as December 2, 1921 when in fact she was born on December 2, 1911, or ten years earlier. By doing this, Halloran was able to reduce Miller's premium from $1,159.92 to $441.72. Had Miller known that she was responsible for paying a much higher premium, she would not have purchased the policy. On February 25, 1989 respondent accepted another check from Miller in the amount of $773.00 for an unknown reason. At about the same time, respondent submitted to NSLIC an application for a medical-surgical expense policy dated the same date purportedly executed by Miller In fact, Miller had not executed the policy and her signature was forged. NSLIC declined to issue a new policy to Miller since she already had a policy of that type in effect. On January 20, 1989 respondent visited Gertrude Simms, an elderly resident of Fort Myers. Simms desired to purchase a hospital expense insurance policy with a provision for dental insurance coverage. Simms desired such coverage because she had a medical condition that required her to have her teeth cleaned frequently to avoid an infection. Respondent was aware of this condition. Nonetheless, Halloran prepared an application with NSLIC for a limited medical-surgical expense insurance policy which did not provide any dental coverage. Respondent accepted a $1,100 check from Simms which he represented to her was the first year's premium. In fact, the first year's premium was only $506. Although respondent was supposed to return to Simms' home to explain the policy provisions, he never returned. At about this same time, TLIC received an application on behalf of Simms for a long-term care insurance policy bearing the signature of respondent as agent. However, Simms had no knowledge of the application and did not wish to purchase such a policy. The information contained in the TLIC application misrepresented Simms' age so that the premium was lower than it should have been. Although TLIC issued a policy and sent it to respondent, Halloran never delivered it to Simms. On February 1, 1989 respondent visited Velma Sonderman, who resided in Venice, Florida, for the purpose of selling her a health insurance policy. She had become acquainted with respondent through Grace Miller, who is referred to in finding of fact 4. Sonderman was then covered by a supplemental medicare insurance policy issued by United American Medicare. According to Sonderman, respondent gave a "snow job" and represented he could sell her better coverage through NSLIC. Sonderman agreed to purchase a new policy for supplemental medicare coverage to replace her existing policy and signed an application filled in by respondent. However, the application submitted by respondent was for a NSLIC limited benefit health insurance policy rather than the medicare supplement insurance policy Sonderman believed she was purchasing. Respondent also convinced Sonderman to purchase a long-term nursing home care policy issued by TLIC. When filling out the application on her behalf, but without telling Sonderman, respondent misrepresented Sonderman's birth date as July 11, 1915 instead of the correct date of July 11, 1911. By doing this, Sonderman's premium was reduced from $999.36 to $599.04 per year.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent's license as a health insurance agent be REVOKED. DONE and ENTERED this 4 day of April, 1990, in Tallahassee, Florida. DONALD ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4 day of April, 1990. APPENDIX Petitioner: 1-3. Substantially used in finding of fact 1. 4-17. Substantially used in findings of fact 4, 5 and 6. 18-29. Substantially used in findings of fact 9 and 10. 30-33. Substantially used in findings of fact 2 and 3. 34-45. Substantially used in findings of fact 7 and 8. 46. Substantially adopted in finding of fact l. Copies furnished to: Honorable Tom Gallagher Insurance Commissioner Plaza Level, The Capitol Tallahassee, FL 32399-0300 James A. Bossart, Jr., Esquire 412 Larson Building Tallahassee, FL 32399-0300 Mr. Michael Halloran 2519 McMullen Booth Road Clearwater, FL 34621 Donald A. Dowdell, Esquire Department of Insurance Plaza Level, The Capitol Tallahassee, FL 32399-0300
The Issue Whether the School Board of Broward County's award of a contract for Excess General and Auto Liability insurance coverage to United National Insurance Company is barred because of illegality?
Findings Of Fact The Parties Ranger Insurance Company, Petitioner, is the holder of a Certificate of Authority dated September 9, 1996 and issued by the Department of Insurance and Bill Nelson, Insurance Commissioner and Treasurer. Good through June 1, 1997, the certificate authorizes Ranger to write in a number of lines of insurance business, including, Private Passenger Auto Liability, Commercial Automobile Liability, Private Passenger Automobile Auto Physical Damage, Commercial Auto Physical Damage and Other Liability. As such, Ranger is an "authorized" or "admitted" insurer in the State of Florida. L.B. Bryan & Company, Alexander & Alexander, Inc., and Benefactor Financial Group, Inc., is a joint venture and co- petitioner with Ranger in this proceeding through whom Ranger proposed to procure the Excess General and Auto Liability (“Excess GL/AL”) coverage. A timely proposal under Request for Proposal 97- 072S was submitted to the School Board of Broward County by the petitioners to provide the Excess GL/AL Insurance Coverage sought by the RFP. United National Insurance Company is an "eligible" surplus lines insurer, approved by the Florida Department of Insurance to transact all surplus lines coverages in the State of Florida and licensed as such. The Department has notified insurance agents of United Nation's eligibility as a surplus lines insurer since 1978. It is the insurer of the Excess General and Excess Auto Liability insurance coverage awarded by the School Board under RFP 97-072S. Arthur J. Gallagher & Company ("Gallagher,") is the eighth largest insurance broker in the world. It has four sales offices, nine service offices, and approximately 150 employees in the State of Florida alone. The office from which it conducted business related to this proceeding is in Boca Raton, Florida, an office for which Area President David L. Marcus is responsible. Gallagher submitted a timely proposal (the "Gallagher proposal,") in response to the RFP on behalf of United National. The School Board of Broward County is the authority that operates, controls, and supervises all free public schools in the Broward County School District, "[i]n accordance with the provisions of s. (4)(b) of Article IX of the State Constitution ...". Section 230.03(2), F.S. In accord with its powers, the School Board may contract directly to purchase insurance. It is not required by its purchasing rules to use a competitive bidding or procurement process to purchase insurance. Nonetheless, on Friday, April 26, 1996, it issued a request for proposals, the RFP at issue in this proceeding, for insurance coverages including for Excess GL/AL insurance coverages. Siver Insurance Management Consultants Siver Insurance Management Consultants ("Siver,") are the drafters of RFP 97-072S. The School Board relied on Siver to draft the RFP, particularly its technical sections. Technical review of the proposals made under the RFP was conducted by Siver. And Siver put together for the School Board's use a summary of the policies proposed by both United National and Ranger. The summary was considered by the School Board's Evaluation Committee when it evaluated the competing proposals. The determination of whether the competing proposers were properly licensed was made by Siver. The School Board's Evaluation Committee, indeed the School Board, itself, played no role in determining the licensing credentials of the proposers while the proposals were under consideration. Under the arrangement between Siver and the School Board, however, the School Board retained the primary responsibility for administering the RFP. The RFP Request for Proposal 97-072S was mailed to 324 vendors (prospective proposers) the same day as its issuance, April 26, 1996. None of the vendors knew the contents of the RFP until it was issued. The RFP sought proposals for seven coverages, each of which was severable from the remainder of the coverages and was allowed to be proposed separately. The scope of the request was described in the RFP as follows: The School Board of Broward County, Florida ... is seeking proposals for various insurance coverages and risk management services. To facilitate distribution of the underwriting data and the requirements for each of the coverages, this consolidated Request for Proposals ... has been prepared. However, each of the coverages is severable and may be proposed separately. The following are included: Boiler & Machinery Excess General and Automobile Liability Excess Workers' Compensation School Leaders Errors & Omissions Crime Including Employee Dishonesty - Faithful Performance, Depositor's Forgery Claim and Risk Management Services (Including Managed Care Services) Statutory Death Benefits Petitioner's Ex. 1, pg. I-1. Since the seven coverages are severable and no proposer had to submit a proposal on all seven coverages, one way of looking at RFP 97-072S is as a consolidated RFP composed of seven, separate proposals, each for a different type of insurance coverage. Of the 324 vendors to whom the RFP was sent, only two, Gallagher, on behalf of United National, and Ranger, through the action of the joint venture, submitted proposals with respect to the Excess GL/AL coverages. Reasons for Using an RFP The School Board, under the auspices of Siver, chose to seek insurance coverage through an RFP rather than an Invitation to Bid, or what is colloquially referred to as a "straight bid," for a number of reasons. As one familiar with RFPs and Invitations to Bid might expect, the School Board and Siver were attracted to the RFP by the increased flexibility it offered in the ultimate product procured in comparison to the potentially less flexible product that would be procured through an invitation to bid. More pertinent to this case, however, Siver chose to use an RFP for the School Board in this case because "as explained ... by the Department of Insurance over the ... years, while there may... [be a] prohibition against any surplus lines agents submitting a straight bid, there would not be a prohibition against a ... [surplus lines] agent responding to a request for proposal " (Tr. 149.) The RFP approach was not chosen, however, in order to avoid any legal requirement or to circumvent the Insurance Code. As explained by Mr. Marshall, the approach was born of hard reality: Id. [O]ne of the primary motivations [for using an RFP rather than an Invitation to Bid] was to allow us [The School Board and Siver] to consider surplus lines companies because of the fact that very often they were the only insurers that would respond on the number of coverages and clients that we were working for. The Insurance Code and the Surplus Lines Law The Insurance Code in Section 624.401, Florida Statutes, requires generally that an insurer be authorized by the Department of Insurance (the "Department,") to transact business in the State of Florida before it does so: (1) No person shall act as an insurer, and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance, in this state except as authorized by a subsisting certificate of authority issued to the insurer by the department, except as to such transactions as are expressly otherwise provided for in this code. One place in the code where transactions are "expressly otherwise provided for ...," is in the Surplus Lines Law, Section 626.913 et seq., Florida Statues. The purposes of the law are described as follows: It is declared that the purposes of the Surplus Lines Law are to provide for orderly access for the insuring public of this state to insurers not authorized to transact insurance in this state, through only qualified, licensed, and supervised surplus lines agents resident in this state, for insurance coverages and to the extent thereof not procurable from authorized insurers, who under the laws of this state must meet certain standards as to policy forms and rates, from unwarranted competition by unauthorized insurers who, in the absence of this law, would not be subject to similar requirements; and for other purposes as set forth in this Surplus Lines Law. Section 626.913(2), F.S. Surplus lines insurance is authorized in the first instance only if coverages cannot be procured from authorized insurers: If certain insurance coverages of subjects resident, located, or to be performed in this state cannot be procured from authorized insurers, such coverages, hereinafter designated "surplus lines," may be procured from unauthorized insurers, subject to the following conditions: The insurance must be eligible for export under s. 626.916 or s. 626.917; The insurer must be an eligible surplus lines insurer under s. 626.917 or s. 626.918; The insurance must be so placed through a licensed Florida surplus lines agent; and The other applicable provisions of this Surplus Lines Law must be met. Section 626.915, Florida Statutes, and then only subject to certain other conditions: No insurance coverage shall be eligible for export unless it meets all of the following conditions: The full amount of insurance required must not be procurable, after a diligent effort has been made by the producing agent to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this state ... . Surplus lines agents must verify that a diligent effort has been made by requiring a properly documented statement of diligent effort from the retail or producing agent. However, to be in compliance with the diligent effort requirement, the surplus lines agent's reliance must be reasonable under the particular circumstances surrounding the risk. Reasonableness shall be assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the information provided by the retail or producing agent. Declinations must be documented on a risk-by-risk basis. It is not possible to obtain the full amount of insurance required by layering the risk, it is permissible to export the full amount. Section 626.916, F.S. Authorized vs. Unauthorized Insurers Unlike authorized insurers, unauthorized insurers do not have their rates and forms approved by the Department of Insurance, (the "Department.") Similarly, unauthorized insurers are not member of the Florida Insurance Guaranty Association, which guarantees payment of claims if an insurer becomes insolvent. Unauthorized insurers may qualify to transact Florida insurance business under the Surplus Lines Law and so, for purposes of the Surplus Lines Law, be considered "eligible" to transact surplus lines business in Florida. When a Surplus Lines insurer is eligible, Department of Insurance employees refer to the insurer in Surplus Lines terms as "authorized," a term in everyday English that is synonymous with "eligible." But an eligible surplus lines insurer remains an "unauthorized" insurer when compared to an "authorized" insurer for purposes of the Insurance Code and that part of the code known as the Surplus Lines Law. Submission and Review of Proposals Both L.B. Bryan & Company, Alexander & Alexander, Inc., and Benefactor Financial Group, Inc., (the "Joint Venture") and Gallagher submitted timely proposals with regard to Excess GL/AL coverage in response to the RFP. The Joint Venture's proposal was submitted, of course, on behalf of Ranger, an authorized insurer, and Gallagher's was submitted on behalf of United National, an insurer eligible to transact insurance in the State of Florida as a surplus lines insurer but otherwise an unauthorized insurer. The School Board's Insurance Evaluation Committee met on May 30, 1996, to evaluate proposals received pursuant to the RFP. Although briefly discussed by the Evaluation Committee, the issue of proper licensing was not determined independently by the committee. Instead of making that determination, the committee turned to its insurance consultant, Siver. Siver had determined that both proposers, Ranger and United National, were properly licensed for purposes of responding to the RFP and being considered by the committee. Siver communicated that determination to the committee. The committee relied on Siver's determination. Aside from receiving Siver's determination of proper licensing when "briefly discussed" (Tr. 108,) the Evaluation Committee did not address whether either Ranger or United National were properly licensed. Certainly, no issue of whether Ranger should take precedence over United National by virtue that it was an authorized insurer when United National was an unauthorized insurer and a mere eligible Surplus Lines insurer was ever discussed by the committee. In evaluating the proposals, the Committee awarded 73 points to the Gallagher proposal and 69 points to the Ranger proposal. Points were awarded on the basis of three criteria or in three categories: Qualifications (20 points maximum); Scope of Coverages/Services Offered (30 points maximum); and, Points for Projected Costs (50 points maximum.) The Ranger proposal outscored the Gallagher proposal in the "projected cost" category, 50 to 23, but it scored lower in the "qualifications" category, 14 versus 20 for Gallagher, and significantly lower in the "scope of coverages" category, five points versus 30 for Gallagher. The United National coverage was more than twice as costly as Ranger's, a $491,000 annual premium as opposed to Ranger's $226,799, which explains the points awarded in the "projected cost" category. The Gallagher proposal received more points than the Ranger proposal in the "qualifications" category because United National has provided the School Board with Excess GL/AL coverage for a number of years and Ranger has never provided the School Board with such coverage. The Ranger proposal fell so drastically short of the Gallagher proposal in the "scope of coverages/services offered" category primarily because of an athletic participation exclusion appearing in a rider to the specimen policy appearing in its proposal. Ranger had intended to cover athletic participation and the rider was included with the Ranger proposal in error. Ranger notified the School Board of its intent immediately after the tabulations were released. Nonetheless, the Evaluation Committee was never informed of the error and no attempt was made by the School Board to negotiate with Ranger to improve the coverages offered, despite authority in the RFP for the School Board to negotiate with any of the proposers. (The language used in the RFP is "with one or more" of the proposers.) The Ranger proposal also fell short of the Gallagher proposal in the "scope of coverages/service offered" category because the Gallagher proposal was made in several ways. One way was as to only Excess GL/AL coverage. Another way included School Leaders' Errors and Omissions ("E & O") coverage. The E & O coverage was offered by United National in the Gallagher proposal together with the Excess GL/AL coverage in a "combined lines" package, similar to United National coverages already existing for the School Board. Furthermore, the Ranger proposal expressly excluded coverage for Abuse and Molestation, a needed coverage due to the School Board's prior claims history. On June 5, 1996, the Evaluation Committee submitted its recommendations to the School Board's Purchasing Department. With regard to GL/AL coverage, the Evaluation Committee recommended the purchase of the GL/AL/E & O "combined lines" coverage offered by Gallagher through United National. The School Board posted its Proposal Recommendation/Tabulations adopting the recommendation, two days later, on June 7, 1996. Ranger Seeks Redress from the Department Following the School Board's award, Ranger, thinking that it should have received the award under the RFP as the only authorized insurer to submit a proposal for Excess GL/AL coverage, sought redress from the Department. On June 14, 1996, Ranger personnel met with the head of the Department's Surplus Lines Section, Carolyn Daniels, alleging a violation of the Insurance Code's Surplus Lines Law. On June 18, 1996, Ranger reiterated its complaint in writing and asked Ms. Daniels to find a violation that day. On June 24, 1996, Ranger, now through its attorneys, met with Ms. Daniels and her supervisor. Again, on July 4, 1996, Ranger's attorneys wrote to Ms. Daniels, further pleading for her to find a violation and asking for an administrative hearing if Ms. Daniels did not find in favor of the Ranger position. On a fifth attempt, Ranger wrote Ms. Daniels on July 11, 1996, requesting that she adopt Ranger's position. Ms. Daniels reviewed Ranger's five complaints with her supervisor, the Chief of the Bureau of Property and Casualty Solvency and Market Conduct. In a letter dated August 14, 1996, to the School Board's Purchasing Agent, Ms. Daniels announced her determination: I did not find any evidence to indicate that Mr. David L. Marcus of Arthur J. Gallagher & Company or United National Insurance Company violated the Surplus Lines Law in providing a quote for the School Board. Intervenor's Ex. No. 2. Ms. Daniel's determination was based on a number of factors, including the School Board's position in the transaction as an "informed consumer," (Tr. 422-423,) and that the School Board had possessed a United National policy for 13 years. But, the determination was primarily based on the fact that Gallagher had received three declinations from authorized insurers to provide Excess GL/AL coverage and so had performed that which was required prior to deciding that the coverage was eligible for export and provision by a surplus lines insurer: due diligence. Due Diligence Section 626.916(1)(a), Florida Statutes, provides, [n]o insurance coverage shall be eligible for export unless it meets ... the following condition[]: ... [t]he full amount of insurance required must not be procurable, after a diligent effort has been made by the producing agent to do so, from among the insurers authorized to transact and actually writing that kind and class of insurance in this state, and the amount of insurance exported shall be only the excess over the amount so procurable from authorized insurers. (e.s.) The statute goes on to require that the diligent effort, "be reasonable under the particular circumstances surrounding the export of that particular risk." Reasonableness is assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the information provided by the retail or producing agent. Declinations must be documented on a risk-by- risk basis. Section 626.916(1)(a), F.S. "'Diligent effort' means seeking coverage from and having been rejected by at least three authorized insurers currently writing this type of coverage and documenting these rejections." Section 626.914(4), F.S. Under this definition, the "producing agent should contact at least three companies that are actually writing the types of clients and the business in the area [that they are] wanting to write." (Tr. 268.) A specific form to help insurance agents document their three rejections is adopted by Department rule. The rule provides: When placing coverage with an eligible surplus lines insurer, the surplus lines agent must verify that a diligent effort has been made by requiring from the retail or producing agent a properly documented statement of diligent effort on form DI4-1153 (7/94), "Statement of Diligent Effort", which is hereby adopted and incorporated by reference. Rule 4J-5.003(1), F.A.C. Fully aware of the requirement for documentation of diligent effort to find authorized insurers, and cognizant that it would be unlikely that an authorized insurer could be found based on experience, Gallagher began soliciting proposals for coverage in the middle of April, 1996, several weeks before the School Board had issued the RFP. In fact, at the time that Gallagher started soliciting bids, the School Board had not yet assembled or distributed the underwriting data needed by bidders. Nonetheless, with good reason based on experience, Gallagher expected that the School Board would seek a "combined lines" package of GL/AL/E & O coverages like the School Board then received through United National, and that it would be unlikely that an authorized insurer would step forward to propose coverage. Gallagher, therefore, used the policy form current in April of 1996, that is the form providing Excess GL/AL/E & O coverage in a "combined lines" package, "as an example of what the School Board had been looking for this type of program and seeking a program similar to that and similar in coverage." (Tr. 242.) But it also sought Excess GL/AL without combination with E & O coverage. As Mr. Marcus testified, when seeking coverage from authorized insurers beginning in April of 1996, Gallagher "would be looking at a variety of different ways, whether they were package or not." (Tr. 243.) One authorized insurer, Zurich-American, declined to quote because it could not offer a combined line SIR program (a package of excess general liability and excess auto liability coverages) as requested by the RFP. Furthermore, the School Board risk was too large for Zurich-American to handle. A second authorized insurer, American International Group, declined to quote due to the School Board's adverse loss experience. A third authorized insurer, APEX/Great American, declined to provide a quote to Gallagher due to the large size of the School Board account. The responses of these three authorized insurers were listed in a Statement of Diligent Effort provided to Ms. Daniels, which she considered in determining that Gallagher and Mr. Marcus had committed no violation of the Surplus Lines Law. Gallagher also provided Ms. Daniels with a second Statement of Diligent Effort. The statement documented the attempt to attract quotes by adding a school leaders errors and omission component to the Excess GL/AL coverage. It, too, was used by Ms. Daniels in making her determination of no violation of the Surplus Lines Law by Gallagher. The same three insurers refused to quote for the "combined lines" program. Attempts by other Authorized Insurers Gallagher requested that any responses to its requests for quotes be submitted by May 10, 1996, so that it could prepare and submit its proposal by the RFP's deadline for submission of original proposals by all vendors, 2:00 p.m. May 16, 1996. One insurer, Discover Re/USF&G attempted to submit a quote on May 15, 1996, one day before the RFP deadline but five days after May 10. By then, Gallagher had already started printing its 625 page proposal. Furthermore, the company failed to provide the required policy forms until the day after the School Board's deadline for filing proposals. Coregis Insurance Company offered coverage of up to $700,000 for each claim and for each occurrence, but like Discover Re/USF&G, failed to provide the required policy forms until after the RFP deadline. Furthermore, definitive coverage under the Coregis policy would only be provided on the condition that the Florida Legislature pass a Legislative Claims bill, a limiting condition not authorized in the RFP or requested by Gallagher. American Home Assurance Company never responded to Gallagher with the School Board's required quote or policy forms. Rather, the company merely provided an "indication" that the company declined to provide a quote. An "indication" consists of an approximate premium rate, without any terms or conditions. A "quote," on the other hand, includes the terms and conditions of a policy. The Department places with the producing agent the responsibility of determining whether an insurer's communication constitutes and "indication" or a "quote." An agent, according to Ms. Daniels, can only violate the Surplus Lines Law if the agent receives a reliable quote. Gallagher even requested a quote from Ranger, despite never having been appointed to transact insurance on its behalf. But Ranger declined. In response to a request by Gallagher's minority business partner, McKinley Financial Services, Ranger, through E. Michael Hoke on American E & S letterhead, wrote in a letter dated May 6, 1996, "[w]e have received a prior submission on this account so we are returning the attached." Intervenor's Ex. No. 7. The Petition Ranger's petition for formal administrative hearing is the letter dated June 19, 1996, to the Director of Purchasing for the School Board under the signature of E. Michael Hoke, CPCU, Assistant Vice President of AES/Ranger Insurance Company. The letter asks its readers to "bear[] in mind we are not attorneys," p. 1 of the letter, before it outlines three protest issues. The third protest issue is the one about which Ms. Daniels made her determination that no violation of the statute had been committed by Gallagher or its employees: "3) Florida Statute 626.901 (Representing or aiding unauthorized insurer prohibited)." The other two issues deal not with the propriety of Gallagher's actions but the legality of the School Board's award to an unauthorized insurer, United National, when coverage was available from an authorized insurer, Ranger: Florida Statute 626.913 (Surplus Lines Law). . . Our Position * * * Ranger Insurance Company is an admitted authorized insurer ... Its proposal for excess general and auto liability is proof that the Board requested coverage was procurable. United National Insurance Company is an unauthorized insurer under the laws of the State of Florida ... . The United National Insurance Company proposal and/or its offer to extend it's current policies appear to us as "unwarranted competition." Ranger Insurance Company is protected from unwarranted competition from United National Insurance Company in accordance with the Florida Statute 626.913. Florida Statute 626.913 (Eligibility for Export) ... Our Position * * * Ranger Insurance Company is an admitted authorized insurer under the laws of the State of Florida. ... It's proposal for excess general and auto liability is proof that the Board requested amounts were available. The proposal and/or contract extensions offered by United National are for the full amount of coverage sought and not excess over the amount procurable from Ranger, an authorized insurer. The petition, therefore, set in issue not just whether Gallagher acted illegally but whether the School Board acted illegally when it made the award to United National, an unauthorized insurer when Ranger, an authorized insurer, had also submitted a proposal. Extension As soon as the School Board was made aware of the Ranger protest, it extended the existing insurance contracts procured under RFP 92-080S, awarded approximately five years earlier. The extension was on a month-to-month basis until resolution of the protest. The extension was necessary to avoid a lapse in the School Board's coverage during this proceeding.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the award to United National under the Gallagher proposal in response to RFP 97-072S be rescinded. DONE AND ENTERED this 28th day of January, 1997, in Tallahassee, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1997. COPIES FURNISHED: Paul R. Ezatoff, Esquire Christopher B. Lunny, Esquire Katz, Kutter, Haigler, Alderman, Marks, Bryant & Yon, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877 Edward J. Marko, Esquire Robert Paul Vignola, Esquire Office of the School Board Attorney K.C. Wright Administrative Building 600 Southeast Third Avenue - 11th Floor Fort Lauderdale, Florida 33301 A. Kenneth Levine, Esquire Blank, Risby and Meenan, P.A. Post Office Box 11068 Tallahassee, Florida 32302-3068 Dr. Frank Petruzielo, Superintendent Broward County School Board 600 Southeast Third Avenue Fort Lauderdale, Florida 33301-3125
The Issue The issues are whether Petitioner, Daniel O. Cobb, is entitled to payment of claims for surgery performed on Ms. Cobb, Susan Catherine Cobb, his spouse, on November 11, 1985, and whether Respondent, the State, is estopped from denying coverage. A prehearing stipulation was filed limiting the facts, issues, exhibits and witnesses. The stipulated facts were incorporated into the Recommended Order and are in the Final Order as well. Petitioner presented the testimony of himself and his spouse. Petitioner's exhibits 2 through 6 were accepted into evidence. Exhibits 3 and 4 constituted hearsay. The Department presented the testimony of Hazel Rosser and Joseph F. Wellman. Four exhibits by the Department were offered into evidence and were accepted. Neither party ordered a transcript. Only the Department filed a proposed recommended order and findings of fact. The Findings of Fact and the Conclusions of Law in the Recommended Order are hereby adopted, except in Findings of Fact Nos. 16, 17, and 18, Mrs. Scott is changed to Mrs. Cobb and in Findings of Fact No. 18, Mr. Scott is changed to Mr. Cobb.
Findings Of Fact Daniel O. Cobb was an employee of the Florida Department of Transportation during 1985. Mr. Cobb and his spouse, Susan Cobb, had family coverage under the State of Florida Employees Group Health Self Insurance Plan (hereinafter referred to as the "State Plan"), until November 1, 1985. The State Plan is administered by Blue Cross/Blue Shield. Pursuant to the agreement between the State of Florida and Blue Cross/Blue Shield benefits which are payable under the State Plan are governed by a "Benefit Document." Each year, State employees are given an opportunity change the form of health insurance coverage they wish to have. During this "open enrollment period" an employee covered by the State Plan can elect to participate in a Health Maintenance Organization and an employee covered by a Health Maintenance Organization can elect to participate in the State Plan. During 1985, there was an open enrollment period between September 9, 1985, and September 20, 1985. During the 1985 open enrollment period State employees, including Mr. Cobb, were provided a Notice to Employees in which they were advised to carefully review information contained in a Benefit Comparison Brochure, a Rate Comparison Chart and a Health Care Plan Selection Form. These documents were provided to all State employees. The Selection Form instructed employees to "Please read the employee notice about HMO service areas and effective date of coverage before completing this section." State employees were also advised that any change in coverage would be effective November 1, 1985. On September 19, 1985, Mr. Cobb signed a State of Florida Employes Group Health Self Insurance Plan, Change of Information Form. Pursuant to this Change of Information Form, Mr. Cobb elected to terminate his health insurance coverage with the State Plan. On the Change of Information Form it was indicated that Mr. Cobb's election to terminate his coverage under the State Plan was to be effective November 1, 1985. Therefore, Mr. Cobb was informed and should have known that he was no longer eligible for medical cost payment for himself or his family pursuant to the State Plan after October 31, 1985. Mr. Cobb also signed a Member Enrollment (Group) and Physician Selection Form on September 19, 1985. Pursuant to this Form, Mr. Cobb enrolled himself, his Spouse and their children, in Health Options, Inc., a health maintenance organization. Mr. Cobb's participation in Health Options, Inc., began November 1, 1985. On September 19, 1985, Mr. Cobb was provided a list of Health Options, Inc., approved physicians which were available for use by Mr. Cobb and his family. Mr. Cobb designated Gerald A. Giurato, M.D., as his primary care physician on the Physician Enrollment Form which he signed on September 19, 1985. On October 28, 1985, Mr. Cobb was mailed a copy of the Health Options Member Handbook which, among other things, describes the grievance procedure to be followed when medical expenses were not paid by Health Options Inc., and the manner in which physicians were to be used in order to be entitled to payment, of their charges. The Handbook informed Mr. Cobb that all care had to be arranged through a primary care physician and that only services provided or approved by the primary care physician were covered. The Handbook also indicated that treatment by physicians who were not approved by the primary care physician would be the responsibility of the patient. During 1985 Mrs. Cobb was under the care of Alexander Rosin, M.D. Dr. Rosin performed surgery for the removal of a cyst on Mrs. Cobb, on November 11, 1985. Dr. Rosin was not a physician approved by Health Options, Inc., or Mr. Cobb's primary care physician. Nor was the surgery approved. Claims attributable to the November 11, 1985, surgery were submitted to the State Plan. Claims, for the charges of Dr. Rosin, Scott Blonder, M.D., and a Pathologist were submitted. The expenses for the November 11, 1985, surgery were incurred after coverage of Mr. and Mrs. Cobb under the State Plan ended. The type of surgery performed on Mrs. Cobb was also not authorized by the Benefit Document. No claims were submitted to Health Options, Inc., for medical expenses incurred for Mrs. Cobb's operation on November 11, 1985. None of the medical expense attributable to Mrs. Cobb's November 11, 1985, surgery were incurred with physicians or facilities approved by Health Options, Inc. By letter dated August 27, 1986, the Department denied the claims submitted to the State Plan attributable to Mrs. Cobb's November 11, 1985, surgery. Mr. Cobb filed a request for an administrative hearing to contest the Department's proposed denial.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is RECOMMEDED that a final order be issued by the Department denying payment of claimed expenses attributable to Mrs. Cobb's surgery of November 11, 1985. DONE and ENTERED this 15th day of July, 1988, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 864109 The Department has submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number, of Acceptance or Reason for Rejection 1 18. The letter denying payment was dated August 27, 1986, and not September 4, 1986. See DOA exhibit 1. 2 7. 3 Hereby accepted. 4 7. 5 3. 6 4 and 5. 7-9 6. 10-12 11. Summary of testimony and irrelevant. Summary of testimony argument. Concerning the weight to be given evidence and cumulative. 15 7. 16 Hearsay. 17-18 Conclusion of law. 19-20 16. 21 Not supported by the weight of the evidence. 22 15. COPIES FURNISHED: O. C. Beakes, Esquire Lindner Smith, Jr., Esquire 836 Riverside Avenue Jacksonville, Florida 32205 Andrea R. Bateman, Esquire Department of Administration Room 438, Carlton Building Tallahassee, Florida 32399-1550 Adis Vila, Secretary 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
Recommendation Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Administration, enter a Final Order that Petitioner, Marvin Brownlee, is owed a total of $158.56 under the State of Florida Employees' Group Health Insurance Program consisting of $126.08 of expenditures previously conceded to be eligible coverage but not yet paid, plus $32.48 of expenditures for bed underpads or chucks determined after final hearing to be covered. RECOMMENDED this 10th day of February, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-0806 Rulings On Petitioner's Proposed Findings Of Fact. Rejected as unnecessary and irrelevant. No items before the effective date of the State's self-insurance program, May 1, 1978, were found to be covered. Covered by Findings 2 through 6. Rulings On Respondent's Proposed Findings Of Fact. 1-2. Covered by Finding 1. Covered by Finding 7. 4-6. To the extent necessary and relevant, covered by Findings 8 through 11. Rejected as not supported by the totality of the evidence; covered by Findings 2 through 6. Covered by Finding 6. Covered by Findings 3 through 6. Covered by Findings 2 and 5. Second sentence specifically rejected as not supported by the totality of the evidence. As found, the specific use of the underpads is to catch and absorb Brownlee's excrement. But they are part of an overall method for control of Brownlee's bowels and, as such, aid in his physical well-being. See Conclusion 3. Rejected. First, it is unnecessary to recite the agency's preliminary decision. Second, there was no evidence of the qualifications of the persons determining that the underpads are not "medically necessary." Third, the determination is not supported by the totality of the evidence. See Findings 2 and 5. (The part on prescription drugs is covered by Findings 3 through 6 and 10.) COPIES FURNISHED: Marvin Brownlee Route 3, Box 581 Havana, Florida 32333 Augustus D. Aikens, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Gilda Lambert Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
