Findings Of Fact Petitioner, Department of Insurance, is the state agency charged with the responsibility of licensing and monitoring the business activities of insurance agents to assure statutory compliance with the Florida Insurance Code. The Respondent, Larry Densmore, is currently eligible for licensure and is licensed in this state as a life insurance agent, life and health insurance agent, health insurance agent, and variable annuity contracts salesman, and was so licensed at all times relevant to these proceedings. The Respondent at all times relevant to these proceedings was licensed in this state to solicit insurance on behalf of Travelers Insurance Company (Travelers). On or about November 15, 1992, the Respondent visited the offices of American Business Interiors of Melbourne, Florida (ABI) for the purpose of soliciting a Travelers Insurance group health care insurance plan. ABI elected to purchase the group health insurance plan being solicited by Respondent. The Respondent left applications at the company for each employee to complete. ABI distributed the application forms to its employees and collected them after they had been completed so that Respondent could submit the entire application package to Travelers. Each employee, including Sara Perrers, Jo Anne Wallace, and Santiago Jusino, filled out the application completely and truthfully, fully disclosing any and all preexisting health conditions they may have had. Sara Perrers disclosed on her application that she had suffered in the past from a carcinoma of the cervix and had undergone treatment for depression. Pre-existing medical conditions of an applicant would affect whether or not an insurance policy would be issued as well as the amount of premium charged. The Respondent knew or should have known this fact. After being notified that the employee applications had been finished, the Respondent returned, collected the applications and took them to his office to complete the application package. ABI made and retained a copy of each original application for its own records. At no time did the Respondent ever actually meet any of the prospective insureds. Respondent was working on five (5) proposals simultaneously with the ABI proposal. He completed a total of three (3) Travelers' group health insurance submissions which included ABI's proposal and forwarded them to the Travelers' processing centers in Minneapolis, Minnesota and Naperville, Illinois in mid-November, 1992. Upon review of ABI's employees applications, Respondent recognized that four of them disclosed pre-existing medical conditions. Respondent completed an application form for four (4) ABI employees, affixed their names and signatures to the applications and submitted them to Travelers for processing. The applications submitted by the Respondent failed to disclose to Travelers the pre-existing medical conditions of four ABI employees. Other information contained in the applications of Jo Anne Wallace and Sara Perrers was also inaccurate. The Respondent submitted these substitute applications without the knowledge or consent of the four employees and with their signatures fraudulently affixed thereto. The substituted applications submitted by the Respondent contained false information and were a material misrepresentation of fact, which resulted in the issuance of insurance coverage which may or may not have otherwise been issued. Based solely upon the information contained in the applications submitted to Travelers by the Respondent, the group health insurance plan was duly issued to ABI. The Respondent received a commission. In the latter part of June, 1993, Sara Perrers received a letter from the Travelers dated June 23, 1993. It stated that she had failed to disclose certain health conditions, including her treatment for depression, on her insurance application. Sara Perrers' insurance coverage was rescinded for non- disclosure of the health conditions. Had Travelers been aware of Sara Perrers' true health history, American Business Interior's group policy would not have been issued. Understandably perplexed and concerned, ABI contacted the Respondent. The Respondent first represented that it was only a simple mistake and that he would look into it. Several days later, however, the Respondent came to ABI and asked to meet with Jack Drudy, the company comptroller, and Ralph Perrers, the company president as well as Sara Perrers' father, in order to discuss Sara Perrers' insurance. Sara Perrers, in the meantime, had several medical claims that were unpaid because her health insurance had been cancelled. The Respondent paid these claims from his own private funds. Ralph Perrers contacted Travelers about the Respondent's conduct. Travelers, upon investigation, did not consider Sara Perrers to be responsible for what had happened and reinstated her insurance. The Respondent's assertions that the true applications were lost in the mail and that he was directed by an unknown Travelers underwriter to mail in the substituted applications with the unauthorized signatures for "identification purposes only" is unsupported by the evidence. Travelers' policy does not allow agents to sign applicant's names to applications and the company underwriting guidelines reflect this. Only the applicant can sign his or her signature. If an application is lost, a new original application with the applicant's original signature must be procured. Copies are not acceptable. Respondent has been a licensed insurance agent for over seventeen years and has not previously been disciplined by the Department.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED as follows: The Respondent, Larry Densmore, be found guilty of violations Sections 626.611(5), (7), (8), (9), 626.621(6), and 626.954(1)(e)1., Florida Statutes. Pursuant to Rules 4-231.080 and 4-231.090, Florida Administrative Code, Respondent's licenses and eligibility for licensure be SUSPENDED for a period of one year, followed by a two year period of probation upon such reasonable conditions as the Commissioner may require. DONE and ENTERED this 30th day of August, 1995, in Tallahassee, Florida. DANIEL M. KILBRIDE 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 30th day of August, 1995. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties. Proposed findings of fact submitted by Petitioner. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18 (in part), 19, 20, 21. Rejected as not supported by clear and convincing evidence: paragraph 6. Rejects as subsumed or irrelevant and immaterial: paragraphs 17, and 18 (in part). Proposed findings of fact submitted by Respondent. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8 (in part), 10, 18, 27 (in part), and 28 (in part). Rejected as not supported by credible evidence: paragraphs 8 (in part), 14, 15, and 16. Rejected as subsumed or irrelevant and immaterial, paragraphs 9, 11, 12, 24, 25, 26, 27 (in part), 30, and 31. Rejected as a comment on the evidence, conclusion of law or argument paragraphs 13, 17, 19, 20, 21, 22, 23, 24, 28 (in part) and 29. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 612 Larson Building Tallahassee, Florida 32399-0300 Charles J. Grimsley, Esquire 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Petitioner, Patricia A. Wotring, is an employee of the Department of Health and Rehabilitative Services. At all times relevant hereto she was enrolled as a member of the State of Florida Employees Group Health Self Insurance Plan (Plan). The State of Florida is a self-insurer. It has contracted with Blue Cross - Blue Shield to act as its administrator in processing and paying all claims by employees under the Plan. Claims are suppose to be paid-in accordance with coverage requirements, limitations and exclusions that have been adopted by the State. These requirements are set forth in the Employees Group Health Self Insurance Booklet (Booklet) which has been received in evidence as respondent's exhibit 1. Between November, 1982 and January, 1983 petitioner submitted five claims for benefits with Blue Cross - Blue Shield. The claims totaled $633, of which $620 were for mental health services provided by a Tallahassee clinical psychologist and $13 for laboratory services performed by a Tallahassee physician. Although Blue Cross - Blue Shield had been "instructed" to not pay this type of claim, the claims were nonetheless honored in early 1983 and Wotring received checks at that time for $633. Upon advice from respondent, Department of Administration, Blue Cross - Blue Shield requested reimbursement from petitioner in June, 1983 for $633. That request prompted the instant proceeding. As a basis for claiming reimbursement, Blue Cross - Blue Shield relied upon Section H of the Exclusions portion of the Booklet. That section reads as follows: No payment shall be made under the Plan for the following: H. Services, care, treatment, and supplies furnished by a person who ordinarily resides in the Insured's home or by any person or institution not otherwise defined in the Definitions section of this booklet. (Emphasis Added) It then referred to page 39 of the Booklet which defines a "physician" as follows: "Physician" shall mean the following: a doctor of medicine (M.D.), doctor of osteopathy (D.O.), doctor of surgical chiropody (D.S.C.) or doctor of podiatric medicine (D.P.M.), who is legally qualified and licensed to practice medicine and perform surgery at the time and place the service is rendered; a licensed chiropractor acting within the scope of his/her license, provided the insured receiving his/her services is covered under the chiropractic coverage option of the Plan and the proper premium has been paid; a licensed dentist who performs specific surgical procedures covered by the Plan, or who renders services due to injuries resulting from Accidents, provided such procedures or services are within the scope of the dentist's professional license; a licensed optometrist who performs procedures covered by the Plan provided such procedures are within the scope of the optometrist's professional license. A clinical psychologist is not defined within the Definitions section of the Plan. Because a clinical psychologist does not fall within the definition of a physician, and is not otherwise defined within that section, the services received by Wotring were properly excluded from coverage by the Plan. Effective October 1, 1983, the Legislature amended the law to require that services rendered by a clinical psychologist be covered by the Plan. In the event payments are made in error, the Department's policy is to instruct its Administrator (Blue Cross - Blue Shield) to request reimbursement from the insured. Petitioner acknowledged that the five claims were paid in error. However, she contended that the claims were submitted in good faith over a period of time and were honored. Accordingly, she argues it is wrong to now require her to repay those amounts.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that petitioner repay respondent $613 for payments previously received in error that are not covered by the Plan. It is further RECOMMENDED that in view of the size of the amount owed, petitioner be allowed to repay that amount on an installment basis over a six-month period, if she so chooses. It is further RECOMMENDED that she not be required to repay $20 to respondent if all deductibles for the appropriate calendar year have been met. DONE and ENTERED this 18th day of November, 1983, in Tallahassee, Florida. DONALD R. ALEXANDER 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 18th day of November, 1983. COPIES FURNISHED: Patricia A. Wotring 1833 Mayfair Road Tallahassee, Florida 32303 Daniel C. Brown, Esquire 435 Carlton Building Tallahassee, Florida 32301 Nevin G. Smith, Secretary Department of Administration Room 435, Carlton Building Tallahassee, Florida 32301
The Issue Whether Respondent, Suncoast Architecture and Engineering, LLC. (Suncoast), retaliated against Petitioner, Kenan Tuzlak, after Petitioner filed a discrimination complaint against Suncoast and, if so, what relief should be granted to Mr. Tuzlak.
Findings Of Fact At all times material to this case, Suncoast was an architectural and engineering company located in Clearwater, Florida. Mr. Burnett is the president and sole owner of Suncoast. Suncoast was an "employer" pursuant to the definition of the term set forth within the applicable Pinellas County Code provision. In November 2011, Mr. Tuzlak was first employed by Suncoast as a draftsman. He was promoted to designer, receiving an increase in pay and bonuses. His initial title at Suncoast was "Senior Engineering Technician." On Monday, June 11, 2012, Mr. Tuzlak was terminated from his employment at Suncoast. On November 5, 2012, Mr. Tuzlak filed a charge of employment discrimination (Charge 1) pursuant to Pinellas County Code section 70–76. Mr. Tuzlak alleged he was discriminated against based on his religion and retaliation. On Friday, December 21, 2012, William Hurter, counsel to Suncoast, mailed a letter directly to Mr. Tuzlak. Mr. Tuzlak received the letter the next day. That letter, in pertinent part stated: By way of introduction, this firm represents the interests of Suncoast Architecture & Engineering LLC ("Suncoast"). We are in receipt of your claim and have already been in contact with the Pinellas County Office of Human Rights. To begin, we would like to reiterate Suncoast's position: your termination from employment had nothing to do with any sort of discrimination whatsoever, and was based solely on legitimate business necessities. Our client also stated your claim is filled with falsehoods and misrepresentations. As a result, Suncoast is demanding that you withdraw your discrimination claim within 7 days of the date of this letter. If you do not withdraw your claim, we will represent Suncoast throughout the discrimination proceedings and we will also be filing a lawsuit against you for trade slander, in addition to any other legal causes of action which Suncoast may be able to pursue against you for your meritless discrimination claim. We would also ask that any further communications you may seek to have with Suncoast come strictly through this office. We will ensure that any statements or other information from you is forwarded to the appropriate representative of Suncoast. Overall, we are sympathetic to your situation and understand the hardships associated with losing one's job. However, in today's economy many individuals and business [sic] are struggling and it is inappropriate and against the law to file a discrimination claim in retaliation to a lawful and necessary termination of employment. With that in mind, we hope you will accept our offer to withdraw your claim against Suncoast in exchange for Suncoast agreeing not to pursue its legal rights against you. Mr. Tuzlak felt threatened and scared by the letter. Mr. Tuzlak believed the intent "of this document [letter] was to scare me off and stop me from enforcing my legal rights." Mr. Tuzlak understood the letter was a demand for him to withdraw the prior discrimination case (Charge 1) against Suncoast, or Mr. Tuzlak would be sued for, among other things, "trade slander."1/ The letter accused Mr. Tuzlak of filing Charge 1 with "falsehoods and misrepresentations." Mr. Tuzlak feared he would incur financial loses. His testimony is found to be credible. On January 22, 2013, Mr. Tuzlak filed the retaliation charge (Charge 2) pursuant to Pinellas County Code section 70-54. At the time Charge 2 was filed, the allegations in Charge 1 had not been resolved.2/ After Charge 2 was filed, but before this hearing was held, Mr. Tuzlak moved to Alberta, Canada, where he is currently working as a design engineer. Mr. Burnett makes all the decisions regarding Suncoast. Mr. Burnett directed Mr. Hurter to write the letter to Mr. Tuzlak. Mr. Burnett wanted Mr. Tuzlak to stop pursuing the original discrimination charge. Mr. Burnett "intended to gain an end to this proceeding [Charge 1] without causing any more damage to anyone." Mr. Burnett's stated desire to "inform him [Mr. Tuzlak] that there are adverse consequences that can happen to you if this happens" is self-serving. Mr. Burnett does not have any recollection of any statements Mr. Tuzlak made outside of the allegations found in Charges 1 and 2. Mr. Burnett did not receive any direct feedback from the community about any statements Mr. Tuzlak may have made. Suncoast's employees were told of the allegations in the Charges, but that information did not come from Mr. Tuzlak. Mr. Burnett conceded he had no way to know if Suncoast sustained any loss or damage as a result of either Charge.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered: Finding that Respondent, Suncoast Architecture & Engineering, LLC, violated section 70-54(l), Pinellas County Code; and Ordering Suncoast to pay Mr. Tuzlak reasonable costs and attorney's fees. Jurisdiction is retained to determine the amount of costs and attorney's fees, if the parties are unable to agree to the amount. DONE AND ENTERED this 3rd day of January, 2014, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of January, 2014.
The Issue Whether Respondent violated various provisions of the Insurance Code, specifically Sections 626.561(1), 626.611, 626.621 and 626.9521, Florida Statutes, which warrants that Respondent's licenses as an insurance agent should be disciplined.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: 1. Respondent was, at all times pertinent, licensed as a general lines agent and health agent in Florida 2 Respondent was the registered agent, sole director and officer of Sunshine State Insurance of Manatee, Inc. As a result of her corporate capacity, Sheryl Ann Satterfield is responsible for actions of employees working under her direct supervision and control. FINDINGS REGARDING COUNT I On or about April 5, 1991, Respondent's employee solicited an application for automobile insurance from Miguel A. Coronado of Bradenton, Florida. The automobile insurance was to be provided by the Nu-Main of Florida Agency. At this same time, the premium for the automobile insurance was quoted as $414.00 for a six month coverage. After being informed of the premium amount, Mr. Coronado paid Respondent's employee $146.00 in cash as a down payment on the premium. Receipt #6557 was issued which acknowledged receipt of said premium. On or about April 26, 1991, Mr. Coronado received a cancellation from Instant Auto Credit stating that his automobile was an unacceptable vehicle. After receiving this notice, Mr. Coronado went to the Sunshine State Insurance office to discuss the cancellation with Respondent. Respondent refused to refund the $146.00 premium to Mr. Coronado. Respondent never forwarded the $146.00 premium funds received from Mr. Coronado to Nu-Main of Florida. Further, Respondent failed, and refused to refund the premium to Mr. Coronado upon demand. Respondent misappropriated funds held in trust for her own use and benefit. FINDINGS REGARDING COUNT II On or about November 26, 1990, Jodi Spencer of Sarasota, Florida went to Respondent's agency for the purpose of obtaining automobile insurance. Ms. Spencer made a premium down payment of $197.00 on a quote of $697.00 annual premium. Respondent's employee issued receipt #7874 which acknowledged receipt of the $197.00 premium down payment. The auto insurance was to be provided by Nu-Main of Florida, Inc., and American Skyhawk Company. On February 11, 1991, American Skyhawk Insurance Company sent Ms. Spencer a cancellation notice. Respondent was to return $24.50 of unearned commission to Ms. Spencer which she failed to do. FINDINGS REGARDING COUNT III On or about December 31, 1990, Matthew Baker of Bradenton, Florida, went to Sunshine State Insurance Agency to obtain automobile insurance. At this time, Matthew Baker paid a down payment of $197.00 on an annual premium of $1,313.00. The insurance was to be provided by First Miami Insurance Company. Respondent's agency issued receipt #6851 upon receipt of the aforementioned premium down payment. On January 31, 1991, First Miami Insurance Company sent Mr. Baker a cancellation notice. At the time of cancellation Respondent was to return an unearned commission of $154.60. Respondent has failed to return $154.60 in unearned commission to Mr. Baker. FINDINGS REGARDING COUNT IV On or about January 11, 1991, Edwin Soto of Bradenton, Florida, was cancelled by First Miami Insurance Company with whom he had an existing automobile insurance policy. Edwin Soto had purchased this First Miami Insurance Company policy from Respondent. (Testimony of Edwin Soto). As a result of this cancellation Mr. Soto is owed $70.61 from Respondent which she has failed to return to him. FINDINGS REGARDING COUNT V In January 1991, William M. Woodyard of Bradenton, Florida, met with Respondent to renew his general liability and worker's compensation insurance. At this same time Mr. Woodyard gave Respondent his premium down payment. During the latter part of 1991, Mr. Woodyard went to Sunshine State Insurance of Manatee, Inc. to obtain a copy of his worker's compensation policy. Upon Mr. Woodyard's arrival, he met with Joe Money, President of Sunshine State Insurance Group, Inc. No record of insurance or coverage for Mr. Woodyard or his company existed. Previously, Capital Premium Finance Company had issued two return premium checks to Mr. Woodyard. Respondent deposited Mr. Woodyard's return premium checks into the Sunshine State Insurance Agency's checking account in the total amount of $440.80. Mr. Woodyard was entitled to receive a premium refund check and unearned commission check from Respondent. Mr. Woodyard did not receive any premium refund or unearned commission funds from Respondent.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that Respondent's licenses as an insurance agent in this state be REVOKED. DONE and RECOMMENDED this 20th day of October, 1992, at Tallahassee, Florida. DANIEL M. KILBRIDE 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 20th day of October, 1992. APPENDIX The following constitute specific rulings, pursuant to Section 120.59 (2), Florida Statutes, upon the parties respective proposed findings of fact (PFOF) Petitioner's PFOF: 1. - 27. Accepted in substance. Respondent's PFOF: Respondent did not file proposed findings of fact. COPIES FURNISHED: Willis F. Melvin, Jr., Esquire Daniel T. Gross, Esquire Department of Insurance and Treasurer 412 Larson Building Tallahassee, Florida 32399-0300 Ms. Sheryl Ann Satterfield P.O. Box 333 Polk City, Florida 33868 Tom Gallagher, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether the Respondent, the Department of Administration, Division of State Employees' Insurance, administrator of the State of Florida group health insurance policy, should pay all covered medical expenses incurred by the Petitioners for non-PPC providers on behalf of their dependent daughter that exceed $3,000 1/ maximum out-of-pocket expense stop loss provision of the policy, despite the part of the stop loss provision that subjects it to maximum payments for room and board (and some other services) supplied by non-PPC providers.
Findings Of Fact Pertinent History of the Insurance Plan. The State of Florida offers group health insurance to its employees, including employees of the State University System, as an optional fringe benefit. Since 1978, the State has self-insured this coverage. The group health insurance coverage is administered by the Respondent, the Department of Administration, Division of State Employees' Insurance. The Respondent contracts with Blue Cross Blue Shield of Florida as a third party administrator of the insurance coverage. The State pays part of the premium required for the coverage; the balance of the premium is paid by the employee. Depending on their county of residence, state employees can choose membership in one of several approved health maintenance organizations (HMOs) in lieu of coverage under the State's health insurance plan. When an employee joins an approved health maintenance organization in lieu of the state health insurance plan, the State contributes to the cost of membership to the same extent that it contributes to an employee's insurance premium under its group health insurance plan. Since the State began to self-insure in 1978, coverage under the state group health insurance contained limits on the maximum amount the plan would pay for hospital room and board. The plan also differentiated between the amounts that would be paid under the plan for services rendered by pre-approved "preferred providers" (PPCs). From time to time through the years, the Florida Legislature changed the maximum amounts the plan would pay for various services, and the plan was changed accordingly. But in each version of the plan, there was a distinction made between services rendered by a PPC versus services rendered by a non-PPC. When the State began to self-insure its employee group health insurance benefit on May 1, 1978, it mailed a new, 25-page certificate of insurance to each employee covered by the plan. Whenever a change in the coverage under the state group health insurance plan was occasioned by new legislation, a revised certificate of insurance was mailed to each employee covered by the plan. This occurred in July, 1982, (a 40-page booklet), in August, 1983, (an eight-page addendum), in August, 1985, (a 13-page booklet), and in July, 1988 (a 13-page booklet). Consistent with the master group health insurance policy to which they refer, each of these certificates of insurance are clear that the maximum out- of-pocket "stop loss" feature is subject to certain limitations. In particular, all make clear that the feature is subject to a maximum payment for room and board. Each of these certificates of insurance contains language cautioning the employee that the certificate is not a contract of insurance, that the purpose of the certificate is only to summarize the insurance plan, and that the certificate does not include all covered and non-covered benefits. Each also advises that a copy of the complete contract (the master policy), and the administrative rules under which the plan is administered, could be inspected in the office of the Respondent, as well as in the employee's personnel office. Each advises employees to present questions to their agency personel office or to the Office of State Employee's Insurance. The August, 1985, certificate of insurance reflects a change in the policy to differentiate between PPC and non-PPC providers. It also clearly states that the maximum out-of-pocket stop loss feature of the policy is subject to maximum payments for room and board (and some other services) supplied by non-PPC providers. The July, 1988, certificate also clearly provides that the maximum out-of-pocket stop loss feature of the policy is subject to maximum payments for room and board (and some other services) supplied by non-PPC providers. Both of these certificates were entitled the "State of Florida Employees Group Health Self Insurance Plan Brochure." In addition to the certificates of insurance, Blue Cross Blue Shield also printed an abbreviated version of the July, 1988, insurance certificate called the "State of Florida Employees Group Health Self Insurance Plan Benefits." It is a seven-page document intended for distribution, along with information concerning the various available state-approved HMOs, to all new state employees, who have the opportunity to choose to enroll in the state group health plan, in one of the HMOs, or neither. It also was intended for distribution to all employees during open enrollment periods, when employees have the opportunity to change from an HMO to the state group health insurance, or vice versa, or to drop the benefit. The purpose of the "benefits" document was to give employees information on which to make that choice. Since it was anticipated that it would be mailed to many state employees who ultimately would choose against the state group health insurance plan, the information was condensed to shorten the document to save mailing costs. Only if a new employee (or an old employee during the open enrollment period) chose the insurance would the employee get mailed a certificate of insurance in the mail. Among the information contained in the July, 1988, "benefits" document was an item entitled "Maximum Out of Pocket Expense" that simply listed: "$1500 individual coverage" and "$3000 family coverage." Omitted from the "benefits" document were the limitations on the maximum out-of-pocket stop loss feature (Finding 7, above) and the language cautioning that it was not a contract (Finding 6, above). Under the heading "Exclusions and Limitations," it states: "Complete list in employee brochure." The last two pages of the document contains two lists, one entitled "Limitations," and the other entitled "Exclusions." Neither list specifies the limitations on the maximum out-of- pocket stop loss feature (Finding 7, above). On the cover of the document, it states: "This brochure replaces any other brochure or booklet printed prior to July 1, 1988, relative to the Plan and shall remain in effect until further notice." The Saffs' Insurance Decision. Edward B. Saff has been a mathematics professor at the University of South Florida (USF) in Tampa, Florida, for 22 years. The Saffs did not prove that they did not receive copies of the May 1978, July, 1982, August, 1983, August, 1985, and July, 1988, certificates of insurance. The Saffs' daughter Lisa, who was born on April 24, 1970, had been diagnosed in June, 1985, as having acute lymphoblastic leukemia. She was treated at the University of South Florida through June, 1988, and seemed to have been cured. During the summer of 1988, the Saffs had occasion to consider the question whether they should obtain health insurance other than, and in addition to, their family coverage under the State employees' group health insurance. Although the Saffs did not prove that they had not received their copies of the May 1978, July, 1982, August, 1983, August, 1985, and July, 1988, certificates of insurance, they apparently did not retain them or at least did not have them readily available to consult. As a result, Dr. Saff asked his secretary to get information on the state employees' group health insurance coverage from the USF personnel office. The evidence was that the Department of Administration has made a copy of the master group health self-insurance policy, and copies of the certificate of insurance, available in all state agency personnel offices, including in the USF personnel offices, for inspection by state employees. The July, 1988, certificate of insurance states: "The agency personnel office will provide needed assistance to State officers and employees enrolling in the Plan; however, such officers or employees should take care to assure that they receive the coverage applied for and that proper deductions are made." But there was no evidence specifically what Dr. Saff told his secretary to ask of his USF personnel office. Dr. Saff's secretary did not testify, and there was no evidence from which a finding can be made as to what the secretary asked for or what the secretary was told by the USF personnel office. But the secretary returned with a copy of the abbreviated version of the July, 1988, insurance certificate (the "State of Florida Employees Group Health Self Insurance Plan Benefits.") Cf. Findings 8 and 9, above. Based exclusively on the information relayed by Dr. Saff's secretary, i.e., on the abbreviated version of the July, 1988, insurance certificate (the "State of Florida Employees Group Health Self Insurance Plan Benefits"), with its incomplete information under the heading entitled "Maximum Out of Pocket Expense," the Saffs decided that they did not need any additional health insurance coverage for their daughter Lisa. They reasoned that they could afford the maximum out of pocket expense referenced in the document. They did not seek any further information about the policy before making this decision. The Saffs' Insurance Claim. In August, 1990, Lisa Saff underwent a routine gynecological examination, and a pelvic mass was discovered. The mass was removed surgically at Humana Women's Hospital in Tampa. Cancer of the ovaries was diagnosed, but at first the type of cancer was not identified. After more tests, it was determined that Lisa had suffered a recurrence of her previous cancer, but it was highly unusual for that type of cancer to recur in the ovaries. Since the physicians at Humana Women's and at USF were unfamiliar with the recurrence of the cancer in the ovaries, they recommended that Saffs seek medical care at Sloan-Kettering Hospital in New York City, where Lisa began treatment in the early part of September, 1990. Since starting treatment at Sloan-Kettering, Lisa has been under the care of Dr. Timothy Gee. She was hospitalized at Sloan-Kettering three times in 1990 and approximately twice in 1991. Fortunately, she has responded to treatment and is now on the maintenance portion of her protocol, receiving treatment as an outpatient of the hospital. Sloan-Kettering charges $700 a day for a hospital room and also charges for some other medical services in excess of the PPC fee and charge schedule under the State of Florida Group Health Self Insurance policy. In all, the Saffs have incurred $46,870 for medical treatment for Lisa for 1990. As of the date of the final hearing, they incurred $14,439 for medical treatment for Lisa for 1991. They continue to incur medical expenses for Lisa under her maintenance protocol. They have submitted claims for payment under the state group health insurance policy, including all medical expenses during both 1990 and 1991 by which their out-of-pocket expense exceeded $3000 per calendar year. 2/ The Respondent's Position. In response to the Saffs' claims, the Respondent has taken the position that, in accordance with the master policy and the certificate of insurance, the maximum out-of-pocket stop loss feature of the policy is subject to maximum payments for room and board (and some other services) supplied by non-PPC providers. Cf. Finding 7, above. In accordance with that position, the Respondent has paid $18,554 of the Saffs' 1990 claims and $2,162 of the Saffs' 1991 claims. (The Saffs have paid $14,089 of the balance of their 1990 claims and $9,250 of the balance of their 1991 claims.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Respondent, the Department of Administration, Division of State Employees' Insurance, enter a final order (1) giving effect to the provision of the group health self-insurance plan that subjects the maximum out- of-pocket stop loss feature of the policy to maximum payments for room and board (and some other services) supplied by non-PPC providers and (2) paying $18,554 of the Saffs' 1990 claims and $2,162 of the Saffs' 1991 claims. RECOMMENDED this 19th day of September, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 19th day of September, 1991.
Findings Of Fact In December of 1985, the Petitioner and his dependents were covered by the State Employees Group Health Self Insurance Plan. Robert S. Coughlin, the Petitioner's nineteen-year-old dependent, was hospitalized in an out-of-state hospital from December 24, 1985, to December 26, 1985. The total expense for the hospitalization was $935.00. A claim for insurance benefits to cover the expense was received by the Insurance Plan administrator on August 10, 1987. The claim was filed by the hospital on behalf of the insured dependent, Robert S. Coughlin. The administrator for the Respondent refused to pay the claim as it was not submitted within the sixteen-month period set forth in the contract of insurance. The contract, which is referred to as the benefit document, contains a policy exclusion which provides that no payment shall be made under the Plan for claims made after the expiration of the sixteen-month time limit which begins to run from the date medical expenses are incurred. The hospital did not timely file the claim because a mix-up had occurred during the hospital admission concerning the patient's insurance coverage. The dependent, Robert S. Coughlin, was unconscious during his emergency out-of-state hospital admission. Either the hospital personnel or the dependent's friends mistakenly used the information on another insurance card located in the patient's wallet as the applicable insurance. As the hospital directly filed the claim with the first insurance company, processing delays within the first company caused the hospital to miss the filing deadline for the actual insurance benefits. The Petitioner, Charles R. Coughlin, was not made aware of the situation until after the sixteen-month dime period had expired, and the claim for payment had been refused by the Respondent.
The Issue The issues are whether Respondent's licenses as an insurance agent should be disciplined, and if so, what penalty should be imposed.
Findings Of Fact At all times relevant to these proceedings, Respondent was eligible for licensure and licensed in Florida as a life insurance agent and a life and health insurance agent. Respondent has been licensed to sell insurance for 23 years. He has no history of a prior disciplinary action being filed against his licensure. Over the years, Respondent has won several awards in his profession. Counts I and II In March 1985, Respondent sold Joel and Kay Majors a whole life insurance policy, Sun Life Assurance Company of Canada (Sun Life) policy No. 9007333. This policy, with a specified face amount of $200,000, insured the life of Joel Majors. The monthly premium on this policy was $258.83. In June 1989, Respondent sold the Majors a last- survivor whole life insurance policy, Sun Life policy No. 5978802. The purpose of the second policy, with a face amount of $500,000, was to pay estate taxes after the death of the last survivor of Mr. and Mrs. Majors. The annual premium on this policy was $4,585.00. Respondent represented to the Majors that the policy premiums on the second Sun Life policy, policy No. 5978802, would be paid using accumulated cash and dividends from the first Sun Life policy, policy No. 9007333. Respondent explained to the Majors that they would never have to pay out-of-pocket premiums on the second policy. Based on Respondent's representations, the Major's believed that Sun Life policy No. 9007333 would generate sufficient cash and dividend values to pay the premiums on Sun Life policy No. 5978802. Respondent did not explain to the Majors what it would mean for them to use the cash value of one policy to pay the premiums on another policy. The cash value of a whole life insurance policy is essentially the amount the policy owner may borrow against that policy. Because the cash value is determined by the amount the policy owner has paid on the policy, use of the cash value is an interest-bearing loan to the policy owner. The loan does not have to be repaid at any particular time, but in the event of a claim or surrender of the policy, proceeds from the policy are reduced by the amount of the loan plus outstanding interest. In November 1991, Respondent sold the Majors a third whole life insurance policy, Sun Life policy No. 9247770. This policy insured the life of Joel Majors in the face amount of $200,000. The Majors never received a copy of this policy. The monthly premium on this policy was $404.83. Each year, when the annual premium for Sun Life policy No. 5978802 was due, Respondent presented Joel Majors with blank forms entitled Policy Service Request. Joel Majors signed the forms without realizing that they authorized interest-bearing loans to be taken out of the cash value of policy No. 9007333 and on one occasion out of policy No. 9247770. These loans were made without the knowledge or informed consent of the Majors. Respondent never mentioned the word "loan" to the Majors. The Majors would never have purchased the Sun Life policy No. 5978802 with the understanding that the premium would be paid with interest-bearing loans from their other policies. All annual premiums on Sun Life policy No. 5978802, except one annual premium, were paid from loans made against Sun Life policy No. 9007333. Page 6 of Sun Life policy No. 9007333 states as follows in relevant part: Interest on all policy loans will accrue from day to day at the rate of 8 percent per annum, and shall be due and payable on each policy anniversary. Any unpaid interest will be added to the principal amount of the policy loan and will bear interest at the same rate and in the same manner as the policy loan. We will accept repayment of any policy loan at any time before the maturity of this policy. When the policy proceeds become due, we will deduct the balance of any outstanding policy loans and accrued interest on such loans, from that amount. If your policy loan balance ever equals or exceeds the net cash value, this policy will terminate 31 days after we mail notice to your last known address . . . . One loan was made against Sun Life policy No. 9247770. According to page 6 of the Sun Life policy No. 9247770, the company sets the policy loan interest rate annually according to the provisions contained therein. The Majors were not aware that any funds from this policy would be used to pay premiums on any other policy. Sometime in 1997, the Majors learned about the loans on policy Nos. 9007333 and 9247770. They realized for the first time that loans were used to pay the premiums on Sun Life policy No. 5978802. The Majors never intended to authorize interest- bearing loans that would deplete the death benefit of one policy to pay policy premiums on another policy. Respondent testified at the hearing that loans from Sun Life policy Nos. 9007333 and 9247770 were used to pay the premiums on Sun Life policy No. 5978802. However, his testimony that the loans were made with the knowledge or informed consent of the Majors is not persuasive. The Majors were not knowledgeable about insurance policies. They placed their trust in Respondent to handle their insurance transactions. Often the Majors did not open mail from the insurance company containing statements about their policies. Count III In July 1990, Respondent sold the Majors a flexible premium deferred annuity, Financial Benefit Life Insurance Company (Financial Benefit) policy No. 818249, with a maturity date of July 13, 2010. The initial deposit for the annuity was $25,000. Later in the year, the Majors deposited an additional $10,000 in the annuity. Respondent promised the Majors that if the interest rate on the annuity dropped, he would "roll-over" the annuity to obtain a higher rate. Respondent also promised that he would pay any penalties associated with the transaction. Respondent did not explain the definition of a "roll-over" to the Majors. In February 1994, Respondent withdrew a portion of the funds (the $10,000 contribution plus accumulated interest) from the Majors' Financial Benefit annuity, policy No. 818249. He used the funds to purchase the Majors a second annuity, Financial Benefit policy No. 707450, with an initial contribution in the amount of $12,503.43. Although the second annuity had a higher interest rate, Respondent made this purchase without the Majors' knowledge or informed consent. Respondent received a commission on this unauthorized transaction. Financial Benefit issued the second annuity but a copy of the policy was never delivered to the Majors. Respondent never disclosed its purchase to the Majors. In 1996, the Majors complained to Respondent that the interest rate had dropped on what they believed was their one Financial Benefit annuity. At that time, the original annuity was worth the initial $25,000.00 contribution plus interest or approximately $33,000.00. Respondent requested the surrender of the remaining funds in the original annuity, Financial Benefit policy No. 818249, to purchase the Majors a third annuity, Financial Benefit policy No. 712937. Financial Benefit assessed a surrender charge in the amount of $2,250.00. Subsequently, on October 10, 1996, Financial Benefit issued policy No. 712937 to the Majors with an initial contribution of $33,477.60 and an October 10, 2016, maturity date. Respondent purchased the third annuity without the knowledge or informed consent of the Majors. The Majors did not receive a copy of the third annuity. Respondent received a commission on this unauthorized transaction. The Majors were not aware that Respondent had purchased the second and third annuities. They continued to believe that they had only one annuity, the one purchased in 1990, which had been "rolled over" to obtain a higher interest rate. However, they eventually became aware of the $2,250.00 surrender charge assessed by Financial Benefit. They complained to Respondent and reminded him of his promise to pay all penalties. Respondent then purchased two money orders from Capital City Bank in the total amount of $2,250.00. Respondent mailed the money order to Financial Benefit with instructions for the company to deposit the funds into the annuity. Knowing that the insurance company would not permit Respondent to make personal contributions to the Majors' annuity, Respondent signed the name of Joel Majors on the money orders. Joel Majors had no knowledge of the money orders and did not authorize Respondent to sign his name. If the Majors had known that Respondent was going to "roll-over" their original annuity by using its funds to purchase two new policies with different maturity dates, they would never have agreed to the transactions regardless of higher interest rates. Instead, they would have let their original policy mature and take their money out for placement in another investment vehicle. Counts IV and V In 1985, Respondent sold Joel and Kay Majors a $50,000.00 life insurance policy, Sun Life policy No. 9009995D. The policy insured the life of the Majors' son, Timothy Majors. About ten years later, Esther Majors, wife of Timothy Majors, was employed as a travel agent. As a full-time employee, Esther Majors was entitled to $110.00 per month from her employer's benefit plan. The money was available to Esther Majors for savings because she did not need to participate in her employer's health insurance plan. Esther Majors could use the money to purchase an Individual Retirement Account (IRA) or other comparable investment. Timothy and Esther Majors sought Respondent's assistance in setting up an appropriate investment for Esther Majors' funds. Respondent first met with Esther Majors' employer to discuss the retirement account. The employer and Respondent discussed using the money to fund a self-directed IRA or annuity that could be rolled over later if Esther Majors changed jobs. Respondent also met with Timothy and Esther Majors. They discussed setting up what Timothy and Esther Majors believed would be an IRA with a monthly contribution of $110.00 for as long as she worked full-time for the same employer. Respondent did not set up the IRA for Esther Majors. Instead, in January 1995, Respondent submitted an application to Time Insurance Company (Fortis) for an adaptable life insurance policy insuring the life of Esther Majors and naming Timothy Majors as the beneficiary. Respondent submitted the application without the knowledge or informed consent of Timothy and Esther Majors. Esther Majors either did not read the application when she signed it or did not understand that she was signing an application for life insurance as opposed to an IRA annuity. Respondent requested that Fortis issue the policy with a face amount of $69,533.00 and with a monthly premium in the amount of $110.000. Fortis issued the policy as policy No. 985698. Timothy and Esther Majors never intended to purchase a life insurance policy. Respondent did not discuss life insurance with Timothy and Esther Majors at any time. Esther Majors could have purchased life insurance through her employer. Thus, Respondent misrepresented the nature of the insurance product that he sold to Timothy and Esther Majors. On or about July 15, 1995, Timothy Majors informed Respondent that Esther Majors would temporarily cease making the $110.00 contribution to what he believed was Esther Majors' IRA because she was going to college and would no longer be working full-time as a travel agent. Timothy Majors assured Respondent that, upon graduation, Esther Majors intended to resume payments and roll her IRA over to a new employer. Respondent replied that Timothy and Esther Majors needed to continue saving for their future. He also told Timothy Majors that the company where Esther's money was invested required a minimum deposit per year in order not to lose the money already deposited. Respondent asked Timothy Majors for a check in the amount of $60.00. Timothy Majors gave Respondent the check. On or about October 25, 1995, Respondent requested a loan for $270.00 to be made from Timothy Majors' Sun Life insurance policy No. 9009995D. Respondent requested this loan without Timothy Majors' knowledge or informed consent. Sun Life mailed a check payable to Timothy Majors in the amount of $270.00 to Respondent's office. Respondent then obtained Timothy Majors' signature endorsement on the check without explaining that the funds would be used to pay the quarterly premium on Esther Majors' Fortis insurance policy. Timothy Majors signed the check unaware that it represented a loan on his Sun Life insurance policy. Respondent used the Sun Life check in the amount of $270.00 and, together with Timothy Majors' check for $60.00, paid another quarterly premium on Esther Majors' Fortis insurance policy in the amount of $330.00. Neither Timothy nor Esther Majors authorized Respondent to make this payment. No further premium payments were made for Esther Major's Fortis insurance policy. Respondent never told Timothy and Esther Majors that the policy would lapse if they stopped paying the premiums. The policy was too new to have any cash value. As a result, the life insurance policy eventually lapsed. Esther and Timothy Majors lost all of the funds used to pay premiums on a life insurance policy that they never knew they owned. Count VI In 1995, Kay Majors arranged for Respondent to sell an annuity to her mother, Bernice Langford. During the initial meeting between Ms. Langford and Respondent, he was informed that Ms. Langford was born on February 5, 1918, and that her age was 77. Respondent filled out an application for a Financial Benefit flexible premium deferred annuity for Ms. Langford. Because Ms. Langford's age made her ineligible to purchase the annuity, Respondent misrepresented her date of birth as February 5, 1928, and her age as 67 on the application. Financial Benefit issued a $60,000.00 annuity, policy No. 711110, to Ms. Langford. Respondent received a commission for selling the annuity to Ms. Langford. Thereafter, Kay Majors became aware of inaccuracies in her mother's age and informed Respondent about them. Respondent indicated that he would take care of the problem. Respondent later sent a letter to Ms. Langford representing that he had notified the company about her correct age and had the records corrected. Although Financial Benefit sells annuities to people up to 100 years old, it would not have issued the annuity in question to Ms. Langford had it known her correct age. The company is aware of the age discrepancy and has not rescinded the annuity. Count VII In 1993, Respondent sold a Sun Life modified benefit whole life insurance policy, policy No. 9292231, to Cheryle Hayes Wood Burch (n/k/a Cheryle Hicks.) This policy had an initial face amount of $91,443.00 and a monthly premium of $100.00. In 1995, Respondent advised Ms. Hicks that he had found her a better policy through Fortis, with identical coverage and premium. Respondent presented the replacement policy to Ms. Hicks as if he had already switched the policies and only needed her signature on some paperwork. Respondent indicated that Ms. Hicks' Sun Life policy had no cash value. Ms. Hicks had not requested that Respondent replace her Sun Life policy. However, she trusted him to act in her best interests. Respondent told Ms. Hicks he would take care of everything. At Respondent's request, Ms. Hicks signed an insurance application dated May 16, 1995. Ms. Hicks either did not read the application before signing it, did not understand what she read, or signed a blank application form presented to her by Respondent. Subsequently, Fortis issued an adaptable life insurance policy, policy No. 994725, to Ms. Hicks. The new policy had a face amount of only $50,000, even though the premium was identical to the Sun Life policy. Ms. Hicks was not aware that her new policy had a reduced face amount. Respondent received a commission on this transaction. Ms. Hicks believed her new Fortis policy had a $100,000 death benefit. She never intended to purchase a replacement policy with only a $50,000.00 death benefit. Respondent misrepresented the terms of the replacement policy for the purpose of receiving a commission. Counts VIII and IX Respondent sold a Sun Life permanent life insurance policy, policy No. 9216228, with a face value of $33,805.00 to Faye Thompson Hoover. Sun Life issued the policy in November 1990. Respondent also sold a Financial Benefit annuity, policy No. 819862, to Ms. Hoover. Financial Benefit issued the policy in November 1990. In December 1993, Respondent urged Ms. Hoover to cancel her Financial Benefit annuity, policy No. 819862, and purchase a new Financial Benefit annuity. Ms. Hoover did not understand why she should purchase the new annuity, but she trusted Respondent and followed his advice. The new annuity was purchased and issued as Financial Benefit policy No. 707176 in January 1994. In 1996, Respondent urged Ms. Hoover to let him cancel her Sun Life policy No. 9216228 and deposit the funds into her Financial Benefit annuity, policy No. 707176. She agreed. Respondent did not cancel Ms. Hoover's Sun Life policy. Instead, he requested Sun Life to issue a loan for the maximum amount allowable for a loan against the Sun Life policy No. 9216228. Sun Life subsequently issued Ms. Hoover a check in the amount of $4,800.00, which represented a loan against the cash value of the policy. Respondent requested the loan without Ms. Hoover's knowledge or informed consent. Sun Life mailed the $4,800.00 check to Ms. Hoover. Upon receipt of the check, Respondent told Ms. Hoover that the proceeds represented the cash value of her Sun Life policy. Based on Respondent's representations, Ms. Hoover incorrectly believed that her Sun Life policy had been cancelled and that the company had sent her the policy's cash value. Respondent's representations regarding Ms. Hoover's Sun Life policy were false. At no time did Respondent disclose that the check she received was a loan against the cash value of her policy and that the policy was still in effect. Next, Respondent requested Sun Life to stop the monthly draft on Ms. Hoover's bank account that paid the premium on her Sun Life policy. He did this by falsely advising Sun Life that Ms. Hoover had changed her bank account. Because the premium payments had ceased and a new bank authorization was never received by Sun Life, the policy lapsed, but only after exhaustion of the policy's remaining cash value. Ms. Hoover became aware that funds in her Sun Life policy had been exhausted when she received a letter dated August 26, 1996, from the company. When Ms. Hoover confronted Respondent about leaving money in her Sun Life account, he told her he would get her funds back. However, he never did secure a refund of the exhausted funds. In the meantime, Ms. Hoover deposited the $4,800.00 Sun Life check into her bank account. She then wrote a check to Respondent for $4,000.00, with instructions for him to deposit the money into her Financial Benefit annuity, policy No. 707176. Respondent accepted the check but did not follow Ms. Hoover's instructions. Rather, he submitted an application to Financial Benefit for an IRA annuity without Ms. Hoover's knowledge or informed consent. He also sent Financial Benefit Ms. Hoover's $4,000.00 check. Financial Benefit issued the IRA annuity, policy No. 712086, with Ms. Hoover as the annuitant. Ms. Hoover never received a copy of the annuity. Respondent received a commission on this transaction. Count X In 1992, Elizabeth R. Maxwell discussed her retirement needs with Respondent. She wanted to invest her funds so that a portion of it would be available to her in five years. She wanted the balance of her funds to be available in seven years. Ms. Maxwell told Respondent she wanted to be able to retire around age 59. Respondent suggested that Ms. Maxwell invest her money in annuities. He was aware that Ms. Maxwell knew very little, if anything, about annuities and that she was relying on his expertise and experience to assist her in making investment decisions. In April 1992, Respondent sold Ms. Maxwell a Financial Benefit IRA annuity, policy No. 823703, with a maturity date of 2012. Ms. Maxwell subsequently deposited $10,947.95 into this annuity as the original contribution. Respondent received a commission for the transaction. Respondent also sold Ms. Maxwell a Financial Benefit regular annuity, policy No. 823568, with a maturity date of 2012. Ms. Maxwell deposited $90,000.00 into this annuity as the original contribution. Respondent received a commission on the transaction. The maturity date of an annuity is the date on which annuity payments begin. In December 1992, Ms. Maxwell gave Respondent $30,000.00 for deposit into what she thought was one of her two existing annuities. Respondent used the money to purchase a USG Annuity and Life Company (USG) annuity, policy No. 128153, without Ms. Maxwell's knowledge or informed consent. This annuity matures in 2042. In January 1993, Ms. Maxwell gave Respondent $50,000.00 for deposit into what she thought was one of her two existing annuities. Respondent used the money to purchase a USG annuity, policy No. 132140, without Ms. Maxwell's knowledge or informed consent. This annuity matures in 2043. In April 1996, Ms. Maxwell gave Respondent $74,672.57 for deposit into what she thought was one of her two existing annuities. Respondent used the money to purchase an additional Financial Benefit annuity, policy No. 712410, without Ms. Maxwell's knowledge or informed consent. This annuity matures in 2016. Respondent received a commission on this transaction. In April 1996, Respondent, without Ms. Maxwell's knowledge or informed consent, cancelled her Financial Benefit annuity, policy No. 823703. He then transferred $18,927.30, representing the surrender value, into a new Financial Benefit annuity, policy No. 712497. The new annuity's maturity date was 2016. Respondent received a commission on this transaction. In May 1996, Respondent, without Ms. Maxwell's knowledge or informed consent, cancelled her Financial Benefit annuity, policy No. 823568. He then transferred $166,182.69, representing the surrender value, into a new Financial Benefit annuity, policy No. 712548. The new annuity matures in 2016. Respondent received a commission on this unauthorized transaction. In November 1996, Ms. Maxwell gave Respondent $25,000.00 for deposit into what she thought was one of her two existing annuities. Respondent used the funds to purchase an additional Financial Benefit annuity, policy No. 713242, without Ms. Maxwell's knowledge or informed consent. The new annuity matures in 2016. Respondent received another commission. Sometime in 1996, Ms. Maxwell became confused and concerned about her annuity investments. Ms. Maxwell asked her accountant for assistance in determining the status of her investments. She took her accountant boxes of documents containing insurance company statements and other insurance correspondence. Some of the documents were in unopened envelopes. The accountant's investigation, which took place over a six-month time period, revealed at least seven annuities. The accountant also determined that the insurance companies had assessed surrender fees on some of the transactions. Ms. Maxwell was shocked at the result of her accountant's investigation. She was unaware of any annuities other than what she understood to be her two Financial Benefit annuities. The accountant requested that Respondent provide copies of Ms. Maxwell's annuities. Respondent did not provide the copies. At the request of the accountant, Respondent signed a statement that he would personally pay any penalties if surrender charges were assessed. Respondent reimbursed Ms. Maxwell for some of the surrender charges. However, Respondent never provided Ms. Maxwell's accountant with documentation accounting for reimbursement of about $6,000.00 in surrender charges. After Ms. Maxwell's accountant became involved, Respondent asked the accountant to approve the "roll-over" of an annuity. The accountant requested information about the old policy and the new policy before making a decision. Respondent refused to provide the information. Respondent told the accountant that he knew more about insurance than the accountant. Respondent stated that the accountant needed to attend to his business and that Respondent would take care of the insurance side of it. The accountant and Respondent have had no subsequent conversations. As of the date of the final hearing, Respondent had not provided Ms. Maxwell or her accountant with sufficient documentation to account for all of her investments. Until November of 1996, Financial Benefit paid its agents commissions on the sale of annuities at the time of the original deposit and on each subsequent contribution. In November 1996, Financial Benefit notified its agents that no commission would be paid for additional contribution into annuities after the third policy year. After Ms. Maxwell learned that Respondent had invested her funds in more than two annuities and despite Respondent's failure to cooperate with the accountant, Ms. Maxwell continued to trust Respondent to invest her money in annuities. She did so with the understanding that each new transaction would increase the interest she would earn. Ms. Maxwell did not understand the effect the new transactions would have regarding penalties and maturity dates. In February 1997, Respondent, without the knowledge or informed consent of Ms. Maxwell, cancelled Ms. Maxwell's USG annuity, policy No. 132140. He then transferred $58,309.01, representing the surrender value, into a new Financial Benefit annuity, policy No. 713549. The new annuity, on which Respondent received a commission, has a maturity date in 2017. In July 1997, Ms. Maxwell gave Respondent $2,005.11 for deposit into an annuity. Respondent used the funds to purchase an additional Financial Benefit annuity, policy No. 714186, without Ms. Maxwell's informed consent. The new annuity matures in 2017. Respondent received another commission. In October 1997, Ms. Maxwell gave Respondent $15,189.66 for deposit into an annuity. Without Ms. Maxwell's informed consent, Respondent used the funds to purchase a USG annuity, policy No. 529581. This annuity matures in 2014. Respondent received a commission. In January 1998, Ms. Maxwell gave Respondent $2,000.00 for deposit into an annuity. Without Ms. Maxwell's informed consent, Respondent used the funds to purchase a Financial Benefit annuity, policy No. 714865. This annuity matures in 2013. Respondent received a commission. In January 1998, Respondent, without Ms. Maxwell's informed consent, cancelled her USG annuity, policy No. 128153. He then transferred $38,498.43, representing the surrender value, into a new Financial Benefit annuity, policy No. 714866. The new annuity, on which Respondent received a commission, has a maturity date in 2013. Ms. Maxwell received a copy of only one of the many policies that Respondent purchased on her behalf. In 1996 or 1997, Respondent took that policy from Ms. Maxwell, telling her the company was going to adjust it and give it back to her. He never gave the policy back to Ms Maxwell. Respondent obtained Ms. Maxwell's signature each time he purchased an annuity on her behalf. On some occasions Ms. Maxwell thought she was signing a form to deposit additional funds into her original two annuities with Financial Benefit. Sometimes Ms. Maxwell did not know what she was signing because she did not see the whole page or did not read the document first. Respondent would tell her he was in a hurry and she should just sign next to the "X." Respondent told her he would date it later. On other occasions, Respondent told Ms. Maxwell that he was "rolling over" an existing fund into a new fund. He told her the "roll-over" would give her a higher interest rate but that nothing else would change. He said that everything would mature at the same time, otherwise Ms. Maxwell would not have agreed to the "roll-over." Respondent told Ms. Maxwell that there would be no penalties and that he did not get paid commissions. At times Ms. Maxwell signed documents referencing the surrender of annuities and associated penalties. On those occasions, Ms. Maxwell thought she was surrendering the annuities so that they could be rolled over. She trusted Respondent's representation that the penalties were not true penalties. None of the annuities that Respondent sold to Ms. Maxwell or purchased in her name had maturity dates in five to seven years from the date of the original transactions. Respondent never disclosed that the annuities would mature between fifteen and forty years from the purchase date. Consequently, the annuities would not have reached maturity, making her funds available for retirement free of any surrender charge in time for her to retire at age 59. Count XI In 1991, Respondent met with Dr. Charles Moore to discuss the purchase of life insurance as a part of Dr. Moore's estate planning needs. Dr. Moore told Respondent that he wanted to be able to retire in about ten years with about $1,000,000.00 in life insurance. As a result of this discussion, Respondent sold Dr. Moore a Sun Life permanent life insurance policy, policy No. 9245964, with a face amount of $250,000.00 and a monthly premium of $788.28. Respondent also sold Dr. Moore a Sun Life permanent life insurance policy, policy No. 9241898, with a face amount of $250,000.00, and a monthly premium of $876.61. This policy had a renewable term rider with an additional benefit amount of $250,000.00, with a premium in the amount of $88.33 for the first year. The premium on the term rider would increase over time. Respondent told Dr. Moore that in approximately ten years, the policies would have sufficient cash value to pay the premiums from their dividends. Respondent stated that the policies would then be "paid-up" that Dr. Moore would no longer have to pay premiums. Respondent told Dr. Moore that at some point in time, the term rider on Sun Life policy No. 9241898 would have to be cancelled because the premium would become too expensive. Dr. Moore would not have purchased these policies but for Respondent's representations. In December 1994, Respondent sold Dr. Moore a Fortis life insurance policy, policy No. 985470, with a face amount of $500,000 and an annual premium in the amount of $13,000.00. Dr. Moore needed additional insurance to cover potential estate taxes on family-owned real estate in another state. Respondent represented that the policy premiums on the Fortis policy would be paid entirely from dividends from Dr. Moore's Sun Life policies without depleting the cash value of those policies. Dr. Moore would not have purchased this policy but for Respondent's representations. Contrary to Respondent's representations, the dividends on Dr. Moore's Sun Life policies, in and of themselves, were not sufficient to pay the premiums on his Fortis life insurance policy. Instead, without Dr. Moore's knowledge or consent, Respondent submitted loan requests for a series of loans on the cash value of Dr. Moore's Sun Life policies, policy Nos. 924564 and 9241898, from 1995 through 1998. The loans against the Sun Life policies, including principle and interest, total in excess of $52,000.00. When Dr. Moore received checks for the loan proceeds from Sun Life, he would endorse them and give them to Respondent. Dr. Moore thought he was endorsing dividend checks. Respondent used the proceeds from the loans to pay the annual premiums on Dr. Moore's Fortis policy. The loans do not have to be repaid at any certain date. However, the amount of the loans, principal and interest, will be subtracted from the death benefits of the policies in the event of a claim or from the value of the policies in the event of surrender. At the time of the hearing, Dr. Moore either had surrendered his Sun Life policies or was in the process of doing so. He was paying for his Fortis policy on a monthly basis. Count XII At all times pertinent herein, an agent's agreement was in effect between Canada Life Assurance Company (Canada Life) and Respondent. In 1994, Respondent sold Mack Wallace Womble a Canada Life whole life insurance policy. Respondent received commissions on the initial and subsequent premiums paid on this policy. Mr. Womble never received a copy of his policy from the insurance company. Eventually, Respondent complained to Petitioner on Mr. Womble's behalf. Petitioner then directed Canada Life to refund all of Mr. Womble's premiums plus interest. The company complied with this directive and rescinded the policy. There is no evidence that Respondent was responsible for Canada Life having to refund Mr. Womble's premiums. There is evidence that the lengthy dispute over the delivery of the policy involved the company, the company's regional representative, and Mr. Womble. The record contains no business record documenting Canada Life's demand that Respondent refund all commissions paid to him for Mr. Womble's policy. Canada Life's representative/record custodian testified that the company had made such a demand at some unknown point in time. Her testimony, in and of itself, is not competent evidence that the company made a formal demand and that Respondent received that demand. However, Respondent admitted in a deposition that he has not refunded the premiums because cancellation of the policy was the company's fault, causing him to lose a valuable client. Respondent's Producer's Contract with Canada Life states as follows in relevant part: PART I GENERAL CONDITIONS * * * 3. REPAYMENT OF INDEBTEDNESS - The company, at its discretion, may: (a) deduct any commissions or other obligations of any nature payable to the individual Producer or estate, or any of their assigns under this or any other Contract with the Company or; (b) require the Producer or estate to pay to the Company on demand any outstanding balances arising from chargebacks, deductions, adjustments and reversals under the terms of this or any other Contract with the Company regarding such income as, but not limited to, commissions. In the event that this Contract is terminated for whatever reason, all outstanding balances shall be immediately due and payable. * * * PART II CONDITIONS GOVERNING PAYMENT OF REMUNERATION * * * 1. In the event that the Company deems it necessary to refund a premium for a policy, the Producer, if called upon by the Company, shall repay on demand any remuneration received by him in connection with such policy. Canada Life's representative/records custodian testified that the subject Producer's Contract was terminated in 1996. There is no business record in evidence to support that testimony. According to Respondent's official licensure records, the contract between Canada Life and Respondent was "not renewed" in 1997.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order revoking Respondent's insurance licenses. DONE AND ENTERED this 25th day of August, 2000, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 25th day of August, 2000. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 William M. Furlow, Esquire Katz, Kutter, Haigler, Alderman, Marks Bryant & Yon, P.A. 106 East College Avenue, Suite 1200 Tallahassee, Florida 32302-1877 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 Honorable Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300
The Issue The issues are (1) whether certain medical expenses incurred by petitioners' daughter should be covered under the state group health insurance program, and (2) whether the state is estopped from denying the claim based upon erroneous misrepresentations made by its agent.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, Etta Aldridge, is a full-time employee of Sunland Training Center in Marianna, Florida and is a participant in the state group health insurance program (the plan). James Aldridge, her husband and also a petitioner in this cause, and Jerrilyn Aldridge, her daughter, are covered by the plan. On November 3, 1987, Jerrilyn, then around seventeen years of age, was severely injured in an automobile accident near her home in Greenwood, Florida. Among other things, she suffered a skull fracture, abrasions, crushed pelvis and hip, and punctured lungs and stomach. She was initially taken to a Marianna hospital for emergency treatment and then transferred to a Tallahassee hospital for longer-term care. While at the Tallahassee hospital, Jerrilyn was diagnosed by her neurologist as having a closed, diffuse brain injury and brain stem contusions. After Jerrilyn was treated in Tallahassee for two and one-half months, which included one month in the hospital and forty-five days at the hospital's extended care facility, her parents were advised that, due to her poor prognosis, they had a choice of putting her in a nursing facility or taking her to their home. Although Jerrilyn was still in a coma, petitioners decided to take her home and care for her in a bedroom which had been converted into a hospital room setting. After six or seven weeks at home, and contrary to earlier medical expectations, Jerrilyn opened her eyes, made noises and manifested some slight arm movement. Based upon these encouraging signs, petitioners sought further medical advice and were told that, given the foregoing signs of improvement, treatment in a facility that specialized in brain injury rehabilitation would improve their daughter's condition. Petitioners contacted the National Head Injury Foundation and were given a list of health care facilities in the state that provided rehabilitative services for brain injured patients. This list included Manatee Springs Nursing Center, Inc. d/b/a Mediplex Rehab-Bradenton (MRB), a facility licensed by the state as a skilled nursing facility but which specialized in rehabilitating brain injured patients. MRB is the largest brain injury rehabilitation facility in the southeastern united States. Since the Aldridges did not have the financial resources to pay for any additional treatment for Jerrilyn, it was essential that they selected a facility that would be covered by the plan. After James Aldridge spoke with and received information from most of the facilities on the list, and conferred with Jerrilyn's neurologist, he eventually narrowed his choice to several facilities, including MRB, which impressed him because of its good reputation and specialty in head injury rehabilitation. To confirm whether coverage would be provided for further treatment, James Aldridge telephoned the customer service unit of Blue Cross and Blue Shield of Florida, Inc. (BCBS), the plan's administrator. He also contacted MRB and authorized it to make an inquiry with BCBS on his behalf. On March 28, 1989 Aldridge received favorable advice from a BCBS service representative concerning coverage and benefits for Jerrilyn at MRB. This advice was independently confirmed by MBR on the same date, and Jerrilyn was accepted as a patient at the facility effective March 31, 1988. Some three months later, and after some of the bills had been paid, BCBS advised MBR and petitioners that a "computer" error had been made and that the requested benefits applied only when rendered in a licensed hospital and not a skilled nursing facility. BCBS accordingly declined to pay the bills. That prompted petitioners to initiate this proceeding. The bills in question total over $225,000. The Insurance Plan The State has elected to provide a self-insured group health insurance program for its employees and their dependents. The legislature has designated respondent, Department of Administration, Division of Employees' Insurance (Division), as the responsible agency for the administration of the plan. To this end, the Division has entered into an agreement with BCBS to administer the plan. Among other things, BCBS provides verification of coverage and benefits, claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications. Including dependents and retirees, there are almost 300,000 persons who are covered by the plan. Upon enrolling in the plan, all employees, including Etta Aldridge, were routinely given an insurance card with BCBS's telephone number and a brochure entitled "State of Florida Employees Group Health Self Insurance Plan Brochure" (brochure) containing a general description of the plan. The brochure warns the insured that the brochure is not a contract since it does not include all the provisions, definitions, benefits exclusions and limitations of the plan. It also contains advice that if the brochure does not answer an employee's question, he should telephone the Division's customer service section in Tallahassee. In actual practice, however, if an employee contacts the Division number, he is told to telephone BCBS's customer service unit in Jacksonville regarding any questions as to coverage and benefits, claims or other problems concerning the plan. The Division generally becomes involved only when an employee is unable to resolve a claims problem with BCBS. BCBS has established a service unit that deals exclusively with inquiries regarding coverage and benefits under the state group health plan. There are approximately twenty- eight service representatives in that unit. Each representative receives four weeks of training before being certified as a customer service representative. After being certified, a representative's primary responsibility is to respond to inquiries from state employees, health providers and physicians regarding verification of benefits and coverage under the state group policy. It should be noted that a distinction exists between verification of benefits and coverage. To verify coverage means to verify that a person has an active policy at the time services are rendered. To verify benefits means to confirm that a specific service is covered under the policy. In this case, there was an inquiry by the insured and provider regarding both benefits and coverage. In the event a representative is unsure as to the licensing status of a facility or provider, the representative has access to BCBS's master registry department which maintains the provider number and licensure status of every facility in the state. That registry identified MRB as a skilled nursing home. BCBS representatives have the authority to make decisions regarding benefits and coverage. It is only when an inquiry falls within a "grey area" that the final decision is referred from the unit to either the Legal or Medical Division of BCBS. The Division, with the assistance of BCBS, has prepared a seventy-five page benefit document (document) which governs all claims arising under the plan. However, the document is for BCBS in-house use only and is not given to state employees or providers. The document first became effective on May 1, 1978 and has been subsequently amended from time to time. When Jerrilyn was admitted to MRB, the document effective October 1, 1987 was controlling. The document was further amended effective July 1, 1988, which was three months after her admission to MRB. As is pertinent here, the July 1, 1988 amendments increased the deductibles and narrowed the definition of a "hospital". According to the state benefits administrator, the document is "the final word" on any dispute regarding coverage or claims. The BCBS service unit uses this document to verify coverage and benefits. Included in the document are numerous definitions that are used to resolve disputed claims. Relevant to this controversy is the definition of a hospital at the time Jerrilyn was admitted to MRB: "Hospital" means a licensed institution engaged in providing medical care and treatment to a patient as a result of illness or accident on an inpatient/outpatient basis at the patient's expense and which fully meets all the tests set forth in 1., 2., and below: It is a hospital accredited by the Joint Commission on the Accreditation of Hospitals, or the American Osteopathic Association or the Commission on the Accreditation of Rehabilitative Facilities; It maintains diagnostic and therapeutic facilities for surgical or medical diagnosis and treatment of patients under the supervision of a staff of fully licensed physicians; It continuously provides twenty-four (24) hour a day nursing service by or under the supervision of registered graduate nurses. It is undisputed that, while MRB may have provided many services comparable to those rendered by a licensed hospital and is considered to be an atypical nursing home, MRB is still licensed by the state as a skilled nursing facility. Thus, MRB cannot qualify as a hospital under the benefit document. Payment for services in a skilled nursing facility, such as MRB, are much more limited and restrictive than for a hospital. To qualify for payment of benefits in a skilled nursing facility, the insured must have been hospital confined for at least three consecutive days prior to the day of hospital discharge before being transferred, upon a physician's advice, to a skilled nursing facility. Once admitted to such a facility, the insured's room and board reimbursement is limited to a maximum of $76 per day. Further, payment of services and facilities is limited to sixty days of confinement per calendar year. In contrast, benefits for hospital care include, for example, unlimited days of coverage per calendar year and much higher reimbursement rates for room, board and other services. In this case, besides having been admitted to MRB directly from her home, and not a hospital, Jerrilyn had already used up forty- five of the sixty days of annual benefits at the extended care unit of a Tallahassee hospital. BCBS also has a fee schedule that is used in paying all covered claims. However, the schedule was not introduced into evidence. Estoppel Before he made a final decision as to where to send his daughter, James Aldridge spoke by telephone with several BCBS representatives, including Michelle Sahdala and Rhonda Hall, the unit supervisor and considered its most experienced representative. 1/ Aldridge made these telephone calls because he wanted to positively confirm which facilities would be covered by the plan. During one conversation, Sahdala advised Aldridge that the proposed treatment would not be covered in several facilities named by the National Head Injury Foundation, including New Medico Rehabilitation Center of Florida in Wauchula, Florida and Capital Rehabilitation Hospital in Tallahassee. Aldridge advised BCBS that he might want to place his daughter in MRB, but only if such treatment was covered under his wife's insurance plan. He heard nothing further from BCBS until a week later. Aldridge contacted MRB on March 21, 1988 and advised an MRB representative that he wished to place his daughter in the facility if his wife's insurance covered the treatment at MRB. He also gave MRB the BCBS unit supervisor's name (Rhonda Hall) and telephone number. To verify coverage and benefits, MRB's admission coordinator, Patricia Dear, telephoned Hall on March 22, 1988. Such an inquiry is routinely made by the provider on behalf of the insured and before the patient is admitted to the facility. This is to ascertain if the prospective patient is insured, and if so, to verify the amount of benefits. Dear identified herself and advised Hall that she was requesting benefits information on Jerrilyn Aldridge, an insured. She told Hall that MRB was a skilled nursing facility and not a hospital, the nature of services that would be provided to Jerrilyn and her need to determine whether such services would be covered under the plan before Jerrilyn was accepted as a patient. When asked if she would need further information in hand concerning MRB before determining the amount of benefits, Hall responded affirmatively. Accordingly, Dear sent Hall by overnight mail a letter and brochure describing the facility's services. They were received by BCBS the next morning, or March 23. The letter included information concerning MRB, the fact that it was a skilled nursing facility and not a hospital, the type of services that MRB provided, a summary of the expected charges for treating Jerrilyn (from $600 to $850 per day), the average length of stay of a patient (3 to 9 months), and an offer to answer any additional questions that BCBS might have. When Dear heard nothing further from Hall within the next few days, she made a follow-up telephone call to Hall on March 28 to see if Hall had any questions and to verify benefits coverage. Hall acknowledged receiving the letter of March 22 with attachment. After Dear discussed each of the disciplines and types of services to be provided and their expected cost, including physician services, physical therapy, neuropsychology, central supply, pharmacy, laboratory services and a room and board charge of $351 per day, Hall advised Dear that the only policy exclusions on coverage would be occupational and speech/language therapy. She added that all charges would be subject to medical necessity, and ambulance costs to transport Jerrilyn to the facility would be covered. The two also discussed the fact that there were no time limitations under the policy and that almost $475,000 in lifetime coverage still remained. Hall represented that after the Aldridges satisfied their $1500 deductible on which BCBS paid only 80% of the bills, BCBS would thereafter pay 100% of all medically necessary charges. In making that representation, Hall did not disclose the fact that BCBS has a fee schedule and that all payments were subject to the limitations specified in that schedule. After verifying that Hall had cited all policy limitations, and consistent with her longtime experience in verifying benefits with other insurance carriers, Dear properly assumed that if the policy contained a provision which limited payment to something less than 100% of covered services, Hall would have said so. Dear asked Hall if there was any reason not to admit Jerrilyn and Hall replied "no." Dear also asked Hall if she (Hall) was in a position to verify benefits and Hall represented that she was. Dear then told Hall that Jerrilyn would be presented to the admissions committee the next day and, if clinically appropriate, she would be admitted. Dear ended the conversation by advising Hall that a letter confirming their understanding would be sent after Jerrilyn was admitted. After speaking with Hall, Dear had a clear understanding that coverage and benefits had been approved and, except for occupational and speech/language therapy, BCBS would pay 80% of all medically necessary charges until the Aldridge's $1,500 deductible was met, and then to pay 100% of all remaining medically necessary charges. 2/ After receiving the favorable advice, Dear telephoned Aldridge the same day and told him the results of her conversation with Hall. Within a few moments after speaking with Dear, Aldridge received a telephone call from an unidentified female BCBS representative who informed him that BCBS would pay for his daughter's treatment at MRB. Jerrilyn was accepted as a patient by MRB's admissions committee on March 28, 1988. Both the provider and the insured relied upon Hall's representations in admitting Jerrilyn to the facility. Had Jerrilyn not been covered by the plan, the committee would not have approved her admission. Also, if the Aldridges had known that the treatment at MRB was not covered, they would have sent their daughter to another facility covered by the plan. On April 4, 1988, and pursuant to her last telephone conversation with Hall, Dear sent Hall by overnight mail the following letter: This is to confirm the admission of Jerrilyn Aldridge on March 31, 1988, to the specialized head trauma rehabilitation program at Mediplex Rehab-Bradenton, Florida. The following benefits information has been verified by you and Patricia Dear, R. N., Admissions Coordinator on March 28, 1988. Effective date: 10/1/79 Benefits: After $1,500 - out of pocket/yr- 100% coverage Days available: Unlimited days Monies available: $474,533.79 Exclusions: Occupational Therapy, Speech- Language Therapy Limitations: Treatment subject to "Medical Necessity" If I do not hear from you, I will consider you to be in agreement with the above information. Please place this in the client's file. Thank you for your prompt attention to this matter. (Emphasis supplied) Although BCBS's records reflect that Dear's letter was received, Hall did not advise Dear that there were any problems concerning Jerrilyn's coverage and benefits under the plan or that Dear's understanding of the benefits to be paid was inaccurate or in error. Of some note is the fact that Hall is considered one of the most knowledgeable BCBS representatives on state health plan benefits and recognizes that her statements concerning benefits are relied upon by providers. Even though Hall was specifically advised both orally and in writing that MRB was licensed as a nursing home, and she had access to BCBS's master registry to confirm MRB's licensure status, she failed to discern that a nursing home was not a covered facility for the requested services within the meaning of the plan. Indeed, she later acknowledged by deposition that she knew that "the state does not pay for nursing homes" and that she had made a mistake by failing to properly "investigate" the matter more thoroughly. By failing to convey accurate advice to James Aldridge and MRB and to note that the proposed treatment would not be covered if rendered by a nursing home, Hall failed to use reasonable care and competence in responding to the inquiry. Three months after Jerrilyn's admission, James Aldridge received notice that BCBS had changed its position and now asserted it was not going to pay for Jerrilyn's rehabilitation and treatment at MRB. Proposed agency action confirming this decision was later issued by the Division on October 21, 1988. Miscellaneous All medical services received by Jerrilyn were medically necessary within the meaning of the benefit document. The necessity of Jerrilyn's placement in a rehabilitation facility was established by Dr. James D. Geissinger, her Tallahassee neurologist, who based it upon Jerrilyn's improvement after leaving the Tallahassee hospital and made her a candidate for brain rehabilitation. Doctor Geissinger also noted that, as a result of receiving treatment at MRB, Jerrilyn had made "remarkable" improvement and was able to partially regain her language function, use her left arm and hand, and improve her "activities of daily living." There are expectations that she will be able to walk again within a year. Further, based upon the testimony of an MRB staff physician, the services and treatment received by Jerrilyn at MRB were medically necessary to facilitate her neurologic and functional recovery. Given the nature of her injury and MRB's nursing staffing ratios, the required intensive medical rehabilitation and monitoring of Jerrilyn's medical and neurological condition was comparable to care in a hospital intensive care unit. These matters were not contradicted. On April 1, 1988, the Aldridges executed a standard financial agreement with MRB whereby they agreed to indemnify MRB for all charges which were not paid by BCBS. As is normally done, they also authorized MRB to directly bill BCBS for all charges incurred by Jerrilyn while being treated at the facility. Finally, the Aldridges authorized MRB to make inquiries on their behalf with BCBS to verify insurance coverage and benefits for Jerrilyn. MRB submitted to BCBS all bills for services and treatment given to Jerrilyn during her five or six month stay at the facility. A summary of the dates of service, charges, payments made by BCBS and balance due is contained in petitioners' exhibit 17. In all, there are thirty-eight outstanding bills totaling $227,139.27. The parties have stipulated that the bills in exhibit 17 represent services that were actually performed and supplies that were actually received by the patient. As noted in finding of fact 21, all such supplies and services were medically necessary. For the reasons given in the conclusions of law portion of this recommended order, the doctrine of equitable estoppel applies, and petitioners are entitled to be reimbursed for all unpaid bills filed with BCBS in accordance with the representations of agent Hall. These include room and board charges (at the intensive care room rate), physician services, neuropsychology, physical therapy, central supply, pharmacy and laboratory charges as more fully described in petitioners' exhibit 17. Such reimbursement should be not be subject to the limitations prescribed in the fee schedule.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the amended petition of Etta and James Aldridge be GRANTED, and the Division order Blue Cross and Blue Shield of Florida, Inc. to reimburse petitioners $227,139.27 as reflected in petitioners' exhibit 17. DONE and RECOMMENDED this 7th day of August 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 7th day of August, 1989.
