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November 2005 State: Florida Area of Interest: Insurance Agent Loses License, Must Pay $90,000 Fine An insurance agent who misled at least 35 customers, including several senior citizens, in the sale of annuities and forged their signatures to cover his tracks has had his license revoked and has been ordered to pay a $90,000 fine. Tom Gallagher, Florida's chief financial officer, last week ordered Clinton Mitchell Alford's insurance licenses revoked after a formal hearing ended with a Division of Administrative Hearings judge recommending license revocation. The action follows Alford's arrest in August on one count of scheme to defraud, a first-degree felony, and one count of uttering a forged instrument, a third-degree felony. He faces up to 35 years in prison if convicted on the criminal charges. Alford, 37, of Louisville, Tennessee, was formerly employed with both Mercantile Bank in Orlando and UVEST Financial Services. The department's Bureau of Investigation found that Alford had led at least 35 annuity customers to believe their surrender charge period - the period in which an annuity holder can be penalized for withdrawal of their investment - was much shorter than it actually was. Further, Alford told some customers that the guaranteed interest rate was higher than the actual rate. To conceal his misrepresentations, Alford forged customer signatures and falsified documents sent to the carrier, Lincoln Benefit Life (LBL), as well as those returning to the consumer from LBL. Alford earned commissions ranging from $1,300 to $36,000 on the sale of the annuities, earning well over $125,000 in commissions. LBL agreed to honor the terms under which the customers thought they had bought the annuity products. Source: State of Florida State: California Area of Interest: Bus Driver Pleads Guilty to Workers Compensation Fraud MTA driver collected over $15,200 in workers' compensation benefits claiming injuries while secretly employed with a second company A Metropolitan Transportation Authority (MTA) bus driver has pleaded guilty to workers' compensation insurance fraud after an investigation by the California Department of Insurance (CDI) Fraud Division. Renee Terri Henderson, 40, of Marina Del Rey, was found to have submitted fraudulent claims during the investigation. She entered her plea on October 21 and now faces a sentence of 90 days in jail, three years probation and she must pay restitution of $15,245. Her formal sentencing is set for November 21. According to CDI investigators, Henderson filed several workers' compensation claims with the MTA when she was employed as a bus operator. As a result of claims she filed on March 21 and March 22, 2003, Henderson received Total Temporary Disability (TTD) benefits from March 22, 2003 to December 22, 2003, collecting $386.65 every week. Source: State of California State: Illinois Area of Interest: Madison, Ill., Business Cited Again for Serious and Willful Violations of Worker Safety and Health Laws; $418,200 Penalty Proposed The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has proposed $418,200 in fines for Midwest Racking Manufacturing Inc., Madison, Ill., for failing to protect workers from numerous workplace hazards identified in a recent OSHA inspection and eight previous inspections. According to OSHA, the company has consistently failed to correct grave and potentially disastrous workplace hazards, including the lack of such basic worker protections as personal protective equipment, machine guarding, fire prevention measures, safety training, fall protection, and lockout/tagout procedures which render machinery inoperable during maintenance and repair. Source: Occupational Safety and Health Administration State: New York Area of Interest: Railroad Car Manufacturer Faces $130,500 in OSHA Fines for Safety and Health Hazards A cross section of safety and health hazards at a Hornell, N.Y., manufacturer and refurbisher of railroad cars has resulted in $130,500 in fines from the U.S. Labor Department's Occupational Safety and Health Administration (OSHA). Alstom Transportation Inc. was cited for a total of 17 alleged willful and serious violations of workplace safety and health standards at its Alstom Drive plant. The citations result from an OSHA inspection begun April 18 under OSHA's site-specific targeting program which directs inspections to workplaces with illness and injury rates higher than the industry average. Two willful citations, which account for $99,000 in fines, were issued for hazards involving large overhead cranes. The first citation concerned an employee exposed to falls of up to 45 feet due to his being required to climb over a crane wheel to access the crane's cab; the second citation addressed the company's failure to correct this and other unsafe conditions, including no load rating capacity and missing runway rail sweeps, identified during safety inspections of three cranes. OSHA's inspection identified other hazards in the plant, including unguarded floors and runways; unguarded machinery; improper storage of compressed gas cylinders; storage of excess amounts of flammable liquids; electrical hazards; no eyewash where employees worked with corrosive liquids; employees exposed to excess levels of cadmium; and employees exposed to being struck by a high pressure water stream operating at 38,000 pounds per square inch. These resulted in the issuance of 15 serious citations and $31,500 in fines. Source: Occupational Safety and Health Administration State: Florida Area of Interest: Gallagher Expresses Support for Workers' Compensation Rate Cut Tom Gallagher, Florida's chief financial officer, today expressed support for Insurance Commissioner Kevin McCarty's rejection of the National Council on Compensation Insurance's (NCCI) rate decrease request of 7.2 percent on workers' compensation rates in favor of a larger decrease. McCarty is recommending a statewide average decrease of 13.5 percent. "Lowering rates and cutting costs will save Florida's small-businesses an estimated $445 million that can be used to create new jobs and grow our economy," said Gallagher, who oversees the Florida Department of Financial Services. Last month, Gallagher called for an independent rate review of NCCI's rates. The review confirmed that rates proposed by NCCI did not adequately account for projected losses, earnings and medical costs for workers' compensation insurance companies. Gallagher also acknowledged McCarty's recognition that this year's decrease is due, in large part, to improved compliance and a reduction in fraud. Gallagher oversees the department's divisions of Insurance Fraud and Workers Compensation. "We have aggressively fought to combat workers' compensation fraud, and doubled the number of fraud arrests in just one year," Gallagher said. "Our compliance efforts have also added over $52 million in evaded premium to our state's workers compensation system and ensured that nearly 21,000 employees have coverage." This year's decrease will be the third consecutive drop in rates. Once approved by the Office of Insurance Regulation, the cumulative drop in overall rates since 2003 will total 32.6 percent Source: State of Florida State: California Area of Interest: Insurance Commissioner John Garamendi Announces Major Settlement and $8 Million Fine Against UnumProvident Over Insurer's Handling of Disability Claims Landmark agreement will change the way disability
policies are handled in California Declaring that all disability insurers doing business in California will eventually be required to adhere to the standards set in the UnumProvident agreement, Commissioner Garamendi announced the settlement at the Glendale Adventist Medical Center's Therapy and Wellness Center near Los Angeles. The case stems from an exhaustive Department investigation begun in 2003 into allegations of unfair claims settlement practices by the Tennessee-based UnumProvident. The investigation uncovered more than 25 business practices that violated California law, including:
Last year, UnumProvident signed a settlement with 48 other states over some of the same practices, in addition to paying a fine of $15 million. Commissioner Garamendi declined to sign that agreement, working instead to seek further consumer protections consistent with California law. Important aspects of the settlement include
Source: State of California
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