Companies and Agents Disciplined for Insurance Fraud Violations

Kreidler disciplines, fines insurance companies and professionals for law violations 

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler in April disciplined and issued fines totaling $14,000 against insurance companies, agents and brokers who violated state insurance regulations.

Amco Insurance Co., Des Moines, Iowa; fined $5,000, order 16-0249
The insurance commissioner found that Amco charged some commercial customers rates that had not been filed and approved by the OIC, resulting in some overcharges and undercharges. The company also didn’t properly apply some rating factors, issued policies with incomplete underwriting information and was employing producers whose appointments and affiliations were expired.

American Strategic Insurance Corp.; St. Petersburg, Fla.; fined $4,500, order 17-0044
The company allowed 108 insurance producers whose appointments had lapsed to conduct 584 transactions totaling more than $151,000. State law requires insurers to file a notice and pay a fee to the insurance commissioner for each licensed producer who will act as an agent of an insurer. A total of 359 of its producers had lapsed appointments for 22 days.

5 Star Life Insurance Co., Baton Rouge, La.; fined $2,000, order 17-0045
The company allowed seven insurance producers whose appointments had lapsed to conduct 106 transactions totaling more than $6,153. State law requires insurers to file a notice and pay a fee to the insurance commissioner for each licensed producer who will act as an agent of an insurer. A total of 62 of its producers had lapsed appointments for 21 days.

Great Northwest Insurance Co., St. Paul, Minn.; fined $2,000, order 17-0047
The company allowed five insurance producers whose appointments had lapsed to conduct 41 transactions totaling more than $8,041. State law requires insurers to file a notice and pay a fee to the Insurance Commissioner for each licensed producer who will act as an agent of an insurer. A total of 22 of its producers had lapsed appointments for 17 days.

American Home Guard, Philadelphia; ordered to cease and desist, order 17-0085
The company sold service contracts, also known as warranties, to Washington consumers for home appliances and home systems. The company is not registered in Washington state, as required by state law.

Donna K. Stephenson, Everett; license revoked, order 17-0039
Stephenson ran an insurance business, Newcastle Insurance LLC dba Glen Gay Agency, with her husband, John Glen Gay.

Stephenson and Gay made an agreement with a client that they would pay his monthly health insurance premium to Premera in exchange for the client placing an ATM machine owned by the couple at his marijuana business. It is illegal for an insurance producer to pay a client’s premium.

Stephenson made the payments to Premera by forging the client’s signature on money orders, a violation of state law.

The couple stopped paying the client’s insurance premium after six months because of a dispute with the client, so Premera canceled the policy for nonpayment. The client complained to Premera, which in turn reported the case to the insurance commissioner. Premera canceled its affiliation with the agency in June 2016.

Stephenson’s license was revoked on March 17. The insurance commissioner has separate actions against Gay and Newcastle Insurance.

Jeffrey Byron Gordon, Tulalip; license revoked, order 17-0041
Gordon applied for an insurance producer license in November 2015. He disclosed eight felony charges and was issued a probationary license under the guidance of a mentor. In November 2016, the mentor notified the insurance commissioner that Gordon had again been charged with a new felony and would no longer be his mentor. The probationary license requires Gordon to report future charges or convictions against him. Gordon did not report the charges or resulting plea. As a result, his license was revoked on March 24.

Larry D. Andre, Puyallup; fined $250, order 17-0060
Andre sold a customer a Medicare Advantage Plan that was not suitable for the customer’s needs. Andre failed to get complete information about what types of health plans the customer needed and qualified for, and also misrepresented the benefits of the plan the customer bought. The customer filed a complaint with the insurance commissioner, and Andre agrees to pay the fine.

Joshua D. Hemstreet, Bremerton; fined $250, order 17-0053
Hemstreet applied for an insurance producer’s license in March 2017 and said he had no criminal history. The background check revealed two previous convictions. He agrees to pay the fine in order to obtain his license.

Ella Hipes, dba Measured Wealth, Spokane; ordered to cease and desist, order 17-0051
Hipes is not licensed as an insurance producer in Washington state. She solicited business in Washington state and sold four annuities for nearly $600,000 to three Washington consumers along with another unlicensed producer, Justin W. Smith. Hipes kept nearly $35,000 in commission and paid over $4,400 in commission to Smith. She has failed to respond to all inquiries from the insurance commissioner and refused delivery of the final notification letter. The state of Tennessee is also taking action against Hipes for allegations of misappropriation and fraud.