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Gallagher Takes Emergency Action against Agents


TALLAHASSEE -- In an ongoing crackdown on the sale of unauthorized health insurance in the state, Florida Treasurer and Insurance Commissioner Tom Gallagher announced today that he has suspended the licenses of two agents suspected of "rolling" consumers from one unlicensed plan to another.

The action was taken in emergency orders filed last week against Jerry Dewain Crook, of Cardinal Financial Services in Kissimmee, and Thomas Jerome Daugherty of Cocoa. The orders charge that both agents sold insurance policies for unlicensed T.R.G. Marketing Group, of Greenwood, Ind. Similar actions are anticipated against other agents around the state.

"A licensed insurance agent should know the product he or she is selling," said Florida Treasurer and Insurance Commissioner Tom Gallagher. "While the vast majority of agents are law abiding, there are some agents steering consumers into plans that are offering a false sense of security."

In addition to possibly not having sufficient reserves, unlicensed entities may offer premiums that are often inadequate to cover the costs of future medical bills. The principals of unlicensed entities do not undergo background checks and the plans do not participate in guaranty funds that insure consumers against unpaid or abandoned claims. Licensed insurers in Florida are required to have specific reserve levels and to participate in the state's guaranty fund.

The department issued an order against T.R.G. and its principals in January, requiring them to respond to charges of transacting insurance business without a license. Carmelo Zanfei, chairman of T.R.G. Companies, has requested a formal hearing on the charges.

T.R.G. is the fourth company this year that Gallagher has taken action against for selling unauthorized insurance.

T.R.G. abruptly shut down its operations in late November, and consumers soon began complaining about unpaid health care bills. Yet, the emergency order alleges, Crook and Daugherty and their recruits transferred clients from enrollment in T.R.G. to other unlicensed plans operating as Benefits of America, EOShealth, and Consumer Health Education Association (CHEA).

The order alleges that Crook had at least seven other agents working with him in the scheme, and that Daugherty had at least nine agents in his network.

T.R.G. claimed to be qualified for exemption from state regulation under the federal Employee Retirement Income Security Act (ERISA), which under limited circumstances allows self-insured plans to be organized by single employers, unions or associations. However, T.R.G. was pooling unaffiliated individuals and employer groups, more like a multiple employer welfare arrangement, or MEWA, that would require state licensure.

Genuine ERISA plans are single-employer based, fully self-insured health plans. As such, an insurance agent is not needed to establish one.

The department is hoping to get legislation passed this year that would require agents to take a course on ERISA plans as part of their continuing education and would increase the penalty for a licensed agent who sells unauthorized insurance from a misdemeanor to a felony.

Gallagher said the problem of unauthorized insurance can be difficult to uncover unless consumers register complaints. Consumers buying or renewing policies are urged to check with the insurance department to make sure the company and the agent offering the plan are licensed in Florida. The department's toll-free Consumer Helpline number is 1-800-342-2762, and is open Monday through Friday from 8 a.m. to 7 p.m.