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IN RE:
DUSTIN W. BLACK
National Producer # 3688040
Maine License # ADR44191 |
Docket No. INS 06-502
DECISION AND ORDER
REVOKING
INSURANCE ADJUSTER
LICENSE |
INTRODUCTION
1) This matter is before the Superintendent of Insurance, after notice
and opportunity for hearing, pursuant to a Petition to REVOKE the resident
adjuster license of Dustin W. Black, dated October 13, 2006, and filed
by the Staff of the Maine Bureau of Insurance.
2) The Maine Insurance Code regulates persons who offer or sell insurance
products and services in the State of Maine, including adjusters. The
Superintendent of Insurance has jurisdiction over this matter pursuant
to the Insurance Code generally, Title 24-A Maine Revised Statutes Annotated,
and in particular, 24-A M.R.S.A. §§211, 220, 1413, 1417, 1420-K
and 1472.
FINDINGS OF FACT
and
CONCLUSIONS OF LAW
3) Dustin W. Black has been licensed in Maine as a resident insurance
adjuster since 1995. His license number in Bureau records is ADR44191.
His National Producer Registry Number is 3688040.
4) Mr. Black’s last known address, as specified in Bureau of
Insurance license records, is:
27 Old Port Road
Kennebunk, ME 04043
5) At all times relevant to the facts set forth in this Petition, between
1998 and 2005, Mr. Black was a workers’ compensation claims representative
for ESIS Inc., a licensed adjuster firm and third party administrator.
In such capacity, Mr. Black was responsible for the administration of
specific claims in Maine, and was the designated “responsible
person” for the firm under its adjuster business entity license
pursuant to 24-A M.R.S.A §1413(3) which states in relevant part:
“At least one individual licensee must be designated responsible
for the business entity's compliance with the insurance laws and rules
of this State.”
6) Pursuant to its regulatory function under the Maine Workers' Compensation
Act, Title 39-A Maine Revised Statutes Annotated §§101 - 409,
the Workers Compensation Board (“Board”) audited 84 claims
administered by ESIS in 2004 for the exam period of 2001, to determine
compliance with requirements concerning: form filing; timeliness of
indemnity payments; and accuracy of indemnity payments. The Board’s
Office of Monitoring, Audit & Enforcement issued its Compliance
Audit Report February 14, 2005.
7) Due to questionable claims handling techniques identified in the
above audit process, the audit was expanded to include a limited scope
audit of 61 claims from 2003 and 5 claims from 2004. This limited scope
audit concerned: apparent use of fictitious data in Box 24 and 28 of
the Memorandum of Payment (“MOP”) form; late initial payments;
and violations subject to penalty under 39-A M.R.S.A. §205(3).
8) The Board certified its findings to the Superintendent pursuant
to 39-A M.R.S.A. §359(2), and referred its findings for the Superintendent’s
review of Mr. Black’s activities under his adjuster license and
appropriate action against this license in accordance with the Insurance
Code. The specific purpose of a certification under §359(2) is
for the Superintendent to take appropriate action so as to bring patterns
of questionable claims-handling practices to a halt on the part of an
employer, insured, or third party administrator. No further action by
the Superintendent is needed under §359(2), as ESIS has taken steps
to improve its procedures. However, although ESIS has terminated Mr.
Black’s employment, he remains individually licensed. The Board’s
referral concerns matters which implicate the Superintendent’s
authority to take action directly under the Insurance Code against Mr.
Black’s adjuster license.
9) The Bureau provided notice by U.S. Certified Mail to Mr. Black of
the Petition to revoke, and provided opportunity for hearing, directed
to his address of record, 27 Old Port Road, Kennebunk, ME 04043, on
October 16, 2006, in accordance with the requirements of 24-A M.R.S.A.
§213.
10) The Bureau later received the Certified Mail receipt, indicating
receipt of the Petition and Notice and Opportunity for Hearing at Mr.
Black’s address of record on October 17, 2006.
11) Mr. Black has not requested a hearing on this matter, and the time
period allotted for the filing of any such request has expired.
Late filings of required
forms
12) Title 39-A M.R.S.A. §360(1) provides:
§360. Penalties.
- Reporting violations. The board may assess a civil penalty not
to exceed $100 for each violation on any person:
A. Who fails to file or complete any report or form required
by this Act or rules adopted under this Act; or
B. Who fails to file or complete such a report or form within
the time limits specified in this Act or rules adopted under this
Act.
13) The WCB-1 form, “Employer’s First Report of Occupational
Injury or Disease,” is required to be filed with the Board under
39-A M.R.S.A. §303, which provides:
When any employee has reported to an employer under this Act any
injury arising out of and in the course of the employee's employment
that has caused the employee to lose a day's work, or when the employer
has knowledge of any such injury, the employer shall report the injury
to the board within 7 days after the employer receives notice or has
knowledge of the injury.
14) The “Wage Statement” form, WCB-2, is also required to
be filed under 39-A M.R.S.A. §303.
15) Form WCB-2A, “Schedule of Dependents and Filing Status,”
must also be filed under 39-A M.R.S.A. §303.
16) Form WCB-3, “Memorandum of Payment” or the WCB-9 “Notice
of Controversy” form as warranted in particular cases, are required
to be filed under Board Rule Chapter 1, §1.1, which provides as
follows:
§ 1. Claims for Incapacity and Death Benefits
- Within 14 days of notice or knowledge of a claim for incapacity
or death benefits for a work-related injury, the employer or insurer
will:
A. Accept the claim and file a Memorandum of Payment checking
"Accepted" in Box 18; or
B. Pay without prejudice and file a Memorandum of Payment checking
"Voluntary Payment Pending Investigation" in Box 18;
or
C. Deny the claim and file a Notice of Controversy.
17) Form WCB-4, “Discontinuance or Modification of Compensation,”
must be filed under Board Rule Chapter 8, §11, which provides:
The Discontinuance or Modification of Compensation (WCB 4) shall
be filed by the employer or insurer when the employee returns to work
or receives an increase in pay pursuant to 39 A M.R.S.A. § 205(9)(A).
18) The “Statement of Compensation Paid,” form WCB-11,
is required under Board Rule Chapter 8, §1, as follows:
The initial Statement of Compensation Paid, Interim Report (WCB-11)
shall be filed with the Board within 195 days of the date of an injury
where indemnity payments have been made, and as a Final Report when
no further payments are anticipated. Subsequent Statements of Compensation
Paid (WCB-11) shall thereafter be filed with the Board within fifteen
(15) days of each anniversary date of an injury when payments of any
type have been made since the previous Statement of Compensation Paid
(WCB-11). The Statement of Compensation Paid (WCB-11) is required
when only medical payments are made subsequent to the filing of a
Final Report. There is no requirement to file the Statement of Compensation
Paid on claims when payments are made for medical only services and
no indemnity was ever paid on the claim.
19) In April 2005, ESIS and the Board entered into a Consent Decree
based upon 30 specific instances of late filings of forms in twelve
cases for which Mr. Black was responsible as a function of his duties
on behalf of ESIS, resulting in a total penalty of $3,000, based upon
a civil forfeiture of $100 for each of 30 separate violations of 39-A
M.R.S.A. §360(1)(B). A copy of this Consent Decree is attached
as Exhibit 1, and indicates the following:
a) Three late filings of Form WCB-1, “Employer’s First
Report of Occupational Injury or Disease;”
b) Six late filings of Form WCB-2, “Wage Statement;”
c) Ten late filings of Form WCB-2A, “Schedule of Dependents
and Filing Status;”
d) Three late filings of Form WCB-3, “Memorandum of Payment;”
and
e) Eight late filings of Form WCB-11, “Statement of Compensation
Paid.”
Incorrect information in filed
forms
20) The Board’s certification to the Superintendent described
in Paragraph 8 above cites 26 instances of incorrect information or
fictitious data entered on Form WCB-3, “Memorandum of Payment,”
in particular at Box 24, “Date check mailed,” and Box 28,
“First Day of Compensability After Waiting Period is Met,”
in the following cases for which Dustin Black served as claims representative,
and which are identified here by the Board’s file number and the
initials of the 25 injured employees:
Injured employee “I. A.” Board file#1001924;
Injured employee “K. A.” Board file#3013513;
Injured employee “T. B.” Board file#1001850;
Injured employee “G. B.” Board file#3010380;
Injured employee “S. B.” Board file#3006543;
Injured employee “R. C.” Board file#1017083;
Injured employee “D. C.” Board file#3007715;
Injured employee “U. C.” Board file#1002838;
Injured employee “B. D.” Board file#1018577;
Injured employee “S. G.” Board file#1-7897;
Injured employee “W. H.” Board file#3008212;
Injured employee “B. K.” Board file#3014937;
Injured employee “J. L.” Board file#3012747;
Injured employee “B. L.” Board file#3014979;
Injured employee “W. L.” Board file#4002913;
Injured employee “A. L.” Board file#3001511;
Injured employee “J. M.” Board file#3013880;
Injured employee “B. M.” Board file#3008318;
Injured employee “B. M.” Board file#3016311 (same employee
as #3008318);
Injured employee “G. P.” Board file#1012697;
Injured employee “S. P.” Board file#1017310;
Injured employee “D. P.” Board file#4001627;
Injured employee “E. R.” Board file#3015749;
Injured employee “M. R.” Board file#3014148;
Injured employee “J. T.” Board file#3012391; and
Injured employee “R. V.” Board file#3010675.
Late payments of benefits
21) Title 39-A M.R.S.A. §205 provides in relevant part:
1. Prompt and direct payment. Compensation under
this Act must be paid promptly and directly to the person entitled
to that compensation at the employee's mailing address, or where the
employee designates, without an award, except in cases when there
is an ongoing dispute.
2. Time for payment. The first payment of compensation
for incapacity under section 212 or 213 is due and payable within
14 days after the employer has notice or knowledge of the injury or
death, on which date all compensation then accrued must be paid. Subsequent
incapacity payments must be made weekly and in a timely fashion. Every
insurance carrier, self-insured and group self-insurer shall keep
a record of all payments made under this Act and of the time and manner
of making the payments and shall furnish reports, based upon these
records, to the board as it may reasonably require.
3. Penalty for delay. When there is not an ongoing
dispute, if weekly compensation benefits or accrued weekly benefits
are not paid within 30 days after becoming due and payable, $50 per
day must be added and paid to the worker for each day over 30 days
in which the benefits are not paid. Not more than $1,500 in total
may be added pursuant to this subsection. For purposes of ratemaking,
daily charges paid under this subsection do not constitute elements
of loss.
22) In April 2005, ESIS and the Board entered into ten Consent Decrees
involving late payments in the following cases, for which Mr. Black
had served as ESIS Claims Representative:
a) The initial indemnity payment made on May 11, 2001 was 72 days
after compensation became due and payable to injured employee Irene
Abbott in Board File #1-1924 and ESIS File #86764450537394, resulting
in a $1,500 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 2.
b) The initial indemnity payment made on April 1, 2002 was 110 days
after compensation became due and payable to injured employee Randy
Cloutier in Board File #1-17083 and ESIS File # C445C2200506, resulting
in a $1,500 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 3.
c) The initial indemnity payment made on January 16, 2002 was 65
days after compensation became due and payable to injured employee
Beth Dana in Board File #1-18577 and ESIS File #8574452355650, resulting
in a $1,500 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 4.
d) The initial indemnity payment made on June 22, 2001 was 72 days
after compensation became due and payable to injured employee Shane
Gionette in Board File #1-7879 and ESIS File #86094452129611, resulting
in a $1,500 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 5.
e) The initial indemnity payment made on November 4, 2003 was 56
days after compensation became due and payable to injured employee
Jason Barry in Board File #3-10128 and ESIS File # C445C2592821, resulting
in a $1,300 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 6.
f) The initial indemnity payment made on June 13, 2003 was 48 days
after compensation became due and payable to injured employee Samuel
Blackstone in Board File #3-6543 and ESIS File # C445C225974-1, resulting
in a $900 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 7.
g) The initial indemnity payment made on April 25, 2003 was 57 days
after compensation became due and payable to injured employee Allen
Libby in Board File #3-1511 and ESIS File #86094452260467, resulting
in a $1,350 penalty pursuant to 39-A M.R.S.A. §205(3) under the
Consent Decree attached as Exhibit 8.
h) The payment made on December 14, 2004, for five days out of a
total of six days of incapacitation, was 314 days after compensation
became due and payable to injured employee Bruce McLeod in Board File
#3-16311 and ESIS File #92504452271379, resulting in a $1,500 penalty
pursuant to 39-A M.R.S.A. §205(3) under the Consent Decree attached
as Exhibit 9.
i) The payment made on December 15, 2004 was 398 days after compensation
became due and payable to injured employee Joseph Medeiros in Board
File #3-16311 and ESIS File #92504452271379, resulting in a $1,500
penalty pursuant to 39-A M.R.S.A. §205(3) under the Consent Decree
attached as Exhibit 10.
j) Further, in the case of injured employee Samuel Blackstone, Board
File #3-6543 and ESIS File # C445C225974-1, benefits were increased
from partial to total on December 11, 2003 which was 122 days after
compensation became due and payable, resulting in a $1, 500 penalty
pursuant to 39-A M.R.S.A. §205(3) under the Consent Decree attached
as Exhibit 11.
Incorrect calculations of benefits
23) The Board’s certification to the Superintendent described
in Paragraph 8 above cites 6 instances of incorrect benefit calculations
in the following cases for which Dustin Black served as claims representative,
and which are identified here by the Board’s file number and the
initials of the 6 injured employees:
Injured employee “N. B.” Board File #1010632;
Injured employee “R. C.” Board File #1017083;
Injured employee “B. D.” Board File #1018577;
Injured employee “S. G.” Board File #1-7897;
Injured employee “T. M.” Board File #1017095; and
Injured employee “G. P.” Board File #1012697.
Questionable claims handling
in general
24) Title 39-A M.R.S.A. §359 provides in relevant part:
§359. Audits; penalty; monitoring
1. Audits. The board shall audit claims, including insurer, self-insurer
and 3rd-party administrator claim files, on an ongoing basis to determine
whether insurers, self-insured employers and 3rd-party administrators
have met their obligations under this Act and to identify the disputes
that arose, the reasons for the disputes, the method and manner of
their resolution, the costs incurred, the reasons for attorney involvement
and the services rendered by the attorneys.
If as a result of an examination and after providing the opportunity
for a hearing the board determines that any compensation, interest,
penalty or other obligation is due and unpaid to an employee, dependent
or service provider, the board shall issue a notice of assessment
detailing the amounts due and unpaid in each case and shall order
the amounts paid to the unpaid party or parties.
2. Penalty. In addition to any other penalty assessment permitted
under this Act, the board may assess civil penalties not to exceed
$10,000 upon finding, after hearing, that an employer, insurer or
3rd-party administrator for an employer has engaged in a pattern of
questionable claims-handling techniques or repeated unreasonably contested
claims. The board shall certify its findings to the Superintendent
of Insurance, who shall take appropriate action so as to bring any
such practices to a halt. This certification by the board is exempt
from the provisions of the Maine Administrative Procedure Act.
25) As described in Paragraph 5 above, Mr. Black was generally responsible
for ESIS’s compliance with the Insurance Code under its license,
and as a licensed adjuster Mr. Black was responsible as claims representative
for specific ESIS Maine claims, including those referred to in each
specific allegation above.
26) In April 2005, ESIS and the Board entered into a Consent Decree
based upon overall noncompliance with claims handling requirements resulting
in a total penalty of $10,000 under 39-A M.R.S.A. §359. A copy
of this Consent Decree is attached as Exhibit 12, and indicates the
following:
a) failing to pay claims timely;
b) failing to pay benefits due;
c) failing to calculate benefits accurately;
d) failing to file or timely file required forms with the Board; and
e) failing to file accurate information on forms filed with the Board.
SPECIFIC GROUNDS FOR
REVOCATION OF LICENSE
VIOLATION OF INSURANCE LAWS
27) The Superintendent may, after notice and opportunity for hearing,
revoke an Adjuster’s license under 24-A M.R.S.A. §1417 and
§1420-K(1)(B), based upon “violating any insurance laws,
or violating any rule, regulation, subpoena or order of the superintendent
or of another state's insurance commissioner.”
28) The above findings and conclusions pertain to insurance laws administered
through Title 39-A, the Maine Workers Compensation Code.
29) Mr. Black’s violations of such laws included conduct which
resulted in 13 consent decrees with the Workers Compensation Board imposing
penalties totalling $27,050.00, as follows:
- 30 specific violations of law subjecting ESIS to a penalty of $3,000
under the consent decree described in Paragraph 19 above;
- late payments to nine injured employees who were due compensation,
ranging from periods of 48 days late to 398 days late, subjecting
ESIS to total penalties of $14,050 under the 10 consent decrees described
in Paragraph 22 above; and
- Pervasive improper claims-handling practices in general, subjecting
ESIS to a penalty of $10,000 under the consent decree described in
Paragraph 26.
30) Mr. Black violated workers compensation insurance laws on numerous
occasions in his role as the individual responsible for ESIS’s
conduct as an adjuster business entity in Maine under 24-A M.R.S.A.
§1413, and as claims representative on specific files, all as more
specifically stated above, constituting statutory grounds for revoking
Mr. Black’s Adjuster license under 24-A M.R.S.A. §1420-K(1)(B).
FRAUDULENT, COERCIVE OR DISHONEST
PRACTICES;
INCOMPETENCE OR UNTRUSTWORTHINESS
31) The Superintendent may, after notice and opportunity for hearing,
revoke an Adjuster’s license under 24-A M.R.S.A. §1417 and
§1420-K(1)(H), based upon “using fraudulent, coercive or
dishonest practices, or demonstrating incompetence, untrustworthiness
or financial irresponsibility in the conduct of business in this State
or elsewhere.”
32) Mr. Black’s incompetent, coercive, or dishonest practices
and untrustworthy conduct in the course of his activities under his
adjuster license included all of the above referenced conduct which
related to the consent decrees and penalties for specific violations,
as well as:
- 26 instances of incorrect information in filed forms, including
misinformation regarding the timing of payments, regarding the cases
of 25 injured employees who were due compensation, as described in
Paragraph 20 above; and
- 6 instances of incorrect calculations of benefits due to 6 injured
employees, as described in Paragraph 23 above.
33) Mr. Black used coercive or dishonest practices, and demonstrated
incompetence or untrustworthiness on numerous occasions in in his conduct
as an adjuster as more specifically stated above, constituting statutory
grounds for revoking Mr. Black’s Adjuster license under 24-A M.R.S.A.
§1420-K(1)(H).
FAILURE TO MEET BASIC QUALIFICATIONS
FOR ADJUSTER LICENSE
34) Title 24-A M.R.S.A. §1472 specifies that: “The superintendent
may not issue, continue or permit to exist any license as an adjuster,
except in compliance with this chapter or unless the person meets the
requirements of subsection 2.” Subsection (2)(B) of §1472
specifies that an adjuster: “Must be competent, trustworthy, financially
responsible, and of good personal and business reputation.”
35) The above described incidents establish that Mr. Black engaged
in conduct that deprived injured employees of compensation as and when
it was legally due them, provided inaccurate information on required
forms, and exposed ESIS to liability based upon claims-handling practices.
To the extent such conduct related to late or improperly calculated
benefits, Mr. Black caused particular harm to injured employees. To
the extent such conduct related to incorrect information in filed forms
and late filings, Mr. Black caused particular harm to the Board’s
discharge of the regulatory oversight responsibility with which it is
charged for the protection of the public. All such conduct establishes
that Mr. Black is not competent, trustworthy, or of good business reputation,
and that therefore he is not eligible to continue to hold an Adjuster
license in Maine.
ORDER REVOKING LICENSE
of DUSTIN W. BLACK
Per Order of the Superintendent of Insurance, after notice and opportunity
for hearing, the resident insurance adjuster license of Dustin
W. Black, # ADR 44191, is hereby REVOKED pursuant
to the above grounds under Maine Insurance Code and in accordance with
the above Findings of Fact and Conclusions of Law.
The effective date of this Order is November 21, 2006.
NOTICE OF APPEAL RIGHTS
This Decision and Order is a final agency action of the Superintendent
of Insurance within the meaning of the Maine Administrative Procedures
Act. It is appealable to the Superior Court in the manner provided in
24-A M.R.S.A. §236, 5 M.R.S.A. §11001, et seq., and
M.R.Civ.P. 80C. Any party to the proceeding may initiate an appeal within
thirty (30) days after receiving this notice. Any aggrieved non-party
whose interests are substantially and directly affected by the Decision
and Order may initiate an appeal within forty (40) days of the issuance
of this Decision and Order. There is no automatic stay pending appeal;
application for stay may be made in the manner provided in 5 M.R.S.A.
§11004.
PER ORDER OF THE SUPERINTENDENT OF INSURANCE
| Dated: November 20, 2006 |
______________________________
ALESSANDRO A. IUPPA
Superintendent, Maine Bureau of Insurance |
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