ALJDEC decisions subject to certification as final

18A-060-INS-RES2 · Department of Insurance · 2018-10-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 18, 2018, at 1:00 p.m. APPEARANCES: The Arizona Department of Insurance (“the Department”) was represented by Deian Ousounov, Esq., Assistant Attorney General; Dinh Quach (“Respondent”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Department referred this matter to the Office of Administrative Hearings (“OAH”), an independent agency, for an evidentiary hearing. On August 22, 2018, the Department issued a Notice of Hearing, setting a hearing on October 18, 2018, at 1:00 p.m., alleging certain facts and charging violations of statutes regulating licensed insurance producers in Arizona. The Department sent copies of the Notice of Hearing to Respondent’s addresses of record. A hearing was held on October 18, 2018. The Department presented the testimony of Wendy Greenwood, its Investigator and, since April 2018, Administrator of its Enforcement Unit, and submitted five exhibits. Respondent did not request to appear telephonically and did not request that the hearing be continued. Although the Department did not complete its presentation of evidence until approximately 1:45 p.m., Respondent did not appear, personally or through an attorney, and did not contact OAH about this matter. Consequently, Respondent did not present any evidence to defend his Arizona non-resident insurance producer’s license. Hearing Evidence On or about June 23, 2017, the Department issued a non-resident insurance producer’s license to Respondent, authorizing Respondent to sell Life and Accident and Health or Sickness insurance in Arizona. Respondent was domiciled in Sacramento, California, and was licensed as an insurance producer in California. Respondent’s Arizona license is due to expire on April 30, 2021.[1] On February 22, 2018, the Department received a letter from New York Life Insurance Company stating that Respondent had been terminated effective January 22, 2018, after he admitted selling his brother a life insurance police, on which his nephew was the named beneficiary, and after his brother passed, withholding death benefit proceeds totaling $99,757.85 from his nephew and using $3,566.00 to pay a premium for his own life insurance policy. Respondent also admitted to forging his nephew’s name on an insurance application without his authorization or consent.[2] Ms. Greenwood testified that Respondent never contacted the Department about the incident. New York Life Insurance Company provided to the Department a summary of its employee Mark Spagnuolo’s January 10, 2018, interview of Respondent. Respondent stated that he had sold his brother, Mike Quach, a life insurance policy in December 2016, which named Mike’s son, Paul, as the sole beneficiary. Respondent admitted that after Mike passed, Respondent filled out the death claim form and forged Paul Quach’s signature on it. Respondent then opened a joint account in his own and Paul Quach’s name, without Paul Quach’s knowledge or consent.[3] Although Respondent stated that he emailed the paperwork to Paul Quach, when Paul Quach was interviewed, he denied receiving any paperwork. In a handwritten statement, Paul Quach indicated that he was not aware of any insurance proceeds from his father’s death, did not sign any claim forms, and did not open a joint account with his uncle, Respondent.[4] Ms. Greenwood testified that Respondent’s conversion of client funds and forgeries were especially concerning because those acts violated the fiduciary duty that insurance agents owe to their clients. In addition, if Respondent would defraud a family member, he is probably even more likely to defraud a member of the public. Ms. Greenwood testified that the Department’s objective is to promote a safe, strong, and competitive insurance marketplace for consumers and businesses. Its main role is to protect consumers. On March 31, 2018, Respondent’s California insurance license expired.[5] Ms. Greenwood testified that a non-resident insurance producer is required to maintain an active license in his state of residence. She had checked the website and Respondent’s California license was still in expired status on the date of the hearing. CONCLUSIONS OF LAW This matter lies within the Department’s jurisdiction.[6] The Notice of Hearing that the Department mailed to Respondent at his addresses of record were reasonable.[7] Respondent is deemed to have received notice of the hearing.[8] The Department bears the burden of proof to establish cause to discipline Respondent’s non-resident insurance producer’s license by a preponderance of the evidence.[9] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[10] By depositing the proceeds of his brother Mike’s life insurance policy into a joint account that the beneficiary of the policy, Respondent’s nephew Paul, did not know about and using some of the proceeds to purchase life insurance for himself, Respondent violated A.R.S. § 20-295(A)(4)[11] by converting monies that Respondent had received for the benefit of another. This violation furnishes cause for the Department to revoke Respondent’s non-resident insurance producer’s license. By forging Paul’s name onto the claim form and onto the documents opening the joint checking account, Respondent violated A.R.S. § 20-295(A)(10).[12] This violation furnishes additional cause for the Department to revoke Respondent’s non-resident insurance producer’s license. By forging Paul’s name and converting the insurance proceeds to his own use, Respondent engaged in dishonest practices, in violation A.R.S. § 20- 295(A)(8).[13] This violation furnishes additional cause for the Department to revoke Respondent’s non-resident insurance producer’s license. A.R.S. § 20-287(A)(1) requires that a person be “currently licensed as a resident and in good standing in the person's home state” to hold a non- resident insurance producer’s license. Because the Department established that Respondent’s California license has expired, the Department established additional cause to revoke Respondent’s non-resident insurance producer’s license under A.R.S. § 20-295(A)(2).[14] ORDER Based upon the above, Respondent Dinh Quach’s non-resident insurance producer’s license shall be revoked on the effective date of the Order entered in this matter. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five days from the date of that certification. / / / / Done this day, October 29, 2018.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Keith A. Schraad, Interim Director Arizona Department of Insurance ----------------------- [1] See the Department’s Exhibit 1. [2] See the Department’s Exhibit 3. [3] See the Department’s Exhibit 4. [4] See the Department’s Exhibit 5. [5] See the Department’s Exhibit 2. [6] See A.R.S. §§ 20-281 to 20-301. [7] A.R.S. § 20-286(C)(1) required Respondent to notify the Department within 30 days of any change in his residential or business address. He has not done so. [8] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [9] See A.R.S. § 41-1092.07(G)(1); A.A.C. R2-19-119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [10] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [11] A.R.S. § 20-295(A)(4) includes among the grounds to revoke an insurance license “[i]mproperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business.” [12] A.R.S. § 20-295(A)(10) includes among the grounds to revoke an insurance license “[f]orging another's name to any document related to an insurance transaction.” [13] A.R.S. § 20-295(A)(8) includes among the grounds to revoke an insurance license “[u]sing fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.” [14] A.R.S. § 20-295(A)(2) includes among the grounds to revoke an insurance license “[v]iolating any provision of this title or any rule, subpoena or order of the director.”

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826