ALJDEC decisions subject to certification as final

20A-078-INS · Department of Insurance and Financial Institutions - Insurance · 2021-08-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Shawn Bruce Brown

(National Producer 7129733)

And

Farnsworth Ricks Insurance Agency, Inc.

(National Producer No. 8847291),

Respondents,

No. 20A-078-INS

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: July 27, 2021

APPEARANCES: Assistant Attorney General James Rolstead represented the Arizona Department of Insurance and Financial Institutions. Jeffrey Eavenson, Senior Investigator, appeared as a witness for the Arizona Department of Insurance and Financial Institutions. Assistant Attorney General Holly Wan and Susan Hack observed the proceedings. Respondents Shawn Bruce Brown and Farnsworth Ricks Insurance Agency, Inc. failed to appear.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

At all times relevant to this matter, Shawn Bruce Brown (“Mr. Brown”) was licensed by the Arizona Department of Insurance and Financial Institutions (“Department”) in Arizona as an Arizona resident insurance producer, National Producer Number 7129733, with lines of authority in life insurance, accident and health or sickness insurance, and property and casualty insurance. Mr. Brown’s license expired on May 31, 2019.

At all times relevant to this matter, Farnsworth Ricks Insurance Agency, Inc. (“Farnsworth Ricks”) was licensed by the Department as an Arizona resident business entity insurance producer with lines of authority in life insurance, accident and health or sickness insurance, and property and casualty insurance, National Producer Number 8847291. Farnsworth Ricks’ license expired on July 31, 2020. Mr. Brown was the President of Farnsworth Ricks prior to the expiration of his license.

J.H.O. Complaint

On or about February 24, 2017, the Department received a Request for Assistance from a consumer, J.H.O., alleging that Mr. Brown collected a premium payment for general liability and worker’s compensation policies that Mr. Brown never placed in force. Senior Department Investigator, Jeffrey Eavenson, investigated J.H.O.’s complaint.

Mr. Eavenson testified the J.H.O.’s complaint alleged that J.H.O. had paid Mr. Brown $344.70 to bind his general lability and worker’s compensation insurance for his business, however, Mr. Brown failed to do so. J.H.O. discovered that Mr. Brown never placed the policies after one of J.H.O.’s employees sustained a work related injury. J.H.O. was subject to a fine imposed by the Industrial Commission for failing to have worker’s compensation insurance.

During the course of his investigation, Mr. Eavenson discovered that Mr. Brown received two quotes for J.H.O.’s general liability insurance policy.

Mr. Brown responded to the Department’s inquiry regarding J.H.O.’s complaint and provided a bank statement that Mr. Brown indicated proves that he returned J.H.O.’s premium payment to J.H.O.’s father. However, the bank statement does not delineate the refund of the amount J.H.O. paid and no explanation was provided as to why Mr. Brown would return J.H.O.’s monies to J.H.O.’s father. Mr. Brown failed to provide the Department with a satisfactory explanation regarding this complaint, notwithstanding multiple requests by the Department for Mr. Brown to provide the Department with information. Mr. Eavenson testified that the Department has not received any documentation that Mr. Brown bound the insurance policies for J.H.O., and opined that it would not make sense for Mr. Brown to assert that he reimbursed J.H.O. the premium payment if Mr. Brown had actually bound the policies.

D.B. Complaint

On January 4, 2019, D.B. filed a Consumer Complaint with the Department against Farnsworth Ricks and Mr. Brown alleging that Mr. Brown created a fraudulent insurance policy for D.B.’s houseboat and collected premium payments for that fraudulent policy.

Mr. Eavenson testified that Mr. Brown had been D.B.’s insurance agent for a previous houseboat owned by D.B., named Golden Eagle. During the course of his investigation, Mr. Eavenson discovered the following in relation to D.B.’s complaint:

Golden Eagle was lost to a fire and a claim was paid on that loss.

D.B. subsequently purchased another houseboat named Chillin The Most.

D.B. contacted Mr. Brown in order to obtain insurance for Chillin The Most.

D.B. paid premiums toward the new policy on November 10, 2016, in the amount of $1,666.00, and on March 31, 2018, in the amount of $1,766.66.

D.B. believed that Chillin The Most had been insured for two years, however it was never insured. Instead, Mr. Brown “recycled” the insurance policy issued for Golden Eagle in order to have D.B. believe that Chillin The Most had been insured.

D.B. issued a check in the amount of $1,666.00 to American Marine Insurance Services on November 10, 2016, which was endorsed to Farnsworth Ricks and deposited into Mr. Brown’s/Farnsworth’s Ricks’ bank account.

Mr. Brown provided D.B. as proof of insurance for Chillin The Most, a Rate Indication document that contained a rate quote with the policy number for insurance issued for Golden Eagle, not Chillin The Most.

Mr. Brown also provided D.B. as proof of insurance for Chillin The Most a Watercraft Declarations Page that contains D.B.’s name but not the name of the boat.

D.B.’s March 31, 2018 check in the amount of $1,766.66 was issued to Farnsworth Ricks.

Markel American Insurance Company provided the Department with a response to a request to review Declarations Pages provided to D.B. by Mr. Brown. The response indicates the following in pertinent part:

MYH0000240399 – D.B.

On the Declarations Page provided, the insured is reflected as D.B., however we show that the insured is Golden Eagle Houseboats.

This policy canceled on June 2, 2016. The policy period on the Declarations Page provided is not correct.

The coverage lines, limits, and premium columns does not match our output format. . . .

. . . .

QT00001312726 – Chillin The Most

A number starting with QT means that was a quote that was never turned into a policy.

. . . .

The Quote was for D.B. and not Chillin The Most.

The quote date as shown towards the top of the document does not match.

The premium charged does not match.

. . . .

Farnsworth Ricks is not a contracted agent with MAIC.

All errors in original.

Mr. Brown’s/Farnsworth Ricks’ bank statements show deposit dates corresponding with the dates D.B.’s insurance premium checks were issued.

Mr. Eavenson testified that D.B. was at considerable risk due to Mr. Brown’s actions as Chillin The Most was not insured for two years and D.B. paid for insurance he did not receive.

Casa Verde Complaint

On January 25, 2019, S.F., on behalf of Casa Verde Construction, LLC (“Casa Verde”), submitted a Consumer Complaint to the Department alleging that Mr. Brown collected a premium payment for a general liability policy and a commercial automobile police for Casa Verde and subsequently issued fraudulent insurance and identification cards.

Mr. Eavenson testified that Casa Verde contacted Mr. Brown about obtaining commercial auto insurance for a fleet of construction vehicles, as well as general liability insurance. Mr. Eavenson further testified that Mr. Brown emailed Casa Verde two certificates of insurance for the dates December 29, 2018 through December 29, 2019, as well as insurance cards that indicated Liberty Mutual as the insurer.

Mr. Eavenson testified that on January 22, 2019, Casa Verde contacted Liberty Mutual and was informed there was no record of an insurance quote and that the policy number on the insurance cards was not valid. During the course of his investigation, Mr. Eavenson obtained copies of email correspondence between Mr. Brown and Casa Verde with attachments containing the two certificates of insurance and the four insurance cards.

Subsequent to Casa Verde’s communication with Liberty Mutual, Liberty Mutual attempted to contact Mr. Brown regarding the policies written for Casa Verde. Mr. Brown did not respond to Liberty Mutual’s inquiries.

Mr. Eavenson testified that notwithstanding that Casa Verde did not pay any monies to Mr. Brown, Casa Verde sustained considerable risk because of the gap in insurance created by Mr. Brown. Mr. Eavenson explained that because of the lapse in insurance, Casa Verde was placed in a higher risk tier resulting in a higher insurance rate to obtain new insurance.

On February 1, 2019, the Department issued a Subpoena Duces Tecum ordering Mr. Brown to appear on February 19, 2019, at the Department to provide documents and give testimony in regard to the above-specified complaints. Mr. Eavenson testified that the subpoena was sent to Mr. Brown’s addresses of record with the Department. Mr. Brown failed to appear as ordered.

Apache Wells Complaint

On February 12, 2019, Liberty Mutual Insurance Company (“Liberty Mutual”) sent a letter to the Department alleging that Mr. Brown and Farnsworth Ricks collected from Apache Wells Homeowners Association (“Apache Wells”) “approximately $60,000.00 for commercial coverage supposedly provided in 2018 and 2019,” and that “[n]either of the policy numbers are legitimate Liberty Mutual Insurance policy number[s].” The letter further stated, “Shawn Brown/Farnsworth Ricks Insurance Agency Inc. are not appointed with Liberty Mutual Insurance as a commercial agent and are not authorized to act on behalf of Liberty Mutual Insurance.”

The Department received documentation establishing that Apache Wells paid $28,785.23 to Farnsworth Ricks on June 22, 2018. The Department obtained documentation showing that a deposit for $28,920.43 was made into Mr. Brown’s/Farnsworth Ricks’ bank account on June 22, 2018.

The Department also received a copy of a Certificate of Liability Insurance dated February 4, 2019, showing the insured as Apache Wells, Farnsworth Ricks as the Producer, Mr. Brown as the point of contact, the insurer as Liberty Mutual, with a policy number that does not exist.

On December 24, 2019, an attorney representing Apache Wells sent Mr. Brown a demand letter, demanding reimbursement for the amounts paid by Apache Wells for insurance policies that “never existed and were issued fraudulently.”

J.E.P. Complaint

On March 28, 2019, Lincoln National Life Insurance Company (“Lincoln”) submitted a Consumer Complaint to the Department and attached thereto were documents related to a policy issued to consumer J.E.P. The Complaint alleged that Mr. Brown created a fraudulent life insurance policy, collected premium payments from a consumer for that policy, and failed to remit the premium check to Lincoln.

The documentation attached to this complaint included a copy of the check issued to Farnsworth Ricks dated November 19, 2018, in the amount of $1,654.00 for the life insurance premium, Mr. Brown’s/Farnsworth Ricks’ bank statement showing a deposit made on November 30, 2018, in the amount of $1721.05, and a letter dated January 2, 2019, from Lincoln to J.E.P. informing him that “[w]e have not received the outstanding requirements necessary to place your policy in force and find it necessary to process your policy as Not taken. Therefore, no life insurance coverage is in effect under this policy.”

Notwithstanding the fact that Mr. Brown did not pay the premium for the policy, Mr. Brown sent J.E.R. an email on January 23, 2019, assuring him, “spoke to underwriter and should be posted within 48 hours, everything is good.”

In response to an inquiry from the Department regarding this complaint, Mr. Brown asserted that he attempted to pay the premium, however, Lincoln would not accept “agency checks.” Mr. Eavenson testified that Mr. Brown did not submit to the Department any evidence that he attempted to remit the premium to Lincoln, and moreover, if Mr. Brown was unable to remit the payment via one method, it was his obligation to remit the premium payment via an acceptable method.

J.C.J. Complaint

On April 8, 2019, Liberty Mutual sent another letter to the Department with attachments related to an insurance policy issued by Mr. Brown to J.C.J. The letter indicated that “[t]he policy number is not a legitimate Liberty Mutual Insurance policy number” and that “Shawn Brown/Farnsworth Ricks Insurance Agency Inc. are not appointed with Liberty Mutual Insurance as a commercial agent and are not authorized to act on behalf of Liberty Mutual Insurance in any capacity.” The attachments to the letter included a copy of the premium payment from J.C.J. to Liberty Mutual in the amount of $3,679.86, dated September 12, 2018, and endorsed by “Farnsworth Ricks Agents for Liberty Mutual,” and a falsified policy. The Department obtained a copy of Mr. Brown’s/Farnsworth Ricks’ bank statement showing a deposit in the amount of $3,692.93 on September 14, 2018. Mr. Eavenson testified that J.C.J. was never reimbursed by Mr. Brown for the monies paid for the insurance premium.

J.N. Complaint

On April 29, 2019, J.N. filed a Consumer Complaint with the Department alleging that Mr. Brown created a fraudulent insurance policy and collected a premium payment and never remitted that payment to the insurer. J.N. issued a check on December 10, 2018, payable to Safeco Insurance in the amount of $643.00 which was endorsed as “payable to Farnsworth Ricks Agents for and behalf of Safeco.” Mr. Eavenson testified that J.N. sent another check to Safeco and Mr. Brown did not reimburse J.N.

On June 3, 2019, the Department issued a second Subpoena Duces Tecum ordering Mr. Brown to surrender specified documents to the Department immediately upon service of the subpoena. Mr. Brown failed to respond to the subpoena.

Mr. Eavenson testified that Mr. Brown failed to cooperate in the Department’s investigation which delayed the investigation.

On September 25, 2020, and October 5, 2020, the Department attempted to arrange a web-conference with Mr. Brown. Mr. Brown failed to schedule web-conferences when requested to do so by the Department.

On November 5, 2020, the Department issued a third Subpoena Duces Tecum ordering Mr. Brown to appear at the Department on December 2, 2020, to give testimony and produce specified documents. Mr. Brown failed to respond to the subpoena.

Also on November 5, 2020, the Department issued a letter to Mr. Brown giving him the option of appearing by video or phone on December 2, 2020, rather than appear in person, due to the pandemic. Mr. Eavenson testified that the subpoena that was sent to the business address for Mr. Brown/Farnsworth Ricks was returned to the Department as “unclaimed” and “unable to forward.” However, the subpoena mailed to Mr. Brown’s residential address was successfully delivered.

On November 7, 2020, Mr. Brown emailed the Department with dates of availability.

On November 9, 2020, Mr. Eavenson responded to Mr. Brown’s November 7, 2020 email, to which Mr. Brown failed to respond and further failed to appear on December 2, 2020 pursuant to the subpoena.

Mr. Brown did not appear at the hearing; therefore, he did not present any evidence to refute or rebut the evidence presented by the Department.

CONCLUSIONS OF LAW

This matter is a disciplinary proceeding wherein the Department must prove by a preponderance of the evidence that Respondent violated the State’s Insurance Laws. See A.A.C. R2-19-119.

The copies of the Notice of Hearing that the Department sent to Mr. Brown and Farnsworth Ricks at the addresses of record and at the email addresses of record were reasonable and both are deemed to have received notice of the hearing. A.R.S. §§ 41-1092.04 and 41-1092.05(D).

Mr. Brown’s and Farnsworth Ricks’ conduct, as described above, constituted violating any provision of this title or any rule, subpoena or order of the director, within the meaning of A.R.S. § 20-295(A)(2).

Mr. Brown’s and Farnsworth Ricks’ conduct, as described above, constituted improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business, within the meaning of A.R.S. § 20-295(A)(4).

Mr. Brown’s and Farnsworth Ricks’ conduct, as described above, constituted using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere within the meaning of A.R.S. § 20-295(A)(8).

Grounds exist for the Director of the Department to suspend, revoke, or refuse to renew the Licenses pursuant to A.R.S. § 20-295(A).

Further, Mr. Brown’s and Farnsworth Ricks’ conduct and lack of cooperation and candor throughout the course of the Department’s investigation coupled with the failure to appear at the hearing demonstrate that they are not able to be regulated at this time.

ORDER

Based upon the above, Mr. Brown’s and Farnsworth Ricks’ Licenses 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 (5) days from the date of that certification.

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-137160-45720000Done this day, August 6, 2021.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Evan G. Daniels,

Department of Insurance and Financial Institutions - Insurance

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-137160-45720000