ALJDEC - Licensing
23A-039-INS · Department of Insurance and Financial Institutions - Insurance · 2024-02-05
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
In the Matter of:
Professional Insurance Solutions, Inc.,
Respondent.
No. 23A-039-INS
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: October 27, 2023 and January 22, 2024.
APPEARANCES: Douglas B. Gregg represented Respondent Professional Insurance Solutions, Inc. (Respondent). Assistant Attorney General James M. Rolstead represented the Arizona Department of Insurance and Financial Institutions (Department).
ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn
EXHIBITS ADMITTED INTO EVIDENCE: Department Exhibits 1 through 15; Respondent Exhibits A through E.
_____________________________________________________________________
FINDINGS OF FACT
1. Professional Insurance Solutions, Inc. (Respondent) is an entity registered with the Tennessee Division of Business Services. Douglas Benjamin Gregg (Gregg) is the member manager and registered agent of Respondent. Respondent has three owners: Gregg, Rich DeLuca, and Gary Dunham.
2. On May 24, 2023, the Department received an email from Jacqueline Ward, an Arizona nurse practitioner, who expressed her concerns regarding a professional liability insurance quote she received from Ben Gregg.
3. In her complaint, Ms. Ward states, in part,
[H]is company is listed as Professional Insurance Solutions Inc. with the website www.pisolutionspro.com. He was referred to me by my daughter who has several friends who are esthetic nurses who purchased liability insurance from him.
[Gregg] quoted me a very reduced rate compared to other quotes I received. When I asked him for a PDF showing coverage with inclusions and exclusions, as well as who the insurance carrier was, he became very elusive and vague with his answers and stated that his company is the carrier ... I am just concerned that there are nurses who think they are covered with malpractice insurance and indeed might not be.
4. Ms. Ward also forwarded to the Department an email she received from Ben Gregg on May 23, 2023 which stated, in part:
I believe we discussed that PISolutions is the carrier and the quote is $2850. With the 5% full-pay discount the annual premium is $2707. I have attached a sample policy.
5. The sample policy attached to Ben Gregg’s email shows Respondent as the carrier which is providing Medspa Professional Liability Coverage.
6. Upon searching the website provided by Ms. Ward in her email, the Department found, among the information displayed, the following:
“Your Top Rated Local ® Professional Liability Insurance”
The homepage stated, “[b]y offering medical liability insurance for dentists, med spa owners, chiropractors, psychologists, psychiatrists and wellness centers, Professional Insurance Solutions helps small business owners with comprehensive liability insurance protection against both errors and omissions and product liability claims.”
Under “About Us” is the statement, “[a]s a captive small business liability insurance company, our coverage risk is pooled only with others who practice within the same profession. This helps to keep our medical liability insurance rates low.”
Under “Our Services” is the statement, “[w]ith years of knowledge behind us, we are the experts to turn to when looking for insurance for your small business. Profession Insurance Solution’s comprehensive risk management program allows us to offer greater discounts, and our in-house approach and online quoting system reduces operating expenses that we pass on to you.”
7. During its investigation, the Department conducted a license search on the National Association of Insurance Commissioners (NAIC) database for “Ben Gregg.” The search revealed that his full name is Douglas B. Gregg (Gregg) and that he holds a resident insurance producer license in Tennessee, National Producer Number 7712404. The Department’s search further revealed that Gregg was not licensed in any other state or U.S. territory.
8. “PISolutions, LLC” has been registered with the Tennessee Secretary of State, Division of Business Services, as a domestic limited liability company since October 10, 2016. Neither “Professional Insurance Solutions, Inc.” nor “PISolutions, LLC” is licensed as an insurance producer business entity in any state or U.S. territory.
9. Neither “Professional Insurance Solutions, Inc.” nor “PISolutions, LLC” is registered with the Arizona Corporation Commission. However, Ms. Ward’s email and the information she provided demonstrated that, in fact, Respondent was transacting insurance business in the State of Arizona.
10. On June 9, 2023, the Department sent an email to Gregg requesting that he provide the authority under which he is actively selling insurance policies in Arizona and who the carrier is for the insurance policies.
11. On June 12, 2023, the Department’s investigator spoke with Gregg by telephone. The following day, the investigator sent an email to Gregg summarizing the telephone conversation. The summary included the following:
You confirmed that at present you are only licensed as an insurance producer (individual) in TN.
You confirmed that your company...is not a licensed insurance producer (entity) but the company is registered with the TN Secretary of State.
You advised that you are an ‘offshore captive’ agent.
To the best of your recollection, you sold your first professional liability policy to an AZ consumer in 2018-19. (Please confirm).
The Department’s investigator also reminded Gregg to submit a written response to the Department’s June 9, 2023 correspondence.
12. In June 2023, Gregg applied for and was issued an Arizona non-resident insurance producer license, National Producer Number 7712404, effective June 17, 2023.
13. On June 20, 2023, Gregg provided to the Department a list of 37 names and corresponding email addresses for Arizona consumers with whom Respondent has made contracts of insurance since January 1, 2023.
14. The Department contacted some names on the list and obtained and reviewed several contracts of insurance that had been made by Respondent with those Arizona consumers. The Department found that some of the contracts were made in 2023 and have expiration dates in 2024.
15. Gregg provided to the Department a copy of Respondent’s Certificate of Renewal (Certificate) from the Island of Nevis (Nevis), Financial Services Regulation and Supervision Department, Office of the Registrar of International Insurance. The Certificate has an expiration date of December 31, 2023. The Certificate states as follows:
Professional Insurance Solutions, Inc. is duly registered to carry on Insurance Business in the class of Captive Insurer from within the Island of Nevis in accordance with the provisions of section 10 of the Ordinance.
16. The Department’s Chief Captive Analyst verified with Simone Ottley, the Nevis Registrar of International Insurance, that the Nevis Certificate issued was for Pure Captive Insurance and not for Association Captive insurance.
17. On July 14, 2023, the Department issued an Order to Cease and Desist (CD Order) against Respondent, prohibiting Respondent from effectuating new or renewal contracts of insurance in Arizona and collecting premiums. The CD Order also required Respondent to mail Notices of Cancelation to all current policyholders by August 13, 2023, including the return of any unearned premiums.
18. On August 2, 2023, the Department received a Notice of Appearance and Request for Hearing contesting the CD Order and requesting a hearing.
19. The Department’s position is that Respondent was not authorized to issue its policies in Arizona because (a) at the time of some policy issuances, Respondent did not have any license to transact insurance business in Arizona, and (B) subsequently, Respondent did not have the appropriate Arizona licensing authority. The Department argued that Respondent’s Certificate of Captive Insurance licensure in Nevis allows Respondent to issue policies only to Respondent’s owners; further, that Respondent’s three owners are the only members of Respondent.
20. Respondent’s position is that his licensing authority through Nevis is not Pure Captive but is an Association Captive licensure, which allows Respondent’s to issue this particular insurance to its “Association” MedSpa members. Respondent argued that its policies are only issued to MedSpa owners who fully understand the nature and breadth of the policy they obtain and that they join the “association” to have some tax advantages and to take advantage of lower insurance rates. Regarding “transacting business,” Respondent argued that Respondent does not have an office, does not advertise, and does not solicit business in Arizona; Gregg described their activities as “taking orders” for insurance policies.
21. Regarding the Nevis Certificate, Respondent argued that their April 2016 application in Nevis for registration and licensing was for Association Captive authority.
22. Respondent presented no evidence showing that the Arizona consumers (i.e., MedSpa owners and professionals) with whom Respondent made contracts of insurance have any ownership interest in or affiliation with Respondent or with Respondent’s three owners. Respondents did not provide any certificate of authority authorizing Respondent to issue insurance policies to individuals who are not affiliated with Respondent or with Respondent’s three owners.
CONCLUSIONS OF LAW
1. The Department was created and enabled to administer certain laws of the State of Arizona by protecting the public interest through licensure and regulation of the insurance producer profession in this state. See A.R.S. § 20-142 and A.R.S. §§ 20-281 et seq.
2. The Office of Administrative Hearings has subject matter and personal jurisdiction over the named parties in this Notice of Hearing. See A.R.S. § 20-161 and A.R.S. §§ 41-1092 et seq.
3. Based on the hearing record, Respondent’s conduct, as described in the Findings of Fact, constitutes engaging in the business of making contracts of insurance indemnification in this State, within the meaning of A.R.S. §§ 20-103, 20-104, and 20-106.
4. Based on the hearing record, Respondent’s conduct, as described in the Findings of Fact, constitutes the following violations:
(a) the transaction of insurance in this state without complying with the applicable provisions of A.R.S. Title 20, in violation of A.R.S. § 20-107.26;
(b) transacting insurance in this state without the authorization to do so granted by the Director, in violation of A.R.S. § 20-206; and,
(c) the unlawful transaction of insurance business in this state without a certificate of authority from the Director, within the meaning of A.R.S. § 20-401.01(A).
5. Based on the hearing record, the Administrative Law Judge concludes that the Department’s CD Order was appropriately issued and should be affirmed, while Respondent’s appeal should be denied.
RECOMMENDED ORDER
IT IS ORDERED the Department’s Cease and Desist Order dated July 14, 2023, is affirmed and Respondent’s appeal is denied.
Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.
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 forty (40) days from the date of that certification.
Done this day, February 5, 2024.
/s/ Kay A. Abramsohn
Administrative Law Judge
Transmitted electronically to:
Barbara D. Richardson, Director
Department of Insurance and Financial Institutions - Insurance
Assistant Attorneys General
[email redacted]
[email redacted]
[email redacted]
PISolutions, LLC
Attn: Douglas B. Gregg
[email redacted]
[email redacted]
By: OAH Staff