ALJDEC - Licensing

24A-010-INS · Department of Insurance and Financial Institutions - Insurance · 2024-06-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

ERIK LEONARD FRIENDS

(National Producer License No. 7691249),

Respondent.

No. 24A-010-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 14, 2024

APPEARANCES: Erik Leonard Friends represented himself. Assistant Attorney General James Rolstead represented the Arizona Department of Insurance and Financial Institutions.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: Department Exhibits 1 through 14.

_____________________________________________________________________

FINDINGS OF FACT

Erik Leonard Friends (“Respondent”) was, at all material times, licensed in the State of Arizona as an Insurance Producer, National Producer License Number 7691249, with lines of authority in property, casualty, accident and health or sickness, and life insurance. Respondent is owner of an independent insurance firm, the Yuma Risk Management Group, LLC (“YRM”).

The Arizona Department of Insurance and Financial Institutions (“Department”) issued Respondent’s license on May 20, 2003. The license is scheduled to expire on October 31, 2024.

In 2015, William Walshe (“Walshe”) had purchased, through YRM, an automobile insurance policy [Policy #[number redacted]] with Traveler’s Insurance Company (“Traveler’s”). When he went to the Motor Vehicle division (“MVD”) to renew the automobile registration, in June 2023, Walshe was informed that that plate registration had been suspended due to the insurance policy having been cancelled.

On September 20, 2023, Walshe submitted a complaint to the Department alleging that Respondent had misappropriated the premium monies that were to be paid to Walsh’s automobile insurance policy. Walshe indicated that, on June 20, 2023, Respondent had sent a letter to MVD stating that there had been no lapses in coverage; however, Walsh contacted Travelers which informed Walshe that the policy had been cancelled three times in 2022 and sent to collections in October 2022. Walshe provided a Traveler’s document showing the premium payments filed therewith.

On November 3, 2023, Insurance Analyst/Investigator Jesus Acosta sent an email to Respondent regarding the Walshe complaint. Mr. Acosta requested that Respondent provide a response and a comprehensive billing history of the Walshe account on or before November 24, 2023.

Not receiving the documents, Mr. Acosta sent another email extending the deadline to December 8, 2023.

On December 13, 2023, Respondent requested an extension indicating had has some unexpected business that took him out of town.

Mr. Acosta extended the deadline to December 18, 2023. On December 18, 2023, Mr. Acosta sent Respondent a reminder email of the deadline. However, Respondent failed to make a response or any filing.

On January 3, 2024, the Department issued a Subpoena Duces Tecum to Respondent requiring that he appear and produce specified documents regarding the Walshe policy.

Finally, on February 7, 2024, the Department sent Respondent a certified letter with its further “formal request” for Respondent’s narrative response and “any and all records” regarding the Walshe complaint.

On April 3, 2024, the Department issued its Notice of Hearing and Complaint, setting the administrative hearing regarding Respondent’s license for May 14, 2024 at the Arizona Office of Administrative Hearings.

At hearing, Respondent acknowledged the situation that a premium payment had been late and Traveler’s, once a payments was late, required that payment to be paid by a date certain or it would cancel the policy. Respondent indicate that the Walshe’s typical payment practice was to come into the office on the first Monday to make the payment, but in December (of 2021), they came in on the second Monday. Respondent stated that he tried to get the policy reinstated but was unsuccessful, after which he admitted he misled Walshe as to the existence of a current policy. Respondent testified that he always intended to fix the problem and, subsequently, Respondent wrote a new policy with Progressive for Walshe.

Respondent indicated that he had tried to calculate the amount of money with interest that really belonged to Walshe and, further, that he would want the opportunity to make restitution to Walshe; Respondent indicated that he had reached out to Walsh but had received no response. Respondent expressed a great deal of remorse and shame for his actions in not communicating with Walshe, and the Department, as to the situation and not taking care of it. Respondent requested consideration for his good record of having only one other complaint in 20 years of business.

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.

A.R.S. § 20-295 provides, in pertinent part, as follows:

A. The director may deny, suspend for not more than twelve months, revoke or refuse to renew an insurance producer's license or may impose a civil penalty in accordance with subsection F of this section or any combination of actions for any one or more of the following causes: ...

2. Violating any provision of this title or any rule, subpoena or order of the director. ...

4. Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business.

5. Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance. ...

8. Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.

Respondent’s conduct, as described in the Findings of Fact herein above, constitutes violating provisions of this title, within the meaning of A.R.S. § 20-295(A)(2), (A)(4), (A)(5), and (A)(8).

Based on the foregoing, these multiple grounds exist for the Director of the Department to suspend, revoke, or refuse to renew the License pursuant to A.R.S. § 20-295(A). Additionally, Respondent’s failures to appropriately respond to the Department’s requests, subpoena and final demand demonstrate that Respondent is not able to be regulated at this time.

RECOMMENDED ORDER

IT IS ORDERED Respondent’s National Producer License Number 7691249 A

shall be revoked on the effective date of the Order entered in this matter.

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 Administrative Law Judge Decision. If the licensee accepts the Administrative Law Judge Decision, the Administrative Law Judge 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, June 3, 2024.

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted electronically to:

Barbara D. Richardson,

Department of Insurance and Financial Institutions - Insurance

[email redacted]

Erik Leonard Friends

[email redacted]

Attorney General's Office

[email redacted]

By: OAH Staff