ALJDEC - Licensing

24A-055-INS · Department of Insurance and Financial Institutions - Insurance · 2025-02-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Derreck Jackson

(National Producer Number 17748116),

Respondent.

No. 24A-055-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 5, 2025.

APPEARANCES: Respondent failed to appear. Assistant Attorney General Zachary Howard appeared for the Department of Insurance and Financial Institutions.

ADMINISTRATIVE LAW JUDGE: Samuel Fox

EXHIBITS ADMITTED INTO EVIDENCE: Department Exhibits 1 through 9.

_____________________________________________________________________

FINDINGS OF FACT

The Arizona Department of Insurance and Financial Institutions (Department) issued a Notice of Hearing, dated October 30, 2024, setting a hearing in the above-entitled matter for December 13, 2024, at 9:30 AM. The Department sent the Notice of Hearing to four physical addresses associated with Derreck Jackson (Respondent) and sent a copy by electronic mail to Respondent’s email address of record.

At the request of the Department, the hearing was rescheduled to February 5, 2025, at 1:00 PM. The Order Granting Continuance was emailed to Respondent’s email address of record. Respondent failed to appear on February 5, 2025, and as of this Decision, Respondent has not contacted the Arizona Office of Administrative Hearings.

At the Hearing, the Department’s witness, Insurance Analyst/Investigator Rachel Smith testified that the facts provided in the Notice of Hearing were accurate based on her knowledge of the matter, and she testified accordingly. The Tribunal finds that the Department’s facts are supported by the documents and testimony, and it adopts them in full:

4. On April 19, 2023, the Department issued to Jackson an Arizona non-resident insurance producer license, National Producer Number 17748116, with a line of authority in personal lines insurance. The license is scheduled to expire on September 30, 2026.

5. Jackson's addresses of record with the Department are: 6841 Domingo Drive, Rancho Murieta, CA 95683 (business and mailing) and his e-mail is [email redacted].

Allstate Insurance Company Termination Notice

6. On March 15, 2024, Allstate Insurance Company ("Allstate") sent notice to the Department that Jackson had been terminated for cause due to falsification.

7. In 2023, Allstate initiated an investigation of The Thorpe Agency[] in Gilbert, Arizona, after an Allstate Field Business Conduct Compliance Consultant provided information “which suggested the Thorpe Agency may have falsified customer information on Auto and Homeowners policy applications to provide customers with insurance and lower premiums that they were not otherwise entitled to receive.”

8. Jackson was working as an independent insurance producer during the time of the investigation and was one of the independent producers associated with The Thorpe Agency.

9. Allstate's Summary of Evidence ("Report"), dated February 20, 2024, included the following information relevant to Respondent's actions:

a. "[E]leven new Auto policies were issued by the Thorpe Agency with declared prior insurance where the agency failed to provide any proof of prior insurance, provided insufficient proof, or the prior policy number appeared to be fictitious based on its unusual format of all letters and no numbers. We observed seven of the eleven were issued by LSP Derreck Jackson. We observed that five of the seven had a prior policy number with an unusual format of all letters and no numbers."

b. "Between August 1, 2023 and November 30, 2023, sixty-nine vehicles on fifty-seven policies were issued with the Farm Discount. A vehicle could receive the Farm Discount if it was used as a 'Farm Automobile' as defined in the Line 10 Auto Rules ... We observed thirty-four of the vehicles did not qualify ... as they were all four-door sedan style vehicles. All fifty-seven of the policies were issued by LSP Jackson."

c. "Sixteen Auto policies were issued with the Multiple Policy Discount (MPD) where they didn't qualify for the same because no supporting line policy application was submitted on the date the Auto application was submitted. Fifteen of the sixteen were issued by Jackson ... "

d. "We spoke with two customers who each told us the prior insurance information declared on their policies issued by Jackson was inaccurate and did not match the information they provided to Jackson when they purchased the policy."

10. The Report provided statements from Jackson that he made during a recorded interview with an Allstate investigator. Jackson's statements included, in part:

• His denial of falsifying ... information so that customers could receive discounts or lower premiums;

• Regarding the statement from customer Fierros, he made a mistake and input Farmers when he meant State Farm for prior insurance;

• Regarding the statement from customer Miller, he stated she must have told him something different when he issued the policy about her prior insurance than she told us;

• He thought the MPD automatically was removed by the Company (because he had seen it occur) if the policy did not qualify so he was not concerned if he didn't remove the discount himself;

• He acknowledged he used the Farm Discount more than he should in certain circumstances. He did not obtain vehicle usage information from every customer he provided with the Farm Discount and gave them the Discount based on his assumptions about their vehicle usage because their address appeared to be in a rural area.

• He denied using placeholder prior insurance policy numbers and had no explanation for the inaccurate policy numbers with only letters that we observed.

Department's Investigation

11. On April 22, 2024, the Department asked Jackson to provide a narrative response to Allstate's allegations, submit documents, and provide his availability to appear for an On-the-Record interview.

12. On April 22, 2024, Jackson provided a narrative response where he denied the allegations of falsification. Jackson did not submit any documents or provide his availability for an interview.

13. The Department sent Jackson an email that same day (April 22, 2024) requesting that he provide his availability for an interview. Jackson did not respond.

14. On May 14, 2024, the Department sent Jackson an email advising that the interview was mandatory and that if he did not provide his availability, a subpoena demanding his appearance would be issued.

15. On May 16, 2024, Jackson sent an email response stating, "Ok, May 24'h at 3pm. Ill [sic] see what I can do to fit u [sic] in my full time work schedule."

16. Jackson did not appear for the interview.

The Department put forward four specific examples of where Respondent apparently made intentional misrepresentations to get customers a lower price than they would have qualified for without the misrepresentations.

On April 22, 2024, Respondent said the following in an email to the Department:

[It] cannot be said that I wasn’t an excellent employee and loved by a majority of customers there and made that Agency lots of money & extremely successful; I worked for them for 3 years and never had any issues with Allstate Corporate or disciplinary problems; and in fact I was one of the top 10 reps in all of Ca at the Allstate LSP Forum 2 years running before covid took that away. . . .

It seems to me Allstates game is to hire sales people and create a situation where it is impossible to get any sales in good faith without someone bending or breaking their underwriting rules, but they don’t make the rules Clear or Enforce those rules on a consistent basis or in good faith until a time of their choosing or they decide to throw someone(usually always an LSP under the bus).

While not strictly an admission of intentional fraud, Respondent indicated that he was very successful; then, he stated it was impossible to be successful without cheating.

CONCLUSIONS OF LAW

Respondent was deemed to have received notice in this matter.

The Director had jurisdiction over this matter. The matter was properly brought before the Office of Administrative Hearings pursuant to A.R.S. § 41-1092 et seq.

Pursuant to A.R.S. § 41-1092.07(G)(2), at “a hearing on an agency action to suspend [or] revoke . . . a license or permit, the agency has the burden of persuasion.” The burden of persuasion is by a preponderance of the evidence. A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.

Pursuant to A.R.S. § 20-295(A), “[t]he 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” for enumerated causes. “[T]he director may . . . [i]mpose a civil penalty of not more than two hundred fifty dollars for each unintentional failure or violation, up to an aggregate civil penalty of two thousand five hundred dollars. . . [and] not more than two thousand five hundred dollars for each intentional failure or violation, up to an aggregate civil penalty of fifteen thousand dollars.”

“Using fraudulent, coercive or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere” is one enumerated cause, which may result in revocation an civil penalties.

Respondent failed to appear; accordingly, only the Department’s evidence has been admitted to the record.

The preponderance of the evidence established the following violations of A.R.S. § 20-295(A)(8):

Finding of Fact 9(a) established by a preponderance of the evidence, seven violations of A.R.S. § 20-295(A)(8).

Finding of Fact 9(b) established by a preponderance of the evidence at least thirty-four violations of A.R.S. § 20-295(A)(8).

Finding of Fact 9(c) established by a preponderance of the evidence fifteen violations of A.R.S. § 20-295(A)(8).

Based on the facts above, it is more likely than not that all of the violations were intentional.

RECOMMENDED ORDER

IT IS RECOMMENDED that Respondent’s National Producer Number 17748116, be revoked and a civil penalty of $4,600.00 should be imposed based on the following recommendations.

IT IS RECOMMENDED that for each of the 4 specific examples identified by the Department a single violation from each example should have imposed a civil penalty of $500 upon Respondent in the total amount of $2,000.

IT IS RECOMMENDED that for the 52 other violations a civil penalty of $50 per violation should be imposed upon Respondent resulting in a civil penalty amount of $2,600.

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 24, 2025.

/s/ Samuel Fox

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Barbara D. Richardson,

Department of Insurance and Financial Institutions - Insurance

Derreck Jackson

[email redacted]

Zachary Howard

Office of the Attorney General

[email redacted]

By: OAH Staff