Adjuster’s License Revoked for Fraud

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 No License for Fraudster

Michael Bresette sought relief from a final order of the Rhode Island Department of Business Regulation that permanently revoked his insurance claim adjuster’s license in Michael Bresette v. State of Rhode Island and Providence Plantations Department of Business, No. KC 12-0390 (R.I.Super. 01/07/2013) claiming that he did not receive proper notice of the administrative hearing that he did not attend. Prior to the hearing Bresette had been charged with five felony counts of insurance fraud and other criminal activities and multiple complaints for improper activities as an insurance adjuster.

Facts

The Department of Business Regulation (“Department”), is the administrative agency charged with regulating the practice of insurance adjusters in the State of Rhode Island. Bresette held a Rhode Island resident insurance adjuster’s license from March 5, 2009 until January 9, 2012. In December 2011, the Department – acting upon numerous customer complaints and information that Bresette had been indicted on eight felony counts of larceny and insurance fraud – decided to initiate administrative action against Bresette.

Bresette did not appear at the order to show cause hearing, where counsel for the Department appeared before a hearing officer and submitted evidence concerning the eight-count felony indictment and the consumer complaints that had been investigated prior to that date. Also presented was the evidence that notice of the hearing had been delivered to Bresette’s residence. The hearing officer who presided over the hearing prepared a written document that included findings of fact and conclusions of law based on evidence presented at the hearing. This document recommended that Bresette be defaulted based on his failure to appear and defend the administrative action, and that his insurance adjuster’s license be permanently revoked.

Bresette filed a motion to reconsider with the Department, along with an affidavit indicating that Bresette was out of the country and that he never received a copy of the hearing notice. The Department issued an order (“Order”) denying the motion to reconsider, based in part on Bresette’s failure to file this motion promptly after entry of the Department’s final Decision. The Order went on to state that even if the Motion to Reconsider had been timely filed, Bresette had not established good cause for the Hearing Officer to reconsider the matter. The Order concluded that the Department had effectuated service pursuant to its regulations and Bresette had not satisfied his burden of showing excusable neglect for failing to appear or otherwise respond.

Bresette filed a Complaint in Superior Court appealing the Department’s Decision, which permanently revoked Bresette’s insurance adjuster’s license.

Analysis

Pursuant to Rhode Island General Laws the Department of Business Regulation has authority over insurance claims adjusters and the power to suspend or revoke an insurance claim adjuster’s license “upon proof . . . that the interests of the insurer or the interests of the public are not properly served under the license, or for cause.”

Bresette seeks relief from the Decision issued by the Department, a designated administrative agency. The Decision, which permanently revoked Bresette’s insurance adjuster’s license, was based on the recommendations of the Department’s Hearing Officer, following a hearing on the matter held on January 9, 2012. These recommendations were then approved by the Director of the Department, who issued the Decision. Finding that review of the Department’s final orders will provide an adequate remedy.

On appeal, Bresette maintains that he never received notice of the administrative hearing and seeks relief from the Department’s default Decision permanently revoking his insurance adjuster’s license after Plaintiff failed to appear. In addition to not being served in person, Plaintiff submits an affidavit stating that he never received notice of the hearing at his mailing address when he returned. Although Plaintiff’s affidavit does not mention whether he received the notice sent by certified mail, Plaintiff argues in his brief that even if he had received notice sent by certified mail “purportedly left at his residence on January 7,” such notice does not constitute “reasonable notice” for a hearing.

Here, the record reflects that notice was sent to Bresette in accordance with the statute and the Department’s Rules. Notice of the hearing was mailed to Bresette’s home address – the address provided by Bresette and on file with the Department – by both regular and certified mail, although service by only one of these modes was necessary. The statement contained in the Decision claiming that Bresette was served notice of the hearing on December 29, 2011 is not in error, since the Rules clearly allow service to be considered effectuated upon the date of mailing.

The Rhode Island Supreme Court has established a two-part test for setting aside a default judgment on the basis of accident, mistake, unforeseen cause or excusable neglect. The person seeking relief must convince the trial justice of the adequacy of the reason given for his failure to respond to the court’s process and he must state a defense which is prima facie meritorious. Moreover, the moving party must make a “factual showing” in regard to this two-prong standard.

In Rhode Island, notice sent by regular mail to a person’s address of record and usual place of abode creates a presumption of receipt. As to certified mail, receipt of notice constitutes actual delivery as a notice by [certified] mail is considered to have reached a recipient when it is delivered where he normally receives mail. Bresette offered no explanation for his alleged failure to receive two separate forms of notice while receiving all other correspondence from the Department, including the Decision, Order and seven customer complaints which Bresette responded to in writing and are included in the record. Moreover, the mailed notices were never returned as undeliverable to the Department, thus reinforcing the presumption that the notices reached their final destination.

The record reflects that the Department mailed, and thus served notice upon Bresette on – twelve days in advance of the scheduled hearing date and more than the ten day notice provided for in the statute.  Prior to this date, Bresette had already been indicted and formally charged with eight felony counts, all stemming from events occurring while in his capacity as an insurance adjuster, an occupation regulated by the Department. These eight felony counts, which also served as the basis for the Department bringing sanctions against Bresette, had already been brought to Bresette’s attention by the Department well in advance of the show cause hearing. In fact, the record reflects that the Department, upon receiving each customer complaint which served as the basis of the respective felony charge, forwarded the complaint to Bresette and demanded a written response explaining the occurrence. These detailed explanations to the Department – individually written by Bresette within days of receiving each complaint – date back to 2010 and are contained in the record.

Thus, based on the facts of this case – including the severity of the criminal charges, Bresette’s prior knowledge of the allegations, and the Department’s authority to take immediate action to guard against any further harm to the public – this Court finds that the notice provided to Bresette of the show cause hearing was reasonable.

At the show cause hearing held on January 9, 2012, the hearing officer heard testimony and considered evidence concerning the five felony counts of insurance fraud and three felony counts of obtaining money under false pretenses that Bresette was indicted upon and later charged with by the Rhode Island State Police. Also considered by the hearing officer were seven consumer complaints against Bresette from different individuals, with dates of loss ranging from January 2010 to January 2011, each alleging improprieties relative to his conduct as an insurance claims adjuster. Based on such evidence submitted, the hearing officer further found that it would be in the public interest to immediately and permanently revoke Bresette’s insurance adjuster’s license.

The hearing officer found that Plaintiff committed the following violations: “(3) violating any insurance laws, or violating any regulation, subpoena, or order of the Department or of another state’s insurance commissioner;” “(5) improperly withholding, misappropriating, or converting any monies or properties received in the course of doing insurance business;” “(6) having been convicted of a felony;” “(7) having admitted or been found to have committed any insurance unfair trade practice or insurance fraud;” “(8) using fraudulent, coercive or dishonest practices; or demonstrating incompetence, untrustworthiness or financial irresponsibility in this state or elsewhere.”

Zalma Opinion

People who commit, and for many years, get away with insurance fraud have such unmitigated gall as to make Cyrano DeBergerac blush. The best defense Bresette was able to come up with was that he did not get notice and it was unfair to send him notice by mail. He made no comment about his violation of insurance laws, insurance fraud, and converted monies belonging to his clients. The court took his license and gave him the opportunity to present his argument before a court and an appellate court, treated his arguments with courtesy and then properly affirmed the revocation of the license of a person who gave the profession of insurance adjusting a bad name. In so doing he breached the code of conduct of the National Association of Public Insurance Adjusters, including those that provide: “The members shall conduct themselves in a spirit of fairness and justice to their clients, the Insurance Companies, and the public; Members shall refrain from improper solicitation; No misrepresentation of any kind shall be made to an assured or to the Insurance Companies; Commission rates shall be fair and equitable, and strictly in accordance with the prevailing custom in the locality, and must, where laws or regulations of insurance departments exist, comply fully with such laws or regulations.

© 2013 – Barry Zalma

Barry Zalma, Esq., CFE, has practiced law in California for more than 40 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally, for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Mr. Zalma recently published the e-books, “Zalma on California Claims Regulations – 2013”; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Insurance Fraud – 2012″; “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,”  “Arson for Profit”  and others that are available at www.zalma.com/zalmabooks.htm.

Mr. Zalma can also be seen on World Risk and Insurance News’ web based television program “Who Got Caught” with copies available at his website at http://www.zalma.

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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