jolyn m. hohnstein hearing demand regarding revocation of ... · rcw 48.17.530 permits the...

BEFORE THE STATE OF WASHINGTON OFFICE OF INSURANCE COMMISSIONER WIS MAY-2 i 10 31

In the Matter of Docket No 17-0297 HE1RINGS UNIT

OFFICE CFltlSUH~llGF LJ middotiSSIONER

JOLYN M HOHNSTEIN FINDINGS OF FACT CONCLUSIONS OF LAW AND FINAL ORDER

Appellant

TO Jolyn Hohnstein 31224 Lee Hill Road Auburn WA 98092

COPY TO Mike Kreidler Insurance Commissioner James T Odiorne JD CPA Chief Deputy Insurance Commissioner Melanie Anderson Deputy Commissioner Consumer Protection Division Jeff Baughman Licensing amp Education Manager Consumer Protection Division Toni Hood Deputy Commissioner Legal Affairs Division Dave Jorgensen Insurance Enforcement Specialist Legal Affairs Division Office of the Insurance Commissioner PO Box 40255 Olympia WA 98504-0255

BACKGROUND

I On September 20 2017 the Office of the Insurance Commissioner (OIC) issued an Order Revoking License No 17-0297 (Order Revoking) effective October 3 2017 revoking Jolyn M I-Iohnsteins Washington State insurance producers license

2 On September 29 2017 Ms Hohnstein filed a Demand for Hearing (Demand) with the OIC Hearings Unit requesting a hearing to contest the Order Revoking The Order Revoking was thereby automatically stayed pending entry of Findings of Fact Conclusions of Law and Final Order

3 On October 3 2017 I issued to Ms Hohnstein a Notice of Receipt of Demand for Hearing acknowledging the OICs receipt of her Demand On that same date I transmitted the Demand and Ms Hohnsteins case to the Office of Administrative Hearings (OAH) and requested that an Administrative Law Judge (ALJ) from 0 AH as presiding officer conduct an evidentiary hearing and issue an initial order in this matter

4 On January 25 2018 ALJ TJ Martin of OAH acting as Presiding Officer conducted an evidentiary hearing on Ms Hohnsteins Demand Ms Hohnstein did not appear at the hearing On March 22 2018 Judge Martin entered an Initial Order in this matter which contained findings of fact and conclusions of law A copy of ALJ Martins Initial Order is attached hereto

5 ALJ Martins Initial Order was transmitted to me for review and for entry of Findings of Fact Conclusions of Law and Final Order pursuant to RCW 3405464

6 I have reviewed and considered the record in this matter including the evidence presented to ALJ Martin

7 I have given due regard to ALJ Martins opportunity to observe the witnesses pursuant to RCW 3405464(4)

FINDINGS OF FACT

I make the following changes to the Findings of Fact in ALJ Martins Initial Order and adopt the unchanged portions of the same

45 In the first sentence add the word to after not

424 In the first sentence delete the word Senior

425 In the first sentence replace the word was with were

429 Replace the word authorized with unauthorized

431 In the first sentence replace the word Inspector witl1 Investigator

432 In the first sentence replace the word Inspector with Investigator

435 Delete the words OIC Senior and Bobby In citation to evidence only state Testimony ofFrye and Ex l

437 In the first sentence add word not after did

CONCLUSIONS OF LAW

I reject Conclusions of Law 52-516 in ALJ Martins Initial Order and replace them with Conclusions of Law 51-541 which are as follows

FINDINGS OF FACT CONCLUSIONS OF LAW AND FINAL ORDER No 17-0297 Page 2

Jurisdiction

51 I have jurisdiction to decide this matter as reviewing officer per RCW 4804010 RCW 3405464 and WAC 284-02-070

RCW 4817530

52 RCW 4817530 permits the commissioner among other things to revoke an insurance producer license for certain causes and states in part

(1) The commissioner may revoke an insurance producers license for any one or more of the following causes

(b) Violating any insurance laws or violating any rule subpoena or order of the commissioner or of another states insurance commissioner

(e) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance

(h) Using fraudulent coercive or dishonest practices or demonstrating incompetence untrustworthiness or financial irresponsibility in this state or elsewhere

(Emphasis added)

53 As stated in Tesoro Refining and Mktg Co v Dept of Revenue 164 Wn2d 310 317 190 P3d 28 (2008) The goal of statutory interpretation is to carry out the legislatures intent Burns 161 Wash2d at 140 164 P3d 475 If the meaning of the statute is plain the court discerns legislative intent from the ordinary meaning of the words1 As stated in Tenino Aerie v Grand Aerie 148 Wn2d 224 239 59 P3d 655 (2002) Legislative definitions provided in a statute are controlling See also Postema v Postema Enters Inc 118 Wn App 185 195 72 P3d 1122 (2003)(lf a term is defined in a statute we must use that definition)

1 Although an Insurance Commissioner cannot bind the courts the courts appropriately defer to an Insurance Commissioners interpretation of insurance statutes and rules Credit General Ins Co v Zewdu 82 Wn App 620 627 919 P2d 93 (1996) Premera v Kreidler 133 Wn App 23 37 131 P3d 930 (2006) As the Court stated in Premera An agencys interpretation of the statutes it administers should be upheld if it reflects a plausible construction of the statutes language and is not contrary to legislative intent 133 Wn App at 37


54 Aside from statutory definitions of terms Washington courts use Websters Third New International Dictionary in the absence of other authority State v Glas 106 Wn App 895 27 P3d 216 (200l)(citing In re Personal Restraint of Well 133 Wn2d 433 438 946 P2d 750 (1997)) But as the Washington Supreme Court explained in Gorre v City of Tacoma 184 Wn2d 30 37 357 P3d 625 (2015) the ordinary definition of a term is not dispositive of a statutes plain meaning where the term is also a term of art As the Court states in City ofSpokane ex rel Wastewater Mgmt Dep t v Dept ofRevenue 145 Wn2d 445 452 38 P3d 1010 (2002) Teclmical language should be given its technical meaning when used in its technical field Keeton v Dep t ofSoc amp Health Servs 34 Wn App 353 361 661 P2d 982 (1983) In other contexts courts have turned to the technical definition of a term of art even where a common definition is available

55 The Washington Supreme Court has clarified that the plain meaning rule also encompasses related statutes

Additionally while traditional plain language analysis of statutes focused exclusively on the language of the statute this court recently has also recognized that all that the Legislature has said in the statute and related statutes should be part of plain language analysis Dep t of Ecology v Campbel amp Gwinn LLC 146 Wn2d 1 11 43 P3d 4 (2002)

Cerrillo v Esparza 158 Wn2d 194 202 142 P3d 155 (2006) The rules of statutory construction require that when possible the various provisions of an act be harmonized this usually arises wit11in particular statutory chapters State v Williams 62 Wn App 336 338 813 P2d 1293 (1991) Statutes that concern the same subject matter inpari materia should be construed as constituting one law to the end that a harmonious total schema which maintains the integrity of both is derived Beach v Bd ofAdjustment 73 Wn2d 343 346 438 P2d 617 (1968) State v Houck 32 Wn2d 681 684 203 P2d 693 (1949) In seeking to harmonize provisions of a statute statutes relating to the same subject must be read as complementary instead of in conflict with each other State v Chapman 140 Wn2d 436 448 998 P2d 282 (2000)

Subsection (] (e)

56 The question to be addressed under RCW 48 l 7530(l)(e) is when Ms Hohnstein signed William Atwater and Michelle Bell up for life insurance policies with Primerica and arranged for Primerica to withdraw funds monthly from their bank accounts including that of April Cipriano without their knowledge or consent and for several months misled Mr Atwater by indicating she was seeking a refund of premiums paid to Primerica on his behalf when she was not whether Ms Hohnstein was intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance This requires analysis of the language in that provision which necessarily involves an examination of related statutes and case law addressing intentional misrepresentation and what an insurance contract or application for insurance is

FINDINGS OF FACT CONCLUSIONS OF LAW AND FINAL ORDER No 17-0297 Page4

57 The terms intentional misrepresentation fraudulent misrepresentation and fraud are synonymous Concrete Spaces Inc v Sender 2 SW3d 901 904 (Tenn 1999) See Cornerstone Equip Leasing Inc v Macleod 159 Wn App 899 905 247 P3d 790 (201 l)(Fraudulent misrepresentation requires proof by clear cogent and convincing evidence of the nine elements of fraud) Hawkins v EmpRes Healthcare Mgmt LLC 193 Wn App 84 100 371 P3d 84 (2016)(To state a claim for fraud or intentional misrepresentation a plaintiff must plead nine elements)(Citing Stiley v Block 130 Wn2d 486 505 925 P2d 194 (1996) via footnote)

5 8 The nine elements of fraudintentional misrepresentationfraudulent misrepresentation are (I) representation of an existing fact (2) materiality (3) falsity (4) the spealrnrs knowledge of its falsity (5) intent of the speaker that it should be acted upon by the plaintiff (6) plaintiffs ignorance of its falsity (7) plaintiffs reliance on the truth of the representation (8) plaintiffs right to rely upon it and (9) damages suffered by the plaintiff Stiley 130 Wn2d at 505 The law recognizes two distinct types of fraudulent misrepresentation Affirmative misrepresentation and silence when a duty of disclosure is owed Dussault v Am Int Group Inc 123 Wn App 863 871 99 P3d 1256 (2004) A duty of disclosure is not an element of fraud when the plaintiff alleges affirmative misrepresentations by the defendant Id

59 Taking into account the elements of intentional misrepresentation set forth in Stiley above I note that Ms Hohnsteins actions as to Mr Atwater and Ms Bell notably signing them up for insurance policies and arranging for deductions from their bank accounts (including Ms Ciprianos) were done without their knowledge which is important Ms Hohnsteins actions do not amount to intentional misrepresentation since Ms Hohnstein did not represent any facts to Mr Atwater Ms Bell or Ms Cipriano (element (I) above) did not intend that any representations be acted upon by them (element (5) above) and those individuals did not rely upon any representations by Ms Hohnstein As for Ms Hohnstein misleading Mr Atwater into believing she was seeking a refund on his behalf from Primerica while technically on its face this satisfies all of the elements set forth in Stiley it did not involve intentional misrepresentation of the terms of an actual or proposed insurance contract or application for insurance

510 The other inquiry under RCW 4817530(l)(e) is whether the refund request on behalf of Mr Atwater is an actual or proposed insurance contract or application for insurance itself a prerequisite to trigger the application of that provision RCW 4801040 defines insurance as a contract whereby one undertalces to indemnify another or pay a specified amount upon determinable contingencies (Emphasis added) RCW 4818190 equates an insurance contract with an insurance policy 2 and explains that an insurance policy must contain the entire contract between the insurer and insured and states No agreement in conflict with modifying or extending any contract of insurance shall be valid unless in writing and made a part of the policy (Emphasis added)

Along the same lines see RCW 4818080(1) and its reference to insurance policy or contract


511 Per RCW 4801040 and RCW 4818190 the refund request that Ms Hohnstein led Mr Atwater to believe she was working on for him was not insurance or an insurance contract or policy At all relevant times the terms of Mr Atwaters life insurance policy regardless of whether initiated by him remained unchanged Case law addressing RCW 4801040 demonstrates the terms insurance policy and insurance contract are not to be applied broadly With regards to self-insurance which similar to the refund request at issue is also not insurance or an insurance contract or policy in Krykos v State Farm Mut Auto Ins Co 121 Wn2d 669 674-675 852 P2d 1078 (1993) the court stated

State Farm urges a broad understanding of the term insurance policy so as to include self-insurance However such a reading is specifically foreclosed by RCW Title 48 which defines insurance as a contract whereby one undertalrns to indemnify another or pay a specified amount upon determinable contingencies RCW 4801040 When a statute is unambiguous its meaning must be derived from the actual language chosen by the Legislature Everett Concrete Prods Inc v Department ofLabor amp Indus 109 Wn2d 819 822 748 P2d 1112 (1988) By its very nature self-insurance does not involve this type of third party arrangement See Jones v Henry 542 So 2d 507 509 (La 1989) (Self-insurance is a misnomer It is not insurance but instead is one of four methods by which a person can satisfy the [financial responsibility statute] Consequently the certificate of self-insurance cannot be considered a policy for the purposes of uninsured motorist coverage requirements under [the statute]) Because the self-insurance exclusion conflicts with the specific language of the UIM statute we hold that it is void and unenforceable

(Emphasis added)

512 RCW 4818080(1) addresses applications for insurance and implies they generally precede an insurers issuance of an insurance policy or contract to an insured and states in part No application for the issuance of any insurance policy or contract shall be admissible in evidence in any action relative to such policy or contract tmless a true copy of the application was attached to or otherwise made a part of the policy when issued and delivered (Emphasis added)

513 Per RCW 4818080(1) Mr Atwaters request for refund from Primerica is not an application for insurance Having concluded that Ms Hohnstein did not intentionally misrepresent the terms of any life insurance policy form to Mr Atwater Ms Bell or Ms Cipriano and given that any alleged intentional misrepresentation at issue did not involve the terms of an actual or proposed insurance contract or application for insurance since a request for refund is neither I conclude that Ms Hohnstein did not violate RCW 4817530(1 )( e )


Subsection Cl) (h)

514 The question to be addressed under RCW 4817530(1)(h) is when Ms Hohnstein signed William Atwater and Michelle Bell up for life insurance policies with Primerica and arranged for Primerica to withdraw funds monthly from their bank accounts including that of April Cipriano without their knowledge or consent and for several months misled Mr Atwater by indicating she was seeking a refund of premiums paid to Primerica on his behalf when she was not whether Ms Hohnstein was using fraudulent coercive or dishonest practices or demonstrating incompetence untrustworthiness This requires us to interpret that crucial statutory phrase As explained in Lake v Woodcreek Homeowners Assn 169 Wn2d 516 528 243 P3d 1283 (2010)

The dictionary describesmiddot or as a function word indicating an alternative between different or unlike things WEBSTERS THIRD NEW INTERNATIONAL DICTIONARY 1585 (2002) (emphasis added) In this sense or is used to indicate an inclusive disjunctive-one or more of the unlike things can be true The dictionary gives the example wolves [or] bears are never seen in that part of the country Id

Given the inclusive disjunctive or present in the relevant statutory phrase in RCW 4817530(1)(h) we will evaluate the meaning of the sub-phrases using fraudulent coercive or dishonest practices and demonstrating incompetence untrustworthiness separately since both represent alternative modes of violating that statutory provision

515 The verb using in RCW 4817530(l)(h) is an undefined statutory term Websters Third New International Dictionary 2523 (2002) defines the verb use of which using is the nonfinite verbparticiple form in relevant part as follows

1 a archaic to observe or follow as a custom b archaic to follow or practice regularly as a mode oflife or action c archaic to make familiar by repeated or continued practice or experience d chiefly dial to resort to regularly FREQUENT

516 The adjective fraudulent is an undefined statutory term Websters Third New International Dictionary 904 (2002) defines the adjective fraudulent in part as follows

1 belonging to or characterized by fraud founded on fraud obtained or performed by fraud

517 Websters Third New International Dictionary 904 (2002) defines the noun fraud in part as follows

1 a an instance or an act of trickery or deceit an intentional misrepresentation concealment or nondisclosure for the purpose of inducing


another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right a false representation of a matter of fact by words or conduct by false or misleading allegations or by the concealment of what should have been disclosed that deceives or is intended to deceive another so he shall act upon it to his legal injury

518 The adjective coercive an undefined statutory term is defined in Websters Third New International Dictionary 439 (2002) in part as follows

serving or intended to coerce being or exerting coercion

519 The verb coerce is defined in Websters Third New International Dictionary 439 (2002) in part as follows

1 to restrain control or dominate nullifying individual will or desire (as by force power violence or intimidation) 2 to compel to an act or choice by force threat or other pressure

520 The adjective dishonest is also an undefined statutory term Websters Third New International Dictionary 650 (2002) defines the adjective dishonest in part as follows

2 characterized by lack of truth honesty probity or trustworthiness or by an inclination to mislead lie cheat or defraud FRAUDULENT ltshypoliticiansgtlthoarding his - gainsgtlta - report on his earningsgt

Syn DECEITFUL LYING MENDACIOUS UNTRUTHFUL DISHONEST may apply to any breach of honesty or trust as lying deceiving cheating stealing or defrauding lt a - clerk fired for stealinggt

521 Practices is too an undefined statutory term Websters Third New International Dictionary 1780 (2002) defines the noun practices as follows

[HJ abitual conduct that is socially ethically or otherwise unacceptable ltthe unwholesome -s of folk medicinegtltdeparting these evil -sgt

(Emphasis and brackets added)

522 Harmonizing these dictionary definitions I conclude that the sub-phrase using fraudulent coercive or dishonest practices in RCW 4817530(1)(h) means customary or regular (ie habitual) conduct characterized by a lack of truth honesty probity or trustworthiness by an inclination to mislead misrepresent lie cheat trick deceive conceal not disclose or defraud or by force threat or other pressure compelling another to act that is socially ethically or otherwise unacceptable This definition is consistent with the call in RCW 4801030 that requires all persons in the business of insurance be


actuated by good faith abstain from deception and practice honesty and equity in all matters

523 Ms Hohnsteins actions including signing William Atwater and Michelle Bell up for life insurance policies with Primerica and arranging for Primerica to withdraw funds monthly from their bank accounts including that of April Cipriano without their knowledge or consent and for several months misleading Mr Atwater by indicating she was seeking a refund of premiums paid to Primerica on his behalf when she was not equate to Ms Hohnstein using fraudulent coercive or dishonest practices in violation of RCW 4817530(l)(h) As Regina Wood Associate Vice-President for Primerica confirmed Ms Hohnstein was terminated from Primerica due to complaints regarding her habitual and customary failure to follow company policies and her general carelessness with respect to her duties and responsibilities as an insurance producer including with regards to Mr Atwater Ms Bell and Ms Cipriano Ms Hohnsteins conduct towards Mr Atwater Ms Bell and Ms Cipriano was characterized by a lack of truth honesty probity or trustworthiness and by an inclination to mislead misrepresent lie cheat trick deceive conceal not disclose or defraud Given these circumstances Ms Hohnsteins conduct amounted to using fraudulent coercive or dishonest practices in violation ofRCW 4817530(1)(h)

524 Now turning to the sub-phrase demonstrating incompetence untrustworthiness in RCW 4817530(1)(h) and whether Ms Hohnsteins actions with respect to Mr Atwater Ms Bell and Ms Cipriano violated that clause The verb demonstrate is an undefined statutory term Websters Third New International Dictionary 600 (2002) defines the verb demonstrate in part as follows

1 b to manifest clearly certainly or unmistalrnbly show clearly the existence of

525 The noun incompetence is also an undefined statutory term Websters Third New International Dictionary 1144 (2002) defines the noun incompetence inmiddot part as follows

the state or fact of being incompetent as a lack of physical intellectual or moral ability INSUFFICIENCY INADEQUACY b lack oflegal qualification or fitness

526 The noun untrustworthiness is too an undefined statutory term Websters Third New International Dictionary 2514 (2002) defines the noun untrustworthiness in part as follows

the quality or state of being w1trustworthy

527 Websters Third New International Dictionary 2514 (2002) defines the adjective untrustworthy in part as follows


not trustworthy UNRELIABLE

528 In Chandler v Office of the Ins Commr 141 Wn App 639 661-662 73 P3d 275 (2007) the court addressed RCW 4817530 and what it means to be untrustworthy under that statute stating

The purpose of RCW 4817530 is to protect the public and the professions standing in the eyes of the public In the context of the common knowledge and understanding of members of the insurance profession the terms trustworthy and untrustworthy are sufficiently clear to put an insurance agent on notice that certain conduct is prohibited As the Supreme Court said about the term moral turpitude in Haley v Medical Disciplinary Board the central question is whether the conduct in question reflects an unfitness to practice the profession In Haley the court explained that [p ]hysicians no less than teachers veterinarians police officers [or insurance agents] will be able to determine what kind of conduct indicates unfitness to practice their profession

He cannot seriously contend that he did not know or realize or have adequate notice that this conduct would violate the statutory standard

(Emphasis added footnotes omitted)

529 Again hannonizing these dictionary definitions with the case law above I conclude that the sub-phrase demonstrating incompetence untrustworthiness in RCW 4817530(1)(h) means where a person manifests clearly certainly or unmistakably that they lack the ability to practice in the insurance profession because they are not trustworthy or reliable

530 Ms Hohnsteins actions including signing William Atwater and Michelle Bell up for life insurance policies with Primerica and arranging for Primerica to withdraw funds monthly from their bank accounts including that of April Cipriano without their knowledge or consent and for several months misleading Mr Atwater by indicating she was seeking a refund of premiums paid to Primerica on his behalf when she was not manifested clearly certain or unmistakably that she was untrustworthy or unreliable and therefore unable to practice in the insurance profession To reiterate as Regina Wood Associate Vice-President for Primerica confirmed Ms Hohnstein was terminated from Primerica due to complaints regarding her habitual and customary failure to follow company policies and her general carelessness with respect to her duties and responsibilities as an insurance producer including with regards to Mr Atwater Ms Bell and Ms Cipriano Mr Hohnsteins conduct amounted to demonstrating incompetence untrustworthiness in violation of RCW 4817 530(1 )(h)

FINDINGS OF FACT CONCLUSIONS OF LAW AND FINAL ORDER No 17-0297 0

RCW 4830090

531 RCW 4830090 addresses among other things misrepresentation of the terms of an insurance policy or the benefits or advantages promised thereby and states

No person shall make issue or circulate or cause to be made issued or circulated any misrepresentation of the terms of any policy or the benefits or advantages promised thereby or the dividends or share of surplus to be received thereon or use any name or title of any policy or class of policies misrepresenting the nature thereof

(Emphasis added)

532 The legal term misrepresentation in RCW 4830090 is broader than the legal term intentional misrepresentation in RCW 48l 7530(l)(e) and as case law explains the former necessarily includes negligent misrepresentation under its umbrella whereas the latter does not But RCW 4830090 still requires among its alternatives that the negligent misrepresentation relate to the terms benefits or advantages of an insurance policy Case law addressing RCW 4830090 supports my interpretation of the language in RCW 4830090

533 In Shah v Allstate Ins Co 130 Wn App 74 121 P3d 1204 (2005) in February 2000 appellants agreed to purchase a house in Bellevue Washington for $760000 which it would use as a rental property Appellant wife had been a real estate agent for over 25 years and the appellants had bought numerous properties A bank agreed to loan them $400000 to purchase the real property The bank required appellant to purchase an insurance binder for the property To obtain the binder appellants contacted an agent with Allstate Insurance Company Appellant husband testified that he told the insurance agent to send the bank whatever they needed and that he relied on the agent to meet the banks requirements The bank faxed the agent an appraisal of the property The appraisal estimated the total value of the property using the cost approach as $760995 The bank also provided the insurance agent the form requesting the binder which did not specify how much coverage was required or whether the coverage was to be replacement coverage The insurance agent entered information from the appraisal and title records into the Allstate Cost Estimator (ACE) program which generated an insurance value of $307000 However although the house was about 3771 square feet the insurance agent entered the home into the ACE as having only 2070 square feet Later the insurance agent met with appellants to go over the policy and the application The insurance agent testified he did not know how the ACE program generated insurance values and that it was not his practice to ask lenders what their requirements were but rather to use only the ACE program to determine insurm1ce values

Appellant husband testified that in fall 2002 while shopping insurance quotes from different companies he received a quote for a $700000 policy from another insurance company Apparently appellant husband asked the insurance agent from Allstate in


October 2002 why the policy amount on the house was so low and appellant husband testified the agent told him not to worry that appellants had replacement value In November 2002 the property burned down Allstate paid appellants about $330000 which included the $307000 policy limit and some additional money for debris removal and land damage But the total cost to rebuild the property was estimated between $513675 and $589350 Appellants claimed the insurance agent was negligent because he underinsured the real property in question relied on incorrect information when creating the policy and did not inform them of uninsured exposures

534 The court concluded in Shah that appellants made out a case for negligent misrepresentation - as opposed to fraudulentintentional misrepresentation above - which the court equated to a violation ofRCW 4830090 stating in part

[5] [6] P19 A person who commits the tmi of negligent misrepresentation is

One who in the course of his business profession or employment or in any other transaction in which he has a pecuniary interest supplies false information for the guidance of others in their business transactions is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information if he fails to exercise reasonable care or competence in obtaining or communicating the information

Lawyers Title Ins Corp v Baik 147 Wn2d 536 545 55 P3d 619 (2002) (quoting ESCA Corp v KPMG Peat Marwick 135 Wn2d 820 826 959 P2d 651 (1998) (quoting RESTATEMENT (SECOND) OF TORTS sect552 (1) (1977))) Justifiable reliance means that the reliance was reasonable under the surrounding circll1nstances Baik 147 Wn2d at 545 (emphasis omitted) (quoting ESCA Corp 135 Wn2d at 827-28) Whether a party justifiably relied upon a misrepresentation is an issue of fact ESCA Corp 135 Wn2d at 828

[7] P20 The trial court erred in holding that no reasonable person could find that there was justifiable reliance [Appellant husband] stated that when he asked [the Allstate insurance agent] why his policy amount was so much lower than quotes given by other insurance companies [the agent] told him it was replacement value and not to worry [Appellant husband] also stated that he decided to stay with Allstate because of those assurances [Appellants] produced evidence that [the Allstate insurance agent] had known their family for the past 20 years and that [the agent] had created policies for [appellants] children They also produced evidence that [the agent] had previously made recommendations about adequate insurance coverage Due to [appellants] long-standing relationship with [the Allstate insurance agent] and their historic reliance upon him for their insurance coverage needs there is genuine issue of material fact as to whether [appellant husbands] reliance on [the agents] statement was justified in this instance

P2 l Because there is a genuine issue of material fact as to whether [appellants]


justifiably relied on [the agents] statement we remand for trial on the issue The [appellants] have presented evidence on all of the other elements of a claim of negligent misrepresentation They presented evidence that [the agent] supplied them with false information that their policy was for replacement value They also presented evidence that they suffered a pecuniary loss as a result of the misrepresentation because they did not get the replacement value of their home Finally [appellants] presented a declaration from [another insurance underwriter] that stated [the agent] did not act with reasonable care or competence when he made the statement to them

The alleged misrepresentation made to [appellant husband] violates RCW 4830090

[W]hether [the Allstate insurance agent] violated RCW 4830090 by making a misrepresentation about [appellants] coverage is a matter of public interest

Shah 130 Wn App at 84-87 (brackets and emphasis added)

535 In Peterson v Big Bend Ins Agency 150 Wn App 504 202 P3d 372 (2009) on January 19 2004 an insurance agent and part owner of Big Bend Insurance Agency (the agentowner) met with appellants to determine whether they wanted to stay with Big Bend or obtain insurance coverage elsewhere The agentowner informed appellants that his agency would take care of business While discussing homeowners insurance the agentowner told appellants they had replacement value coverage with a limit of $179800 in coverage The appellants explained that they wanted their home insured so that it could be replaced if destroyed Appellants indicated they did not know what the cost of this coverage would be or how that figure would be determined The agentowner told the appellants that his agency would use a fonnula that involved plugging in certain items such as the square footage the type of construction and certain upgrades The agentowner told appellants he would handle this task for them Appellants described their home to the agentowner who informed appellants they were underinsured Appellants stressed their desire to have their home insured for its full replacement value Appellant wife asked who would come up with the replacement number for the home The agentowner replied he would and that this would require him to go to their home take measurements gather other information and plug the information into the formula to come up with the replacement number At no time did the agentowner represent he was an appraiser builder or had expertise in valuing real property or its replacement cost The formula the agentowner used was a computer software program designed by EH Boeckh Company known as the Boekch Cost Guide Use of this software or similar program was commonly used in the insurance industry in determining the replacement value of homes It was Big Bends policy to use the Boekch


Cost Guide to estimate the cost to replace a home in the event of a total loss The guide was not usually provided to the client but Big Bends agents would usually go over the report with the client when they discussed policies and renewals

The Boeckh Cost Guide results for appellants home established a basic replacement value of $219103 with a location adjusted value of $223463 On June 21 2004 Big Bend sent an insurance summary to appellants which showed replacement value coverage of $193000 for their home On September 14 2004 Appellant husband signed the insurance summary On November 27 2004 appellants home burned down The Grange assigned the claim to a field representative On January 5 2005 appellants attorney called the field representative and requested copies of the policies and expressed concern that the coverage limits on appellants home had been undervalued On January 21 2005 the field representative received the appraisal on appellants home that placed a fair market value of $190000 on the home based on comparable sales analysis and a new replacement value of $328843 In late January 2005 appellants obtained a bid from a general contractor totaling $31003057 but the Grange continued to reject appellants claim for replacement cost in excess of $193000 Appellants then filed a complaint for among other things negligent misrepresentation asserting that the agentowner of Big Bend undertook to provide them with full replacement value coverage on their home of $328000 The court in Peterson disagreed with the trial court and found that the agentowners negligent misrepresentation of the limits of the replacement value coverage on their home violated RCW 4830090 and stated in part

~41 [Appellants] contend that Big Bend engaged in an unfair or deceptive practice by violating RCW 4830090 which states in part that no person shall make issue or circulate or cause to be made issued or circulated any misrepresentation ofthe terms ofany policy (Emphasis added)

~42 The trial court determined that Big Bend did not misrepresent the limits of the [appellants] replacement value coverage for purposes of a CPA claim The court concluded that Big Bends negligent misrepresentation did not fall within the prohibitions of RCW 4830090 because Big Bends negligent misrepresentation did not relate to the limits of the replacement coverage or any other term in the policy but instead related to how this particular term was determined The court explained that Big Bend did not misrepresent the limits of the policy because the insurance summary clearly stated the limit as $193000

[18] ~47 The court found that Big Bend negligently provided [appellants] with false information when it provided them with a replacement limit that was not calculated under the cost guide formula As a result the $193000 figure in the policy was false because it was not based on the cost guide formula The Petersons justifiably relied on this false information to their detriment fu providing the $193000 figure to the Petersons Big Bend misrepresented the


terms of the policy to the Petersons and violated RCW 4830090 The trial court erred by concluding that Big Bend did not misrepresent the limits of the replacement coverage

Peterson 150 Wn App at 520-521 (brackets and emphasis added)

536 The holdings in Shah and Peterson with regards to violations of RCW 4830090 are distinguishable since Ms Hohnstein never misrepresented the terms of any insurance policy or the benefits or advantages promised thereby as the insurance agents in those two cases did with replacement coverage at issue Rather Ms Hohnstein arranged for money to be deducted from bank accounts of Mr Atwater Ms Bell and Ms Cipriano without their prior authorization and misled Mr Atwater in to thinking she was pursuing a refund on his behalf even though she was not none of which involved her misrepresentation of the terms of any insurance policy or the benefits or advantages promised thereby As such I conclude Ms Hohnstein did not violate RCW 4830090

RCW 4830140

537 RCW 4830140 addresses rebating and other activities by insurers insurance producers or title insurance agents and prohibitions on the same and states in relevant part

(1) Except to the extent provided for in an applicable filing with the commissioner then in effect no insurer insurance producer or title insurance agent shall as an inducement to insurance or after insurance has been effected directly or indirectly offer promise allow give set off or pay to the insured or to any employee of the insured any rebate discount abatement or reduction of premium or any part thereof named in any insurance contract or any commission thereon or earnings profits dividends or other benefit or any other valuable consideration or inducement whatsoever which is not expressly provided for in the policy

(Emphasis added)

538 The noun inducement in RCW 4830140(1) is not statutorily defined Websters Third New International Dictionary 1154 (2002) defines the noun inducement in part as follows

1 a the act or process of inducing ltput into effect a system of~ to encourage workers to turn out more workgt b a quality or state which induces (as to action) or lures or entices

539 The noun valuable consideration in RCW 4830140(1) is also not statutorily defined Websters Third New International Dictionary 2530 (2002) defines the noun valuable


consideration in part as follows

an equivalent or compensation having value that is given for something (as money marriage services) acquired or promised and that may consist either in some right interest profit or benefit accruing to one party or some responsibility forbearance detriment or loss exercised by or falling upon the other party

(Emphasis added)

540 Taking into account the definitions of nouns inducement and valuable consideration above I conclude that RCW 4830140(1) generally prohibits an insurance producer from directly or indirectly persuading luring or enticing another to acquire insurance or to remain insured by offering allowing or giving services or other enticements not expressly provided for in the policy3

541 After issuance of life insurance policies to Mr Atwater Ms Bell and Ms Cipriano without their knowledge and once they became aware of Ms Hohnsteins actions Ms Hohnstein attempted to persuade lure or entice them to remain insured by offering to pay their car repairs lapsed policy premiums and overdraft charges none of which were expressly provided for in their insurance policies This was a violation of RCW 4830140(1)(and hence RCW 4817530(l)(b))

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law and specifically because she violated RCW 487530(1)(h) and RCW 4830140(1)(and hence RCW 4817530(l)(b)) I hereby revoke Jolyn M Hohnstein s Washington State insurance producers license

Willian1 G Pardee Reviewing Officer

3 As explained in Lake v Woodcreek Homeowners Assn 169 Wn2d 516 528 243 P3d 1283 (2010)

The dictionary describes 1or11 as a function word indicating an alternative between different or unlike things WEBSTERS THIRD NEW INTERNATIONAL DICTIONARy 1585 (2002) (emphasis added) Jn this sense or is used to indicate an inclusive disjunctive---0ne or more of the unlike things can be true The dictionmy gives the example wolves [or] bears arn never seen in that pmmiddott of the countty Id

The inclusive disjunctive or 1 between as an inducement to insurance and after insurance has been effected in RCW 4830140(1 ) signifies that insurance producers are prohibited among other things from offering allowing or giving services or enticements to both prospective and cmrent insureds not expressly provided for in the policy


Pursuant to RCW 3405461(3) the parties are advised that they may seek reconsideration of this order by filing a request for reconsideration under RCW 3405470 with the undersigned within

10 days of the date of service (date of mailing) of this order Further the parties are advised that pursuant to RCW 3405514 and 3405542 this order may be appealed to Superior Court by within 30 days after date of service (date of mailing) of this order 1) filing a petition in the Superior Court at the petitioners option for (a) Thurston County or (b) the county of the petitioners residence or principal place of business and 2) delivery of a copy of the petition to the Office of the Insurance Commissioner and 3) depositing copies of the petition upon all other parties of record and the Office of the Attorney General


CERTIFICATE OF SERVICE

The undersigned certifies under the penalty of perjury under the laws of the state of

Washington that I am now and at all times herein mentioned a citizen of the United States a

resident of the state of Washington over the age of eighteen years not a party to or interested

in the above-entitled action and competent to be a witness herein

On the date given below I caused to be filed and served the foregoing Findings of Fact

Conclusions of Law and Final Order on the following people at their addresses listed below

Jolyn Hohnstein 31224 Lee Hill Road Auburn WA 98092

Mike Kreidler Insurance Commissioner James T Odiorne JD CPA Chief Deputy Insurance Commissioner Melanie Anderson Deputy Commissioner Consumer Protection Division Jeff Baughman Licensing amp Education Manager Consumer Protection Division Toni Hood Deputy Commissioner Legal Affairs Division Dave Jorgensen Insurance Enforcement Specialist Legal Affairs Division Office of the Insurance Commissioner PO Box 40255 Olympia WA 98504-0255

Dated this ~day of May 2018 in Tumwater Washington


WASHINGTON STATE OFFICE OF ADMINISTRATIVE HEARINGS

In the matter of Docket No 10-2017middot1NSmiddot00020 ma MAR 2 3 A (-) l 0 Jolyn Hohnstein INITIAL ORDER HEARINGS UNIT

OfflCF OF Agency Office of the Insurance d~HiV~6~eyen1SSIOIHR Program Office of the Insurance Commissioner

----------~ Agency No 17middot0297

Appellant

1 ISSUESmiddot Based on the Office of the Insurance Commissioners Order Revoking License dated September 18 2017

11 Whether the Appellant Jolyn Hohnstein submitted an application for life insurance policies without the knowledge or consent of consumers and by failing to diligently pursue a refund request by a consumer due to cancellation with the Insurer violated RCW 48 17530(1 )(e) RCW 4817530(1)(h) andor RCW 4830090

12 Whether the Appellant offered to pay $200 towards a consumers oar repair and - by paying a $5000 premium payment and a $3000 overdraft bank fee for

a consumer violated RCW 4830140(1 )

13 If these allegations are proven by the Office of the Insurance Commissioner whether the Appellants license should be revoked consistent with RCW 4817530(1)

2 ORDER SUMMARY

22Affirmed The Appellant Jolyn Hohnstein submitted applications for life insurance policies without the knowledge or consent of consumers and by failing to diligently pursue a refund request by a consumer due to cancellation with the insurer violated RCW 4817530(1)(e) RCW 4817530(1)(h) and RCW 4830090

23 Affirmed The Appellant Jolyn Hohnstein offered to pay $200 towards a consumers car repair and by paying a $5000 premium payment and a $3000 overdraft bank fee for a consumer violated RCW 4830140(1 )

24 Affirmed Based on the abovemiddotcited allegations being proven by the Office of the Insurance Commissioner the Appellant Jolyn Hohnsteins license is revoked consistent with RCW 48 17530(1 )

[Continued]

OAH (253) 476-6080INITIAL ORDER Dockal No 10-2017-INS-00020 Page middot1 of 12

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3 HEARING

32 Hearing Date Thursday January 25 2018

33Administratlve Law Judge TJ Martin

34 Appellant Jolyn Hohnstein (Appellant) did not appear

35 Agency Office of the Insurance Commissioner (OIC)

351 Representative David Jorgensen OIC Insurance Enforcement Specialist

352 Witnesses Rachel Abrier Complainant

Krystal Phy Licensees former manager

Regena Wood Primerica Associate VicemiddotPresident

Bobby Frye OIC Investigator

36 Exhibits OIC Exhibits 1 through 22 were admitted without objection

The Appellant did not submit any exhibits

4 FINDINGS OF FACT

The undersigned middot administrative law judge finds the following facts by a preponderance of the evidence

Jurisdiction

42 On September 18 2017 the Office of Insurance Commissioner ordered and notified Jolyn M Hohnstein of Order Revoking License No 17middot0297 effective October 3 2017 regarding revocation of her license

43 On September 29 2017 Ms Hohnstein appealed the order seeking to revoke her license by filing a Demand for Hearing

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Submitting an Insurance Application without Consent Failure to Diligently Request a Refund Payment of Car Repairs and Overdraft Payments

44 On January 4 2016 Rachel Abner (Abner) and her former fiance William T J Atwater (Atwater) met with Hohnstein a Prlmerica Insurance representative The three people discussed life insurance and possibly Abner and Atwater becoming representatives for Primerica Abner Atwater and Hohnstein were the only persons present for the meeting Testimony of Rachel Abner (hereinafter Testimony of Abner and Exhibit (Ex) 2

45At the conclusion of the January 4 2016 meeting Abner and Atwater decided not purchase a life insurance policy However they did provide Hohnstein with their contact information for future correspondence if they decided to purchase life insurance at a later date Testimony of Abner

46At the January 4 2016 meeting neither Abner nor Atwater signed an insurance policy or contract either by hand or electronically Testimony of Abner

47 However Atwater may have given electronic signature approval but only for an insurance quote but not to purchase a policy Ex 6

48 Beginning in February 2016 Primerica withdrew $7333 out of Atwaters bank account without his consent Testimony of Abner and Exs 5 amp 6

49 Atwater believes Hohristein acquired his bank account information from a previous unrelated transaction relating to his personal training business Exs 5 amp6

410 Upon the money being withdrawn by Primerica from his bank account Atwater contacted Hohnstein about the unauthorized withdrawal Hohnstein told Atwater she would take care of it Testimony of Abner Ex 2 page 3 17 and Ex 6

411 In March 2016 Primerica once again withdrew $7333 from Atwaters bank account without his consent Once again Atwater contacted Hohnstein about the unauthorized withdrawal Hohnstein repeatedly assured Atwater his money would be refunded Testimony of Abner Ex 2 page 417 and Ex 6

412 In April 2016 Primerica again withdrew $7333 from Atwaters bank account without his consent Atwater once again contacted Hohnstein about the unauthorized withdrawal At that time Hohnstein said if Primerica did not refund Atwater his money she would personally repay him However she never did Testimony of Abner and Ex 2 page 317

[Continued]

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4 13 On April 28 2016 Atwater expressed his frustration with Hohnstein about money being taken out of bank account especially since he was unable to pay for a car repair in the amount of $20000 Hohnstein offered to pay for the car repair The payment for the car repair was not a part of any Insurance policy Atwater had purchased from Hohnstein since he never purchased any policy from her Testimony of Abner ampEx 2 Page 5-8

4 14 In May June and July Primerica continued to withdraw $7333 per month from Atwaters bank account without his consent Hohnstein assured Atwater she was working with Primerlca to resolve the issue Testimony of Abner and Ex 2 page 3-17

415 In August 2016 after eight months of not being refunded his money Atwater along with Abner went to Prlmerlcas website for information to stop the money being withdrawn from his bank account as well as to file a complaint against Hohnstein 1t was at this time Atwater and Abner learned the listed agent of Atwaters policy was Sheila Palaruan Neither Atwater nor Abner knew Palaruan nor was she present either in person or via video when Atwater and Abner met with Hohnstein on January 4 2016 Testimony of Abner and Ex 6

4 16 In all Primerica withdrew $73000 from Atwaters bank account without his consent over an eight month period from January 2016 to August 2016 Testimony of Abner and Ex 6

4 17 No evidence exists demonstrating that Hohnstein was ever working with Primerica to resolve the issue regarding Atwater getting refunded his money

Testimony of Bobby Frye (hereinafter Testimony of Frye)

4 18 Shortly thereafter Primerica not Hohnstein cancelled the Insurance policy issued to Atwater and refunded his money Testimony of Frye and Ex 6

4 19 On October 19 2016 Abner filed a complaint against the Appellant with the Office of the Insurance Commissioner Testimony of Abner and Ex 2 page 1 -2

420 On October 21 2016 OIC Senior Investigator Bobby Frye interviewed via telephone Atwater regarding the complaint Atwater confirmed his version of the events from January 2016 to the date of fillng of the complaint Testimony of Frye and Exs 2 5 amp 6

421 On October 24 2016 Investigator Frye requested a response from Hohnstein regarding Abners complaint Testimony of Frye and Ex 1O

[Continued]

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422 On November 14 2016 Hohnstein provided written documentation regarding Abners complaint Hohnstein provided a copy of an insurance policy electronically middot signed by Atwater However Atwater denied he ever electronically signed any document presented by Hohnstein Testimony of Frye and Ex 11

423 Krystal Phy is an Office Manager for Prlmerlca Insurance She trained Hohnstein regarding insurance policies for the company Testimony of Krystal Phy (hereinafter Testimony of Phy) and Ex 15

424 On February 2 2017 Senior Investigator Frye telephonically interviewed Phy regarding Abners complaint At that time Frye learned Hohnstein had been terminated by Primerica effective January 30 2017 Testimony of Frye Ex 3 page 14-15 and Exs 16 amp 17

425 On February 21 2017 Investigator Frye telephonically interviewed Hohnstein Hohnstein asserted that Abner and Atwater requested and was issued an insurance policy Hohnstein alleged that Sheila Palaruan a producer for Hohnstein and signing agent participated in the January 4 2016 meeting via video conference call Testimony of Frye and Ex 12

426 Palaraun Is a licensed Washington State Insurance Producer Ex 18

427 On February 22 2017 Regina Wood Primerica Associate Vice-President confirmed Hohnstein had been terminated from Primerica due to complaints regarding her failure to follow company policies providing Inaccurate bank information and general carelessness of her duties and responsibilities as an insurance provider Ms Wood provided Investigator Frye with the Primerica case file regarding Hohnsteins transactions Testimony of Regina Wood (hereinafter Testimony of Wood) and Exs 3 amp 19

428 On February 23 2017 Investigator Frye interviewed via telephone Abner and Atwater regarding their complaint against Hohnstein Abner and Atwater confirmed the events relating to Hohnstein dating back to January 2016 Both Abner and Atwater denied a person named Sheila Palaruan participated in their January 4 2016 meeting Testimonies of Frye and Abner and Exs 5 7 amp8

429 On February 27 2017 Abner and Atwater provided sworn declaraiions regarding the events involving Hohnstein and the authorized taking of money from Atwaters bank account based on an insurance policy which he never requested or signed Testimony of Frye and Ex 6 amp 8

430 On March 24 2017 Hohnstein provided a sworn declaration asserting she had sold a life insurance policy to Atwater but that he later changed his mind about the policy Ex 13

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431 In addition Inspector Frye also received Information regarding a complaint filed by Michelle Bell with Primerica regarding an insurance policy issued to her by Hohnstein Bell denied ever requesting or signing paperwork for such a policy Testimony of Frye and Ex 4

432 Inspector Frye inquired as to whether Hohnstein had paid $5000 towards a lapsed premium and a $3000 overdraft fee for Michelle Bell Hohnstein denied the allegation Testimony of Frye and Ex 14

433 In addition on April 27 2017 Investigator Frye telephonlcally interviewed April Cipriano a former customer of Hohnstein Frye determined Hohnstein paid an overdraft fee of $3000 on Ciprianos behalf when her bank account was also charged without her consent Hohnstein paying the overdraft fee was not a part or of any insurance policy issued by Primerica Testimony of Frye and Exs 20 amp 21

434 On May 9 2017 Cipriano provided a sworn declaration to Investigator Frye regarding Hohnstein withdrawing money from her bank account without her consent since she had changed her mind about activating her policy Ex 21

435 On June 5 2017 OIC Senior Investigator Bobby Frye completed a Final Investigative Report regarding the complaint waged against Hohnstein by Abner Testimony of Bobby Frye (hereinafter Testimony of Frye) and Ex 1

436 The Appellant Jolyn Hohnstein has been a licensed Washington State Insurance Producer since December 1 2013 Testimony of Frye and Exs 9 amp 13

437 Jolyn Hohnstein did appear for the hearing As a result she did not refute any of the testimony or evidence presented by the Office of the Insurance Commissioner

5 CONCLUSIONS OF LAW

Based upon the facts above the undersigned administrative law judge makes the following conclusions

Jurisdiction

52 The undersigned administrative law judge has jurisdiction to hear and decide this matter under the Revised Code of Washington (RCW) 4804010(5) and 4817540(2) chapters 3404 and 34 12 RCW and Washington Administrative Code (WAC) 284-02-070

Issuance of Unauthorized Policies Failure to Diligently Request a Refund

53 The Office of the Insurance Commissioner Is responsible for implementing and enforcing the provisions of Title 48 RCW and Title 284 WAC which govern all insurance and insurance transactions in the State of Washington

RCW 4802060

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54 RCW 4801030 Public Interest establishes

middot The business of insurance is one affected by the public interest requiring that all persons be actuated by good faith abstain from deception and practice honesty and equity in all insurance matters Upon the insurer the insured their providers and their representatives rests the duty of preserving inviolate the Integrity of Insurance

RCW 4801030

55 RCW 4817530(1) provides

The Commissioner may place on probation suspend revoke or refuse to issue or renew an adjusters license an insurance producers license or may levy a civil penalty in accordance with RCW 4817560 or any combination of actions for any one or more of the following causes

(e) Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance and

(h) Using fraudulent coercive or dishonest practices or demonstrating Incompetence untrustworthiness or financial Irresponsibility in this state or elsewhere

RCW 4817530(1)(e) amp (1)(h)

56 RCW 4830090 Misrepresentation of policies provides


RCW 4830090

57 Finally RCW 480470 Nonattendance establishes

The validity of any hearing held in accordance with the notice thereof shall not be affected by failure of any person to attend or remain in attendance

[Continued]

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middot 58 In the present case under RCW 4817530(1 )(h) Ms Hohnstein had a duty as an Insurance producer not to misrepresent or mislead any prospective customers Ms Hohnstein disregarded this duty when she signed up William Atwater for an insurance policy without his knowledge or consent then proceeded to have Prlmerlca withdraw monthly funds from his bank account For the next several months Atwater continually requested a refund of his money and Hohnstein continually represented to Atwater that she was working on getting him a refund However evidence is lacking demonstrating she took affirmative steps to refund his money Rather only after eight months had lapsed without any action from Hohnstein did Atwater along with Abner take matters Into their own hands on getting a refund

59 The action by Ms Hohnstein of signing Atwater up for an insurance policy without his knowledge and consent then using his bank account information from a previous unrelated business dealing demonstrates fraudulent coercive and a dishonest practice on her part While Ms Hohnstein denied the allegations when interviewed by OIC Investigator Frye she falled to appear at the hearing and provide testimony and evidence cont_rary to the case established by the Office of the Insurance Commissioner Ms Hohnstein has failed to establish by a preponderance of the evidence that her actions were anything but fraudulent coercive or dishonest

51 o Therefore Ms Hohnstein violated RCW 4817530(1 )(e) amp (1 )(h) and RCW 4830090 through her actions of signing up Atwater for an insurance policy without his knowledge and consent failing to diligently request a refund and intentionally misrepresenting to Atwater that she was working on getting his money back to him

Rebatingmiddot Providing Funds Unrelated to the Original Policy

511 RCW 4830140(1) Rebating- Other inducements provides

[N]o Insurer insurance producer or title insurance agent shalI as an inducement to insurance or after insurance has been effected directly or Indirectly offer promise allow give set off or pay to the Insured or to any employee of the insured any rebate discount abatement or reduction of premium or ariy part thereof named in any insurance contract or any commission thereon or earnings profits dividends or other benefit or any other valuable consideration or inducement whatsoever which is not expressly provided for in the policy

RCW 4830140(1)

[Continued]

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512 In the matter of Atwater the RespondE)nt Hohnstein on April 28 2016 offered to pay for his car repairs due to Primerica continuing to withdraw money from his bank account Atwater never accepted Hohnsteins offer However Hohnsteins action of offering to pay funds on behalf or for a customerclient constitutes rebating under RCW 4830140(1) Therefore Hohnstein violating RCW 4830140(1) by offering to pay for Atwaters car repairs since providing such funds was never discussed at the Issuance of the original policy since no such policy ever existed

513 Further In the matter of Michelle Beil the Respondent Hohnstein submitted an Insurance application for Bell who denied ever requesting one Further Hohnstein also paid $5000 towards Bells lapsed policy and $3000 of an overdraft fee Both monetary transactions by Hohnstein were transactions Involving funds not contemplated by any previous policy As a result the Respondent Hohnstein violated RCW 4830140(1) by providing rebate funds for andor on behalf of a customerclient not contemplated at any previous time or at the time of the creation of the life insurance policy application

514 Finally in the matter of April Cipriano the Office ot the Insurance Commissioner has established the Respondent Hohnstein paid $3000 of an overdraft fee on behalf of Cipriano after she changed her mind previously about purchasing a life insurance policy The action of paying the overdraft fee by Hohnstein represents the payment of funds for the benefit of a customerclient not originally contemplated at the time of the creation of the life insurance policy application As a result Hohnstein violated RCW 4830140(1 )

Revocation of License

515 Jolyn Hohnstein violated RCW 4817530(1)(e) amp (1)(h) RCW 4830090 by signing up William Atwater for a life insurance policy without his knowledge and consent then continually and intentionally misrepresenting to him that she was diligently working to get him a refund when she was not Further Ms Hohnstein violated the rebating provision of RCW 4830140(1) when she offered to pay for Atwaters car repair as well pay overdraft fees for both Michelle Bell and April Cipriano Based on these violations Jolyn Hohnsteinsmiddot license Is revoked consistent with RCW 48 17530(1 )

5 16 Based on the abovemiddotclted Findings of Fact and Conclusions of Law the Office of the lnsurance Commissioners Order Revoking License dated September 18 2017 is affirmed

[Continued]

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6 INITIAL ORDER

IT IS HEREBY ORDERED THAT

61 Affirmed The Appellant Jolyn Hohnstein submitted an application for a life insurance policy without the customers knowledge or consent and by failing to diligently pursue a refund request by a consumer due to cancellation with the insurer violated RCW 4817530(1 )(e) RCW 4817530(1 )(h) andor RCW 4830090


middot63Affirmed Based on the above-cited alJegations being proven by the Office of the Insurance Commissioner the Appellant Jolyn Hohnsteins license is revoked consistent with RCW 4817530(1 )

64 The Office of the Insurance Commissioners Order Revoking License dated September 18 2017 is AFFIRMED

Issued from Tacoma Washington on the date of mailing

TJ Martin Administrative Law Judge Office of Administrative Hearings

CERTIFICATE OF SERVICE ATTACHED

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APPEAL RIGHTS

FINAL ORDER

An initial order does not become a final order until the Insurance Commissioner reviews 111 The Insurance Commissioners Chief Hearing Officer will automatically review this matter and issue a final order

PETITION FOR REVIEW

In addition to the automatic review any party may file a Petition for Review2 If you file a Petition for Review the Chief Hearing Officer will consider your specific objections to the lnitlal Order and your arguments for a different result

You must file your Petition for Review with the Office of the Insurance Commissioner (OIC) within twenty (20) days of the date OAH mailed the Initial Order3 File means served on all other parties and delivered during business hours4 Mail a copy to the other parties at the addresses in the Certificate of Mailing below

The Petition for Review must specify all parts of the Initial Order that you dispute and the evidence that supports the Petition5 Other parties may file a reply to the Petition within i Odays after the petitioner serves the Petition6

Deliver the Petition tor Review and Reply to the following address

Office of Insurance Commissioner Chief Hearing Officer Hearings Unit OIC PO Box40255 Olympia WA 98504-0255

1 WAC 284-02-070(2)(c)(i) 2 RCW 3405464 WAC 10-08-211 3 WAC 10-08-211 4 WAC 10-0B-110 5 WAC 10-08-211(3) 6 WAC 10-08-211(4)

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CERTIFICATE OF SERVICE FOR OAH DOCKET NO 10-2017-INS-00020

I certify that true copies of this document were served from Tacoma Washington via Consolidated Mail Services upon the following as indicated

Jolyn Hohnstein 31224 Lee Hiii Road Auburn WA 98092 Appellant

lZJ First Class Mail D Certified Mail Return Receipt D Hand Delivery via Messenger D Campus Mail D Facsimile D E-mail

David Jorgensen Insurance Enforcement Specialist Legal Affairs Divisiori Office of Insurance Commissioner MS 40255 PO Box40255 Olympia WA 98504-0255 Agency Representative

D First Class Mail D Certified Mall Return Receipt D Hand Delivery via Messenger tgJ Campus Mail D Facsimile DE-mail

Dorothy Seabourne-Taylor Hearings Unit Paralegal Office of Insurance Commissioner MS 40255 PO Box 40255 Olympia WA 98504-0255 Agency Contact

D First Class Mall D Gertilied Mail Return Receipt D Hand Delivery via Messenger IZl Campus Mall D Facsimile b E-mail

Date Thursday March 22 2018

OFFICE OF ADMINISTRATIVE HEARINGS

+Ricci Frisk Legal Administrative Manager

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4 On January 25 2018 ALJ TJ Martin of OAH acting as Presiding Officer conducted an evidentiary hearing on Ms Hohnsteins Demand Ms Hohnstein did not appear at the hearing On March 22 2018 Judge Martin entered an Initial Order in this matter which contained findings of fact and conclusions of law A copy of ALJ Martins Initial Order is attached hereto

5 ALJ Martins Initial Order was transmitted to me for review and for entry of Findings of Fact Conclusions of Law and Final Order pursuant to RCW 3405464

6 I have reviewed and considered the record in this matter including the evidence presented to ALJ Martin

7 I have given due regard to ALJ Martins opportunity to observe the witnesses pursuant to RCW 3405464(4)

FINDINGS OF FACT

I make the following changes to the Findings of Fact in ALJ Martins Initial Order and adopt the unchanged portions of the same

45 In the first sentence add the word to after not

424 In the first sentence delete the word Senior

425 In the first sentence replace the word was with were

429 Replace the word authorized with unauthorized

431 In the first sentence replace the word Inspector witl1 Investigator

432 In the first sentence replace the word Inspector with Investigator

435 Delete the words OIC Senior and Bobby In citation to evidence only state Testimony ofFrye and Ex l

437 In the first sentence add word not after did

CONCLUSIONS OF LAW

I reject Conclusions of Law 52-516 in ALJ Martins Initial Order and replace them with Conclusions of Law 51-541 which are as follows

FINDINGS OF FACT CONCLUSIONS OF LAW AND FINAL ORDER No 17-0297

Jurisdiction


RCW 4817530






(Emphasis added)








Subsection (] (e)











(Emphasis added)




Subsection Cl) (h)










































RCW 4830090



(Emphasis added)




























RCW 4830140



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(Emphasis added)



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Appellant






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(Emphasis added)








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(Emphasis added)







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Appellant






2 ORDER SUMMARY




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8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP
































RCW 4830090



(Emphasis added)




























RCW 4830140



(Emphasis added)







(Emphasis added)



ORDER

























Appellant






2 ORDER SUMMARY




[Continued]


8500-SCP

3 HEARING












4 FINDINGS OF FACT


Jurisdiction



middot[Continued]


6500middot8CP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP
























RCW 4830140



(Emphasis added)







(Emphasis added)



ORDER

























Appellant






2 ORDER SUMMARY




[Continued]


8500-SCP

3 HEARING












4 FINDINGS OF FACT


Jurisdiction



middot[Continued]


6500middot8CP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP



(Emphasis added)



ORDER

























Appellant






2 ORDER SUMMARY




[Continued]


8500-SCP

3 HEARING












4 FINDINGS OF FACT


Jurisdiction



middot[Continued]


6500middot8CP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP



















Appellant






2 ORDER SUMMARY




[Continued]


8500-SCP

3 HEARING












4 FINDINGS OF FACT


Jurisdiction



middot[Continued]


6500middot8CP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP

3 HEARING












4 FINDINGS OF FACT


Jurisdiction



middot[Continued]


6500middot8CP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP











[Continued]


85DOmiddotSCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP











[Continued]


8500middotSCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP











8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP










Jurisdiction




RCW 4802060


8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP



RCW 4801030





RCW 4817530(1)(e) amp (1)(h)



RCW 4830090



[Continued]


8500middotSCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP







RCW 4830140(1)

[Continued]


8500middotSCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP







[Continued]


8500middotmiddotSCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP

6 INITIAL ORDER










8500middotSCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP

APPEAL RIGHTS

FINAL ORDER


PETITION FOR REVIEW








8500-SCP













8500-SCP













8500-SCP

jolyn m. hohnstein hearing demand regarding revocation of ... · rcw 48.17.530 permits the...

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