otc o? i018 - washington state office of the insurance

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STATE OF WASHINGTON OFFICE OF THE INSURANCE COMMISSIONER

In the Matter of

NATIONAL BROKERS OF AMERICA, INC.

and

QUADELLSPRADLEY

Respondents.

Docket No. 08-2018-INS-00040

Agency No. 17-0201 & 17-0204

OIC'S MOTION FOR SUMMARY JUDGMENT

OtC O? i018

OFFICEOF I. RELIEF REQUESTED ADMINISTFlAllVE HEARING

The Office of the Insurance Commissioner ("OIC" or "Insurance

Commissioner") submits this motion requesting entry of an order finding that there is no

genuine issue of material fact, and that the Insurance Commissioner is entitled to

summary judgment in this matter. The Insurance Commissioner requests that National

Brokers of America, Inc. ("NBOA'') be ordered to pay a fine of$10,000.00 as authorized

per RCW 48.17.063(4)(a)(iii), and as stated in tl1e OIC's Notice of Intent to Impose a

Fine After Hearing. In addition, the Insurance Commissioner requests that Quadell

Spradley ("Mr. Spradley") be ordered to pay a fine of $3,000 as authorized per RCW

48.17.063( 4)(a)(iii), and as stated in the OIC's Notice of Intent to Impose a Fine After

Hearing. This motion is based on all documents in the record in this case and, in

particular, the Declaration of Harvey Churchill ("Churchill Deel"), the Declaration of

Kathleen Butler ("Butler Deel"), and attachments 1 to 38 thereto, filed concurrently with

this motion.

II. ISSUES

1. Did Quadell Spradley violate the Washington Insurance Code, RCW 48.17.060(1 ), by selling, soliciting, or negotiating insurance without a license to a Washington consumer, justifying the imposition of a fine under RCW 48.17.063(4)(a)(iii)?

OIC'S MOTION FOR SUMMARY JUDGMENT Docket No. 08-2018-INS-00040

LA~ 1373105 - 1

1 State of Washington Office of Insurance Commissioner

POBox40255 Olympia, WA 98504-0255

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2. Did National Brokers of America, Inc. ("NBOA") violate the Washington Insurance Code, RCW 48.17. 060( 1 ), by soliciting insurance business in Washington State when unlicensed to do so, accepting insurance business from a person who is required to be licensed under this title and is not so licensed, and by allowing an lmlicensed producer to sell, solicit, or negotiate an insurance policy to a Washington consmner on NBOA's behalf, justifying the imposition of a fine lmder RCW 48.l 7.063(4)(a)(iii)?

III. STATEMENT OF FACTS

In May, 2016, the Insurance Commissioner received a case referral from Kathleen

Butler, Special Investigator for the Pennsylvania Insurance Department. See Attachment

1 to Churchill Deel: 5-2-17 OIC Investigative Report, at p. 4; and Butler Deel. Ms.

Butler provided the Insurance Commissioner with a complaint from a Washington

resident, Nancy Booth. See Attachment 2 to Churchill Deel: 5-3-16 Report of

Investigative Activity from the Pennsylvania Insurance Department; Attachment 3 to

Churchill Deel: 4-19-16 Complaint by Nancy Booth from the Pennsylvania Insurance

Department; and Butler Deel. In Ms. Booth's complaint, she explained that she was

searching online for health insurance, completed information on a website, and

immediately received a call from NBOA. (Attachment 3, Churchill Deel, at p. 3) She

reported the following:

"I spoke with Quadell Spradley concerning coverage ... I then explained to him that I am currently residing in Bermuda and asked if the coverage would cover me in Bennuda. He said that it covers me anywhere outside of the state of Washington, my soon to be residence. (deception #2). I was taken through an underwriting process and provided coverage and payment was taken for $610.42. I received the policy via email and reviewed it. .. "

Id. (Emphasis added.) For additional documents regarding the insurance policy at issue,

see Attachments 4, 5, 6, 7, and 8 to Churchill Deel Ms. Booth's application included

her Washington address. See Attachment 4 to Churchill Deel: 4-18-16 HCC

Application and additional policy docmnents, at p. 1. The title of tl1e application is "HCC

Life Short Tenn Medical Plan Application For use in WA." Id. (Emphasis added.) The


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United Service Association ("USA") for Health Care Membership Application also

included Ms. Booth's Washington address. See Attachment 5 to Churchill Deel: 4-18-

16 USA Membership Application, at p. 1. The application listed an individual named

Albert Groff ("Mr. Groff') as the "HCC Life Appointed Agent". (Attachment 4 to

Churchill Deel, p. 2, and Attachment 5 to Churchill Deel, p. 1.)

On October 5, 2016, the Insurance Commissioner's Investigations Unit

("Investigations") conducted an audio-recorded interview ofNancy Booth ("Ms. Booth").

7 (Attachment 1, pp. 8-10; see also Attachment 9 to Churchill Deel: 10-5-16

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Memorandum oflnterview ofNancy Booth; Attachment 10 to Churchill Deel: 10-5-16

Authorization to Audio Record Ms. Booth; and Attachment 27 to Churchill Deel: 10-

5-16 audio recording of interview of Ms. Booth (CD)). Ms. Booth reported that she was

relocating back to Washington State to retire, and had researched insurance on the web.

(Attachment 9 to Churchill Deel, p. 1, para. 2.) She reported to Investigations that "she

located the Washington Health Finder website on April 18, 2016 and filled in information,

but then realized she was outside of the enrollment period." Id., at para. 3. She stated that

"somehow she navigated to a site that looked very similar to the Washington Health Finder

site" and after submitting infonnation, she .immediately received a call about coverage

from Quadell Spradley of NBOA. Id., at para. 4. Ms. Booth informed Mr. Spradley that

"she was currently a resident of Bermuda for at least ninety days and would lose her

employer's insurance for a period of time." Id., at p. 2, para. 1. Mr. Spradley "confirmed

coverage anywhere outside of Washington which would be her residence in July, 2016"

and thereafter, discussed the terms of the policy. Id., at para. 1-2; see also Attachment 11

to Churchill Deel: 3-2-17 email between Investigator Churchill and Nancy Booth

regarding residency. Ms. Booth was then "taken through the lmderwriting process and

provided credit card infonnation for the payment of$610.42." (Attachment 9 to Churchill

Deel, p. 2, para. 3.) After receiving and reviewing the insurance policy sold to her, Ms.

Booth requested to cancel the policy during the 10-day free look period. Id,; at para. 5; see

also Attachment 12 to Churchill Deel: Handwritten notes of Ms. Booth taken during

the insurance transaction with Mr. Spradley; and Attachment 13 to Churchill Deel: 4-

2016 emails between Ms. Booth & I-III regarding termination and refund.


LA-1373105 -1

3 State of Washington Office oflnsurance Commissioner

PO Box40255 Olympia, WA 98504-0255

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Ms. Booth reported to Investigations that she was "not aware of nor spoke to a

person named Groff." (Attachment 9 to Churchill Deel, p. 2, para. 8.) Ms. Booth reported

to Investigations the names of the individuals she spoke with during the insurance

transaction. Id., at para. 8-9. She also provided Investigations with "copies of the notes

she made in conversation with [Mr.] Spradley at the time she purchased the insurance."

(Attachment 1 to Churchill Deel, .p. 10, para. 3, and Attachment 12 to Churchill Deel)

A licensing check conducted by Investigations and the Insurance Commissioner's

Producer Licensing and Oversight Manager disclosed that Mr. Spradley did not hold a

producer's license authorizing him to conduct the business of insurance in the state of

Washington. See Attachment 14 to Churchill Deel: 9-29-16 Declaration of Jeff

Baughman and the OIC and NAIC licensing records of Mr. Spradley. A licensing check

conducted by Investigations disclosed that Mr. Groff held a producer's license authorizing

him to conduct the business of insurance in the State of Washington. See Attachment 15

to Churchill Deel: OIC & NAIC licensing records of Mr. Groff. An additional licensing

check disclosed that NBOA did not hold a producer's license authorizing the entity to

conduct the business of insurance in the state of Washington. See Attachment 16 to

Churchill Deel: 9-29-16 and 4-26-17 Declarations of Jeff Baughman and the OIC

licensing records of NBOA.

On May 23, 2016, Investigations sent a letter to Mr. Spradley, notifying him of

Ms. Booth's complaint and requesting that he provide the Insurance Commissioner with

a written response to the allegation. See Attachment 17 to Churchill Deel: 5-23-16

Notice of Investigation letter to Mr. Spradley. Investigations ''lmsuccessfully attempted to

interview [Mr.] Spradley" during the investigation after attempting to arrange contact

through NBOA, by email, and by direct telephone contact. (Attachment 1 to Churchill

Deel, p. 12.) In addition, Mr. Spradley "did not respond to calls and emails to arrange

interviews ... " Id.

Investigations opened a second investigation to address Mr. GrofI's involvement

regarding Ms. Booth's complaint. (Attachment 1 to Churchill Deel, p. 3, para. 4; see also

Attachment 18 to Churchill Deel: 3-15-17 OIC Investigative Report regarding Mr.

Groff) On May 23, 2016, Investigations sent a letter to Mr. Groff, notifying him of Ms.


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Booth's complaint and requesting that he provide the Insurance Commissioner with a

written response to the allegation. See Attachment 19 to Churchill Deel: 5-23-16 Notice

of Investigation letter to Mr. Groff. Investigations "unsuccessfully attempted to interview

Albert Groff' dming the investigation after sending him a certified letter, attempting to

arrange contact through NBOA, and leaving several telephone messages. (Attachment 1

to Churchill Deel, p. 10, para. 5.)

On May 27, 2016, NBOA provided Investigations with a briefresponse in regard

to Ms. Booth's complaint. (Attachment 1 to Churchill Deel, p. 11, para. 5; see also

Attachment 20 to Churchill Deel: 5-27-16 written response of NBOA to the OIC.)

NBOA responded the following:

"Quadell Spradley was the qualifying specialist who originally spoke to Ms. Booth. After collecting the client's basic information (name, date of birth, and address), Mr. Spradley then transferred Ms. Booth to Albert Groff to discuss different plan options."

(Attachment 20 to Churchill Deel).

Investigations reported that "NBOA ignored the OIC's request for any recordings

or notes taken during Booth's sales call." (Attachment 1 to Churchill Deel, p. 11, para. 5.)

Furthermore, "NBOA, Spradley, and Groff did not respond to numerous follow-up

attempts by email and telephone to secure that information." Id. In a telephone

conversation with J.C. Moreno ofNBOA, the NBOA representative stated that "NBOA is

a call center only" and that Health Insurance Innovations ("HII"), a licensed producer,

sold the insurance package at issue. Id., at para. 8; see also Attachment 21 to Churchill

Deel: 10-14-16 Memorandum of Interview of J.C. Moreno (NBOA).

Investigations determined that Mr. Groff"knowingly accepted insurance business

from non-resident producer, Quadell_ Spradley, who is required to be licensed in this state

and is not so licensed in violation ofRCW 48.17.530(1)." (Attachment 18 to Churchill

Deel, p. 17.) On November 1, 2017, the Insurance Commissioner issued Revocation Order

No. 17-0403, revoking Mr. Groffs producer license for his role in Mr. Spradley's sale of

an insurance policy to Ms. Booth. See Attachment 22 to Churchill Deel: 11-1-17

Revocation Order No. 17-0403. The Order states the following:


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"By submitting a policy for a producer that was not licensed in the state of Washington and misrepresenting the policy as his sale, issuing and delivering policies that had not been filed and approved by the Insurance Commissioner, and failing to respond to an inquiry from the Insurance Commissioner, Licensee violated RCW 48.17.475, RCW 48.17.530(1)(1), RCW 48.l 7.530(1)(h), RCW 48.18.100(1), RCW 48.18.100(5), justifying the revocation of his license under RCW 48.17.530(1 )(b)."

Id., at p. 4. See Attachment 18 and Attachment 22 to Churchill Deel, for additional details

regarding Mr. Groff s violations of the Washington Insurance Code. Mr. Groff did not file

a hearing demand with the OIC Hearings Unit disputing the violations. His license was

revoked effective November 16, 2017.

On February 1, 2018, the Insurance Commissioner issued Consent Order No. 17-

0204, levying a fine against NBOA, as well issued an Order to Cease and Desist, Order

No. 17-0203. The Insurance Commissioner also issued Consent Order No. 17-0201,

levying a fine against Mr. Spradley, as well as an Order to Cease and Desist, Order No.

17-0202. The parties did not respond to the OIC regarding either the Cease and Desist

Orders or the Consent Orders. In addition, the parties did not dispute the matter by

submitting a hearing request with the OIC Hearings Unit.

The Insurance Commissioner filed hearing demands with the OIC Hearings Unit,

requesting that the Court impose the fines levied by the Insurance Commissioner against

NBOA and Mr. Spradley. See the Insurance Commissioner's hearing demands filed with

the OIC Hearings Unit regarding Notices oflntent to Impose Fine After Hearing No. 17-

0201 and No. 17-0204.

IV. AUTHORITY

A. Authority of the Washington State Insurance Code

Washington insurance laws and regulations prohibit unlicensed insurance

activities. RCW 48.17.060(1) states that "[a] person shall not sell, solicit, or negotiate

insurance in this state for any line or lines of insurance unless the person is licensed for

that line of authority in accordance with this chapter." "[ A ]n act is committed in this state

if it is committed, in whole or in part, in the state of Washington, or affects persons or

OIC'S MOTION FOR SUMMARY ITJDGMENT Docket No. 08-2018-INS-00040

LA-1373105 -1


PO Box 40255 Olympia, WA 98504-0255

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property within the state and relates to or involves an insurance contract, health care

services contract, or health maintenance agreement." RCW 48.17.063(1). WAC 284-17-

473 provides that "[i]ndividual licensees that represent a business entity or act on its behalf

must be affiliated with the licensed business entity. A business entity must have at least

one affiliated individual licensee in order to transact insurance business. Each business

entity must provide the commissioner with the names of all individual licensees authorized

to represent the business entity and act on its behalf by electronic submission and pay the

applicable fees." RCW 48.17.010(11) defines "Negotiate" as "the act of conferring

directly with, or offering advice directly to, a purchaser or prospective purchaser of a

particular contract of insurance concerning any of the substantive benefits, terms, or

conditions of the contract, provided that the person engaged in that act either sells

insurance or obtains insurance from insurers for purchasers." RCW 48.17. 010(13) defines

"Sell" as "to exchange a contract of insurance by any means, for money or its equivalent,

on behalf of an insurer." RCW 48.17.010(14) defines ''Solicit" as "attempting to sell

insurance or asking or urging a person to apply for a particular kind of insurance from a

particular insurer."

The OIC also has ample authority for the fine ammmt requested. RCW

48.17.063(4)(a)(iii) provides that "[i]f the commissioner has cause to believe that any

person has violated the provisions ofRCW 48.17 .060, the commissioner may: (iii) Assess

a civil penalty of not more than twenty-five thousand dollars for each violation, after

providing notice and an opporttmity for a hearing in accordance with chapters 34.05 and

48.04 RCW."

B. Authority for Summary Judgment

In administrative adjudications, summary judgment procedure is governed by

WAC 10-08-135. Themle provides: "A motion for summary judgment may be granted

and an order issued if the written record shows that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as a matter oflaw." WAC

10-08-135. Summary judgment is designed to do away with imnecessary trials where

there is no genuine issue of material fact. LaPlante v. State, 85 Wn.2d 154, 158, 531


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P.2d 299 (1975); see also Jacobsen v, State, 89 Wn.2d 104, 108, 569 P.2d 1152 (1977)

("A 'material fact' is one upon which the outcome of the litigation depends.") (Citations

omitted).

The burden is on the moving party to demonstrate that there is no genuine issue

of material fact and that, as a matter of law, summary judgment is proper. Jacobsen, 89

Wn.2d at 108. A tribunal must consider the material evidence and all reasonable

inferences thereon most favorably for the nonmoving party; if reasonable people might

reach different conclusions, the motion should be denied. Jacobsen v. State, 89 Wn.2d

104, 108-109, 569 P.2d 1152 (1977).

Factual issues may be decided on summary judgement "when reasonable minds

could reach but one conclusion from the evidence presented." Lane v. Harborview Med.

Ctr., 154 Wn. App. 279, 288, 227 P.3d 297 (2010) (citing Van Dinter v. City of

Kennewick, 121 Wn.2d 38, 47, 846 P.2d 522 (1993))." If the moving party satisfies its

burden, then the nomnoving party must present evidence demonstrating material facts

are in dispute. Atherton Condo. Ass 'n v. Blume Dev. Co., 115 Wn.2d 506,516, 799 P.2d

250 (1990) (Citations omitted). The nonmoving party must "set forth specific facts

showing there is a genuine issue for trial." LaPlante, 85 Wn.2d at 158, Lastly, a

nonmoving party may not successfully oppose a motion of su1mnary judgment by

"nakedly asserting that there are unresolved factual questions." Bates v. Grace United

Methodist. Church, 12 Wn. App. 111, 115, 529 P.2d 466 (1974).

V. ANALYSIS AND ARGUMENT

A. Pursuant to RCW 48.17.063(4)(a)(iii), the Insurance Commissioner is authorized to impose a $3,000 fine against Quadell Spradley for violating RCW 48.17.060 by selling, soliciting, or negotiating insurance to a Washington consumer.

In this case, the undisputed facts show that Quadell Spradley was not licensed to

sell, solicit, or negotiate insurance in vVashington State for any line or lines of insurance

during the time period he sold an insurance policy to Ms. Booth. (Attachment 1 to

Churchill Deel, p. 7; Attachment 14 to Churchill Deel) In Mr. Spradley's contact with Ms.


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Booth, he undisputedly solicited, negotiated, and sold an insurance policy to a Washington

consumer.

RCW 48.17.060(1) states that "[a] person shall not sell, solicit, or negotiate

insurance in this state for any line or lines of insurance tmless the person is licensed for

that line of authority in accordance with this chapter." (Emphasis added.) The Washington

Insurance Code defines "solicit" as "attempting to sell insurance or asking or urging a

person to apply for a particular kind of insurance from a particular insurer." RCW

48.17.010(14), Ms. Booth was contacted by Mr. Spradley ofNBOA, who discussed the

coverage and terms of a particular insurance policy. See Attachments 3, 9, 12 and 27 to

Churchill Deel. His discussion with Ms. Booth was clearly an "attempt to sell insurance

or asking or urging a person to apply for a particular kind of insurance from a particular

insurer." See RCW 48.17 .010(14). Therefore, Mr. Spradley undisputedly solicited the sale

of an insurance policy by Ms. Booth.

"Negotiate" is defined as "the act of conferring directly with, or offering advice

directly to, a purchaser or prospective purchaser of a particular contract of insurance

concerning any of the substantive benefits, terms, or conditions of the contract, provided

that the person engaged in that act either sells insurance or obtains insurance from insurers

for purchasers." RCW 48. 17.010(11). Mr. Spradley negotiated the sale of an insurance

policy in that Ms. Booth was a "prospective purchaser" and he discussed in detail "a

particular contract of insurance concerning" many ''substantive benefits, terms, or

conditions of the contract..." See RCW 48.17,010(11). See Attachments 3, 9, 12, and 27

to Churchill Deel. For example, Ms. Booth reported the following:

"Spradley took Booth through the terms, telling Booth it was an annual term ... it was a PPO so she could go to any doctor, there was no copay on the general practitioner visits, $50 copay for urgent care and specialist, $3 to $10 for generic meds, 60 to 70 percent off name brand meds, with a $1,000 out of pocket deductible at a cost of $485.42 and a three year rate review. There was a $125.00 medical fee so they wanted $610.42 at the time of application. There was a two million dollar life maximum on the policy and it covered dental and vision."

(Attachment 9 to Churchill Deel, p. 2, para. 2.) In the notes Ms. Booth took during her

phone call with Mr. Spradley, she wrote down many of the "substantive benefits, tenns,


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or conditions of the contract" that Mr. Spradley discussed, in violation of RCW

48.17 .010(11 ). See Attachment 12 to Churchill Deel, p. 1. Therefore, Mr. Spradley

undisputedly negotiated the sale of an insurance policy by Ms. Booth.

"Sell" is defined as "to exchange a contract of insurance by any means, for money

or its equivalent, on behalf of an insurer." See'RCW 48.17.010(13). Ms. Booth stated she

only spoke with Mr. Spradley, a female from underwriting who asked health questions, as

well as a male named "Kyle", and a female during the cancellation process. (Attachment

9 to Churchill Deel, p. 2, para. 9.) Ms. Booth informed "[Mr.] Spradley she was currently

a resident of Bermuda for at least ninety days and would lose her employer's insurance

for a period of time." Id., at p. 2, para. 1. Mr. Spradley then "confirmed coverage anywhere

outside ofWashington which would be her residence in July, 2016." Id. (Emphasis added.)

Ms. Booth was "taken through the underwriting process and she provided credit card

information for the payment of $610.42." Id., at p. 2, para. 3. Thereafter, she was emailed

policy documents for an insurance policy that she immediately cancelled. See Attachments

3, 4, 5, 6, 7, 8, 9, and 12 to Churchill Deel.

Mr. Spradley sold an insurance policy to Ms. Booth that was a "Monthly - 11

month plan." (Attachment 4 to Churchill Deel, p. 3.) In addition, the title of the insurance

policy application stated "HCC Life Short Term Medical Plan Application For use in

WA." (Emphasis added.) Id., at p. 1. The policy documents included Ms. Booth's

Washington address. (Attachment 4 and Attachment 5 to Churchill Deel) Therefore, Mr.

Spradley was aware of Ms. Booth's Washington residence and plans to relocate to

Washington State, but nonetheless, proceeded to sell her an insurance policy. Mr. Spradley

was not licensed to sell, solicit, or negotiate insurance in Washington State for any line or

lines of insurance at the time that he solicited, negotiated, and sold an insurance policy to

Ms. Booth. (Attachment 14 to Churchill Deel) Therefore, Mr. Spradley undisputedly

violated RCW 48.17.060(1), justifying the imposition of a fine under RCW 48.17.063.

OIC'S MOTION FOR SUMMARY TIJDGMENT Docket No. 08-2018-INS-00040

LA~ 1373105 -1

10 Slate of Washington Office of Insurance Commissioner

PO Box4O255 Olympia, WA 98504-0255

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B. Pursuant to RCW 48.17.063(4)(a)(iii), the Insurance Commissioner is authorized to impose a $10,000 fine against NBOA for violating RCW 48.17.060(1) by soliciting insurance business in Washington State when unlicensed to do so, by accepting insurance business from a person who is required to be licensed under this title and is not so licensed, and by allowing an unlicensed producer to sell, solicit, or negotiate an insurance policy to a Washington consumer on NBOA's behalf.

A licensing check conducted by Investigations and the Insurance

Commissioner's Producer Licensing and Oversight Division disclosed that NBOA did

not hold a producer's license authorizing the entity to conduct the business of insurance

in the State ofWashington. (Attachment 16 to Churchill Deel.) RCW 48.17.060(1) states

that "[a] person1 shall not sell, solicit, or negotiate insurance in this state for any line or

lines of insurance unless the person is licensed for that line of authority in accordance

with this chapter."

An NBOA representative, J.C. Moreno, stated to Investigations that the

insurance policy at issue was sold through licensed producer, HII. (Attachment 21 to

Chmchill Deel.) On November 22, 2016, Investigations sent a letter to HII requesting a

response to Ms. Booth's complaint. See Attachment 23 to Churchill Deel: 11-22-16

OIC Notice oflnvestigation letter to Bil. A licensing check conducted by Investigations

disclosed that HII held a producer's license authorizing the entity to conduct the

business of insurance in the state of Washington. See Attachment 24 to Churchill Deel:

OIC licensing records ofHII and Consent Order No. 15-0136. I-III provided a response,

which included a letter sent to NBOA on June 1, 2016, te1111inating their relationship.

See Attachment 25 to Churchill Deel: 11-29-16 written response ofHII to the OIC;

see also Attachment 26 to Churchill Deel: 6-1-16 letter from HII to NBOA. In HII's

letter, terminating its relationship with NBOA, HII stated that "National Brokers of

America, Inc. ("NBOA''), shall immediately cease and desist engaging in any activity

relating to the promotion and/or sale of products available through HII." (Emphasis

added.) (Attachment 26 to Churchill Deel, at p. 1.) This information shows that NBOA

was selling insurance products through HII, such as the insurance policy at issue.

1 RCW 48.17.010(12) defines "person" as "an individual or a business entity." (Emphasis added.)

OIC'S MOTION FOR SUMMARY 11 State of Washington JUDGMENT Office ofinsurance Commissioner Docket No. 08-2018-INS-00040 PO Box 40255

Olympia, WA 98504-0255

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"Pursuant to Washington Administrative Code 284-17-473, if a producer in the

solicitation or sale of insurance represents himself to be an employee of an entity, that

entity must also be licensed as a producer to sell insurance in Washington." (Attachment

16 to Churchill Deel, p. 2.) Mr. Spradley contacted Ms. Booth on behalf ofNBOA, an

entity, and sold an insurance policy to Ms. Booth. As a result, NBOA was required to

be licensed pursuant to RCW 48.17.060(1) and WAC 284-17-473. However, neither

NBOA nor Mr. Spradley were licensed to conduct the business of insurance in

Washington State. (Attachment 14 and Attachment 16 to Churchill Deel) Mr. Spradley,

a representative of NBOA, solicited, negotiated, and sold an insurance policy to Ms.

Booth, a Washington consumer. See Section A. As a result, NBOA solicited insurance

business in Washington State while being unlicensed, as well as allowed and accepted

insurance business from Mr. Spradley, an unlicensed producer in the state of

Washington, who solicited, negotiated, and sold an insurance policy on NBOA's behalf

to a Washington consumer. Therefore, NBOA undisputedly violated RCW

48.17.060(1),justifying the imposition of a fine under RCW 48.17.063.

C. NBOA has a history of allowing and directing multiple prior employees to sell, solicit, and negotiate several insurance policies to consumers of other states without holding the proper licensure.

On July 9, 2018, Kathleen Butler provided the Insurance Commissioner with

several consent orders levied by the Pennsylvania Insurance Department against prior

employees ofNBOA. See Attachment 32 to Butler Deel: 7-9-18 email ofMs. Butler

to OIC. Ms. Butler also provided certified licensing records for Mr. Spradley, NBOA,

Mr. Groff, and Alan Redmond, the owner of NBOA. (See Attachments 28, 29, 30, &

31 to Butler Deel) The Consent Orders explain that NBOA's employees have

committed several licensing violations and other violations of dishonesty.

On January 3_0, 2017, the Insurance Department of the Commonwealth of

Pennsylvania ("PA DOI") and Kyle Madeya, an employee ofNBOA, executed Consent

Order CO16-12-005. See Attachment 33 to Butler Deel: 1-30-17 Pennsylvania

Insurance Dept. Consent Order. The Consent Order states that Mr. Madeya, "at the

OIC'S MOTION FOR SUMMARY JUDGMENT _Docket No. 08-2018-INS-00040

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direction of National Brokers of America, sold, solicited and negotiated at least 48

contracts of insurance in Pennsylvania and various other states without holding a

producer license beginning in approximately August of 2015 and continuing until

February of 2016." Id., at p. 2.

On September 7, 2016, the PA DOI and Daniel Cuesta, an employee ofNBOA,

executed Consent Order CO16-06-002. See Attachment 34 to Butler Deel: 9-7-16

Pennsylvania Insurance Dept. Consent Order. The Consent Order states that Mr. Cuesta

"at the direction of National Brokers of America, sold, solicited and negotiated

numerous contracts of insurance in Pennsylvania and various other states without

holding a producer license from around November of 2014 and continuing through

December 2015." Id., p. 3.

On August 19, 2016, the PA DOI and Isaiah Thomas, an employee ofNBOA,

executed Consent Order CO16-06-015. See Attachment 35 to Butler Deel: 8-19-16

Pennsylvania Insurance Dept. Consent Order. The Consent Order states that Mr.

Thomas "at the direction of management and staff at National Brokers of America, made

false statements and misrepresentations to prospective policy holders and engaged in

other dishonest acts to include misrepresentation ... " Id., at p. 3.

On March 24, 2016, the PA DOI and Joshua Westendorp, an employee of

NBOA, executed Consent Order CO16-03-012. See Attachment 36 to Butler Deel: 3-

24-16 Pennsylvania Insurance Dept. Consent Order. The Consent Order states that Mr.

W estendorp "during the time of his employment at NBOA, knowingly pennitted and

condoned the impersonation of himself by at least one (1) unlicensed employee of

NBOA." Id., at p. 3. In addition, Mr. Westendorp "during the time of his employment

at NBOA, permitted and condoned the submission of hundreds of health insurance

policy applications to insurers under his signature and producer license which were sold

by several unlicensed employees of NBOA ... " Id.

On October 19, 2018, the PA DOI and Jason Everett, an employee ofNBOA,

executed Consent Order CO16-08-0l3. See Attachment 37 to Butler Deel: 10-19-16

Pennsylvania Insurance Dept. Consent Order. The Consent Order states that Mr.

Everett, "while holding a management position at National Brokers of America,


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engaged in dishonest acts to include ... permitting and condoning unlicensed insurance

sales." Id., at p. 5.

In addition to the Pennsylvania consent orders involving NBOA employees, In

the Matter of National Brokers of America and Alan C. RedmoncP, Case No. 16-0303,

the Oregon Department of Insurance, revoked NBOA's Oregon producer license and

ordered the entity to pay a fine of $101,400. See Attachment 38: 6-29-17 Oregon DOI

Cease & Desist and Final Order Revoking by Default and Assessing Penalties. The

Consent Order states that the "[r]espondents violated ORS 744.053 3 on 1,014

occasions.'' Id., at p. 4.

RCW 34.05.452 provides"[ e ]vidence, including hearsay evidence, is admissible

if in the judgment of the presiding officer it is the kind of evidence on which reasonably

prndent persons are accustomed to rely in the conduct of their affairs." The Consent

Orders executed by NBOA employees and other states' Insurance Departments,

demonstrate that NBOA has allowed and directed multiple prior employees to sell;

solicit, and negotiate numerous insurance policies to consumers in other states without

being licensed.

D. Neither Mr. Spraclley nor NBOA have presented information to the Insurance Commissioner "demonstrating material facts are in dispute." Atherton Condo. Ass'n v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990).

NBOA provided a brief response to Investigations that Mr. Groff was "the

qualifying specialist who originally spoke to Ms. Booth and that "[a]fter collecting the

clienfs basic information (name, date of birth, and address), Mr. Spradley then

transferred Ms. Booth to Albert Groff to discuss different plan options." (Attachment

20 to Churchill Deel) Investigations "unsuccessfully attempted to interview [Mr.]

Spradley" during the investigation after attempting to arrange contact through NBOA,

2https://dfr.oregon.gov/ AdminOrders/enf-orders 2017/NBOA %20Final%20Order%20Default%20SSig. pelf

3 ORS 744.053 states that "a person may not sell, solicit or negotiate insurance in this state for any class or classes of insurance unless the person is licensed as an insurance producer ... "

OIC'S MOTION FOR SUMMARY 14 State ofWashington nJDGMENT Office ofinsmance Commissioner

Docket No. 08-2018-INS-00040 PO Box 40255 Olympia, WA 98504-0255

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by email, and by direct telephone contact. (Attachment 1, Churchill Deel, at p. 12). In

addition, Mr. Spradley "did not respond to calls and emails to arrange interviews ... " Id.

Moreover, Mr. Groff did not respond to Investigations' attempts to contact him, which

included sending him a certified letter, attempting to arrange contact through NBOA,

and leaving several telephone messages. (Attachment 1 to Churchill Deel, at p. 10). On

November 1, 2017, the Insurance Commissioner issued Revocation Order No. 17-0403,

revoking Mr. Groff s producer license for his role in Mr. Spradley' s sale of an insurance

policy to Ms. Booth. (Attachment 22 to Churchill Deel) Mr. Groff did not dispute the

matter by submitting a hearing request with the OIC Hearings Unit and his license was

revoked, effective November 16, 2017.

The OIC has met its burden in showing that Mr. Spradley and NBOA have

violated the Washington Insurance Code. A nonmoving party may not successfully

oppose a motion of summary judgment by "nakedly asserting that there are unresolved

factual questions." Bates v. Grace United Methodist. Church, 12 Wn. App. 111, 115,

529 P.2d 466 (1974). NBOA has provided a brief response regarding the matter.

However, NBOA and Mr. Spradley have failed to "set forth specific facts showing there

is a genuine issue for trial." LaPlante, 85 Wn.2d at 158.

E. The Insurance Commissioner is authorized to impose rmes against Mr. Spradley and NBOA for violating RCW 48.17.060.

RCW 48.17.063(4)(a)(iii) provides that "[i]fthe [Insurance] [C]ommissionerhas

cause to believe that any person has violated the provisions of RCW 48.17.060, the

Insurance Commissioner may [a]ssess a civil penalty of not more than twenty-five

thousand dollars for each violation, after providing notice and an opportunity for a hearing

in accordance with chapters 34.05 and 48.04 RCW." The Insurance Commissioner has

followed the proper procedure pursuant to RCW 48.17.063, and is therefore authorized to

impose a fine of $3,000 against Quadell Spradley for violating RCW 48.17.060. In

addition, the Insurance Commissioner has followed the proper procedure pursuant to

RCW 48.17.063, and is therefore authorized to impose a fine of$10,000 againstNBOA

for violating RCW 48.17.060.


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VI. CONCLUSION

Based on the undisputed evidence, authority, and arguments made above, the

Insurance Commissioner respectfully requests that the Administrative Law Judge grant

his motion for smmnary judgment. In addition, the Insurance Commissioner respectfully

requests that National Brokers of America, Inc. be ordered to pay a fine of $10,000.00

as authorized perRCW 48.17.063(4)(a)(iii), and that Quadell Spradley be ordered to pay

a fine of $3,000 as authorized per RCW 48.17.063(4)(a)(iii).

DATED this {p1"'- day of December, 2018.

Insurance Enforcement Specialist Legal Affairs Division

CERTIFICATE OF MAILING

The undersigned certifies under the penalty of perjury 1.mder 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 served the foregoing OIC'S MOTION FOR

SUMMARY JUDGMENT AND DECLARATIONS OF HARVEY CHURCHILL AND

KATHLEEN BUTLER IN SUPPORT OF OIC'S MOTION FOR SUMMARY

JUDGMENT AND SUPPORTING ATTACHMENTS 1 ~ 38, on the following

individuals in the manner indicated:


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Debra Pierce Administrative Law Judge Office of Administrative Hearings 949 Market Street Suite 500 Tacoma WA 98402 253.593 .2200/fax

By facsimile (15 pages of filing plus Facsimile Cover Sheet) and by depositing complete filing in the U.S. mail via state Consolidated }.,Jail Service with proper postage affixed.

Quadell Spradley 946 N 5th Street, Apt. 1 Reading, PA 19601 [email protected] [email protected]

Stephanie Miller, CFO Alan Redmond, Owner National Brokers of Amelica, Inc. 4 S 4th Street, 3r<l Floor Reading, PA 19602-2819 [email protected] [email protected]

Alan Redmond 2005 Regency Drive Wyomissing, PA 19610

By email and by depositing in the U.S. mail via state Consolidated Mail Service with proper vostage affixed.

-tto SIGNED this~ day of December, 2018, at Tmnwater, Washington.

~~>h Dawn Krech Paralegal


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PO Box.40255 Olympia, WA 98504-0255

otc o? i018 - washington state office of the insurance

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