Tennessee Disciplines 3 Insurance Agents for Violations, Fraudulent Conduct

February 5, 2016

The Tennessee Department of Commerce & Insurance (TDCI) announced disciplinary actions against three former Tennessee licensees for the intentional misrepresentation of policy terms, forgery, and the use of fraudulent conduct in the business of insurance.

The punishments were the result of months of work by TDCI’s Insurance Fraud Investigations team.

“Tennesseans should be able to trust their insurance agents, and in these cases they were duped,” said TDCI Assistant Commissioner for Insurance Michael Humphreys. “These individual agents have behaved in a way that does not represent the vast majority of hard-working and honest Tennessee agents, but that is not always readily apparent to consumers.”

Details of the cases include:

Richard Wayne Davis, Jr. of Winchester, Tenn., had his insurance producer license revoked by a final order, effective Nov. 18, 2015, and was assessed a $10,000 civil monetary penalty as a result of an Aug. 6, 2015 hearing. Davis was found to have willfully committed 40 violations of insurance law, and assessed a fine of $250 per violation. The violations stemmed from Davis’ misconduct involving the replacement of a policyholder’s existing policy through impersonation and forgery with a new policy from a different carrier (commonly referred to as “twisting”) without the policyholder’s consent. Davis was found to be in violation of Tennessee law by obtaining approximately 40 new policies through “twisting” without the consent of the policyholder. Davis had been a licensed insurance producer for 20 years and therefore, as stated in the Order, “should have known that his conduct was inappropriate and illegal”.

A consent order was finalized, effective September 24, 2015, between TDCI and Betty S. and Jeffrey B. Lackey of N. Charleston, S.C., revoking Betty’s license and assessing a $2,500 civil monetary penalty to both Betty and Jeffrey individually. Both held a Tennessee non-resident insurance producer license at varying periods of time. Jeffrey’s license had been previously revoked by the Division in October, 2007 and he remained unlicensed with the TDCI ever since. The penalties were a result of violations of insurance law on two separate occasions, occurring in Kingsport and Telford, Tennessee, during which the Lackeys were involved in the misrepresentation of the terms of annuity contracts. During both occasions Jeffrey Lackey was not a licensed agent. On one occasion such misrepresentations of the terms of the annuity contract resulted in the consumer’s loss of approximately $10,142 in surrender charges.

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