Indianapolis-based International Medical Group Inc. has incurred the wrath of Florida regulators who accuse it of trying to sell policies in their state without a license.
However, an IMG representative says the allegations stem from paperwork problems and the lobbying of a disgruntled excustomer turned "cyber stalker."
Founded in 1990 with four employees, IMG now employs 220 in offices in Indianapolis and Great Britain.
The company administers insurance policies for U.S. citizens living or traveling overseas. It also provides coverage here for foreign nationals who aren't eligible for domestic insurance, said Adam Hirschfeld, IMG vice president and general counsel.
The Florida Department of Financial Services accuses IMG of violating a consent order company President Joseph Brougher signed last year in which it agreed not to sell insurance in Florida without a license.
Regulators sent IMG officials a 10-page letter last month denying their application for a license in the state. The letter cites several instances in which the company did business-mostly with employees of yachts and cruise lines-after signing that order.
"We look very unfavorably on unauthorized activity," said Bob Lotane, a spokesman for the Financial Services Department, which encompasses insurance regulation. "And when we find out you sign a consent order and then you violate that consent order, we take that extremely seriously."
Licensing allows states to track companies and their financial situation, said Joe Belth, professor emeritus of insurance at Indiana University's Kelley School of Business.
"The fact is that it's a form of consumer protection, that is a major part of regulation," Belth said.
Indeed, the Florida Legislature passed a law in 2003 that makes selling insurance in the state without a license a felony. The companies that provide the unlicensed insurance also can face fines or be ordered to pay restitution, Lotane said.
No one has been charged with a crime in the IMG case, said Lotane, who knows of no unpaid claim problems.
Beyond that, he declined to comment, citing an ongoing investigation.
IMG's Florida headaches began about a year ago when regulators subpoenaed company records.
The resulting consent order, signed in August, states the company had agreed "not to solicit, market or administer any insurance in Florida" without complying with licensing provisions.
Brougher could not be reached for comment. But a statement provided by Hirschfeld said IMG signed the order under duress because regulators "threatened significant civil and criminal penalties."
Hirschfeld said outside counsel has told the company it doesn't need a license to do business in Florida. Still, IMG applied for one in 2003 because the state serves as a hub for foreign tourists.
IMG received a letter from the state announcing its approval for a license, but the company never got the actual license, despite trying for months to contact insurance officials, the lawyer said.
Eventually, state officials told IMG the 2003 application was missing and said it should file another one, Hirschfeld said.
In February, he said, a state regulator told IMG its application had been handled improperly and that the company would be recommended for license approval.
This is where the "cyber stalker" comes into play, according to Hirschfeld. He believes a former customer named Jon Bond, who lives in Spain, found out about the impending approval and waged an email campaign to regulators protesting it.
The lawyer said he thinks Bond, who also maintains an anti-IMG blog, helped spur the notice of denial. On the site, Bond claims IMG officials "cheat and deceive as a business policy."
Bond, who used to live in Florida, told IBJ that if IMG believes he influenced regulators, "I think they need some counseling. ... The regulators just did their job."
IMG sued Bond last year in federal court, accusing him of contacting several regulatory bodies and embarking on a libelous campaign to disrupt "legitimate businesses," according to a federal complaint filed in Indianapolis.
Bond never responded to the lawsuit. Earlier this year, federal Judge David Hamilton ordered Bond to stop making false statements about the company and its employees and awarded more than $15 million in damages.
The company is challenging Florida's denial and expects the case to be resolved in a "positive and constructive manner," Hirschfeld said.
"In the end, we expect a favorable result on all matters relating to our license and our ability to write this international business," he said.
Editor's note: Greg Andrews is on assignment this week and on vacation next. His Behind the News column will return April 17.