Ide v. Utah Ins. Dept.

Ide v. Utah Ins. Dept.

IN THE UTAH COURT OF APPEALS

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Gerald G. Ide,

Petitioner,

v.

Utah Insurance Department,

Respondent.

MEMORANDUM DECISION
(Not For Official Publication)
 

Case No. 20020981-CA
 

F I L E D
(December 4, 2003)
 

2003 UT App 421

 

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Original Proceeding in this Court

Attorneys: Gregory J. Sanders and Margaret R. Wakeham, Salt Lake City, for Petitioner

Mark L. Shurtleff and M. Gale Lemmon, Salt Lake City, for Respondent

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Before Judges Jackson, Bench, and Orme.

BENCH, Judge:

Ide first contends that he was denied due process when the burden of proof was erroneously shifted to him to prove that he did not market unauthorized insurance. This argument is without merit. In his Order on Hearing, the Insurance Commissioner indicated that "'the burden of proof' or 'burden of going forward' in this case as to the above issue(s) is on the Complainant Department." Accordingly, the Department proceeded to present its prima facie case. It submitted evidence that Ide did in fact market unauthorized insurance. Thereafter, Ide was given an opportunity to respond and refute the Department's evidence. The burden of proof was not shifted. Although the "burden of going forward" may have shifted, that was proper. Cf. State v. Swenson, 838 P.2d 1136, 1138 (Utah 1992) (holding that once the state establishes a prima facie case, the burden of going forward shifts to the defendant).

Ide next argues that, regardless of whether the burden of proof was improperly shifted, he was not marketing unauthorized health insurance under Utah law. We disagree. Health insurance

"means insurance providing (i) health care benefits; or (ii) payment of incurred health care expenses." Utah Code Ann. § 31A-1-301(70)(a) (Supp. 2003). Furthermore, the Utah Insurance Code explicitly prohibits any person from assisting "in the illegal placement of insurance with an unauthorized insurer." Utah Code Ann. § 31A-15-102(1) (2001). The evidence presented at trial overwhelmingly shows that Privilege Care was unauthorized health insurance. The following sample of evidence illustrates that Privilege Care would provide benefits typically associated with health care insurance: An "Enrollment" form asking for medical and previous insurance information; a "Medical Questionnaire"; a listing of benefits that Privilege Care would pay; an "Authorization Agreement for Preauthorized Payments" for automatic debits from a participant's bank account; and a rate chart showing the rates charged for single, couple, and family coverage. Additionally, Ide marketed Privilege Care to two clients and a fellow insurance agent. Either Ide directly represented to them that Privilege Care was health insurance or they understood it to be health insurance. Because Privilege Care was not licensed to do insurance business in Utah, it was an unauthorized insurer. See Utah Code Ann. § 31A-1-301(125) (holding that an unauthorized insurer is an insurer not holding a valid certificate of authority to conduct insurance business in Utah).

Ide also asserts that Privilege Care involved the services of a Professional Employer's Organization (PEO), which is exempt under the Utah Insurance Code. This argument fails. First, as the Commissioner properly held, Privilege Care was not registered with the Utah Department of Commerce, which has specific jurisdiction over PEOs. Privilege Care was therefore not exempt under the Insurance Code. Second, even if Privilege Care was a registered PEO, it may not provide health insurance even to its employees unless it is underwritten by an authorized insurer. See Utah Code Ann. § 31A-4-106(2) (2001). Privilege Care falsely claimed Union Labor Life Insurance Company to be its underwriter, and has identified no other authorized insurer.

We conclude that (1) the burden of proof was not improperly shifted to Ide to prove that he did not sell unauthorized insurance, and (2) Privilege Care was indeed unauthorized health insurance. We therefore affirm.

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Russell W. Bench, Judge

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WE CONCUR:

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Norman H. Jackson,

Presiding Judge

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Gregory K. Orme, Judge