Former state Rep. Allen W. Kerr sold his independent insurance agency in June 2013 and succeeded Jay Bradford (left inset) as commissioner of the Arkansas Insurance Department in January of this year. Another former commissioner, Mike Pickens (right inset), criticized the treatment Kerr recieved from Bradford.
The favorable treatment that Arkansas Insurance Commissioner Allen Kerr received from his predecessor, Jay Bradford, in a 2011 dispute with Farmers Insurance Group has been criticized in court documents by another former insurance commissioner, Mike Pickens.
Pickens, a Maumelle lawyer who served as Gov. Mike Huckabee’s insurance commissioner for almost eight years, represents Steve Cotroneo of Cabot, whose insurance license was revoked by Bradford shortly before he was replaced in January by Kerr, a former state representative.
After Kerr rejected Cotroneo’s request for a rehearing, Pickens appealed to the Lonoke County Circuit Court in an attempt to have his client’s license reinstated. And he didn’t mince words in suggesting that the Arkansas Insurance Department wasn’t playing fair, using the current commissioner’s unrelated — and dissimilar — case as an example.
“Allen Kerr received unprecedented and highly unusual preferential treatment due to his position as a sitting legislator at the time Farmers terminated him for cause,” Pickens said in a June court filing.
The fact that Kerr was allowed to keep his license after Farmers accused him of serious infractions shows “the fundamental unfairness, and arbitrary and capricious nature of the [AID’s] hearing process and procedures,” Pickens wrote.
Farmers, which accused Kerr of understating risks when writing a number of commercial policies, ultimately agreed to a fine ordered by Bradford for the way it handled Kerr’s termination and that of another agent.
More: Read about the insurance case that led to the split between Farmers and Kerr.
AID spokesman Ryan James declined to address the Cotroneo case, in which the agent was accused of misappropriating proceeds from a business partnership — something Pickens said the AID had no jurisdiction to investigate in the first place.
“Despite the comments of Mr. Pickens, the Arkansas Insurance Department does not comment on pending litigation,” he said.
And, he said, “The consent order of February 2013 issued [against Farmers] by former Commissioner Bradford speaks for itself.”
In separate interviews, both Kerr and Bradford maintained that Kerr was treated fairly and deserved to keep his license. Gov. Asa Hutchinson, who appointed Kerr to succeed Bradford immediately after he took office, agreed.
“Commissioner Kerr made us aware of the Insurance Department review and fully disclosed it,” Hutchinson said in a statement to Arkansas Business. “This was prior to his appointment as commissioner. I reviewed the file and found that he was exonerated, and I reached the conclusion that there was no merit in the allegations brought against him.”
Pickens’ POV
Pickens didn’t reach the same conclusion.
In an email to Arkansas Business last week, Pickens said Bradford didn’t handle Farmers’ allegations against Kerr in a way that assured impartiality.
If there had been an allegation of fraud involving a sitting legislator while he was commissioner, Pickens said, he would have instructed the AID to investigate the case “just as they would any such case since allegations of misappropriation of funds or misrepresentations of material fact on insurance applications are involved. These allegations, if true, would constitute insurance fraud.”
But beyond that, Pickens said, he would have appointed an independent hearing officer, either a local former judge or an attorney/mediator with insurance experience, to hear the case in a public hearing.
Still, Pickens, a Republican like Kerr, told Arkansas Business that he had found Bradford, a Democrat, to be a “very honest, straightforward, ethical individual. … He did have a reputation of being hard on agents.”
Bradford, a career insurance agent himself, agreed with Pickens on that point. “I had a reputation of being a tough son of a gun on any agent.”
But Bradford said it was “a stretch that I would have to recuse myself” from Kerr’s case. Bradford said there were countless cases where there were alleged improper acts by agents — some are false and some are true.
“We always gave them a thorough investigation,” he said.
Bradford said Farmers had every right to fire Kerr because Arkansas is an employment-at-will state, meaning an employer can terminate an employee at any time.
“However, they did not present proper evidence to me that his license should be revoked based on that information,” Bradford said.
Farmers maintained for more than a year that it severed ties with Kerr for willful misrepresentation in connection with his commercial book of business. But the carrier eventually paid a $5,000 fine for filing termination notices with the AID that alleged that Kerr and another agent mishandled premiums, which turned out to be false.
Pickens said that’s the problem with the case: Kerr should have faced more scrutiny than the insurance carrier that terminated him.
A spokesman for Farmers declined to comment. But in agreeing to the fine, Farmers said it disagreed with the information in the consent order but wanted “to avoid further proceedings in this matter.”
Bradford said Farmers wouldn’t have paid the fine if it were innocent.
“It was a very serious on-the-record admission,” Bradford said.
Kerr told Arkansas Business last week that he will recuse himself from handling disputes with Farmers “to make sure there’s no air of impropriety or wrong decision-making because of this situation.”
He said the AID’s chief deputy or attorney will handle Farmers cases.
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