The Arkansas Insurance Department had no justification to summarily suspend a Marion agent's license, Pulaski County Circuit Judge Wendell Griffen ruled Wednesday.
The judge said state regulators appeared to have been punishing Matthew Glass for exercising his constitutional right to legal counsel. The suspension order also imposed a $10,000 fine.
"The right to have legal counsel present is guaranteed by the Constitution of the United States ... and it has been part of that Constitution since 1791," the judge said, questioning regulators' motives for sanctioning Glass. "This is not a recently obtained right."
Glass' license was suspended in January, but Griffen ordered it be reinstated immediately, with further orders that the department take no further action that would impede Glass from doing business, at least until his lawsuit against the department is resolved.
Glass sued the department last week to appeal the suspension, almost four months after the sanction was imposed because regulators claimed he'd refused to allow them to see his records. An internal review of the suspension order upheld the sanction and imposed the fine April 8.
Aside from the license-suspension issue, Glass' lawsuit is asking the judge to interpret the record-keeping obligations of insurance agents, like Glass, whose clients are insured through the state's expanded Medicaid program, known as Arkansas Works.
Because of the unique nature of the program, established through the federal Patient Protection and Affordable Care Act, sometimes called Obamacare, Insurance Department regulators have a "fundamental misunderstanding" of what records Glass should be keeping, his attorney told the judge.
The sides will be filing written arguments on the issue in the coming weeks.
In ordering the license suspension lifted, Griffen said he found no evidence that Glass had refused an inspection by regulators.
"There is no factual support for the department's assertion that Matthew Glass denied access to records of his insurance agency," the judge said.
Griffen said Glass apparently was penalized because he wanted his lawyer, Nate Steel, present during a surprise record inspection last year. Rather than wait for the lawyer to arrive, the inspector left.
"The assertion of a constitutional right is not a refusal to produce records," the judge said.
Griffen emphasized that he viewed the department's claim that Glass refused to cooperate during a record inspection as "pretext" for punishing Glass. The department's action "raises issues of bad faith that this court is unwilling to ignore," he said.
The suspension was upheld during the agency's administrative review, but the judge found the review process to be flawed. Department officials wrongly barred Glass from bringing the witnesses he wanted to present to a review tribunal, Griffen said.
The law specifically requires that Glass be allowed to subpoena the witnesses and evidence he wanted to present, the judge said. The reason for the denial -- that the hearing officer didn't think the witnesses would provide any useful information -- has no basis in the law, Griffen said.
Gray Turner, an Insurance Department attorney, denied that Glass was being punished for wanting legal counsel. He told the judge that the Insurance Department had no objection to Glass' lawyer being present. He said that what the regulators could not tolerate was any attempt to impose conditions on the inspections, which are required by law.
"We do not consider that cooperation when we are made to wait," Turner told the judge.
Turner questioned whether Glass was entitled to have his lawyer monitor the inspection. He said Glass would never be subjected to any questioning about the records during one of the reviews.
The nearly four-month license suspension has prevented Glass from earning a living, Steel told the judge at Wednesday's hearing.
One-third of the partnership that owns Southeastern Insurance Group in West Memphis, Glass, who has a 42 percent stake in the agency, told the judge that his partners have interpreted the suspension to mean that he can't be paid any proceeds from the company.
Metro on 04/26/2018