BEFGRE THE INSURANCE COMMISSIO
1. 0? THE
COMMONWEALTH OF 

IN RE: AELEGED VIOLATISNS:
THE COMMONWEALTH AGENCY, INC., Sections 603, 684, 633, 63331
l?87 Century Parkway West 638 and 639 cf the Act
Suite 1, Building 18 z'y?f May 1921, 789, Not
Blue Bell, PA 19422 $85 known as tha Inaurance

- Department Act of 1921, {46
PHILLIP 9.t. ?g Secticns
1 Peter Gamble Laa? 4, 
618a Mills, PA. 19342 of tha Act of July

22, 589, NO. 205,

JQEL BS 7 kaown ag ?nfair Iasurance
1329 Stump Roa? Practicea Aat (40 Pig.
lagi? ??11?191 g3 

Seatie?s titla
31 9f the Pa??gylva?ia Coda;
3i Pa? C??e 

Secti?m 35% Gf af
May l?21, $82, No.
28%; kmawn as tha I?gur3?ca
Comgany Law ??Sg 

?g?kat ?at ??3w02?2?

QREER TS SHOW 

 

m1} W315i; t?ig ?afg GE garchg 3.9%3, ?HESmaat ti}
the Statutes gagtia?a? abavt am? i3 a?ch?am?g with 2 Fa, ?G?e
arg hateby QRQEREE i? aygear at a Earmal
a?miaigtrativa heaxigg befgze tha :?suranca Cammi?sianet Qf tha
3f @an?gylvamiai 0: ha: ?uiy ?agignate? @rasi?ing
?ffia?r; an? Q3333 why the Egsuxamaa Cgmmigsi?neti u?a?
?e?si?gratia? 3f the ?aatu&i ?llagatis?s gursug?t tg Aggiigabla

?aw; i3 wit? Citg? i?f?i?i E?gai? 

  

im??g? ?g??ttiaag $3 said t?tmg'

beigw?

 



 

 

 

 

IT IS HEREBY ORBEREE that Reegdndemte each file an
Answer is this Order to Shaw Cause in writing within the time
specified herein, ix with 1 Pa. Code Such
Answer shall specifically admit or deny each of the Factual
Allegations made herein and the autheeticity of the Exhibits
attached hereto, and shall set forth the facts and state
concieely the matters 0f law upeg Ehich Reepon?emte rely If

emy aedfer all Ree?endente fail to file an Aeewez within the time

_a110wed herein the Factual Allegatimne and the aethemticity ef
the atteehe? Exhibits She11 be ?eemed e?mitte? end the Insurance

mey issue an Erder imgeeimg emeh Eenaltiee e3 she 

?eeme eygregriete
ALEEGATEQES

11 Cenne11eg 111 {g?emnelle?g is ea
ie?iei?eei Ehe :eeidee at 1 Pe?er Gemb1e gene; Elem Eilie,

Pemneylveeie 193e2.

2? Seel E: Cherzy {g?herry?) is en indiviauel whe

:eei?ee et 132E Stem? Eee?, Chelfeet; 18?1e1

3. Ceemelle is has been 

agents tzue em? eerreet eegy ef Cennellege eertifie? 

hieiezy 1E etieehed as Exhibit 

Cherry 1e ee? has heem agents

tree ee? seizeet eegy ef EEe3?y1e certifie? hietezy

is ee Exhibit E1

 

 

 

 

 

 

1

5? Caenella and Cherry are principals amd officers of
eke Cemmonwealth Agency, Inc., a cerperetien as an
agent, which is currently located at l?8? Century Parkway West,
Suite 1, Buil?ing 18, Blue Bell, 19422. A true and
cerrect ceyy of the Commonwealth Ageecy Inc.fs certified

licensiag is attached as Exhibit C.

6. Commenwealth Agemcy, Inc. is an? has beem
autherized t0 act as an agent for American Fidelity a?d Liberty
Ineerance Cem?any (?Amerieam Fidelity?) fer the eelicitatien and

Sale ef leeg~term merging care 

"1

?e er abeet Segiember lge?i 
Ageney, Ina; eateze? i?te ea :eeuraaee Marketing Agreemeat with
A?eriea? gi?elity; A ?rue ae? eerreet Cegy ef tee ineurenee

Metketimg Agreement is etieehe? ee Exhieii 

8; Fi?elity ie a 
eertifieate 0f autherity wi?? a mailing ef e. 0. Box
(Egg; ?arkeeburg, 2?355, ehieh writee, inter elia;

lengwterm mureieg Gare ineeremce;

e, Amerieem Fi?eiity eempemee?ee ite egeete fer the
Sale ef i?e lengwierm mareieg eere ieeureaee by geyi?g
ef a? te sixty ef @Kemium fer mew

and a? ?e twenty gereent fer 

gag eilgrim gife Seegeey {?eilgrimg} ie a
eer?ifieete ef eetheriiy; eiih 

ef geelever?; 

 



 

 

 

 

Penneylvania, which writes, inter nursing home

care insuraece.

11; On or about Segtember 15, 198?, Cannella entered
inte a General Agent?s Agreemeet with Pilgrim. A true and
coxrect cepy 0f the September 15, 198? ?eneyel Agent's Agreement
and supplementary materials complete? and submitted by Ceneella

to Pilgrim is attache? e3 Exhibit E,

12. Se or abeut Qacember 198? Cherry; as Preeideet

ef the Cherw?rittalee?reace entered inte a Sugervieieg

Ageet-?entzeci with 9ilgximj A tree en?ieerreet eegy ef'

the 198? Sagezvieiag Agent Cantreet ie

eifeehe? herete as Exhibit 

@ilgrim ite egente fer the eele ef its
lemgwterm nursing care insurance by peyiag ef up t0
sixty five GE gremiem fer new en? eerie

five fer renewal 

14. Pemn T?eety Eaeurence Cemgeny Treetygg ie a
lieenee? ieeurerf certifieete 0f eut?erity; with a
ef ?ehigh Street, Allentewa, 

whieh writee; iate: elie, iengwtezm nureieg eere i?eueeneeg

?eem Tzeety ite egeete fer the sale of
leng~te?m nureieg eere Ey geyieg ef
3? ie eighiy ef fer ?ew ea? a? te

tweety fee 

 

 

 

 

 

16. Ga or about Fabruary 29, 1988 Cherxy antered intm a
General Agent's Vested Commission Contract with Fenn Treaty. 
true and carrect aapy bf the 1988 General Agent?s Vestad

Commisaion Contract is attached hereta as Exhibit 

Provi?ers Fideli?y En$urance Company (?Providers?)
is a licensed ingurer, posse33i?g a certificate Of autharity,
with a business a?dress sf P. 0* Bax 1120, Elma Bell,
9e??sylvania 19?22* Fravi?ars gtepped writing langmterm gursing

hema c?verage in l?89.

is. United Security Asguxanca Insuraaca Campaay
(??nit??ig?curity?? is licenge? iagurarg?gcssessing a
Cartifi?a?e cf autherityf with a bugimesg a??rgsg cf 6?3 Charxy
Lame, Saudertan; which gritas, gg?gg 

la??~iazm marging heme cage imguganae?

l?m Unitg? Secugity campemsatas its agg?is 53: the gala
75f Eta l?ngmterm nursimg care insuramce by gaying Sammigsians sf
my tQ Sixty parcamt 6f premium far nay bagimass an? up t3

twegty peraa?? Ear renew?i buginegsg

agita? ?mezicam Ingmragce Camgaay {??nita?
gmeri?an?} is a liaansa? i?gureg, ya?aegsi?g a cgrtifisat? Sf
autharity, with a b?simesg @f 2%39 Earth Busk?ar
Emul?vay?f gag; Rag @axag, whic? writes, 

l?ngmterm margi?g 6&re jaguramge;

Smiie? ?mgziga? Eggara?ca ??m?aay C$mgaagatam its



far the Sale 3f its Eg?gwiazm gazsi?g Qars i?gura?ae ?g

 

 

 

 

 

 

yaying cemmissians af up to Sixty percent sf gaemium for

Raw business and up ta twenty gezcent far ranewal busi?eas.

22. American In?ependent Life Insurance Company
(?American :ndepen?ent") is a licensed insurer, possessimg a
certificate of authority, with a mailing a??xess Uf 9.0. Bax
6146?, King 0f Prussia, PA 19046, whi?h writes, 

lcng~term gursing hame care insuranaet

23. America? In?apem?ent campangates itg agaats far the
sala 9f its laag~term nursiag ?ara inaura?ce by paying
Gf?up ta sixty g?rcaat 8f premium is: new

bugi?egg; an? my ta twenty yercant far ranewal buginess?

24. America& E?guranca {?Amaricag
I?tegrity?} is a lice?ge? insarag; ??3gesg?ag a ?artifigatg 8f
authmzity; with a businegs ?ddresg 9f 23% Elgar, Twa ?a?n anter
Fl&zaf Phila?elghia; ?emn$yiv??i?f whiah wziia$i i?%ar 

l?agmtaxm ?urgiag care iasmramme.

25; Amaziaam integrity cmmyemg?tas i?g 3gants the
gala 3f itS loagwtezm nurging carg insuzagga by @ayimg
cammissi?gs @f mp t0 sixty ?ezca?t 3f gramium far ?ew

an? my ts twegty gazca?t fa: :emewal huginagsg

26? Amazica? Txavgliarg Life Insura?aa Csm?any
fravallerg?? is a i?guzerf a
agr?ifigaig @f amthariiy, with a busigegg a??zegg 8f 322$ Tiilmam
Erive; Bengaiem; i?i?r 

Caxg imggragaeg

 

1%

 

 

 

 

275 American Travellera compenaateg its agentg fax the
sale of itS lenguterm aursing care inguzance by paying
cammissions of up to fifty four percent of.premium far ?aw
business and up to twenty seven pexcent for renewal

business.

28, Cantinental Life insurance Company (?Cantinental?}
is a liaenaad insurer; peggesging a certificate of autherity,
with a busi?ess address Of 834? West Chester ?ikaf Upper Eaxby,
 whigh writasf tarm nursing sage

_i53urance;.

29, Cantimentai campansated its ag?ais fax the gala 0f
i?s la?g~tgrm murgi?g saza insuxa?ca?by payi?g c?mmigsie?s af my
i0 Sixty parge?t af.?remium f?r ?aw hugigass am? u? ta

twegty ?azce?t far raaewal busig?sgs

Katia?a: Saagrity Gamegal Imgura?ca Cmmgany 
is an insurar ngza?tly in liqui?a?iam by virtue Sf the Segiember

3??2 ?Xder @f Gamma?waalih Ccuxts

31? Pxiag ta agtagimg liqui?ati?m; wzs?e; i?teg

alia; langmtexm margigg gage imguramaas

32% Egg 33m?a?gate? i?g far the S?l? 3f itg la?g
term care insufa?$$ by gayimg ?Qmmisaiams a; ta gixiymfive
gezae?t 5f ?remium fa: ?aw ?ugimesg ?g ta iWE?iwai??

far re?ewai $33iagsg?

 

 

 

 

 

 

33? Warl? Life an? Health Insaxance Camgany {?World
Life"; is an insurer aurrently in liquidatian by virtua 5f ihe

Jaly 29, 1991 Qr?er of Commonwealth Ceurt.

34. Prior to entering liquidation, Werld Lifa wxote,

inter alia, nursing Gaye insurance.

35. Warld Life compensated i?s agents for the sale of
its igng~tazm nagging cage by paying cammisaiens 3f up
ta seveaty~five percent af premium fat new businesa am? u?

ta twaiva an? Snamhaif ?erca?t {12 1f2%} far ranawal businesg?

36$ 8% ax abQQt Juaa 34! 19?0; Qan?ella waat ta the
zesi?amga 3f Sg ?h$mag, yga: Qi? im?ivi?uai 
resides at lg? $al?ut Straai, Ag?yimemt Ewl??, Ki?ggtaa;

Fanmgyivamia 18?$?e

?t that timg Gamnellg ralate? ta MS: fhsmaa that he

saal? G?i?in fa: her marging ?are thraugh Pilgrim.

38. A: the iima Qf the maetimg with MS. Thamasf
Canmgii& @ag awarg ihai ag a??ii?ati?? far laggmterm ?agging aazg
caver?ge ha? hag? previausly submitta? ta $il?rim %y 
insgra?aa i3 Januazyrl?8?, an? ?hat Sai? aggliaati?? had

bee? zgjacte? by Pilgrimf

At Saga 39?? C??melia thai?a? ?gg
sigxaimze 33 aa a?pliC?ti?? inauzagcg wiih gilgrim;
a Seag?? separ&t% agglicaiia? i?guign?e with ??iia?

?meriga?g

 

 

 

 

 

 

40? In additian t0 taking the Pilgrim aad United
American applicaticns, Cannella teak thiee checks M33 Thamas
a ch?ck in the amaunt of $836.30 payable ts United American,
and two checka payable ta Pilgrim in the amouats of $953.41 and

$2;875.39 KESpectively.

?nite? American accepted Ms? Themaa? applicatiom

and a palicy wag late: issued.

7&2. Pilgrim decline? Ms? Thomaaita?plicatim? and issued
 3 zefun? aback; ?ate? Suly 1?96 i5 am?g?t 9f $3,828.86,

upayabla tG-?s, Thamag.

i?g @ilgrim fQEW?r?e? Themag? :efun? Cha?k ta

Sannallg wiih insiructia?g t3 ratuza it ?g Thamagg

3aly 2&5 lgg?g Saa?alla returne? ta ?gs Thamas?
ragi?emaa explai?a? ta he: ihat Pilgrim ?gslige? ha:
cavaxaga; am? that ha sgui? thaim aursimg ?ama caverage far her;

but that aha t3 firgi j?i? tha Ameyi?aa Sa?smmer ?lliancay

?Sg $mariaam ?anaumar Aliia?ca was gm iagarggrata?
ragtity thzaugh whiah guzgiag Qar? with Umita?

Seamzity was m??g avaiiabla t3 xegide?ig Qf Csmmanwgalth?

468 Ca??alia ragg?$en?ed is M85 Thsmag that it waul?
Ssgi $359?? ta j?i? ?ha Ameriga? Cansumer ?llia?gg, am? 
igak Egg fh?mag i? amgugt 3f gi?g?g payable ?g

gmagisaa C$?Sumeg 

 

 

 

 

 

 

mugw

47, Cannelia also tol? Ms. Thomas that the nuraing home
caveraga wguld be ebtaimed thrcugh Unite? Security an? tha scat

0f coverage would ha $5,9?9?55.

48. Canmella instructed Ms. Thomas t0 em?orse the
?i1grim refum? Check aver to him; which ska did, and toqk yet

another Check from Ms; Thamas in the amaunt of 

&t the Jaly 28, 1998 mee?ing, Ca?nalla teak an
apylicatisg for asverage with United Security Exam Ms. Thomas, A
atrue the 331? 28, l9?$ ayplicatioa ta waited

?Sacazity :3 hazeta as Exhibit 

At the 33mg maeti?g, Cannalla taak a separaie
a??1i$??ian Maw @hsmag ta amazican gi?elityg A igae and

garregt sayy 0f guly 28; 199% aggli?atiaa i9 Amarieaa Ei?elity'

i3 at?aaha? hazaie as Exhibit :5

513 ??a?nella alga taak a chagk ?29m MS, Thgmas im the

am?uat of ?ayabla ta Ame:ic&? gi?elity?

52? Sa?aalia subaitte? iha a??iicati$? ta ?mezicag
Fi?eiity w?iah gart?aye? a ?iffeze?t gyemiumaamguat iham that
whi?h he calleata?y basa? ugaa ihe regeivg? by the

samgamy.

53$ ?n ?ugmgt Ca?aalla again Vigita? T??mag
?i ha: regi??m??g am? ygg?egte? ih?t SEQ yrgvi?e amethe: chaak

is Amayica? Fi?glity in tha amauai @f 

 

 

 

 

 

 

54. On August 4, 1990, Cannella again visited Ms.
Thomas and requested that she provide another check payable to
American Fidelity in the amount of 

55. On August a. 1990, Cannella again visited Ms.
Thomas and, at the request of Cannella. she voided the August 1,
1990 check, and provided a substitute check in the amount of
$2,961.30.

56. On or about September 14, 1990, American Fidelity
declined coverage for Ms. Thomas, and issued Ms. Thomas a refund

check in the amount of $4,130.

57. On December 11, 1992, United Security issued a

refund check to Ms. Thomas in the amount of $2,120.75 to reflect

a refund of the July 28, 1990 check made payable to United
Security.

58. The United Security refund check was provided to

the Insurance Department, which delivered it to Ms.

Thomas.

59. The Thomas refund check from Pilgrim and the United
Security refund checks were deposited into a bank account in the
name of Community Health Care Services with Provident National

Bank, and the proceeds have never been returned to Ms. Thomas.

60. Ms. Dorothea Stetler is a 79 year old individual

who resides at 6725 Ridge Avenue, Apartment 303, Philadelphia,

19128.

-11-

 

 

 

 

 

61? On 0: about January 15, 1?85, Ms. stetler purchase?
a term nursing care policy from Penn Treaty, and at that

time pravided a premium payment 0f 

62. Ms. Stetler aubgequently rexewed her coverage with
Pa?n Treaty an or about Secembar lg, 1986, agd at that time

prsvided a premium payment of $543.80.

63* Ga ax absut Segtembez 25; ?98? Cagnella teak an
agglica?iam f0: tarm nur?iag car? caverag? through ?ilgrim,
an? a pramium ch&?k in the ama??t'sf $15534??5 ?33m.MSt Statlar?
. 3 ?rue and coxxect Sa?tgmeK 2E, $98?-a?plisatig? ?g

attaahe? 38 Exhibit 3.

Qm ?r abaat Gatoba: S, 1?88 gs. Statia: {a??wad her

Qavaxaga thraagh Pilgrim am? yai? a yramiam 0f $1E?3?g??g

$3 $3 abaat 3&1? 2Q, l?8? Ca?meiia wa?t ta 
Stailer?s re$i?a?ca he: that @ilgrim was having gamblemg

wag ?at payiag glaimg;

66% %t the tima 9f ?he Suly l?8? mgatimgg Caamella
ta Ms: Statiex that Sag Qurahage la?g term aarsi?g

cage iagmra?ae Frgvidaxa ?i?glity:

gt ?ha time 3f the $uly 23; 198% maetiggf Caa?ella
iagk a premiu? shegk i? the amaan? @f gram.%sg Sietl?r

far Csverage with ?ravi?erg Fi?aliiyg

68%. 83 a: abaai 3; Eg?gg G??mglla 

thai Ega Siatie: ?gr Pravi?azg Fi?aliiy mayarage $iih



 

 

 

 

 

long term nursing care insurance thrmugh 

At the time of th@ ?avember~3, 1989 
rewommendatian, Cagnella task a check in the ameunt 0f $2,152.49

fram Ms. Stetler.

78. On or absut August 9, 19%0, Cannella 
Ms. Stetler that she replace her NSG caverage with term

nursi?g gate thraugh Pilgrim?

At the t?me 9f the Augast 9, 1990 Pilgrim
res?mmgadatia?g Canmalla'tgak a check in the amaunt sf 

?fzm? S?atlars

Ga ?r abgut March 8, lggl; Qamnalla yacamme??e? ta
M38 gtatlar that She replace the Pilgrim a?verage with 133g t?rm

marging ?aze insuramca thxamgh ?ena ?reatyg

In salicitimg iha ?enm fxeaty a?pli?atimg fxam 
Sta?lar; Ca?nalia usa? a erm enti?la? ?C?mm??wealih ?gemsy 
Imauxanca @raggam Sff?re? Ratirad State Em?lay$es i3 
1?9l Eazglimemt? E?xallmg?? Farm?}g A iraa 33$ g?rract

ca@y 3f tha e?zaiimeai fazm iS atiaahgd harata as Exhibit ?g

Ia relian?a ihg :9p388522a?iga3 m&?a by
Samgalla ag? iggl E?i?llm??t anm; Sigilar ?r?vi?e? a
Sh??k ig?t?e amngt 3f ma?a gayabla is the

?gen?y; E??g

Eggaty galigy ??2232?2;

with a& affe?iive ?ata Qf Eafch i??ig ?g M33 St?iigz?

?13m

 

 

 

 

 

 

?69 On St about April 10; Gannella obtaine? an
applicat?og far loag~term nursing iasuramce through American
Fidelity fram Dgrathy 3* Kuryloski {?Kuryloski a?plication?}, a
63 year al? individu?l who resides at 1004 Calm Meeting Place

Rcad, Coatesville, 19320.

In saliciting Ms. Kurylaski, Cannella use& an
advartising document extitled the ?Commonwealth Agency 
I?surance ?regram foere? Retired State Emplayees i? ?eam$ylvania
1991 Enrollmant? {?1991 Form?). a true and marrect

cepy Qf the 1991 Enrollment Farm i3 attached berets as Exhibit L.

1m reliange mg ?ha regrase?tatiams 9f 
tha 1??1 Farm, M39 Kurylagki gravi?a? G?mnalla with a

Chaak in tha amaunt 0f $1,535932!

79* an er ahaut Ju?e Amari?aa Fi?ality iggae?

g?li?y $95368 t9 Kuryiaski.

?n 0r abgut Augugt Camgeila t?mk
far gurgi?g a?ra ingugamce with ?mariaam
Ei?ali?y from Segrge 9g aa? Esther Rg Staa?e?mayer (?Stau?g?mayer
a??licatia??}; i?divi?uals gasi?e at 5 Ravare gaa?, Berwym;
$8?a3ylva?ia l?322? G?azga G9 S?au?ammayex i3 y?ar$ Gl? an?

Siam?e?m?ygr i3 ?4 year? 61$;

al? ?t iha timg 3f ihe gugagi l??1 
tha Siau?g??ay?zs ha? Zengwiazm sara cgveraga i2 fgxaa @ith
@i?grim a3 iha :eault 3f Piigrimga acgeg?a??a $5 iha
St?u?enmayezgg Sa?tembez Apgligatigg gar Eagura?3?;
wzi?iag ?g ?5gi @epiga?

wig?

 

 

 

 

 

 

 

82. Baring the CQurse 0f soliciting the Staudemmayers,
Cannella used an advertising document entitle? ?Gammamwealth
Aga?cy Insurance Program Offeraa Retired State Emplayees in
19?1 Enrollment? (?1991 Enrollment Form?). A true

and correct copy of the 1991 Enrollment Farm is attached hereto

as Exhibit M.

83. During tha couxse 0f aoliciting the Stau?g?mayers,
Ca?nella represented that ?ilgrim was a poor campany ?nd that

Amarican Fi?$lity was a bettsr cam?a?yg

gating the mauzse_0f gglicitimg the Staudagmayezs*
a??licatiamg, ?anmeila represgnte? that he was agsaciated with

the retired State amplayeas,

85g 1% ze?iange ups? th? regf?ge?tatigng of Can?ella
an? the 39?: aaralimg?t farm; the yrsvi?e? Cana?lla
with a pr?mium shack in tha amgunt af $3g3?9?S?f made gayable ta

later detasite? by Cammgawaalth Agemsy, Kati

86. an a: abaut actabat 1, &merican?Fi?ality
iggue? ggiigieg an? ??6?88 ta the Stau?ammayergg Tgue an?

cartagt smgias @f tha gai?si?g $3 ?aliveyg? ta the Stau?a?mayars

azg att?che? a3 Exhibits 3 and 

Subsggua?tiy! $3 g: abagt gavembar the
Stag?emwayers t? g?acgi tha p?li?igs isgua? by gmezia&?
V?i?giity ag? ta abiaig a rgfg?? at th& ytemium gai?; but ware

i?fgtme? by gmgtisan Fi?elity that their :ggaagt waal? ?at ta

?agaza?g

mgg?

 

 

 

 

 

 

88? an 5r about March 22, 199:, Cannella went ta the
resi?ence of Elizabeth Zeigler! an 83 yea? old individual wha
resides at 2931 Hillside Raa?, Braamall, 19008; t0
sell a longeterm nursing care ins?rance poligy ?23m American

Fidelity.

89* At the time of the March 22, 19%; meati?g, MS.

Zeigler had long?term nagging gaverage i3 farce thtaugh 9ilgrim.

98. The coverage thraugh ?ilgxim ha? regulted a
 ea 5r abaut May an? wag in effa?t-
_Iib? A true aha copy.gf.tha May
?if ?gpiic?ii?n ta Filgrim and the chicy iggue? by @ilgzim

is attaahe? as Exhibit 

g1! Buri?g tha somrsa mf his Margh 22; Egg: Salgs
?zaga?iatiaa ?e Ms. Zeiglar, Sangella utilize? gm a?vertisiug?
?scumem? en?itl?d ?Gamma?wealth ?gancy Insurance ?rsgram
?ff?re? Ratira? Staie i3 Pa??gylva?ia l??l
Enrellment FarmHE, tzug Sargect ?Q?y Qf

tha lgg; EaxallmEQt Eaz? is attache? herata as Exhibit 

Duri?g aha CQurSe cf big salgg pregantatica t3 
Zeiglarg Camaalia rayresea?e? that the ig?gwiezm hame
i?sura?cg ha was @ff??i?g was gram? jagura?e?g?that tiara was a
iimita? avail&bility far ?mrallmantg that tha $83 bei?g
aff?rg? fa: zetir?? Si?ie i?ach?y?g a?d that thara 3%

gremaxigiimg ?gm?itiam Eimita?i??g SQ tha p?li?yk

?3g ?ei&ila? jg ii?
gz??gdi?g garagxagh were ii??g aa? wagg intan?a? i3 ig?an

Wig?

 

 

 

NW 

 

 



 

Ms: Zeigler ta Qurchasa the American Fi?elity policy which

Cagnella was selliag.

94. Durimg the course of his sales presentation,?
Cannella reprasented that American Fidality was rated as an 
rate? company by A. Begt and that her than current insurer,

Pilgrim, was met financially sound.

At the time 0f the meeting with Ms. Zeigler,

Ameriaan Fidelity was mat an rate? campany by Best?

gg? Cannella alas represe?te? ta Mas Zeiglgr that the

.Ameri8&? Fi?elity palicy wamid net be effeetive until May 1, Egg;

so 53 ?g avei? ?u?licatiaa 35 ha: axigti?g savagaga with ?ilgrim*

g7; ??Q??lla instrugt?? Ms; Eaiglgr ta mat pay her

Pilgrim pgamium whg? it cama ?ue fax yenamalg

Ea rali&aae 63 Camneiia?g regregantatig?g $35 tha
lg?l Emrallme?t Farm; M83 Zaigiar prcvi?a? Cannelia with 3 aheak
ia the amaumt Sf gayabla is Inc:

aa? gigme? an far i?sura?ag$

?mericag Fi?aiity subggquaitly isgma? a gaiicy t3
M39 Zeigler? irua an? serreat gag? @f the pglisy, ?g ?elivara?

t? Egg ieigleg; 13 ?iiachad Egretg a3 Ex?ihi? E3

Egg; :3 gagast l??lf Mg? zaigler amazica?
Fi?ality i3 :aquegt Ca?aalla?ia? @f i?e g?liay ag? a sf

ihg gzemium ihera??g ?awavgrf ?mayiga? Ei??liiy Eafuse? ta

he?gr the :egaastg

%1?m

 

 

 

 

 

 

 

 

101. On er abcut May 19; 1991, Timothy Ju?sem
{"3udsen"), an agent.selicitimg en behalf 0f Pilgrim went ta Ms?

Zeigler's residence far the ?urpase sf selling lengwterm Bursing

care insurance to Ms. Zaigler.

102. Zeiglez related is Sudson thai she ha? coverage

thxaugh American Fidelity.

103. Judsmn represantad ta Ms, Zeigle: that he wauld be
able t0 abtain a refund of th? premium pai? by MS. Zeiglar t0
American Fi?elity; amd praaeeded t0 camplata an applicatian t?
Filgrim an behalf Qf Ms. Zeigler. A true an? SGrrect cagy of MS:

Zeigler?g gpglicatioa is Filgrim is atiache? a3 Exhibit 8%

At tha May 1991 meeti?g; Ju?3?? ?aak a gzemium

Check ?33m Zgigler in tha ameu?t Sf 

Egg, Piigrim isgu?? Msi z?igle: palicy mumbgr SECS

2131891; with a? 13338 ?ata 3f gay i3; 

1G6. Mag late: Seugh? a ?g pxemium
pai? tg yilgrim aa? a camaall?tiaa @f the yaiisy i$gua? by it;

hswever; ?iigrim reigsa? i3 baggy thega zagm?gtss

?sg Egigi?r ?aeg Curra?tiy hava ia?gwiazm

gurgigg Sate C??azagas

3&8? at gb?mt ganuary 8; l??2g t$9k ax

a??li?aiiag fat Ea?gwi?im gagging h?mg gaverage fxam Ezizabei?



fagiiaga {Ryaglia?g a??li?aii?n?}? a ?9 gag: im?ivi?u?i 

$3



Q?i?gg at 22? ?xgagwa?? $3aaeg Eri?ggviliei 

?3

 

 

 

 

 

 



A true and carract cepy Qf the apylicatiem is attashe?

berets as Exhibit Tg

109. In soliciting the Vagliano agplicatian, Cannella
use? a3 advertising dosament entitled ?CGmmonwealth Agency, Inc.
Serving Retira? State Employees l9?2? {"1992

Form?)? A true and carr?ct copy 0f the 19?2 Entallment Form is

attached as Exhibit U.

li?i in reliance an the {egresa?tationg sf Cannella an?
tha 1??2 Farm! MS. Vagliann yravi?ad Ca??alla with a ?remium
Ch?Ck in tha ameunt mf 33,98885?, payable to Cammoawaalth Agency,

tg tha gtemium ?ne Gm ih? caverageg

111? Sn Qt abmut Se?tember 21; 1??23 gmari?a? Ei?elity

issue? a paiicy t3 Vaglian?.

112g ?g gt abaut Eatruaty E?f 1??23 Shatzy 
mat with Aibert E, aa? Ramhaal ?g Egtimg (?Eptimg?;, individualg
zesi?a at Kirkwes? Avenue; Philadelghiag 
71?:11; far tha ?ut?oge ?f agiliag th?m la?g?term mugging Sara
insurance thraugh amerisam Fi??lity? ?lbatt E, Egtimg i3 83

yaata af ag? an? Rachael Egtigg :3 8% yeara Qf age;

:13, At the tim% 9f tba selicitati?? ty Chazty 
Cag?eiia; ih? E?ti?gs ?ttSi?g cata i3
f?zsa gitt ?iigtim as th& result Qf g?liaies #1121?91 5nd 2:31??1

iggug? by Piigtim ?g ?ay 2; l??ig

zz?a Kg saiisiting t?g ?matiia? yi?e?ity gsli?y;

?a?ggiia ag? C??ffy uge? a3 a?vertigi?g ?a?gme?t Extitla?

Wig?

 

 

 

 

fServing Retired State Employees (?1992 Form"). A true and
correct copy of the 1992 Form is attached as Exhibit v.

115. In soliciting the American Fidelity coverage,
Cherry and Cannella represented to the Eptings that they would be

purchasing group insurance.

116. In reliance on the representations of Cannella and
Cherry, and the 1992 Form, the Eptings gave Cannella and Cherry
a premium check in the amount of $8,135.00, payable to

Commonwealth Agency to reflect the premium due on the coverage.

11?. American Fidelity subsequently issued to the
Eptings long-term nursing coverage policies #07923 and #07924,
with an effective date of May 1, 1992.

118. On or about February 20, 1992, and subsequent to
the receipt of the American Fidelity policies, the Eptings
contacted American Fidelity and requested the cancellation of
their policies, and a refund of the premium paid; however,

American Fidelity declined to honor this request.

119. Esther I. Ross is an individual, 79 years of age
who resides at 523 Sharpless Avenue, West Chester, 

19382.

120. On July 22, 1992, Ms. Rose purchased long term
nursing care coverage from Penn Treaty, and paid $4,193.00 in

premium.?

121. The coverage purchased by Ms. Rose was effective

through at least June 15, 1993.

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122. On or about September 4, 1992, Ms. Ross was
solicited by Cherry and Cannella for the purchase of long term

nursing care coverage through American Fidelity.

123. At the time of the September 4, 1992 solicitation,
Cherry and Cannella represented to Ms. Rose that they were
investigating agents of Penn Treaty, and that they would assist
Ms. Ross in obtaining a refund of the premium paid to Penn
Treaty.

124. By letter dated September 26, 1992, a demand for

the ref?nd of the premium paid by Ms. Rose was made and sent to

Penn Treaty.

125. The September 26, 1992 letter was prepared by
Cherry and Cannella, who obtained the signature of Ms. Rose, upon
the representations of Cherry and Cannella that the letter would

prompt a refund from Penn Treaty.

126. On or about August 25, 1992, American Life and
Casualty Insurance Company ("American Life") filed an Application
for Resident Agent License for Cherry ("American Life
Application"). A true and correct copy of the American Life
Application is attached as Exhibit w.

127. On or about August 28, 1992, the American Life
Application was rejected by the Insurance Department, and

Returned to American Life.

128. On August 14, 1992, Cherry took an annuity

application to American Life from Isabelle Hill, an 81 year old

-21-

 

 

 

 

 

 

individual who resides at 226 Ridge Street, Spring City,
19475, and submitted the application to American

Life. A true and correct copy of the annuity application is
attached as Exhibit X.

129. On August 14, 1992, Cherry took two annuity
applications to American Life on behalf of Ralph L. and Laura C.
Amsler, 1050 W. Bridge street, Phoenixville, 19460
and submitted the applications to American Life. Ralph L. and
Laura C. Amsler are 91 years of age and 79 years of age,
respectively. A true and correct copy of the annuity

applications are attached as Exhibit Y.

130. On August 14, 1992, Cherry submitted an annuity
application to American Life on behalf of Sandra Zentz, an
individual who is 52 years of age and has a mailing address of
8.0. Box 182, Williamsburg, A true and correct

copy of the annuity application is attached as Exhibit 2.

131. On August 14, 1992. Cherry submitted an annuity
application to American Life for Patricia Gahagan, an individual
who is 49 years of age, who resides at 226 Ridge Street, Spring
City, 

132. Because the annuity applications referred to in
paragraphs 128?131 above were submitted without Cherry?s having
proper licensing and the legal authority to do so, American Life
contacted each of the applicants, who in turn determined to

cancel their application.

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133. American Life, in response to the request of the
applicants, cancelled the annuity applications and returned the

premium to each applicant.

134. On or about July 31, 1991, Cherry took an
application for long term nursing care insurance on behalf of
American Fidelity from Ms. Mildred S. Ruth (?Ruth Application"),
aL71 year old individual who resides at 666 Club Drive,

Allentown, 

135. At the time of the meeting, Ms. Ruth had coverage
through AMEX Life Insurance Company which coverage was
in effect until at least September 1, 1991.

136. At the time of the July 31, 1991 meeting, Cherry
represented to Ms. Ruth that he represented the Commonwealth
Agency for Retired State Employees and that the insurance which

he was selling was endorsed by the Allentown Teacher's

Association.

137. In soliciting the American Fidelity coverage,
Cherry utilized an advertising document entitled "Commonwealth
Agency Insurance Program Offered Retired State Employees in
- 1991 Enrollment" ("1991 Enrollment Form"). A true

and correct copy of the 1991 Enrollment Form is attached hereto
as Exhibit AA.

138. In reliance on the representations of Cherry and

the 1991 Enrollment form, Ms. Ruth provided a premium check made

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we

 

 

 

payable t0 the Commonwealth Agency, Ene., in the ameunt of

$3,500,00g

139. Cherry remitted premium monies taken from Ms. Ruth
to American Fidelity aiong with the request that the issuance

?ate be made effective September 1, 1991?

146. American Fidelity issued policy mumber 06143 to Me.

Ruth with ea effective ?ate ef geptember 1, legit

34:. By certified letter ef August g: 199:, which

emerieen Fi?elity Eeliey; Me. Ruth requeste? frem

h??ertygieeneeiletiee ef the American Fi?elity peliey; 

retuee ef the eremium peie,

lezg ?e er ?eiebee 3, lgelg Ruth maile? 
eertifie? letter ?e Cherry she eeughi e? the

eeliey eed ef ihe ereeium eei?.

143$ Meg Ruth alee ceetaeted Cherry by ?e seek
ef the eeliey, and reture ef the premiume paid, ee?
wee falsely ?el? ey ?hezry that ?he be

ee he: he? been ie a except

i?eg 2y letter ?ete? lggif 
Ei?elity eetifie? ?eg Ruth that her zefee? ef $3f?ee by way ef

eheek he? fereer?e? Ee 

lee; ietier Segeemee: Zlg?1??2, 
Ei?eiiey eetifie? the ehee 
Ei?e?iiy eheei eegig ie tee ef
ngg?eg ee? ?e Eeg Reehg

mg?m

 

 

WWRW

 

 

 

 

146; On Q: about catcher l, 1990, Cherry teak an
apglicatian far long term nursing care insuranca with Fawn Treaty
fram Ms. C. Walah (?Walsh 84 y?ar Ola
indivi?ual, residing at 149 River Street, Forty fort;



147* Cherzy took a pramium check, Qumber 834, dated
?Oct. 2, 1990,? payable ta Commonwealth Agency, Inst, im the?

3f fram Ms. walsh t0 reflect the premium ?ue on

the cavaragag

Egg. an ax abogt ?a?gber 2g Ms. walSh-matified

Rgg?ayg fact Sf her ?esixe ta withdraw hex

a??licatian an? hat integt ta stag ?ayme?t of bar Ch??k;

l?gg an Qatgber 2, 199%; Ms? Walsh ina?vartagtly 

paymeai tha wrogg ?hack; ahgck samba: 833%

15%. $3 ax abaut ?c?abe: g; lgg?f shaak number
834 wag ?g??sita? ta ?G3w28$m? wi?h Prsvide?t Eatignal

Bank; an aacau?t sf Che?ry an? Camme?wealih Aganmyg 

ESEE Sm GE ?b?ut ?gvember 28; l9?$t Mg; waigh; ?hxaugh
he: atiazney, farwar?a? lethars ta Cammenwealth ggancy; :35, 33$

t?e E?gurange ?agaztme?t; reggeg?i?g a Eafu?? @f Walghig msgeyg

l?2? a: ??aut July 12; 1%?13 gha?ry fazway?a? 3
Shack glgi? yayable t?e Cammanweai??_?ga?gyg ii 

a??amt Sf $2;62?586 :8 Egg ?alshg

 

 

 

 

 

 

MW

153% Ga J?ly 10; 1988, Cannella said to Me, Anna 
Weir, an i?dividual 83 years 0f age; who resides at 206%
Bellemead Ave?ue, Havertown, 19083, long~term
nursing care insurance with Pilgrim through policies 

an? with coverage effective July 10; 3989,

154. On Octaber 19, 1988, Cannella Sole Ms. Weir leng
term care imsera?ce with.Werld Life effective through yolicy

eweoagzs?za?, with ceverage en?ing Octeber 29, 1989?

155? 0n er abeut Rovember 1988f Cannella said Ms.
Weir leng~tetm_neteing care insurance with Unite? Securiiy

through eeliey 2&84m3??w91?8? with coverage en?ieg ?evembe: if
i?8?g

:56? Gm ?evember 1?88g Cameelle eel? ?eg weix 19mg
?erm merging Ca?e wit? American Ig?egee?emi 
Cemee?y effective threegh E?cg?l?e? and 0??88%269, with

caverage threugh Eevember 28g 

15?. Ga er abeut ?ctebei 9; 1??Qg Cherey en? Ceneelle
ieek an egglicatie? fiem Meg weig fez leegwterm egreieg eare

ineeienee with Amezicen Fi?elityk

1&8; ?e ef the Beteber ?g ?eg ?eiz
ha? ieegmiezm eerei?g cage ?e effee? ihreug? @ee?

Tf??iyg ?ii?rim; @ezl? gifef ??iie? Seeuxityg

i??s $he ?erl? Life sevegege ef gee weir was the regal:

ef Sf Eeiz by ee e: ebemi ?exeh 22;

wgge

 

 

 

 

 

 

 

1990, which resulted in the issuance of World Life policy
3?0009353510.

160. On or about July 30. 1990, Cannella took an
application for long-term nursing care coverage with Pilgrim from

Ms. Weir and at that time Ms. Weir provided a check in the amount
of $3,036.00.

161. Pilgrim returned the July 30, 1990 application to
Cannella with instructions to obtain the signature of the

insured, and to return the application to Pilgrim.

162. Pilgrim subsequently provided coverage to Ms. Weir
through policies succ 1052990, ANCR 1052990 and HIP1022990, with
coverage effective through July 31, 1991.

163. Cannella never returned the July 30, 1990
application to Pilgrim.

164. On or about October 26, 1990, Pilgrim issued a
check in the amount of $3,086.00 to reflect a refund of the

premium paid on the above?referenced policies.

165. The United Security coverage of Ms. Weir was the
result of policy number 2?47-4600-13679 issued on January 15,

1990 with a renewal date of January 15, 1991.

166. At the October 9, 1990 meeting, Cherry took an

application for Insurance with American Fidelity from Ms. Weir.

167. At the time of the October 9, 1990 meeting, Ms.
Weir provided a premium check, dated October 9, 1990, in the

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ameuet of to reflect the premium.due an the sewerage.

168: MS. Weir was issue? palicy number 03853 by Ameticag

Fi?elity with coverage effective October 9, 1990.

1:69o Subseqeent to the Gctober 1998 apglieatien, MS.
Weir informed Caneelle Of her deeire to cancel her ceverage due

to the high cost of the insurance.

178. Cagnelle falsely te MS. Wei: that the

_eeuld met eaecel the eeverage ee she-bet been elaced_in gteupg

tvl? at this a refuge

0f the pate te Cemmenweelth Ageney, Eneg

t?ze ?ea weir ate net mete ?eyment te Fi?elity

Qf the etemiem due em peliey 838?3?

l?3? ?e er ebeet 2E, Cterty ebteiee? at
?gelieetiee fet thteugh Fi?elity ef Me. tetra

A ttee ee? eetteet eepy ef the 23f igeg egplieatiee it

etteehe? as Exhibit 33;

in the epglieetiee ef ?ei @Eifg Chetty
uee? en e?eettieieg entitte? the Ageecy 
?tegtem Qtfete? Retiree State i? 
gee: Eeteilmeet? eetellment fetmtit tree ee? Getteet

eety ef the get: fete i3 etteete? tetete ee Exhibit S?g

t?59 At the time that he teat the Shetty

.etee teet get wettge ttemiet eteeti i? tte ef tegttegg?

egg?

 

 

 

 

yayable to Commonwealth Agency ta reflect the premium due an the

caverage.

176; Wairis December 5, 1991 chack was deposited ts
account 500w269w9 at Provident Natienal Bank on December 6, 1991,

an aacount maintai?ed by Cherry a?d Commamwealth Agancy; inc:

17?. Cherry provided Ms. Weir an umdate? American
Fidelity receipt acknawledging he: aa? yaymegt 3f

$?;190s50a

l?8, Sn January 28? weir was isgued Amarican

Fi?ality galiay aumber with an ?ffeative date of Samuary
25; 

$3 j?nuary 33, l??25 E?war? Fe?lsm, 
a Eisengg? agen? gf Pilgyimf regi?ing at 11?
whitamargh Raa?f Ar?marai S?ii?it?? 
a?taiged ihe apylicatisn 35 Ms? Wei: far purchaga af logg term

narsing Sage i?suzanae with Pilgrimk

:83. Q3 Jaguar? i?9af ganlan gsligitgd ih? writing
Qf a Statemg?t by Wait; regugsti?g rafun? 3f maney gai?
?m?rica? and acsugimg Can?ella 3f unlawful ca??uc?? A

tzua S?ziegt asgy @f Ja?u&zy 1??2 latter is attache?

?g Exhibit 

1839 Feala? t?a tgagsmitial sf 3aau&ry 

3??2 ta tha ?amasyivamia Insuxamcg ?$?arimagt?



 

 

 

 

 

182. On May a, 1992, American Fidelity refunded
$4,190.50 to Ms. Weir as the result of the efforts of the

Insurance Department.

133. On May a, 1992, Cherry wrote, and obtained Ms.
Weir's signature to a letter. A true and correct copy of the May

8, 1992 letter is attached as Exhibit EE.

184. On_or about November 1, 1990, Cherry and Cannella
solicited the application of Ms. 2. Frances Walker, an 81 year
old individual residing at 769 Laurel Lane, Wayne, 
19037, for the purchase of long~term nursing care insurance with
American Fidelity at a premium cost of $3,049.00. A true and

correct copy of the American Fidelity application is attached as
Exhibit FF.

185. At the time of the solicitation by Cannella and
cherry, Ms. Walker had coverage in effect with Pilgrim by virtue
of policy numbers SNCC1064789 and HNCR 1064739, which had been
previously solicited by Cannella on or about November 9, 1989. A
true and correct copy of the Pilgrim application for which the
policies were issued, is attached as Exhibit GG.

186. American Fidelity issued policy 04184 to Ms.

Walker, upon underwriting of November 27, 1990, with an effective

date of November 1. 1990.

187. Ms. Walker lapsed the aforementioned Pilgrim

coverage by failing to pay the renewal premium due Pilgrim.

-30-

 

 

 

 

 

 

188. The American Fi?elity application 0f November 1;

was axecuted by Cherry.

189. an or about Decembar 18, 1990,Cherry 32d Cannella
smlicite? the application 0f Ms. Leela N. Lewis (?Lawis
applicatiam"), an 89 year Old in?ividual regiding at Apartment
521, ?70 Welsh Road, Hu?timgdon Valley, 1?606 for
gurchase 3f lung term auzsing care insurance githugmericam
Fidelity: A trua aad correct csgy the Lewis applicatiag is

attacha? aw Exhibit BB.

190. At the time Qf tha Baaem?er S?lisitatimm,
ngig had iamgmtexm nursing care igsurana? in faraa with @an?
Traaty, threagh at leagt Suly if 19?l, by vigtue sf palisy ?umbar
Kg true an? cczgect cmyy cf P??n fraaiy gelicy iggue?

ta gawig is attashe? a3 Exhi?it Iig,

Euriag ihe ssligita?is? 9f M39 L?wig, ?h$zry am?
Canmeiia falgeiy reprgse?ta? ?hat ??mm Treaty mag in 

finangial gam?itiam waul? be gsi?g Gut 0f business?

i?2. at the time a5 tha Begem?ar i3, lgg? salicitatia?i
Cannella taak a ??emi?m Shack ?30m iewisf ?e?amber l8,
gayable ta Csmmagwaalth gge?cy, im the ?meuat Qf
i? zetgrn gravi?e? MS: gewis wi?h a reaaigt
aaknegla?gi?g he: ap?ii$aiie? an? gayme?t. A time carzaat

cagy Qf zecgi?t ig atta?ha? $3 Exhibit 33*

i?3g 3% a: ab?ut 2396; Egg aegis? ghagk wag
ta a ??tigaai B??k aga?unif Eg?wgz?w?f
C?ezry Ssmm?awealih ?geg?y; 

?33m

 

 

 

 

 

 

 

19%. American Fidelity issua? palisy 04428 t0 MS. Lewis,
effeciive Dacamber 18, 1990, which wag delivered is MS. Lewis by
United States mail in a Commonwealth Aga?cy, Inc? eavelcpe
bearing a January 18; 1991 postmark? A true and correct copy of

the ?olicy as delivered is Ms. Lewis is attached as Exhibit KK.

195; On or abcut March 9, 199l, Canmella solicited amd
obtaine? an application {?Snavely applicatism?) from MS: Ella H.
Snavely, a 93 year imdivi?ual resi?i?g at Apartmeat 
Brathrem Village; 3601 Lititz Park Callage, Lancaster; 17604
for longmterm nursing cara insuxanae with Amarican Fi?elity. A

txua Carr@ct Gf tha Sgavely agylicatiag i5 attache? as

EXhi?it Lg:

Lg?g ?g March 9; Ms? gmavely ?agging
aaz? agvezagg with Pena fxgaty i? Eff??t by viriua sf y?lisy

mumbe: am? 

l??g Snavely ba? made apglic&tiam f3: @em? Tzaaty
yalicy number 386439 an gyril 6; 1988 threugh Stave Millar; a

lica?ga? agent 3f Fagg Treaty;

l?aq Can??lla a?dfar Shaggy ha? @ravi?a? Smavaly

?andwzitta? ma?aa waz?igg Snavely mat i9 &ll0w Siav? Millar

i?tg he: hameg

l??g ?r ?ar?h is; l??lg Shariy ?ask a gremium
cheak, mumbgi 222; t3 gamma?weal?h Ea$? ?g t?a

amau?i 9f $3g?l?s?S frag Snavalyg

9432M

 

 

 

 

200* The March 18, l?91 premium check of Me. Snevely was
deepeeite? ie a Prevident Netionei Bank ea or

about March 21, 1991?

291. On Apxil 11, 1991, American Fi?elity issued policy

@5243 to Me. Seevely wi?h an effective date of Mexeh 9, 1991.

2G2. The applieatien of Me. Snavely had been eltezed so
as to reduce nursing care benefits en? add waiver ef premium



283. Sn er ebeut April 12; American Fi?elity
Cheek te Me; fer ef yeemiue

by eheek member 2?49 ie the ef 

23%? @e er ebeet 1e; leel, Ei?elity
eetitle? ef 
beerieg the eigeetere ef Meg 
eetee July 12! 199: by Sherry; A tree eereect

of the ie etteehe? as Exhibit eM?

Ge er @eieber 3; keel; Cherry eeve ee?
ee Fieelity he: 
end ef $3g3?ese3e tree ef the 

3, gee: ie eiteehe? as Exhibit ee?

2eeg Ge er ebeet leg gee}, 
by EeVie Se Eeeg, ?ee ef 
Beyer ?emehee! ef ef the ?eeth ef

ee Egei?

 

 

 

 

 

207. On or about December 12, 1991, American Fi?elity?
returned $941;46 to the estate ef MS, Seaeely as unearee?

premium.

208. an or about February 5, 1993, American Fidelity
issued a refue? te the estate of Ella Snaveiy in the amount of
$3,368.93, fellewing the intervention ef the 

:neureeae Bepartmeet.

gee. an er ebeet ?gril 18, 199:, Cennella teek an
_epyli?atien frem Heery_Ag ee? Anne {?Leu?enelegax
epglieetiee?}, in?iei?eele et Aeertmeet e, :9 earth 19th
Street, lele?, fer Eeegmiexm eereieg eere
with Fi?elity, Mr. wee yeeze

ef age and ?re. wee ?e yeere ef age; et the time ef

eeglieetiee.

glee Ge er eheut e?ril 3e; Fieeli?y
peliey nu?ber with em ef egril

18; geel, he Mr? eed Mrs? 

211? Se er ebee? May a; Eggif ie with the
?elivezy ef emerieae eieeli?y eeliey 35421 ?e Mr? ee? eze.
Zeeg preei?ee erg Mrei
geeleeme Leiierge A tree ee? eetreei ef the

?eleeme eetteg ie etieehe? ee Exhieit 

222% ?t the time ieek the ?i?elity
epylieetieeg ex; ee? ?ee; bee leeg ?eze eezeieg eeze

ie effeei @Eeetyg eiih ehzeegh ei

Wg?m

 

 

 

 

least November 1, 1991. True and correct copies of the

Laudenslagers' Penn Treaty policies are attached as Exhibit PP.

213. On or about June 22, 1990, Cannella.took an
Application for Insurance and a premium check in the amount of
$2,200.00 on behalf of United American from Anne Solodiak
{Solodiak application), a 78 year old individual who resides at
444 Gedie Street, Wilmington, Delaware 19805. A true and
correct copy of the Solodiak application is attached as Exhibit
00.

211. The Solodiak application was executed in the State

of Delaware.

215. Cannella was not licensed as an agent or broker in
the State of Delaware as of June 22, 1990, and has never been

licensed with the State of Delaware.

216. On or about September 18, 1990 United Security
determined to reject the Solodiak application, and refunded
$2,208.00 to Ms. Solodiak.

217. On or about February 9, 1993, Cherry met with
Eleanor Boger, an 87 year old individual, who resides at the
Presbyterian SeniorCare, Washington Division, 825 South Main

Street, Washington, 15301-6299.

218. At the time Cherry met with Ms. Boger, Cherry was

informed that Ms. Boger was mentally impaired; and not capable of

making an informed decision.

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219. Cherry, upon being so informed as previously
indicated, agreed to cooperate and assured the staff at
Presbyterian SeniorCare that he would not ask Ms. Boger to

execute anything.

220. On February 12, 1993 Cherry returned to Presbyterian
SeniorCare to see Ms. Boger claiming he had left something behind
during his previous visit, and was informed by the staff at
Presbyterian Seniorcare of their responsibility to protect
tenants like Ms. Boger.

221. Ms. Boger had previously had long-term nursing care
coverage through Pilgrim and Penn Treaty, and the Penn Treaty

coverage had resulted from applications and premiums taken by

subagents of Cherry.

222. Despite his assurances to the contrary, Cherry 
provided advertising material for coverage through American
Fidelity to Ms. Boger on or about February 12, 1993. A true and

correct copy of the advertising material is attached as Exhibit
RR.

223. On or about February 9, 1993 Cherry also took an
Application for Insurance with American Fidelity and a check in

the amount of $4,434.62 from Ms. Boger.

224. American Fidelity subsequently issued policy number

10346 to Ms. Boger with an effective date of February 9, 1993.

225. The 1991 Enrollment Form, 1992 Form, and the

Certificate of Welcome have never been submitted to the

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MW Wm

Department fer its aypreval an? have never been appreve? by the

Eegeriment.

?226. During the conduct of their Cannella,
Cherry and the Cemmonwealth Agency, Inc; regularly utilize a
document entitled ?Cextificete of Welcome?? True and correct

copies of certain of the Certificates of Weleeme are attached as

Exhibit SS.

22?. Cherry; ?ammelle aed Cemmoneealth Agency, Ina. have
_zeereited_en? used agents en?'eebere?ueere fer the 0f

'ee?ling 

228% In eelieitieg leegmtere eureieg eere end
with the keewie?ge eedXer eutheeity ef Cherryg ee?
Ine;g theix agents eed have

etiliee? the lee; Eerellmee: em? the :9e2 

22?; In eelieitieg Zengueere eezeieg eere ee?
eiih the em?fer eutheeity ef Sherry, Seene?le eed
lee?i their agents ee? have
fieeneiel eemditiee ef eemeetitere ee? the

ef eemeetieg egentee

g??g In leegwterm mereieg eere ee?
eith tee ee?fe: eeiheriiy ef Cheezyf ee?
eheir egeeie ee? 
eheeke ?zem getee?iel eeyeele ?e 

Zeea

 

 

 

 

 

 

 

231, In galici?ing longmterm marging cara insurance,
Cherry, Cannalla and ?he Agency, Inc. have utilize?

agents an? Subproducers do not possess the proper licensing

authority.

232. In-saliciting long~term nursing care insurance, an?
with the knowledge and/0r authority Gf Cherry, Ca?nella and
Commonwealth agency, 135., their agents subpre?ucers hava

migrepresented tha benefits agd caverage 0f the gelicies being

said,

233, In soliciting longmteym nursing care imsuzamce, and
I wi?h the knewle?ge an?/Qz autharity sf Charxy, Cannella 
Cammamwaaith ?gancy, inc,, their agenta Subgreduaers have
rgiarme? paliaieg beazi?g a gaiiay cav?: sheet emiitle?
?Qamm?nwealth Age?cy ggrvi?g Ratixa? State Em?igye$3 

?a?n3ylva?ia.3

$34. Em g?liai?i?g langmterm ?ursimg cara imsura?ga, an?
wi?h ihg knawle?ga am?far authariiy 0f Sherxy, Ca?mell? aa?
Csmmanwealih ?ge?sy, Emc,, ?hgir age?tg Subgr??usezg h?ve

S?i? ?uplisate gaverage ?g pezaa?g i3 axcags Qf ?g yaarg Gf age,

233, all Qf ihe fareg?ing ga?agra?h$ with t&a ?xaagtia?
$5 l?imi??, 12?m133 i??~182 agtabiish thai ?hargy, Caamaila

Camm?nwealth aga??y, EEC. hava vielatg? Seeii??g Efag??},

E?a?i3?, a??x?z Eiagglg} 35 th& Gf 3&1? 22, 

2&5, Ragwg the Qafai: Eggura?sa



 

 

 

236. All of the foregoing paragraphs with the exception
of 101-106, 126-133, and 179-182 establish that Cherry, Cannella
and Commonwealth Agency, Inc. have violated sections 633.1, 637,
and/or 638 of the Act of May 17, 1921, P.L. 789, No. 285, ?g
amended, known as the Insurance Department Act (40 P.S. 55233.1,
278).

237. Paragraphs 82, 86, 91, 99, 109. 114, 137, 174,
211, 226, 228, and 233 establish that Cherry, Cannella, and the
Commonwealth Agency, Inc. have violated Section 354 of the Act of
May 17, 1921, P.L. 682, No. 284 ?g amended, known as the

Insurance Company Law. {40 9.5. 5477(b1).

233. Paragraphs 77, 92, as, 91, 99, 109, 114, 137, 174,
211, 226, 228, and 233 establish that Cherry, Cannella and the
Commonwealth Agency, Inc. have violated sections 51.11_through

51.34 of Title 31 of the Code. 31 Pa. Code $51.11-
51.34.

239. Paragraphs 126?133 establish that Cherry has
violated section 604 of the Act of May 17, 1921, P.L. 789, as

amended, known as the Insurance Department Act (40 P.S. 5234).

Cannella and the Commonwealth Agency, Inc. are not worthy of
licensure within the meaning of Section 603 of the Act of May 17,

1921, P.L. 789, as amended, known as the Insurance Department

Act.

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240. All of the foregoing paragraphs establish that Cherrf



 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPLICABLE LAW

Based On the foxegaimg Factual Allegatians, it is
alleged that Respondents have violate? the following statutes and

regulaticns:

1. Act 0f May 1921, P.L. ?89, knowa as The

insurance Depar?mexi Act (40 P?s. g: 865.);
2. Act 0f June 22, 1931, F.L. 822 (40 9.3. ?483};

3. Th8 Ugfair Insura?ce Practices Act, Act of July 22,

19?4; Pei; 589 {40 P582 g3 saga).

Aci 3f May 1?213 682; 8S the

Emguranaa Samgamy gg 363$}
5* witlg 31; Chapiar $1 {31 @aa Ca?e ??Elgl gg segg)

sheul? @150 ha made ?6 the failawimg Staiuteg

aa? raguiatiamsz

1* gaminigtxativa Agga?y 2 Pa? 


2g Sagera: Rules Sf gami?ig?zaiiva gzactiaa aa?

Sage 

3g Rules ?f A?mi?igtzativg ?raa?i?a 

3; Fa? ?a?a ??5593w??g39

W?gw

 

 

 

 

 

 

 

 

PENALTEES

After the ProcedureS set forth herein, if the Insurance
Commissioner finds the Factual Allegations set forth herein to be
true and correct, and ?etermines that Resgond?ntg hava violated
any provision of Applicable Law, the'Insurance Cemmisgioner at

hex ?iscretion may impose any a: all of th? follcwing Penalties:

1, Far tach an? ?vety vimlatia? 9f the Act 05 May 17,
1921, ?89, No. 285, knowa as the In?uranc? Ba?artmemt Act
9,83 an ard?r revaking, susgan?img Qt rafusing
-tm renew the liaenses sf Reapon?emts, and/?x a panaity af 

far Bash an? every vislatiam th?xeaf;

2; Ear @a?h an? eveyy vialatimn Qf Secticn 3f tha
B?fait I?gura?ga ?racti?e$ act; ?at sf Sui? 22; Fag. 58%,

at} E?g a C?asa an? aegis: 

3a Fat gvety vialatia? Qf Sectimm 3 9f the
Safair Imgur?mae ?za?ti?ea Ast, gat of July 22; Egg. ?8?f
2&5 ??1131glg ?g Segg} at ar?ar ravokimg a??/ar

susgem?i?g tha licanses $5 Reg?cnde?ts aa?fat a caage ?asist

Qt?az,

Est east aa? ever? vialatian Sf tha U?fair
ingutanca Ptactigeg g?ti sf Suiy 22, 53%; ?at 235
??:2?iglg gt am as?az Qt rastitutiagf 
a3? ?11 fagg am? axgemgag ?ttgn?a?t ta ti? ?f
Qaagamgtg a??far tte ?egartmg?t ia Staking :agtituti?g by tha
?g?gamgtg a: ?e?attm$?t 3g ba?aif $5 gai?


m?i?

 

 

 

 

 

Wm

5. Fer eed every violetien of the Uefair
insurance Practices Act, Act ef July 22; 1974; Pan. 589; N3. 285
(40 P.S. ?ll?l.l e: egg.) an Order direc?ing the Department to
petitien the egyzopriate eeurt for the o: 

penalties under the statute.

6, Far each and every violation of the Act of May 
1921, P.L. 682, No; 284, an order revekieg, suependimg e:
refusing to renew the ef Reepee?eets; andfer penalty

0f for each and evezy Vielatien thereof;

ear each every vieletiee ef ?it1e Chapter
53f en erde: er refeeieg t0 the
license ef ee?fer fer $1,836 fee 

Vieletiee thezeef;

8% Fe: ee? every vieletiee ef by
the ?he ef ether

ee the eheele eetermiee 


$he ehell file eeittee te thie
Grieg ?e ghee within gee} ?eye ef the ?ete etetee en
eege ef teie Greera Seeh eheil egeeifieeily e?eit
e: ef the Feeteei hereie; ee? eke?
eethee?ieiiy ef the Exhibits ee? eet Eerie
tee feeie eteie tee eetiere ef lee 
if ee?fee ell feii ?e file ee
eiehie the 
the ef tee etieehee ee 

we?

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admitted, and the Znsuranca Ccmmissiener will issue an Grier

imposing pagalties as set forth herein.

Notice of thiS Or?er to Show Cause shall be given by the

Insurance ?epartmemt by forwarding a copy by first

C1383 mail t0

the Respondents named hereia, and by ?ublication in accordance

with 1 Pa. Ce?e ?35&105 and 31 Pa. Cede ?57.l.

 

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Da?uty Insu?anca CQmmiSS?gner

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