III v. Indiana Department of Insurance, Appellee-Respondent. (2025)

MEMORANDUM DECISION ON REHEARING

[1] The Indiana Department of Insurance (“the Department”) has filed a petition for rehearing from our memorandum decision in which we affirmed the revocation of Edwin J Larson, III's insurance license. See Larson v. Ind. Dep't of Ins., No. 24A-MI-2992 (Ind. Ct. App. Aug. 7, 2025) (mem.). In its petition, the Department asserts that we misidentified the statute governing State Farm's responsibility to report violations of its insurance producers such as Larson. In response, Larson agrees with the Department's assertion but still challenges our conclusion that State Farm's audit investigation report was admissible.

[2] Larson is a licensed insurance producer in Indiana, and State Farm is an insurer. See Ind. Code § 27-1-2-3(x) (2011) (defining “insurer”). As an insurer, State Farm must adhere to certain guidelines, one of which we misidentified in our memorandum decision. An insurer must notify the Commissioner within thirty days of the termination of the insurer's business relationship with an insurance producer if the reason for the termination is described in Section 27-1-15.6-12 or risk suspension or revocation of its certificate of authority. Ind. Code § 27-1-15.6-15(a)(1),¹ (f) (2001). In our original opinion, we misidentified the statute mandating State Farm's duty of reporting to the Commissioner as Indiana Code subsection 27-1-15.6-12(e). See Larson, No. 24A-MI-2992, at *3.

[3] Our misidentification, however, does not change our conclusion regarding the admission of Exhibit 1, which is State Farm's internal audit investigation report concerning Larson. As an insurer, State Farm must monitor and assess those selling insurance on its behalf in order to maintain its certificate of authority and therefore its business as a whole. Thus, records pertaining to such activities are part and parcel of State Farm's business. Here, the audit report is the summary of State Farm's assessment and investigation into Larson's activities following identification of potential statutory violations related to quoting activity and rate manipulation in Larson's office. It was created so that State Farm could assess Larson's actions, fully evaluate whether violations had occurred, and determine what, if any, action was required. As such, the report is part of State Farm's regularly conducted business activity. The Department's later request for State Farm's report and State Farm's duty to provide it, pursuant to Subsection 27-1-15.6-15(a), does not change the character of the report. Accordingly, Exhibit 1 was properly admitted.

[4] For all the reasons set forth in our original opinion, we find Larson did not satisfy his burden of demonstrating the invalidity of the agency's decision and therefore affirm the trial court's denial of Larson's petition for judicial review. Thus, while we grant this petition to address our misidentification of the pertinent statute, we confirm our original opinion.

FOOTNOTES

1.   Larson argues that the language of Subsection 27-1-15.6-15(a)(2), which requires an insurer to notify the Commissioner within thirty days of the termination of the insurer's business relationship with an insurance producer if an insurer knows the producer was found by a court, government body, or self-regulatory organization to have engaged in any activities described in Section 27-1-15.6-12, establishes that State Farm's report was prepared in anticipation of litigation. However, that subsection is not at work in this case. Rather, as we discuss, Subsection 27-1-15.6-15(a)(1) is the portion of the statute pertinent here.

Robb, Senior Judge.

Chief Judge Altice and Judge Bradford concur. Altice, C.J., and Bradford, J., concur.