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    Bankers Insurance criticized

    The Department of Insurance has filed a complaint against the company's board.

    By LUCY MORGAN

    © St. Petersburg Times, published March 30, 2001


    TALLAHASSEE -- Prominent Floridians on the board of St. Petersburg-based Bankers Insurance Co. should have done more to rein in executives who hired a private investigator to snoop on a state regulator, according to a complaint filed by the Department of Insurance.

    The complaint notes that recent statements made under oath by the directors -- former Gov. Wayne Mixson; former Insurance Commissioner Bill Gunter; former Sen. John Grant; and Dr. David Nye, a University of Florida professor -- indicate they did not pursue an independent investigation of other Bankers officials when the matter was brought to their attention.

    They relied instead on reports from their fellow directors, the same men accused of hiring a private investigator who illegally wiretapped regulator Kevin McCarty in the summer of 1995.

    That wiretapping incident and other work done by the investigator led the state to attempt to strip Bankers and its affiliated companies of the right to do business in Florida.

    The complaint criticizing the Bankers board was filed after the company's lawyers failed Thursday to block it. Administrative Law Judge Paul Michael Ruff also rejected the efforts of Barry Simon, a Washington attorney hired by Bankers, to paint officials with the state Department of Insurance as liars who should be sanctioned.

    Dexter Douglass, former general counsel for Gov. Lawton Chiles, was there to represent the outside directors.

    Douglass denounced the Insurance Department for damaging the reputations of respected members of the community by "dragging them into this."

    The individual directors are not accused of a crime and are not named as defendants in the action against the insurance company. William E. Williams, attorney for the state agency, said the state is not asking that they be removed from the board or banned from the insurance industry.

    The case against Bankers began in the summer of 1995 when telephone company employees discovered an illegal wiretap at the home of McCarty, a regulator for the Department of Insurance. The wiretap was traced to private detective Peter Rayner, who pleaded guilty to felony wiretap charges in federal court in 1996.

    Rayner later invoked his Fifth Amendment right against self-incrimination and refused to testify when called to a hearing by state regulators. Bankers went to court to block the state from taking action and kept the issue tied up in court for several years.

    Meanwhile, McCarty filed a civil suit against Bankers and collected $2.25-million. McCarty accused the company of invading his privacy and holding him up to ridicule by exposing the fact that he was a homosexual.

    The state has accused David Meehan, Robert G. Menke and Kris Delano, all Bankers officers, of participating in the decision to investigate McCarty's private life.

    The company officers say they did not know Rayner was installing a wiretap but merely wanted to find information on McCarty that would help them determine why insurance regulators were taking actions against the company.

    Williams said the action against Bankers is based on the need to keep regulators free to regulate businesses without fear that their private affairs will be exposed.

    The case against Bankers will be heard by Ruff at a hearing later this year.

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    From the Times state desk