vs. ) CASE NO. 80-1339
KENNETH P. CASEY, )
Respondent. )
Pursuant to notice an administrative hearing was held in this because before P. Michael Ruff, Hearing Officer for the Division of Administrative Hearings, in Pensacola, Florida, on March 5, 1981.
For Petitioner: Jon W. Searcy, Esquire
For Respondent: Antony E. Fiorentino, Esquire
The Petitioner, by an administrative complaint filed May 15, 1980, seeks to revoke the Respondent's license for the fitting and selling of hearing aids (certificate of registration number 346-04-69) for alleged violations of Chapter 468, Part II, Florida Statutes. Specifically, it is alleged in the fifteen count complaint that the Respondent: failed to specify on sales receipts for hearing aids sold to various customers the model and serial numbers of the hearing aids; that he took orders for hearing aids which were not delivered within the time promised; that he made representations that the customers would hear as well with the hearing aids as they did with the hearing testing machine; that he collected down payments on hearing aids from a number of customers and either never delivered the hearing aids in one case and in another failed to timely refund the purchase price; that he falsely represented to one customer that the customer would be deaf within six months if he didn't purchase another hearing aid. Additionally, the Respondent is charged with failing to inform certain customers that any complaint concerning hearing aids or guarantees therefor if not reconciled by the Respondent, could be directed to the hearing aid licensure office of the Petitioner; and, finally, that on two occasions he failed to include on receipts for purchased hearing aids the required disclaimer which states that the hearing aid would not restore normal hearing nor prevent further hearing loss.
The parties requested the benefit of a transcript of the proceedings and waived the thirty-day requirement for recommended order. After the transcript was ultimately filed the parties stipulated that the cause be held in abeyance until September 15, 1981. Pursuant to the parties' request, an extended briefing schedule was granted. The Petitioner presented eight witnesses and sixteen exhibits and the Respondent presented four witnesses and fifteen exhibits. All exhibits were admitted into evidence.
The Respondent, Kenneth P. Casey, holds license number 346-04-69 authorizing him to fit and sell hearing aids in Florida. Mr. Casey is fifty-two years of age and has been in the hearing aid sales and service business for approximately twenty-three years. He has never been involved in any legal altercations with the Petitioner. Mr. Casey has been the Beltone hearing aid dealer in the Pensacola area for a substantial period of time until approximately November of 1979.
On or about September 5, 1978, the Respondent sold to Mr. Henry Golden two hearing aids for the price of nine hundred twenty dollars. The Petitioner has alleged that, hen he sold the hearing aids to Mr. Golden, the Respondent promised him that he would hear as well with the hearing id as he did when he was connected to the "master testing machine" which determined the need for a hearing aid. Mr. Golden's own testimony, however, as corroborated by the Respondent's, established that the Respondent only told him that the hearing aids would perform as well as the testing machine "If they were made to the same specifications." The testimony of witness Behrends, the audiologist testifying on behalf of Petitioner, established the accuracy of the Respondent's statement and that generally hearing aids should perform as well as the testing machine if fitting and manufacture are correct. Witness Behrends amplified on this testimony by stating that fitting, tuning or "peaking-up" the performance of hearing aid sometimes takes as long as forty-five to ninety days during which time adjustments must typically be made. In any event, Mr. Golden was assured that his hearing aids would be delivered in approximately two to four weeks. In fact, however, it took six weeks to two months before the hearing aids arrived. Mr. Golden testified he could not hear any better with the hearing aids, so Mr. Casey returned them to the manufacturer to exchange for a new pair. Mr. Golden testified that Mr. Casey adjusted the hearing aids well and they fit well, but he was not satisfied with them and ultimately returned the hearing aids to Casey who returned his money in full. The Respondent did not charge Mr. Golden for the cost of ear molds or fitting the hearing aids. The Petitioner established, as indeed the Respondent acknowledged, that Casey failed to include the serial numbers and model numbers of the hearing aids on Mr. Golden's sales receipt.
The Respondent states that this was because the hearing aids were not in stock hen ordered since Beltone would only send them to him on C.O.D. basis. This basis of dealing with the Beltone Corporation resulted from Mr. Casey's poor financial condition and instances of his not paying Beltone promptly for hearing aids in the past. Mr. Golden also demonstrated in his testimony that the Respondent never did promise him that the hearing aids would prevent deafness.
There is no question, however, that the Respondent did not deliver the hearing aids when promised, although this was shown to be due to the poor payment record of the Respondent with the Beltone Corporation and its consequent reluctance to process orders until payment was received, rather than any intent by Casey to defraud the customer.
On June 22, 1977, the Respondent received a down payment of three hundred seventy dollars from Mr. M. P. Bryant for two hearing aids that were to be delivered to Mr. Bryant within four weeks. Mr. Bryant never received his hearing aids. The Respondent established in an unrefuted way that they were never received by Mr. Bryant because Beltone Corporation would not ship to the Respondent since his credit had been suspended with that supplier. The Respondent acknowledged that he had not timely returned Mr. Bryant's money because he had been attempting to sell a piece of property in order to raise the money to refund. Before he could accomplish this, a judgement against him was entered on behalf of Mr. Bryant. In this instance, again, the Respondent did not put the model and serial numbers of the hearing aids on Mr. Bryant's receipt because he did not have the hearing aids in his possession when the sale was made due to his bad credit relationship with Beltone Corporation.
On or about March 22, 1978, the Respondent sold a hearing aid to Robert Carr for the use of Mr. Carr's mother, Susie I. Carr. Her hearing had been tested by Mr. Behrends, the audiologist who testified on behalf of Petitioner, who had referred her to the Respondent for fitting of a hearing aid. On March 22, 1978, Mr. Carr gave a hundred dollar deposit to Mary Cobb who fitted hearing aids for Casey. The hearing aids were delivered on April 18, less than a month later. Mrs. Carr was unsatisfied with the performance of the hearing aids and so her son returned the aids to Mr. Casey on May 2, 1978, requesting a refund. Mrs. Carr did not seek to have the hearing aids adjusted or tuned for better performance prior to or turning them to the Respondent for a refund. It is significant that the contract that the Carr's entered into with the Respondent contained a provision that the hearing aid must be returned in three days in order for a refund to be received, but the Respondent ultimately refunded the money in full anyway, on August 7, 1978.
In the case of the contract between the Carr's and the Respondent, the serial number of the hearing aid was entered. The audiologist testifying for the Petitioner, Mr. Behrends, was familiar with the Carr's case and stated that with proper manufacture and proper tuning and adjustment the hearing aids should perform as well as the client was able to hear on the testing machine. Ms. Carr's audiogram chart reveals that she had a high-frequency hearing loss and Behrends would have recommended the type of ear mold made for her by Casey, which appeared to be appropriately manufactured.
Witness Mary Cobb worked for thirteen years with Mr. Casey as a licensed audiologist and was familiar with the Carr hearing aid purchase transaction, as well as Mr. Golden's problems. Mr. Golden came back a number of times for adjustment and still was not satisfied with his hearing aid and ultimately requested refund. This Petitioner's witness corroborated the Respondent's showing that financial problems in his business prevented prompt refunds in some cases and also resulted in failures to timely deliver hearing aids, rather than any intent on Casey's part to defraud customers. This directly resulted from Beltone's practice of sending his hearing aids C.O.D. instead of dealing with him "on account," with monthly invoicing, as they had in former times. Sometimes hearing aids were sent back to Beltone when Casey failed to pay C.O.D. charges. Ultimately, Ms. Cobb became the Beltone dealer approximately fifteen months prior to the hearing, since the franchise was taken away from Casey due to their financial altercations.
This witness also established that, although it is not always possible to have a person hear as well with a hearing aid as with a testing machine, that on some occasions the customers hear better with the hearing aids than with the machine.
On August 10, 1979, the Respondent sold a hearing aid to Ora Lee Johnson. Ms. Johnson testified for the Petitioner, and established that it took approximately five months to receive her hearing aid after that order date. During the interim, however, the Respondent lent her a hearing aid which she used satisfactorily until her's arrived. She had previously bought a hearing aid from the Respondent in 1975 and had been thoroughly satisfied. He had always effectively serviced her hearing aid without charge. He never made any representation to her that the hearing aid would prevent or cure her deafness. She has since bought another hearing aid from Mr. Casey, in October of 1980, and has always been happy with his service. The Petitioner did establish that the sales receipt for the hearing aid sold to Ms. Johnson did not have depicted thereon the brand and serial number.
Mr. Frank Kraus signed a purchase order for a hearing aid from the Respondent on March 23, 1977. This was on a Friday and approximately on thee following Monday he became ill and was to be hospitalized. He therefore went to the Respondent's office to attempt to cancel the contract and be refunded his two hundred dollar deposit. The Respondent acknowledges that he did not refund Kraus' money, but contends this was because Kraus simply changed his mind about the purchase and had no problem with the hearing aid. Mr. Kraus and his wife as well, testified in a vague manner that the Respondent made an ill-defined representation to the effect that Kraus would probably be deaf in about six months. Mrs. Kraus was unable to testify that she remembered or recognized the Respondent when he was pointed out to her in the hearing room, although she contended he made such a representation. Mr. Kraus states he remembers the representation being made, but was unable to recall the times or dates or exactly what was said. Neither witness could testify regarding the context of the conversation from which this representation was allegedly made and Mr. Kraus acknowledged repeatedly that his memory was faulty and that he was in ill health. The Respondent vehemently denies making such a representation and the Petitioner's witness, audiologist Mary Cobb, as well as Virginia Gesselman testified that when accompanying the Respondent in sales presentations to customers, they never beard him make such a representation on other occasions. In short, Mr. and Mrs. Kraus' testimony, memory and recall of those events is not of sufficient clarity to establish that the Respondent made such a representation with the intent that they be so induced into purchasing a hearing aid, in the face of the contrary evidence.
Witness Ralph Gray, the administrator of the hearing aid license program for the Petitioner, testified that he had received more complaints a out the Respondent than for most dealers (thirty-five complaints in thirteen years)
. He testified, however, that not all of the complaints were justified and he was not able to testify which of the complaints were found justified after investigation. Other dealers' contracts typically show the same omissions of disclaimers, serial numbers or model number . Neither was Mr. Gray able to state whether the additional number of complaints received regarding the Respondent's business was due to a greater number of customers and more business volume than other dealers under his supervision.
Virginia Gesselman, a former audiologist for the Respondent, corroborated testimony of the Respondent and Mary Cobb that Casey did not make a practice of telling clients that the client would become deaf unless he purchased a hearing aid and that most people she fitted with hearing aids said they could hear better with the hearing aids than they had with the testing apparatus, after adjustments were made. Witnesses Mary Dubuisson, Thomas Roberts and James Peaden, all have received excellent service from the
Respondent and have considered him to have conducted his business with them in an ethical manner.
The Respondent candidly admitted that his deliveries of hearing aids in some of these instances were late, due to his poor financial condition and the resultant difficulty in obtaining prompt delivery from the Beltone Corporation. He established that he was suffering a very turbulent personal life during these times, chiefly because his son had a problem with drug addiction which ultimately resulted in the breakup of his marriage, the loss of his home and the incurring of thousands of dollars in legal fees and hospitalization expenses. He has since been successfully engaged in reassembling his shattered personal life, has remarried and his present wife is a "good business woman" and is presently assisting him greatly in running his hearing aid sales and service business. He is recovering from his financial difficulties and has earned a profit in the last two years. He no longer has any problem in assuring customers of timely delivery. The Respondent denied he ever had any intent to defraud or misrepresent the facts and circumstances of a transaction to any of his customers.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding.
The Petitioner has alleged that the Respondent violated various portions of Chapter 468, Florida Statutes (1978) , which are set forth in pertinent part as follows:
468.130 Unethical conduct defined.-- unethical conduct hall include:
The obtaining of any fee or the making of any sale by fraud or misrepresentation
Making an predictions or prognostications a to the future course of a hearing impairment, either in general terms or with reference to an individual person.
Stating or implying that the use of any hearing aid will improve or preserve hearing, revent or retard progression of a hearing impairment, or that it will have any similar or opposite effect. .
Section 468.136(1) and 2) , Florida Statutes (1979) provides as follows:
Each person who fits and sells hearing aids shall deliver to each person he supplies with a hearing aid a receipt which shall contain his signature and how the address of his regular place of business and the number of is certificate of registration, together with
the brand, model, and serial number
of the hearing aid furnished and amount charged therefore. Said receipt shall also specify whether the hearing aid is new, used, or rebuilt and the length of time and other terms of the guarantee and by whom guaranteed. aid receipt shall also state that an complaint con- cerning the hearing aid and guaran- tee therefor, if not reconciled with the registrant from whom the aid was purchased, should be directed by the
purchaser to the Hearing Aid Licensure Office, Department of Health and Rehabilitative Services. The address and telephone number of such office shall be stated on the receipt.
No hearing aid shall be sold
to any person unless both the pack- aging containing the hearing aid and the itemized receipt provided pur- suant to subsection (1) carry the following disclaimer in 10-point or larger type: "This hearing aid will not restore normal hearing, nor will it prevent further hearing loss."
As discussed in the Findings of Fact above, the Petitioner failed to establish by even a preponderance of the evidence that the Respondent had made a false or fraudulent representation or exhibited an intent to defraud any of the customers who testified in support of the Petitioner in an effort to induce them to purchase a hearing aid. Thus, the record does not establish that the Respondent actually falsely represented to Mr. or Mrs. Kraus that Mr. Kraus would be deaf within six months unless he bought a hearing aid from Respondent, nor does it establish that the Respondent's representation that customers could hear as well with a hearing aid as with the master testing machine, provided the hearing aids were made to the same specifications, was an inaccurate one, nor that it was designed to mislead the customers.
The record clearly reflects, and indeed the Respondent did not refute, the showing by the Petitioner that the disclaimers and the hearing aid serial numbers and model numbers required by the above authority to be included on the customer's receipt were not so included (with the exception of the Carr contract). Therefore Respondent is guilty as charged in this regard. This is a violation of a rather technical nature and, in mitigation of the Respondent's omissions, it was shown that the provision of deficient sales receipts to customers is a common occurrence with many licensees. There was no showing that the omission of this information from the customers' receipts was due to any intent to mislead or defraud them by the Respondent.
Section 468.130(e) and (f) provide generally that the failure to deliver a product to the buyer within a reasonable time thereafter or the failure to have access to a quantity of the advertised product at the advertised price sufficient to meet reasonably anticipated demands constitutes unethical conduct. Thus, the failure to deliver the bearing aid to Ora Lee Johnson, Mr. Bryant and Mr. Golden within the time promised or a reasonable time thereafter
technically constitutes a violation of these two subsections, although it was established in an unrefuted way by the Respondent that this was no intentional failure to deliver on his part after receiving those customers' funds, but rather was due to his poor financial condition and resulting slow deliveries by the Beltone Corporation which were dependent on him either paying for the hearing aids in advance or paying for C.O.D. shipments only. In short, these slow delivery times were due to his mismanagement of his business rather than to any intent to defraud these customers after receiving their money. No evidence was adduce to show intent to fraudulently misrepresent the situation regarding delivery of the hearing aids to these customers, and thus, no violation of subsection (1) of the above authority has been established with regard to the slow delivery times.
The same consideration apply to the failure to refund the four hundred eighty-five dollar purchase price to Mr. Carr for approximately three months.
In fairness to the Respondent the evidence shows that the contract signed by Mr. Carr provided he should have only a three-day trial period during which time he was entitled to a refund. In any event, the Respondent ultimately voluntarily refunded the purchase price to Mr. Carr. Thus, the record establishes that the failures to deliver the hearing aids promptly and to refund money promptly were in almost all cases related to the Respondent's mismanagement of his business, poor financial condition and strained relations with the Beltone Corporation, his supplier, rather than any intent to fraudulently misrepresent the circumstances of the transactions of these customers.
A number of witnesses, including Ora Lee Johnson (testifying for the Petitioner) established that the Respondent generally conducts his business in an ethical manner and has provided good service for years, often without charging his customers. The evidence does not demonstrate that he generally and regularly conducts his business in a fraudulent, unethical manner and no such intentional course of conduct as to these customers was established.
The two hundred dollar deposit collected from Mr. Kraus apparently remains in the possession of the Respondent and he offered no substantial justification for his retention of it. Mr. Kraus informed him only several days after the transaction was entered into that he wished to cancel his order and prior to the Respondent's reliance on the order to his detriment. Thus, it appears that the Respondent's retention of Mr. Kraus' two hundred dollar deposit is not reasonable; however, there was no showing that it is in actual violation of any charged provision of Chapter 468 or the rules promulgated thereunder, since it was not obtained through fraud or misrepresentation. It is a matter redressable in the civil courts, as was the issue of the refund of Mr. M. P. Bryant, who obtained a judgement against the Respondent in similar circumstances. The Petitioner, however, should treat this dispute in the manner recommended below.
Accordingly, it is concluded that the allegations in the Administrative Complaint regarding misrepresentation to the customers contained in Counts II, III and XII have not been proven by even a preponderance of the evidence. It was not shown that the slow deliveries of the hearing aids, after obtaining deposits or purchase money therefor, was due to any intentional fraud or misrepresentation at the time by the Respondent. There is no question that he is guilty of the technical violations described above involving the failures to include the disclaimer as well as the various serial and model numbers and the address of the Petitioner's complaint office on the customers' sales receipts, although this was not shown to have been done with any overt intent to misrepresent the facts to those customers.
Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses and the pleadings and arguments of counsel, it is therefore
RECOMMENDED that the Respondent, Kenneth P. Casey, be found guilty of the charges contained in Counts IV, VI, VIII, X and XI of the Administrative Complaint and that he be issued a written, public reprimand by the Petitioner, and that his licensure be placed on probationary status for one (1) year, with the Respondent's customer records subject to monthly audit by the Petitioner's personnel to show that no similar violations occur.
It is further RECOMMENDED that the Respondent be fined the sum of three hundred dollars, to be paid within thirty (30) days of the date of entry of the Final Order in this cause and that two hundred of the said three hundred dollar fine be suspended on the condition that the Respondent, within a like period of time, refund the two hundred dollar deposit paid him by Mr. Kraus.
DONE AND ENTERED this 23rd day of December, 1981, in Tallahassee, Florida.
P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 1981.
Jon W. Searcy, Esquire District I, Legal Counsel Post Office Box 17389 Pensacola, Florida 32522
Antony E. Fiorentino, Esquire
