vs. ) CASE NO. 80-1504
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on January 6, 1981, 1/ in Miami, Florida.
For Respondent: Thomas F. Woods, Esquire
Pascale, acting under his general lines insurance licenses, has engaged in activities and conduct which would merit disciplinary action pursuant to Chapter 626, Florida Statutes.
Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found.
Respondent, John Roger Pascale, currently holds an insurance license issued by the Florida Department of Insurance (Petitioner), and is eligible for the issuance of further licenses. It is admitted that Respondent was a licensed general lines agent during times material to the Complaint allegations herein. Respondent, however, has voluntarily elected not to renew his license since September, 1980.
By its five count Administrative Complaint dated June 13, 1980, Petitioner advised Respondent that it intended to revoke, refuse to issue or renew, or to impose lesser penalties as may be proper under the provisions of Sections 626.611 and 626.621, Florida Statutes.
The main thrust of Count I is that Respondent committed the following violations:
Received premiums or other funds belonging to insurers or others in transactions under his license which were trust funds received by him in a fiduciary capacity, which funds he failed to account for or pay to the insurer, insured or other persons entitled thereto in violation of Chapter 626.561(1), Florida Statutes.
Lacked one or more of the qualifications for the license or permit as specified in the Insurance code in violation of Chapter 626.611(1), Florida Statutes.
Willfully, under his license, circumvented the prohibitions of the insurance code. Chapter 626.611(4), Florida Statutes.
Was willfully deceptive with regard to an insurance policy in violation of Section 626.611(5), Florida Statutes.
Demonstrated a lack of fitness or trustworthiness to engage in the business of insurance contrary to the requirements contained in Chapter 626.611(7), Florida Statutes.
Demonstrated a lack of reasonable and adequate knowledge and technical competence to engage in the transactions authorized by the license or permit. Chapter 626.611(8), Florida Statutes.
Engaged in fraudulent or dishonest practices in violation of Chapter 626.611(9), Florida Statutes.
Misappropriated, converted, or unlawfully withheld monies belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under his license. Chapter 626.611(10), Florida Statutes.
Willfully violated an order, rule or regulation of the insurance department, or willfully violated a provision or provisions
of the insurance code. Chapter 626.611(13), Florida Statutes.
Withheld information from which the issuance of a license or permit could have been refused had it then existed and been known to the department contrary to the requirements of Chapter 626.621(1), Florida Statutes.
Violated a provision of the insurance code contrary to Chapter 626.621(2), Florida Statutes.
Violated a lawful order, rule, or regulation of the department in violation of Chapter 626.621(3), Florida Statutes.
Has shown himself to be a source of injury or loss to the public or detrimental to the public interest in violation of Chapter 626.621(6), Florida Statutes.
In support of the above allegations, Petitioner produced as its primary witness, Delores V. Cardet, who first purchased insurance from Respondent in November of 1977. The agent employed by Respondent with whom Ms. Cardet transacted business was Rigo Avila (Avila). (See Petitioner's Exhibit 1) Ms. Cardet's insurance application was transmitted to Lumberman's Insurance Company to effect the appropriate coverage. Her complaint against Respondent is that the wrong address was placed on her insurance application and that she was overcharged for insurance based on the premiums quoted by agent Avila.
Respecting the allegation that agent Avila placed the wrong address on her insurance application, evidence indicates that when this matter was called to Respondent's attention, the matter was taken care of and Ms. Cardet subsequently received billing notices at the correct address. (Petitioner's Exhibit 3).
During the time in which Ms. Cardet purchased insurance through Respondent's agency, she was employed as a manager for Beneficial Finance Company of Florida. As part of her employment duties, Ms. Cardet is involved in collections and has received management training from her employer. During the period in question Ms. Cardet had one address change. This change was properly brought to Respondent's attention and the change was effected without incident.
Respondent quoted Ms. Cardet a total premium during 1978 of $699.00 whereas the insurer, Lumberman's Insurance Company, charged Ms. Cardet an annual premium of $677.00. The $22.00 overcharge represented the difference between the premium quoted by agent Avila and the actual premium charged. The excess was referred to the premium finance company (Sonny Financial Services) where it was handled as a credit toward the balance owed by Ms. Cardet.
During 1979, Ms. Cardet was quoted a total annual premium of $797.00 for renewal of her insurance policy. Her policy reflects a premium of $662.00 plus two (2) motor club memberships for her two (2) vehicles at the rate of
$50.00 each. The remaining difference of $35.00 was refunded from Kemper
Insurance Company and forwarded to Sonny Financial Services as a credit toward the remaining balance of Ms. Cardet's premiums. 2/
Linda Manning, the underwriting service manager for Lumberman's Mutual Casualty Company, a subsidiary of the Kemper Insurance Group, acknowledged that in the insurance business, mistakes regarding insurance print-outs occur on a frequent basis. Ms. Manning services several hundred premium changes daily and testified that there are numerous reasons for an agency to give a prospective insured an improper quote. Among the reasons listed by Ms. Manning is the fact that drivers' records are not always available for a prospective insured and rate adjustments occur for various reasons.
COUNT TWO
The gravamen of Count Two is that Respondent's employees used an incorrect address when insurance was placed by Respondent's agency for Mr. Jeffrey Brown which resulted in the insured not getting a premium notice from the insurance company. It is also alleged that Respondent willfully listed an incorrect address for Mr. Brown in a lower rate territory which gave the insured the advantage of a lower premium.
In support of the above allegations in Count Two, Petitioner introduced the testimony of Respondent's former spouse, Robin LaPlante. Ms. LaPlante's husband, Jeffrey Brown, purchased insurance through Respondent's agency on February 26, 1978. It is alleged that Respondent falsely indicated on the Brown application for automobile liability coverage with Lumberman's Mutual Casualty Company that Mr. Brown's address was in Lauderhill, Florida, whereas he actually resided in Miami, Florida.
Ms. LaPlante's complaint with Respondent is that they sold a van, which was one of the two vehicles covered under the policy, and it took approximately nine (9) months before the van was deleted and a refund check was issued for termination of that coverage. Ms. LaPlante had no direct dealings with Respondent and/or his agents during the time in question. Respondent's dealings were with Ms. LaPlante's former husband, Jeffrey Brown, who did not appear to testify in these proceedings.
COUNT THREE
As amended by Order dated December 31, 1980, Count Three alleges that Respondent employed the services of someone other than his employees or himself to complete a portion of an insurance application; that the insured was sold membership in a motor club without his knowledge and consent and that the Respondent unlawfully endorsed a check payable to the insured from the insurance carrier to reinstate the insured's policy which had been cancelled by the insurance carrier.
In support of Count Three, Petitioner presented the testimony of Stanley Friehofer.
Friehofer went to Houston Motors in Dade County, Florida, for the purpose of purchasing a Subaru Brat. To do so, it was necessary for Friehofer to provide evidence of insurance on the vehicle in order to obtain financing through the dealership. Sam Houston, the salesman involved, arranged the financing on behalf of the automobile dealership. Friehofer had obtained an insurance quote from his stepmother who was also in the insurance business. After discussing the possibility of the stepmother's agency issuing a policy,
Mr. Houston called Respondent, John Pascale, who was at the dealership on other matters, Respondent quoted a rate less than that quoted by Friehofer's stepmother. Friehofer paid Houston Motors $440.00 and was given an insurance binder by Sam Houston. (Petitioner's Exhibit 20).
Friehofer was accompanied by his brother at Houston Motors. Also present at the time was Sam Houston. Friehofer testified that Sam Houston completed the entire insurance application and issued him the insurance binder 3/ Friehofer never received a policy for his insurance although he received a bill from Kemper Insurance Company of Orlando, Florida. (Petitioner's Exhibit 22).
Friehofer noted three errors on his insurance application. Those errors were (1) his marital status (Friehofer is single), (2) the use of the vehicle was incorrectly noted, and (3) the premium quoted was the wrong amount. Friehofer also complained that he was incorrectly enrolled for membership in a motor club contrary to his consent.
When Friehofer purchased the vehicle from Houston Motors, he was in the process of transferring from the Virgin Islands. Friehofer therefore used his brother's address on his insurance application. According to Friehofer, his first acquaintance with Respondent was during the taking of a deposition in this matter. Linda Manning confirmed the fact that Lumberman's Mutual charged Richard Friehofer a premium of $410.00 for insurance coverage to his vehicle.
Friehofer received a cancellation notice dated April 30, 1979, from Kemper Insurance Company (Kemper) and was instructed by a Mr. Bell of Kemper to obtain "dual coverage" until Kemper could investigate the matter and refund the premiums expended by him to maintain dual coverage when the situation was resolved. Friehofer received an agency check from Respondent dated June 28, 1979. (Petitioner's Exhibit 23).
Friehofer initiated the call to Kemper to advise that he intended to cancel his insurance which was effected by Respondent's agency. After Friehofer advised Kemper that he planned to cancel his coverage, he notified Respondent approximately four (4) days later. Respondent received a refund from Kemper and was unable to contact Friehofer. Respondent therefore endorsed the check and returned it to Kemper to reinstate the coverage. Respondent later learned of Friehofer's intention to, in fact, cancel the coverage and Respondent stopped payment on the check to Kemper. (See Respondent's Exhibit 1). Thereafter, Respondent refunded the premium paid from Kemper to Friehofer on June 28, 1979. (Respondent's Exhibit 13).
COUNT FIVE 4/
Count Five charges Respondent with the sale of membership in a motor club to an insured and accuses the Respondent of misappropriating $38.00 of the insured's money. In support of this allegation, Petitioner introduced the deposition of Betty Monette. The thrust of this allegation is that Ms. Monette was quoted a renewal premium for her Personal Injury Protection (PIP) insurance coverage of $142.00. Thereafter, Respondent's employees determined that they could provide the same coverage through another carrier for $104.00. As a consequence, Respondent refunded the difference of $38.00 to Ms. Monette, however, the refund was accompanied by a transmittal which erroneously stated that the refund resulted from a cancellation of a motor club membership. Ms. Monette acknowledged having received the $38.00 refund, and the difference i.e.
$104.00, coincides with the premium charged by Banker's Insurance for the PIP coverage.
RESPONDENT'S DEFENSE
Sam Houston is an official affiliated with Houston Motors. Houston contacted Respondent, who happened to be at the dealership attending to an unrelated business matter at the time the Friehofers were at the dealership to purchase a Subaru vehicle. Houston has not participated or otherwise benefited from insurance commissions derived by Respondent. Houston Motors has a policy of not being affiliated with insurance salesmen or other brokers based on legal requirements imposed upon the automobile dealerships. Houston was in charge of handling financing and insurance arrangements for purchasers of vehicles at the dealership when Stanley Friehofer purchased his vehicle from Houston Motors.
Houston recalled copying basic pertinent data from a financing application onto an insurance application due to the rush that Respondent found himself in after he had quoted Friehofer a premium for coverage. Houston is not licensed to sell automobile or property insurance and is unfamiliar with the procedure of quoting premiums.
When shown a copy of the insurance application executed on behalf of Friehofer, Houston recalled completing the name, address, company, telephone number, state, car information and lienholder on the insurance application. Houston was certain that he did not complete any item listed on page 2 of Petitioner's Exhibit 21 which was received in evidence herein. Houston is only licensed to sell credit life, accident and health insurance in connection with financing agreements. Houston finally recalled giving Friehofer a receipt for the $440.00 tendered for insurance premiums. Houston remembered that the Friehofer transaction was unique and to the best of his recollection, had not been previously handled by him in that fashion.
Respondent, John R. Pascale, is, as stated herein, a licensed casualty, property agent who holds what is designated as a "220" license. Respondent received a bachelors degree in Business Administration from Pace University and has been involved in the insurance business since he was approximately nineteen (19) years old. Respondent started his first insurance agency in Florida during 1971, and the agency grew to five (5) offices employing approximately sixteen (16) to twenty (20) employees, presently.
In response to the specific charges, Respondent had no personal dealing with Ms. Cardet on her purchase of insurance from the Pascale agency. The agent involved was Rigo Avila who was dismissed from Respondents employ on August 6, 1980. Respondent's agency files reflect that Ms. Cardet had several address changes during the three-year period in which she was insured with the assistance of Respondent's agency. Respondent countered the allegations that he incorrectly listed the wrong address for Ms. Cardet by assigning her to an area which charges lower premiums by asserting that there was no economic advantage to do this since the agency collects a commission on the amount of premiums charged. Thus, a lower premium nets the agency a lower commission. Therefore, during 1977, when Ms. Cardet was quoted a premium of $699.00, Kemper Insurance determined that the premium was approximately $677.00. A refund check was sent to Respondent which was forwarded to Segral Premium Finance Company for credit to Ms. Cardet's premium finance balance. Likewise, during 1978, Ms. Cardet was quoted a premium of $797.00 with a down payment of $300.00, with the balance financed over three (3) installments through a premium finance agency. Respondent was paid directly by the agency and the overcharge (alleged)
represented a $100.00 motor club membership and a $35.00 refund which was remitted by the carrier. The refund was transferred to the premium finance agency for credit to Ms. Cardet's premium balance account. Sonny Financial Service received the $35.00 check in question. (See Respondent's Exhibits 2 and 3)
Respondent acknowledged that it is an agency responsibility to correct an error once the agent learns of the error or through diligence, it is otherwise brought to the agent's attention. To correct errors, Respondent's agency usually amends the policy by means of a "declaration."
Finally, Respondent acknowledged that the bookkeeping errors relative to the Cardet account had been the subject of a civil claim which was amicably settled in Ms. Cardet's behalf. (See Respondent's Exhibit 5 and 6)
The insurance rates of residents in Lauderhill are generally less than the rates charged residents in Dade County. The producing agency has no control over a carrier's billing procedures.
Respecting the allegations surrounding the Jeffrey Brown/Robin LaPlante matter, evidence reveals that Respondent sent policy changes per Jeffrey Brown's request to the carrier during April and September of 1978. (See Respondent's Exhibits 5 and 6)
As to the allegations surrounding the Betty Monette incident, evidence revealed that Respondent was able to obtain the identical coverage through another carrier for Ms. Monette at a lower rate and thus was refunded $38.00 of a quoted $142.00 premium. The transmittal letter which accompanied the refund check, however, incorrectly stated that the $38.00 refund represented a credit for cancellation of a motor club membership. (Respondent's Exhibit 10)
When all of these charges surfaced, Respondent attempted to get an understanding from his employee, Mr. Avila, who abandoned his employment with Respondent. However, Respondent did all that he could to effectively resolve the difficulties and terminated Avila's employment relationship by sending him a mailgram on August 6, 1980. (See Respondent's Exhibits 11 and 12)
As to the allegations surrounding the Friehofer incident, Respondent was at Houston Motors in an effort to canvass and otherwise "drum up' additional business through the dealership. Respondent met Mr. Friehofer, quoted the insurance premium, explained the various coverages available, asked if there were questions and solicited Mr. Houston to complete the necessary basic data.
Respondent acknowledged that it was not a good business practice for him to leave the insurance forms with Mr. Houston to complete, however, he considered the situation rare and unusual. He also felt that it was both an accommodation for Messrs. Houston and Friehofer. Respondent admitted that he benefited from the transaction by receiving the commission from the Friehofer insurance contract. Respondent completed the second sheet of the insurance application with the exception of the signature. (See Petitioner's Exhibit 21) Respondent did not leave any blank forms at the Houston agency or any other business enterprise. Respondent has not shared commissions received with any unlicensed or unemployed person who is not authorized to complete insurance forms.
Respondent received the refund check from the Friehofer insurance application on June 20, 1979. He reviewed his file, and noted that there was no
file notation regarding any intent by Mr. Friehofer to cancel his insurance coverage. He made an effort to contact Mr. Friehofer and learned that he was living with his brother-in-law in Miramar, Florida, and commuted on weekends to the Virgin Islands. He, therefore, redeposited the refund check to Kemper thinking that the policy had been erroneously cancelled. (See Petitioner's Exhibit 25 and Respondent's Exhibit 13)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Chapter 120.57(1), Florida Statutes.
The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.
The authority of the Petitioner is derived from Chapter 626, Florida Statutes.
During times material, Respondent was a licensed insurance agent and as such was subject to the provisions of Chapter 626, Florida Statutes.
Insufficient evidence was offered to establish that the Respondent engaged in conduct violative of Count I through V as amended by the Administrative Complaint filed herein. Chapter 626.611, Florida Statutes, sets forth various grounds for which the Department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent or managing general agent. Likewise, Chapter 626.621, Florida Statutes, sets forth various grounds for which the Department may, in its discretion, deny, suspend, revoke or refuse to renew or continue the license of any agent or managing general agent. Turning to the facts herein, evidence reveals that Respondent was not directly involved in any of the numerous alleged incidents save the Stanley Friehofer incident.
To the extent that the Respondent was made aware of agent Avila's improper or otherwise unsatisfactory conduct, Respondent immediately attempted to resolve or otherwise rectify the conduct of agent Avila to the insured's benefit in each instance. This is exemplified by Respondent's involvement in the Monette and Brown/LaPlante incidents. Respondent's agency files also revealed that Respondent's conduct as relates to the Cardet's incident was proper under the circumstances. Thus, on each occasion where there was an alleged overcharge, documentary evidence reveals that when a refund was mailed to the agency, the refund was in turn forwarded to the financing agency who was carrying the insured's premium financing agreement and handled as a credit to offset the amount owed. This appears to be in keeping with standard agency practice statewide.
As to the Friehofer incident, Respondent was directly involved in effecting insurance coverage for Stanley Friehofer. Evidence reveals, however, that this was an unusual transaction and was apparently the first and the last of such occurrences throughout Respondent's ten-year career in the insurance industry. While such conduct should not be countenanced by Petitioner, it is, on the other hand, not the type conduct which, standing alone, warrants either a suspension or a revocation of an insurance license. See for example, James H. Bowling v. Department of Insurance, 1st DCA Case No. PP-379, filed February 13, 1981. I, therefore, conclude that Respondent should be issued a letter of written reprimand by Petitioner based on his conduct of Permitting an unlicensed, unauthorized person to partially complete an insurance application.
That the Respondent be issued a letter of written reprimand cautioning him against the practice of allowing unlicensed or unauthorized persons to assist in completing forms which may be used to effect insurance coverage.
In all other respects, it is RECOMMENDED that the complaint allegations filed herein be DISMISSED.
RECOMMENDED this 25th day of March, 1981, in Tallahassee, Florida.
JAMES E. BRADWELL
Filed with the Clerk of the Division of Administrative Hearings this 25th day of March, 1981.
1/ The transcript of the final hearing was received by the Division on January 26, 1981. The hearing officially closed on February 11, 1981. Pursuant to leave, the parties were allowed through February 11, 1981, to submit proposed memoranda supportive of their respective positions. Said memoranda was received and considered by me in preparation of this Recommended Order. To the extent that the findings submitted by the parties in their proposed memoranda are not incorporated herein, said proposed findings were deemed either irrelevant or not supported by the evidence of record.
2/ As an aside, evidence reveals that the controversy surrounding the alleged overcharge by Respondent was the subject of litigation in another forum which resulted in a settlement in Ms. Cardet's favor.
3/ To the extent that Friehofer's testimony differs from the testimony of Respondent regarding completion of the subject insurance application, Respondent's testimony, which was corroborated by Sam Houston, is credited.
4/ Count IV is a derivative and/or conclusionary allegation which stems from the remaining Complaint allegations.
Leon Rolle, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301
Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112
