STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF TREASURER, INSURANCE ) COMMISSIONER, )

)

Petitioner, )

)

vs. ) CASE NO. 80-1604

)

FRANK CIMINO, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on December 2, 1980, at 9:30 A.M. in Tampa, Florida. The issue for determination at the hearing was whether respondent's insurance licenses should be revoked or otherwise disciplined for the reasons set forth in the Administrative Complaint dated August 4, 1980, as amended on October 23, 1980.

APPEARANCES

For Petitioner: Richard P. Harris, Attorney

Department of Insurance 428-A Larson Building

Tallahassee, Florida 32301

For Respondent: Frank Cimino, Jr.

Post Office Box 1520 Brandon, Florida 33511

INTRODUCTION

By an Administrative Complaint dated August 4, 1980, and amended on October 23, 1980, petitioner seeks to revoke or otherwise discipline the licenses of respondent for alleged violations of Florida Statutes, Chapter 626, and Florida Administrative Code, Chapters 4-9 and 4-35. In summary form, the Administrative Complaint charges that respondent knowingly signed -- or caused to be signed an insured's signature to insurance cancellation forms and submitted said forms to the respective insurance companies without the insured's consent or knowledge.

The complaint further charges that respondent placed or caused to be placed in The Tampa Tribune an advertisement which contained false or misleading representations.

At the hearing, the Petitioner presented the testimony of Donald Carter, Edward Kimball, Jr., Linda Kimball, Charles Ritzi, Joseph P. Sabella and Luis D. Menendez. Exhibits 1 through 8, which includes the deposition of John T. McCarthy, a handwriting expert, were received into evidence on petitioner's behalf. Respondent offered the testimony of William T. Mitchell and Exhibits A through H.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts are found:

1. At all times relevant to this proceeding, the respondent Frank Cimino, Jr. was licensed as an ordinary life, ordinary life including disability and dental health plan insurance agent. Respondent was also the president and incorporator of National Consumer Investment Counselors, Inc., a Florida corporation doing business at Post Office Box 1520, Brandon, Florida.

   
   

2. Charles R. Ritzi is an insurance salesman employed at National Consumer Investment Counselors, Inc., and respondent is his supervisor. On or about November 2, 1979, Mr. Ritzi went to the home of Edward Kimball for the purpose of discussing insurance with him. He received from Mr. Kimball his other existing insurance policies and took them back to his office to analyze and compare their benefits, costs and terms with a policy which could be provided by respondent's corporation. Among the policies taken was Mr. Kimball's State Farm Insurance Company "IRA" annuity policy number 4,664,836.

   
   

3. Several days later, Mr. Ritzi and respondent returned to Mr. Kimball's residence. Mr. Kimball made a decision to purchase an insurance Policy from respondent and numerous forms were signed by Mr. Kimball. These forms were then taken back to respondent's office and processed. Mr. Kimball did not sign a cash surrender form for his State Farm "IRA" annuity policy and he did not intend for that policy to be cancelled.

   
   

4. On December 6, 1979, the offices of State Farm Life Insurance Company received in the mail a cash surrender request form on Edward Kimball' s "IRA" annuity policy number 4,664,836. Mr. Kimball's name appeared on the signature line of the form. The form also contained a change of mailing address section in which had been written the respondent's business address. The form constitutes a request for a withdrawal of dividends and surrender of the policy. By the terms of the policy, only the owner of the policy may make such a request. The "IRA" annuity policy funds a retirement plan. If the request form had been processed, there would have been a penalty imposed by the Internal Revenue Service for a premature distribution of funds and the funds distributed would have been treated as ordinary income for tax purposes. State Farm sent a service agent to Mr. Kimball's residence and it was discovered that Mr. Kimball did not desire to give up his "IRA" policy number 4,664,836, and that he did not sign the cash surrender request form. A handwriting expert confirmed that the handwriting appearing on the line entitled "Signature of Policyowner" was not the signature of Mr. Kimball.

   
   

5. It is concluded as an ultimate finding of fact that respondent or an employee acting under his supervision signed the name of Edward Kimball, Jr. appearing on the State Farm cash surrender form and transmitted sold form to State Farm without the knowledge or consent of Mr. Kimball, the policy owner.

   
   

6. In February of 1980, respondent placed an advertisement in the East Hillsborough Edition of The Tampa Tribune, a newspaper with a circulation of approximately 36,000. The advertisement guaranteed the reader that:

   
   

   "...if you are insurable and own any personal, ordinary life insurance, regardless of the company, we can show you a method of

   rearranging your program in a way that will:

   1. Increase the amount of money which would be paid to your beneficiary in the event of your death. 2. Increase the amount of cash available for retirement [sic], 3. Retain all of your existing guarantees and benefits and

      4. We can do all this with no increase in premium."

      
      

7. The four guarantees mentioned in the advertisement may not be capable of performance in all life insurance policies. However, it is possible for a qualified agent to accomplish the four guarantees in personal ordinary cash value life insurance policies. The guarantees are made to those persons who are insurable and who own personal, ordinary life insurance.

   
   

   CONCLUSIONS OF LAW

   
   

8. The factual allegations contained in the Administrative Complaint include references to an unauthorized cancellation of a Penn Mutual Life Insurance Whole Life policy and the State Farm "IRA" Retirement policy. The petitioner offered no evidence at the hearing regarding the Penn Mutual policy, and therefore no findings of fact or conclusions of law can be made with regard to that policy.

   
   

9. With regard to the State Farm policy, petitioner contends that the respondent' s conduct of knowingly signing or causing to be signed the insured's signature to the cancellation form without the insured's consent, and of knowingly submitting or causing to be submitted the form to State Farm without the insured's consent or knowledge constituted a violation of Florida Statutes, Section 626.611(4), (5), (7), (8), (9) and (13); Section 626.621(2), (3), (6) and (9), and Section 626.9541(1)(f) and (g). The undersigned has carefully reviewed these statutory provisions.

   
   

10. Section 626.611, Florida Statutes, contains grounds for the compulsory suspension or revocation of an insurance agent's license. As relevant to this proceeding, these grounds include the following:

    
    

    1. If the license or permit is willfully used, or to be used to circumvent any of the requirements or prohibitions of this code.

    2. Willful misrepresentation of any insurance policy or annuity contract or willful decep

    tion with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.

    1. For demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    2. For demonstrated lack of reasonably ade quate knowledge and technical competence to engage in the transactions authorized by the license or permit.

    3. Fraudulent or dishonest practices in the conduct of business under the license or permit.

    (13) Willful failure to comply with, or will ful violation of, any proper order, rule, or

    regulation of the department or willful vio lation of any provision of this code.

    
    

    The undersigned concludes that the petitioner failed to present evidence at the bearing sufficient to demonstrate respondent's lack of adequate knowledge and technical competence to engage in insurance transactions within the meaning of Section 626.611(8), Florida Statutes. It is further concluded that respondent's conduct of signing or causing to be signed Edward Kimball's signature to the cancellation form for his State Farm policy and submitting or causing to be submitted said form to State Farm, all without Mr. Kimball's consent or knowledge, constitutes a violation of subsections (4), (5), (7), (9) and (13) of Chapter 626.611, Florida Statutes. Having concluded that respondent's conduct violated the provisions of Section 626.611, Florida Statutes, which contains grounds for mandatory suspension or revocation, it is unnecessary to consider whether-or not the grounds contained in Section 626.621, Florida Statutes, have been violated. The latter Section 626.621, Florida Statutes, provides grounds for discretionary suspension or revocation of a license under circumstances for which such disciplinary action is not mandatory under Section 626.611, Florida Statutes. Finally, it is concluded that the respondent's actions of signing and submitting, or causing the same, the cancellation form for the State Life policy constitutes a violation of Section 626.9541(1)(f), Florida Statutes. That section defines "a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy" as an unfair method of competition and unfair or deceptive act or practice.

    
    

11. Petitioner further charges that the advertisement appearing in The Tampa Tribune constitutes a violation of various subsections of Sections 626.611, 626.621 and 626.9541, Florida Statutes as well as various rules contained in Chapters 4-9 and 4-35, Florida Administrative Code. For the most part, these statutes and rules prohibit deceptive, misleading and untrue advertisements.

    
    

12. The petitioner has failed to adduce sufficient evidence that the advertisement in question contained statements which were deceptive, misleading or untrue. To the contrary, the testimony adduced at the hearing indicates that the representations made in the advertisement can he true for personal, ordinary life insurance policies.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT:

1. The charges in the Administrative Complaint relating to a Penn Mutual Life Insurance Whole Life Policy be dismissed;

   
   

2. Count II of the Administrative Complaint relating to an advertisement appearing in The Tampa Tribune be dismissed;

   
   

3. Respondent be found guilty of violating Florida Statutes, Sections 626.611(4),(5),(7),(9), and (13) and 626.9541(1)(f); and

   
   

4. Pursuant to Section 626.611, Florida Statutes, the insurance licenses presently held by the respondent be suspended for a period of one (1) year.

Respectfully submitted and entered this 6th day of February, 1981, in Tallahassee, Florida.

DIANE D. TERMOR

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1981.

COPIES FURNISHED:

Richard P. Harris, Esquire Department of Insurance 428-A Larson Building

Tallahassee, Florida 32301

Frank Cimino, Jr.

Post Office Box 1520

Brandon, Florida 33511

Honorable Bill Gunter Office of Treasurer Insurance Commissioner The Capitol

Tallahassee, Florida 32301

Docket for Case No: 80-001604

Orders for Case No: 80-001604