STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 81-944

)

JOSEPH L. HILAND, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on June 4, 1981 at Orlando, Florida.

APPEARANCES

For Petitioner: Leon Rolle, Esquire

Department of Insurance and Treasurer 428-A Larson Building

Tallahassee, Florida 32301

For Respondent: Patrick M. Magill, Esquire

125 South Court Street Orlando, Florida 32801

By Administrative Complaint dated March 9, 1981 the State of Florida, Department of Insurance, Petitioner, seeks to revoke, suspend or otherwise discipline the license of Joseph L. Hiland, Respondent, as an ordinary life, including disability, insurance agent. As grounds therefor it is alleged that Respondent visited the home of William E. Tucker and sold him life policies which Tucker intended as a replacement for policies issued by Beneficial Life Insurance Company (Beneficial), wilfully checked "no" to the question on application form whether policy was to be a replacement policy, without authorization mailed a letter to Beneficial reguesting the Beneficial policies issued to Tucker be cancelled, and completed Tucker's application without providing him with disclosure statements and forms relative to the replacement of existing insurance coverage; all in violation of various sections of Chapter 626, Florida Statutes.

At the hearing two witnesses were called by Petitioner, Respondent testified in his own behalf and 13 exhibits were admitted into evidence. There was no dispute as to the facts here involved.

Proposed findings submitted by the parties and not included below were not supported by competent evidence or were deemed immaterial to the results reached.

FINDINGS OF FACT

1. Joseph L. Hiland, at all times here relevant, was licensed by Petitioner as an ordinary life, including disability, insurance agent. He has been a licensed insurance agent for 17 years and is presently a general agent for Philadelphia Life Insurance Company (Philadelphia) , National Reserve Life Insurance Company, and Century Life Insurance Company. He is not a general agent for but is licensed by Connecticut Mutual Insurance Company.

   
   

2. In early 1980 the Philadelphia agent who served William Earl Tucker's policies, before moving out of the area, called Tucker to say he was leaving and that Hiland would be servicing his policies in the future. In April, 1980 Hiland sent Tucker an annual review letter and, after receiving Tucker's response, telephoned Tucker who asked Hiland to stop by.

   
   

3. On or about May 24, 1980 Hiland visited Tucker's home and spoke with Tucker and his wife. At this time Tucker had Philadelphia policies which Hiland was reviewing and Hiland was unaware that Tucker had policies with Beneficial. A review of Tucker's Philadelphia policies had convinced Hiland Tucker did not need additional insurance; but Philadelphia had recently come out with a new policy, railed Avant Guarde, which appeared better suited for Tucker's situation than his existing policies. Hiland explained this policy to Tucker and Tucker concluded that he wanted to replace his existing Philadelphia policies. Tucker also wanted to take out an insurance policy on his youngest child. He already had policies on his other children.

   
   

4. After the applications had been filled out Tucker asked Hiland to review his other policies and he presented four policies he had with beneficial. After reviewing these policies Hiland advised Tucker that he could get better coverage with Philadelphia policies for less money than he was paying for his Beneficial policies. Tucker then told Hiland he wanted to replace the Beneficial policies with Philadelphia policies and asked Hiland to take care of it for him. Tucker's application for the Avant Guarde policy and the new child's policy had been filled out before Hiland realized Tucker intended to replace the Beneficial policies and the block in Section 3 had been marked "no" on those forms and was not changed after Hiland learned of Tucker's desire to replace the Beneficial policies. Hiland explained the disclosure statement to Tucker and told him he should be presented with the forms if he was replacing insurance Tucker replied he didn't have time for Hiland to fill out those forms and for Hiland to take care of the necessary paper work. Because of the late hour and the need to fill out four disclosure statements for the four policies Tucker wanted to replace, Hiland did not fill out these forms. Completion of the disclosure statements would not have affected Tucker's determination to replace his Beneficial policies. Then Hiland left Tucker's home he had applications for Philadelphia policies on William E. Tucker and Tucker's four minor children Jess, Kelly, Doug and April. He also had Tucker's check in the amount of $295 for the initial premium on these policies. When Hiland realized Tucker intended to cancel his Beneficial policies he told Tucker that Carter George (the Beneficial agent) would be very upset. Tucker's response was to the effect that's too bad.

   
   

5. Hiland prepared a letter (Exhibit 5) for Tucker to send to Beneficial to cancel the policies Tucker wanted to cancel. By mistake this letter was forwarded to Beneficial without being signed by Tucker and without the policies to be cancelled. Upon receipt of this letter Beneficial advised Agent George and sent Exhibit 6 to Tucker with enclosed forms for Tucker to complete.

6. Upon receipt of the information that Tucker was cancelling his Beneficial policies George called Tucker, told him that Hiland was a crook and should be in jail. George also presented the Department of Insurance with his version of Hiland's transgressions. At this time Tucker knew little of Hiland and agreed to help George put Hiland in jail if he was a crook. The following morning an investigator from the Department of Insurance came by Tucker's home around 6 or 7 a.m. to discuss the case with Tucker.

   
   

7. Upon receipt of the application Philadelphia prepared the policies Tucker had applied for and sent them to Hiland. When Hiland called Tucker to advise him he had the policies he was told by Tucker that the insurance department was investigating and that Tucker didn't want the policies. Hiland arranged for the cancellation of the Philadelphia policies and refunded the premiums advanced by Tucker. The Beneficial policies were never cancelled.

   
   

8. While this investigation was proceeding Tucker talked with other people who had dealings with Hiland and George and concluded that perhaps George was the crook and Hiland the straight man. When he testified in these proceedings Tucker was quite positive that Hiland had fully explained to him the policies he was offering, the procedures to be followed in replacing insurance policies, and that he was in no wise misled nor did Hiland make any misrepresentations to him regarding the insurance policies in issue. He requested Hiland to take care of cancelling the Beneficial policies and discouraged completion of the disclosure statements.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of these proceedings.

   
   

10. Respondent is here charged with violation of Sections 626.611(5), (9) and (13); 626.621(2), (3), (5), (6) and (9); and 620.9541(5)(b), (11)(a), and (12), Florida Statutes; and Rules 4-24.04(1), (2), (3)(a), (3)(b) , (3)(c) , (3)(d) and 4-9.02, Florida Administrative Code. Violations of Section 626.611 lead to compulsory revocation or suspension of a license. Subparagraph (5) involves willful misrepresentation, Subparagraph (9) involves fraudulent or dishonest practices and Subparagraph (13) involves willful failure to comply with or willful violation of a rule or order. No substantial evidence was presented to support a finding that Respondent violated any provision of Section 626.611 as alleged.

    
    

11. Violations of Section 626.621 provides grounds for discretionary revocation or suspension of a license by the Department of Insurance. Subsection (2) prescribes the violation of any provision of the insurance code. Subsection (3) prescribes violation of any lawful order or regulation of the department. Subsection (5) prescribes "twisting" which is defined in Section 626.9541(12), a violation of which is also charged. Subsection (6) involves engaging in unfair or deceptive acts in conducting insurance business.

    Subsection (9) prescribes violation of the code of ethics by life agents. Under Section 626.9541, Subsection (5)(b) prescribes knowingly making a false entry in a report; Subsection (11)(a) prescribes making false or fraudulent statements or misrepresentations relative to an application for insurance; and Subsection (12) prescribes "twisting" which is defined as knowingly making false statements to induce a person to lapse, forfeit or convert any insurance policy or to take out a policy of insurance in another insurer.

12. Chapter 4-24, Florida Administrative Code, is entitled Replacement of Life Insurance - Disclosure to Affected Persons - Approved Forms. Rule 4-24.04 lists duties of the agent. These duties with which Respondent is charged with failure to comply are:

    
    

    1. Obtain with or as a part of each application for life insurance a statement signed by the applicant as to whether such insurance will replace existing life insurance;

    2. Submit to the insurer in connection with each application for life insurance a statement as to whether, he knows or has reason to believe replacement is involved in the transaction

    3. Where a replacement is involved:

       1. Obtain with or as a part of each application a list of all existing life insurance policies to be replaced;

       2. Present to the applicant, not later than at the time of taking the application, a completed "Disclosure Statement" signed by the agent and a "Notice to Applicants Regarding Replacement of Life Insurance" on forms substantially as described in Exhibits A-1, A-2 and B and leave such forms with the applicant for his records;

       3. Submit with the application to the insurer a copy of any proposal used and the completed "Disclosure Statement" and the name of each

          insurer which issued any insurance being replaced;

       4. Have the applicant acknowledge receipt of the completed "Disclosure Statement" and the "Notice to Applicants Regarding Replacement of Life Insurance."

          
          

          Rule 4-9.02 repeats the statutory prohibition against "twisting."

          
          

13. The gravamen of these charges is that Respondent fraudulently induced Tucker to cancel his Beneficial policies and replace them with Philadelphia policies. The facts presented will not support such a conclusion. Respondent fully and accurately apprised Tucker of the provisions of the insurance policies involved and in no manner misled Tucker. If Respondent mailed the unsigned letter he prepared for Tucker's signature to Beneficial by inadvertence, as undoubtedly happened, he could not have expected Beneficial to cancel those policies on the basis of an unsigned letter and without surrendering the policies. An agent who has sold life insurance for 17 years would certainly know that the company that issued the policies the insured was requesting be cancelled would get more information from the insured before cancelling the policies. Respondent fully advised Tucker of the information contained in the Disclosure Statement but failed to complete the Disclosure Statement, have Tucker acknowledge receipt of the Disclosure Statement and forward same to the

    insurer. In view of Tucker's insistence that he did not want to spend any more time on the application and for Respondent to take care of the paper work necessary to accomplish Tucker's desires, it is understandable, but not excusable, for Respondent to fail to complete the Disclosure Statement. This factor coupled with marking the "no" block in Part 5 of Exhibits 7 through 11 raised the inference of fraudulent conduct that was dispelled by Tucker's testimony.

    
    

14. From the foregoing it is concluded that Respondent violated Sections 626.621(3) and 626.9941(5), Florida Statutes, in failing to complete the Disclosure Statement and in submitting the application (Exhibits 7 - 11) with the "no" marked in Part 5 when Respondent knew that the policies were intended to replace existing life policies. Under the circumstances surrounding this transaction these delicts are more of a technical than of a substantive nature. It is further concluded that Respondent is not guilty of all other charges. It is, therefore,

RECOMMENDED that Joseph L. Hiland be admonished for failure to complete the Disclosure Statements and for erroneously marking the "no" block on the applications submitted for insurance requested by William E. Tucker.

DONE and ENTERED this 19th day of June, 1981 in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of June, 1981.

COPIES FURNISHED:

Leon Rolle, Esquire

Department of Insurance and Treasurer 428-A Larson Building

Tallahassee, Florida 32301

Patrick M. Magill, Esquire

125 South Court Street Orlando, Florida 32801

Docket for Case No: 81-000944

Orders for Case No: 81-000944