STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA, DEPARTMENT ) OF INSURANCE AND TREASURER, )
)
Petitioner, )
)
vs. ) CASE NO. 81-1442
)
MARY LOU FINN, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice the Division of Administrative Hearings by its designated Hearing Officer, Michael Pearce Dodson, held the final hearing in this case on September 30 through October 1, 1981, in Gainesville, Florida. The following appearances were entered:
APPEARANCES
For Petitioner: Daniel Y. Sumner, Esquire
and David A. Yon, Esquire Department of Insurance
428-A Larson Building Tallahassee, Florida 32301
For Respondent: John H. Haswell, Esquire
211 Northeast First Street Post Office Drawer 0 Gainesville, Florida 32602
PROCEDURAL BACKGROUND
These proceedings began on May 6, 1981 when Petitioner, Department of Insurance, served an Administrative Complaint against Respondent, Mary Lou Finn. Respondent filed an Answer to the Complaint on May 19, 1981 and requested an administrative hearing on the charges made in the Complaint. On May 21, 1981 the matter was forwarded to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing.
On June 15, 1981 Petitioner requested leave to amend its Administrative Complaint by adding Counts VI, VII, VIII and IX. Leave was granted and the Administrative Complaint was amended effective June 29, 1981. The final hearing was noticed for August 25-27, 1981. On July 27, 1981 Petitioner moved for a protective order to prevent the taking of a deposition from Mr. Bill Gunter, the Insurance Commissioner and Treasurer of the State of Florida. In response to the Motion the Hearing Officer entered an Order on August 4, 1981, which provided that the deposition of Mr. Gunter could be renoticed, but if it were, the period of direct examination of Mr. Gunter by Respondent could not exceed two hours. On August 13, 1981, Petitioner filed in the District Court of
Appeal, First District, an appeal of the August 4, 1981 Order. 1/ Because of the rescheduling of Mr. Gunter's deposition the final hearing was continued until September 30 - October 1, 1981.
Respondent moved on August 28, 1981 for permission to amend her Answer to the Amended Administrative Complaint. Her Motion was granted by an Order dated September 10, 1981. Paragraphs
were added to her answer.
At a prehearing conference held on September 22, 1981 Respondent filed a Motion for Judgment on the Pleadings and a Motion for Sanctions relating to the depositions of Robert Vittitoe and Vernajor Parker. The Motions were denied in a Prehearing Order issued on September 29, 1981. At the final hearing Petitioner presented as its witnesses, Mr. Alton Louis Starker, Ms. Lillie Mae Young, Ms. Willie Mae McCray, Mr. Jose M. Alvarez, Mr. Vernajor K. Parker, Mr. James Alfred Curry, Jr., Mr. Mark Alfarone, Ms. Betty Jean Nobles and Mr. James Franklin Clark. Petitioner offered Exhibits 1-7, 9-12, 14-23 which were received into evidence. Exhibit 8 was marked for identification but was not offered by Petitioner into evidence.
Respondent presented herself and Mr. Robert David Baynard as her witnesses. She offered Exhibits A, C, D, E and G which were received into evidence. During the hearing Petitioner was allowed to amend Count VII, paragraph 1 to substitute the date September, 1979 for June, 1979. At the conclusion of the hearing pursuant to Section 120.57(1)(b)4. Florida Statutes (Supp. 1980), the parties were informed of their right to file proposed findings of fact and proposed recommended orders. Both parties filed excellent proposed recommended orders.
To the extent that the proposed findings submitted by the parties are not reflected in this order, they are rejected as being either not supported by admissible evidence or as being irrelevant to the issues determined here.
Agrico Chemical Company v. Department of Environmental Regulation, 356 So.2d 759, 763 (Fla. 1st D.C.A. 1979).
Because Respondent's counsel became ill during the time for the parties to prepare their proposed findings and orders, Respondent moved for and received additional time for the parties to make their filings. This extension waived the thirty-day time period for the submission of a recommended order by the Hearing Officer. Section 28-5.402, Florida Administrative Code.
FINDINGS OF FACT
The Respondent, Mary Lou Finn, is licensed by Petitioner as a general lines insurance agent. During the period of May 5, 1979 until November 1, 1980, she was the agent of record at the Ocala, Florida, office of University Insurance. During that time she held a 220 license and was the only agent responsible for that office.
From April 1979 until November 1, 1980 Mr. Robert Vittitoe was the manager and owner of the Ocala office. Through an arrangement, which Respondent described as a consulting contract, she supervised the operation of the office. She also had a consulting contract but no supervising duties with University Insurance offices in Lake City and Tallahassee.
In the course of her supervision and consulting advice for the University Insurance offices Ms. Finn issued a blizzard of memoranda on the operation of those offices.
One of the memoranda which was received at the Ocala office on August 27, 1979 gave instructions concerning the sale of automobile motor club memberships. It states in pertinent part:
The new yellow I.D. cards are for the following reason--When you write PIP only and a club, do not tell the insured he has towing and road service. Simply quote him the total rate, get all required signatures and TYPE them the yellow ID. card. When PIP policy and club policy [come] in we WILL NOT MAIL. We will keep their policies in their file.
This will save on cancelled clubs when insured sees everything, plus it will save loads of postage.
Remember - DO NOT MENTION motor club, towing and road svc., etc. They do not have to take the club anymore. Simply say the coverage they want (PIP) is $44.00 or whatever get signatures, type them their card and say
good-bye. (Get money)
This memorandum was shortly followed by one dated September 2, 1979, which said in part:
In Gainesville we are not mailing policies. Instead having insured pick up. We will try it & see. Last week I sent a memo to you to explain. Had some calls that you didn't understand memo & thought I meant keep policies in file NO! No one has enough room in file cases for that. It is to save on postage. If you want to save yourselves money give it a try
Re: The motor club, don't overemphasize the towing and road svc. We have too many claims. Explain all the coverages and emphasize the bail bond, legal fees, trip routing etc.
Subsequently by a memorandum dated September 26, 1979, Respondent sent further instructions regarding motor clubs. The memorandum stated:
When you write a motor club with other coverages and finance, be sure to list premiums separately on finance contract and get all signatures incl. club app. Make sure that the ins. knows all coverages on club.
We are having a lot of towing claims and company is complaining so go into detail on other coverages as well.
The last memorandum concerning this issue sent from Respondent to the Ocala office was written in the early part of 1980. It says:
Please use the small statements for insureds to sign in addition to motor club app. so they are well aware of what they are purchasing. Will protect you too. Make sure they understand all coverages, BI, PD, PIP, COLL, COMP, UM, motor club if written & explain all deductibles. VERY IMPORTANT.
3 weeks after they leave office they won't know what they have, so be explicit. Get all signatures required especially motor club apps. & the statement that insured understands they have motor club & its [sic] a separate charge.
The foregoing memoranda were sent by Ms. Finn with the intent that the sales personnel at the Ocala office follow her instructions contained therein.
I find that the memorandum received on August 27, 1979 constituted an instruction to misrepresent the full nature of the insurance purchase transaction between the Ocala office and its customers. Ms. Finn's instructions were that "when PIP policy and club policy [come] in we will not mail. We will keep their policies in their file. This will save on cancelled clubs when the insureds see everything, plus it will save loads of postage." The implication is clear that the insureds are not to know that they have purchased automobile club coverage so they will not cancel it. This finding is supported by the following instruction: "Remember - DO NOT MENTION motor club, towing and road svc., etc. They do not have to take the club anymore. Simply say the coverage they want (PIP) is $44.00...".
The three later memoranda in varying degrees countermanded the instructions of the August 27 memo. As soon as September 2, 1979 Respondent instructed the Ocala office to explain all the coverages and emphasize the bail bond, legal fees and trip routing features of the motor club memberships. If the sales people followed this directive they would necessarily inform the applicants that they were purchasing motor club memberships. The taint of the August 27 memorandum which arises from the instruction not to mail out insurance policies was eliminated by the September 2, 1979 memorandum which suggests that rather than mailing policies, the office request the insureds to pick the policies up.
I find by September 26, 1979 Respondent was no longer instructing the Ocala office to "slide" motor clubs. 2/ Her memorandum of that date required listing the motor club fee separately on the premium finance agreements signed by the applicants. That instruction is incompatible with sliding. By the time her memorandum of early 1980 was written, Ms. Finn was instructing the Ocala office to add additional statements to insure that the insured knew they were purchasing motor club memberships and it was a separate charge.
At the final hearing Ms. Finn gave testimony in an attempt to resolve the contradiction between the August 27, 1979 memorandum and the subsequent three memoranda received into evidence. She stated she intended by the August 27, 1979 memorandum to have the sales personnel only de-emphasize the towing and road service portion of the motor club memberships being purchased. While her explanation coincides directly with the instructions in the September 2, 1979 memorandum, it does not adequately explain the clear language of the instructions received in Ocala on August 27, 1979. Ms. Finn's testimony on that point is not accepted as credible. This finding rests in part on the
evasiveness and demeanor the witness showed in answering both direct and cross- examination questions during her testimony.
Individual Transactions
On June 4, 1979 Ms. Lillie Mae Young purchased an automobile insurance policy at University Insurance in Ocala. 3/ As part of the transaction she also purchased a membership in the Nation Motor Club. During the course of that transaction she executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement.
When Ms. Young went to the Ocala office of University Insurance she asked to purchase the minimum insurance required by law to have her automobile registered. Whoever sold her the insurance did not mention to Ms. Young that she was purchasing a motor club membership. Ms. Young did not carefully read the documents she executed when she purchased her insurance. She believed that the person who sold her the insurance was a man. If Ms. Young had known that she was paying $35 for a motor club membership, she would not have bought it.
On June 2, 1979, Ms. Willie Mae McCray purchased personal injury protection and bodily injury insurance for $163 at the Ocala office of University Insurance. As part of that transaction she also purchased a membership in the Nation Motor Club for $35. In the course of the transaction she executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement. Both the motor club application and the premium finance agreement indicated the fee for the motor club was $35, but the evidence is not clear whether these documents were completed when Ms. McCray executed them.
When Ms. McCray went to the Ocala office she asked to purchase PIP insurance. She was told by the salesperson that she could not buy just PIP alone, but must also purchase "liability". Ms. McCray agreed to purchase both coverages because she needed to register her automobile. She was not aware on June 2, 1979 that she had purchased a motor club membership. She was not told by the salesperson, who was not Ms. Finn, that she was making such a purchase. If Ms. McCray had known that the motor club membership was a $35 charge over and above her insurance premium she would not have paid it.
At the time Ms. McCray bought her insurance she signed the documents mentioned above without reading them because she was in a hurry to get her insurance. She has difficult reading but did not mention her difficulty to the salesperson.
On June 15, 1979 Mr. Alton Starker purchased personal injury protection and bodily injury insurance for $183 at University Insurance in Ocala. As part of that transaction he also purchased a membership in the Nation Motor Club for $35. In the course of the transaction he executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement. The Nation Motor Club application which he signed indicated the club membership fee was $35. There is no evidence on whether the application was filled in at the time he signed it. There are two duplicate parts of the premium finance agreement in evidence. One part, the assured's copy, has only the dollar amounts filled in and Mr. Starker's signature; the other part, the agent's copy, is completely filled in and shows a $35 charge for Nation Motor Club membership. These two copies are part of a manifold tear- apart form. The original was not in evidence; therefore, it is impossible to tell which part of the premium finance agreement was filled in at the time Mr.
Starker executed the original. The copy which was given to him to retain for his records was the assured's copy which does not show an itemized charge for the motor club.
Mr. Starker's memory of the transaction is not accepted as credible. His testimony at the final hearing was impeached by a prior inconsistent statement he made in a discovery deposition. He denied signing the insurance application, yet without his signature he could not have purchased insurance which he testified he bought.
On May 5, 1980 Mr. James Clark purchased personal injury protection and bodily injury insurance for $274 from University Insurance in Ocala. As part of the transaction he also purchased a membership in the Associated Motor Club for $35. In the course of that transaction he executed two documents: an insurance application and a premium finance agreement. The finance agreement indicated the charge for the motor club was $35 but there is no evidence on whether the document was filled in at the time Mr. Clark signed it.
When Mr. Clark, who was accompanied by his wife, went to the Ocala office he asked to purchase the insurance necessary to "cover the vehicle, that's required for the law, and that was it." The salesperson who handled Mr. Clark's purchase did not show him anything which Mr. Clark thought indicated he purchased a motor club membership. Ms. Finn was not the salesperson in his transaction. Mr. Clark did not know he had paid a motor club membership fee until the investigation of this case by Petitioner began.
On December 14, 1979 Mr. Mark Alfarone purchased bodily injury, liability, property damage liability, comprehensive including collision, and uninsured motorist coverage for $579 at University Insurance in Ocala. As part of the transaction he also purchased a membership in the Nation Motor Club for
$35. In the course of the transaction he executed three documents: an insurance application, a premium finance agreement and a Nation Motor Club application. Both the motor club application and the premium finance agreement indicated that the membership fee was $35 but there is no evidence whether the documents were filled in at the time Mr. Alfarone executed them.
When Mr. Alfarone went to purchase his insurance he asked for full coverage because the new Corvette he was insuring was financed. He did not request a motor club membership. He already belonged to AAA. Sharyn Vittitoe, the wife of the office manager Robert Vittitoe, handled his purchase. Mr. Alfarone did not read all the documents Ms. Vittitoe handed him to sign. She did not fail to answer any of his questions about his coverage which she explained to him. He did not tell her that he was a member of AAA. At the time he purchased his insurance Mr. Alfarone was not aware that he was charged for a motor club. He does not recall anything about a motor club being discussed then. He also does not recall receiving any documentation in the mail which identified him as a member of the Nation Motor Club. Mr. Alfarone does not recall signing any document for the purchase of a motor club membership although in his cross-examination he admitted probably seeing the Nation Motor Club application before he signed it.
On September 26, 1979 Mr. James Curry purchased personal injury protection and bodily injury insurance on two automobiles for $299 at University Insurance in Ocala. As part of that transaction he also purchased two memberships, one per car, in the Nation Motor Club for a total of $53. In the course of the transaction he executed four documents: two Nation Motor Club applications, an insurance application and a premium finance agreement. One
motor club application indicated that the membership fee was $35. The other application showed a fee of $18 for a second car. The premium finance agreement indicated a charge of $53 for "NMC". There is no evidence on whether the documents were filled in at the time Mr. Curry signed them.
The evidence does not show what type of coverage Mr. Curry requested when he went to the Ocala office. At the final hearing he testified as follows:
(Mr. Sumner) Q All right. Did you have any particular insurance coverages in mind?
(Mr. Curry) A Well, I just wanted some where I could get my tag and, you know, cover some liability.
(Mr. Sumner) Q Did you explain that to the people at
the University Insurance Agency?
(Mr. Curry) A I don't know what I did. I don't know, really I don't. But I just told them I wanted some coverage, you know, to protect me on the road and, you know--
He did not remember the details of what happened during the transaction. He did not remember signing either his insurance application or his premium finance agreement. He did not read the documents he was asked to sign. At the end of the transaction he did not understand that he had purchased motor club membership.
On June 18, 1979 Ms. Betty Jean Nobles purchased personal injury protection and bodily injury insurance for $163 at University Insurance in Ocala. As part of that transaction she also purchased a membership in the Nation Motor Club for $35. In the course of her transaction she executed three documents: a premium finance agreement, an insurance application, and a Nation Motor Club application. Both the premium finance agreement and the motor club application indicated that the motor club membership fee was $35 but there is no evidence on whether the documents were filled in when Ms. Nobles signed them.
Ms. Nobles' testimony about the details of her insurance purchase has not given any weight here because at the final hearing she did not remember the transaction well. The following testimony is typical of her recollection:
(Mr. | Sumner) | Q | Did you have any particular insurance coverages in mind when you bought -- went down there to buy insurance? |
(Ms. | Nobles) | A | Not really, just full coverage. I needed insurance for a tag. |
(Mr. | Sumner) | Q | Did you ask for full coverage, or did you explain what you wanted to the people there? |
(Ms. | Nobles) | A | Well, I think I asked -- I really don't remember. I think I asked for full coverage. I didn't ask for insurance just for a tag, no. |
(Mr. Sumner) Q Okay. Miss Nobles, it's also been
established that at the time you bought your automobile insurance, that you were charged for an automobile club membership. Were you aware that you had paid for that particular item at the time that you bought your insurance?
(Ms. Nobles) A Well, to tell the truth, I can't say yes, and I can't say no, because I don't remember asking for one, no.
On July 6, 1979 Mr. Vernajor Parker purchased personal injury protection and bodily injury insurance for $293 from University Insurance in Ocala. As part of that transaction he also purchased a membership in the Nation Motor Club for $35. In the course of the transaction he executed three documents: an insurance application, a premium finance agreement and a Nation Motor Club application. Both the premium finance agreement and the motor club application indicated that the motor club membership fee was $35. There is no evidence on whether or not the motor club application and the premium finance agreement were completely filled in at the time Mr. Parker signed them. 4/
Mr. Parker went to the Ocala office with the intention of purchasing the minimum insurance he needed to register his car. He does not remember whether or not the man who sold him his insurance discussed towing and road service with him. Mr. Parker remembers reading what he considered the important parts of all the documents he signed.
The insurance policies of Mr. Parker, Mr. Curry and Ms. Young were not delivered to them but were retained in their file at University Insurance in Ocala. The Nation Motor Club Service contracts of Ms. Young, Mr. Alfarone and Mr. Parker were similarly retained in their files. These documents are necessary to a full understanding of the insurance coverage and motor club benefits the insureds purchased.
Because certain dates in these findings are crucial to the following legal conclusions the dates are summarized here:
Chronology of Transactions and Memoranda June 2, 1979 Willie Mae McCray
June 4, 1979 Lillie Mae Young
June 15, 1979 Alton Louis Starker
June 18, 1979 Betty Jean Nobles
July 6, 1979 Vernajor K. Parker
August 27, 1979 Memo received instructing no
disclosure of motor clubs.
September 2, 1979 Memo written instructing
explain all coverages but do not overemphasize towing and road service.
September 26, 1979 Memo written instructing make
sure insureds know all coverages on motor clubs.
September 26, 1979 James Alfred Curry, Jr. December 14, 1979 Mark Alfarone
Early 1980 Memo written instructing use small statements that applicants understand they have purchased a motor club for a separate charge.
May 5, 1980 James Franklin Clark CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Sections 120.57(1) and 120.65, Florida Statutes (1981).
By its Amended Administrative Complaint the Department seeks to suspend or revoke Respondent's license as a general lines insurance agent. Authorization for such action is found in both Sections 626.611 (compulsory revocation or suspension) and 626.621 (discretionary revocation or suspension), Florida Statutes. 5/ As alleged by the Administrative Complaint the pertinent portions of Section 626.611 are:
The department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent ... and it shall suspend or revoke the eligibility to hold a license or permit of any such persons if it finds that as to the applicant, licensee, or permittee any
one or more of the following applicable grounds exist:
* * *
If the license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.
Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.
* * *
(7) For demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
* * *
(9) Fraudulent or dishonest practices in
the conduct of business under the license or permit.
* * *
(13) Willful failure to comply with, or willful violation of, any proper order, rule, or regulation of the department or willful violation of any provision of this code.
Section 626.621, Florida Statutes provides: The department may, in its discretion,
deny, suspend, revoke, or refuse to renew or
continue the license of any agent...and it may suspend or revoke the eligibility to hold a license or permit of any such persons if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist under circumstances
for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:
* * *
(2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.
* * *
(6) If in the conduct of business under the license or permit he has engaged in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part VII of this chapter, or has otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.
The relevant provisions of Part VII of Chapter 626 referenced above include Sections 626.9521 and 626.9541, Florida Statutes (1981).
Section 626.9521 provides in part:
No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s.626.9561 to be, an unfair method of competition or an unfair or deceptive act or
practice involving the business of insurance.
Any person who violates any provision of this part shall be subject to the penalties provided in s.627.381.
Section 626.9541 explicates the alleged unfair competition charged in the Amended Administrative Complaint as follows:
The following are defined as unfair methods of competition and unfair or deceptive acts or practices:
* * *
Filing with any supervisory or other public official,
Making, publishing, disseminating,
circulating,
Delivering to any person,
Placing before the public,
Causing, directly or indirectly, to
be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement.
* * *
Knowingly making false or fraudulent statements or representations on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.
* * *
Knowingly collecting as a premium or charge for insurance any sum in excess of or less than the premium or charge applicable to such insurance, in accordance with the
applicable classifications and rates as filed with and approved by the department, and as specified in the policy; or, in cases when classifications, premiums, or rates are not required by this code to be so filed and approved, premiums and charges in excess of or less than those specified in the policy and as fixed by the insurer. This provision shall not be deemed to prohibit the charging and collection, by surplus lines agents licensed under part VI of this' chapter, of the amount of applicable state and federal taxes in
addition to the premium required by the insurer.
Compared with the foregoing legal labyrinth the factual allegations of the Amended Complaint are simple. Eight transactions are charged. The allegations as to each transaction are the same except for the dates and the customers. The following count is representative:
COUNT VI
That you, MARY LOU FINN, as the general lines agent of record for the University Insurance Agency, Ocala, Florida, or one of your agents or employees acting under your direction or supervision, on or about December 14, 1979, sold to Mark Alfarone automobile insurance coverage.
That you, MARY LOU FINN, or one of your agents or employees acting under your direction or supervision, charged Mark Alfarone for membership in an automobile club in the price of his automobile insurance premium without his knowledge or consent.
That Mark Alfarone neither requested nor desired to pay additional monies for
membership in an automobile club and would not have knowingly purchased the same at additional cost.
IT IS THEREFORE CHARGED that in the conduct of business under your license, you, MARY LOU FINN:
[Legal Conclusions Follow] Standard Of Proof
In license revocation cases such as this the Petitioner has the burden to prove the allegations of the Amended Administrative Complaint. Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st D.C.A. 1980). The standard by which the agency's proof is tested has not been clear in Florida. Fact finders such as judges, jurors and hearing officers are familiar with three standards of proof: preponderance of the evidence, clear and convincing, and beyond and to the exclusion of a reasonable doubt. Traditionally findings of fact once made by the fact finder have been reviewed by appellate bodies under the test of "competent substantial evidence." The fact finding tests are essentially weighing devices. Because appellate bodies do not reweigh evidence, 6/ they review a record only to determine if someplace in that record there appears evidence of sufficient reliability (competent substantial evidence) which should be allowed to support a factual determination. Town of Indialantic
v. Nance, 400 So.2d 37, 40 (Fla. 5th D.C.A. 1981); Hughes v Office of the Comptroller, So.2d 6 FLW 2490 (Fla. 2nd D.C.A. November 18, 1981); 5 Am Jur.2d, Appeal and Error 839 at 282 (1962). Once reliable evidence can be gleaned from the record which supports a finding, the appellate body cannot upset that finding. 5 Am Jur.2d, Appeal and Error 882 (1962).
Unfortunately the foregoing concepts have been confused in recent opinions concerning professional license revocation cases. Gans v. Department of Professional and Occupational Regulation, 2 FALR 239J (Fla. 3rd D.C.A. April 29, 1980) is an example. There the appellant argued in a license revocation case that a preponderance of the evidence test had been used by the Hearing Officer instead of the clear and convincing test, contrary to the holding of Walker v. State Board of Optometry, 322 So.2d 612 (Fla. 3rd D.C.A. 1975). In his opinion for the Court Judge Hendry asserted that the preponderance of the evidence is the correct test to be used in an administrative proceeding. Judge Nesbitt, specially concurring, argued that the proper test was competent substantial evidence. Judge Hubbart dissented. He correctly reasoned that competent substantial evidence was not a test to be employed by fact finders but was really a standard of review by appellate bodies. Because his argument cannot be better restated by the undersigned, it is quoted here:
Finally, I find nothing in Florida's Administrative Procedure Act which dictates a contrary result. It is true that an administrative agency in reviewing the findings of fact of a hearing examiner, as contained in the recommended order, may not reject or modify such findings unless it first determines that the findings of fact were not based on "competent, substantial evidence" in the record; Section 120.57(1)(b)9, Fla. Stat. (1979); moreover, an appellate court in reviewing final
administrative agency actions may not substitute its judgment for that of the agency as to the weight of evidence on the disputed findings of fact and is authorized to set aside such agency action only if it finds that such action depends on a finding
of fact that is not supported by a "competent, substantial evidence" in the record. Section 120.68(10), Fla. Stat. (1979). These are, however, standards by which an administrative agency and an appellate court must review findings of fact previously made by an
hearing examiner or other administrative finder of fact; they do not speak to the burden of proof which a hearing examiner, as here, must employ in making his findings of fact after a full evidentiary hearing. As such, these review standards have no relevance to the central issue of this case and in no sense conflict with the rule of the Walker decision. In this regard, I find the following principle of law entirely controlling:
"There is a distinction between the standard by which an administrative tribunal measures the proof presented to it. . .and the standard by which a reviewing court measures the correctness of an administrative order under review... See DeGroot v. Sheffield, (Fla. 1957), 95 So.2d 912, 916. The functions of the two tribunals are dissimilar and the standards are not interchangeable." Florida Dep't of Health and Rehabilitative Servs., Div. of Health v. Career Service Comm'n of the State of Fla., Dep't of Admin., 289 So.2d 412, 415, n.2 (Fla. 4th DCA 1974), quoted with approval in Fitzpatrick v. City of Miami Beach, 328 So.2d 578, 579 (Fla. 3d
DCA 1976).
It should be noted that the Hearing Officer in the Gans case actually employed a competent substantial evidence test. Board of Chiropractic Examiners v. Gans, Case No. 78-101 (Florida Division of Administrative Hearings, Recommended Order October 2, 1978). The District Court of Appeal, Third District, became aware of that fact after issuing its original opinion which was subsequently withdrawn.
The replacement opinion, with all three judges in agreement states:
The administrative order under review is affirmed upon a holding that: (a) the standard of proof employed by the hearing examiner in reaching the findings of fact in this cause was not one of preponderance of the evidence, as both parties to this appeal have mistakenly assumed, and, accordingly, we have no occasion to determine whether the utilization of such a standard would in the
abstract, constitute reversible error, as urged by appellant, it being abundantly clear that such an alleged error did not occur in this case.
Gans v. Department of Professional and Occupational Regulation, 390 So.2d 107 (Fla. 3rd D.C.A. 1980).
The opinions in Gans were followed by Bowling
v. Department of Insurance, 394 So.2d 165 (Fla. 1st D.C.A. 1981). The Court there held that the Hearing Officer (whose recommended order was adopted by the Department) erred in finding that Bowling had violated statutes regulating the conduct of insurance agents. In deciding the case the court properly applied the appropriate review standard, competent substantial evidence, and found that there was insufficient evidence in the record to support certain findings. Unfortunately the opinion contains language which can be interpreted to mean that the competent substantial evidence test should be used to determine the existence or nonexistence of facts during an administrative hearing. See for example, Smith v. School Board of Leon County, 405 So.2d 183, 186 (Fla. 1st
D.C.A. 1981); Office of Treasurer, Insurance Commissioner v. Azis, Case No. 80- 1278 (Florida Division of Administrative Hearings Recommended Order, June 3, 1981); Department of Professional Regulation, Board of Real Estate v. Miller, 3 FALR 2317A, 2319A (Florida Division of Administrative Hearings Recommended Order, August 14, 1981).
It frequently happens during a trial or a hearing that there is competent substantial evidence to support the existence of an alleged fact and there is also competent substantial evidence to support the non-existence of that fact. Because of its roots in the review process, competent substantial evidence provides no assistance to the fact finder in weighing evidence which may be equally competent and substantial yet contradictory. The task of the fact finder is to resolve the contradiction. This is where the traditional standards of proof give direction. The fact finder knows if the appropriate standard is preponderance of the evidence, then one scintilla of evidence more in favor of the existence of a fact than that evidence to the contrary will require him to find the fact exists. If the appropriate test is beyond and to the exclusion of the reasonable doubt he knows the evidence in favor of a fact must be so overwhelming as to exclude any reasonable contrary conclusion.
For the foregoing reasons I conclude that competent substantial evidence as discussed in Bowling is not the appropriate standard of proof to be used in this proceeding. Since license revocation cases are penal in nature, 7/ clear and convincing evidence is the applicable criterion for determining whether or not Petitioner has established the facts alleged in its Amended
Administrative Complaint. Walker v. Board of Optometry, 322 So.2d 612 (Fla. 3rd
D.C.A. 1975); Reid v. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd D.C.A. 1966).
Proof Of Allegations
The Respondent had no direct contact with any of the alleged customers of University Insurance in Ocala. None of the insurance purchasers remembers Ms. Finn as the person who sold him his policy. Because they were not called as witnesses there is no evidence from the Ocala salespeople who actually had contact with the complaining witnesses that Ms. Finn told them to "slide" motor clubs. The only link between Ms. Finn and the transactions alleged in the Administrative Complaint to violate the Insurance Code is the instructions she
gave the Ocala office in her memorandum received on August 27, 1979. It is therefore concluded that no nexus has been established here between Ms. Finn and all transactions which antedate August 27, 1979. See the chronology of transactions set out in Finding of Fact 30. For this reason, Counts I, II, III, VIII and IX should be dismissed.
The fact that Ms. Finn was the agent in charge of the Ocala office is not by itself sufficient to find her guilty of the alleged violations set out in the Counts above. Mere negligence in supervision of the salespeople even if proven, is not sufficient to sustain discipline in a license revocation case of this kind. Bach v. State Board of Dentistry, supra at 36.
Counts IV, VI and VII concern transactions subsequent to the August 27, 1979 memorandum. Mr. Curry purchased his insurance on September 26, 1979. That was the same day Respondent wrote her memo which purged her earlier instructions to slide motor clubs. The record is barren of evidence on when the September 26, 1979 memorandum was received or acted on in Ocala. If I assume arguendo that the Ocala office was operating under a continuing taint from the August 27, 1979 memorandum, it is still not permissible to conclude that Petitioner has proven a violation by clear and convincing evidence. Mr. Curry, when testifying three years after he bought his insurance, did not remember what coverage he asked for or many other significant details of his transaction.
When asked on cross-examination whether he remembered what happened at his transaction on September, 1979 he stated "No, I can't remember." Count VII of the complaint therefore must be dismissed for a lack of proof.
Counts VI and IV, alleged transactions which took place subsequent to September 26, 1979, when the improper instructions of the August 27, 1979 memorandum had been effectively countermanded. The link between Respondent and any misrepresentations which occurred in the sale of insurance to Mr. Alfarone and Mr. Clark had been severed. For this reason, Counts VI and IV should be dismissed.
Summary
The facts established here by clear and convincing evidence do not support a conclusion that Ms. Finn has violated any provisions of the Insurance Code as alleged in the Amended Administrative Complaint. This determination is not meant to condone in any way Respondent's instructions in her August 27, 1979 memorandum. Had she been charged with instructing her subordinates to violate the Insurance Code and therefore demonstrating a lack of fitness to be licensed as an insurance agent, this might have been a different case. Since no such facts were pled here, the Amended Administrative Complaint must be dismissed in its entirety. 8/
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
The Department of Insurance and Treasurer enter a final order dismissing the Amended Administrative Complaint against Mary Lou Finn.
DONE and RECOMMENDED this 12th day of January, 1982, in Tallahassee, Florida.
MICHAEL PEARCE DODSON
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 12th day of January, 1982.
ENDNOTES
1/ The deposition of the appeal is unknown to the Hearing Officer. Mr. Gunter's deposition was renoticed and taken.
2/ In the argot of the insurance industry to "slide" a coverage is to sell it without the purchaser being aware that he is charged for it.
3/ The facts relating to Ms. Young's transaction are not as complete as they are for other purchasers because her documents, Exhibit 8, were not offered into evidence.
4/ Portions of the insurance application were filled in when Mr. Parker signed it but he has no memory about how much of the premium finance agreement or motor club application was complete.
5/ See the discussion of these statutes in Bowling v. Department of Insurance, 394 So.2d 165, 167 and 171 1st D.C.A. 1981).
6/ DeGroot v. Sheffield, 95 So.2d 912, 916 (Fla.
1957); 2 Am Jur.2 Administrative Law s393 at 200 (1962).
7/ Lester v. Department of Professional and Occupational Regulation, 348 So.2d 923, 925 (Fla. 1st D.C.A. 1977).
8/ This recommendation avoids addressing the constitutional issues raised in Respondent's Amended Answer. The statutes challenged by Ms. Finn were recently found to be valid. Brewer v. Insurance Commissioner and Treasurer, 392 So.2d 593 (Fla. 1st D.C.A. 1981).
COPIES FURNISHED:
Daniel Y. Sumner, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301
David A. Yon, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301
John H. Haswell, Esquire
211 Northeast First Street Post Office Drawer 0 Gainesville, Florida 32602
Bill Gunter, Insurance Commissioner and Treasurer
The Capitol
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA OFFICE OF THE TREASURER
AND INSURANCE COMMISSIONER
IN THE MATTER OF MARY LOU FINN | ||
REVOCATION OF LICENSE AND | CASE NO. | 81-L-38S |
ELIGIBILITY FOR LICENSURE | DOAH CASE NO. | 81-1442 |
GENERAL LINES AGENT / | ||
FINAL ORDER
THIS CAUSE came before the Insurance Commissioner and Treasurer for consideration and final agency action after administrative proceedings designated Case No. 81-1442 were conducted before the Division of Administrative Hearings, Department of Administration. A Recommended Order was rendered by the Hearing Officer, which has been considered by the Petitioner, and a copy thereof is attached hereto and hereby made a part of this Order. A complete review of the record has been made and upon consideration thereof
IT IS ORDERED:
That the Hearing Officer's statement of procedural background is hereby adopted by the Petitioner in full.
That the findings of fact made by the Hearing Officer are adopted with the following exceptions:
In paragraph 10 of the Recommended Order the Hearing Officer's "finding" that "[t]he taint of the August 27 Memorandum .was eliminated by the September 2, 1979 Memorandum. . ." is considered a mixed question of law and fact. The factual portion of the finding is rejected because it is not supported by competent substantial evidence. The legal conclusion is also rejected upon review of the complete record. For purposes of organization, the reasons for rejection are discussed in paragraph 3(q) of this Order.
In paragraph 10 of the Recommended Order's legal conclusions section the Hearing Officer makes the following statement: "The only link between Ms. Finn and the transactions alleged in the Administrative Complaint to violate the Insurance Code is the instructions she gave the Ocala office in her memorandum received on August 27, 1979." That statement is rejected because it is not supported by competent substantial evidence, and is hereby rejected pursuant to Section 120.57(1)(b)(9), Florida Statutes. This statute requires that the Petitioner, in making such a rejection, descend to the particulars in the record, which are set forth as follows:
In addition to the August 27, 1979 Memorandum, authored by the Respondent, evidence was adduced at the administrative hearing in the form of a sworn statement by Robert Vittitoe, introduced into evidence as Respondent's Exhibit A, and deposition of Vittitoe in Evidence as Petitioner's Exhibit 1 in which he testified as the Manager of the Ocala Office, he and his wife were given verbal instructions by the Respondent, as the General Lines Agent responsible for the Ocala Office, in person and by telephone to "slide" auto club memberships. (Sworn Statement, Vittitoe 23-24) Vittitoe testified that these conversations occurred on more than one occasion (Sworn Statement Vittitoe
24) and that Respondent's and her husband tried to "put a little bit of heat" on the Ocala office after Vittitoe refused to follow Finn's directives. (Sworn Statement Vittitoe 24, 25)
Moreover, Vittitoe testified that since the opening of the Ocala office in 1977, he had been continuously instructed by the Respondent to always include the price of a motor club in a telephone quote without telling the prospective customer that the motor club was included in that quote. Vittitoe admitted following this practice. (Sworn Statement Vittitoe 10-11, 25-30, 34, 35)
Finally, Vittitoe admitted that each of his sales employees in the Ocala office individually read the Respondent's memoranda and that it was possible that these employees could have carried out her directives indicated in the August 27 Memorandum. (Sworn Statement Vittitoe 39; Deposition Vittitoe 5) This possibility gathers more certainty as the sales employees of the Ocala office received a commission directly from the sale of motor clubs, whereas Vittitoe, himself, was a salaried employee and only received an indirect commission from the sale of motor clubs. (Sworn Statement Vittitoe 35-36, Deposition Vittitoe 5, 6, 35)
That the Hearing Officer's Conclusions of Law and Recommendations are hereby rejected as being not in accordance with law. Following a review of the complete record, the following legal conclusions are hereby rendered by the agency pursuant to Section 120.57(1)(b)(9), Florida Statutes:
Accepting the Hearing Officer's finding that the testimony of witnesses Starker, Curry, and Nobles was not credible, the respective Counts III, VII and VIII in the Administrative Complaint involving those witnesses' purchase of insurance are hereby dismissed.
With respect to the remaining Counts I, II, IV, V, VI, and IX, the Petitioner expressly rejects the Hearing Officer's legal conclusion reflected in paragraph 9 of the Recommended Order that the Department was required to prove the allegations against the Respondent by clear and convincing evidence. This conclusion, by the Hearing Officer's own admission, directly conflicts with Howling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981) where the court expressly rejected the "clear and convincing" test in license revocation or suspension proceedings; 394 So.2d at 171. The Petitioner is unaware of any special exception allowing a hearing officer within the territorial jurisdiction of the First District Court of Appeals to disregard precedent established by that district court.
As to Counts I (Young), II (McCray), and IX (Parker) which all involved transactions occurring before the Respondent's August 27, 1979 Memorandum was received in the Ocala office, the record (see paragraph 2(b), supra) establishes a pattern of dishonest, deceptive, and fraudulent solicitation of insurance.
The Hearing Officer's findings of fact indicate Respondent, Mary Lou Finn, held a 2-20 (General Lines Agent) license and was the only agent responsible for the Ocala office. Those factual findings interlock with Section 626.747(1), Florida Statutes, which provides:
Each branch office of businesses established by an agent or agency, firm, corporation, or association, shall be in active, full-time charge of a licensed general lines agent.
Moreover, the Hearing Officer's findings of establishes and the record otherwise reflects that the Respondent primarily instructed and governed the standard operating procedure in Ocala by telephone and inter-office memoranda. (Sworn Statement Vittitoe 6, 11, 22-23, 28-29, 34; Deposition Vittitoe 5, 6, D 27-30; T
127, 128, 131, 132)
At the minimum, the Hearing Officer's findings and the record when read in its entirety (see paragraph 2 (b), supra) establishes that Young, McCray, and Parker were deceived by the Respondent's business practices such that those insured did not realize that they had purchased a motor club membership at significant cost as a part of their insurance transaction. In fact, the deception was so complete the customers did not realize they had access to the benefits of motor club membership. (See Recommended Order)
The Petitioner notes, as the Hearing Officer found in paragraph 27 of the Recommended Order, that the insurance policies and motor club contracts of Parker and Young were not delivered to them but were retained in the Ocala office files. The Petitioner agrees with the Hearing Officer's conclusion in paragraph 11 that "these documents are necessary to a full understanding of the insurance coverage and the motor club benefits the insureds purchased." This is noteworthy in light of the directions in the August 27 Memorandum that:
When PIP policy and club policy in we WILL NOT MAIL. We will keep their policies in their file. This will save on cancelled clubs when insureds see everything, plus it will save loads of postage.
The Hearing Officer did not find the August 27 Memorandum to be sufficient in itself to support the charges against the Respondent. Similarly,
the Petitioner considers the instructions given by the Respondent in the August
27 Memorandum for its cumulative impact with the other evidence previously specified in paragraphs 2(b), 3(d), 3(e) and 3(f) of this Order.
While there is no direct evidence that the Respondent's policies during the transactions involved in Counts I, II, and IX were as blatantly fraudulent as those instructed in the August 27 Memorandum, the conduct and policies instigated by the Respondent, as reflected by the record prior to that memorandum, are still culpable and accountable within the ambit of Sections 626.611(4), 626.611(5), 626.611(9), 626.611(13), 626.621(2), 626.621(3)*, 626.621(6)**, 626.611(7), 626.9521, 626.9541(11)(a), 626.9541(5)(a), and 626.9541(15)(b). This conclusion recognizes that the individuals in the above- mentioned counts were deceived and harmed as an incidence of purchasing insurance secured under the authority and responsibility derived from the insurance license of the Respondent.
In this conclusion it is specifically held that the Respondent was liable for the acts of the employees under her supervision and control at the Ocala office as the General Lines Agent in charge of that office under Chapter 626 and also because of common law rules of agent-principal. See Russell v. Eckert, 195 So.2d 617 (Fla. 2nd DCA 1967); Patek v. Associated Underwriters, Inc., 167 So.2d 721 (Fla. 3rd DCA 1964).
The Hearing Officer at paragraph II of the Recommended Order erroneously relied on Bach v. State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1980) in concluding that "mere negligence in the supervision of sales people, even if proven, is not sufficient to sustain discipline in a license revocation case of this kind." Bach, was limited in scope to a revocation of a dentist's license under Section 466.38. There the court noted that Section
466.38 required as a precondition to the suspension of the dentist's license that the dentist permit his employee to perform an unauthorized operation. The Bach court distinguished G. B. of Jacksonville, Inc. v. State, 371 So.2d 137(Fla. 1st DCA 1979) and Pauline v. Lee, 147 So.2d 359 (Fla. 2nd DCA 1962) , which cases held that the State Beverage Director correctly revoked certain beverage licenses because the licensee's employees had "persistently violated the law, leading to the conclusion that despite the licensee's absence from the premises, the licensee either condoned or negligently overlooked the legal activities." 378 So.2d 35, 36. The Bach court noted that Section 561.29 imposed a standard of simple negligence by the licensee as opposed to a stricter requirement of liability under Section 466.38 which requires proof that the licensee give his permission to his employee.
Likewise, the language of Sections 627.342, 626.734, 626.738 and 626.747, which impose responsibility on insurance agents for acts of their subordinates, are comparable to the language in the Beverage Code and do not contain the stricter permit" language that was crucial to the holding in Bach. Accordingly, the Department concludes that a licensee under Chapter 626 "is liable for the acts of its agents or employees if the licensee "failed to exercise ordinary care in the maintenance of the license premises or the supervision of the licensee's employees." Bach, supra pg. 36.
Even if the stricter standard of proof required in Bach applies to the instant case, the August 27 Memorandum operated minimally as a ratification of the transactions involved in Counts I, II, and IX and even more as a furtherance by the Respondent of the policies that she had implemented in the Ocala office prior to that time as specified in paragraphs 2(b) and 3(f) of this Order.
As to the remaining undismissed Counts IV (Clark), and VI (Alfarone), Petitioner rejects the Hearing Officer's legal conclusion and factual finding that the memoranda issued by the Respondent subsequent to her August 27 Memorandum entirely removed the taint of the August 27 Memorandum. Again, only a question of the degree of culpability on the part of the Respondent is involved -- not whether the charged statutes were violated. The subsequent memoranda, viewed in their most favorable light to the Respondent, only partially remedied the previous illegal, instructed procedures, and even continued to some extent the Respondent's policy of not being totally straightforward with her customers. For example, the subsequent memoranda when read as a whole continues to suggest that the Ocala employees deemphasize road repair and towing service. Also, there is no language in the subsequent memoranda advising the Ocala office employees to begin mailing insurance policies to the insureds.
Most importantly, the testimony of Clark and Alfarone, who stated that they were not advised by the employees of the Ocala office that they had purchased motor clubs nor did they request same, corroborates the Petitioner's conclusion that the subsequent memoranda did not remove all of the ill effects of the August 27 Memorandum as well as the Respondent's other pre-existing deceitful practices.
Thus, as to Counts IV and VI the Respondent is determined to be in violation of Sections 626.611(4), 626.611(5), 626.611(9), 626.611(13), 626.621(2), 626.621(3)***, 626.621(6), 626.611(7), 626.9521, 626.9541(11)(a) , 626954l(5)(a), and 626.9541(15)(b), which are more specifically set out in the Administrative Complaint.
Commensurate with the violations in connection with Counts I, II, IV, V, VI and IX, all agent insurance licenses heretofore issued to the Respondent and eligibility to hold such licenses are hereby suspended for a period of one year.
DONE and ORDERED this 31st day of March, 1982, at Tallahassee, Florida.
BILL GUNTER
Insurance Commissioner and Treasurer
ALLAN J. KATZ
Assistant Insurance Commissioner and Treasurer
ENDNOTES
1/ Count II only.
2/ Counts I & IX only. 3/ Count IV only.
COPIES FURNISHED:
John H. Haswell, Esquire
211 Northeast First Street Post Office Drawer 0 Gainesville, Florida 32602
Michael Pearce Dodson Hearing Officer
Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32301
Daniel Y. Sumner, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Apr. 01, 1982 | Final Order filed. |
| Jan. 12, 1982 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 31, 1982 | Agency Final Order | |
| Jan. 12, 1982 | Recommended Order | Evidence did not establish negligent, fraudulent or dishonest behavior advocating "sliding" motor club insurance by Respondent to her agents. |
DEPARTMENT OF INSURANCE AND TREASURER vs. ALBERT WADE ANDERSON, 81-001442 (1981)
DEPARTMENT OF INSURANCE AND TREASURER vs. CHARLES EDWARD JAMES, 81-001442 (1981)
DEPARTMENT OF INSURANCE AND TREASURER vs. HARRY JOSEPH FINN, 81-001442 (1981)
DEPARTMENT OF INSURANCE AND TREASURER vs RALPH SCOTT FRANCIS, 81-001442 (1981)
DEPARTMENT OF INSURANCE AND TREASURER vs. JEFFREY ALLAN AZIS, 81-001442 (1981)
