STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 82-108

)

JAMES EDWARD SNAPP, )

)

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 19 May 1982 at West Palm Beach, Florida.

APPEARANCES

For Petitioner: Julie St. John, Esquire

428-A Larson Building Tallahassee, Florida 32301

For Respondent: Michael L. Cohen, Esquire

909 North Dixie Highway

West Palm Beach, Florida 33401

By Amended Administrative Complaint dated 5 May 1982, the Department of Insurance, Petitioner, seeks to revoke, suspend or otherwise discipline the license of James Edward Snapp as an Ordinary Life, including Disability Agent, Dental Agent and Disability Agent in this state. As grounds therefor it is alleged in Count II that Respondent, in a series of transactions between him and Mabel McCarthy, a 79-year-old widow, received premiums for which he failed to properly account; made misrepresentations to Mrs. McCarthy regarding the benefits of insurance policies; made misrepresentations intended to cause Mrs.

McCarthy to surrender an existing policy; knowingly made false entry of material fact on statement to underwriters; made false statements in application for insurance for the purpose of obtaining a commission; knowingly made misleading representations of policies for the purpose of inducing Mrs. McCarthy to take out another policy; represented an insurer without authority to act as agent for that insurer; and generally engaged in fraudulent or dishonest practices. Count IV alleges Respondent accepted money from George Guertin, which the latter thought was to purchase insurance and he retained the funds without providing the insurance. It also alleges Respondent was not licensed with the insurance company from whom Guertin expected the policy to be issued.

Petitioner voluntarily withdrew Count I and Respondent's objection to proceeding on Count III, on grounds of insufficient notice, was sustained. The Amended Administrative Complaint containing Count III was filed 5 May 1982 and was not received by Respondent fourteen days prior to the hearing date of 19 May 1982.

Respondent stipulated that at all times here relevant he was licensed as alleged. Thereafter, Petitioner called four witnesses, Respondent testified in his own behalf and 20 exhibits were admitted into evidence. The parties further stipulated that Respondent's VA medical records would be admitted as late filed Exhibit 21 and the deposition of a medical witness would be admitted as late filed Exhibit 22. It was stipulated that both of these exhibits would be submitted by June 19, 1982. To date, neither of these exhibits has been received. The attorney for Petitioner advised that she had received no notification of the taking of the deposition for late filed Exhibit 22.

Proposed findings submitted by the Petitioner and not included below were not deemed material to the results reached.

FINDINGS OF FACT

1. James Edward Snapp is licensed by the Department of Insurance as an Ordinary Life, including Disability Agent, Dental Agent and Disability Agent and was so licensed at all times in 1981 and 1982 in his dealings with Mrs. Mabel McCarthy and Mr. George Guertin.

   
   

2. In July 1981 Respondent went to the apartment of Mabel McCarthy, a 79- year-old widow, and talked to her about insurance. His visit was unsolicited and Mrs. McCarthy initially told him she had adequate coverage with her Medicare, Medicaid and Blue Cross. Respondent discussed the issuance of a "gold" card which provided better coverage than she was presently receiving. They also discussed her $1,000 life insurance policy for which she had designated the Haven School in Miami as beneficiary. When she indicated she would also like to leave something to another school in Palm Beach County, Respondent suggested she cancel the $1,000 policy and take out two $5,000 policies and make each school beneficiary of one policy. Following Respondent's assertions to Mrs. McCarthy regarding her taking out different insurance policies, Mrs. McCarthy gave Respondent her check on 26 July 1981 in the amount of $1,100 made payable to Accident & Health Agency, the agent for whom Respondent worked. Mrs. McCarthy understood this to be the premium payment for the life insurance and hospitalization insurance policies. Respondent told Mrs. McCarthy the cash surrender value of her life insurance policy should be about

   $900. When she wrote Mutual of Omaha about the cash surrender value, she was advised it was nearer $700 and the company questioned her reasons for cancelling the policy. This aroused Mrs. McCarthy's suspicions and she called the Insurance Commissioner's branch office to inquire about Respondent. Up until this time she had full confidence in Respondent.

   
   

3. In the application for health insurance for Mrs. McCarthy which Respondent subsequently submitted 12 July 1981 to American Sun Life Insurance Company, he checked the "no" square to the question "Is the insurance applied for intended to replace any insurance presently in force?" knowing he had suggested to Mrs. McCarthy this policy would replace her Blue Cross insurance policy. The total premium on these policies, one providing for medical expenses and the other providing for nursing home care, is $530. American Sun Life Insurance Company does not sell life insurance.

   
   

4. On 28 July 1981 Respondent again visited Mrs. McCarthy, obtained her check in the amount of $380 made payable to Accident & Health Agency, and submitted an application to American Sun Life Insurance Company on behalf of Mrs. McCarthy which provides hospital and medical benefits. On this application

   he also checked the "no" square to the question about replacing existing insurance. The annual premium for this policy was $370.

   
   

5. Mrs. McCarthy also gave Respondent a check in the amount of $500 payable to Accident & Health Agency for additional policies. Before this check had been cleared, Mrs. McCarthy received the first policies Respondent had sold her and realized they were no different from her prior coverage, no "gold" card was included and neither was a life insurance policy. Upon receipt of these policies on 11 August 1981 Mrs. McCarthy stopped payment on the $500 check and again called the Insurance Commissioner's office.

   
   

6. When the Insurance Commissioner contacted American Sun Life Insurance Company with Mrs. McCarthy's complaint, they refunded $900 to Mrs. McCarthy for the policies they had issued. Those policies were for the maximum coverage Sun Life provides. The three policies issued by Orange State Life Insurance for various health care benefits were those applied for when the $500 check was written by Mrs. McCarthy and these policies were cancelled when payment was stopped on that check. The total premium for these policies was $449.99 plus a

   $26 policy fee.

   
   

7. Respondent obtained the name of George Guertin as a potential client and called him for an appointment to discuss insurance. Upon arrival 18 January 1982 shortly after the phone call, Respondent looked at two policies Guertin showed him covering Medicare Supplemental payments on Guertin and his wife. These policies were issued by Tara Life Insurance Company. Respondent told Guertin that the agent who sold him these policies had charged top price and he could get these policies for him at a lower premium. The premium paid on the policy issued to George Guertin was $482 and the premium on the policy issued to Alma Guertin was $445. Respondent was not authorized to solicit policies for Tara. Guertin gave Respondent his check payable to J. Snapp in the amount of

   $540 to renew the two policies with Tara Life Insurance Company. Guertin also gave Respondent his life insurance policy issued on John Hancock Mutual Life Insurance Company to inquire about the cash surrender value. This policy was later returned to Guertin without change. Respondent's testimony that the $540 was for services he was to provide the Guertins in preparing Medicare claims and that the Guertins understood this at the time the check was signed, is not credible.

   
   

8. George Guertin was born in Canada in 1903 but has lived in the United States for 65 years. Although he went to school in Canada through the eighth grade, he does not read English. George's brother Eme apparently lived with the Guertins and was disabled. Respondent offered to take Eme to the Veteran's Administration to get his disability pension increased. He was paid $250 for this service and for taking Eme to the VA on other occasions. Guertin testified that the signature on Exhibit 12 was not his signature and that on Exhibit 13 was not his wife's signature. Respondent testified that these "contracts" were signed by George Guertin and Alma Guertin in his presence. Regardless of the validity of the signatures, these "contracts" provide that compensation [of Respondent] shall be determined by mutual agreement. There was no mutuality of agreement that the $540 paid by Guertin to Respondent was for services to be rendered by Respondent in completing Medicare forms.

   
   

9. When Guertin was advised by Tara Life Insurance Company that his policies were about to lapse for nonpayment of premiums, he realized Respondent had not renewed these policies as he was told Respondent would do, he complained to the Insurance Commissioner's office, and he sent premium payments to Tara.

10. Respondent suffered injuries while serving in the Marine Corps in Korea. He was discharged with a 35 percent disability rating in 1955 and since that time he has been treated from time to time in VA facilities. He has had several heart attacks, five according to Respondent's testimony, and takes a wide variety of medication.

    
    

11. In his testimony Respondent admitted that he only sold insurance and left the doing of the paperwork associated with these policies to the agency for whom he works. He does not keep records of his insurance transactions because he has a "real tough time" doing so. He leaves those chores to the agency.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

13. Section 626.611, Florida Statutes, provides, inter alia, the Department of Insurance shall revoke or suspend the license of an insurance agent if it finds one or more of the following grounds exist:

    
    

    (5) 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 informa- tion or advertising.

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

    2. For demonstrating a lack of reasonably adequate 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.

    4. Misappropriation, conversion, or unlawful withholding of monies belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license.

    (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 the Code.

    
    

14. Section 626.621, Florida Statutes, provides similar grounds for discretionary revocation or suspension of a license and Section 626.9521 provides the Department may impose a monetary penalty on any person subject to Department jurisdiction who has engaged in unfair and deceptive acts involving insurance policies.

    
    

15. From the foregoing it is concluded that in his dealings with Mrs. McCarthy Respondent is guilty of misrepresentation regarding insurance policies regarding both benefits and surrendering existing policies; of knowingly making false entry of material fact on statement to underwriters; of making false statements on applications; of failure to properly account for funds received;

    and of failure to carry out the duties of an agent in procuring and delivering an insurance policy to the insured. With respect to the allegations involving his dealings with the Guertins, Respondent is guilty as alleged of obtaining funds from an insured for policies, not applying for the policies, and retaining the funds so received; of applying for insurance from insurer who he was not licensed to represent; and of making material misrepresentations pertaining to insurance policies and the obtaining of insurance.

    
    

16. It is further concluded that by reason of mental or physical disabilities or infirmities Respondent is not capable of performing the duties required of an insurance agent in soliciting insurance, properly accounting for funds received, and in protecting the rights of insureds as required by Chapter 626, Florida Statutes. It is, therefore,

RECOMMENDED that all licenses of James Edward Snapp to engage in the business of insurance be revoked.

ENTERED this 25th day of June, 1982, at 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 25th day of June, 1982.

COPIES FURNISHED:

Julie St. John, Esquire Michael L. Cohen, Esquire Department of Insurance 909 North Dixie Highway

428-A Larson Building West Palm Beach, Florida 33401 Tallahassee, Florida 32301

Honorable William Gunter State Treasurer and

Insurance Commissioner The Capitol

Tallahassee, Florida 32301

Docket for Case No: 82-000108

Orders for Case No: 82-000108