Chavis, duly designated Hearing Officer of the Division of Administrative Hearings, on April 27, 1983, in Clearwater, Florida.
For Petitioner: William W. Tharpe, Jr., Esquire
For Respondent: George W. Greer, Esquire
This case concerns the issue of whether Respondent's license as an Ordinary Life including Disability agent should be suspended, revoked, or otherwise disciplined for making certain misrepresentations to a Mr. Roger L. Robert in connection with the sale of a life insurance policy to Mr. Robert. A second issue relating to such disciplinary action is whether the Respondent improperly applied to become an insured under a group insurance policy. At the formal hearing, the Petitioner called as witnesses John E. Riley, Roger L. Robert, Angela Stackler, Marie Ellena Mullins, Frederick P. Quinn. The Respondent called as witnesses Baron Kramer, and the Respondent, Stanford J. Sabarsky. The Petitioner offered and had admitted into evidence Petitioner's Exhibits 1 through 7.
Counsel for the Petitioner and counsel for the Respondent submitted proposed findings of fact and conclusions of law to the Hearing Officer for consideration. To the extent that the findings of fact herein are consistent with those proposed findings, the proposed findings were adopted by the Hearing Officer. To the extent that the findings herein are inconsistent with the proposed findings the proposed findings were considered by the Hearing Officer and rejected as having been unsupported by the evidence or as being unnecessary to the resolution of this cause.
As to Count I of the Administrative Complaint, the parties stipulated to certain facts alleged in the Administrative Complaint, and those facts are found as facts in Paragraphs 1 through 9 below:
Respondent, Stanford J. Sabarsky, at all times material herein, represented the All American Life Insurance Company as a licensed Ordinary Life, including Disability Agent.
Stanford J. Sabarsky did on or about September 16, 1980, contact one Roger L. Robert, President of Freight Sales Centers, Inc. of Tampa, Florida for the purpose of soliciting an application for life insurance from Mr. Robert.
At that time and place, Respondent represented to Mr. Robert that he could purchase a seven hundred fifty thousand dollar ($750,000.00) life insurance policy to be issued by the All American Life Insurance Company with an initial annual premium payment of fourteen thousand two hundred and eighty-five dollars ($14,285.00)
As a result of said application, the All American Life Insurance Company subsequently issued to Mr. Robert policy number L1124920 effective November 11, 1980, in the face amount of seven hundred fifty thousand dollars ($750,000.00).
Premium payments on policy number L1124920 were made by Mr. Robert on a monthly basis from October, 1980, to November, 1981.
On or about November, 1981, Mr. Robert received notice from the All American Life Insurance Company that the second annual renewal premium on policy number L1124920 was due.
On or about December 4, 1981, Mr. Robert requested that the renewal premium be paid from the cash value of his policy.
As a result of the request, the second year annual renewal premium on policy number L1124920 was paid for by a policy loan against said policy, thereby reducing the net insurance protection of that policy.
That Respondent, Stanford J. Sabarsky, earned a sales commission due to the issuance of policy L1124920.
Prior to purchasing policy L1124920, Mr. Robert was given a sales presentation in his office by the Respondent. It was represented to Mr. Robert, by Mr. Sabarsky, that after the first year's premium was paid, the premium would thereafter be paid by the cash value and he would not have to make any more premium payments. Mr. Sabarsky also explained to him that the cash value could be borrowed out of the policy at approximately seven percent interest.
It was Mr. Robert's understanding that after he paid the first year's premium, he would never have to pay out any more money for the life insurance coverage. He expressed this understanding to Angela Stackler, an employee, in the presence of Respondent, and Respondent did not inform him that his understanding was incorrect.
In approximately November, 1981, Mr. Sabarsky returned to Mr. Robert's office. At that time, Mr. Sabarsky was questioned by Mr. Robert and his employee Ellena Mullins about the fact that they had received a bill for the next year's premium. In response to the inquiry, Mr. Sabarsky related that the first year's premium would carry the policy and that Mr. Robert wouldn't have to pay any more money.
Mr. Sabarsky did not explain to Mr. Robert in November, 1980, or in November, 1981, the out-of-pocket expense which Mr. Robert would have to pay each year in order to borrow the cash value to pay the premium. In order to obtain those loans annually, Mr. Robert, within six years of the policy, would have out-of-pocket interest expense of $3,779.00, and in ten years, would pay interest of $10,163.00 in order to maintain the policy in effect.
On April 1, 1982, Mr. Robert, after making inquiry to All American Life Insurance Company, received a letter setting forth the out-of-pocket expenses which would be required of him in order to maintain the life insurance policy in effect.
COUNT II
As to the allegations of Count II of the Administrative Complaint, the parties stipulated to those facts found in Paragraphs 14 through 16 below.
That at all times pertinent to the dates and occurrences referred to in this Administrative Complaint, Respondent, Stanford J. Sabarsky, was qualified and licensed as an insurance agent in this state.
On or about January 29, 1979, Stanford J. Sabarsky, while licensed as an insurance agent for Home Security Life Insurance Company, did solicit and sell to Roger L. Robert, President of Freight Sales Center, Inc. of Tampa, Florida, a group disability insurance plan for the employees of Freight Sales Center, Inc.
That on or about February 12, 1981, Stanford J. Sabarsky, signed an application to Home Security Life Insurance Company to have his name added to said group disability insurance plan and indicated on said application that he was an employee of Freight Sales Center, Inc.
Prior to signing the application on February 12, 1981, the Respondent had asked Roger L. Robert to allow him to add his name to the group disability insurance plan of Freight Sales Center, Inc.
As a result of the February 12, 1981, application, the Respondent was, in fact, added as an insured to the group disability insurance policy. He remained as an insured under the policy until approximately May, 1981. In March, 1981, the Respondent submitted a claim to Home Security Life Insurance Company. The claim was paid.
The application signed by the Respondent (Petitioner's Exhibit 6) on February 12, 1981, reflected that he worked a minimum of 30 hours per week for Freight Sales Center, Inc, that his date of employment was 1/30/81, and that his base earnings was $600 per week. These facts were not true. At no time from January 30, 1981, to May, 1981, was the Respondent an employee of Freight Sales Center, Inc.
The Respondent was aware at the time that he signed the application that he was not an employee of Freight Sales Center, Inc.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this action.
Under the provisions of Sections 626.621 and 626.611, Florida Statutes (1979), the Department of Insurance is empowered to suspend, revoke, or otherwise discipline a licensee for any of those grounds listed in those sections.
Count I of the Administrative Complaint charges Respondent with having violated the following subsections of Section 626.611:
(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 dissemina- tion of information or advertising.
For demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
For demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.
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.
Count I also charges the Respondent with violations of the following subsections of Section 626.621:
(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 pro- hibited 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 following subsections of Section 626.9541 were also alleged to have been violated by Respondent under Count I:
Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, state- ment, sales presentation, omission, or comparison which:
Misrepresents the benefits, advan- tages, conditions or terms of any insurance policy.
(5)(a) Knowingly:
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, cir- culated, delivered to any person, or placed before the public,
any false material statement.
(5)(b) Knowingly making any false entry of a material fact in any book, report, or state- ment of any person, or knowingly omitting to
make a true entry of any material fact pertain- ing to the business of such person in any book, report, or statement of such person.
(11)(a) 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.
(11)(b) Any agent, solicitor, examining physician, applicant, or other person who knowingly makes any false and fraudulent statement or representation in, or with reference to, any application or negotiation for insurance, in addition to any other penalty provided in this act, shall, upon conviction, be guilty of a misdemeanor of the second degree, punishable as provided in s.775.082, s.775.083, or s.775.084.
Count II of the Administrative Complaint charged Respondent with violations of Sections 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.621(2), 626.621(6), 626.9541(5)(a), 626.9541(5)(b) , 626.9541(11)(a), and 626.9541(11)(b), Florida Statutes (1979)(set forth above).
The facts in the instant case establish that the Respondent represented to Roger L. Robert that he could purchase a whole life insurance policy with $750,000 coverage by paying the first year's annual premium and thereafter paying the annual premium out of accumulated cash value. As a result of these representations, Roger L. Robert understood he would not have to pay any more money after the first year in order to keep the policy in effect. This understanding was stated to Respondent as well as employees of Mr. Robert in Respondent's presence. This incorrect understanding was not corrected by
Respondent. At the end of the first year's premium payments, Respondent again represented to Mr. Robert that the first year's annual premium would carry the policy for the remainder of his life. At no time did the Respondent reveal to Roger L. Robert the substantial interest payments that would be required to be paid out-of-pocket each year by Mrs. Robert in order to continue to borrow the cash value to pay the premiums. These facts constitute a violation of 626.611(5), 626.621(6), 626.9541(11)(a), and 626.9541(5)(a), as alleged in Count I.
The facts also establish that in February, 1981, the Respondent submitted a false application to be added as an insured to a group insurance policy. In order to qualify for such coverage, Respondent had to be an employee of Freight Sales Center, Inc. and work at least 30 hours per week for that company. Respondent was not an employee of Freight Sales Center, Inc. and knew that at the time he signed the application. These facts constitute a violation of Sections 626.611(5), 626.611(9), 626.621(6), and 626.9541(5)(a), and 626.9541(11)(a) and (b), Florida Statutes (1979) as alleged in Count II.
The evidence under Count I and II did not establish violations of Sections 626.611(7), 626.611(8), 626.611(13), 626.621(2), and 626.9541(11)(b), Florida Statutes (1979).
