STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 83-530

)

EUGENE LIPOFSKY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, This cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on June 1, 1983, in Miami, Florida.

Petitioner Department of Insurance and Treasurer was represented by Curtis A. Billingsley, Esquire, Tallahassee, Florida, and Respondent Eugene Lipofsky represented himself.

Petitioner filed an Administrative Complaint seeking to suspend, revoke, or take other disciplinary action against Respondent as licensee and against his license to practice as an insurance agent under the laws of the State of Florida.

Respondent timely requested a formal hearing on the allegations contained within that Administrative Complaint. Accordingly, The issues for determination are whether Respondent is guilty of the charges contained in that Administrative Complaint and, if so, what disciplinary action should he taken, if any.

Petitioner presented the testimony of Lee Webb, Antje Kalb, Thomas J. McCorkle, Lazara C. Pena, and Robert T. Featherstone. The Respondent testified on his own behalf. Additionally, Petitioner's Exhibits numbered 1 through 20 and Respondent's Exhibits numbered 1 through 4 were admitted in evidence.

Both parties submitted posthearing proposed findings of fact in the form of a proposed recommended order. To the extent that any proposed findings have not been adopted in this Recommended Order, they have been rejected as not having been supported by the evidence, as having been irrelevant to the issues under

consideration herein, or as constituting unsupported argument of the parties or conclusions of law.

Petitioner's posthearing Motion to File First Amended Administrative Complaint and Petitioner's Motion to Strike and Amend Pleadings to Conform to the Evidence be and The same are hereby denied.

FINDINGS OF FACT

1. From January 15, 1980, until November 30, 1981, Respondent was the only licensed general lines agent at the C&M Insurance Agency of Dade County, located at 1014 Northwest 27th Avenue, Miami, Florida. At the same time, Respondent also sold insurance as Authorized Insurance Agency at The North Miami Flea Market, 14135 Northwest Seventh Avenue, Miami, Florida. While Respondent was the only licensed agent at that C&M address, his contract with C&M Insurance Agency expressly prohibited him and his employees or agents from soliciting or selling any form of insurance. Rather, the contract provided That Respondent was only permitted to use office space to prepare and file income tax returns at the C&M Northwest 27th Avenue address and also at C&M's other offices located on South Dixie Highway and on South State Road Seven. While doing business at the North Miami Flea Market, Respondent held himself out as president of Authorized Insurance Agency.

   
   

2. During the same time period, Respondent wrote business at The North Miami Flea Market during the week and not just on weekends. Further, on December 19, 20 and 22, 1920, Respondent wrote business at both The North Miami Flea Market and at the C&M Northwest 27th Avenue address.

   
   

3. On September 9, 1981, John G. Holmes completed an application and paid $639 for automobile insurance with National Security Insurance Company. The application was signed by Respondent and contains C&M's Northwest 27th Avenue address. Neither the application nor the insurance premium monies were ever forwarded to National Security Insurance Company. Holmes has never received either insurance coverage on his automobile or a refund of his insurance premium.

   
   

4. On October 6, 1981, Antje Kalb purchased an automobile. The salesman at the dealership told her she needed to purchase insurance and gave her the name and telephone number for C&M's Northwest 27th Avenue office. She called C&M, and someone from that Agency came to the dealership. Kalb gave to C&M's representative $783 for full automobile insurance coverage, and the C&M employee gave Kalb a receipt for her premium. The receipt carries the C&M Northwest 27th Avenue address, and the

   binder given to Kalb carries Respondent's signature. Neither Kalb's application nor her premium payment were ever forwarded to the insurer, Commercial Union Insurance Company, and Kalb has never received either her automobile insurance coverage or a refund of her premium payment.

   
   

5. On July 14, 1980, Sidney Sugarman from C&M's South State Road Seven office entered into a written agency agreement with Fortune Insurance Company. Between November 1, 1980, and January 31, 1981, Respondent signed and sent 23 applications for automobile insurance to Fortune Insurance Company, which applications reflected that the business had been written out of C&M's Northwest 27th Avenue address. Fortune issued policies to The insureds based upon those applications. Respondent performed all The acts and duties of a general lines insurance agent for Fortune Insurance Company.

   
   

6. On October 24, 1980, Respondent entered into a written agency agreement on behalf of Authorized Insurance Agency with Fortune Insurance Company. Between October 31, 1980, and January 31, 1981, Respondent signed and sent 14 applications for automobile insurance from Authorized Insurance Agency to Fortune Insurance Company. Fortune issued policies to the insureds based upon these applications. Respondent performed all The acts and duties of a general lines insurance agent for Fortune Insurance Company.

   
   

7. Respondent was not licensed with Fortune Insurance Company until June 17, 1981. Fortune Insurance Company and Respondent had no brokerage arrangements prior to June 17, 1981; rather, all applications submitted by Respondent to Fortune Insurance Company prior to that date were written as direct contracts and not through any brokerage arrangement.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. Section 120.57(1), Florida Statutes (1981).

   
   

9. During the formal hearing in this cause, Petitioner dismissed Count II of the Administrative Complaint filed herein.

   
   

10. Section 626.747(1), Florida Statutes, requires that: "Each branch place of business established by an agent or agency firm, corporation, or association, shall be in active full-time charge of a licensed general lines agent." At all times material hereto, Respondent was The only general lines licensed agent at the C&M office on Northwest 27th Avenue. However, the evidence establishes that Respondent was contractually prohibited from

    selling insurance at That address. Accordingly, he was not an "active" agent for that office. Further, the evidence shows that Respondent sold insurance for Authorized Insurance Agency at simultaneous times with his sale of insurance at C&M Insurance Agency. Thus, Respondent was not a "full-time" agent at the C&M agency. By allowing the use of his license at the C&M agency when he was not an active full-time agent there, Respondent has violated Section 626.743, Florida Statutes, and therefore Sections 626.611(4) and 626.621(2), Florida Statutes (using license to circumvent, and violating the insurance code)

    
    

11. Section 626.561(1), Florida Statutes, provides that premiums received by an agent shall be trust funds, and the agent shall account for and pay those monies to the insurer, insured or other person entitled thereto. The premiums paid by Holmes and Kalb in conjunction with their applications written by or through Respondent were never forwarded to the insurer. Accordingly, Respondent has violated Section 626.561(1), Florida Statutes, and Section 626.611(10), Florida Statutes (misappropriation).

    
    

12. Section 626.112(2), Florida Statutes, prohibits an agent from transacting business as to any kind of insurance for which he is not then licensed by the Department, and Section 626.331(2), Florida Statutes, provides That: "A general lines shall be required to have a separate license as to each insurer by whom he is appointed as an agent By transacting business as a general lines insurance agent for Fortune Insurance Company on behalf of Authorized Insurance Agency and on behalf of C&M Insurance Agency prior to being licensed with Fortune Insurance Company by Petitioner herein, Respondent has violated Sections 626.112(2) and 626.331(2), Florida Statutes.

    
    

13. Section 626.9541(5), Florida Statutes, prohibits a licensee from knowingly making and filing false statements. By representing himself to be an active full-time licensed general lines agent for C&M Insurance Agency at its Northwest 27th Avenue address, Respondent has violated Section 626.9541(5), Florida Statutes, and Section 626.621(5), Florida Statutes (unfair or deceptive acts or practices)

    
    

14. Although Kalb did not deal directly with Respondent in her attempted purchase of insurance, she dealt with someone at C&M's Northwest 27th Avenue office, at which location Respondent was the only licensed general lines agent and was therefore responsible. Although Kalb paid for full coverage, no insurance was ever provided to her. Similarly, The application signed by Holmes in his attempted purchase of insurance recites that it was processed through C&M's Northwest 23th Avenue office and is specifically signed by Respondent. Although Holmes paid for full automobile insurance coverage, none was provided. Accordingly,

    Respondent has violated Section 626.9541(15)(a), Florida Statutes, and therefore Section 626.621(6), Florida Statutes.

    
    

15. Section 626.611, Florida Statutes, sets forth grounds for compulsory discipline of a licensee such as Respondent and includes the following:

    
    

    (4) If The license or permit is willfully used, or to be used, to circumvent any of The requirements or prohibitions of this code.

    1. For demonstrated lack of fitness or trustworthiness to engage in the business of insur- ance.

    2. For demonstrated 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 busi- ness under The license or permit.

    (13) Willful failure to comply with, or willful violation of any provision of this code.

    Petitioner has clearly proven Respondent's repeated violations of These subsections of Section 626.611, Florida Statutes.

    
    

16. Petitioner has failed to prove that Respondent has violated Sections 626.611(5), 626.112(1), 626.421, 626.621(1) and (3), 626.9521, and 626.9541(11)(a), Florida Statutes, as charged in the Administrative Complaint filed herein.

    
    

17. In summary, Petitioner has met its burden of proving both numerous violations of Chapter 626, Florida Statutes, some of which require Petitioner to take disciplinary action and some of which allow Petitioner to take disciplinary action. No evidence has been offered by Respondent in mitigation.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered dismissing Count II of the Administrative Complaint filed herein; finding Respondent guilty of The allegations contained in Counts I, III, IV, V and VI of the Administrative Complaint filed herein; and

revoking all licenses currently possessed by Respondent and his eligibility to hold a license pursuant to Chapter 626, Florida Statutes.

DONE and RECOMMENDED this 19th day of October, 1983, in Tallahassee, Leon County, Florida.

LINDA M. RIGOT,

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 October, 1983.

COPIES FURNISHED:

Curtis A. Billingsley, Esquire Department of Insurance

413-B Larson Building Tallahassee, Florida 32301

Mr. Eugene Lipofsky 1851 NE 168th Street

North Miami Beach, Florida 33162

The Honorable Bill Gunter Insurance Commissioner and

Treasurer The Capitol

Tallahassee, Florida 32301

Docket for Case No: 83-000530

Orders for Case No: 83-000530