STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 86-2098

)

FRANK ALVIN LASHMAN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled case on October 29, 1986, in Fort Pierce, Florida.

APPEARANCES

For Petitioner: Richard E. Turner, Esquire

Department of Insurance and Treasurer 413-B Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Bruce M. Wilkinson, Esquire

55 East Osceola Street, Suite 100 Stuart, Florida 33494

PRELIMINARY STATEMENT

By administrative complaint filed with the Division of Administrative Hearings on June 10, 1986, Petitioner, Department of Insurance and Treasurer, seeks to discipline Respondent, Frank Alvin Lashman, a licensed insurance agent in the State of Florida. The Department asserts, inter alia, that Respondent solicited an application for a medicare supplement insurance policy which he failed to procure, and that he collected premium funds from the applicant which he misappropriated or converted to his own use.

At final hearing the Department called as witnesses: Martha Lunsford, Ronald J. Capone, and Lawrence F. Lawson. The Department's exhibits 1-7 were received into evidence. Respondent testified on his own behalf, and his exhibits 1 and 2 were received into evidence.

The transcript of hearing was filed November 7, 1986, and the parties were granted leave through November 17, 1986, to file proposed findings of fact. The parties proposed findings have been addressed in the appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent, Frank Alvin Lashman (Lashman), was at all times material hereto a licensed insurance agent in the State of Florida. Lashman is qualified for licensure and/or licensed as an Ordinary Life, including Health Agent, Dental Health Care Service Contract Salesman, and Legal Expense Insurance Agent.

   
   

2. At all times material hereto, all funds received by Lashman from consumers or on behalf of consumers representing premiums or monies for insurance policies were trust funds received in a fiduciary capacity. Such funds were to be paid over to the insurer, insured, or other persons entitled thereto, in the regular course of business.

   
   

3. On or about July 1, 1985, Lashman, as a general agent for American Integrity Insurance Company (American), solicited Martha Lunsford to purchase a medicare supplement insurance policy. On July 31 1985, Lashman secured an application for the subject insurance policy from Ms. Lunsford, and delivered to her a "certification" document which provided:

   
   

   That, I am a licensed agent of this insurance company and have given a company receipt for an initial premium in the amount of $189.20 which has been paid to me by ( ) check (x) cash ( ) money order.

   
   

4. The proof establishes that Lashman did not receive the initial quarterly premium of $189.20 from Ms. Lunsford, or give a company receipt for any monies. Rather, Lashman collected $25.00 on July 3, 1985 with the intention of submitting the application to American once he had collected the entire initial premium.

   
   

5. Over the ensuing months Lashman visited Ms. Lunsford on a number of occasions to collect the balance due on the initial premium. While the proof is uncontroverted that the full premium of $189.20 was never paid, there is disagreement as to the total amount Ms. Lunsford paid to Lashman.

   
   

6. The premium installments Ms. Lunsford paid to Lashman were in cash. Lashman kept no record of the amount or date of payment, and gave no company receipt for the monies collected. The only evidence of payment Lashman provided to Ms. Lunsford was a brief note on the back of his business cards stating the amount received. The last business card he gave to Ms. Lunsford reflects a payment of $60.00, and a balance due of $9.00. On balance, the proof establishes that Ms. Lunsford paid to Lashman $180.20 toward the initial premium of $189.20.

   
   

7. Under the terms of Lashman's general agent's contract with American, he

   was:

   
   

   . . . authorized to solicit applications for insurance for (American), to forward these applications to (American) for approval or rejection, and to collect only the initial premium payment due on such applications.

   While American averred that Lashman's contract did not permit him to collect the initial premium payment in installments, there is no such prohibition contained in the agreement or proof that Lashman was otherwise noticed of such a prohibition. Accordingly, there is no proof that Lashman committed any offense by collecting the premium in installments, by failing to remit any monies to American until he was in receipt of the full initial premium, or by failing to submit the application to American until the initial premium was paid in full.

   
   

8. Although Lashman is free of wrongdoing in the manner in which he strove to collect the initial premium and his delay in submitting the application to American, the proof does establish that Lashman breached a fiduciary relationship by failing to safeguard and account for the monies collected.

   
   

9. On November 22, 1985, Ms. Lunsford filed a criminal complaint against Lashman for his failure to secure the subject insurance policy. Incident to that complaint, Lashman was interviewed by a criminal investigator with the State Attorney's Office and served with a subpoena duces tecum which required the production of:

   
   

   ANY AND ALL RECORDS PERTAINING TO THE INSURANCE POLICY SOLD TO . . . MARTHA D. LUNSFORD ON JULY 3, 1985 BY FRANK LASHMAN, ACTING AS AGENT FOR AMERICAN INTEGRITY INSURANCE COMPANY.

   
   

10. During the course of his interview, Lashman told the investigator that he had not procured the policy because the initial premium had not yet been paid in full. Lashman further stated that although he kept no records of the payments made, all funds received from Ms. Lunsford had been deposited in his account with Florida National Bank. As of December 20, 1985, Lashman's account with Florida National Bank carried a balance of $5.81.

    
    

11. At hearing Lashman averred that he had erred when he advised the investigator that he had deposited the monies he received from Ms. Lunsford in his account with Florida National Bank. According to Lashman, he put the money, as he collected it, into an envelope, which he kept in the file with Ms. Lunsford's insurance papers. Lashman's explanation for not exhibiting the envelope and money to the investigator when questioned was ". . . he didn't ask me for that." Lashman's explanation is inherently improbable and unworthy of belief.

    
    

12. On January 12, 1986, the investigator advised Lashman's attorney that a warrant had been issued for Lashman's arrest on the complaint filed by Ms. Lunsford. On his counsel's advice, Lashman sent Ms. Lunsford a cashier's check in the sum of $149.00, as a refund of premiums paid. Ms. Lunsford did not negotiate the check, nor was it of a sufficient sum to represent a return of all premiums paid by Ms. Lunsford.

    
    

    CONCLUSIONS OF LAW

    
    

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

14. Pertinent to these proceedings, Section 626.611, Florida Statutes, provides:

    
    

    The department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjuster or the permit of any service representative, supervising or managing general agent, or claims investigator, and it shall suspend or revoke the eligibility to hold a license or permit of any "such person if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist:

    * * *

    (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    * * *

    1. Fraudulent or dishonest practices in the conduct of business under the license or permit.

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

    
    

15. Lashman's misappropriation or conversion of the monies entrusted to him by Ms. Lunsford, and his failure to account therefor, constituted a clear violation of Section 626.611(7)(9) and (10), Florida Statutes, and was contrary to the public trust inherent in his licensure as an insurance agent. Natelson

1. Department of Insurance, 454 So.2d 31 (Fla. 1st DCA 1984).

   Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the licensure and qualification for licensure as an

   insurance agent of Respondent, Frank Alvin Lashman, be REVOKED.

   
   

   DONE and ENTERED this 21st day of November, 1986 in Tallahassee, Florida.

   
   

   WILLIAM J. KENDRICK

   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 21st day of November, 1986.

   
   

   APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-2098

   
   

   The Department's proposed findings of fact are addressed as follows:

   
   

   1. Addressed in paragraph 1.

   2. Addressed in paragraph 3.

   3. Addressed in paragraph 7.

   4. Not relevant.

5-22. Addressed in paragraphs 3-7.

23-27. Addressed in paragraphs 8-12.

Respondent's proposed findings of fact are addressed as follows:

1. Addressed in paragraph 1.

2. Not relevant.

3-10. Addressed in paragraphs 3-7.

1. Addressed in paragraph 12.

2. Not relevant.

13-15. Addressed in paragraph 7.

COPIES FURNISHED:

Richard E. Turner, Esquire Department of Insurance

and Treasurer

413-B Larson Building Tallahassee, Florida 32399-0300

Bruce M. Wilkinson, Esquire

55 East Osoeola Street Suite 100

Stuart, Florida 33494

Honorable William Gunter

Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32301

Docket for Case No: 86-002098

Orders for Case No: 86-002098