STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT ) OF INSURANCE AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 86-3444

)

THERESA GERARDA BLAIR, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly designated Hearing Officer, on February 25, 1987, in Gainesville, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: Wilbur W. Anderson, Esquire

Richard E. Turner, Esquire Office of Legal Services

Department of Insurance and Treasurer 413-B Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Theresa Gerarda Blair, pro se

4390 Northeast Second Court Ocala, Florida 32670

(No appearance at second portion of bifurcated hearing.)

This cause arose upon an Administrative Complaint filed by the Department of Insurance (Department) against Theresa Gerarda Blair alleging various violations of the Insurance Code more particularly set forth in the Administrative Complaint. Ms. Blair requested a formal proceeding pursuant to Section 120.57(1), Florida Statutes, concerning the charges in the complaint. After a number of procedural delays, the cause came on for hearing as noticed. On the first day of hearing, evidence was taken but certain subpoenaed witnesses called by the Department failed to appear through no fault of the Department, but due to illness or infirmity. The Hearing Officer, by agreement of the parties, rescheduled the hearing in Gainesville, Florida. Notice of that hearing was duly and timely issued and sent to the last-known address of the Respondent, notice to which address had caused her to appear at the initial hearing. The Respondent, however, failed to appear.

The Department is alleging that the Respondent engaged in unfair or deceptive acts or practices as defined in the various provisions of the Insurance Code cited in the Administrative Complaint and referenced and

discussed herein. The Department contends that the Respondent has demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, has made false representations with regard to applications for insurance and has allegedly misappropriated, converted or unlawfully withheld monies belonging to another.

At the hearing the Department called a total of five witnesses, consisting of Kimberly Ice, Diane McDougal, Mary Foeder, Marguerite Kozloski and Leon Kozloski. The depositions of Jewell Terwilliger and George Terwilliger were admitted into evidence as well, on behalf of the Petitioner.

The Petitioner elected to submit Proposed Findings of Fact and Conclusions of Law subsequent to the hearing and the filing of the transcript. Those proposed findings are addressed herein and are addressed again with specific rulings in the Appendix attached hereto and incorporated by reference herein.

Subsequent to the hearing the Respondent, by letter, moved to reopen the proceeding alleging that she had not been accorded an opportunity to be present and present her defense to the Department's case nor to cross-examine the Petitioner's witnesses. Accordingly, an Order to Show Cause was entered directing the parties to show cause why the evidence should be reopened and particularly why the Respondent allegedly had no notice of the second session of the bifurcated hearing, inasmuch as the notice thereof had been sent to the

last-known address of the Respondent, which was the same address to which the notice of the first hearing was sent and to which she responded by appearing at the first hearing. The Petitioner's response to the Order to Show Cause was timely received on July 29, 1987. The Respondent never responded to the Order to Show Cause. Hence the proceeding was not reopened for the taking of evidence.

The issue to be resolved in this proceeding concerns whether the Respondent committed the proscribed conduct as alleged in the Administrative Complaint and, if so, whether that constitutes violations of the statutory provisions pled as supportive of those charges. If that be the case, then it must be determined what, if any, penalty is warranted regarding her licensure status.

FINDINGS OF FACT

1. The Petitioner is an agency of the State of Florida charged with licensing insurance agents of all types, regulating the licensure status and enforcing the practice standards of licensed agents within the ambit of the powers granted it by the Legislature in Chapter 26, Florida Statutes. The Respondent at times pertinent hereto was a licensed health insurance agent in the State of Florida licensed and regulated as to her insurance agency practice by the Petitioner in accordance with the provisions of Chapter 626, Florida Statutes, and related rules. The Respondent, Ms. Blair, at times pertinent hereto was employed as a licensed health insurance agent by National Health Agency Associates, Inc.

   
   

2. On June 25, 1985, Ms. Blair went to the home of Marguerite J. Kozloski in Gainesville, Florida, ostensibly for the purpose of delivering a United General Life Insurance Company hospital indemnity policy (number 0981039). That policy had been sold to Ms. Kozloski by a former National Health Agency Associates, Inc. agent, Mr. Donald Johnson. In the course of meeting with Ms. Kozloski, Ms. Blair informed her that she did not really need the particular policy that the Respondent had come to deliver (policy number 0979258) which had previously been sold to her by agent Johnson. Instead, the Respondent indicated

   to Ms. Kozloski that she really needed a different health insurance policy or program and took a new application for that insurance from Ms. Kozloski, a different policy. Upon taking the application for the new policy which she was selling to Ms. Kozloski, the Respondent collected Ms. Kozloski's check payable to "National Health Agency" in the amount of $781. That check represented the initial annual premium payment for the policy the Respondent was selling to Ms. Kozloski. Upon concluding this arrangement, Ms. Blair informed Ms. Kozloski that she would have policy number 0979258 and number 0981039 cancelled (the policies sold to Ms. Kozloski by agent Johnson) and would have the full premiums for those policies refunded to Ms. Kozloski.

   
   

3. Later that same day the Respondent returned to her office and attempted to submit the application for the policy she sold to Ms. Kozloski to the insurer. Upon attempting to submit the application to the insurer, she was informed by an official of National Health Agency Associates, Inc. that the application could not be submitted to the insurer because it duplicated coverage on Ms. Kozloski.

   
   

4. After being informed that the application would not be accepted, the Respondent filled out and executed, without Ms. Kozloski's knowledge or consent, two applications for supplemental medical-surgical expense insurance to be issued by the insurer, Atlantic American Life Insurance Company. She forged Ms. Kozloski's signature on these applications. The Respondent also indicated on these applications certain representations including that Ms. Kozloski did not have existing coverage and that the applied-for policy was not intended to replace existing insurance. These representations were false and the Respondent knew at the time of making them that they were false. She was also aware that in forging Ms. Kozloski's signature on the applications that Ms. Kozloski had no knowledge and had not consented to her placing her name on the applications for insurance, nor consented to the alternative applications being filled out and submitted. Ms. Blair never returned any refund or return premium to which they were entitled to the Kozloskis. She engaged in this scheme to seek to have the policies originally sold by Donald Johnson cancelled and to have the policies she attempted to sell to the Kozloskis replace the outstanding coverage in order for her to obtain the sales commissions attributable to them.

   
   

5. The second "Kozloski application" was executed and forged by the Respondent when she learned from the insurer, (on July 8, 1985), that a second application to Atlantic American Life Insurance Company would be necessary to obtain the coverage requested in the first "replacement application" which had been completed by the Respondent and forged on June 25. The Respondent again falsely represented on that application that Ms. Kozloski had no existing or pending applications for Medicare supplement, hospital, medical or surgical insurance although the Respondent knew that to be a false representation. The Respondent also falsely represented, as to that second application, that the policy applied for would not replace any accident or sickness insurance presently applied for or already in force, although she knew that to be a false statement. Further, the Respondent failed to request that the original United General Life Insurance Company policy number 0979258 originally sold by Donald Johnson, be cancelled despite her representation to Ms. Kozloski that she would make such a request, which event would have entitled the policy holder to a refund of premium, which Ms. Kozloski never received.

   
   

6. On April 5, 1985, the Respondent went to the home of George A. and Jewel C. Terwilliger in High Springs, Florida, for the purpose of selling Ms. Terwilliger a nursing home care insurance policy. On that occasion, Ms. Terwilliger informed the Respondent that she could not afford to buy more

   insurance and that her husband refused to pay for any more insurance. The Respondent, after discussing the matter with the Terwilligers, nevertheless obtained an unsigned check from George A. Terwilliger (check number 1314) and persuaded Ms. Terwilliger to sign an application for insurance.

   
   

7. Thereafter, without the Terwilligers' knowledge or consent, the Respondent forged George A. Terwilliger's signature on that check and made the check out in the amount of $678. The Respondent thereafter submitted the check, together with Jewel C. Terwilliger's application, to National Health Agency Associates, Inc. The Respondent engaged in this scheme and transaction for the purpose of monetary benefit in the form of a sales commission she expected to earn for selling the Terwilligers the insurance policy based upon her misrepresentations.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has juris- diction of the subject matter of and the parties to these proceedings. Section 120.57(1), Florida Statutes.

   
   

9. Sections 626.611 and 626.621, Florida Statutes, empower the Department of Insurance to suspend, revoke or otherwise discipline a licensee for violations of applicable sections of Chapter 626, Florida Statutes, including those referenced below.

   
   

10. In Count I of the complaint, the Respondent is charged with having violated Section 626.611(5), which proscribes the willful misrepresentation of any insurance policy or willful deception with regard to any such policy or contract, whether the deception is done personally by the agent or in the form of dissemination of false information or advertising. There is no question, given the above Findings of Fact, that the Respondent willfully submitted two applications for insurance which contained representations which were false and which falsity the Respondent was aware of at the time she made the representations.

    
    

11. Section 626.611(7) provides as a grounds for licensure discipline the "demonstrated lack of fitness or trustworthiness to engage in the business of insurance." There is no question that the Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance as evidenced by the forging of Ms. Kozloski's name on the applications for insurance and the submitting of those applications knowing they contained false information and knowing that this scheme was engaged in without the consent or knowledge of the putative insured, Ms. Kozloski.

    
    

12. Section 626.611(8) provides, as grounds for discipline, act ions by an agent which demonstrate lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit. This charge has not been proven because it has not been shown that Ms. Blair did not have reasonably adequate knowledge or technical competence to engage in the subject insurance sales transactions and submissions of applications. Rather, she performed, at least as far as the record evidence indicates, all the necessary steps in selling a policy of insurance and submitting the application therefor to the insurer company. She simply engaged in repeated false representations designed to induce the insurer to undertake the coverage or to make it appear that the insured had willingly entered into the transaction.

13. Section 626.611(9), Florida Statutes, precludes an agent engaging in fraudulent or dishonest practices in the conduct of insurance business under the authority of his license or permit. Fraudulent or dishonest acts or practices inherently involve the necessity to demonstrate that the perpetrator had scienter or intent to engage in the dishonest conduct at the time the conduct was committed. Shelton vs. Florida Real Estate Commission, 120 So.2d 191, (Fla. 2nd DCA 1960). Here, the unrefuted evidence of record clearly shows that Ms. Blair committed the fraudulent representations regarding the Kozloski transaction with full knowledge that she was misrepresenting to Ms. Kozloski the state of her insurance coverage, and the false necessity that she replace the coverage already sold her with coverage to be sold by the Respondent. She then knowingly withheld funds that Ms. Kozloski was entitled to and forged her signature on the applications at issue, asking false representations in the body of the applications. The violation of paragraph (9) of this subsection, as charged, has clearly been established.

    
    

14. The Respondent has also been charged in Count I of the complaint with having violated Section 626.621(5), Florida Statutes, which prohibits violation of the provision against "twisting," a type of transaction defined in Section 626.9541(1)(1), Florida Statutes. "Twisting" in that paragraph is defined as "knowingly making any misleading representations or incomplete or fraudulent comparisons of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer." Unrefuted evidence establishes equivocally that the Respondent violated this provision, as prohibited by Section 626.621(5), Florida Statutes, by decrying the necessity for Ms. Kozloski to maintain the coverage sold her by agent Johnson originally, recommending and fraudulently inducing Ms. Kozloski to cancel or let the Respondent cancel that original coverage and substitute coverage sold to her by the Respondent with the motive that the Respondent would thus obtain a commission on the sale of the supposedly- substituted coverage.

    
    

15. The Respondent is also charged with regard to Count I with violating Section 626.621(6) which prohibits engaging in unfair methods of competition or unfair or deceptive acts or practices or having otherwise shown oneself to be a source of injury or loss to the public or detrimental to the public interest. Section 626.9521 prohibits a person engaged in the business of insurance from engaging in unfair methods of competition or unfair or deceptive acts or practices involving the business of insurance. Section 626.9541(1)(a)6 prohibits knowingly making, issuing, circulating any estimate, illustration, circular, statement, sales presentation, omission or comparison which is a misrepresentation for the purpose of inducing or intending to induce allapse, forfeiture, exchange, etc. of any insurance policy. Section 626.9541(1)(k)1 proscribes the knowing making of false or fraudulent statements or representations regarding an application for a policy for the purpose of obtaining a fee, commission or other benefit from any insurer, agent, broker or individual. Finally, Section 626.9541(1)1 regarding unfair methods of competition and unfair or deceptive acts, prohibits the misrepresentation of benefits, advantages, conditions or terms of any insurance policy. Concerning these last-named five subsections and paragraphs of Chapter 626, there is no question that the Respondent has violated them all by the various false representations and forgeries she committed regarding the Kozloski transaction.

    
    

16. Concerning Count II of the complaint, it is charged that the Respondent violated Section 626.621(7) and (9), Florida Statutes, concerning the demonstration of a lack of fitness or trustworthiness to engage in the business

    of insurance and engaging in fraudulent or dishonest practices in the conduct of business under her license. There is no question, regarding the Terwilliger transaction with which Count II is concerned, that the Respondent demonstrated a lack of fitness or trustworthiness to engage in the insurance business because she knew the consumers did not desire the insurance at issue and yet she not only obtained an unsigned check from them, but also submitted an application for them containing known misrepresentations and forged Mr. Terwilliger's name on the supposed premium check.

    
    

17. She also committed fraudulent and dishonest practices for purposes of paragraph (9) cited above by fraudulently endorsing Mr. Terwilliger's signature on the blank check and making the false representations referenced herein on the application for insurance involved. Additionally, she has violated Section 626.621(10) which prohibits misappropriation, conversion or unlawful withholding of monies belonging to insurers or insureds, etc. by her misappropriation and conversion of Mr. Terwilliger's funds without his or his wife's consent or knowledge, as evidenced by her forgery of Mr. Terwilliger's check.

    
    

18. The Respondent also obviously engaged in deceptive acts and practices by obtaining and signing the check of Mr. Terwilliger and submitting the application for insurance without their consent or knowledge. Such constitutes a violation of Section 626.621(6) because it amounts to conduct of business under her license involving unfair or deceptive acts or practices thereby rendering herself to be a source of injury or loss to the public or detrimental to the public interest. Finally, Sections 626.9521 and 626.9541(1)(k)1, Florida Statutes, have been violated with regard to Count II and the Terwilliger transaction in a similar manner to the way in which those two subsections were violated with regard to the Kozloski transaction. The Respondent clearly made knowing false and fraudulent representations regarding the application for insurance on behalf of the Terwilligers, which coverage they never wanted in the first place. Obviously, the conduct proscribed by these two subsections, and discussed above with regard to Count I, has been proven to have been committed in a similar context in the Terwilliger transaction.

    
    

19. In summary, the Petitioner produced four witnesses, the "consumers" involved, who established that the Respondent submitted the applications at issue without their knowledge and consent to the insurers. Initially, Ms. Ice, the agency employee, testified without contradiction that the Respondent had knowledge that the original application for the Kozloskis' insurance could not be submitted because it duplicated coverage already written and enforced by agent Donald Johnson. Both Mr. and Mrs. Kozloski established that the Respondent never returned to their home after the initial visit, hence, it was impossible for Mrs. Kozloski to have signed the applications involved and that, indeed, she did not sign them. The Department also, through expert witnesses, established that the questioned documents had not been signed by Mrs. Kozloski and that the signature on Mr. Terwilliger's check was not his signature. Only the Respondent had possession of these documents and the expert testimony was not rebutted.

    
    

20. In short, the charges in the complaint have been sustained with clear and convincing proof, with the exception of the charge concerning the Respondent's alleged lack of adequate knowledge and technical competence to engage in the subject transactions, which was not proven. Accordingly, the charges in all other particulars having been established and in view of the repetitive and intentional nature of the Respondent's miscreant conduct, a substantial penalty is warranted.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore

RECOMMENDED that a Final Order be entered by the State of Florida, Department of Insurance and Treasurer revoking the Respondent's licensure.

DONE and ORDERED this 7th day of October, 1987, in Tallahassee, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550 904/488-9675

FILED with the Clerk of the Division of Administrative Hearings this 7th day of October, 1987

COPIES FURNISHED:

Wilbur W. Anderson, Esquire Richard E. Turner, Esquire Office of Legal Services Department of Insurance

and Treasurer

413-B Larson Building Tallahassee, Florida 32399-0300

Theresa Gerarda Blair

4390 Northeast Second Court Ocala, Florida 32670

Honorable William Gunter Commissioner

Department of Insurance and Treasury The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Docket for Case No: 86-003444

Orders for Case No: 86-003444