STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1545

)

LORI ANN THOMAS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Don W. Davis, on June 20, 1989, in Clearwater, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Robert V. Elias, Esquire.

Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Thomas F. Woods, Esquire

1709-D Mahan Drive Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issue for determination is whether Respondent made or is accountable for misrepresentations that were made in the course of sales of automobile personal injury protection insurance policies to various consumers; thereby committing violations of Chapter 626, Florida Statutes, sufficient to subject Respondent's licensure as general lines insurance agent to disciplinary action.

PRELIMINARY STATEMENT

On March 15, 1989, Petitioner issued an Administrative Complaint containing allegations that Respondent, or her subordinates, made misrepresentations in the sale of automobile personal injury protection to 13 different individuals and thereby committed various violations of Chapter 626, Florida Statutes, sufficient to support the imposition of disciplinary sanctions against her license as a general lines insurance agent.

Respondent requested a formal administrative hearing on the charges contained in the Administrative Complaint that she, or subordinates at the Mr. Auto Insurance Company of Clearwater Inc., located in Clearwater, Florida, sold memberships in the Colonial Touring Association, a motor club, to individuals

who had requested only the purchase of personal injury protection insurance policies. Subsequently, the matter was transferred to the Division Of Administrative Hearings to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At hearing, the parties jointly moved to consolidate this matter, solely for the purpose of final hearing, with Division Of Administrative Hearings case number 89-1530. In that case, Respondent's brother faces similar charges with regard to the operation of offices of Mr. Auto Insurance of St. Petersburg Inc., located in St. Petersburg, Florida. The motion was granted.

At the hearing, Petitioner presented the testimony of Phil Adamo, Rachel Lareau, Patrick Golik, Kelly O'Brien, Richard Davis, Bruce Campbell, Jeri Exner and Susan Weatherwax. Petitioner also presented seven evidentiary exhibits.

Respondent testified on her own behalf and offered one evidentiary exhibit which was not admitted into evidence.

The transcript of the hearing was filed with the Division Of Administrative Hearings on June 30, 1989. The parties requested and were granted leave to file posthearing submissions more than 10 days after the filing of the transcript and, in accordance with Rule 221-6.031, Florida Administrative Code, waived provisions of Rule 28-5.402, Florida Administrative Code.

Proposed findings of fact submitted by the parties are addressed in the appendix attached to this recommended order.

FINDINGS OF FACT

1. Respondent is Lori Ann Thomas, currently licensed and eligible for licensure by Petitioner as a general lines insurance agent. Respondent has held such licensure status since March 12, 1985.

   
   

2. At all times pertinent to these proceedings, Respondent was the general lines agent of record for Mr. Auto Insurance of Clearwater Inc. (Mr. Auto), located in Clearwater, Florida.

   
   

3. On March 4, 1987, Kelly John O'Brien went to Mr. Auto after being notified by state officials that his failure to maintain required automobile insurance would result in the loss of his driver's license. He made a number of telephone calls to ascertain the amount of money necessary to purchase the minimum amount of insurance required by law at the least expensive price. Of the quotes O'Brien obtained, Respondent's price was the cheapest. O'Brien received a receipt from Respondent's agency in return for his payment of $82. The total premium charge for the personal injury protection (PIP) insurance purchased by him was $52.

   
   

4. As part of his purchase of PIP coverage, O'Brien was charged $30 for membership in the Colonial Touring Association, a motor club providing towing coverage and accidental death insurance benefits to members. O'Brien was not asked whether he wanted to purchase a membership in the Colonial Touring Association and would, if he had known extra cost was involved, have rejected the membership. During the course of the insurance purchase at Respondent's agency, O'Brien signed and initialled an application form for PIP coverage with

   B.I.G. Underwriters, Inc., a subsidiary corporation of Bankers Insurance Group, Inc., which discloses the $52 premium cost for PIP coverage.

5. In addition to signing and initialling the application form, O'Brien also signed and initialled a form supplied by Respondent indicating his rejection of bodily injury and property damage liability coverage; election of no-fault deductibility in the amount of $2,000; rejection of uninsured motorist coverage; rejection of basic property protection and collision insurance; and election to purchase the accidental death insurance benefit and motor club towing coverage package. Further, at the bottom of this form he signed a statement that he had read and understood all provisions of the form. It is found that O'Brien signed the form in order to acquire the PIP coverage which he sought to purchase and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

   
   

6. On May 28, 1987, Susan Weatherwax went to the offices of Mr. Auto to acquire the basic minimum required insurance coverage for registration of her automobile. A previous telephone survey by her indicated that Mr. Auto offered the cheapest price for the desired coverage. She was told by the salesman at the agency that the cost for PIP coverage would be $65. She received a receipt for this amount.

   
   

7. While at Mr. Auto, Weatherwax signed and initialled an application form for PIP coverage with B.I.G. Underwriters, Inc., a subsidiary corporation of Bankers Insurance Group, Inc., which discloses the correct premium cost for the PIP coverage purchased by her to be $35. Weatherwax also signed and initialled a form supplied by Respondent indicating rejection by her of bodily injury and property damage liability coverage; election of no-fault deductibility in the amount of $2,000; rejection of uninsured motorist coverage; rejection of basic property protection and collision insurance; and election to purchase the accidental death insurance benefit and motor club towing coverage package. Further, at the bottom of this form she signed a statement that she had read and understood all provisions of the form. It is found that Weatherwax was charged

   $30 for membership in the Colonial Touring Association, the accidental death insurance benefit and motor club towing coverage package, which she did not request to purchase. She signed Respondent's form in order to acquire the PIP coverage which she desired and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

   
   

8. On April 22, 1987, Bruce Campbell went to the offices of Mr. Auto to purchase the legally required PIP minimum coverage necessary to get tags for his automobile. He paid $82 and received a receipt for that amount. He also signed and initialled an application form for PIP coverage with B.I.G. Underwriters, Inc., a subsidiary corporation of Bankers Insurance Group, Inc., which discloses the correct premium cost for the PIP coverage purchased to be $52. He also signed and initialled a form supplied by Respondent indicating rejection of bodily injury and property damage liability coverage; election of no-fault deductibility in the amount of $2,000; rejection of uninsured motorist coverage; rejection of basic property protection and collision insurance; and election to purchase the accidental death insurance benefit and motor club towing coverage package otherwise known as membership in the Colonial Touring Association. Further, at the bottom of this form he signed a statement that he had read and understood all provisions of the form.

   
   

9. Campbell's testimony establishes that he purchased the motor club benefit package because he understood such purchase was required in order to receive the PIP coverage. It is found that he did not request to purchase the

   $30 membership in the Colonial Touring Association. He signed the form in order to acquire the PIP coverage which he desired and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

10. On a subsequent visit to Mr. Auto, Campbell purchased PIP coverage without the auto club membership, but only after specifically stating he did not want the coverage and waiting until the salesperson sought and received confirmation that such a sale could be made.

    
    

11. Patrick Golik went to Mr. Auto on January 23, 1987, to purchase PIP and liability insurance on his automobile. His testimony fails to establish that he was sold membership in the Colonial Touring Association without his informed consent. He did, however, profess dissatisfaction with the membership's benefits.

    
    

12. On May 5, 1987, Richard Davis went to Mr. Auto to buy just the basic amount of required insurance for a second automobile to "make it legal." He was informed that the premium cost for PIP coverage would be $65. He paid this amount and received a receipt. He also signed and initialled an application form for PIP coverage with B.I.G. Underwriters, Inc., a subsidiary corporation of Bankers Insurance Group, Inc., which discloses the correct premium cost for the PIP coverage purchased to be $35. He also signed and initialled a form supplied by Respondent indicating rejection of bodily injury and property damage liability coverage; election of no-fault deductibility in the amount of $2,000; rejection of uninsured motorist coverage; rejection of basic property protection and collision insurance; and election to purchase the accidental death insurance benefit and motor club towing coverage package otherwise known as membership in the Colonial Touring Association. Further, at the bottom of this form he signed a statement that he had read and understood all provisions of the form.

    
    

13. Davis' testimony establishes that he did not request to purchase the

    $30 membership in the Colonial Touring Association. He signed the form in order to acquire the PIP coverage which he desired and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

    
    

14. On May 2, 1987, Jeri Exner went to Mr. Auto to acquire PIP coverage. He was told the premium would be $65. He paid this amount and received a receipt. He also signed and initialled an application form for PIP coverage with B.I.G. Underwriters, Inc., a subsidiary corporation of Bankers Insurance Group, Inc., which discloses the correct premium cost for the PIP coverage purchased to be $35. He also signed and initialled a form supplied by Respondent indicating rejection of bodily injury and property damage liability coverage; election of no-fault deductibility in the amount of $2,000; rejection of uninsured motorist coverage; rejection of basic property protection and collision insurance; and election to purchase the accidental death insurance benefit and motor club towing coverage package otherwise known as membership in the Colonial Touring Association. Further, at the bottom of this form he signed a statement that he had read and understood all provisions of the form.

    
    

15. Exner's testimony establishes that he did not request to purchase the

    $30 membership in the Colonial Touring Association. He signed the form, but did not read it, in order to acquire the PIP coverage which he desired and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

    
    

16. The proof establishes that a general business practice prevailed at Mr. Auto, a corporation duly organized under the laws of the State of Florida, whereby consumers requesting to purchase PIP insurance were quoted a price including a membership in the Colonial Touring Association. Such memberships, while including a life insurance benefit, are not insurance policies.

    CONCLUSIONS OF LAW

    
    

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

    
    

18. The Administrative Complaint contains 13 counts charging Respondent with violations of Chapter 626, Florida Statutes. No direct admissible evidence was presented with regard to counts two, four, six, seven, ten, eleven, and thirteen. Consequently, Respondent is not guilty of the violations alleged in those counts.

    
    

19. As to the allegations contained in counts one, three, five, eight, nine and twelve of the Administrative Complaint, Petitioner bears the burden of proving by clear and convincing evidence that Respondent committed those offenses. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

20. Respondent was the general lines agent of record for the corporation known as Mr. Auto. As such agent, she was accountable for the actions of subordinates acting on behalf of the corporation. Section 626.734, Florida Statutes.

    
    

21. The proof is clear and convincing with regard to counts one, three, five, nine and twelve of the Administrative Complaint, that salespersons at Mr. Auto engaged in the practice of "sliding" insurance coverages, and collecting premiums which included payment for membership in the Colonial Touring Association, without the consent of their customers. Such practices violated provisions of Sections 626.611(5), (7), and (9); 626.621(2) and (6); 626.9541(1)(a)1 and (1)(o)1, Florida Statutes, which proscribe such willful misrepresentations and dishonest practices by an insurance licensee. Therefore, Respondent, as the general lines agent for the corporation, is guilty of these violations as set forth in counts one, three, five, nine and twelve.

    
    

22. The evidence is not clear and convincing that Respondent is guilty of the charge contained in count eight of the Administrative Complaint in view of the testimony of Patrick Golik which, when taken in its totality, merely establishes Golik's dissatisfaction with the product he purchased.

    
    

23. Petitioner correctly notes that proven violations of Sections 626.611(5), (7), and (9), Florida Statutes, mandate a period of suspension or revocation of licensure.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered suspending Respondent's license and eligibility for licensure as an insurance agent for a period of one year.

DONE AND ENTERED this 19th day of July, 1989, in Tallahassee, Leon County, Florida.

DON W. DAVIS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings. 1-15. Addressed.

16.-20. Accepted in part, but rejected as to the deception implied in proposed

finding 19 on the basis that a review of Golik's testimony shows he recalled being questioned about the purchase. He was dissatisfied with the company. 21.-32. Addressed. Respondent's Proposed Findings.

Respondent's proposed findings of fact consisted of two unnumbered paragraphs. The first paragraph is addressed in substance. The second paragraph is rejected as not supported by the weight of the evidence.

COPIES FURNISHED:

Robert V. Elias, Esq. Office of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Thomas F. Woods, Esq. 1709-D Mahan Drive Tallahassee, FL 32308

Honorable Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol

Tallahassee, FL 32399-0300

Don Dowdell, Esq.

The Capitol, Plaza Level Tallahassee, FL 32399-0300

Docket for Case No: 89-001545

Orders for Case No: 89-001545