STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1877

)

FRED HOEFUL MERCER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 2, 1989, in Deland, Florida, before the Division of Administrative Hearings, by its designated Hearing Officer, Diane K. Kiesling.

APPEARANCES

For Petitioner: Stephen C. Fredrickson

Attorney at Law

Department of Insurance and Treasurer Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Fred Hoeful Mercer, Pro Se

555 Cassadaga Road

Lake Helen, Florida 32744 STATEMENT OF ISSUES

The issue is whether the license of Respondent, Fred Hoeful Mercer, should be revoked or otherwise penalized based on the acts alleged in the Administrative Complaint.

PRELIMINARY STATEMENT

The Petitioner, Department of Insurance and Treasurer (the Department), presented the testimony of Eleanor v. Mack and Evelyn Vickers Lawry and had Exhibit 1 admitted in evidence. Mercer presented his own testimony.

The transcript of the proceedings was filed on June 29, 1989. Mercer waived filing of proposed findings of fact and conclusions of law. The department timely filed its proposed findings of fact and conclusions of law on July 14, 1989. All proposed findings of fact and conclusions of law have been considered. A specific ruling on each proposed finding of fact is made in the Appendix attached hereto and made a part of this Recommended Order.

FINDINGS OF FACT

1. Fred Hoeful Mercer is licensed and qualified for licensure as an insurance agent in the State of Florida. At the times relevant to this case, Mercer was licensed with Old Southern Life Insurance Company and American Integrity Insurance Company.

   
   

2. On April 9, 1985, Mercer was placed on probation for a period of two years pursuant to a Consent Order (Case No. 84-L-3I7SF).

   
   

3. In October, 1985, and again on or about August 10, 1987, Mercer went to the home shared by Evelyn Lawry and Eleanor Mack, sisters. Mercer went to their home to sell a Medicare Supplement policy.

   
   

4. At the time of each sales visit, Ms. Mack was covered by Medicare. Ms. Lawry was not covered by Medicare.

   
   

5. During each visit, both women told Mercer several times that Ms. Lawry did not have Medicare coverage. Mercer told both women that a Medicare Supplement policy would pay benefits even if Ms. Lawry was not covered by Medicare.

   
   

6. As a result of the October 1985, sales visit, Ms. Lawry bought the Medicare Supplement policy from American Integrity Insurance Company.

   
   

7. A person not on Medicare is not eligible for benefits under a Medicare Supplement policy. In fact, when Ms. Lawry submitted a claim to American Integrity in 1987, the claim was denied because she was unable to submit the required Medicare Explanation of Benefits form.

   
   

8. On August 10, 1987, Mercer returned to the sisters' home and tried to sell them new Medicare Supplement policies with Old Southern Life Insurance Company. The women signed up for the new policies but refused them when they came because they had found out that the Medicare Supplement policy would cover only if Medicare coverage already existed.

   
   

9. On both sales visits, Mercer made the primary sales presentations, but was accompanied by Horace LeGrave. Mr. LeGrave actually wrote the policies.

   
   

10. The sales commission paid by the insurance companies is 60% of the first year's premium. Mercer and LeGrave split the commission for both of these sales.

    
    

11. Ms. Lawry ultimately was refunded the premiums paid on both policies by the insurance companies.

    
    

12. At the time of the first solicitation visit in October, 1985, Mercer's license was on probation with the Department. That probation arose from an Administrative Complaint that involved multiple counts alleging misrepresentations in the sale of Medicare Supplement policies. Those sales were allegedly also with LeGrave as the writing agent.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction of the parties to and subject matter of these proceedings. Section 120.57(1), Florida Statutes.

14. Mercer is charged with violating the following sections of the Florida Statutes:

    
    

    626.611(1) Lack of one or more of the qualifications for the license or permit as specified in this code.

    * * *

    (5) Willful misrepresentation of any insurance policy . . .

    * * *

    1. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.

    * * *

    (13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.

    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.

    (3) Violation of any lawful order or rule of the department.

    * * *

    (6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, . . . or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

    626.9521 No person shall engage in this state in any trade practice which is defined

    in this part as, or determined pursuant to s. 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. 626.9541(1) UNFAIR METHODS OF COMPETITION

    AND UNFAIR OR DECEPTIVE ACTS--The following

    are defined as unfair methods of competition and unfair or deceptive acts or practices: --

    (a) Misrepresentations and false

    advertising of insurance policies. --Knowingly making, issuing, circulating, or causing to

    be made, issued, or circulated,

    any . . . sales presentation . . . which:

    1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.

    
    

15. Mercer made false statements to Ms. Mack and Ms. Lawry which induced Ms. Lawry to purchase Medicare Supplement policies in October 1985, and again in

    August 1987. His actions and misrepresentations clearly demonstrate a lack of fitness and trustworthiness to engage in the business of insurance. This constitutes a violation of Sections 626.611(1) and (7), Florida Statutes.

    
    

16. Additionally, these same acts by Mercer violate Sections 626.611(5) and (8) and 626.621(2). Section 626.9541(1)(a)1 prohibits the making of a sales presentation which misrepresents the benefits and terms of any insurance policy. A violation of this section is considered an unfair and deceptive trade practice, which in turn is prohibited by Sections 626.9521 and 626.621(6). Mercer is guilty of these violations as well.

    
    

17. Finally, Mercer has been previously disciplined by the Department and was on probation at the time of the October 1985 violations. The October 1985 violations constitute violations of Sections 626.611(13) and 626.621(3). See also Section 626.681(1).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Insurance Commissioner enter a Final Order revoking

the insurance license of Fred Hoeful Mercer.

DONE and ENTERED this 11th day of August, 1989, in Tallahassee, Florida.

DIANE K. KIESLING

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 11th day of August, 1989.

APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-1877

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case.

Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, Department of Insurance and Treasurer

1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 1-7(1-12).

COPIES FURNISHED:

Stephen C. Fredrickson Attorney at Law Department of Insurance Office of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Fred Hoeful Mercer

555 Cassadaga Road Lake Helen, FL 32744

Hon. Tom Gallagher State Treasurer and

Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300

Don Dowdell General Counsel

Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300

Docket for Case No: 89-001877

Orders for Case No: 89-001877