STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF THE TREASURER, )

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 89-2919

)

PAUL JUDSON LOVELACE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on October 4, 1989, in Miami, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Robert V. Elias, Esquire

Office of the Treasurer, Department of Insurance

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: No Appearance

STATEMENT OF THE ISSUES

1. Whether Respondent committed the offenses described in the administrative complaint?

   
   

2. If so, what punishment should he receive?

PRELIMINARY STATEMENT

On April 11, 1989, Petitioner filed an administrative complaint charging that Respondent had engaged in conduct which constituted grounds for the suspension or revocation of his general lines insurance agent license. The complaint alleged that on March 11, 1985, while he was the general lines agent of record for Dixie Insurance Brokers, Respondent received a completed application for automobile insurance, along with a down payment, from Elsa Garcia and thereupon signed and gave to Garcia a binder reflecting that her insurance coverage was effective that day, notwithstanding that the application indicated that coverage would commence on April 2, 1985. According to the complaint, Garcia was involved in an automobile accident on March 23, 1985, and her insurance company has refused to pay any claims for damages resulting from the accident on the ground that her coverage was not effective until after the accident. The complaint further alleged that during the time that he was the general lines agent for Dixie Insurance Brokers of record, Respondent merely

"rented" his license to the agency inasmuch as he was "not in the full-time active control of that office" and "never personally signed any applications for insurance." By letter dated April 25, 1989, Respondent denied that he had "violated any provisions of the Florida Insurance Code." In view of Respondent's denial of wrongdoing, Petitioner, on May 31, 1989, referred the matter to the Division of Administrative Hearings for the assignment of a Hearing Officer.

The hearing in the instant case was originally set for July 20, 1989, but was subsequently continued until October 4, 1989, at the request of both parties. On October 2, 1989, Respondent filed a motion requesting a second continuance. The motion was opposed by Petitioner. On October 3, 1989, the Hearing Officer issued an order denying the requested continuance.

Although given notice in accordance with Section 120.57(1)(b)2, Florida Statutes, Respondent did not take advantage of his opportunity to appear and participate in the October 4, 1989, hearing on the charges against him.

Petitioner, on the other hand, appeared and participated through counsel. It presented the testimony of two witnesses: Alan D. Kruger, Garcia's attorney in the litigation resulting from her automobile accident; and Burton Powell, an investigator employed by Petitioner who investigated the allegations against Respondent. In addition to the testimony of these witnesses, Petitioner offered six exhibits, all of which were received into evidence.

At the close of the hearing, upon being advised that Petitioner would be furnishing him a copy of the transcript of the hearing, the Hearing Officer announced on the record that post-hearing pleadings were due ten days following the filing of the hearing transcript with the Clerk of the Division of Administrative Hearings. The transcript was filed with the Clerk on October 16, 1989. Petitioner filed its proposed recommended order on October 26, 1989. The findings of fact proposed by Petitioner have been carefully considered and are addressed in the Appendix to this Recommended Order. To date, Respondent has not filed any post-hearing pleading.

FINDINGS OF FACT

Based on the record evidence the Hearing Officer makes the following Findings of Fact:

1. Respondent is now, and has been for approximately the past 20 years, licensed by Petitioner as a general lines insurance agent.

   
   

2. On July 3, 1986, Petitioner received a complaint concerning Respondent from Elsa Garcia. Garcia reported that she had purchased automobile insurance through Dixie Insurance Brokers and had been given a temporary insurance binder bearing the signature of a "Paul J. Lovelace" reflecting that her coverage was to be effective March 11, 1985. According to Garcia, however, she had subsequently discovered, after having been involved in an automobile accident on March 23, 1985, that her insurance coverage had not taken effect until after the accident.

   
   

3. Garcia's complaint was assigned to one of Petitioner's employees, Burton Powell, to review and investigate. As part of his investigation, Powell contacted Alan D. Kruger, Garcia's attorney. Kruger supplied Powell with Garcia's affidavit and other pertinent documents, including a copy of Garcia's automobile insurance application and the temporary insurance binder she had been given by Dixie Insurance Brokers.

4. The application reflects that Garcia was seeking coverage for the period from April 2, 1985, to October 2, 1985. The binder, on the other hand, indicates that it was to be effective for one month commencing, not April 2, 1985, but March 11, 1985. Someone other than Respondent signed his name to both the application and the binder. 1/

   
   

5. On various occasions prior to December 18, 1987, Respondent was the general lines insurance agent of record for Dixie Insurance Brokers. 2/ On these occasions he never personally signed any insurance applications, nor did he otherwise play any role in the operation and control of the agency. By his own admission, he simply allowed the agency to use his license, without any restrictions imposed by him, in exchange for monetary consideration. In so doing, he willfully engaged in a scheme designed to circumvent the licensing requirements of the Florida Insurance Code.

   
   

   CONCLUSIONS OF LAW

   
   

6. No person may lawfully transact business as a general lines insurance agent in the State of Florida unless currently licensed to do so by Petitioner. Sections 626.041(2) and 626.112, Fla. Stat. Furthermore, Section 626.747(1), Florida Statutes, requires that any office where such business is transacted "shall be in the active full-time charge of a licensed general lines agent."

   
   

7. Once issued, a license to act as a general lines insurance agent must be suspended or revoked by Petitioner if it is determined that the licensee has committed any of the offenses described in Section 626.611, Florida Statutes. Among these offenses are the following:

   
   

   1. If the license . . . is willfully used . . . to circumvent any of the requirements or prohibitions of this code.

   2. Willful misrepresentation of any insurance policy . . . or willful deception with regard to any such policy

      . . ., done either in person or by form of dissemination of information or advertising.

      * * *

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

      * * *

      (9) Fraudulent or dishonest practices in the conduct of business under the license

      * * *

      (13) Willful failure to comply with, or willful violation of, any proper order or rule of the [D]epartment [of Insurance] or willful violation of any provision of this code.

      
      

8. In its discretion, Petitioner may suspend or revoke the license of an insurance agent for the commission of any of the offenses enumerated in Section 626.621, Florida Statutes. These offenses include the following:

   (2) Violation of any provision of this code or any other law applicable to the business of insurance in the course of dealing under the license.

   * * *

   (6) In the conduct of business under the license . . ., engaging in unfair methods of competition or in unfair or

   deceptive acts, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

   
   

   In lieu of license suspension or revocation, as punishment for the commission of these offenses, Petitioner may impose an administrative fine and/or place the licensee on probation for a period not to exceed two years, provided the licensee has no prior disciplinary record. Sections 626.681 and 626.691, Fla.

   Stat.

   
   

9. "No revocation [or] suspension . . . of any [insurance agent's] license is lawful unless, prior to the entry of a final order, [Petitioner] has served, by personal service or certified mail, an administrative complaint which affords reasonable notice to the licensee of the facts or conduct which warrant the intended action and unless the licensee has been given an adequate opportunity to request a proceeding pursuant to s. 120.57." Section 120.60(7), Fla. Stat.

   
   

10. The licensee must be afforded a formal evidentiary hearing, if, upon receiving such written notice, he disputes the alleged facts upon which Petitioner has indicated it intends to act. Sections 120.57(1) and 120.60(7), Fla. Stat. At the hearing, Petitioner bears the burden of proving by clear and convincing evidence that the licensee engaged in the conduct alleged in the administrative complaint and thereby committed an offense warranting the suspension or revocation of his license. See Ferris v. Turlington, 510 So.2d

    292 (Fla. 1987); Pascale v. Department of Insurance, 525 So.2d 922 (Fla. 3d DCA 1988). "The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established." Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th DCA). If Petitioner fails to adduce such evidence establishing the licensee's guilt, it may not suspend or revoke his license based on the charges set forth in the administrative complaint.

    
    

11. In the instant case, Petitioner has served on Respondent an administrative complaint alleging that Respondent engaged in conduct constituting grounds for the suspension or revocation of his general lines insurance agent license. In Count I of the complaint, Petitioner alleges that Respondent violated Sections 626.611(5),(7),(9) and (13) and Section 626.621(2) and (6), Florida Statutes, as a result of his actions in response to Elsa Garcia's March 11, 1985, request that Dixie Insurance Brokers assist her in obtaining insurance for her automobile.

    
    

12. Whether evaluated by the "clear and convincing evidence" standard or the less demanding "preponderance of the evidence" test, the proof submitted at hearing in the instant case is insufficient to establish that Respondent had any dealings, either direct or indirect, with Garcia. There was no testimony from any witness who had personal knowledge of Respondent's involvement, if any, in

    the efforts made by Dixie Insurance Brokers to procure insurance for Garcia. Neither Respondent, Garcia nor anyone connected with Dixie Insurance Brokers testified. Although Respondent did not testify at hearing, a copy of a deposition he had given on December 18, 1987, was offered into evidence by Petitioner and received by the Hearing Officer. A review of the deposition, however, does not shed any significant light on the issue. Respondent admitted during the deposition that he previously had been associated with Dixie Insurance Brokers, but he did not remember the dates of his association with the agency and he denied having any knowledge regarding the Garcia matter. In addition to a copy of the deposition, Petitioner also produced copies of Garcia's automobile insurance application and the temporary insurance binder she had been given by Dixie Insurance Brokers, both of which documents bear, what purports to be, Respondent's signature. While this evidence, at first blush, may appear to be particularly damning, closer inspection and examination reveals that these signatures were not placed on the documents by Respondent. 3/ Having failed to adequately prove that Respondent signed these documents or in any other way participated in the attempt to obtain automobile insurance for Garcia, Petitioner should dismiss Count I of the administrative complaint against Respondent.

    
    

13. In the second and final count of the complaint, Petitioner alleges that Respondent violated Sections 626.611(4), (7), (9), and (13) and 626.621(2), Florida Statutes, by "renting" his license to Dixie Insurance Brokers. In the aforementioned deposition that Respondent gave on December 18, 1987, he volunteered the information that he had engaged in such a practice on various occasions. There being no record evidence to the contrary, Respondent's admission constitutes clear and convincing evidence of his guilt of the charge that he "rented" his license to Dixie Insurance Brokers, an offense for which his license must be suspended or revoked pursuant to Section 626.611, Florida Statutes. Such an offense is especially egregious because it seriously undermines the fundamental purpose of Petitioner's licensing authority, which is "to facilitate the public supervision of [insurance-related] activities in the public interest." In view of the seriousness of the offense committed by Respondent, the revocation of his license is warranted.

RECOMMENDATION

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

RECOMMENDED that Petitioner enter a final order (1) dismissing Count I of the administrative complaint; (2) finding Respondent guilty of Count II of the administrative complaint; and (3) revoking Respondent's general lines insurance agent license for his having engaged in the conduct specified in Count II of the administrative complaint.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 2nd day of November, 1989.

STUART M. LERNER

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 2nd day of November, 1989.

ENDNOTES

1/ This finding is based upon the Hearing Officer's comparison of these signatures against those found on the letters contained in Respondent's licensure file that are part of Petitioner's Exhibit 1.

2/ The evidence is insufficient to establish, however, that Respondent was so associated with Dixie Insurance Brokers in March, 1985.

3/ See footnote 1, supra.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 89-2919

The following are the Hearing Officer's specific rulings on the findings of fact proposed by Petitioner:

1. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order.

2. Accepted and incorporated in substance.

3. Accepted and incorporated in substance.

4. Accepted and incorporated in substance.

5. Accepted and incorporated in substance.

6. Rejected because it is not supported by persuasive competent substantial evidence.

7. Accepted and incorporated in substance.

8. Rejected because it is beyond the scope of the charges

9. Rejected because it is beyond the scope of the charges.

10. Rejected because it adds only unnecessary detail.

11. Rejected because it adds only unnecessary detail.

COPIES FURNISHED:

Robert V. Elias, Esquire Department of Insurance

412 Larson Building Tallahassee, Florida 32399-0300

Paul Judson Lovelace

17900 North Bay Road, #307

North Miami Beach, Florida 33160

Paul Judson Lovelace Route #1, Box 146

Saltville, Virginia 24370

Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Don Dowdell General Counsel

State Treasurer and Insurance

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Docket for Case No: 89-002919

Orders for Case No: 89-002919