vs. ) CASE NO. 89-4986
Respondent. )
Pursuant to notice, a final hearing in the above-styled matter was held on April 25, 1990, in Fort Pierce, Florida, before Joyous D. Parrish, a designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:
For Petitioner: Nancy S. Isenberg
St. Petersburg, Florida 33743 STATEMENT OF THE ISSUES
The central issue in this case is whether the Respondent is guilty of the violations alleged in the amended administrative complaint filed January 30, 1990; and, if so, what penalty should be imposed.
This case began on August 11, 1989, when the Department of Insurance, Office of the Treasurer (Department) filed an administrative complaint against the Respondent, Lawrence Hugh Sussman, and alleged numerous violations of Sections 626.611, 626.621, and 626.9541, Florida Statutes. All of the alleged violations were incidental to the sale of insurance policies by the Respondent to elderly individuals residing in the St. Lucie County area. The Respondent timely filed a response to the administrative complaint, disputed the allegations of fact, and requested a hearing in connection with the charges.
The case was forwarded to the Division of Administrative Hearings for formal proceedings on September 12, 1989.
At the hearing, the Department presented the testimony of the following witnesses: Julia D. Whitham; Edward W. Whitham, Sr.; Ruth G. Stone; Martha Klingensmith; Rosa Mae Ferrell; and David V. Smith. The Department's exhibits numbered 1 through 10 and 12 were admitted into evidence. The Respondent testified and presented the following witnesses: Wanda Dirks and James Bessimer. Respondent's exhibits numbered 1 through 4 were admitted into evidence.
After the hearing, the transcript of the proceedings was filed with the Division of Administrative Hearings on May 24, 1990 and the parties timely filed proposed recommended orders which have been considered in the preparation of this order. Specific rulings on the proposed findings of fact are included in the attached appendix.
Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made:
The Department is the state agency responsible for the licensure and discipline of persons holding or those eligible to hold various insurance licenses.
At all times material to this case, Respondent was licensed and eligible for licensure in this state as a health insurance agent.
For all policies described below, Respondent was eligible to receive a sales commission and a bonus package which provided Respondent incentive to complete sales of insurance policies.
At all times material to this case, Respondent acted as a sales agent for the following insurance companies: Diversified Health Services, National States Insurance Company, Penn Treaty, and Transport Life. Respondent sold health insurance policies, Medicare supplements, home nursing-care policies, nursing home policies, and booster plans to supplement additional coverage under Part B of Medicare.
On or about April 20, 1988, Respondent went to the home of Martha and Sam Klingensmith in Port St. Lucie, Florida. Respondent's visit was in response to an information lead card that Mrs. Klingensmith had mailed to an insurance company.
Mr. Klingensmith had had surgery in January, 1988, on a malignant brain tumor. Mrs. Klingensmith was anxious for her husband to receive the best care possible and hoped to obtain insurance benefits to help with the costs associated with that care. Mrs. Klingensmith told Respondent about her husband, who was too sick to be interviewed by Respondent (he was bedridden in another room). At that time Mrs. Klingensmith advised Respondent that she and her husband had Medicare supplement policies through a group policy from AARP. Respondent did not review that policy.
On or about April 20, 1988, Respondent completed insurance applications for Mr. and Mrs. Klingensmith for nursing home insurance policies. The application form provided, in part, the following questions:
Is the insurance being applied for intended to replace any accident or sickness insurance, health service or health maintenance contract?
* * *
Complete the following for each person named above who now has insurance in force or pending:
* * *
Does any person above have or ever had any of the following: (Underline condition)
A. Tumor, cancer, malignancy or growth of any kind?
* * *
g. Disease of the rectum or intestine, stomach, kidney, prostate, urinary bladder, liver, gall bladder?
* * *
7.a. Has any person named above consulted or been treated by any physician or practitioner in the last five years?
b. Has any person named above been confined in a hospital in the last five years?
* * *
9.a. List conditions for which medication has been taken or doctor consulted within the past six months:
* * *
10. If any part of questions 6 or 7 was answered YES give details--otherwise--answer question by stating "NONE"
On the application form for Mr. Klingensmith, Respondent wrote the following responses: as to question 4, "No" was entered; as to question 5, "NONE" was entered; as to 6.a. "Yes" was checked; as to questions 7a. and 7b., "Yes" was checked; as to question 9, only medications not conditions were listed; and under question 10, the remaining effects were indicated as "Good Health." The answers given by Respondent to questions 5, 9, and 10 were incorrect and contrary to the information Mrs. Klingensmith had given Respondent. Mrs. Klingensmith signed the application for her husband.
On Mrs. Klingensmith's application form completed by Respondent on April 20, 1988, the answer to question 5 was incorrect and contrary to the information Mrs. Klingensmith had given Respondent.
On or about May 17, 1988, Respondent returned to the Klingensmith home and completed an application for Mr. Klingensmith for an extended care insurance policy. The application for that policy was identical to the one described above. Respondent completed the form and gave the same responses that are indicated above. Respondent knew that Mr. Klingensmith had the National States policy from April, 1988, and he failed to include that information on the application. Further, since Mr. Klingensmith remained bedridden, the response of "good health" to question 10 continued to be false and contrary to the information supplied by Mrs. Klingensmith.
On August 17, 1988, Respondent went to the Klingensmith home and completed two applications for Mr. 5 Klingensmith: one for a Medicare supplement insurance policy and one for a hospital confinement indemnity insurance policy; both to be issued by National States.
On September 14, 1988, Respondent went to the Klingensmith home and completed an application for Mr. Klingensmith to receive a medical/surgical insurance policy from National States. That application did not disclose any of the prior policies sold by Respondent, was again signed by Mrs. Klingensmith (her husband continued to be gravely ill), and falsely stated that Mr. Klingensmith was in good health.
At all times material to the sales of the five policies described above for Mr. Klingensmith, Respondent knew or should have known that Mr. Klingensmith was terminally ill. Respondent either did not report the information given by Mrs. Klingensmith or chose not to inquire further based upon the answers she gave him. Mr. Klingensmith died, at home, in October, 1988.
In connection with the Klingensmith policies Respondent was required to complete a certification form pursuant to Rule 4-46.004, Florida Administrative Code. That form is to be signed by the insurance applicant. Without Mrs. Klingensmith's prior consent or knowledge, Respondent executed certification forms on behalf of the Klingensmiths.
In August, 1988, Mrs. Klingensmith asked Respondent to examine a cancer insurance policy issued by Bankers Fidelity Life Insurance Company covering the Klingensmiths. Respondent failed to disclose that policy on the applications completed in August and September, 1988. Further, Respondent failed to accurately disclose the benefits of that policy to Mrs. Klingensmith. The cancer policy would provide additional benefits which the Respondent should have known could be helpful since Mr. Klingensmith had been diagnosed with a malignant tumor.
In September, 1988, Respondent sold a medical/surgical policy to Charles Areni. Subsequently, in April, 1989, Mr. Areni asked Respondent to assist him in the completion of claims forms. Respondent went to Mr. Areni's home, helped him complete the claims forms, and sold him a National States Medicare supplement insurance policy. At that time, Respondent knew Mr. Areni had been hospitalized since a cancerous prostate problem had reoccurred, and that Mr. Areni was taking medication for pain associated with his most recent surgery.
The application completed by Respondent for Mr. Areni was the same form described in paragraph 6 above. Respondent submitted the following false responses to the questions posed by that questionnaire: in response to question 5, "None" was entered; to question 6a. Respondent checked "No" when he knew or should have known (based upon Mr. Areni's answers) that the prostate condition was cancerous; and "None" to question 9. Further, Respondent provided that Mr. Areni was in good health in response to question 10. At that time Mr. Areni was not in good health, and, while his prognosis was uncertain, it was apparent that he was in poor health.
On or about January 19, 1989, Respondent went to the home of Ruth Stone in Fort Pierce, Florida. That visit was 7
in response to Mrs. Stone's mailed in lead card. At that time, Mrs. Stone was insured by American Life Assurance Corporation with whom she had a Medicare supplement policy.
Mrs. Stone told Respondent about her policy but did not show it to him. Without reviewing the existing policy, Respondent advised Mrs. Stone that a policy he could offer her through National States would be a better buy. Based upon Respondent's representations, Mrs. Stone elected to apply for a policy through Respondent. To that end, Respondent completed the application described in paragraph 6 for Mrs. Stone. Respondent answered question 5 incorrectly since he knew that Mrs. Stone had a current policy. Later, after speaking with her other agent, Mrs. Stone cancelled the National States policy by stopping payment on her check. She later gave a sworn statement to the Department. After Respondent found out about Mrs. Stone's complaint to the Department, he asked her to change her statement since he might lose his job.
On or about February 17, 1988, Respondent went to the home of Edward and Julia Whitham in Fort Pierce, Florida. Respondent sold the Whithams Medicare supplement policies to be issued by National States. The policies sold to the Whithams did not cover dental or optical services. At the time they purchased the policies, the Whithams were under the impression that optical and dental services were covered.
Respondent signed the certifications required by Rule 4-46.004, Florida Administrative Code, for the Whithams without their prior consent or approval.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.
Section 626.611, Florida Statutes, provides, in pertinent part: 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:
* * *
If the license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.
Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.
* * *
(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
* * *
(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.
Section 626.621, Florida Statutes, provides, in pertinent part: The Department may, in its discretion, 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 may suspend or reyoke 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 under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under S. 626.611:
* * *
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.
Violation of any lawful order or rule of the department.
* * *
Violation of the provision against twisting, as defined in S. 626.9541(1)(1).
In the conduct of business under the licensee or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, 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.
Section 626.9541, Florida Statutes, provides, in part:
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:
Misrepresentations and false
advertising of insurance policies.--Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:
* * *
6. Is a misrepresentation for the
purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy.
* * *
(1) Twisting.--Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to 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.
Rule 4-46.004, Florida Administrative Code, provides, in pertinent part:
It shall be the responsibility of each agent directly soliciting a policy of Medicare supplemental insurance to complete a form as indicated by Exhibit "A" herein.
Substantially equivalent forms may be adopted with the prior approval of the Insurance Commissioner. The original copy of such form shall be furnished to the applicant upon the taking of the application and a copy shall be maintained in the files of the company for a period of three years.
The certification form described as Exhibit "A"provides a disclosure whereby the agent affirms that he has explained the provisions of the policy being applied for and the applicant acknowledges receipt of a copy of the form.
The Department has established by clear and convincing evidence that the Respondent is guilty of having violated provisions of Section 626.611, Florida Statutes. Since those violations mandate the suspension or revocation of Respondent's license and are, therefore, more serious than the violations of Section 626.621, Florida Statutes, which have also been established in this case, further discussion of the lesser violations are not included.
As to the Section 626.611, Florida Statutes, violations, the Department has established that the Respondent willfully circumvented the requirements of Rule 4-46.004, Florida Administrative Code, on at least three occasions. By Respondent's admission he improperly signed the certifications for the Whithams and Mrs. Klingensmith. He has presented no credible explanation for why that was done and has not rebutted the overwhelming evidence that it was done to circumvent the requirements of the code. A complete disclosure of the policy terms would have alerted the Whithams to the fact that optical and dental services were not covered. For the premium they were paying, they believed it was covered and would not have purchased the policies from Respondent had they known otherwise.
Additionally, the Department has established that Respondent willfully misrepresented the insurance policy to Mrs. Stone. Respondent had not reviewed her policy, it was, therefore, improper for him to allege that the one he could offer her was superior. The obvious reason Respondent took that approach was to induce Mrs. Stone to purchase the National States policy which was apparently less expensive. He was an effective salesman since that is exactly what she did. That Respondent later tried to get Mrs. Stone to change her report of the incident is reprehensible and further demonstrates his lack of trustworthiness to engage in the business of insurance.
Finally, Respondent's sales of policies to Mrs. Klingensmith also demonstrate his lack of trustworthiness to engage in the business of insurance. Mrs. Klingensmith was extremely concerned that her husband have the best possible care. He remained ill the entire time Respondent went to the home to sell Mrs. Klingensmith policies. Respondent knew that Mr. Klingensmith was not able to discuss the policies, knew he was not able to sign the applications for himself, and knew he was not likely to improve based upon the nature of his illness. The sale of the additional policies was not warranted and was contrary to the insurance company's policy.
That the Department of Insurance, Office of the Treasurer enter a final order revoking the Respondent's health care insurance license.
DONE and ENTERED this 7th day of August, 1990, in Tallahassee, Leon County, Florida.
JOYOUS D. PARRISH
Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1990.
Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level
Nancy S. Isenberg and Dennis Silverman Department of Insurance Division of Legal Services Room 412, Larson Building
Battaglia, Ross, Hastings & Dicus, P.A. 980 Tyrone Boulevard
St. Petersburg, Florida 3371014
APPENDIX TO CASE NO. 89-4986
Paragraph 1 is accepted.
Paragraph 2 is accepted.
Paragraph 3 is accepted.
Paragraph 4 is rejected as contrary to the weight of credible evidence.
Paragraph 5 is rejected as contrary to the weight of the evidence.
Paragraph 6 is accepted as to the fact that the Whithams purchased policies from Respondent; otherwise, rejected as irrelevant.
Paragraph 7 is rejected as unsupported by the record.
Paragraph 8 is accepted.
With regard to paragraph 9, it is accepted that the Whithams asked that their policies be reinstated; otherwise rejected as unsupported by the record or irrelevant.
Paragraph 10 is rejected as unsupported by the record.
The first sentence of paragraph 11 is accepted. The remainder of the paragraph is rejected as contrary to the weight of the evidence.
Paragraph 12 is accepted but is irrelevant.
Paragraph 13 is accepted but is irrelevant.
Paragraph 14 is accepted as to their complaint against the company but is irrelevant.
The first sentence of paragraph 15 is accepted. The remainder of the paragraph is accepted with the notation that Mrs. Stone did advise Respondent that she had a policy in effect. She was shopping for a cheaper policy that offered as good or better benefits. Respondent made no effort to review Mrs. Stone's policy.
Paragraph 16 is rejected as irrelevant.
With regard to paragraph 17, it is accepted that based upon Respondent's representations, Mrs. Stone purchased a national States policy; otherwise rejected as irrelevant.
Paragraph 18 is rejected as contrary to the weight of the evidence.
With regard to paragraph 19, it is accepted that Mrs. Stone spoke with her agent and decided to stop payment on the check to National States; otherwise rejected as irrelevant.
Paragraph 20 is not supported by the record and is, therefore, rejected.
Paragraph 21 is rejected as-irrelevant.
Paragraph 22 is accepted.
With regard to paragraph 23, it is accepted that the application disclosed a prostate condition; otherwise rejected as not supported by the record.
Paragraph 24 is accepted.
Paragraph 25 is accepted.
Paragraph 26 is accepted with the notation that Respondent did not complete the application with all of the pertinent information that Mr. Areni gave him; consequently, Respondent was attempting to have the policy issued when he knew or should have known that Mr. Areni's cancer would preclude him from being eligible.
Paragraph 27 is rejected as contrary to the weight of the evidence; see the notation to paragraph 26 above.
Paragraph 28 is rejected as irrelevant.
Paragraphs 29 through 31 are accepted.
The first sentence of paragraph 32 is accepted. With regard to the second sentence, it is accepted that Respondent was not supposed to write insurance for cancer patients, however, the overwhelming evidence in this case established that Respondent did just that.
The first sentence of paragraph 33 is accepted. It is further accepted that Mrs. Klingensmith executed the applications on behalf of herself and her husband; otherwise the paragraph is rejected as either unsupported by the record or contrary to the weight of the evidence.
The first sentence of paragraph 34 is accepted. The remainder is rejected as contrary to the weight of the evidence since the comment was only made in relation to Mr. Klingensmith's day-to-day behavior. He undoubtedly had some good days relative to his more severe days. It is further concluded that Mr. Klingensmith was never seen by any visiting insurance person other than as a bedridden person. Mr. Bessimer's comment that Mr. Klingensmith could have been napping was not credible in light of the total circumstances known to Respondent.
Paragraph 35 is accepted but is irrelevant.
The second sentence of paragraph 36 is accepted. With regard to the first sentence of that paragraph, it is rejected as contrary to the weight of the evidence. Mrs. Klingensmith's account of the conversation has been deemed more credible than the Respondent's.
Paragraphs 37, 38, and the first sentence of paragraph 39 are accepted. With regard to the remainder of paragraph 39, it is rejected as contrary to the weight of the credible evidence.
Paragraph 40 is accepted but is irrelevant.
