STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-5650

)

ROBERT NORMAN D0OLAN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Jane C. Hayman, held a formal hearing in the above- styled case on January 17, 1990 in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Roy Schmidt, Esquire

Dennis Silverman, Esq. Department of Insurance Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Irving Lesnick, Esquire

Stephen F. Beiner, Esquire 7521 West Palmetto Road Boca Raton, Florida 33433

STATEMENT OF THE ISSUES

The issue presented is whether Respondent committed the offenses alleged in the administrative complaint, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On September 21, 1989, Petitioner filed a four count administrative complaint which charged that Respondent committed multiple violations of the Florida Insurance Code and sought to impose disciplinary penalties against Respondent. The gravamen of the charges was that Respondent misrepresented the benefits of certain insurance policies Respondent was selling to induce consumers to buy the products. Petitioner has alleged that this conduct constitutes misrepresentation, demonstrates Respondent's lack of fitness and trustworthiness to engage in the business of insurance and is in violation of the Unfair Insurance Trade Practices portion of the Florida Insurance Code. On October 4. 1989, Respondent requested a formal hearing, and on October 25, 1989, Respondent filed his answer to the administrative complaint.

On October 17, 1989, Petitioner requested that the Division of Administrative Hearings appoint a Hearing Officer to conduct a formal hearing pursuant to Section 120.57(1). The parties entered into a prehearing stipulation which was made a part of the record and is incorporated into this recommended order to the extent it is relevant.

At the hearing, Petitioner abandoned count one of the administrative complaint. The hearing proceeded on the remaining counts. Petitioner presented the testimony of six witnesses and offered six exhibits which were received into evidence. At the conclusion of Petitioner's case, Respondent moved to strike paragraphs 17, 30 and 31 from the administrative complaint for failure to show a prima facie case. Petitioner agreed to dismiss paragraphs 30 and 31, and accordingly, those paragraphs were stricken. As to paragraph 17, ruling was reserved and is addressed in the conclusion of law section of this recommended order. Respondent then proceeded with its case, testifying on his own behalf, presenting the testimony of one additional witness and offering eight exhibits, seven of which were received into evidence.

A transcript of the proceeding was filed on February 12, 1990. The parties waived the provisions of Rule 28-5.402, Florida Administrative Code. However, both parties submitted proposed findings of fact on February 22, 1990. A ruling on each proposed finding of fact has been made and is reflected in the appendix to this recommended order.

FINDINGS OF FACT

1. At all time material hereto, Respondent, Robert Norman Doolan, was and is currently licensed by Petitioner, Department of Insurance, as a health insurance agent. Respondent was and is licensed to represent National States Life Insurance Company. Each of the counts charged against Respondent by Petitioner relate to alleged misrepresentations made by Respondent concerning National States policies.

   
   

2. Respondent is an aggressive, successful salesman and is highly motivated to sell as many National States policies on an annual basis as possible. He receives a 45% commission of paid annual premiums on policies sold for National States as well as a company bonus. The bonus is computed weekly conditioned on total business written. Respondent consistently received the maximum weekly bonus possible.

   
   

3. On or around December 9, 1988, Respondent sold a nursing home insurance Policy to Mrs. Irene Koenig. Mrs. Koenig is an alert and pleasant lady who suffers from Parkinson's disease. Mrs. Koenig is eighty years old. On the day of the hearing, Mrs. Koenig was affected by her illness but requested to go forward with her testimony and was deemed competent to testify. She offered that her condition on the day of the hearing was worse that it was on the day of Respondent's visit.

   
   

4. Mrs. Koenig's contact with Respondent began sometime around December 9, 1988 when Respondent contacted Mrs. Koenig, by telephone, and told her he would be in the neighborhood and would like to talk with her about insurance. According to Respondent, he called Mrs. Koenig in response to a mail advertisement which Mrs. Koenig had completed indicating that she was interested in talking with someone about insurance. Mrs. Koenig was interested in obtaining insurance for home health care and invited Respondent into her home. During Respondent's visit, he talked to Mrs. Koenig for over two hours attempting to sell her a Policy.

5. Mrs. Koenig explained to Respondent that she was interested in home health care coverage and informed him that she suffered from Parkinson's disease, a heart disease and had undergone a mastectomy.

   
   

6. Mrs. Koenig was not feeling well and wanted Respondent to leave, although she did not ask him to do so. Instead, she Purchased the policy offered by Respondent to get him to leave.

   
   

7. Respondent completed the application for the policy but failed to note that Mrs. Koenig suffered from Parkinson's disease. The National State's underwriting guidelines would have prohibited the issuance of this policy if Respondent had informed *he company that Mrs. Koenig had the disease.

   
   

8. Respondent, however, testified that Mrs. Koenig did not tell him about her Parkinson's disease. He went further to say that if he had known of Mrs. Koenig's condition, he would have placed her with another company, American Integrity, since he was aware that National States did not want insureds with Parkinson's disease. At the time, Respondent was licensed to represent American Integrity. Respondent also said that the commission from American Integrity was a "little better" than National States but after going through the National States' application with Mrs. Koenig, he felt that National States offered a better program. Although the commission may have been more on the sale of an American Integrity policy, evidence of the difference between the bonus policy offered by the two companies was not presented.

   
   

9. Absent further competent substantial proof that Mrs. Koenig did not tell Respondent about her disease, and of how the bonus policy may have affected the sale, and given the demeanor of the witnesses, Mrs. Koenig's testimony concerning her conversation with Respondent about her Parkinson's disease is deemed credible.

   
   

10. The National States policy was approved and mailed to Mrs. Koenig. When Mrs. Koenig received the policy she asked a friend to review it. Her friend told Mrs. Koenig that Parkinson's disease was not mentioned in the insurance papers. Mrs. Koenig then asked her friend to write a letter to the company cancelling the policy. Mrs. Koenig cannot write for the period of time necessary to draft a letter due to her illness. National States cancelled her policy and refunded her premium.

    
    

11. On or about August 24, 1988, Respondent visited the home of Robert P. and Dorothy T. Perry for the purpose of discussing coverage for nursing home care coverage. Mr. Perry is seventy-two years old, and Mrs. Perry is seventy- one. Respondent had previously sold the Perry's a medicare supplement policy. After several visits, Respondent was successful in selling the Perry's two nursing home plan policies. The policies are written on National States and cover nursing home care as well as home nursing care. They pay $80 per day for skilled and intermediate nursing care for a maximum of twenty-four months. The home health care benefit is $40 per day for a maximum of 100 visits per year. The policies also have a rider which pays $20 a day for up to 30 days in any one year.

    
    

12. Petitioner alleged that Mr. Perry was under the impression that the policies provided coverage at $100 per day for two years. The policy which Respondent sold to the Perry's did not include coverage to that amount. At the hearing, Mr. Perry could not recall having made that determination. He also testified that he does not retain matters relating to insurance policies well.

    A letter from Mr. Perry to National States dated January 17, 1989 indicates that Mr. Perry remembered that Respondent had made such representation. The letter was received into evidence without objection. Mr. Doolan testified that he did not tell the Perry's that the policies paid $100 a day for anything. Even though Mr. Perry's letter seems to indicate that Respondent represented the $100 per day coverage, it is clear that Mr. Perry may be confused about the actual coverage of the policies and of the representations made to him by Respondent.

    Thus, Respondent's testimony about the representations concerning the coverage amounts is deemed credible.

    
    

13. Mr. Perry also claimed that Respondent assured him that Respondent would take care of cancelling the policy after Mr. Perry decided not to keep it. In fact, after receiving the policy and within the ten day "free look" cancellation period provided by the policy, Mr. Perry initiated a meeting with his financial advisors, himself and Respondent to go over the policy. At the meeting, it was recommended to Mr. Perry by his financial advisors that he not take the policy. Immediately after the meeting Mr. Perry spoke to Respondent and told Respondent that he wanted to cancel the policy. Respondent assured Mr. Perry that Respondent would handle the cancellation, and that Mr. Perry would receive a return of his full premium since the cancellation would occur within the ten day period. Mr. Perry recalls that Respondent told him that he was going to Chicago but would return in time to cancel his policy. Respondent did not go to Chicago and did not cancel the policy. Respondent was born in Chicago and had discussed the town with Mr. Perry. Mr. Perry may have been confused about Respondent's destination when he left the meeting.

    
    

14. When Mr. Perry noticed that the ten day period was running and Respondent had not cancelled the policy, Mr. Perry attempted to contact Respondent. Unfortunately, he was using an incorrect telephone number. Respondent had given Mr. Perry his home telephone number, but Mr. Perry could not find it at the time he was trying to reach him. Respondent stated that he never told Mr. Perry that he would cancel the policy for him. Instead, Respondent asserted that he told Mr. Perry to contact the company directly by using the self-addressed envelope with which Respondent had supplied Mr. Perry. According to Respondent, his custom is to advise all of his clients about the ten day period and to contact the company directly if they chose to cancel the policy within the ten day period. Although this may be Respondent's normal procedure, Mr. Perry does not recall Respondent instructing him on how to contact the company. Instead, Mr. Perry remembers that Respondent assured him that Respondent would cancel the policy. Considering the demeanor of the witnesses, Mr. Perry's testimony concerning Respondent's assurance that Respondent would handle the cancellation is deemed credible.

    
    

15. When Respondent failed to contact Mr. Perry about cancelling the policy, Mr. Perry, on October 20, 1988, returned the policy to National States. The ten day period had expired, and Mr. Perry did not receive a return of premium.

    
    

16. In 1988, John F. Spence purchased health insurance from Respondent written by National States. The coverage included two policies, a medicare supplement policy and a hospital indemnity policy. Mr. Spence is 92 years old.

    
    

17. While discussing both plans with Mr. Spence, Respondent twice offered a rider to Mr. Spence which would cover dental, vision and hearing. Mr. Spence was interested in the rider, because he had ordered new hearing aids and had hoped to obtain coverage for the cost of his hearing aids. Respondent had told Mr. Spence that the rider would cover up to $500 for hearing aids, although Mr.

    Spence did not tell Respondent he already had hearing aids and had ordered replacements. However, Mr. Spence rejected the rider on both occasions and was not covered for the hearing aids.

    
    

18. Although Mr. Spence testified that Respondent had led him to believe that his hearing aids would be covered under his policies, the demeanor of Mr. Spence and Respondent's testimony at the hearing indicate that Mr. Spence did not recall that he had rejected the hearing aid coverage when he denied the rider. Mr. Spence sought reimbursement for his hearing aids, but his claim was denied.

    
    

19. It was Respondent's policy to give each of his clients an outline of the coverage they had purchased. He did so in each of the above incidents. Even though Respondent documented his actions, each of these clients trusted

    Respondent to provide the insurance protection which they requested. As to Mrs. Koenig, it is clear that Respondent knowingly failed to provide her with a policy which would cover claims relating to Parkinson's disease. As to Mr.

    Perry, the proof also clearly demonstrated that Respondent, in his fiduciary capacity, failed to honor Mr. Perry's trust when he did not cancel the policy within the ten day period although Mr. Perry was relying on him to do so. Mr. Spence, however, declined the coverage for the hearing aids, and Respondent was under no obligation to Mr. Spence to assist him with his claim concerning the hearing aides.

    
    

20. On one previous occasion, a complaint has been filed against Respondent, but he was not found guilty of the allegations therein. The evidence is not clear as to whether the complaint was civil or administrative in nature.

CONCLUSIONS OF LAW

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

   
   

2. Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

   
   

3. The administrative complaint alleges that Respondent violated the following provisions of the Florida Insurance Code: Section 626.611(5), (7), (8), (9), and (13), Florida Statutes (1987), as amended; Section 626.621(2), and (6), Florida Statutes (1987), as amended; Section 626.9521, Florida Statutes (1987); and Section 626.9541(1)(a)1, (1)(b), (1)(e)1, Florida Statutes (1987), as amended.

   
   

4. As to Counts II and III relating to Mrs. Koenig and Mr. Perry, Petitioner demonstrated by clear and convincing evidence that Respondent violated the provisions of Section 626.611(7). Section 626.611(7) provides as follows:

   
   

   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:

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

   
   

5. Insurance is a business greatly affected by the public trust, and the holder of an agent's license stands in a fiduciary relationship to both the client and the insurance company. Natelson v. Department of Insurance, 454 So.2d 31, 32 (Fla. 1st DCA 1984) (distinguished on other grounds, Smith v. Kruqman-Kadi, 547 So.2d 677, 680 (Fla. 1st DCA 1989)). The proof is clear and convincing that both Mrs. Koenig and Mr. Perry relied on Respondent to carry out their interest in trust. Specifically, Mrs. Koenig told Respondent that she had Parkinson's disease and that she wanted a policy which would cover her illness. Instead of providing for her best interest, Respondent broke her trust and breached his duty to her by selling her a policy from-a company which he knew would not cover persons with Parkinson's disease. Likewise, Mr. Perry relied on Respondent's representation that Respondent would cancel his policy within the ten day period. Respondent again failed to honor his duty to Mr. Perry by not timely cancelling the policy. These actions by Respondent clearly demonstrate a lack of trustworthiness to engage in the business of insurance in violation of Section 626.611(7).

   
   

6. In addition, Respondent's actions concerning Mrs. Koenig constitute violations of Section 626.9541(1)(a)1 and (1)(e). These Sections read as follows:

   
   

   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:

      1. 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:

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

         (e) False statement and entries. -

         1. Knowingly:

         1. Filing with any supervisory or other public official,

         2. Making, publishing, disseminating, circulating,

         3. Delivering to any person,

         4. Placing before the public,

         5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or

         placed before the public,

         any false material statement.

         
         

         Respondent knew that Mrs. Koenig had Parkinson's disease when she told him. Respondent also knew that National States would not insure a patient with Parkinson's disease. Yet, even with this knowledge, Respondent represented that the policy would cover her constituting a violation of Section 626.9541(1) (a)1. Also, with this knowledge, Respondent falsely made the material statement to Mrs. Koenig that she would be covered in violation of Section 626.9541(l) (e)

         
         

7. Respondent's violations of Section 626.9541(1)(a)1 and (1)(e) also constitute a violation of 626.9521 which reads as follows:

   
   

   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. Any person who violates any provision of this part shall be subject to the penalties provided in s. 627.381.

   
   

   Since Section 626.9541 defines an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance and Respondent committed the acts defined in Sections 626.9541(1)(a)1 and (1)(e), Petitioner has also met its burden of demonstrating by clear and convincing evidence that Respondent violated Section 626.9521.

   
   

8. Respondent's acts which clearly constitute unfair methods of competition or unfair or deceptive acts or practices occurred while Respondent was conducting business under his health insurance agents license. Thus, Petitioner has also demonstrated that Respondent violated the provisions of Section 626.621(6) which reads as follows:

   
   

   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 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 under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611

   (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, 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.

   
   

9. The provisions of Section 626.621(2) are invoked by Petitioner's proof that Respondent violated the provisions of Sections 626.611(7); 626.621(6); 626.9521; and 636.9541(1)(a)1 and (1)(e). Section 626.621(2) provides as follows:

   
   

   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 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 under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

   (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.

   
   

   By its terms, Section 626.621(2) authorizes Petitioner to discipline a licensee if the licensee, while acting under his license violates any provision of law applicable to the business of insurance. Here, the proof is clear that Respondent is a licensee and the above sections, which he violated, are provisions of law which govern the business of insurance in Florida Thus, Section 626.621(2) is applicable to Respondent.

   
   

10. As to the remaining provisions of law with which Respondent was charged with having violated in Counts II and III, the proof failed to demonstrate by clear and convincing evidence that Respondent's acts were in violation of those sections.

    
    

11. Also, Petitioner failed to meet its burden of proof of the allegations concerning Mr. Spence in Count IV. Although Mr. Spence was under the impression that the insurance policies sold to him by Respondent would pay for his hearing aids, the proof was clear and convincing that Mr. Spence had rejected the hearing aid coverage twice and that he was not covered. Respondent made no representation to Mr. Spence to the contrary.

    
    

12. Count I was abandoned by Petitioner at the commencement of the hearing, as paragraphs 30 and 31 of Count IV were dismissed during the hearing.

    
    

13. Section 626.611 mandates the suspension or revocation of Respondent's license for his violation of Section 626.611(7), and Section 626.621 authorizes the discretionary suspension or revocation of Respondent's license for the violation of Sections 626.621(2), 626.621(6), 626.9521, and 636.9541(1)(a)1 and

(1)(e). Section 626.9521 mandates the imposition of a penalty pursuant to Section 627.381. Section 627.381 refers to the administrative fine pursuant to Section 626.4211. In determining the recommendation for an appropriate penalty in this case, consideration has been given to each of the above cited provisions of law and to the fact that the instant offense is the first violation found against Respondent.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance enter a final order which

finds that Respondent committed the multiple violations of the Florida Insurance Code as set forth in the Conclusions of Law portion of this Recommended Order and suspends Respondent's health insurance agent's license for a period of six

1. months.

   
   

   DONE AND ENTERED this 9 day of April, 1990, in Tallahassee, Leon County, Florida.

   
   

   
   

   JANE C. HAYMAN

   Hearing Officer

   The DeSoto Building 1230 Apalachee Parkway

   Tallahassee, Florida 32399-1550 904/488-9675

   
   

   Filed with the Clerk of the Division of Administrative Hearings this 9 day of April, 1990.

   
   

   APPENDIX

   
   

   The following rulings are made on the proposed findings of fact submitted by Petitioner by paragraph within the Findings of Fact section of this Recommended Order:

   
   

   1. The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1.

   2. The proposed findings of fact in paragraph 2 are adopted in material part by paragraphs 1 and 2.

   3. The proposed findings of fact in paragraph 3 are adopted in material part by paragraphs 3, 4, 5, 6, 7, 8 and 19,; and, in part, rejected as not supported by competent substantial evidence and argumentative.

   4. The proposed findings of fact in paragraph 4 are adopted in material part by paragraphs 16, 17, 18 and 19; and, in part, rejected as not supported by competent substantial evidence and argumentative.

   5. The proposed findings of fact in paragraph 5 are adopted in material part by paragraphs 11, 12, 13, 14, 15 and 19 and, in part, rejected as not supported by competent

substantial evidence and argumentative.

The following rulings are made on the proposed findings of fact submitted by Respondent:

1. The proposed findings of fact in paragraph 1 are adopted in material part in paragraphs 11 and 15.

2. The proposed findings of fact in paragraph 2 are adopted in material part in paragraphs 10, 12 and 13.

3. The proposed findings of fact in paragraph 3 are adopted in material part in paragraph 12.

4. The proposed findings of fact in paragraph 4 are adopted in material part in paragraph 12.

5. The proposed findings of fact in paragraph 5 are adopted in material part in paragraph 12.

6. The proposed findings of fact in paragraph 6 are adopted in material part in paragraphs 13 and 14.

7. The proposed findings of fact in paragraph 7 are adopted in material part as subordinate to paragraphs 13 and 14.

8. The proposed findings of fact in paragraph 8 are adopted as subordinate to paragraphs 13,14 and 19.

9. The proposed findings of fact in paragraph 9 is rejected as not supported by competent substantial evidence and the demeanor of the witnesses.

10. The proposed findings of fact in paragraph 10 are adopted in material part in paragraphs 3, and 7, and, in part, rejected as not supported by competent substantial evidence.

11. The proposed findings of fact in paragraph 11 are adopted in material part in paragraph 5.

12. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 10, and in part rejected as argumentative.

13. The proposed findings of fact in paragraph 13 are adopted in material part in paragraph 7, and, in part, rejected as not Supported by competent substantial evidence.

14. The Proposed findings of fact in paragraph 14 are adopted in material part in paragraphs 3-10, and rejected, in part, as not Supported by competent substantial evidence, argumentative and the demeanor of the witnesses.

15. The proposed findings of fact in paragraph 15 are rejected as not Supported by competent substantial evidence and the demeanor of the witnesses.

16. The proposed finding of fact in paragraph 16 is rejected as a preliminary matter.

17. The proposed finding of fact in paragraph 17 is adopted in material part in paragraphs 16 - 19.

18. The proposed finding of fact in paragraph 17 is adopted in material part in Paragraphs 16 - 19.

19. The proposed finding of fact in paragraph 18 is adopted in material part in paragraph 17.

20. The proposed findings of fact in paragraph 20 are adopted in Paragraphs 17 and 18.

21. The proposed findings of fact in paragraph 21 are adopted as subordinate to Paragraphs 17 and 18.

22. The Proposed finding of fact in Paragraph 22 is adopted in Paragraph 16-19 of the Recommended Order.

Copies furnished:

Roy H. Schmidt, Esquire Department of Insurance Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

Irving Lesnick, Esquire 7521 West Palmetto Road Boca Raton, Florida 33433

Tom Gallagher

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Don Dowdell General Counsel

Department of Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Docket for Case No: 89-005650

Orders for Case No: 89-005650