STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6118

)

MICHAEL HALLORAN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on February 22, 1990, in Sarasota, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Jr., Esquire

412 Larson Building Tallahassee, FL 32399-0300

For Respondent: No appearance

STATEMENT OF THE ISSUES

The issue is whether respondent's license as a health insurance agent should be disciplined for the reasons stated in the administrative complaint.

PRELIMINARY STATEMENT

By an administrative complaint filed on September 7, 1989, petitioner, Department of Insurance and Treasurer, charged that respondent, Michael Halloran, licensed as a health insurance agent, had violated various provisions within Chapter 626, Florida Statutes (1987). More specifically, the complaint alleged that respondent, while licensed as an agent for National States Life Insurance Company and Transport Life Insurance Company, committed numerous illegal acts while selling health insurance policies to customers in January and February 1989. The complaint alleged further that this conduct constituted a violation of Subsections 626.611(5),(7),(8),(9), and (13), 626.621(2),(5)

and (6), 626.9521, and 626.9541(1)(a)5. and 6., (1)(e)1. and 2., (1)(k)1. and

(1)(l), Florida Statutes (1987). Respondent disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes (1987). The matter was referred by petitioner to the Division of Administrative Hearings on November 8, 1989, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated December 11, 1989, a final hearing was scheduled on February 22, 1990 in Sarasota, Florida.

At final hearing petitioner presented the testimony of Grace Miller, Velma Sonderman, Raymond H. Koester, John F. McCarthy, Warren W. Schellhase, and Rosa Mae Ferrell. Also, it offered petitioner's exhibits 1-19. All exhibits were received in evidence. Finally, petitioner voluntarily dismissed count V of the administrative complaint. Respondent did not appear at final hearing.

The transcript of hearing was filed on March 19, 1990. Proposed findings of fact and conclusion of law were filed by petitioner on March 28, 1990. A ruling on each proposed finding has been made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. At all times relevant hereto, respondent, Michael Halloran, was licensed and eligible for licensure as a health insurance agent by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed to solicit health insurance on behalf of National States Life Insurance Company (NSLIC) and Transport Life Insurance Company (TLIC). He was also under contract with Diversified Health Services of St. Petersburg, Florida until that firm terminated his agency appointment on May 5, 1989. This proceeding involves the sale by respondent of various health insurance policies to four customers in January and February 1989.

2. In 1987, Raymond H. Koester, a Largo resident, purchased from respondent a supplemental Medicare policy for both him and his wife. Their first policy was issued by American Integrity. A year later, respondent persuaded the Koesters to replace that policy with one issued by Garden State Insurance Company on the ground the latter policy represented an "improvement" over their existing policy. On January 10, 1989 respondent met with the Koesters for the purpose of selling them

   new health insurance coverage. During their meeting, respondent advised the Koesters that a new NSLIC policy would provide unlimited custodial and home health care, a type of coverage

   desired by the Koesters. Relying upon respondent's representation, the Koesters agreed to purchase two new policies.

   
   

   They filled out an application and paid Halloran $2,628 which was the premium for the first year. When the application was completed, respondent answered "no" to the question of whether the new policies were intended to replace existing coverage.

   This was a false representation.

   
   

3. In June 1989 the Koesters learned that they had a problem with their new policies. This advice was conveyed to them by petitioner's investigator who advised them that the

   policies sold by Halloran loran did not provide any custodial or home health care benefits. Had the Koesters known this, they would

   not have purchased the insurance.

   
   

4. On January 18, 1989 respondent visited Grace Miller, an elderly resident of Venice, Florida, for the purpose of selling her a health insurance policy. At that time Miller had an existing policy in force since 1983 which provided supplemental Medicare coverage. Respondent advised Miller that her existing coverage was inadequate and that more coverage was needed. More specifically, Halloran represented that a new NSLIC policy would supplement her basic Medicare coverage and increase her overall health insurance coverage. Based on that representation, Miller agreed to purchase a replacement policy issued by NSLIC. As it turned out, the policy sold to Miller was of little or no value to a Medicare recipient, such as Miller, and simply filled in the gaps on a major medical policy. Had

   Miller known this to begin with, she would not have purchased the policy.

5. Respondent also persuaded Miller to purchase a

   
   

   long-term care policy from TLIC. She allowed respondent to fill out the application using information from her old policy. Without telling Miller, respondent misrepresented on the application her date of birth as December 2, 1921 when in fact she was born on December 2, 1911, or ten years earlier. By doing this, Halloran was able to reduce Miller's premium from $1,159.92 to $441.72. Had Miller known that she was responsible for paying a much higher premium, she would not have purchased the policy.

6. On February 25, 1989 respondent accepted another

   
   

   check from Miller in the amount of $773.00 for an unknown reason. At about the same time, respondent submitted to NSLIC an application for a medical-surgical expense policy dated the same date purportedly executed by Miller In fact, Miller had not executed the policy and her signature was forged. NSLIC declined to issue a new policy to Miller since she already had a policy of that type in effect.

7. On January 20, 1989 respondent visited Gertrude Simms, an elderly resident of Fort Myers. Simms desired to

   purchase a hospital expense insurance policy with a provision for dental insurance coverage. Simms desired such coverage because she had a medical condition that required her to have her teeth cleaned frequently to avoid an infection. Respondent was aware of this condition. Nonetheless, Halloran prepared an application with NSLIC for a limited medical-surgical expense insurance policy which did not provide any dental coverage. Respondent

   accepted a $1,100 check from Simms which he represented to her was the first year's premium. In fact, the first year's premium

   
   

   was only $506.

   
   

8. Although respondent was supposed to return to

   
   

   Simms' home to explain the policy provisions, he never returned. At about this same time, TLIC received an application on behalf of Simms for a long-term care insurance policy bearing the signature of respondent as agent. However, Simms had no knowledge of the application and did not wish to purchase such a policy. The information contained in the TLIC application misrepresented Simms' age so that the premium was lower than it should have been. Although TLIC issued a policy and sent it to respondent, Halloran never delivered it to Simms.

9. On February 1, 1989 respondent visited Velma Sonderman, who resided in Venice, Florida, for the purpose of selling her a health insurance policy. She had become acquainted with respondent through Grace Miller, who is referred to in finding of fact 4. Sonderman was then covered by a supplemental medicare insurance policy issued by United American Medicare. According to Sonderman, respondent gave a "snow job" and represented he could sell her better coverage through NSLIC. Sonderman agreed to purchase a new policy for supplemental medicare coverage to replace her existing policy and signed an application filled in by respondent. However, the application submitted by respondent was for a NSLIC limited benefit health insurance policy rather than the medicare supplement insurance policy Sonderman believed she was purchasing.

10. Respondent also convinced Sonderman to purchase a long-term nursing home care policy issued by TLIC. When filling

    out the application on her behalf, but without telling Sonderman, respondent misrepresented Sonderman's birth date as July 11, 1915 instead of the correct date of July 11, 1911. By doing this, Sonderman's premium was reduced from $999.36 to $599.04 per year.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties hereto pursuant to Subsection 120.57(1), Florida Statutes (1989).

12. As the party seeking to revoke Halloran's professional license, the agency must prove by clear and convincing evidence that the charges in the complaint are true.

13. Respondent is first charged with violating Subsections 626.611(5),(7), (8),(9) and (13), Florida Statutes (1987). If such violations are shown to be true, respondent's license is subject to mandatory suspension or revocation. In

    addition, he is charged with violating Subsections 626.621(2),(5) and (6), Florida Statutes (1987). These violations, if proven, provide the agency with discretionary authority to discipline respondent's license. Respondent is also charged with violating Section 626.9521, Florida Statutes (1987). Finally, he is charged with violating Subsections 626.9541(1)(a)5. and 6.,(1)(e)1. and 2., (1)(k) and (1)(l), Florida Statutes (1987).

14. The evidence shows clearly and convincingly that respondent, in conjunction with the Miller, Sonderman, Koester,

    and Simms transactions, made willful misrepresentations as to the type of policy being sold to them as well as the age of three of

    
    

    the customers (s. 626.611(5), F.S..), demonstrated a lack of trustworthiness to engage in the insurance business (s.

    626.611(7), F.S.), engaged in a fraudulent and dishonest practice

    in the insurance business (s. 626.611(9), F.S.), willfully failed to comply with various provisions of the insurance code (s.

    626.611(13), F.S.), violated various provisions of the insurance code (s. 626.621(2), F.S.), violated the provision against "twisting", i.e., misrepresented to his customers the benefits, advantages, conditions and terms of a policy (ss. 626.621(5), 626.9541(1)(a)5., and 626.9541(1)(l), F.S.), engaged in unfair and deceptive acts and practices while selling the aforesaid policies (ss. 626.621(6) and 626.9521, F.S.), made misrepresentations for the purpose of inducing his customers to purchase policies (s.626.9541(1)(a)6., F.S.), and knowingly made false material statements (dates of birth) on the applications (ss. 626.9541(1)(e)1.and 2. and (1)(k)1.,F.S.). As to the charge that respondent demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by his license (s. 626.611(8), F.S.), there is less than clear and convincing evidence to sustain this charge.

15. Given the nature and number of violations established herein, revocation of respondent's license is appropriate.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent's license as a health insurance agent be

REVOKED.

DONE and ENTERED this 4 day of April, 1990, in Tallahassee, Florida.

DONALD ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4 day of April, 1990.

APPENDIX

Petitioner:

1-3. Substantially used in finding of fact 1.

4-17. Substantially used in findings of fact 4, 5 and 6. 18-29. Substantially used in findings of fact 9 and 10. 30-33. Substantially used in findings of fact 2 and 3. 34-45. Substantially used in findings of fact 7 and 8.

46. Substantially adopted in finding of fact l.

Copies furnished to:

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

James A. Bossart, Jr., Esquire

412 Larson Building Tallahassee, FL 32399-0300

Mr. Michael Halloran 2519 McMullen Booth Road Clearwater, FL 34621

Donald A. Dowdell, Esquire Department of Insurance Plaza Level, The Capitol Tallahassee, FL 32399-0300

Docket for Case No: 89-006118

Orders for Case No: 89-006118