STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

) DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6244

)

MICHAEL JOSEPH CALDERONE, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in this case was held on May 18, 1989, in St. Petersburg, Florida, and on June 18, 1990, in Tallahassee, Florida, before Donald D. Conn, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: C. Christopher Anderson, Esquire

412 Larson Building Tallahassee, FL 32399-0300

For Respondent: Thomas W. Stahl, Esquire

817 North Gadsden Street Tallahassee, FL 32303-6313

Wayne O. Smith, Esquire 5420 Central Avenue

St. Petersburg, FL 33707 STATEMENT OF THE ISSUE

The issue in this case is whether the license of Michael Joseph Calderone (Respondent) should be disciplined by the Department of Insurance and Treasurer (Petitioner) based upon actions he is alleged to have taken between March, 1988 and January, 1989, involving various insureds, as more particularly set forth in the Administrative Complaint issued herein on or about September 21, 1989, and the Amendment thereto which was allowed by Order entered on April 23, 1990.

PRELIMINARY STATEMENT

At the hearing, the Petitioner called eight witnesses and introduced 21 exhibits. Petitioner's exhibits numbered 8, 11, 18 and 25 were rejected. The Respondent testified on his own behalf and introduced 7 exhibits. Respondent's exhibit 6 was not admitted, but was retained under seal as part of the record.

The Petitioner has voluntarily dismissed and withdrawn Counts III and XII of the Administrative Complaint, and therefore, the allegations contained therein are not at issue.

The final volume of the transcript of the final hearing was filed on July 11, 1989, and thereafter, the parties requested and were allowed to file proposed recommended orders by August 2, 1990. A ruling on each timely filed proposed finding of fact included in the parties' proposed recommended orders is included in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent has been licensed, and eligible for licensure, in the State of Florida as a health insurance agent.

   
   

2. On or about August 16, 1988, Respondent contacted Frank and Theresa Masin of Englewood, Florida, as a result of a "lead card" that they had sent to Respondent's company requesting information on health insurance. Respondent left an outline of coverage that would be provided under nursing home policies the Masins were interested in purchasing, and eventually took an application for a nursing home policy providing $80 a day nursing home benefits, and $40 a day for home care benefits. It was not established at hearing that Respondent made any statement or representation to Mr. or Mrs. Masin to the effect that he would obtain, for each of them, nursing home insurance from National States Insurance Company (hereinafter "National States") that provided, among other benefits, custodial care benefits. In fact, Mr. Masin denied at hearing that Respondent had ever mentioned anything about custodial care benefits, but instead, he testified that Respondent expressly told him that the policies did not provide custodial care benefits. Respondent even highlighted a portion of their policies that stated custodial care was not covered.

   
   

3. On or about November 29, 1988, Respondent contacted Robert McClintick of Nokomis, Florida, since McClintick's insurance policy with National States had lapsed. At the time of this visit, Mr. McClintick had no nursing home coverage, and so they discussed the National States Medicare Supplement that could be purchased with a nursing home rider providing intermediate care benefits. The nursing home rider that was available through National States was very important to Mr. McClintick, and was a major factor in his decision to cancel his coverage with Pioneer Life Insurance Company and replace it with the National States policy. Respondent fully explained to Mr. McClintick that the basic Medicare Supplement policy which he had with Pioneer offered slightly higher benefits, but that the additional nursing home rider available through National States would give him greater protection overall. Mr. McClintick made a reasoned choice, after a full explanation of the benefits and coverages, to replace his Pioneer policy with the National States policy and rider. The evidence is conflicting as to whether Respondent made a statement or representation to Mr. McClintick to the effect that he would stop payment of Mr. McClintick's bank draft to Pioneer on his Pioneer Medicare Supplement policy, and obtain a refund for him. In fact, Mr. McClintick's testimony on this point is contradictory. Therefore, it cannot be found that Respondent made any such representation or statement. Respondent did not stop payment of Mr. McClintick's bank draft to Pioneer.

   
   

4. On or about June 30, 1988, Respondent contacted Alma H. LaForce of Venice, Florida, for the purpose of selling or discussing insurance. Pursuant to said contact, Alma H. LaForce purchased insurance from National States through Respondent. At no time did Respondent represent that said insurance was

   Medicare Supplement insurance because it was not, in fact, Medicare Supplement insurance. Rather, the coverage which the Respondent provide was a medical- surgical supplement to LaForce's two AARP policies. He left an outline of coverage with her which correctly described and set forth the coverage which she had purchased. When informed by LaForce's daughter that she was not satisfied with the coverage that he had provided to her mother, Respondent explained the procedure that should be followed for the insured to cancel this coverage.

   
   

5. In June, 1988, Respondent contacted Florence B. Strom of Venice, Florida, in response to a lead card she had completed requesting insurance information. Respondent enrolled Ms. Strom in two policies, an NH-1 nursing home policy and an MBS medical-surgical policy from National States, and noted on the applications for both policies that she had an existing AARP policy. In November, 1988, Ms. Strom informed Respondent that she was dissatisfied with her AARP coverage, and he enrolled her in a National States Medicare Supplement policy to replace her AARP coverage. After receiving the National States policy, she changed her mind and returned the policy to National States for a full refund. Respondent made no representation to Florence B. Strom that said insurance was additional nursing home insurance because, in fact, it was a medicare supplement policy.

   
   

6. On or about August 10, 1988, Respondent contacted Melvin and Mabel Pierce of Venice, Florida, in response to a notice that their National States policies had lapsed. Mr. and Mrs. Pierce purchased Medicare Supplement insurance from National States through Respondent. At the time of Respondent's visit, the Pierces had just purchased Medicare Supplement insurance from Old Southern Life Insurance Company (hereinafter "Old Southern"), but their policies had not yet been issued or delivered. Therefore, they still had thirty days to cancel their Old Southern policies and obtain a full refund. Respondent assisted them in writing to Old Southern canceling their policies and requesting a full refund. At no time did Respondent tell the Pierces that he would personally get them their money back from Old Southern. In completing the National States application which is in evidence, Respondent fully disclosed and accurately reflected the medical condition and medical history of the Pierces, and specifically disclosed the fact that Mrs. Pierce had a mastectomy in 1980. It was established that the Pierces have submitted claims to, and received benefits from, National States under these policies which Respondent sold to them.

   
   

7. On or about August 18, 1988, Respondent contacted Ralph and Beatrice MacGowan of Englewood, Florida, in response to a lead card they had submitted. At that time, Mr. and Mrs. MacGowan had in force Medicare Supplement insurance with Old Southern, and they purchased one Medicare Supplement policy each from National States through Respondent. Respondent advised them to keep their Old Southern policies in force on a monthly basis until after the National States policies were issued because of the preexisting clauses in the National States policies. The MacGowans signed replacement forms indicating they knew they were replacing their Old Southern policies with the ones from National States, and they also signed certification forms indicating they had received outlines of coverage under the National States policies from the Respondent. It was established that Respondent fully explained the differences between the Old Southern and National States policies, and gave the MacGowans a reasonable time to read the replacement forms. He enrolled them in a bank plan to deduct premiums from their checking account, and Mr. MacGowan signed the bank plan authorization form. Mr. MacGowan admitted that the signature on the authorization form was his.

8. Respondent visited Kenneth Kutter of Lakeland, Florida, a total of three times in early 1988 for the purpose of selling or discussing insurance.

   At that time, Kenneth Kutter had Medicare Supplement insurance in force with Old Southern. During his first visit, Respondent left Mr. Kutter an outline of coverage, and went over that outline with him, checking off the various benefits provided under the National States policy. During his second visit, Respondent answered questions that Mr. Kutter had about the outline of coverage. On his third visit, Respondent sold Mr. Kutter a National States Medicare Supplement policy to replace his Old Southern policy, and filled out the application to reflect that it would be replacing the Old Southern coverage. Mr. Kutter admitted at hearing that he understood the coverages that Respondent had explained to him, and that he had received the outline of coverage. While he did purchase additional Medicare Supplement benefits, Mr. Kutter specifically rejected nursing home, dental, vision and hearing riders which were available for this policy. After receiving his policy, Mr. Kutter changed his mind and decided he did want the nursing home rider. However, he was informed by National States that he would have to wait until his renewal date to add the nursing home rider, and he thereupon returned his National States policy for a full refund.

   
   

9. On or about March 2, 1988, Respondent contacted Rachael Peterson of Lakeland, Florida, for the purpose of selling or discussing insurance. Pursuant to said contact, Rachael Peterson purchased two policies of insurance from National States through Respondent. One policy was a Medicare Supplement policy with a rider providing dental, vision and hearing coverage. Thereafter, Mrs. Peterson purchased eyeglasses, but she never filed a claim under her National States policy because a sales clerk told her that it would not be covered. She never attempted to find out from National States if such a claim would be paid. She also incurred a $1000 hospital bill, but did not file a claim with National States because she did not think it would be paid. Mrs. Peterson admitted she does not really know what her policies will pay because she has never bothered to file a claim. She also acknowledged that Respondent had sold her exactly what she wanted, a Medicare Supplement policy.

   
   

10. On or about January 31, 1989, Respondent contacted Arthur and Esther Braun of North Port, Florida, who each purchased two policies of insurance through Respondent from National States. It was established that Respondent explained to them that the policies would provide $40 per day for home care coverage, and Mr. Braun admitted that Respondent never told him the policy would pay in excess of $40 per day. They discussed the fact that home care coverage could be used as an alternative to custodial care benefits because it was less expensive than custodial care coverage. He did not represent that this was

    long-term custodial care coverage. Respondent also did not represent to the Brauns that they would receive benefits under their National States policies regardless of payments made by Medicare because these policies have nothing to do with Medicare or Medicare Supplement coverage.

    
    

11. On or about November 30, 1988, Respondent had contact with Mary Johnson and Harry Sawyer of Venice, Florida. Pursuant to said contact, Mary Johnson and Harry Sawyer purchased one policy of insurance each through Respondent from National States. These policies do not provide long-term custodial care benefits. In conjunction with the sale of these policies, Respondent did not state or represent to Mary Johnson or Harry Sawyer that the insurance they were purchasing provided long-term custodial care benefits. Mary Johnson admitted at hearing that Respondent explained the benefits she was purchasing, and that they did not discuss custodial care coverage. Harry Sawyer also admitted that Respondent fully explained the coverage he was purchasing.

    They were both enrolled by Respondent in a bank plan providing automatic withdrawal from their checking accounts of premiums for the National States policies. They provided Respondent with blank deposit slips for the purpose of enrolling them in the bank plan. It was established that Respondent fully explained the coverage they were purchasing, and also the bank plan in which they were enrolled.

    
    

12. The evidence does not establish that Respondent falsely or inaccurately compared policies he was selling with policies that the complaining witnesses called on behalf of the Petitioner may have already had. Petitioner's own expert witness, Rosa Mae Ferrell, admitted that she could not express any opinion as to whether one policy is "better" than another policy, since the selection of a particular policy is a personal choice based upon whether an insured prefers one policy over another.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties, and the subject matter in this cause. Section 120.57(1), Florida Statutes. Since this is a case in which the Petitioner is seeking to discipline the Respondent's license, and could thereby adversely affect his ability to continue to engage in the insurance business, Petitioner has the burden of establishing the basis for license disciplinary action by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

14. As it relates to the evidence adduced at hearing, the Petitioner has charged Respondent with violating Sections 626.9541(1)(l), 626.611(5),(7),(8),(9), and 626.621(2) and (5), Florida Statutes, which provide in pertinent part, as follows:

    
    

    Section 626.9541 Unfair methods of competition

    and unfair or deceptive acts or practices defined.--

    
    

    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:

       
       

       (l) TWISTING -- Knowingly making any misleading representations or incomplete or fraudulent comparisons . . . 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, . . . or convert any insurance policy or to take out a policy of insurance in another insurer.

       
       

       Section 626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, solicitor's or adjuster's license . . .

       
       

       The department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent . . . if it finds that as to the applicant, licensee, or permittee any one or more of the applicable grounds exists:

       (5) 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.

       
       

       1. Demonstrated lack of fitness or trust- worthiness 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.

          
          

       3. Fraudulent or dishonest practices in the conduct of business under the license or permit.

       
       

       Section 626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's or adjuster's license . . .

       
       

       The department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license

       of any agent . . . if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exists . . .

       
       

       (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.

       
       

       (5) Violation of the provision against twisting, as defined in Section 626.9541(1)(l).

       
       

15. Petitioner has failed to prove, by clear and convincing evidence, that Respondent violated any of these above-cited provisions of the Insurance Code. As stated in Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So.2d 112 (Fla. 1st DCA 1989), the standard of clear and convincing evidence to be used in license disciplinary cases

    
    

    . . . requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses

    must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief of conviction, without hesitancy, as to the truth of the allegations

    sought to be established. 550 So.2d at 116, n.5

    
    

16. The witnesses called in support of the allegations in the Administrative Complaint were confused, hesitant, and in many instances, contradictory in their testimony. In contrast, the Respondent was a very credible witness, with a precise recollection of relevant events that was supported by documentary evidence in the record. The evidence presented by the Petitioner was not sufficient to produce a firm conviction as to the truth of the allegations in the Administrative Complaint.

17. There was absolutely no evidence of any willful misrepresentation of any insurance policy, or of any twisting on the part of the Respondent in these transactions. It was not established that he falsely or inaccurately compared the policies he was selling with the policies that Petitioner's witnesses already had. He routinely responded to lead cards or lapse notices, and presented outlines of coverage which he left with prospective insureds, returning on request to answer questions and to enroll these individuals in the coverage which they selected. The evidence establishes that he was able to, and did in fact, fully describe the coverages he was selling. The Respondent's actions do not evidence any lack of knowledge or technical competency, nor do they demonstrate any fradulent or dishonest practices by the Respondent. It has not, therefore, been shown that Respondent has in any way violated Section 626.611(5),(8) or (9), Florida Statutes.

    
    

18. While it has been recognized that the Petitioner has broad discretion in defining and identifying what conduct by a licensee demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, the cases which address this authority differ significantly in their facts from this case. In Natelson v. Department of Insurance, 454 So.2d 31 (Fla. 1st DCA 1984), rev. den. 461 So.2d 115, the licensee had plead guilty to conspiracy to distribute, and possession with intent to distribute, cannabis, and such conduct was held to be a proper basis for a finding of a violation of Section 626.611(7).

    Similarly, in Paisley v. Department of Insurance, 526 So.2d 167 (Fla. 1st DCA 1988), the licensee had been convicted of conspiracy to commit mail fraud, and using a fictitious name and address to commit mail fraud, and this was found to be a proper basis for the Petitioner's conclusion that the licensee had violated Section 626.611(7).

    
    

19. In this case, there is no basis upon which it should be found that Respondent's actions demonstrate a lack of fitness or trustworthiness to engage in the insurance business. His actions have not been shown to be violative of any provision of the Insurance Code, and therefore, they bear no similarity to the actions judicially sanctioned as establishing a basis upon which a violation of Section 626.611(7) can be found. The Petitioner has cited no rule or statute which defines the terms used in Section 626.611(7), and since the facts of this case do not demonstrate a violation of the plain meaning of the words used in this provision, it is concluded that Petitioner has not established, by the requisite degree of proof, that Respondent has violated Section 626.611(7), Florida Statutes.

    
    

20. Although it was shown that Respondent sold several policies that were intended to replace existing coverages from other insurance companies, there is no evidence that Respondent made false or incomplete comparisons. The evidence shows that whenever Respondent replaced an existing policy with one from National States, he prepared all of the necessary replacement forms and obtained the required disclosures and forms from the policyholders. Thus, Petitioner has failed to establish that Respondent was engaged in "twisting" or that he violated Sections 626.621(2) or (5), or 626.9541(1)(l), Florida Statutes.

RECOMMENDATION

Based upon the foregoing, it is recommended that Petitioner enter a Final Order dismissing all charges against Respondent contained in the Administrative Complaint filed in this matter.

DONE AND ENTERED this day of August, 1990 in Tallahassee, Florida.

DONALD D. CONN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Filed with the Clerk of the Division of Administrative Hearings this

28th day of August, 1990.

Copies furnished:

C. Christopher Anderson, Esquire

412 Larson Building Tallahassee, FL 32399-0300

Thomas W. Stahl, Esquire 817 North Gadsden Street Tallahassee, FL 32303-6313

Wayne O. Smith, Esquire 5420 Central Avenue

St. Petersburg, FL 33707

Don Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level

Tallahassee, FL 32399-0300

Hon. Tom Gallagher

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, FL 32399-0300

Docket for Case No: 89-006244

Orders for Case No: 89-006244