STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RANDALL PETERSEN, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6248

) DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Respondent, )

) RANDALL PETERSEN, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5140

) DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard before the Division of Administrative Hearings by its duly-designated Hearing Officer, Diane Cleavinger, on November 6, 1990 and February 25, 1991, in Pensacola, Florida.

APPEARANCES

For Petitioner: R. John Westberry, Esq.

25 East Wright Street Pensacola, Florida 32501

For Respondent: Charles C. Anderson, III, Esq.

Michael C. Godwin, Esq. Willis F. Melvin, Jr., Esq. Alan J. Leifer, Esq.

Division of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300 STATEMENT OF THE ISSUES

The issues in this proceeding are 1) whether Petitioner's insurance agent licenses should be disciplined for alleged violations of Section 626, Florida Statutes, and, 2) whether Petitioner's application for a resident license as a life and health agent should be approved.

PRELIMINARY STATEMENT

By Letter of Denial dated October 2, 1989, the Respondent denied Petitioner's Application for a resident license as a life and health insurance agent to represent Reserve Life Insurance Company. Petitioner's application was denied because Petitioner allegedly violated various provisions of Chapter 626, Florida Statutes. Specifically, the denial was based on Petitioner's allegedly misrepresenting policies to a number of insureds and engaging in unfair trade practices in relation to those insureds in violation of Sections 626.561; 626.611; 626.621; 626.9521; and 626.9541, Florida Statutes. Petitioner disputed the reasons for the denial and requested a formal administrative hearing.

On July 11, 1990, the Respondent filed a seven count Administrative Complaint charging that Petitioner violated various provisions of Chapter 626, Florida Statutes. Specifically, the Administrative Complaint alleged that the Petitioner's license should be disciplined for violating Sections 626.611(5),(7),(8)&(9); 626.621(1),(2)&(6); 626.9521; 626.9541(1)(a),(e)1,(e)2

and (k)1, Florida Statutes, by misrepresenting policies to a number of insureds and by engaging in unfair trade practices in relation to those insureds.

Petitioner also requested a formal hearing on the charges of the Administrative Complaint.

Both requests for hearing were forwarded to the Division of Administrative Hearings. The cases were consolidated for purposes of final hearing.

At the hearing, Petitioner, Randall Petersen, testified in his own behalf and presented the testimony of three (3) witnesses. Petitioner offered ten (10) exhibits into evidence. Respondent presented the testimony of thirteen (13) witnesses and offered twenty eight (28) exhibits into evidence. Respondent's exhibits were numbered one (1) through twenty-nine (29); however, the numeral 10 was inadvertently skipped. Additionally, Count III of the Administrative Complaint was voluntarily dismissed by the Department.

Petitioner and Respondent filed their Proposed Recommended Orders on May 20, 1991. The parties' Proposed Findings of Fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence, or were immaterial, cumulative or subordinate. Specific rulings on the parties' Proposed Findings of Fact are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material to this action, the Petitioner, Randall Petersen, was a duly-authorized life and health insurance agent. The Petitioner was employed by Gulf Life Insurance Company. Petitioner was one of Gulf Life's most productive agents during the time of his employment with the company. Petitioner resigned form his employment in 1989.

   
   

2. Count I of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Helen Hinson and her husband; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy or annuity to the Hinsons; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with the Hinsons; violating Section 626.611(9), Florida

   Statutes, by committing fraud or dealing dishonestly regarding the Hinsons; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the Hinsons' monies; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to Petitioner's dealings with the Hinsons. All of these alleged violations arose from one transaction involving Helen Hinson and her husband.

   
   

3. Prior to 1986, Mr. and Mrs. Hinson had insurance coverage with Gulf Life. The Hinson's had purchased their earlier insurance coverage prior to Petitioner's employment with Gulf Life. Petitioner took over the Hinsons' account after he joined Gulf Life.

   
   

4. The Hinsons also had an IRA with New England Life Insurance. In an effort to consolidate their insurance needs with one company, the Hinsons closed their IRA with New England Life. The Hinsons received two (2) checks from New England Life Insurance for their IRA. They wanted to do something with the money which would be beneficial to them, estate, investment and tax-wise. Their idea was to create something similar to an IRA.

   
   

5. Mr. Petersen arranged a visit and consultation with Tom Saita, the Gulf Life Home Office Representative and the company's expert in the area of investment insurance planning. This area of insurance planning can be a very complicated area for lay persons and general agents, like Petitioner, not familiar with tax and planning strategies. A specialist like Mr. Saita is often required.

   
   

6. Mr. Saita was to assist Mr. Petersen in going over the Hinson's insurance needs. Various insurance plans were discussed and Mr. Saita recommended a Universal Life Policy for the Hinsons. Mr. Saita made the sales presentation, along with Mr. Petersen and received a 16% sales commission. Mr. Saita testified that he was very comfortable with the Hinsons' understanding of the sales presentation.

   
   

7. The Hinsons decided to go ahead with Mr. Saita's recommendations. An Application for Universal Life was taken and a required medical examination was obtained. The policies were issued and the premiums paid. Part of the premiums were paid with the two IRA checks from New England Life.

   
   

8. Approximately two (2) years later, Mr. Petersen was contacted by Mrs. Hinson regarding information on their IRA. Mr. Petersen advised Mrs. Hinson that she did not have an IRA, but rather, had Universal Life Insurance.

   
   

9. Mrs. Hinson testified that she thought they had purchased an IRA. She also knew that they had Universal Life. She thought the transaction they had completed two years earlier was a roll-over of their IRA into another IRA.

   
   

10. Mrs. Hinson acknowledged that she either did not understand the sales presentation, or the agents (Petersen and Saita) did not understand what they wanted.

    
    

11. The evidence established that the Hinsons' transaction and subsequent dissatisfaction was the result of miscommunication and misunderstandings between the Petitioner, Saita and the Hinsons. The transaction did not involve any

    misrepresentations on Petitioner's part. Neither did the Petitioner willfully try to cheat the Hinsons or mishandle their money. Both Mr. Petersen and Mr. Saita tried to resolve the problems the Hinsons were having. Eventually, Gulf Life refunded all of the cash value that was paid into the Universal Life Policy.

    
    

12. Based on the foregoing, the Department has failed to sustain its burden of proof with regard to the allegations of Count I of the Administrative Complaint. Petitioner properly called in an expert in the area of investment insurance planning. The expert primarily handled the details of the Hinsons' insurance plan. As indicated earlier, the evidence demonstrated that the parties simply had a misunderstanding. Such a misunderstanding falls short of establishing any of the charges alleged in Count I of the Administrative Complaint. Therefore, Count I of the Administrative Complaint should be dismissed.

    
    

13. Count II of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Halen and Mary Stroud; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to the Strouds; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with the Strouds; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding the Strouds; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the Strouds' monies; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to Petitioner's dealings with the Strouds. All of these alleged violations arose from one transaction involving Halen Stroud and Mary Stroud.

    
    

14. Halen Stroud is the father of Mary Stroud. Both Halen and Mary Stroud are sight-impaired individuals. Halen Stroud is an elderly gentleman. Mary Stroud appeared to be easily confused.

    
    

15. Halen and Mary Stroud had existing insurance with Gulf Life. Mr. Petersen collected premiums from them on a monthly basis.

    
    

16. An agent from Independent Life told Mr. Stroud that "he had money available in his Gulf Life policies and that he could put that money into Independent Life policies". Although it is uncertain what terminology this Independent Life agent used, it appears he was referring to the cash value of the Gulf Life life insurance policies the Strouds already had.

    
    

17. Sometime around 1986 or 1987 and after being prompted by his earlier conversation with the Independent Life agent, Mr. Stroud contacted Petitioner regarding consolidation of his existing insurance, as well as purchasing additional insurance. Mr. Petersen explained that the Strouds could take out loans on the existing cash value of their Gulf Life policies and then purchase additional insurance with the loan proceeds. When the new policies were issued, the old ones could then be cancelled.

18. Both the Strouds dispute that Mr. Petersen explained that the transaction involved a "lien" against the Strouds' policies. Neither Stroud indicated in their testimony whether "loans" of the cash surrender values had been discussed. The better evidence indicates that such loans were discussed since Mr. Stroud and his daughter signed a policy and loan application.

    
    

19. When Mr. Stroud received notice of the loans and liens from Gulf Life, he did not know if he wanted to follow through on the transaction and wanted to think about it further. Mr. Petersen and his sales manager, Edward Agerton, met with the Strouds to re-explain the transaction.

    
    

20. Mr. Stroud told Mr. Agerton that he did not sign any loan forms or buy any additional insurance. However, the signatures on the policy and loan applications were the Strouds' signatures.

    
    

21. Mr. Stroud wanted to think about the transaction some more because he wasn't sure he wanted the policy. His concern centered on the new policies' expense and the lien. Approximately two (2) months later, Mr. Petersen delivered the policies to Mr. Stroud so that he could examine them. Mr. Stroud called Mr. Petersen and said he had decided he did not want the new coverage. Eventually, the entire transaction was rescinded by Gulf Life and the Strouds returned to the status quo.

    
    

22. The evidence is unclear on exactly what Mr. Petersen explained to the Strouds about the consolidation of their insurance and the increase in the amount of their insurance. In this case, it does not appear that there was any misrepresentation by Mr. Petersen, but that either the Strouds did not understand the transaction or that a portion of the transaction was not explained to them by Mr. Petersen. The evidence supports the fact that Mr. Stroud and his daughter signed both the policy applications and policy loan forms and that this transaction was the standard method by which an insured can use the cash value in old policies to purchase more insurance. It appears from the evidence that Mr. Stroud had second thoughts and changed his mind regarding the transaction. None of these actions constitute a violation of Chapter 626, Florida Statutes, or constitute clear and convincing evidence of any of the alleged violations contained in the Administrative Complaint. Therefore, Count II of the Administrative Complaint should be dismissed.

    
    

23. Count IV of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Reba Hammontree or on behalf of Reba Hammontree; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting a replacement health insurance policy that was purchased by Reba Hammontree; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction involving Reba Hammontree; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Reba Hammontree; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the money given him either by Reba Hammontree or on behalf of Reba Hammontree; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to

    Petitioner's dealings with Reba Hammontree. All of these alleged violations arose from one transaction involving Reba Hammontree and her father.

    
    

24. In 1986, Reba Hammontree and her father, Steven Flores, maintained two policies of health insurance with Gulf Life. Mr. Flores paid the premiums for Reba Hammontree. Mr. Petersen collected these premiums from Mr. Flores on a monthly basis.

    
    

25. At some point in time, the existing major medical coverage on Ms. Hammontree lapsed from non-payment of the premiums. This lapse was not shown to be due to any actions on Petitioner's part. Later, Mr. Petersen was advised by Mr. Flores that his daughter wanted to talk to him about purchasing health insurance coverage. Mr. Petersen left the policy with Mr. Flores so that Ms. Hammontree could examine it. He also left an application for such insurance. Mr. Petersen later picked up the application. The application had been completed and was signed with the name "Reba Hammontree". The signature turned out not to be the signature of Reba Hammontree. In fact, the appearance of the signature on the application was not even close to the appearance of Reba Hammontree's signature. However, the signature on the application was not shown to be the handwriting of the Petitioner, and it remains a mystery as to whose hand signed the name "Reba Hammontree". It did not appear from the evidence that either Mr. Petersen or Gulf Life had any way of knowing that the signature on the application was not Ms. Hammontree's signature. Based on the signed application, the policies were issued by Gulf Life. Premiums were paid for over one (1) year on the replacement policy by Ms. Hammontree's father. After that year, Ms. Hammontree's business was transferred out of Mr. Petersen's account.

    
    

26. In submitting the application to Gulf Life, Respondent signed the application in the space titled "Witness (Agent)." Petitioner also signed a portion of the application titled "Agent's Report." The Agent's Report included the following boilerplate representation:

    
    

    I do warrant that I have personally seen the Proposed Insured on the date this application was signed and that I have properly asked

    the questions, recorded the answers, witnessed the signature, and where required by state law, delivered an outline of coverage. ...

    
    

27. Clearly, Petitioner did not see Ms. Hammontree on the date the application was signed or witness the signing of the application. At best, the Department established that Petitioner did not follow the underwriting procedures of Gulf Life by allowing a customer to sign an application outside his presence. The evidence did not show that permitting a customer to sign an application in such a manner is indicative of a lack of knowledge, skill, or trustworthiness on the part of an agent. Likewise, given the fact that the application was left with Ms. Hammontree's father and that it was completed prior to Mr. Petersen's return to pick up the application from the policy payor, Ms. Hammontree's father, the evidence did not show that the Petitioner's failure to witness Ms. Hammontree's signature would have been material to Gulf Life in issuing the policy. Therefore it cannot be said that the Petitioner's misrepresentation in signing such boilerplate language that such events occurred was a misrepresentation of a material fact. Moreover, the fact that the referenced statement in the Agent's Report is boilerplate language, it may be inferred that the specifics of such language are quickly forgotten and Petitioner did not sign the Agent's Report intending to make the representations contained in it. Petitioner's actions only demonstrate a concern for the

    convenience of his customers. Given these facts and absent clear statutory authority, such violation of a private company's underwriting policies does not constitute a violation of any of the provisions of Chapter 626, Florida Statutes.

    
    

28. Ms. Hammontree claims that Mr. Petersen took out policies on her without her authority. She denied signing the policy application. She also denied authorizing anyone else to sign her name to the application. She disavows any knowledge of the new coverage.

    
    

29. Although Ms. Hammontree denies any knowledge of the replacement insurance coverage, the facts demonstrate otherwise. She denied holding any conversation with Mr. Petersen prior to 1987. However, she wrote a letter, dated March 3, 1989, to the Insurance Commissioner and referenced a meeting with Mr. Petersen in 1986. The referenced 1986 meeting regarded updating her insurance. In the letter, she referenced the new coverage. She also filed a claim on the new coverage and received a check from Gulf Life.

    
    

30. Based upon the foregoing, the Department has failed to present clear and convincing evidence that Petitioner violated any provisions of Chapter 626, Florida Statutes. Therefore, Count IV of the Administrative Complaint should be dismissed.

    
    

31. Count V of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Gary Ard; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to Mr. Ard; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Mr. Ard; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Mr. Ard; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Mr. Ard's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Mr. Ard. All of these alleged violations arose from one transaction involving Mr. Ard.

    
    

32. Mr. Ard is a self-made businessman. He owns and operates his own paint and body shop business. The evidence showed that Mr. Ard does not read well and does not handle the details regarding his insurance coverage. Such details were left to Mr. Ard's wife, now x-wife. Mr. Ard is very talkative and does not listen very well. It can be inferred that Mr. Petersen had some difficulty in communicating with Mr. Ard.

    
    

33. Mr. Petersen was the Gulf Life Insurance agent for Mr. Ard. Mr. Ard had existing insurance coverage with Gulf Life. Mr. Ard requested Mr. Petersen to review his existing life policy regarding an increase in coverage. Mr. Ard needed additional life insurance to use as collateral for a bank loan on his paint and body shop business and to replace a Provident Life insurance policy.

    
    

34. A medical examination was arranged for Mr. Ard, and it was determined that he had high blood pressure. The policy was issued with a rated premium. A

    policy amendment was issued for $200,000.00. Mr. Petersen delivered the amendment to Mr. Ard's wife. He returned approximately four (4) days later and picked up the signed amendment. The signature on the amendment said "Gary Ard". However, the signature was not Mr. Ard's. The signature's appearance was very close to the appearance of Mr. Ard's true signature. Again, as with Ms.

    Hammontree, the fake signature was not shown to be Petitioner's handwriting.

    
    

35. To say the least, Mr. Ard's testimony was very confusing and difficult to follow. He identified the $50,000.00 policy. He testified that the signature on the application looked like his, but he did not know for sure. He denied the signature on the policy amendment. He further stated that he was not familiar with the $200,000.00 additional coverage and did not authorize anyone to sign his name to the amendment. He then states that he signed the policy application, without the amendment, but goes on to say that he could not remember signing the application. Mr. Ard's confusion very likely is due to the fact that he left the details of such transactions to his wife, who is now Mr. Ard's ex-wife. Moreover, Mr. Ard's testimony, when compared to other evidence submitted to the Department in its investigation, substantially conflicts in material respects.

    
    

36. Given Mr. Ard's nature and his very confusing and conflicting testimony, it is impossible to make any material findings regarding the allegations contained in Count V of the Administrative Complaint. Therefore, the Department has failed to establish clear and convincing evidence with regard to the allegations contained in Count V of the Administrative Complaint, which Count should be dismissed.

    
    

37. Count VI of the Administrative Complaint charged the Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Aubrey Johnson; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy or annuity to Mr. Johnson; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Mr. Johnson; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Mr. Johnson; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Mr. Johnson's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Mr. Johnson. All of these alleged violations arose from one transaction involving Mr. Johnson.

    
    

38. Mr. Petersen was contacted by Mr. Johnson to review his life insurance and annuity coverage because he had $40,000.00 to invest. Mr. Petersen advised Mr. Johnson that he would arrange a meeting with Tom Saita, the Gulf Life Home Office Representative. A meeting was held with Mr. Johnson, his secretary, Mr. Petersen and Tom Saita.

    
    

39. Mr. Saita made the sales presentation and discussed a universal life contract on Mr. Johnson. Mr. Saita testified that he was comfortable with Mr. Johnson's understanding of the sales presentation. A universal life policy was sold and issued by Gulf Life.

40. Mr. Johnson testified that he had several meetings with Mr. Peterson and met twice with Mr. Saita, before he made his decision to invest with Gulf Life. His bookkeeper was also present during one (1) of the meetings with Mr. Saita.

    
    

41. Mr. Johnson testified that he was told by Mr. Petersen that he could invest his money with Gulf Life and be able to withdraw the full amount at anytime, without a penalty. 1/ Mr. Petersen denied that he made this statement and testified that he told Mr. Johnson that the money could be withdrawn, within thirty (30) days, without a penalty. The thirty-day grace period for withdrawal was a true representation by Mr. Petersen.

    
    

42. The evidence does not clearly and convincingly demonstrate that the Respondent willfully misrepresented this transaction to Mr. Johnson. Given the representations testified to by the Respondent and Mr. Johnson and the multiple meetings between the Respondent, Mr. Johnson and Mr. Saita, the more probable interpretation of the evidence is that Mr. Johnson misunderstood what Mr. Petersen said about the thirty-day grace period. Additionally, the facts and circumstances involved in Petitioner's transaction with Mr. Johnson were similar to the facts involved in Petitioner's dealings with the Hinsons. The same factual conclusions are reached in Petitioner's transaction with Mr. Johnson. Therefore, the Department has failed to sustain its burden of proof, as to the allegations contained in Count VI of the Administrative Complaint and Count VI of the Administrative Complaint should be dismissed.

    
    

43. Count VII of the Administrative Complaint charged the Respondent with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Ms. Tugwell on behalf of her daughter, Janet Iturriaga; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to Ms. Tugwell; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Ms. Tugwell; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Ms. Tugwell; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Ms. Tugwell's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Ms. Tugwell. All of these alleged violations arose from one transaction involving Ms. Tugwell.

    
    

44. Ms. Tugwell manages the Hilburn Apartments and manages the financial affairs of her daughter, Janet Iturriaga. Ms. Iturriaga is slightly mentally retarded and has a heart condition. In 1987, Ms. Tugwell was shopping for health insurance for the apartment employees and her daughter. She contacted Gulf Life. Ms. Tugwell had existing health insurance coverage on her daughter with Prudential and was paying $471.00 per month in premiums.

    
    

45. Mr. Petersen was given the lead on Ms. Tugwell's inquiry and went to see Ms. Tugwell. He explained the available health plans and left an outline of the various types of coverage with Mrs. Tugwell.

46. Mrs. Tugwell called a few days later. Mr. Petersen again visited Mrs. Tugwell at the Hilburn Apartments and upon arrival, saw the daughter, Janet, sitting at the front desk.

    
    

47. Mr. Petersen completed the policy applications, with information given to him by Mrs. Tugwell. Some of the information on Ms. Iturriaga's health was incorrect. Ms. Tugwell claims that she told Mr. Petersen the correct information. She states that she told Mr. Petersen that her daughter would be high risk. Mr. Petersen claims that he faithfully recorded the information given to him by Ms. Tugwell. She further states that she did not receive the original policies, despite the fact that she paid the premiums for three (3) years.

    
    

48. Mrs. Tugwell took the application, left the room, and returned with the application signed "Janet I Tugwell". Mr. Petersen did not actually see the daughter sign the applications. The signature was not Ms. Iturriage's.

    However, he had no reason to believe that Ms. Iturriaga did not, in fact, sign the application for insurance. Again, Petitioner signed the Agent's Report portion of the application. The same findings are made in reference to that Agent's Report as were discussed in Ms. Hammontree's case. The policies were thereafter issued by Gulf Life and delivered to Mrs. Tugwell.

    
    

49. As with Ms. Hammontree, the appearance of the signature on the application did not resemble Ms. Iturriaga's real signature. Likewise, the signature on the application was not shown to be in Petitioner's handwriting.

    
    

50. Ms. Tugwell cancelled her daughter's health insurance with Prudential. She paid the premiums on the Gulf Life policies for approximately three (3) years and also filed a claim for an accidental injury to Janet. Mrs. Tugwell called about her daughter's claim. Mrs. Tugwell was advised that the home office had requested medical records from the hospital. Mrs. Tugwell stated, "Why is it taking so long? There is nothing wrong with my daughter." The claim was initially denied by Gulf Life because two (2) different names were given to the hospital. The name "Tugwell" was listed on the claim form. The claim was eventually paid by Gulf Life and the check was cashed.

    
    

51. Ms. Tugwell testified that her daughter's name on the application, "Janet I. Tugwell", was wrong. Her daughter never called herself "Janet I. Tugwell". She always goes by the name of "Janet T. Iturriaga". Therefore, Ms. Tugwell believes that the signature on the application was not her daughter's signature. However, she did not know whether Janet had signed the application.

    
    

52. Mrs. Tugwell testified that she had authority to take out insurance on her daughter. She also testified that her daughter did not know that she was taking out new insurance on her. Clearly, Janet did not sign the application if she did not know insurance was being taken out.

    
    

53. Ms. Tugwell did occasionally refer to her daughter as "Janet Tugwell", as evidenced by a premium check dated September 1, 1987. The check contains the following legend: "For Janet Tugwell, Policy #8710030". The policy number was the number of the new policies Ms. Tugwell had taken out on her daughter. Clearly, within 8 months of the insurance being taken out, Ms. Tugwell knew her daughter's policy number and knew the policy was under the name of "Janet Tugwell". The only way Ms. Tugwell could have received such information is if she had possession of the new policies or had her daughter's signature placed on the insurance application.

54. In February of 1989, Mrs. Tugwell requested duplicate policies from Gulf Life and to have the name on the policies changed to Janet T. Iturriaga.

    To change the name on the policies, a policy change form was required. On March 13, 1989, Janet signed the policy change form and ratified the earlier coverage. Janet testified, however, that she did not sign the policy change form. The better evidence establishes that Ms. Ituriaga did sign the policy change form and simply has forgotten that fact.

    
    

55. It should be noted that when the duplicate policies came in, Mrs. Tugwell had an agent from another insurance company look them over. The agent allegedly told her that the Gulf Life policies were not worth anything. It was then that Mrs. Tugwell filed her complaint.

    
    

56. Mrs. Tugwell had insurance with Gulf Life and paid premiums for approximately three (3) years. She filed claims on the coverage and accepted the benefits. It appears that the reason behind Mrs. Tugwell's complaint seems to be based on the fact that she became dissatisfied with the coverage on her daughter because she had been told that the coverage was worthless. Given the fact that the alleged misrepresentation in regards to Ms. Iturriaga's health, which was in the application, is based upon a swearing match between Mr. Petersen and Ms. Tugwell and the obvious discrepancies in Ms. Tugwell's testimony, there is simply no clear and convincing evidence to sustain a finding that Mr. Petersen made misrepresentations in the policy application or signed Janet Tugwell's name to the policy application. Finally, as with Ms. Hammontree's case, the fact that Petitioner signed the Agent's Report does not clearly and convincingly demonstrate that Petitioner knowingly made any material misrepresentations to Gulf Life, especially since Ms. Tugwell and Iturriaga ratified the coverage. Such ratification eliminates the materiality of the Agent's Report. Therefore, Count VII of the Administrative Complaint should be dismissed.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

58. The Department has the burden to establish by clear and convincing evidence that Petitioner's agents license should be disciplined. Ferris vs. Turlington, 510 So.2d 292 (Fla. 1987). However, an applicant for a license or permit carries the ultimate burden of persuasion of entitlement to a license or permit. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1981).

    
    

59. The Letter of Denial alleges that Petitioner is in violation of twelve

    (12) provisions of the Insurance Code: Section 626.611(5); 616.611(7), 626.611(8), 626.611(9); 626.621(1); 626.621(2); 626.621(6); 626.9521; 626.9541(1)(a)6; 626.9541(1)(e)1; 626.9541(1)(e)2; and 626.9541(1)(k)1, Florida Statutes. The Administrative Complaint alleges that Petitioner is in violation of nine (9) provisions of the Insurance Code: 626.561(1); 626.611(5); 626.611(7); 626.611(8); 626.611(9); 626.611(10); 626.611(13); 626.621(2); 626.621(5), Florida Statutes. Those provisions provide:

    
    

    626.561 Reporting and accounting for funds.

    (1) All premiums, return premiums, or other funds belonging to insurers or others received by an agent, solicitor, or adjuster in

    transactions under his license shall be trust funds so received by the licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other persons entitled thereto.

    * * *

    626.611 Grounds for compulsory refusal, suspension, or revocation of agent's solicitor's or adjuster's license or service representative's supervising or managing general agent's or claims investigator's permit.

    (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 trustworthiness to engage in the business of insurance.

    2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transaction authorized by the license or permit.

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

    4. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license.

    (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.

    * * *

    626.621 Grounds for discretionary refusal, suspension, or revocation of agent's solicitor's, or adjuster's license or service representative's, supervisory or managing general agent's, or claims investigator's permit.

    1. Any cause for which issuance of the license or permit could have been refused had it then existed and been known to the department.

    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 or permit.

    1. Violation of the provision against twisting, as defined in s. 626.9541(1)(1).

    2. In the conduct of business under the license or permit, engaging in unfair methods of competition of 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.

    * * *

    626.9521 Unfair methods of competition and unfair or deceptive acts or practices prohibited - 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.

    * * *

    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:

       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:

    (6) Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse,

    forfeiture, exchange, conversion, or surrender of any insurance policy.

    (e) False statements 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.

    (2) Knowingly making any false entry of a material fact in any book, report, or statement of any person, or knowingly omitting to make a true entry of any material fact pertaining to the business of such person in any book, report, or statement of such person.

    (k) Misrepresentation in insurance applications. -

    1. Knowingly making false or fraudulent statements or representations on, or relative to, an application for an insurance policy for

    the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

    
    

60. The above-referenced statutes are all violations of various provisions of the Insurance Code and all are applicable to the business of insurance in the course of dealing under Petitioner's license. See Section 626.621(2).

    
    

61. In this case, the Department has failed to present clear and convincing evidence that Petitioner has violated any of the provisions of Chapter 626, Florida Statutes, including any lack of fitness, trustworthiness, technical skill or knowledge to engage in the business of insurance. The evidence does demonstrate that Petitioner is the type of person who is entitled to the renewal of his insurance license. Therefore, the Administrative Complaint should be dismissed and Petitioner's application for licensure should be granted.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a Final Order dismissing the

Administrative Complaint against the Respondent.

It is further RECOMMENDED that Petitioner's application to represent Reserve Life Insurance Company and Pan-American Life Insurance Company be GRANTED.

DONE and ENTERED this 9th day of July, 1991, in Tallahassee, Florida.

DIANE CLEAVINGER

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 9th day of July, 1991.

ENDNOTES

1/ Mr. Johnson was well aware of early withdrawal penalties. He had other annuity contracts with Gulf Life.

APPENDIX TO RECOMMENDED ORDER

The facts contained in paragraphs 4, 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18,

19, 20, 21, 22, 23, 24, 25, 26, 27, 30, 31, 32, 33, 34, 38, 39, 40, 41, 42,

44, 45, 46, 48 and 50 of Petitioner's Proposed Findings of Fact are adopted in substance in sofaras material.

The facts contained in paragraphs 1, 2, 3, 5, 12, 28, 29, 35, 36, 37, 47, and 49 of Petitioner's Proposed Findings of Fact are subordinate.

The facts contained in paragraphs 1, 2, 5, 7, 9, 13, 17, and 20 of Respondent's Proposed Findings of Fact are adopted in substance in sofaras material.

The facts contained in paragraphs 4, 11, 14, 16 and 19 of Respondent's Proposed Findings of Fact are subordinate.

The facts contained in paragraphs 3, 6, 10, 12, 15, 18, 21, and 23 of Respondent's Proposed Findings of Fact were not shown by the evidence.

The facts contained in paragraph 8 of Respondent's Proposed Findings of Fact are adopted except for the Stroud's awareness which was not shown by the evidence.

COPIES FURNISHED:

R. John Westberry, Esq.

25 East Wright Street Pensacola, FL 32501

Charles C. Anderson, III, Esq. Michael C. Godwin, Esq.

Willis F. Melvin, Jr., Esq. Alan J. Leifer, Esq.

Division of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Tom Gallagher, Esq.

State Treasurer and Insurance Commissioner Department of Insurance and Treasurer

The Capitol, Plaza Level Tallahassee, FL 32399-0300

Bill O'Neil, Esq.

General Counsel

Department of Insurance and Treasurer The Capitol, Plaza Level

Tallahassee, FL 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 89-006248

Orders for Case No: 89-006248