STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 91-0946

)

RONALD GENE BROWN, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written Notice, the Division of

Administrative Hearings, by its duly designated Hearing Officer, Daniel Manry, held a formal hearing in the above-styled case on July 11 and 12, 1991, in Port St. Lucie, Florida.

APPEARANCES

For Petitioner: David D. Hershel, Esquire

Department of Insurance Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Thomas F. Woods, Esquire

Gatlin, Woods, Carlson & Cowdery 1709-D Mahan Drive

Tallahassee, Florida 32308 STATEMENT OF THE ISSUE

The ultimate issue for determination in this proceeding

is whether Respondent caused 22 individuals to make application for life insurance without their knowledge and without providing them with a copy of the insurance policies subsequently issued.

PRELIMINARY STATEMENT

Petitioner filed a one count Administrative Complaint against Respondent on January 18, 1991. Respondent requested a formal hearing in his Answer to the Administrative Complaint filed on January 30, 1991.

The matter was referred to the Division of

Administrative Hearings for assignment of a hearing officer on February 12, 1991, and assigned to the undersigned on February 14, 1991. The formal hearing was scheduled for July 11 and 12, 1991, pursuant to a Notice of Hearing issued on March 7, 1991.

At the formal hearing, Petitioner presented the live testimony of 16 witnesses and the deposition testimony of six witnesses, all of whom were city employees. Petitioner also presented the deposition testimony of an employee of the Prudential Insurance Company. Petitioner identified 34 exhibits, of which, 32 were submitted for admission in evidence.

Petitioner's Exhibits 1-24, and 26, were admitted in evidence without objection. Exhibits 29-34 were admitted in evidence pursuant to stipulation. Exhibit 25 was admitted over objection. Exhibits 27 and 28 were identified but not submitted for admission in evidence.

Respondent testified in his own behalf and presented the testimony of two witnesses. Respondent identified 12

exhibits and submitted 11 exhibits for admission in evidence. Respondent's Exhibits 1, 4, 10, and 12 were admitted in evidence

without objection. Respondent's Exhibits 2, 3, 6-9, and 11 were admitted in evidence over objection. Respondent's Exhibit 5 was identified but not submitted for admission in evidence.

A transcript of the formal hearing was filed with the undersigned on August 7, 1991. Proposed findings of fact and conclusions of law were timely filed by Respondent on September 13, 1991, and by Petitioner on September 20, 1991. The parties' proposed findings of fact are addressed in the Appendix to this Recommended Order. Respondent filed a Motion To Augment Authorities on January 7, 1992, which was granted without objection. On the same date, counsel for both parties entered into additional stipulations of fact.

FINDINGS OF FACT

1. Petitioner is the administrative agency charged with responsibility for administering and enforcing the provisions of Chapter 626, Florida Statutes. At all times

   material to this proceeding, Respondent has been licensed and eligible for appointment in Florida as a life and variable annuities agent, a life, health, and variable annuities agent, and a general lines agent.

   
   

2. The City of Port St. Lucie (the "City") has had a City-funded pension plan in effect for its employees since October 1, 1977 (the "plan"). The City funds the plan with a

   contribution of 10.5 percent of the gross income of each employee who is enrolled in the plan (the "participant"). The monthly contributions by the City are sent directly to The Prudential Insurance Company ("Prudential").

   
   

3. The plan is participant directed. It allows each participant to direct the investment of his or her share of the City's contribution into either an investment account or a split investment account. If a participant elects an investment account, all of the City's contributions for that participant are used to purchase an annuity contract. If a participant elects the split investment account, a portion of the City's contribution for that participant is invested in an annuity

   contract and a portion is invested in whole life insurance issued by Prudential. Each whole life policy builds a cash value and provides benefits not available in the annuity contract, including disability benefits. Each participant is completely vested in the plan after he or she has been enrolled in the plan for five years.

   
   

4. Prudential issues annuity contracts and insurance policies on participants and provides plan services to the administrator and trustees of the plan. 1/ The City is the owner of both the annuity contracts and the insurance policies. Both the annuity contracts and insurance policies are maintained in

   the City offices of the plan administrator. Participants do not receive copies of either annuity or insurance contracts and do not receive certificates of insurance. Beginning in 1984, each participant has received monthly Confirmation Statements in their paycheck envelopes. The Confirmation Statements are prepared by Prudential and disclose the net investment activity for the annuity contract. From the inception of the plan, each participant has received an annual Employee Benefit Statement which is prepared by Prudential and discloses the amount of the employer contributions that were allocated to the annuity contract and the amount that was allocated to insurance.

   
   

5. Participants are eligible to enroll in the pension

   plan after six months of service. Biannual enrollment dates are scheduled in April and October each year. Prior to each biannual enrollment date, the City conducts an orientation meeting to explain the pension plan to prospective participants. The City sends a notice to each eligible employee in his or her payroll envelope. The notice informs the employee of his eligibility and the date and time of the orientation meeting.

   
   

6. At the City-run orientation meeting, eligible employees are told that the pension plan is a participant

   directed plan in which each of them must elect either a straight annuity investment or a split investment involving an annuity and life insurance. Thirty to forty percent of the prospective participants do not attend the City-run orientation meeting.

   
   

7. Subsequent to the orientation meeting, Respondent

   meets individually with each eligible employee in a room located on the premises of the City. The enrollment sessions are scheduled by the City so that Respondent has approximately 30 minutes to meet individually with each prospective participant. During that 30 minutes, Respondent provides each eligible employee who enrolled in 1987 and thereafter with a copy of the Summary Plan Description. 2/ Respondent explains the investment options, answers questions, asks the participants for the information contained in the applications and has the participants sign the appropriate applications. 3/

   
   

8. Each participant elects his or her investment

   option during the 30 minute enrollment session with Respondent. 4/ There is no separate written form evidencing the participant's election. The only written evidence of the election made by the participant is the application for annuity contract and, if the

   participant elects the split investment option, the application for insurance. If a participant elects the straight annuity investment option, Respondent completes and has the participant sign only one application. That application is for an annuity contract. If the split investment option is elected, Respondent completes and has the participant sign a second application. The second application is for life insurance.

   
   

9. An application for an annuity contract is completed by Respondent and signed by the participant regardless of the

   investment option elected by the individual participant. 5/ An application for an annuity contract is clearly and unambiguously labeled as such. The top center of the application contains the following caption in bold print:

   
   

   Application For An Annuity Contract

   [] Prudential's Variable Investment Plan Series or

   [] Prudential's Fixed Interest Plan Series

   
   

   The participant must determine as a threshold matter whether he or she wishes to apply for a variable investment or fixedinterest annuity contract. Respondent then checks the appropriate box.

   
   

10. The front page of the application for annuity contract contains an unnumbered box on the face of the application that requires a participant who applies for a variable investment annuity contract to select among seven

    investment alternatives. The unnumbered box is labeled in bold, capital letters "Investment Selection." The instructions to the box provide:

    
    

    Complete only if you are applying for a variable annuity contract of Prudential's Variable Investment Plan Series

    Select one or more: (All % allocations must be expressed in whole numbers)

    
    

    []	Bond
    []	Money Market
    []	Common Stock
    []	Aggressively Managed Flexible
    []	Conservatively Managed Flexible
    []	Fixed Account
    []	Other TOTAL INVESTED	100 %

11. The application for annuity contract is two pages

    long. Question 1a is entitled "Proposed Annuitant's name (Please Print)." Question 4 is entitled "Proposed Annuitant's home address." Question 10, in bold, capital letters, is entitled "Annuity Commencement Date," and then states "Annuity Contract to begin on the first day of." There is an unnumbered box on the application relating to tax deferred annuities. Question 12 asks, "Will the annuity applied for replace or change any existing annuity or life insurance?" (emphasis added)

    The caption above the signature line for the participant is entitled "Signature of Proposed Annuitant."

    
    

12. An application for insurance is also completed by Respondent and signed by the participant if the split investment option is elected. The application for insurance is clearly and unambiguously labeled as such. The upper right corner of the application for insurance contains the following caption in bold print:

    
    

    Part 1 Application for Life Insurance Pension Series to

    [] The Prudential Insurance Company of America

    [] Pruco Life Insurance Company

    A Subsidiary of The Prudential Insurance Company of America

    
    

    The term "proposed insured" also appears in bold print in the instructions at the top of the application for insurance.

    
    

13. The application for insurance is approximately five

    pages long. 6/ It contains questions concerning the participant's treating physician, medical condition, driving record, and hazardous sports and job activities. 7/ Question 1a is entitled "Proposed Insured's name - first, initial, last (Print)."

    Question 7 asks for the kind of policy for which the participant is applying. Question 9 asks if the waiver of premium benefit is desired. Question 12 asks, "Will this insurance replace or change any existing insurance or annuity in any company?" (emphasis added) Question 21 asks, "Has the proposed insured smoked cigarettes within the past twelve months?" The caption under the signature line for the participant is entitled "Signature of Proposed Insured," as is the signature line for the Authorization For The Release of Information attached to the application for insurance.

    
    

14. Respondent met with each of the participants in this proceeding during the time allowed by the City for the enrollment sessions. Mr. Robert Riccio, Respondent's sales manager, was present at approximately 70 percent of those

    enrollment sessions. Respondent provided each participant who enrolled in 1987 and thereafter with a copy of the Summary Plan Description. Respondent explained the investment options, and answered any questions the participants had. The name, occupation, and date of the enrollment session of the participants involved in this proceeding are:

    (a)	Edmund Kelleher	Police Officer	3-16-88
    (b)	Raymond Steele	Police Officer	9-29-88
    (c)	Mark Hoffman	Police Officer	10-29-86
    (d)	Joseph D'Agostino	Police Officer	3-12-88
    (e)	Charles Johnson	Police Officer	9-24-84
    (f)	Donna Rhoden	Admin. Sec.	3-26-87
    (g)	John Gojkovich	Police Officer	10-2-84
    (h)	John Skinner	Police Officer	9-14-84
    (i)	John Sickler	Planner	3-14-90
    (j)	James Lydon	Bldg. Inspect.	9-13-89
    (k)	Robert McGhee	Police Officer	9-18-84
    (l)	Richard Wilson	Police Officer	3-21-89
    (m)	Lorraine Prussing	Admin. Sec.	9-6-84
    (n)	Helen Ridsdale	Anml. Cntrl.	Off. 9-14-84
    (o)	Sandra Steele	Admin. Sec.	4-3-85
    (p)	Linda Kimsey	Computer Op.	3-18-89
    (q)	Jane Kenney	Planner	3-13-85
    (r)	Alane Johnston	Buyer	3-18-89
    (s)	Paula Laughlin	Plans Exam.	3-18-89

    1. Helen Ridsdale Anml. Cntrl. Super. 9-14-84

    2. Jerry Adams Engineer 3-16-88

    3. Cheryl John Records Super. for the

       Police Dept. 9-14-84

       
       

15. Each participant in this proceeding elected the

    split investment option during his or her enrollment session with Respondent and signed applications for both an annuity contract and an insurance policy. Each participant signed the application for insurance in his or her capacity as the proposed insured.

    
    

16. The City paid 10.5 percent of each participant's

    salary to Prudential on a monthly basis. The payments were sent to Prudential with a form showing the amount to be invested in annuities and the amount to be used to purchase insurance. Each participant who enrolled in 1987 and thereafter received with his or her paycheck a monthly Confirmation Statement and all participants received an annual Employee Benefit Statement disclosing the value of the investment in annuities and the value of the investment in life insurance.

    
    

17. The participants in this proceeding, like all participants, did not receive copies of annuity contracts and insurance policies and did not receive certificates of insurance. The annuity and insurance contracts were delivered to the City, as the owner, and maintained in the offices of the City's finance department.

    
    

18. The participants in this proceeding had no actual knowledge that they had applied for insurance during the enrollment session with Respondent. Most of the participants had other insurance and did not need more insurance. Each participant left the enrollment session with Respondent with the impression that they had enrolled in the pension plan and had not applied for insurance.

19. The lack of knowledge or misapprehension suffered

    by the participants in this proceeding was not caused by any act or omission committed by Respondent. Respondent did not, either personally or through the dissemination of information or advertising: wilfully misrepresent the application for insurance; wilfully deceive the participants with respect to the application for insurance; demonstrate a lack of fitness or trustworthiness; commit fraud or dishonest practices; wilfully fail to comply with any statute, rule, or order; engage in any unfair method of competition or unfair deceptive acts or practices; knowingly make false or fraudulent statements or representations relative to the application for insurance; or misrepresent the terms of the application for insurance.

    
    

20. No clear and convincing evidence was presented that Respondent committed any act or omission during the enrollment sessions which caused the participants to believe that they were not applying for insurance. 8/ None of the participants testified that Respondent prevented them or induced them not to read the applications they signed. 9/

    
    

21. All of the participants affirmed their signatures

    on the application for insurance, but most of the participants did not recognize the application for insurance signed by them. Some participants could not recall having signed the application. The participants could not recall being hurried or harassed by Respondent and could not recall if Respondent refused to answer any of their questions. 10/ None of the participants provided a clear and convincing explanation of how Respondent caused them to sign an application for insurance without their knowledge or described in a clear and convincing fashion the method by which Respondent prevented them or induced them not to read or understand the contents of the documents they were signing. 11/

    
    

22. Eleven of the 22 participants cancelled their insurance policies after "learning" that they had insurance

    policies. Eight participants cancelled their policies on August 23, 1990. Two cancelled their policies on February 5, 1991, and one cancelled her policy on April 18, 1991. Financial adjustments required by the cancellations have been made and any remaining contributions have been invested in annuity contracts.

    
    

23. Since 1983, Respondent has assisted Prudential and

    the City in the administration of the pension plan, including the enrollment of all participants. Prior to 1990, there was only one incident in which a participant complained of having been issued an insurance policy without knowing that she had applied for an insurance policy. The policy was cancelled and the appropriate refund made. Respondent has a long and successful relationship with the City and has no prior disciplinary history with Petitioner.

    
    

24. Respondent is the agent for Prudential. The

    pension plan was intended by Prudential and the City to provide eligible employees with investment opportunities for annuities and life insurance. Respondent generally makes higher commissions from the sale of insurance than he does from the sale

    of annuities. 12/ Mr. Riccio receives 14 percent of the commissions earned by Respondent.

    
    

25. Respondent encourages all participants to elect the split investment option by purchasing both annuities and insurance. If a participant states that he or she does not want life insurance, Respondent asks them for their reasons and explains the advantages of life insurance. If the participant then rejects life insurance, Respondent enrolls the participant in a straight annuity investment. Such practices do not constitute fraud, deceit, duress, unfair competition, misrepresentations, false statements, or any other act or omission alleged in the one count Administrative Complaint.

    
    

    CONCLUSIONS OF LAW

    
    

26. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this proceeding. Section 120.57(1), Florida Statutes. The parties were duly noticed for the formal hearing.

    
    

27. The burden of proof is on Petitioner in this proceeding. Petitioner must show by clear and convincing evidence that Respondent committed the acts alleged in the Administrative Complaint and that the penalties requested by Petitioner should be imposed. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

28. Each participant in this proceeding elected the split investment option by signing and submitting two applications. The elections made by the participants are not

    required by any statute or rule to take any particular form. The separate applications for annuity and insurance provide the only written evidence that the participants elected the split investment option during the enrollment sessions and applied for insurance. Petitioner failed to present clear and convincing evidence that Respondent committed any act or omission which caused the participants to elect the split investment option and apply for insurance without knowing what they were doing.

    
    

29. Clear and convincing evidence has been described by the Fourth District Court of Appeal in Slomowitz v. Walker, 429 So.2d 797 (Fla. 4th DCA 1983). The court said:

    
    

    . . . clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts at issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

    Slomowitz, 429 So.2d at 800.

    
    

30. The testimony of the participants at the formal hearing was less than clear and convincing. All but two participants testified that they did not recall the details of the conversations during the enrollment sessions. The testimony of the two participants who did address Respondent's statements during the enrollment session was persuasively rebutted by the signed applications and the testimony of Respondent and Mr. Riccio.

    
    

31. The election made by each participant and the intent to apply for insurance was evidenced by applications signed by each participant in his or her capacity as proposed

    insured. Each application was clearly and unambiguously worded to disclose the fact that it was either an application for an annuity contract or an application for insurance. Each application for insurance was signed at least twice by each

    participant in his or her capacity as the "proposed insured." 13/

    
    

32. A party who executes a written instrument cannot

    claim ignorance of the contents of the document unless the party can demonstrate that he or she was prevented by the other party from reading the document or induced by statements of the party not to read the document. Allied Van Lines, Inc., v. Bratton,

    351 So.2d 344, 348 (Fla. 1977); Manning v. Interfuture Trading, Inc., 578 So.2d 842, 845 (Fla. 4th DCA 1991); Merril, Lynch, Pierce, Fenner & Smith, Inc., v. Benton, 467 So.2d 311, 313 (Fla. 5th DCA 1985); John Deere Industrial Equipment Company v. Roberts, 362 So.2d 65, 68 (Fla. 1st DCA 1978). In Vasquez v. Bankers Insurance Company, 502 So.2d 894, 896 (Fla. 1987), the Florida Supreme Court held that one's signature on an application for insurance affixed below a separate paragraph rejecting uninsured motorist coverage in bold print and in plain unambiguous language constitutes a knowing election to reject such coverage.

    
    

33. No separate written election form was utilized when the participants enrolled in the plan. 14/ Unlike the issue in Vasquez, however, the issue for determination in this proceeding is not whether Respondent prevented the participants from knowingly making an election contained within a signed application for insurance. Rather, the issue in this proceeding is whether Respondent prevented the participants from even knowing that they were signing an application for insurance by committing the acts or omissions alleged in the Administrative Complaint.

    
    

34. While the facts in Vasquez involved a statutory presumption, the legal axiom embodied in the statutory presumption in Vasquez is the same as that generally applicable to all written instruments. In Baum v. Allstate Insurance Company, 496 So.2d 201, 204 (Fla. 4th DCA 1986), the court cited with approval the following quotation from the opinion of the appellate court in Vasquez:

    It is axiomatic that absent unusual circumstances, not present under the facts of the case now before us, one cannot claim ignorance of the contents of a written instrument which one signs. Stonebraker v.

    Reliance Life Insurance Co. of Pittsburgh, 123 Fla. 244, 166 So.583 (1936) and John

    Deere Industrial Equipment Co. v. Roberts, 362 So.2d 65 (Fla. 1st DCA 1978).

    
    

    Baum, 496 So.2d at 204. 15/

    The facts in Deere, which was cited in the quoted language, did not involve a statuary presumption.

    
    

35. A signatory to an instrument has a duty to learn

    and know the contents of the document that he signs. Sabin v. Lowe's of Florida, Inc., 404 So.2d 772, 773 (Fla. 5th DCA 1981) (involving an application for credit). Even persons not capable of reading English have a duty to learn and know the contents of the documents they sign and are free to elect to bind themselves to the terms of a written document without reading it. Merril, Lynch, 467 So.2d at 312.

    
    

36. The fact that none of the participants personally received either a copy of the insurance policy or a certificate of insurance is irrelevant. Each participant was the insured but not the owner of the insurance policy. Even if the participants had been the policy owners, delivery to the agent constitutes delivery to the insured. Reliance Insurance Company v. D'Amico,

    528 So.2d 533, 534 (Fla. 2d DCA 1988) (citing Prudential Insurance Co. of America v. Latham, 207 So.2d 733 (Fla. 3d DCA 1968) for the stated proposition). Further, the plan administrator and the plan trustees maintained insurance policies in the finance office of the City. Those files were available for inspection by the participants.

    
    

37. Petitioner asserts that the plan participants twice did not know the contents and purpose of the clearly labeled documents they signed; once when they provided the information

contained in the two page application for annuity and signed that application, and again when they provided the information contained in the five page application for insurance and signed that application. In the absence of clear and convincing evidence showing the method by which Respondent committed the acts or omissions alleged in the Administrative Complaint, Petitioner asserts that the greater financial incentive to sell insurance coupled with the participants' lack of knowledge or misapprehension requires a conclusion that the participants' unknowing application for insurance could not have occurred "but for" the acts or omissions of Respondent. Such an assertion, however, is unpursuasive. While Petitioner showed that there was a misunderstanding, it failed to show by clear and convincing evidence that Respondent prevented the participants from knowing that they were applying for insurance by committing the acts or omissions alleged in the one count Administrative Complaint.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Petitioner should enter a Final Order finding Respondent not guilty of the allegations in the Administrative Complaint and imposing no fines or penalties.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 14th day of January 1992.

DANIEL MANRY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of January 1992.

ENDNOTES

1/ In providing plan services each plan year, Prudential: calculates the contributions that must be made on behalf of each participant; lists eligible employees; lists contributions allocable to insurance; prepares annual reports for the Internal Revenue Service, Department of Labor, and Pension Guarantee Corporation, if appropriate; prepares actuarial evaluations for defined benefit plans; prepares employee benefit statements; prepares necessary schedules and forms for employees who terminate employment; and prepares data necessary to complete forms 1099R and W2P as required by the Internal Revenue Service.

2/ The Summary Plan Description is a 10 page summary of

the plan prepared by Prudential and distributed at the enrollment sessions. It has been given to each participant who enrolled in the plan in 1987 and thereafter. Prior to 1987, it was not used.

3/ Respondent complained to the City on at least two

occasions that 30 minutes was insufficient to accomplish all that was expected of him during the enrollment sessions. The City concluded that 30 minutes was sufficient and refused to extend the time allocated for each enrollment session.

4/ The record is replete with evidence that the investment option election is made by the enrolle during the enrollment session with Respondent. The form of that election, however, is not disclosed in the record. A determination that election takes the form described in this paragraph was based upon the stipulation of counsel for the parties during a telephone

conference with the undersigned on January 7, 1992. While no separate written form of election was utilized by the City for any of the participants in this proceeding, the City now utilizes a separate written election form for each of its enrolles.

5/ Counsel for the parties stipulated at the formal

hearing that an application for annuity contract was completed by Respondent and signed by each of the complaining witnesses in this proceeding. However, no copy of an application for annuity contract was submitted in evidence at the formal hearing. A copy of the application for annuity contract completed for and signed by one of the complaining witnesses was submitted as a sample by counsel for Petitioner on January 7, 1992, pursuant to the request of the undersigned. It is admitted in evidence as Petitioner's Exhibit 35.

6/ Earlier applications were only four pages long. The length has been increased to five pages.

7/ The page containing questions concerning medical

information was completed for only 10 of the participants. That page was not completed for 11 participants and was missing from the exhibit for the other participant. That page also contains the signature line for the participant as proposed insured.

8/ Of the 22 participants in this proceeding, only two provided any testimony regarding the contents of the enrollment session with Respondent. Mr. Kelleher testified as follows:

I said, "I don't want to buy insurance," and then he said, "Well, you're not buying insurance . . . you're getting a pension plan with some insurance benefits . .

TR at 111.

Mr. Kelleher admitted, however, that he did not remember everything that was said during the enrollment session. Mr. Lydon testified as follows:

. . . Well, if I sign this, I'll be signing up for this other policy, and I don't really want that. . . And the reply was, "Well, you need to sign all of the documents in order to get the full benefit of the program."

TR at 231.

The foregoing testimony was persuasively rebutted by the signed applications for insurance submitted by Petitioner and by testimony from the Respondent and Mr. Riccio. Both men testified that Respondent never submitted an application for insurance for a participant who expressed a desire not to have insurance. If a participant indicated a desire not to purchase insurance, he or she was asked their reasons and the advantages of life insurance was explained. If the participant still did not want life insurance, only an application for an annuity contract was submitted. Respondent conducted approximately 450 enrollment sessions prior to the formal hearing. Mr. Riccio was present at

approximately 70 percent of those sessions. The presentation given by Respondent was substantially the same each time.

Respondent had a long and satisfactory record administering the pension plan over an 8 year period. During that time, there was only one complaint by a participant other than those in this proceeding involving an allegation that an insurance policy was sold to a participant without the participant's knowledge.

9/ Some of the participants testified that they felt pressured to elect the split investment option. Even if high-

pressured sales techniques were used to induce them to apply for insurance, such practices do not constitute fraud, deceit, misrepresentation, or other acts alleged in the one count Administrative Complaint.

10/ None of the participants could recall the content of

the questions they asked. Several participants testified that they did not read the applications, were remiss in not paying more attention to their personal business, and had only themselves to blame for the misunderstanding.

11/ All of the participants testified that they told Respondent at the enrollment session that they did not want insurance. When questioned during cross examination, however,

about other details of the enrollment sessions, the participants were unable to recall any other details. The testimony of the participants was vague and evasive with respect to critical details. The testimony of the two participants that did address statements made by Respondent during the enrollment session was persuasively rebutted by the signed applications for insurance and the testimony of Respondent and Mr. Riccio.

12/ Respondent's commissions on life insurance are 28

percent for the first year, 25 percent for the second year, and 6 percent for each year thereafter. Respondent's commissions on annuity contracts are 3 percent for the first $2,000 in contributions and 2.25 percent thereafter. In the event a participant terminates his or her employment with the City, Commissions earned on life insurance are charged back against Respondent for the year of termination. No charge back is made for the annuity contract. Commissions earned on annuity contracts increase as a participant's salary increases. If an employee earned an annual salary of $15,000 for the three years with no raises, the amount of the 10.5 percent employer contribution would be $1,575 each year. If the participant elected to have 60 percent of the employer contribution ($940) invested in an annuity contract and 40 percent ($630) in an insurance policy, Respondent would earn $418.95 for the first three years of the insurance policy and $141.75 for the annuity contract over the same three years. However, if an employee earned an annual salary that generated an employer contribution of $2,000 in year one and elected to have 60 percent ($1200) invested in an annuity contract and 40 percent ($800) invested in insurance, and if the employee received 10 percent pay raises

each year for 10 years, Respondent would earn $760 over the 10 year period for the insurance policy and $894 for the annuity contract over the same period.

13/ Each participant had to sign the application and the release form attached to the application.

14/ A separate written form is now used for the purpose of electing either the investment option or the split investment option.

15/ The opinion of the appellate court in Vasquez can be

found at Bankers Insurance Company v. Vasquez, 483 So.2d 440, 442 (Fla. 4th DCA 1985). The question of whether one's signature on an application for insurance constitutes a knowing rejection of uninsured motorist coverage under the facts in Vasquez was certified to the Florida Supreme Court and decided in Vasquez v. Bankers Insurance Company, 502 So.2d 894 (Fla. 1987).

APPENDIX

Petitioner submitted proposed findings of fact. It has been noted below which proposed findings of fact have been

generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. No notation is made for proposed findings contained in unnumbered paragraphs, those which do not cite to that portion of the record which is alleged to support the proposed finding, or proposed findings that consist solely of recited testimony.

Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

Respondent submitted proposed findings of fact. It has been noted below which proposed findings of fact have been

generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. No notation is made for proposed findings contained in unnumbered paragraphs, those which

do not cite to that portion of the record which is alleged to support the proposed finding, or proposed findings that consist solely of recited testimony.

Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neil, Esquire General Counsel

Department of Insurance and Treasurer

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

David D. Hershel, Esquire Department of Insurance

412 Larson Building Tallahassee, Florida 32399-0300

Case No. 91-0946

(continued)

Thomas F. Woods, Esquire

Gatlin, Woods, Carlson and Cowdery 1709-D Mahan Drive

Tallahassee, Florida 32308

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.

=================================================================

AGENCY FINAL ORDER

=================================================================

OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF:

CASE NO: 91-L-22DDH

RONALD GENE BROWN 91-0946

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FINAL ORDER

THIS CAUSE came on before the undersigned Treasurer and Insurance Commissioner of the State of Florida, for consideration and final agency action. On or about January 18, 1991, the Department of Insurance filed a one-count Administrative Complaint against RONALD GENE BROWN (hereinafter referred to as "Respondent") charging him with violations of the Florida Insurance Code. The Respondent timely filed a request for a formal proceeding pursuant to Section 120.57(1), Florida Statutes. The hearing was held On July 11 and 12, 1991

in Port St. Lucie, Florida before Daniel Manry, Hearing Officer, Division of Administrative Hearings. After consideration of the evidence and subsequent written submissions by the parties, the Hearing Officer, on January 14, 1992, issued his Recommended Order. (Attached as Exhibit A). The Hearing Officer recommended that the Respondent be found not guilty of the allegations in the Administrative Complaint and that no fines or penalties should be imposed. On January 27, 1992, the Department filed its Exceptions to the Recommended Order. On January 30, 1992, the Respondent filed a Reply to Petitioner's Exceptions to Recommended Order.

RULING ON PETITIONER'S EXCEPTIONS TO RECOMMENDED ORDER

1. Petitioner excepts to the Hearing Officer's findings of fact #15 in which the Hearing Officer finds that each participant elected the split investment option. This is based on the fact that the participants signed the applications for insurance as the proposed insured. The Hearing Officer found in Finding of Fact #8 that the Respondent completes all the applications whether they be for annuities or life insurance. All the enrollees do is sign the

   applications. The Hearing Officer further found that there is no separate form evidencing the enrollees' choice of pension plan.

   
   

   Even though the enrollees signed the life insurance applications the Hearing Officer finds that none of the enrollees wanted life insurance and left the meeting with the Respondent with the impression that they had enrolled in a pension plan, not applied for insurance. (See Finding of Fact #18). In footnote #8 of the Findings of Fact, the Hearing Officer cites the enrollees Kellcher and Lydon relating that the Respondent told them "Well, you're not buying insurance... you're getting a pension plan with some insurance benefits..." and "Well, you need to sign all of the documents in order to get the full benefit of the program."

   
   

   The Hearing Officer's Findings of Fact are inconsistent. On the one had he states that the enrollees did not want life insurance, relayed that fact to the Respondent, and left the pension plan session with the impression that they had not purchased life insurance. However, the Hearing Officer finds that the Respondent did not wilfully misrepresent the pension plan and did not wilfully misrepresent that the enrollees were signing life insurance applications. This is inconsistent with the Hearing Officer's findings that the Respondent had full control over the explanation of the pension plan to the enrollees, filled out the enrollees applications and on at least two occasions told enrollees they were not applying for life insurance when in fact they were. Petitioner's Exception numbered 1 is accepted.

   
   

2. Petitioner excepts to Finding of Fact 19 in which the Hearing Officer found that the Respondent had not wilfully committed any wrongdoing. The Hearing Officer's findings of fact as to the lack of any wilful misrepresentation by the Respondent is supported by competent, substantial evidence in the record and Petitioner's Exception numbered 2 is rejected.

   
   

3. Petitioner excepts to Conclusion of Law #6 regarding the Hearing Officer's interpretation of the election of the insurance by the participants' signatures. This Conclusion of Law is conflicting with Finding of Fact #18. In those findings the Hearing Officer found that the participants had no actual knowledge that they had applied for insurance. Thus a conclusion of law that

   the application was "clearly and unambiguously worded" is inconsistent as a conclusion of law. Petitioner's Exception numbered 3 is accepted.

   
   

4. Petitioner excepts to Conclusion of Law #8 as to the

   Hearing Officer's characterization of the issues. In that Conclusion of Law, the Hearing Officer relies on Vascquez v. Bankers Insurance Company, 502 So.2d 65 (Fla. 1st DCA 1978). The Hearing Officer's reliance on Vascquez is misplaced. The facts in Vascquez involved a dispute between an insurance company and an insured. There was no agent involved, as in this case. In this case, the enrollees relied on their verbal directions to the Respondent that they did not wish to purchase life insurance. These verbal directions created the unusual circumstances to allow the enrollees to claim ignorance of the contents of a written instrument which they signed. See Vascquez, Id. This is coupled with the facts that the Respondent filled out the applications for the enrollees to sign, had control over the pension plan presentations and applications and on at least two occasions told enrollees that they were not applying for life insurance when, in fact, they were. Petitioner's Exception numbered 4 is accepted.

   
   

5. Petitioner excepts to the Hearing Officer's recommendation that all charges be dismissed. The Hearing Officer found that, as supported by

competent, substantial evidence, the Respondent had not wilfully misrepresented any aspect of the pension plan. The Hearing Officer also found, as a conclusion of law, although there may have been a misunderstanding, there was a lack of clear and convincing evidence that the Respondent prevented the enrollees from knowing that they were applying for insurance. Petitioner's Exception numbered

5 is rejected.

RULING ON REPLY TO PETITIONER'S EXCEPTIONS TO RECOMMENDED ORDER

Chapter 120, Florida Statutes and Rule Chapter 4-38, Florida Administrative Code make no provision for the filing of replies or responses to exceptions.

Therefore, the Respondent's Reply to Petitioner's Exceptions to Recommended Order is rejected since replies are not provided for by statute.

Upon careful consideration of the record, the submissions of the parties and being otherwise advised in the premises, it is

ORDERED:

1. The Findings of Fact of the Hearing Officer are adopted in full as the Department's Findings of Fact.

   
   

2. The Conclusions of Law of the Hearing Officer are adopted in full as the Department's Conclusions of Law with the exception that Conclusions of Law numbered 6 and 8 are rejected for the reasons cited above.

   
   

3. The Hearing Officer's recommendation that the Respondent be found not guilty of the allegations in the Administrative Complaint and that no fines or penalties be imposed is approved and accepted as being the appropriate disposition of this case.

ACCORDINGLY, RONALD GENE BROWN is hereby found not guilty of the allegations in the Administrative Complaint and no fines or penalties shall be imposed.

Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be initiated by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, Florida, and a copy of the same with the appropriate district court of appeal within thirty

(30) days of the rendition of the Order.

DONE and ORDERED this 6 day of May , 1992.

TOM GALLAGHER

Treasurer and Insurance Commissioner

Copies furnished to:

Daniel Manry, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

David D. Hershel, Esquire Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

Thomas F. Woods, Esquire 1709-D Mahan Drive Tallahassee, Florida 32308

Docket for Case No: 91-000946

Orders for Case No: 91-000946