STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Petitioner, )

vs. ) CASE NO. 91-7566

)

JANET JOYCE BUCK, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on March 4, 1992, in Orlando, Florida, before Joyous D. Parrish, a designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

APPEARANCES

For Petitioner: Joseph D. Mandt

Division of Legal Services Department of Insurance and

Treasurer

412 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Janet Joyce Buck, pro se

6102 Walbridge Street

Orlando, Florida 32809 STATEMENT OF THE ISSUES

The central issue in this case is whether the Respondent is guilty of the violations alleged in the administrative complaint dated September 6, 1991; and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

This case began on September 6, 1991, when the Department of Insurance and Treasurer (Department) filed an administrative complaint against the Respondent, Janet Joyce Buck. That complaint alleged the Respondent had violated provisions of Chapter 626, Florida Statutes, in connection with a business transaction involving Emma and Lennon Ware d/b/a Abel Towing Service, Inc. More specifically, the complaint alleged that Respondent had failed to pay premium funds to the insurer, insured, or other person entitled thereto in violation of Section 626.561, Florida Statutes; that Respondent had willfully misrepresented an insurance policy or annuity contract in violation of Section 626.611(5), Florida Statutes; had demonstrated a lack of fitness or trustworthiness to engage in the business of insurance in violation of Section 626.611(7), Florida Statutes; had engaged in fraudulent or dishonest practices

in the conduct of business under the license in violation of Section 626.611(9), Florida Statutes; had misappropriated, converted, or unlawfully withheld moneys belonging to insurers or insured or beneficiaries or to others and received in the conduct of business under the license in violation of Section 626.611(10), Florida Statutes; had willfully failed to comply with an order or rule of the Department or any provision of the code in violation of Section 626.611(13), Florida Statutes; had violated any provision of the code or any other law applicable to the business of insurance in the course of dealing under the license or permit in violation of Section 626.621(2), Florida Statutes; had engaged in unfair methods of competition or in unfair or deceptive acts or practices in violation of Section 626.621(6), Florida Statutes; had engaged in any trade practice as defined in the section, or determined pursuant to Section 626.9561, Florida Statutes, to be an unfair method of competition or an unfair or deceptive act or practice in violation of Section 627.381, Florida Statutes; or had knowingly collected a sum as a premium or charge for insurance which is not then provided or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy issued by an insurer as permitted by the code, in violation of Section 626.9541(1)(o)1, Florida Statutes.

The Respondent timely responded to the administrative complaint and disputed the allegations. The matter was then forwarded to the Division of Administrative Hearings for formal proceedings on November 21, 1991.

At the hearing, the Department presented the testimony of the following witnesses: Emma Ware, formerly the corporate secretary and bookkeeper for Abel Towing, Inc.; Lennon Ware, president of Abel Towing, Inc.; and Kimberly Harper, supervisor of the State of Florida for National Council on Compensation Insurance (NCCI) an entity responsible for assigned risk insurance coverage.

The Department's exhibits numbered 1, 3, 4, 5, 6, 7, 8, 9, 10, and 11 were admitted into evidence. By stipulation, Respondent's exhibits numbered 1 through 3 were also received into evidence.

A transcript of the hearing has not been filed. After the hearing, the Department filed a proposed recommended order which has been considered in the preparation of this order. Specific rulings on the proposed findings of fact are included in the attached appendix.

FINDINGS OF FACT

Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made:

1. At all times material to the allegations of this case, Respondent is and has been licensed in the State of Florida as a life and health insurance agent and as a general lines insurance agent.

   
   

2. On December 3, 1990, Respondent received an application for workers' compensation and employers' liability insurance from Emma Ware, corporate secretary for Abel Towing Service, Inc. Also at that time, Respondent received a check from the company in the amount of $817.00 which represented the premium due from the insured for the coverage sought.

   
   

3. The check described above, which was made payable to A.B.C. Insurance Agency, was deposited by Respondent into an account for ABC Enterprises, Inc. on or about December 5, 1990.

4. On December 3, 1990, Respondent issued to Lennon Ware, as the insured, a certificate of insurance indicating that the insured had obtained workers' compensation and employers' liability insurance effective 12/3/90 and that the company affording coverage was NCCI.

   
   

5. NCCI does not afford workers' compensation insurance through authorized agents such as the Respondent. Consequently, the Respondent, or any other licensee, may not bind coverage on behalf of NCCI.

   
   

6. NCCI receives applications for insurance, such as from Abel Towing and, when complete, assigns the insurance coverage to one of several companies in the assigned risk group. NCCI operates under plan guidelines to provide insurance for entities that cannot obtain coverage from the voluntary market. NCCI administers the assignment to insurance companies, and acts as the middle man to collect the premium. NCCI does not, itself, provide the insurance coverage.

   
   

7. After December 3, 1990, based upon the certificate of insurance issued by Respondent, Emma Ware and Lennon Ware operated under the mistaken assumption that their company, Abel Towing Services, Inc. had obtained workers' compensation and employers' liability insurance.

   
   

8. On January 29, 1991, an employee of Abel Towing was injured on the job and taken to a hospital for treatment. In connection with that injury, a claim was submitted to Respondent for payment under the insurance coverage presumed to be in effect.

   
   

9. On or about February 5, 1991, Respondent forwarded an application for insurance coverage on behalf of Abel Towing to NCCI. That application was incomplete as it did not contain the company's form 941, federal quarterly tax reports, for the year 1990.

   
   

10. NCCI returned the application as incomplete and advised Respondent as to the forms required for binding coverage.

    
    

11. In response to requests from Respondent, Emma Ware delivered copies of Abel Towing's tax reports to Respondent in February, 1991.

    
    

12. Respondent failed to timely forward the completed application to NCCI to secure an insurance binding date of February 7, 1991.

    
    

13. Respondent then forwarded the application to NCCI in March, 1991. In order to secure a binding date of March 5, 1991, Respondent was required to have the application package completed by and postmarked to NCCI by March 20, 1991.

    
    

14. Again, the information submitted by Respondent on behalf of Abel Towing was incomplete. Ultimately, the insurance was not bound and effective according to NCCI until March 27, 1991.

    
    

15. Respondent failed to inform Abel Towing or the Wares that the insurance application had been returned by NCCI.

    
    

16. Respondent failed to timely act to procure insurance for Abel Towing and the Wares in December, 1990.

    
    

17. Respondent failed to timely procure insurance for Abel Towing and the Wares in January, 1991, when she became aware of the injury to one of Abel Towing's employees.

18. NCCI allows fifteen days from the first receipt of an application for insurance within which to correct deficiencies or provide information needed to complete an application. If provided within the time line, NCCI will honor the original date and bind the insurance effective at that time.

    
    

19. Respondent did not forward any insurance application to NCCI on behalf of the Wares or Abel Towing in December, 1990.

    
    

20. ABC Enterprises, Inc. is not the corporate name under which Respondent does insurance business.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

22. The Department bears the burden of proof to establish the allegations of the administrative complaint. Such burden requires that the Department prove, by clear and convincing evidence, the allegations of wrongdoing in order to impose the penalty of suspension or revocation of license.

23. Section 626.611, Florida Statutes, provides, in pertinent part: 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.

    The department shall deny, suspend, revoke, or refuse to renew or continue the license of

    any agent, solicitor, or adjuster or the permit of any service representative, supervising or managing general agent, or claims investigator, and it shall suspend or revoke the eligibility to hold a license or permit of any such person, if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist:

    * * *

    (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 dissemi- nation of information or advertising.

    * * *

    (7) Demonstrated lack of fitness or trustworthi- ness to engage in the business of insurance.

    * * *

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

    2. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insured 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.

24. Section 626.621, Florida Statutes, provides, in pertinent part: Grounds for discretionary 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.

    The department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjuster or the permit of any service representative, supervising or managing general agent, or claims investigator, and it may suspend or revoke the eligibility to hold a license or permit of any such person, if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist under circum- stances for which such denial, suspension, revocation, or refusal is not mandatory under

    s. 626.611:

    * * *

    (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.

    * * *

    (6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

    
    

25. Section 626.561, Florida Statutes, provides: 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 transac- tions under his license shall be trust funds

       so received by the licensee in a fiduciary capacity; and the licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.

    2. The licensee shall keep and make available to the department books, accounts, and records as will enable the department to determine whether such licensee is complying with the provisions of this code. Every licensee shall preserve such books, accounts, and records

       pertaining to a premium payment for at least

       3 years after the making of such payment; provided, however, the preservation of records by computer or photographic reproductions or records in photographic form shall constitute compliance with this requirement. The 3-year requirement shall not apply to insurance binders when no policy is ultimately issued and no premium is collected.

    3. Any agent, solicitor, or adjuster who, not being lawfully entitled thereto, diverts or appropriates such funds or any portion thereof to his own use shall upon conviction be guilty of larceny by embezzlement and shall be punished as provided by law.

       
       

26. Section 626.9541(1)(o)1., Florida Statutes, provides:

    
    

    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:

       * * *

       (o) Illegal dealings in premiums; excess or reduced charges for insurance.

       1. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided, or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy issued by an insurer as permitted by this code.

       
       

27. Section 626.9561, Florida Statutes, provides: Power of department.

    
    

    The department shall have power to examine and investigate the affairs of every person involved in the business of insurance in this state in order to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice prohibited by

    s. 626.9521.

    
    

28. Section 627.381, Florida Statutes, provides: Penalty for violation.

    
    

    1. The department may, if it finds that any person or organization has violated any provision of this part, impose an administrative fine pursuant to s. 624.4211. (2) The department may suspend the license or authority of any rating organization or insurer which fails to comply with an order of the department within

       the time limited by such order, or any extension thereof which the department may grant. The department shall not suspend the license or authority of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal therefrom has expired or, if an appeal has been taken, until such order has been affirmed. The department may determine when a suspension of license or authority shall become effective

       and it shall remain in effect for the period fixed by it, unless it modifies or rescinds such suspension, or until the order upon which

       such suspension is based is modified, rescinded, or reversed.

       
       

29. In this case, the Department has established, by clear and convincing evidence, that the Respondent failed to procure insurance on behalf of the Wares or Abel Towing in a timely manner. The Respondent did not remit premium money paid to her in connection with an application for insurance until February, 1991. Those monies had been received by Respondent and deposited into an account controlled by Respondent in early December, 1990. It can be inferred that Respondent received the benefit of the funds when same should have been remitted to NCCI in order to procure insurance for the Wares. Clearly, Respondent failed to refund those monies if insurance was not to be provided, and failed to timely remit those monies to NCCI in order to secure insurance for the insured. Respondent has offered no credible explanation for why the monies were deposited into an account under the name ABC Enterprises, Inc., why the funds were not promptly forwarded to NCCI, why the application was not timely pursued either in December, 1990 or January, 1991, or why it took from December 3, 1990, until March 27, 1991, to obtain insurance for this party.

    
    

30. As a result of Respondent's omissions, the Wares and Abel Towing were not covered by insurance at the time of their employee's injury. Had the Respondent acted timely coverage would have been available through NCCI.

RECOMMENDATION

Based on the foregoing, it is recommended that the Department of Insurance and Treasurer enter a final order finding that the Respondent has violated Section 626.611, Florida Statutes, and suspending her licenses for a period of six months.

RECOMMENDED this 14th day of April, 1992, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32301

(904)488-9675

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

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-7566

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER:

1. Paragraphs 1 through 19 are accepted with the deletion of the phrase "Pursuant to the reapplication of February 26, 1991," found in paragraph 13. That phrase is rejected as contrary to the weight of the evidence or irrelevant.

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT:

None submitted.

COPIES FURNISHED:

Joseph D. Mandt

Division of Legal Services Department of Insurance and

Treasurer

412 Larson Building

Tallahassee, Florida 32399-0300

Janet Joyce Buck 6102 Walbridge Street

Orlando, Florida 32809

Hon. Tom Gallagher State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neil General Counsel

Department of Insurance and Treasurer

Division of Legal Services The Capitol, Plaza Level

Tallahassee, Florida 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: 91-007566

Orders for Case No: 91-007566