STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 92-3531

)

WILLIAM PHILLIP ARLING, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in this case before Daniel Manry, a duly designated Hearing Officer of the Division of Administrative Hearings, on October 8, 1992, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Department of Insurance and Treasurer

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: William Phillip Arling, pro se

Ocean Bank Building, Suite 550 782 N. W. LeJeune Road

Miami, Florida 33125 STATEMENT OF THE ISSUE

The issues for determination in this proceeding are whether Respondent misappropriated or unlawfully withheld insurance premiums, failed to secure the insurance policy requested by the insured, solicited insurance policies for a company not authorized to do business in the state, and, if so, what, if any, disciplinary action should be taken against Respondent's license.

PRELIMINARY STATEMENT

Petitioner filed a two-count Administrative Complaint against Respondent on January 15, 1992. Respondent requested a formal hearing on June 2, 1992. The matter was referred to the Division of Administrative Hearings for assignment of a hearing officer on June 12, 1992, and assigned to Hearing Officer Arnold H. Pollock on June 17, 1992.

A formal hearing was scheduled for October 8, 1992, pursuant to a Notice of Hearing issued on July 6, 1992. The matter was transferred to the undersigned on October 8, 1992.

At the formal hearing, Petitioner presented the testimony of Mr. Milton Seagrave and Ms. Clarice Hunt, both former customers of Respondent. Petitioner submitted 10 exhibits for admission in evidence. 1/ Petitioner's exhibits 1-10 were admitted in evidence without objection.

Respondent testified in his own behalf and submitted one exhibit for admission in evidence. 2/ Respondent's Exhibit 1 was admitted in evidence without objection.

A transcript of the formal hearing was not requested by either party.

Petitioner filed proposed findings of fact and conclusions of law on October 19, 1992. Respondent did not file proposed findings of fact and conclusions of law. Petitioner's proposed findings of fact are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent is licensed in the state as a life and health insurance agent and as a health insurance agent. Respondent was employed by H.B. Barach and Associates during the month of April, 1991.

   
   

2. Respondent and his employer began selling insurance policies for Farmers Health Trust ("Farmers") sometime in April, 1991. North American Life Insurance was the prospective underwriter for Farmers. Respondent was informed by Petitioner's West Palm Beach office that no complaints had ever been filed against Farmers but that no verification could be made as to whether Farmers was licensed to do business in the state. Respondent reviewed the policy and began selling policies to be issued by Farmers. Pursuant to the customary business practice in the community, Respondent included the paper work required to be licensed to sell policies for Farmers when Respondent submitted the first premiums.

   
   

3. Farmers has never been licensed to do business in this state. North American Life Insurance never agreed to be the underwriter for Farmers. Respondent was never licensed to sell insurance policies to be issued by Farmers.

   
   

4. On or about April 1 and 16, 1991, respectively, Respondent solicited and sold to Ms. Clarice Hunt and Mr. Milton Seagrave, separate health insurance policies to be issued by Farmers. Ms. Hunt and Mr. Seagrave each issued a check in the amount of $480 payable to Respondent's employer pursuant to Respondent's instructions. Respondent advised Ms. Hunt and Mr. Seagrave that their money would be refunded to them if Farmers declined to issue a policy. Ms. Hunt had difficulty obtaining health insurance due to a previous back injury for which she had filed a workers' compensation claim. Mr. Seagrave had been previously rejected by Mutual of Omaha.

   
   

5. Ms. Hunt's check and Mr. Seagrave's check was deposited and negotiated by Respondent's employer. No policy was ever issued by Farmers to either Ms. Hunt or Mr. Seagrave, and neither was ever refunded their money.

   
   

6. After April 16, 1991, Respondent was informed by his employer that Farmers did not have an underwriter. Respondent sold no other insurance policies to be issued by Farmers. Respondent made repeated, good faith attempts to obtain refunds for Ms. Hunt and Mr. Seagrave. Respondent was willing but financially unable to personally refund the moneys to Ms. Hunt and Mr. Seagrave.

   When it was apparent to Respondent that his employer would not refund the money to Ms. Hunt, Respondent assisted Ms. Hunt in filing a complaint with Petitioner.

   
   

7. Respondent knowingly solicited insurance on behalf of Farmers without holding an agency appointment to do so. On June 5, 1992, a Consent Order was issued incorporating the terms of a Settlement Stipulation between Petitioner and Mr. Herbert Barach. Pursuant to the terms of the Settlement Stipulation, Mr. Barach agreed to reimburse Ms. Hunt and Mr. Seagrave for the premium paid by each in the amount of $480. Respondent has no other disciplinary history.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto. The parties were duly noticed for the formal hearing.

   
   

9. The burden of proof is on Petitioner. Petitioner must show by clear and convincing evidence that Respondent is guilty of the acts alleged in the Administrative Complaint and, if so, what, if any, disciplinary action should be taken against Respondent's license. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

   
   

10. Petitioner satisfied its burden of proof. Petitioner violated relevant provisions in Sections 626.611(8) and (10), 626.561(1), 626.621(8), and 626.901, Florida Statutes.

    
    

11. Respondent violated Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in otherwise legitimate transactions. Respondent violated Section 626.611(10) by misappropriating moneys belonging to Ms. Hunt and Mr. Seagrave.

    
    

12. Respondent violated Section 626.561(1) by failing to account for and pay to Ms. Hunt and Mr. Seagrave trust funds delivered to Respondent by Ms. Hunt and Mr. Seagrave in Respondent's fiduciary capacity. Neither Respondent nor his employer were at any time entitled to the funds paid by Ms. Hunt and Mr. Seagrave. Farmers was never authorized to do business in this state, and Respondent was never an authorized agent for Farmers.

    
    

13. Respondent violated Section 626.621(8), Florida Statutes, by selling insurance policies of a company not authorized and licensed to do business in this state. Respondent violated Section 626.901, Florida Statutes, by knowingly soliciting health insurance on behalf of a company that was not authorized to do business in the state and for which Respondent did not hold an agency appointment.

    
    

14. Respondent did not violate Sections 626.611(7) and (9), 626.621(6), and 626.9541(1)(o)1., Florida Statutes. The evidence was less than clear and convincing that Respondent lacked fitness or trustworthiness to engage in business, committed fraudulent or dishonest practices in the conduct of business, or collected premiums which Respondent knew at the time would not be accepted in due course.

RECOMMENDATION

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

RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of violating Sections 626.611(8) and (10), 626.561(1), 626.621(8), and 626.901, Florida Statutes, placing Respondent's licenses on probation for one year, and assessing a fine against Respondent in the amount of $500.00.

RECOMMENDED this 14th day of January, 1993, in Tallahassee, Florida.

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, 1993.

ENDNOTES

1/ Petitioner's Exhibit 1 is a certified copy of Respondent's licensure file. Petitioner's Exhibit 2 is a list of companies Respondent was authorized to represent at the time relevant to this proceeding. Petitioner's Exhibit 3 is a certified copy of a settlement stipulation and consent order between Petitioner and Herbert Bernard Barach. Petitioner's Exhibit 4 is a certified copy of a declaration by the Insurance Commissioner that Farmers Health Trust has never been licensed to do business in Florida. Petitioner's Exhibit 5 is a copy of a check in the amount of $480 received by Respondent from Ms. Clarice Hunt and made payable to H.B. Barach. Petitioner's Exhibit 6 is copy of the complaint filed by Ms. Hunt with Petitioner. Petitioner's Exhibit 7 is a copy of a check in the amount of $480 received by Respondent from Mr. Milton Seagrave and made payable to H.B. Barach. Petitioner's Exhibit 8 is a copy of the schedule of benefits offered by Farmers Group Medical Insurance which was given by Respondent to Mr. Seagrave. Petitioner's Exhibit 9 is a copy of a letter dated May 30, 1991, from Mr. Herbert B. Barach to Mr. Seagrave. Petitioner's Exhibit

10 is a copy of a letter dated August 28, 1991, from Mr. Seagrave to Mr. Barach.

2/ Respondent's Exhibit 1 is a copy of the notarized statement of Mr. Peter Kallenberg.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3531

1. Accepted in Finding 1. 2.-3. Accepted in Finding 4.

1. Irrelevant and immaterial.

2. Accepted in Finding 5. 6.-7. Accepted in Finding 4.

8.-9. Irrelevant and immaterial.

1. Accepted in Finding 5.

2. Accepted in Finding 3.

3. Accepted in Finding 7.

4. Recited Testimony.

5. Accepted in Finding 7.

Respondent did not submit proposed findings of fact.

COPIES FURNISHED:

James A. Bossart, Esquire Department of Insurance

and Treasurer

412 Larson Building Tallahassee, Florida 32399-0300

William Phillip Arling, pro se 1830 Abbey Road, Apt. J105 West Palm Beach, Florida 33415

The Honorable Tom Gallagher 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

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.

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AGENCY FINAL ORDER

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

STATE OF FLORIDA OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF:

CASE NO: 91-L-637JB

WILLIAM PHILLIP ARLING DOAH CASE NO.: 92-3531

/

FINAL ORDER

THIS CAUSE came on before the undersigned Treasurer of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration and final agency action. On January 15, 1992, an Administrative Complaint was filed charging Respondent with various violations of the Insurance Code. The Respondent timely filed a request for a formal proceeding pursuant to Section 120.57(1), Florida Statutes. Pursuant to notice, the matter was heard before Daniel Manry, Hearing Officer, Division of Administrative Hearings, on October 8, 1992.

After consideration of the evidence, argument and testimony presented at hearing, and subsequent written submissions by the parties, the Hearing Officer issued his Recommended Order. (Attached as Exhibit A). The Hearing Officer recommended that Respondent's licenses as a life and health insurance agent and a health insurance agent be placed on probation for one (1) year and the Respondent be assessed a fine of five hundred dollars ($500.00). Neither party filed exceptions to the Recommended Order. Upon careful consideration of the record, the submissions of the parties and being otherwise fully 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.

   
   

3. That the Hearing Officer's recommendation that WILLIAM PHILLIP ARLING be placed on one (1) year probation and assessed a five hundred dollar ($500.00) fine is approved and accepted as being the appropriate disposition of this case.

ACCORDINGLY, Respondent, WILLIAM PHILLIP ARLING, is hereby placed on probation pursuant to Section 626.691, Florida Statutes, for a period of one (1) year from the date of this Order. As a condition of said probation, Respondent shall strictly adhere to all provisions of the Florida Insurance Code and the Rules of the Department of Insurance and Treasurer. If, during the period of

probation, the Department has good cause to believe that Respondent has violated the terms or conditions of his probation, it shall immediately initiate proceedings to suspend or revoke the licenses and eligibility for licensure of the Respondent.

AND FURTHER, Respondent, WILLIAM PHILLIP ARLING, shall pay an administrative fine, pursuant to Section 626.681, Florida Statutes, of five hundred dollars ($500.00) within thirty (30) days of the entry of this Order. Failure of Respondent to pay the administrative fine within the specified limit shall result in the immediate revocation of the Respondent's licenses and eligibility for licensure in this state without further proceedings.

Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.8, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 12 Larson Building, Tallahassee, Florida, and a copy of the same with the appropriate district court of appeal within thirty

(30) days of rendition of this Order.

DONE and ORDERED this 2nd day of March, 1993.

TOM GALLAGHER

Treasurer and Insurance Commissioner

COPIES FURNISHED:

DANIEL MANRY, ESQUIRE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

WILLIAM PHILLIP ARLING

Ocean Bank Building, Suite 550 782 North West LeJeune Road Miami, Florida 33125

and

WILLIAM PHILLIP ARLING

1830 Abbey Road, Apt. J105 West Palm Beach, Florida 33415

JAMES BOSSART, ESQUIRE

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

Attorney for the Department of Insurance

Docket for Case No: 92-003531

Orders for Case No: 92-003531