STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-2350

) WILLIAM DEWBERRY MILLS, JR., )

)

Respondent. )

) DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-2351

) WILLIAM DEWBERRY MILLS, SR., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, P. Michael Ruff, in Pensacola, Florida.

APPEARANCES

For Petitioner: John R. Dunphy, Esquire

Department of Insurance Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0333

For Respondent: Rollin D. Davis, Jr., Esquire

SHELL, FLEMING, ET AL.

Post Office Box 1831 Pensacola, Florida 32598-1831

STATEMENT OF THE ISSUES

The issues to be determined in this proceeding concern whether the licenses of each Respondent should be subjected to disciplinary action for violations of Chapter 626, Florida Statutes, as more specifically alleged in the Amended Administrative Complaints. If the violations, or any of them, are proven, it must be established what, if any, penalty is warranted.

PRELIMINARY STATEMENT

This cause arose when the Petitioner, Department of Insurance (Department), instituted charges by Administrative Complaints against the Respondents. The Complaints were originally filed on March 18, 1993. Respondent, William Dewberry Mills, Sr. (Mills Sr.) is a non-resident general lines insurance agent and a non-resident life and health insurance agent. He was charged with various violations of Chapter 626, Florida Statutes, set forth in the Amended Administrative Complaint. On that same date, The Department charged Respondent, William Dewberry Mills, Jr. (Mills Jr.), a non-resident life and health insurance agent, for violation of the various provisions of Chapter 626, Florida Statutes, alleged in the Amended Administrative Complaint and treated in this Recommended Order. The Department thus seeks to impose disciplinary sanctions against the licenses of the Respondents and their eligibility for licensure.

Amendments have been made to the Complaints with leave of the Hearing Officer with the sole amendment of substance being the dismissal of Count V of the original Complaint against Mills Sr.

Mills Sr. was charged with failing to surrender his non-resident agent's license when he became a resident of the State of Florida; that as a holder of a non-resident license, he, as chief executive officer, director and part-owner of Florida Insurance Counselors, Inc., a Florida corporation doing business as an insurance agency in Florida, failed to notify the Department within thirty (30) days of his change of address from Atlanta, Georgia, to Gulf Breeze, Florida.

It is also contended by the Department that Mills Sr. submitted a sworn insurance license application to the Department indicating a home address in Atlanta, Georgia, when, in fact, it was at 3017 West Bay Street, Gulf Breeze, Florida 32561.

The gravamen of the charges against Mills Jr. is that he is a non-resident life and health insurance agent and president of Florida Insurance Counselors, Inc., a Florida corporation doing business as an insurance agency in Brandon, Florida, and that, as such, he violated the prohibition of a non-resident agent having a direct or pecuniary interest in an insurance agency domiciled in the State. It is also alleged that as a non-resident life and health insurance agent, he is prohibited from being an officer, director, stockholder or partner in a corporation or partnership domiciled and doing business in the State as a health insurance agency; that he submitted an application for property and liability insurance coverage which he was not licensed to solicit and produce. Specifically, it is charged that he submitted two applications for property and liability insurance when he was not a resident or non-resident licensed general lines agent.

Mills Sr. denied that he is a resident of Florida, as that status is defined in Chapter 626, Florida Statutes. He contends that he, in fact, had a pecuniary interest in Florida Insurance Counselors, Inc.; however, he was unaware of the prohibition. He contends that he clearly disclosed that interest at the time of his application and was misled by the Department when a license was issued even though he had informed the Department of his interest in the Florida agency. He contends that he was misled by the Department when they issued his non-resident license with the knowledge that he disclosed his interest in the Florida agency and when it did not inform him that he could either surrender his non-resident licenses or divest himself of any interest in Florida Counselors, Inc. Additionally, Mills Sr. contends that his residence for insurance business purposes is 5143 Roswell Road N.E., Apartment #5, Atlanta, Georgia, and, therefore, contending that to be his permanent residence,

he did not fail to notify the Department within thirty (30) days of a change of address or misstate his proper address for insurance purposes on his application.

Mills Jr. contended that he never knowingly violated any insurance regulation and that Florida Insurance Counselors, Inc. handled property and casualty insurance only and not health and life insurance. Mills Jr. maintains he did not know that there was a prohibition against having a pecuniary interest in the Florida insurance agency and was misled by the issuance by the Department of a non-resident license to his father after his father clearly disclosed to the Department his pecuniary interest in Florida Insurance Counselors, Inc.

Mills Jr. contends that he did not transact insurance business without a license in Florida, as the applications in question were thought to be replicas of those already submitted by his Florida resident agent and that they were sent for a different purpose than that of transacting insurance business in Florida.

The cause came on for hearing as noticed, at which the Department presented the testimony of Robert Stewart, its Administrator for the Bureau of Licensing, Division of Agent and Agency Services, as well as Robert "Bob" Burgess, the Property Appraiser of Santa Rosa County, Florida. The Department also called Mills Jr. as a witness. The Respondents adduced the testimony of the Respondents themselves. The Respondents offered no exhibits into evidence, and the Department introduced Composite Exhibit I (consisting of included "Exhibits" A-F), Exhibit II, and Exhibit III (consisting of included "Exhibits" A-E), Exhibit IV (a certified copy of corporate records of Florida Insurance Counselors, Inc.), and Exhibit V (a certified copy of an insurance policy issued by Public Service Mutual Insurance Company). All of the Department's exhibits were admitted into evidence without objection.

The hearing concluded, and the parties elected to order a transcript and avail themselves of the right to submit Proposed Recommended Orders. The proposed findings of fact submitted have been treated in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein by specific rulings.

FINDINGS OF FACT

1. The Department is an agency of the State of Florida charged, as pertinent hereto, with the licensure and regulation of insurance agents of all types and the regulation of the practice of insurance agents, agencies, the business of selling insurance policies, and the insurance industry generally.

   
   

2. The Respondents have been licensed by the Department at all times pertinent hereto. Mills Sr. is licensed as a non-resident life and health insurance agent and as a non-resident general lines insurance agent. Mills Jr. has been licensed at all times pertinent hereto as a non-resident life and health insurance agent. The Respondents have been charged with various violations of Chapter 626, Florida Statutes, as more particularly delineated in the Amended Administrative Complaints and as discussed with particularity in the Conclusions of Law below.

   
   

3. It is undisputed that Florida Insurance Counselors, Inc. is a corporation organized and licensed under laws of Florida. It was purchased by Mills Sr. in 1988. Both Respondents have a pecuniary interest in Florida Insurance Counselors, Inc. That corporation was a Florida insurance agency engaged in the solicitation and sale of property and casualty insurance, but not in the business of sale of policies of life and health insurance. The

   corporation ceased doing business on June 1, 1993 and was formally dissolved on August 13, 1993 at the behest of Mills Sr., who was the principal owner, board chairman, and chief executive officer. Mills Jr. was a shareholder and president of the corporation.

   
   

4. Mills Sr. has held a Florida non-resident life insurance agent's license and a Florida non-resident health insurance agent's license for many years, since approximately 1956. In 1991, Mills Sr. applied for and received a license as a Florida non-resident general lines agent. General lines agency includes the right to sell property and casualty insurance. Statements made by Mills Sr. in three license applications admitted into evidence in terms of the situs of his principal place of insurance business (Atlanta, Georgia) and the disclosure of his pecuniary interest in Florida Insurance Counselors, Inc. have been shown to be true and correct. In spite of the disclosure as to his pecuniary interest in Florida Insurance Counselors, Inc., upon his application for the non-resident general lines agent's license, the Department nevertheless and mistakenly issued the general lines non-resident agent's license.

   
   

5. Upon graduation from college in the late 1940's, Mills Sr. went to work for Atlanta Insurance Company. Except for five years spent in the insurance business in Texas, Mills Sr. has lived in Georgia until the events mentioned hereinbelow. Most of his Georgia career has been associated with the Atlanta, Georgia, area, where his insurance business, residence and domicile has historically been located.

   
   

6. The insurance agency owned and controlled by Mills Sr. in Atlanta, Georgia, is called Institutional Managers of America, Inc. In 1986, he sold that business to Monumental General Insurance Company, effective January 1, 1987. The transaction included a three-year management agreement from Mills Sr. In 1987, Mills Sr. started construction of a residence in Gulf Breeze, Florida, where Mills Sr. had earlier owned a summer home. In February, 1989, for unrelated business or financial reasons, Mills Sr. was forced to purchase the insurance business back from Monumental General Insurance Company. Mills Sr. had planned to retire after the expiration of the three-year management agreement responsibility but elected not to retire after he had to purchase the business back.

   
   

7. Mills Sr. owns the building in which his agency is located at 395 Johnson Ferry Road N.E., Atlanta, Georgia. He directs the staff in that agency from a room in that office. His toll-free telephone number is for incoming calls to that office. All advertising materials of his business show the Atlanta address. Mills Sr. spends most week nights in his Roswell Road apartment in Atlanta, except for approximately one night every other week spent in his Gulf Breeze, Florida, residence, as well as nights spent on the road when traveling in Alabama, Florida, North Carolina, and South Carolina, where Mills Sr. holds non-resident agent licenses. Mills Sr. owns a farm near Yatesville, Georgia, where he spends some weekends, especially during hunting season. Most other weekends are spent at his residence at 3017 Bay Street, Gulf Breeze, Florida. Mills Sr. and his wife spend some weekends in Atlanta because their social life revolves around Atlanta and he has family in the Atlanta area. The records of the Georgia Insurance Department show that Mills Sr. is licensed as a resident agent in the State of Georgia for life, accident and sickness, property and casualty, surety, and allied lines of insurance.

8. On February 15, 1988, Mills Sr. signed a sworn application seeking Florida homestead property tax exemption and filed that application with the Santa Rosa County property appraiser, listing his address as 3017 Bay Street, Gulf Breeze, Florida. The application stated that Mills Sr. became a permanent resident of Florida on or about June, 1987. Pursuant to that application, Mills Sr. was granted homestead property tax exemption for his property, a residence, located at 3017 Bay Street, Gulf Breeze, Florida. On May 9, 1988, Mills Sr. registered to vote in Santa Rosa County, Florida. In conjunction with that registration, Mills Sr. provided the supervisor of elections of Santa Rosa County with his home address as being 3017 Bay Street, Gulf Breeze, Florida.

   
   

9. On January 7, 1989, Mills Sr. signed a renewal application for homestead property tax exemption. On that application, he affirmed that his status as a permanent resident of Florida had not changed since he submitted his original application for tax exemption. Pursuant to the aforementioned renewal application, Mills Sr. was granted continued tax exemption for his property located at 3017 Bay Street, Gulf Breeze, Florida.

   
   

10. On January 9, 1990, Carmelia Mills, the wife of Mills Sr., signed an application for homestead property tax exemption for property owned jointly with Mills Sr. applying for the transfer of homestead property tax exemption from the property located at 3017 Bay Street, Gulf Breeze, Florida, to the property located at that address as joint owners (presumably by operation of law as tenants by the entireties). Pursuant to that application, Mills Sr. and his wife were granted the maximum allowable homestead property tax exemption. The maximum allowable homestead property tax exemption for the county is granted only when all owners of the property are permanent residents of Florida.

    
    

11. In 1988, when Mills Sr. applied for homestead exemption for the home owned in Gulf Breeze, Santa Rosa County, Florida, he was informed by the office of the property appraiser that he would need to register a car in Florida and register to vote in Florida. Mills Sr. did both and was afforded the homestead exemption mentioned above. He is the owner of a 1989 four-door Chevrolet currently registered in Florida and he remains registered to vote in Florida. He holds a Florida driver's license. He and his wife have enjoyed the benefits of homestead exemption with regard to the above-referenced real estate and residence in Gulf Breeze, Santa Rosa County, Florida, in the manner and for the times referenced in the above Findings of Fact concerning the application for and the granting of the homestead exemption. Mills Sr., and presumably his wife, resided in their home in Atlanta until sometime in 1990 when the home was sold. Mills Sr. then moved into an apartment at 5143 Roswell Road, N.E.,

    Atlanta, Georgia, in 1990 and to this date, resides in that apartment when he is located in Atlanta. In light of the above facts concerning his location and the residences he has maintained with his wife, Mills Sr. has believed that his residence is co-extensive with the situs of his insurance agency business, that is, that it is located in Atlanta, Georgia; and that was his belief at the time he executed all applications for insurance relevant to these proceedings.

    
    

12. On August 30, 1976, Mills Sr. applied for licensure as a Florida non- resident life and health insurance agent. The application listed his address as 5910 Garber Drive, Atlanta, Georgia. Pursuant to that application, he was licensed as a non-resident life and health insurance agent. The last paragraph of that application contains a statement by Mills Sr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...".

13. On February 13, 1990, Mills Sr. filed a corporation annual report with the Secretary of State of Florida stating that Mills Sr. was the president, director, and registered agent of Florida Insurance Counselors, Inc. On February 11, 1991, Mills Sr. filed such an annual report with the Secretary of State for that corporation, which stated that he is the president, director, and registered agent of Florida Insurance Counselors, Inc. This report indicated that Mills Sr. had changed his address from 5910 Garber Drive, Atlanta, Georgia, to 3017 Bay Street, Gulf Breeze, Florida.

    
    

14. On May 30, 1991, Mills Sr. applied for licensure as a Florida non- resident general lines insurance agent. That application listed his home address as 5143 Roswell Road, N.E., Atlanta, Georgia. On that application, at paragraph 16, Mills Sr. disclosed to the Department that he was part owner of Florida Insurance Counselors, Inc. In spite of this application, in which Mills Sr. provided his Atlanta, Georgia, address and provided the disclosure that he was part owner of Florida Insurance Counselors, Inc., an insurance agency, the Department, by mistake, licensed Mills Sr. as a non-resident general lines insurance agent.

    
    

15. On February 27, 1992, Mills Sr. filed a corporation annual report with the Secretary of State which stated that he was still the resident agent of Florida Insurance Counselors, Inc. and that he had become the chief executive officer of that corporation. Mills Sr. has filed no notification to the Department of any change of address nor any disclosure to the Department that he is a resident of Florida, as of the time of this hearing.

    
    

16. In 1985, Florida Insurance Counselors, Inc. was incorporated. Mills Sr. owned a partial interest in the corporation at that time. Later, he bought out the other owners, becoming sole owner. Lee Newcomb is a director in the corporation and acted as the Florida licensed agent for the company until on or about May 1, 1992. The corporation did business in the Tampa area with an office in Brandon. The corporation had a Seffner, Florida, mailing address. Mills Sr. owned his interest in Florida Insurance Counselors, Inc. until it ceased doing business on June 1, 1993 and Mills Sr. dissolved the corporation in August of 1993. Mr. Newcomb acted as the Florida resident agent for the corporation and as manager of the agency from its inception. On May 1, 1992, Mills Sr. and Mills Jr. became aware that Mr. Newcomb had suddenly resigned effective April 30, 1992. It was learned from office personnel that Mr. Newcomb may have taken some personal property and records of the agency with him upon leaving. On May 4, 1992, Mills Jr., being concerned with this situation, left Atlanta, Georgia, and drove to Brandon, Florida, where he found that Mr. Newcomb had, indeed, taken certain records of Florida Insurance Counselors, Inc. with him. Florida Insurance Counselors, Inc. had a non-competitive agreement with Mr. Newcomb during his tenure as resident agent and managing agent.

    
    

17. Upon his arrival in the Brandon, Florida, office and shortly thereafter, Mills Jr. began interviewing perspective replacement resident agents. He hired a resident licensed agent who commenced working as the resident licensed agent for Florida Insurance Counselors, Inc. after giving proper notice to her former employer. She began working in approximately the last week of May, 1992 for Florida Insurance Counselors, Inc. originating all insurance business and managing and operating the agency after that time.

    
    

18. It was learned by Mills Jr. from a secretary in the office that Mr. Newcomb, while he was employed by Florida Insurance Counselors, Inc., was sending in certain applications for insurance coverage to a number of carriers or insurers. Copies of those insurance applications were not in the records of

    Florida Insurance Counselors, Inc., the implication being that Mr. Newcomb had taken those documents with him when he left. The secretary, Dolores Olrey, prepared as best she could duplicates of those applications from memory.

    
    

19. Mills Jr. attempted to find out from the insurance carriers involved if they had received the applications for insurance coverage from Mr. Newcomb as originating agent, in order to find out if Mr. Newcomb had violated the non- competitive agreement by submitting applications for insurance coverage as a separately operating agent or agency while he was actually still working for Florida Insurance Counselors, Inc. Mills Jr. testified that he was told that the companies did not have time to look through their records of recent business to determine if Mr. Newcomb had submitted such applications in that fashion. According to Mills Jr., the companies involved advised him that if he merely submitted a duplicate application for the same coverage for the condominiums involved (property and casualty coverage), he would know if another application had previously been submitted, since the later applications would be automatically rejected if that were the case.

    
    

20. Accordingly, Mills Jr. instructed Ms. Olrey to affix his signature stamp on an application by Northeast Heights Condominium of Tamarac, Florida, to the Public Service Mutual Insurance Company of New York, as well as on an application for insurance for the Altamonte Woods Condominium Association of Altamonte Springs, Florida, to MCA Insurance Company of New Jersey. Those were the two applications believed by Ms. Olrey to be replicas of those prepared earlier and submitted by Mr. Newcomb in supposed violation of the non- competitive agreement. These condominium associations were customers of Florida Insurance Counselors, Inc. Mills Sr. sent his applications in for the purpose of acquiring information which could be used against Mr. Newcomb if the Mills and Florida Insurance Counselors, Inc. later attempted to assert that he violated the non-competitive agreement. Mills Jr., however, could have determined by direct contact with those condominium association customers whether or not they had previously submitted an application for insurance through Mr. Newcomb, rather than attempting to find that out indirectly by submitting the applications for insurance involved to the companies.

    
    

21. Mills Jr. genuinely believed that both insurance applications would be rejected because he believed that Mr. Newcomb had already sent in the original applications in violation of the non-competitive agreement. In fact, however, only one of the applications was rejected. The application for insurance for the Northeast Heights Condominium Association eventually resulted in a policy being issued by the Public Service Mutual Insurance Company. The effective date of that policy, as requested by the application, was from June 30, 1992 through June 30, 1993. Geraldine Corbitt became the duly-licensed resident agent of Florida Insurance Counselors, Inc. in the last week of May, 1992; therefore, the coverage became effective under her tenure as the appropriate resident agent for Florida Insurance Counselors, Inc., although Mills Jr. actually originated the application which resulted in that policy coverage. The application submitted for the Altamonte Woods Condominium Association was rejected by the insurer because its information, provided to Mills Jr., was that another agent had already received a quote from the company on that business on May 7, 1992, implicitly Mr. Newcomb.

    
    

22. On March 2, 1989 through February 27, 1992, annual reports were filed with the Florida Secretary of State for Florida Insurance Counselors, Inc. which stated that Mills Jr. was the vice-president and director of Florida Insurance Counselors, Inc. and lastly, was the president and the director of Florida Insurance Counselors, Inc. For a period of approximately two weeks in May of

    1992, as referenced in the above Findings of Fact, Mills Jr. directly operated and controlled the offices of Florida Insurance Counselors, Inc. due to the abrupt departure of the resident insurance agent, Mr. Newcomb.

    
    

23. On both policy applications submitted by Mills Jr., the signature of Mills Jr. appears in the space marked "producer's signature" on a policy which was ultimately issued by Public Service Mutual Insurance Company under Policy No. 78-0047889 to Northeast Heights Condominium Association, effective June 30, 1992. The broker was listed as Florida Insurance Counselors, Inc. and "Bill Mills" was listed as the "contact person." Mills Jr. testified and acknowledged that although the policy was issued for the application he submitted, Ms. Corbitt had finalized the transaction after he sent the application to the insurer. The policy bearing the above number does not contain any indication that Ms. Corbitt sold the policy, originated the coverage, nor does her name appear anywhere on the policy. These policies were for the obtaining of coverage for property and casualty insurance in the State of Florida. The transaction or solicitation of property and casualty insurance in the State of Florida requires a general lines insurance agent's license. Mills Jr. holds no such license. Mills Jr. testified at the final hearing that he did not submit the applications for the purpose of transacting insurance business but to determine whether Mr. Newcomb was in violation of the covenant not to compete with Florida Insurance Counselors, Inc.

    
    

24. Mills Jr. was a life and health insurance agent, and his experience was totally in the field of life and health insurance. He had no experience in the submission of applications for casualty insurance. Mills Jr. had submitted his application for licensure as a non-resident life and health insurance agent on March 15, 1982. Pursuant to that application, he was licensed in Florida as a non-resident life and health insurance agent. In that application, there was contained the statement executed by Mills Jr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...." Florida Insurance Counselors, Inc. is a Florida corporation engaged in the business of insurance agency and is an insurance agency for the purpose of property and casualty insurance. It does not engage in the business of soliciting and selling life and health insurance.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

26. The Department is required to establish the truth of the charges in the Administrative Complaints by clear and convincing evidence in these disciplinary actions against the licenses and entitlements to licensure of the Respondent agents involved in the Administrative Complaints. Ferris v. Turlington, 510 S.2d 292 (Fla. 1987). The Respondents are charged in the Amended Administrative Complaints at issue with violating the following provisions of Chapter 626, Florida Statutes, as to both Respondents:

    
    

    626.611(4) If a license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.

    626.611(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    626.611(8) Demonstrated lack of reasonable adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.

    626.611(9) Fraudulent or dishonest business practices in the conduct of business under

    the license or permit.

    626.611(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(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.

    626.621(6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive actual 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.

    626.835(3) No such applicant or licensee shall have a place of business in this state, nor be an officer, director, stockholder, or partner in any corporation or partnership doing business in this state as a health insurance agency.

    
    

27. Additionally, Mills Sr. is charged with violation of Section 626.611(1), Florida Statutes, which proscribes "lack of one or more of the qualifications for the license or permit as specified in this code", and Section 626.621(1), Florida Statutes, "any cause for which issuance of the license or permit could have been refused had it been existed and been known to the department."

    
    

28. Initially, it is concluded that neither Respondent has been shown to have violated Section 626.835(3), Florida Statutes, referenced above, involving an applicant or licensee having a place of business in this State or being an officer, director or other affiliated person with a corporation or partnership doing business in this State as a health insurance agency. This is because the evidence clearly shows that Florida Insurance Counselors, Inc., the corporation with which the Respondents had affiliation, is clearly a property and casualty insurance agency and is not in the business of soliciting, obtaining and issuing life or health insurance policies. Consequently, neither Respondent has been proven to have violated this section.

    
    

29. Additionally, Section 626.792(3), Florida Statutes, is referenced in the proposed recommended order of the Petitioner agency. That provision proscribes an applicant or licensee having a place of business in Florida as a non-resident applicant or licensee or being an officer, director, stockholder, or partner of a corporation or other business entity doing business in the State as a life insurance agent. Clearly, Florida Insurance Counselors, Inc. is also

    not a life insurance agency and, therefore, neither Respondent has been shown to have violated this provision. Further, this provision was not one of the statutory violations charged in the Administrative Complaint and for this reason, also, no violation can be found.

    
    

30. Both Respondents, as referenced above, are charged with violations of Section 626.611(4),(7),(8),(9) and (13) and Section 626.621(6), Florida Statutes. These provisions concern willful use of the license to circumvent any requirements or prohibitions of the insurance code; demonstrated lack of fitness and trustworthiness to engage in the business of insurance; demonstrated lack of reasonable adequate knowledge and technical competence to engage in the subject transactions authorized by license or permit; fraudulent or dishonest practices in the conduct of business under the license or permit; willful failure to comply with or willful violation of any proper order or rule or willful violation of any provision of the insurance code; and engaging in the conduct of business by unfair methods of competition or unfair or deceptive actual practices or showing oneself to be a source of injury or loss to the public, etc. Neither Respondent was shown to have engaged in any willful, fraudulent, dishonest or deceptive conduct in any of the insurance transactions or in the obtaining of any of the licenses or permits at issue. There was no showing that either Respondent engaged in dishonest, deceptive or fraudulent business practices or in a willful way did not comply with any order, rule or statutory provision. While the Respondents may have engaged in the practice of insurance in Florida with an interest in a Florida insurance corporation in terms of the general lines or property and casualty insurance business done by that corporation, in violation of the authority discussed below, by not being properly licensed to do so or in the case of Mills Sr. being, in effect, a Florida resident while he held a non-resident's license; those violations involved a mistake of the legal requirements placed upon them by the Florida Insurance Code, rather than any willful intent to be dishonest or to engage in conduct amounting to circumvention in a willful manner of the requirements of the Florida law concerning licensure of insurance agents or practice of insurance agency. The Respondents have not been shown to lack reasonable adequate knowledge and technical competence to engage in insurance transactions. Consequently, the statutory provisions mentioned last above have not been shown to have been violated by either Respondent and the Amended Administrative Complaints as to these provisions should be dismissed.

    
    

31. Mills Sr. has been shown to have violated Section 626.611(1), Florida Statutes, which proscribes lack of one or more of the qualifications for the license or permit as specified in this code, in that, by not qualifying for a Florida non-resident's license because he had effected Florida residency and had an interest in the Florida agency, he failed to meet a qualification for that non-resident license even though the situation arose inadvertently and partially through the Department's mistake in issuing the non-resident license in the manner in which it was issued, as referenced in the above Findings of Fact.

    
    

32. Additionally, in light of the Conclusions of Law below based upon the above Findings of Fact, both Mills Jr. and Mills Sr. have violated Section 626.621(2), Florida Statutes, which proscribes "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". Because of the violations found to have been committed by each Respondent (albeit not intentionally), both have derivatively violated this provision.

33. Mills Sr. has violated the following provisions of Chapter 626, Florida Statutes, which provide as follows:

    
    

    626.741(2) The department shall not, however, issue any license and appointment to any non-resident who has an office or place of business in this state, or who has any direct or indirect pecuniary interest in any insurance agent, insurance agency, or in any solicitory licensed as a resident of this state...

    626.835(7) Upon becoming a resident of this state, an individual who holds a Florida non- resident agent's license is no longer

    eligible for licensure as a non-resident agent and his license and any appointment shall be cancelled immediately.

    
    

34. Although it is asserted in the proposed recommended order filed by the Petitioner that Mills Sr. has violated Section 626.792(7), Florida Statutes, concerning license and appointments being cancelled upon the holder of a Florida non-resident agent's license becoming a resident of this State, it has not been shown that either Mills Sr. or Mills Jr. violated this provision because this provision was not actually charged in the Amended Administrative Complaints. Mills Sr. is charged with violating Sections 626.551, Florida Statutes, concerning the requirement that every licensee shall notify the Department in writing within sixty (60) days of a change of his principal business address. (This provision was mistakenly cited as Section 626.511, Florida Statutes, in the Administrative Complaint). Mills Sr. has not violated this provision because, although as discussed in the Conclusions of Law below, he did, indeed, change his residence address to a Florida address, based upon the clear and convincing evidence presented, he never purported to, nor held out, nor, in fact, did change his "principal business address". That address has always remained in Atlanta, Georgia, as delineated in the above Findings of Fact concerning where he conducts his primary business activity, where he resides much of the time and where his business office employees, toll-free telephone number and other indicia of doing business are maintained.

    
    

35. Additionally, Mills Jr., albeit for no fraudulent, deceptive or dishonest intent and due to mistake or ignorance of the law, has violated Sections 626.041(2)(a) and 626.112(2), Florida Statutes. Section 626.041(2) defines "general lines agent" as one transacting insurance business in the areas of property and casualty insurance among others. Section 626.041(2)(a) provides that "unless licensed as a general lines agent as defined in Section 626.041(1), no person shall solicit insurance or procure applications therefor". Section 626.112(2), Florida Statutes, provides, in turn, as follows:

    
    

    No agent, customer representative, or solicitor shall solicit or otherwise transact as agent, customer representative, or solicitor, or represent or hold himself out to be an agent, customer representative, or solicitor as to, any kind or kinds of insurance as to which he has not been licensed and appointed.

36. Mills Jr. has violated these last-referenced provisions. It is true that he did not do this with the intention of permanently or on a repetitive basis soliciting such insurance business or holding himself out as an agent or solicitor of such insurance business but, rather, procured and submitted the two policy applications in question due to the business emergency he and the corporation found themselves in due to the sudden departure of the resident agent, as referenced in the above Findings of Fact. His testimony indicates that he did this upon advice of the insurers involved in the apparent belief that that was the most effective means to determine if the departed resident agent had wrongfully submitted those insurance coverage applications to the companies involved on his own volition, in violation of the anti-competitive agreement. In spite of that consideration, however, the fact remains that he could have more effectively and legally ascertained whether such coverage had already been written by the resident agent by contacting the insured parties.

    
    

37. Both Respondents were officers and directors of Florida Insurance Counselors, Inc. They maintained a place of business in the State of Florida for the purpose of transacting insurance in the form of property and casualty insurance. Mills Sr. was responsible for all corporate filings with the Secretary of State. Mills Jr., for a temporary period of approximately two weeks in May of 1992, submitted insurance applications to insurers from this office and personally operated the office for that brief period. The fact that both Respondents maintained an insurance office in the State of Florida is sufficient to find violations of Section 626.741(2), Florida Statutes, which proscribes, as referenced above, the issuance of any license or appointment to any non-resident who has an office or place of business in the State and who has any direct or indirect pecuniary interest in any insurance agency in the State. Mills Jr. had been issued a non-resident life and health insurance agent's license, and Mills Sr. had a non-resident life and health agent's license and after becoming a Florida resident, was issued a non-resident general lines agent's license. Thus, both Respondents have violated Sections 626.741(2), Florida Statutes. Mills Jr., however, has not violated Section 626.792(3), Florida Statutes, because, first of all, that provision was not charged in the Amended Administrative Complaint, and that provision proscribes an applicant or licensee for a non-resident life insurance agent's license from maintaining a place of business in this State doing business as a life insurance agency. The corporation involved was a property and casualty agency and did no life insurance business. Likewise, neither Respondent is guilty of violating Section 626.835(3), Florida Statutes, which was charged in the Amended Administrative Complaints, because neither of the Respondents, as applicants or licensees, although having a place of business in this State, were holders of an interest in a business or agency which did business in this State as a health insurance agency.

    
    

38. With regard to the proven violations of Section 626.741(2), Florida Statutes, concerning each Respondent, in this regard, it is pointed out that both Respondents signed a sworn statement on the applications for licensure which detailed the conditions incident to maintaining a non-resident Florida insurance license. One such condition was that the applicant may never have a place of business in this State for the purpose of soliciting insurance. By purchasing, establishing, and periodically engaging in the operation of Florida Insurance Counselors, Inc., Respondents have violated this provision by failing to conduct their business in a manner prescribed in their applications for licensure which they agreed to comply with. In mitigation of this and the other violations, it should be pointed out that the Respondents considered the principal place of business to be in Atlanta, Georgia; and the evidence clearly establishes that they had no fraudulent or dishonest intent in executing the

    applications for licensure in the manner in which they did. In fact, Mills Sr. candidly revealed his interest in Florida Insurance Counselors, Inc. upon his application for licensure as a non-resident general lines insurance agent. The Department simply issued the license as such an agent by mistake by overlooking the disclosure he made that he was interested in the Florida corporation.

    Although they may not have realized it at times pertinent, both Respondents had a duty to advise the Department concerning their proper residence address in the case of Mills Sr. and, in the case of both, of the fact that they owned a pecuniary interest and were otherwise involved in the business of Florida insurance agency, which they failed to do, albeit due to ignorance or mistake.

    Consequently, they have violated Section 626.741(2), Florida Statutes.

    
    

    Additional Conclusions of Law Regarding Respondent Mills Sr.

    
    

39. The Florida Constitution mandates that in order to be an elector of the State, the proposed elector must be a permanent resident of this State for a period of one year, and six (6) months of that period must be spent in continuous residence in the county where the individual seeks to be registered to vote. Article VI, Section 2, Florida Constitution. The voter registrant must establish to the Supervisor of Elections satisfaction that he intends to make Florida his permanent home. That intent must be accompanied by the "physical removal of residence to this state and corresponding abandonment of any residence outside of this state". See 1953 Opinion Attorney General Florida 053-68 (March 24, 1953). Mills Sr. physically removed his personal residence from Georgia and now resides in Florida at the address referenced in the above Findings of Fact. He is registered to vote in Santa Rosa County, Florida, and is deemed to have intended that Santa Rosa County become his permanent home, residence and domicile.

    
    

40. According to Article VII, Section 6, Florida Constitution, any person who has "equitable title to real estate and maintains alone the permanent residence of the owner...shall be exempt from taxation thereon...". Vacationers, temporary residents, and transients do not qualify for this homestead tax exemption. "Temporary residence even if long, for the purpose of transacting business or engaging in employment for the sake of health or pleasure, with the intention of returning to the original home, is not sufficient for the acquisition or change of domicile." See 1958 Opinion Attorney General Florida 058-124 (April 9, 1958).

    
    

41. It is true that Mills Sr. works in Georgia for the primary conduct of his insurance business and may spend the majority of his time in Georgia. He is still a Florida resident, however. He has received homestead tax exemption; he has registered to vote; he owns a place of residence in Florida in the county in which he is registered to vote and resides a substantial portion of his time in that residence. He also has registered his personal vehicle in Florida and holds a Florida driver's license. Since he enjoys a homestead tax exemption on his Santa Rosa County, Florida, property, he has to be a resident of Santa Rosa County. He would not have been granted such exemption had he not demonstrated such residence intent to the taxing authority.

    
    

42. The last corporate annual report filed with the Secretary of State for Florida Insurance Counselors, Inc. stated that Mills Sr. was the resident agent of that corporation. Section 607.0501, Florida Statutes, states that an individual may be the registered agent of such a Florida corporation only if he resides in this State. Mills Sr. is a resident of this State and must have so intended, if he held himself out and registered himself as the registered agent of Florida Insurance Counselors, Inc.

43. The term "resident", as used and defined in the Florida Insurance Code, is defined at Section 626.102, Florida Statutes. That provision references "an individual domiciled and residing in the state of Florida". The state of residence is not determined by where he conducts his primary business, as Mills Sr. contends, instead, residency is determined by such factors as the state where he votes, claims tax exemption, holds driver's licenses, physically resides, registers his automobile, pays his taxes, etc.

    
    

44. Mills Sr., on his application for licensure as a non-resident general lines insurance agent, did truthfully disclose that he was part-owner of Florida Insurance Counselors, Inc. Due to the Department's mistake, he was licensed as a non-resident general lines agent in spite of the fact that statutorily, as disclosed above, he was not eligible for such licensure. He should have been either denied licensure as a non-resident agent because of his Florida-owned business or he should have been required to obtain a Florida resident insurance agent's license. The eligibility criterion for the non-resident agent's license contained in the statute is not discretionary and although the Department mistakenly issued the license, that act by the Department does not render the holding of the non-resident agent's license, when the holder owns and is an officer and director of the Florida insurance agency, to be lawfully licensed. This is not a discretionary statutory criterion.

    
    

45. Mills Sr. has asserted his personal residency status to be that of Florida residency for purposes of his tax exemption and voting rights, Florida automobile registration, and driver's licensure, as well as in the capacity of resident agent of his corporation. He still, however, claims to be a resident of Georgia for insurance licensing purposes only, in the belief that his principal business residency is Georgia. The Florida Insurance Code provisions referenced above and in the Administrative Complaints do not allow such inconsistent residency for purposes of issuance and holding of Florida issued insurance licenses. Mills Sr. cannot remain as a Florida resident, which was clearly proven in this case, and still remain licensed by the Department as a non-resident insurance agent under the above-cited provisions of the Florida Insurance Code.

    
    

46. Mills Sr. is found to have been truthful in his assertion that he did not realize, in effect, that claiming Florida residency for personal reasons, such as voting rights, tax exemption, and the other reasons referenced above, rendered him a Florida resident for all purposes. He genuinely and in good faith believed that the relevant residency for his non-resident agent's license was his principal place of business in the insurance business, which is Atlanta. Such lack of fraudulent intent and the fact that he filed the applications and disclosed his residency to be Atlanta, Georgia, in good faith, are relevant in mitigation of any penalty for violation of the statutes concerning non-resident agency and agent's status but do not obviate the technical violations themselves.

    
    

47. Since Mills Sr. resides in Florida and his last known address on file with the Department is the Georgia address, he is under a duty to inform the Department of a change of address, as revealed by the gravamen of the above statutes and by the information disclosed to him on the Department's application form. He failed to actually notify the Department of his new residence address with regard to his non-resident life and health insurance agent's license as of the date of the hearing and upon his application for a non-resident general lines insurance agent's license, he maintained that his residence was in Georgia, even though he had previously manifested the intent to the Supervisor

    of Elections and the Santa Rosa County property appraiser to become a permanent resident of Florida in that county in order to claim homestead exemption and to register to vote. Thus, on his application for licensure as a general lines insurance agent, which was filed after he became a Florida resident, he misrepresented his residency as a fact and failed to disclose his Florida residency. As found and concluded above, however, he did this with no fraudulent or dishonest intent but believed that his residency, as related to his application, referenced the residency of his principal place of business.

    Thus, he violated the provisions of Chapter 626, Florida Statutes, as concluded above but did so with no nefarious intent. The lack of such intent serves to mitigate any penalty which may prove to be warranted.

    
    

    Additional Conclusions of Law Concerning Respondent Mills Jr.

    
    

48. The above-found facts clearly show that Mills Jr., at the times pertinent hereto, was an officer and director of Florida Insurance Counselors, Inc. The facts demonstrate that for a brief period of approximately two weeks in May of 1992, he maintained a place of business at the offices of Florida Insurance Counselors, Inc. in the vicinity of Brandon, Florida. During that brief period, he controlled and oversaw the administration of that corporation as an insurance agency. During this period, he submitted two insurance applications to insurers which listed Florida Insurance Counselors, Inc. as the producing agency and Mills Jr. himself as the producer, as found above. Even if he had not maintained an office in the State prior to those two weeks in May of 1992, he did, at least for that period of time, maintain and operate an office for the purpose of transacting an insurance business in the State of Florida during that two-week period. Mills Jr. violated Section 626.122(2), Florida Statutes, by affixing his signature as the producer to two property and casualty insurance applications and submitting them to the two insurance companies involved.

    
    

49. He contends that the submission of the policy applications was not intended to actually produce insurance policies and they were not submitted for that purpose but rather in an effort to determine whether the departed insurance agent was violating a covenant-not-to-compete with Florida Insurance Counselors, Inc. The application submitted to the Public Service Mutual Insurance Company covering Northeast Heights Condominium Association was, however, accepted by that insurer and a valid policy was issued pursuant to that application.

    
    

50. The second application also bore the signature of Mills Jr. as producer and was submitted to Frank McNeil & Sons, Inc., the insurance carrier. It purported to cover the Altamonte Woods Condominium Association, Inc. for property and casualty coverage. Mills Jr. maintains that he did so to identify the agent who had previously submitted the same risk, if such had been done. McNeil & Sons refused to provide a quotation and coverage because it had previously been submitted by the other agent. In their response to the application, however, they failed to indicate who had submitted the prior application. Mills Jr. maintains that he was told by the insurance company to submit the second application to learn the identity of the competing insurance agent. Yet, the insurance company never revealed the agent's name, just the fact that the coverage had already been submitted by application by another agent.

    
    

51. Mills Jr. acknowledged that the desired information could have been, and eventually was, ascertained through contact with the insured persons, instead of through the insurer. The totality of the evidence indicates that Mills Jr. did not intend by this brief foray into the writing of general lines

    insurance in Florida, while unlicensed, to dishonestly or otherwise illegally conduct business as an insurance agent in Florida without being properly licensed. In reality, he is guilty of a mistake of judgment and misapprehension of the law concerning insurance practices in Florida, as it related to proper licensure. In a technical sense, he was, indeed, transacting general lines insurance business and one policy was actually issued pursuant to that application. Even assuming he did not intend to transact insurance business, he still violated the above-discussed provisions of the Florida Insurance Code, by submitting the executed insurance applications to insurers. His lack of intent does, however, serve to mitigate the violations found above. See Rule 4-231- 160, Florida Administrative Code.

    
    

52. In summary, it is concluded that, in light of the above Conclusions of Law, a number of the statutory violations charged have been proven against one or both of the Respondents. Many of the violations charged, however, were not established and several statutory violations litigated and argued in the proposed recommended order were not actually charged in the Amended Administrative Complaints. Consequently, although the tentative penalty calculation submitted by the Petitioner in its proposed recommended order would not be inappropriate, had all of the violations charged been proven, the penalty should be significantly less because many of the violations were not established by the record evidence, as found and concluded above.

    
    

53. With regard to Mills Sr., it has been established that he is a Florida resident, as envisioned by the provisions of the insurance code referenced and discussed above. He had no intent to defraud or deceive the Department in maintaining his non-resident licenses and in the obtaining of the non-resident general lines license after his personal residence had changed (as opposed to his principal business residence). It is clear that the law does not allow him to be the holder of non-resident licenses, when his Florida residence has been established. Consequently, these licenses should be revoked, but without prejudice to his re-application for Florida resident licensure should he deem that desirable. The penalties to be imposed should be ameliorated by the mitigating factors concerning the lack of willfulness, fraudulent or dishonest intent, as well as the failure to prove a substantial number of the charged statutory violations at all. It is particularly noteworthy that no proof is offered that either Respondent is in any way incompetent or untrustworthy to conduct insurance business as personally-licensed agents or as representatives of corporate license holders in Florida. Inasmuch as their trustworthiness, competency, and general qualifications to be licensed has not been derogated by any proof in this proceeding and because a number of the statutory violations charged were not established, a minimal penalty is warranted.

RECOMMENDATION

In consideration of the evidence of record, the candor and demeanor of the witnesses, and the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered finding Respondents, William Dewberry Mills, Sr. and William Dewberry Mills, Jr., guilty of the violations as determined in the above Conclusions of Law and that the remaining counts and statutory violations, found above not to have been proven, should be dismissed in their entirety. It is

FURTHER RECOMMENDED that Respondent, William Dewberry Mills, Sr.'s licenses as a non-resident insurance agent in Florida be revoked, without prejudice to his re-application as a resident Florida insurance agent should he so desire, for the same level of licensure or other licensure for which he is, by education and demonstrated competency, qualified. The Respondent, William Dewberry Mills, Jr.'s Florida licenses should be suspended for a period of three (3) months.

DONE AND ENTERED this 4th day of February, 1994, in Tallahassee, Florida.

P. MICHAEL RUFF 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 4th day of February, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2350 and 93-2351

Petitioner's Proposed Findings of Fact

1-38. Accepted, but subordinate to the Hearing Officer's findings of fact on the same subject matter in those instances where the Hearing Officer's findings of fact may differ.

Respondent's Proposed Findings of Fact

1-16. Accepted, but subordinate to the Hearing Officer's findings of fact on this subject matter to the extent that the Hearing Officer's findings of fact may differ.

COPIES FURNISHED:

John R. Dunphy, Esquire Department of Insurance Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0333

Rollin D. Davis, Jr., Esquire SHELL, FLEMING, ET AL.

Post Office Box 1831 Pensacola, Florida 32598-1831

Tom Gallagher, Commissioner Department of Insurance

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, PL-11

Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten 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: 93-002350

Orders for Case No: 93-002350