vs. ) CASE NO. 93-2966
Respondent. )
Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Susan B. Kirkland, on September 30, 1993, in Fort Lauderdale, Florida. The following appearances were entered:
For Petitioner: Joseph D. Mandt, Esquire
Whether Respondent violated the following statutory provisions: Sections 626.561(1), 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.611(10),
Florida Statutes, and if so what discipline should be imposed.
By an Administrative Complaint dated May 5, 1993, the Department of Insurance sought to revoke, suspend, or discipline Respondent's license as a life and health agent and a general lines agent. On May 28, 1993, Respondent filed a request for a formal administrative hearing. The matter was referred to the Division of Administrative Hearings for formal proceedings on June 1, 1993. This case was assigned to Hearing Officer David Maloney who scheduled the case for hearing on September 30, 1993. The case was transferred to Hearing Officer Susan B. Kirkland who conducted the formal hearing.
Petitioner presented the testimony of Jesus Escalera. Petitioner's exhibits 1 - 3 were entered into evidence. Respondent testified on his own behalf. Respondent's composite exhibits 1 and 2 were entered into evidence.
No transcript was filed. The parties were given until October 11, 1993, in which to file proposed findings of fact and conclusions of law. Petitioner filed Petitioner's Proposed Recommended Order on October 11, 1993. 1/
Respondent did not file findings of fact or conclusions of law. Petitioner's findings of fact are ruled upon in the Appendix to this Recommended Order.
Respondent, Gus Jones, Jr., is currently and was at all times relevant to this proceeding a licensed insurance agent in this state doing business under the name of A. Maples Insurance Agency.
In August, 1990, Jesus Escalera, who had a roofing business, came to Respondent to obtain workers' compensation insurance. Mr. Escalera's insurance was placed through the National Counsel on Compensation Insurance (NCCI) which is a pool for assigned risk insurance. Mr. Escalera's policy was with Aetna with coverage effective through October 26, 1991.
On August 16, 1991, Mr. Escalera came to Respondent to renew his workers' compensation insurance. Mr. Escalera gave Respondent $409.00, which represented a down payment of one-half the premium for one year's coverage. The remainder of the premium was to be financed with Financial Industries, Inc.
Aetna had withdrawn from the original risk insurance pool, therefore it was necessary to submit a new application to NCCI for placement of insurance for Mr. Escalera.
Respondent sent the application to NCCI in October, 1991.
Mr. Escalera's insurance was placed with United States Fidelity and Guaranty Company (USF&G) on November 13, 1991. Respondent kept a supply of blank drafts from Financial Industries, Inc. at his office. Respondent sent a Financial Industries, Inc.'s draft to NCCI for Mr. Escalera's insurance with USF&G. Financial Industries stopped payment on the draft because they had decided to discontinue financing workers' compensation insurance.
Respondent attempted to finance Mr. Escalera's insurance through Premium Assignment Company (Premium). Respondent sent a premium draft to NCCI, but Premium stopped payment on the draft for Respondent's failure to send a transmittal to Premium.
Mr. Escalera had called Respondent three or four times asking for his payment book so that he could make the installment payments for the insurance. Respondent advised Mr. Escalera that the payment book was in the mail.
USF&G performed an audit on Mr. Escalera's payroll and determined that Mr. Escalera owed $13,724.00 for earned premiums.
In January, 1992, Respondent contacted Mr. Escalera and advised him that USF&G intended to cancel the insurance effective February 16, 1992.
On February 3, 1992, Mr. Escalera went to see Respondent. Respondent explained that he could not get financing for Mr. Escalera and requested Mr. Escalera to pay the balance of the premium of $817.00. Mr. Escalera paid
$409.00 to Respondent and received a receipt for that amount.
Respondent sent USF&G a check for $817.00. The policy was reinstated with coverage effective December 13, 1991.
USF&G gave notice dated March 13, 1992 that Mr. Escalera's policy would be terminated April 13, 1992 for non-payment.
By letter dated April 16, 1992, USF&G returned Respondent his check due to the second cancellation.
By letters dated June 2, 1992, USF&G advised Respondent that Mr. Escalera owed a earned premium of $13,724.00. The policy was terminated effective April 13, 1993, because Mr. Escalera had failed to pay the earned premium.
In April or May, 1992, Respondent placed the retuned check from USF&G in his trust account. Respondent did not advise Mr. Escalera that the premium had been returned. According to Mr. Escalera, he did not know at the time of the hearing who had the money.
On February 6, 1993, Respondent called David Peters, a representative of USF&G and asked Mr. Peters what to do with the $817. Respondent let the money remain in the trust account and awaited further instruction from Mr. Peters.
After Respondent received the administrative complaint, he called USF&G and spoke with Marilyn Bailey who was now handling the account on behalf of USF&G. Based on his conversation with Ms. Bailey, Respondent sent USF&G a cashier's check for $817 dated May 18, 1993.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding, pursuant to Section 120.57(1), Florida Statutes.
The Petitioner has the burden to establish the guilt of the Respondent in this matter by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).
In Count I(a) and (h) of the Administrative Complaint, the Department of Insurance and Treasurer, (Department) has alleged that the Respondent violated Sections 626.561(1) and 626.621(2), Florida Statutes. Section 626.561(1), provides in pertinent part:
All premiums, return premiums, or other funds belonging to insurers or others received by an agent . . . in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity. . . .
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.
Section 626.621(2) provides that the Department may suspend or revoke the license of an agent if the agent violates "any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license," providing the offense is not one which requires mandatory suspension or revocation under Section 626.611.
Petitioner has met its burden of proof relating to charges contained in Count I(a) and (h). After receiving the check from USF&G in April, 1992, Respondent did not return the premium to Mr. Escalera nor did he contact Mr. Escalera to let him know that USF&G had returned the premium. Mr. Escalera testified that at the time of the hearing he still did not know who had his
$817. The check was placed in Respondent's trust account. Respondent waited until February, 1993, to contact USF&G to get further information on what to do with the premium. Not until after Petitioner had issued its Administrative Complaint did Respondent again send the check to USF&G. Once the check was returned to Respondent in April, 1992, Respondent owed a fiduciary duty to account for the funds and pay the funds to whoever was entitled to them. By failing to do nothing about the returned funds until February, 1993, when he contacted USF&G, and by failing to send the funds to either USF&G or to Mr.
Escalera until May, 1993, Respondent breached his fiduciary duty to Mr. Escalera.
In Count I(b) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(5), Florida Statutes, which provides that the Department shall suspend or revoke the license of an agent if the agent has made a "[w]illful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising." There is insufficient evidence to show that Respondent made a willful misrepresentation of an insurance policy or made a willful deception with regard to any such policy. There being insufficient proof, Respondent should not be found guilty of a violation of Section 626.611(5), Florida Statutes.
In Count I(c) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(7), Florida Statutes, which provides that the Department shall suspend or revoke the license of an agent if the agent demonstrates "lack of fitness or trustworthiness to engage in the business of insurance." The evidence is insufficient to establish that the Respondent lacks fitness or trustworthiness to engage in the business of insurance. The proof being insufficient, the Respondent should not be found guilty of a violation of Section 626.611(7), Florida Statutes.
In Count I(d) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(8), Florida Statutes, which provides that the Department shall revoke or suspend the license of an agent if the agent demonstrates "lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license." The proof was insufficient to establish that Respondent lacked adequate knowledge or technical competence to engage in the business of insurance. The proof being insufficient, Respondent should not be found guilty of a violation of Section 626.611(8), Florida Statutes.
In Count I(e) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(9), Florida Statutes, which provides that the Department shall revoke or suspend the license of an agent if the agent engages in "[f]raudulent or dishonest practices in the conduct of business under the license." There was insufficient evidence to show that Respondent engaged in fraudulent or dishonest practices in the conduct of business under his license. There being insufficient proof, Respondent should not be found guilty of violating Section 626.611(9), Florida Statutes.
In Count I(f) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(10), Florida Statutes, which provides that the Department shall revoke or suspend the license of an agent for "[m]isappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license." There is insufficient proof to show that Respondent misappropriated, converted, or unlawfully withheld funds received in the conduct of business under his license. There being insufficient proof, Respondent should not be found guilty of a violation of Section 626.611(10), Florida Statutes.
In Count I(g) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.611(13), Florida Statutes, which provides that the Department shall revoke or suspend the license of an agent for "[w]illful 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." The Petitioner failed to present clear and convincing evidence to establish that Respondent willfully violated a provision of the code. There being insufficient proof, Respondent should not be found guilty of a violation of Section 626.611(13), Florida Statutes.
In Count I (i) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.621(4), Florida Statutes, which provides that the Department may suspend or revoke the license of an agent for "[f]ailure or refusal, upon demand, to pay over to any insurer he represents or has represented any money coming into his hands belonging to the insurer." The evidence failed to establish that the Respondent failed or refused, upon demand, to pay over to an insurer any money coming into his hands belonging to the insurer. To the contrary, the evidence showed that Respondent did attempt to remit $817 to USF&G, and the premium was returned to the Respondent. No evidence was presented to show that between the time the check was returned to Respondent in April, 1992, and the time Respondent again sent USF&G another check in May, 1993, that there was a demand to pay over to the insurer the $817. The proof being insufficient, the Respondent should not be found guilty of a violation of Section 626.621(4), Florida Statutes.
In Count I (j) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.621(6), Florida Statutes, which provides that the Department may suspend or revoke the license of an agent if the agent "[i]n the conduct of business under the license or appointment, engag[es] in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or . . . otherwise show[s] himself to be a source of injury or loss to the public or detrimental to the public interest." There was no evidence presented to prove that the Respondent engaged in unfair methods of competition or in unfair or deceptive acts or practices or otherwise showed himself to be a source of injury or loss to the public or detrimental to the public interest.
In Count I(k) of the Administrative Complaint, the Department has alleged that Respondent violated Section 626.9521, Florida Statutes, which provides that no person shall engage in Florida in any trade practice which is an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. Section 926.9541(1)(o)1., Florida Statutes defines the following as an unfair method of competition and unfair or deceptive act or practice:
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.
There is no evidence to support an allegation that Respondent knowingly collected a premium for insurance which was then not provided or in due course was not provided subject to the acceptance of the risk by the insurer. The evidence does show that Mr. Escalera had workers' compensation insurance coverage through USF&G from December 13, 1991, through April 13, 1992. The policy was eventually cancelled due to Mr. Escalera's failure to pay the unearned premiums. There being no proof, Respondent should not be found guilty of engaging in an unfair method of competition or unfair or deceptive act or practice as defined by Section 626.9541(1)(o)1., Florida Statutes.
Section 626.681(1), Florida Statutes, provides in pertinent part:
. . . [I]f the department finds that one or more grounds exist for the suspension, revocation or refusal to renew or continue any license or appointment issued under this chapter, the department may, in its discretion, in lieu of such suspension, revocation, or refusal, and except on a second offense or when such a suspension, revocation, or refusal is mandatory, impose upon the licensee or appointee an administrative penalty in an amount up to
$500 or, if the department has found willful misconduct or willful violation on the part of the licensee or appointee, up to $2500
. . . .
Section 626.691(1), Florida Statutes, provides as follows:
If the department finds that one or more grounds exist for the suspension, revocation, or refusal to renew or continue any license or appointment issued under this part, the department may, in its discretion, except when under s. 626.681 or when such suspension, revocation or refusal is mandatory, in lieu of such suspension, revocation, or refusal, or in connection with any administrative monetary penalty imposed under s. 626.681, place the offending
licensee or appointee on probation for a period, not to exceed two years, as specified by the department in its order.
Respondent did not violate any provision of Section 626.611; thus, suspension or revocation of Respondent's license is not mandatory. See Dyer v. Department of Insurance and Treasurer, 585 So.2d 1009 (Fla. 1st DCA 1991). The Department may impose an administrative fine or probation in lieu of suspension or revocation of Respondent's license.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer issue a Final
Order finding Respondent guilty of a violation of Sections 626.561(1) and 626.621(2) and that Respondent be assessed an administrative fine of $500 and be placed on probation for a period of one year subject to such terms and restrictions as the Department may apply.
DONE AND ENTERED this 19th day of October, 1993, in Tallahassee, Leon County, Florida.
SUSAN B. KIRKLAND
Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 1993.
1/ In its Proposed Recommended Order, Petitioner addressed only the charges contained in Count I(a) and (h) of the Administrative Complaint.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2966
To comply with the requirements of Section 120.59(2), Florida Statutes, the following rulings are made Petitioner's proposed findings of fact:
Joseph D. Mandt, Esquire Division of Legal Services 612 Larson Building
Mr. Gus Jones, Jr. 1051 East Sample Road
Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level
All parties have the right to submit 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.
