STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EDWARD L. BERGER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-6471

)

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on March 1, 1994, at Fort Lauderdale, Florida, before Michael M. Parrish, duly designated Hearing Officer of the Division of Administrative Hearings. Appearances for the parties at the hearing were as follows:

APPEARANCES

For Petitioner: Mr. Edward L. Berger, CLU, pro se

19390 Collins Avenue, Apt. 725 North Miami Beach, Florida 33160

For Respondent: James A. Bossart, Esquire

Department of Insurance

412 Larson Building

Tallahassee, Florida 32399-0300 STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner's application for examination and licensure as a life and health insurance agent in the State of Florida should be granted or denied. 1/

PRELIMINARY STATEMENT

At the formal hearing in this case the Petitioner testified on his own behalf, but did not call any other witnesses. The Petitioner offered seven exhibits, all of which were received in evidence. The Respondent presented the testimony of one witness. The Respondent also offered five exhibits, all of which were received in evidence. At the conclusion of the hearing the parties decided not to order a transcript of the hearing. The parties were allowed 15 days from the date of the hearing within which to submit their proposed recommended orders. By letter dated March 9, 1994, and received on March 15, 1994, the Petitioner has submitted four pages of argument in support of his position. 2/ Included in the Petitioner's arguments are assertions of fact related to his career in the insurance business. The substance of most of those factual assertions has been included in the findings of fact, with the exception of some subordinate and unnecessary details. 3/ On March 16, 1994, the

Respondent filed a proposed recommended order containing proposed findings of fact and conclusions of law. Specific rulings on the proposed findings of fact submitted by the parties are contained in the Appendix to this Recommended Order. 4/

FINDINGS OF FACT

1. The Petitioner is an applicant for a license as a life and health insurance agent in this state. 5/ The Petitioner submitted an application form dated April 14, 1993.

   
   

2. One of the questions on the application form reads as follows:

   
   

   Have you ever been charged with or convicted of or pleaded guilty or no contest to a crime involving moral turpitude (yes or no), or a felony (yes or no), or a crime punishable by imprisonment of one (1) year or more under the law of any state, territory or county, whether or not a judgment or convic- tion has been entered? (yes or no). If yes, give date(s): .

   
   

   The Respondent answered "yes" in the first three blanks and filled in the final blank as follows: "4/15/86 Case #86-8637 - Broward County Circuit Court, Felony Division 17th Judicial District." Immediately following the foregoing, the form contains six questions identified as (a) through (f). Those questions and the Petitioner's answers to them were as follows:

   
   

   1. What was the crime? Grand Theft

   2. Where and when were you charged?

      See above

   3. Did you plead guilty or nolo contendere?

      Yes

   4. Were you convicted? No

   5. Was adjudication withheld? Yes

   6. Please provide a brief description of the nature of the offense charged:

      Grand Theft

      
      

3. Immediately following the six questions quoted above, the application form contains the following statements:

   
   

   If there has been more than one such felony charge, provide an explanation as to each charge on an attachment. Certified copies of the information or indictment and Final Adjudication for each charge is required.

   
   

   The Petitioner's response to the two statements quoted immediately above was a handwritten notation to the effect that the Department already had copies which were submitted with an earlier application. No certified copies of any court documents regarding criminal charges were submitted with the Petitioner's April 14, 1993, application. No attachment explaining any other felony charge was submitted with the Petitioner's April 14, 1993, application. The Department had copies of court documents regarding the Petitioner's 1986 criminal proceedings.

   The Petitioner did not, however, provide the Department with any information about 1963 criminal charges, discussed below, until the day of the formal hearing in this case.

   
   

4. In 1963, in Westchester County, New York, the Petitioner was charged in a three count indictment with two counts of forgery in the second degree and one count of grand larceny in the first degree. Those charges were disposed of on February 7, 1964, at which time the Petitioner entered a plea of guilty to the crime of petit larceny. On February 7, 1964, the County Court of the County of Westchester in the State of New York entered an order that included the following:

   
   

   It is Ordered and Adjudged by the Court, that the said Edward Berger, for the offense afore- said, whereof he is convicted, be imprisoned in the WESTCHESTER COUNTY PENITENTIARY AND

   WORK HOUSE, at hard labor, for the Term of One Year. AND IT IS FURTHER ORDERED THAT EXECU- TION OF SENTENCE BE SUSPENDED, and the defen-

   dant be placed on Indefinite Probation under the Supervision of the Westchester County De- partment of Probation. Remaining counts dismissed.

   
   

5. The Petitioner was for many years licensed as an insurance agent in the State of New York. A brief history of his licensure in that regard is summarized as follows in a recent letter from the Insurance Department of the State of New York:

   
   

   Please be advised that our records indicate you [the Petitioner] were first licensed by this Department in November, 1949 and your licenses were revoked on August 9, 1963. On May 25, 1966 a pending application was denied.

   You were subsequently relicensed on December 28, 1971, and remained so licensed until June 30, 1985 when you failed to become master licensed.

   
   

6. The factual basis for the 1963 revocation of the Petitioner's New York insurance licenses is set forth in an order issued July 15, 1963, by the Deputy Superintendent of Insurance. The findings of fact in that order describe three separate incidents in which the Petitioner improperly obtained and appropriated to his own use a total of $6,500.00 by signing the names of insureds on applications for loans on insurance policies and then signing the names of insureds as endorsements on the loan checks, all without the knowledge or consent of the insureds.

7. The factual basis for the 1966 denial of the Petitioner's application for a New York insurance license is set forth in an order issued May 19, 1966, by the Deputy Superintendent of Insurance. The findings of fact in that order include the same facts as the 1963 revocation order, as well as the following additional facts:

   
   

   Respondent's licenses to act as an insurance broker and agent were revoked on or about August 9, 1963. Nevertheless, respondent thereafter renewed the automobile liability policy of Leo Marrons (Policy No. 54-35261 of Public Service Mutual Insurance Company) and issued his check dated May 4, 1964, for the renewal premium. Respondent's aforesaid check was returned by the bank on which it was drawn and marked "insufficient funds." The gross premium involved was subsequently paid by res- pondent to said Public Service Mutual Insurance Company.

   Although requested to do so, respondent failed and refused to produce his bank state- ments and cancelled checks from August 1963 to September 1965 at the Insurance Department on September 14, 1965.

   
   

   The findings of fact in the 1966 order also noted that, "[o]n September 27, 1962, respondent made restitution in the amount of $6,500.00, with interest," to the insurance company from which he had improperly obtained money by signing the names of others.

   
   

8. Several years later the Petitioner again applied for an insurance license in New York. On December 28, 1971, his application was granted and he was relicensed in New York. Following his relicensure, the Petitioner was actively engaged in the insurance business in New York until he moved to Florida in 1979.

   
   

9. The Petitioner moved to Florida in 1979 and shortly thereafter became licensed as an insurance agent in this state. Several years later he had a disagreement with Pacific Insurance Company that resulted in administrative disciplinary action and criminal charges. That disagreement and the consequences that flowed from it were described as follows in the Recommended Order in DOAH Case No. 90-3408, issued November 13, 1990:

   
   

   1. For three years, Petitioner was the sole countersignature agent in the State of Florida for American Druggists Insurance Company, handling the professional liability insurance for essentially all chiropractors in the State of Florida. In December of 1984, American Druggists attempted to withdraw from insuring chiropractors in the State of Florida. Respondent prevented American Druggists from withdrawing insurance coverage until January 31, 1985, when Pacific Insurance Company took over that block of coverage. For eight months Petitioner was Pacific Insurance Company's

      Florida representative handling the profes- sional liability needs for chiropractors in the State of Florida.

   2. Hundreds of chiropractors received profes- sional liability insurance coverage during

      that 8-month period. Many of those same chiro- practors also purchased life insurance and major medical policies during that same time period from Petitioner through companies other than Pacific Insurance Company.

   3. Disagreement arose between Petitioner and Pacific Insurance Company regarding the for- warding of premium payments by Petitioner to Pacific Insurance Company and regarding the payment of commissions by Pacific Insurance Company to Petitioner. As a result of that disagreement, a Probable Cause Affidavit was issued against Petitioner, and he was arrested on June 24, 1986, in Broward County. A crimi- nal information was filed against him in the Circuit Court of the Seventeenth Judicial Cir- cuit, in and for Broward County, Florida, charging him with 22 counts of organized fraud, grand theft in the first degree, and grand theft. The criminal information involves al- legations that Petitioner, in essence, col- lected premiums for malpractice insurance from a number of chiropractors, failed to remit those premium payments to Pacific Insurance Company, and failed to refund the premiums or issue policies to the chiropractors.

   4. Prior to the trial of those criminal charges, the prosecuting attorney advised the presiding judge that the State was unable to present the testimony of the chiropractors allegedly damaged as a result of Petitioner's activities and that the chiropractors on whom the prosecuting attorney was relying had ad- vised him that they had either been issued the malpractice insurance policies they had pur- chased or they had received refunds of their premium payments. At that same hearing, Petitioner entered a plea of guilty to one count of grand theft in the first degree and the Court withheld adjudication of guilt.

      That single count involves the allegation that Petitioner withheld monies which belonged to Pacific Insurance Company from that Company.

      The remainder of the charges filed against Petitioner were voluntarily dismissed by the State. On April 8, 1987, Petitioner was placed on probation for a period of five years and ordered to make restitution, assumedly to Pacific Insurance Company, in an amount to be later determined but with a cap set for a maximum payment of approximately $60,000.00.

   5. The amount for restitution was subsequent- ly determined to be $20,000.00, of which Petitioner still owes approximately $14,000.00. Pursuant to a subsequent agreement, Petition- er's probation period was shortened, and by

      the time of the final hearing in this cause the agreed probation termination date was set for September 11, 1990.

   6. On April 29, 1986, Respondent issued an Administrative Complaint against Petitioner and his insurance licensure, resulting from his activities on behalf of Pacific Insurance Company. Three different addresses for Petitioner were listed on that Administrative Complaint. Pursuant to the affidavit of one of Respondent's investigators stating that he was unable to locate Petitioner for personal service of the Administrative Complaint, a Notice of Administrative Complaint was published in the Boca Raton News and News of Delray Beach. Upon Petitioner's failure to respond to the Administrative Complaint, a Final Order of Revocation of Petitioner's in- surance licenses was entered on October 29, 1986. A copy of that Final Order of Revoca- tion was mailed to Petitioner at an address different from the three addresses listed in the Administrative Complaint.

   
   

10. Since the issuance of the Recommended Order in Case No. 90-3408, the Petitioner has paid a total of $20,000.00 in restitution to Pacific Insurance Company. Since the issuance of the Recommended Order in Case No. 90-3408, the Petitioner has been discharged from probation. 6/

    
    

11. In 1989 the Petitioner applied to the Florida Department of Insurance for reinstatement of his insurance license. Following a formal hearing, the Department issued a Final Order on December 14, 1990, denying that application. The Final Order adopted the Hearing Officer's Findings of Fact and the Conclusions of Law in the Recommended Order in DOAH Case No. 90-3408. The Hearing Officer's conclusions in that Recommended Order included the following:

    
    

    Since all of the monies have still not been returned to the rightful owner and Petitioner's licenses and eligibility for licensure was re- voked for failure to forward premium payments to the rightful owner, the circumstances for which eligibility was revoked still exist.

    Petitioner has offered no proof of rehabilita- tion. He believes himself innocent of wrong- doing. He testified as to the financial hard- ship caused him by the revocation of his li- censes and the difficulties he has experienced with employment in the insurance industry.

    Although he remains certified by Respondent to teach courses to applicants for insurance li- censure, that fact in and of itself does not demonstrate rehabilitation.

    The last basis for denial is the Department's allegation that Petitioner lacks competency or trustworthiness to engage in the business of insurance. Petitioner has met his burden of proving competency to engage in the business

    of insurance through his many years of ex- perience and his certification by Respondent to teach insurance courses. His trustworthi-

    ness remains in question at this time, however, due to his failure to resolve his financial obligation to Pacific Insurance Company.

    
    

12. During the course of the Department's processing and investigation of the application at issue in this proceeding, the Department requested and received from the FBI a criminal record identification report of the Petitioner. The FBI report gave the Department reason to suspect that the Petitioner had been charged with the commission of a felony in Hawthorne, New York, in 1963, specifically the crimes of forgery and grand larceny. As a result of the information in the FBI report, the Department wrote to the Petitioner on two occasions asking him to provide additional information concerning the 1963 criminal charges and also asking him to provide certified documents detailing the disposition of the case. The Petitioner refused to provide the requested information, contending in his responses to the Department that the requested information was outdated, inaccurate, obsolete, and irrelevant. 7/ At the formal hearing the Petitioner described the events regarding his 1963 criminal charges and license revocation as "a minor incident thirty years ago."

    
    

13. The Petitioner has had many years of experience in various aspects of the insurance business both in New York and Florida. He obtained his CLU in 1957 and has been certified to teach courses in the field of insurance. The Petitioner appears to be very knowledgeable and competent with regard to the insurance business.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. In a case of this nature, the Petitioner bears the burden of proving, by a preponderance of the evidence, his entitlement to the relief he seeks. See Rule 28-6.08(3), Florida Administrative Code, and Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981). If the proof is insufficient to demonstrate entitlement, the relief requested must be denied.

    
    

16. The Department's amended letter of denial dated December 7, 1993, cites the following statutory provisions as providing the legal basis for the denial of the Petitioner's application: Sections 626.611(1), 626.611(2), 626.611(7), 626.641(2), and 626.785(1), Florida Statutes. The cited statutory provisions read as follows:

    
    

    626.611 Grounds for compulsory refusal, sus- pension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's, or claims investi-

    gator's license or appointment.--The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjuster, customer repre- sentative, service representative, managing general agent, or claims investigator, and it shall suspend or revoke the eligibility to

    hold a license or appointment of any such per- son, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:

    1. Lack of one or more of the qualifica- tions for the license or appointment as speci- fied in this code.

    2. Material misstatement, misrepresenta- tion, or fraud in obtaining the license or ap- pointment or in attempting to obtain the license or appointment.

    * * *

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

    * * *

    626.64 Duration of suspension or revoca- tion.--

    (1) . . . .

    (2) No person or appointee under any li- cense or appointment revoked by the department, nor any person whose eligibility to hold same has been revoked by the department, shall have the right to apply for another license or ap- pointment under this code within 2 years from the effective date of such revocation or, if judicial review of such revocation is sought, within 2 years from the date of final court order or decree affirming the revocation. The department shall not, however, grant a new license or appointment or reinstate eligibility to hold such license or appointment if it finds that the circumstance or circumstances for which the eligibility was revoked or for which the previous license or appointment was revoked still exist or are likely to recur; if an in- dividual's license as agent or solicitor or eligibility to hold same has been revoked upon the ground specified in s. 626.611(12), the department shall refuse to grant or issue any new licenses or appointment so applied for.

    * * *

    626.785 Qualifications for licensure.--

    1. The department shall not grant or issue a license as life agent to any individual found by it to be untrustworthy or incompetent. . . .

17. Inasmuch as the Petitioner has now been discharged from probation and has now paid the $20,000.00 of court-ordered restitution to Pacific Insurance Company, it appears that the circumstances for which the Petitioner's license was revoked no longer exist. 8/ However, for the reasons which follow, there are serious concerns as to whether such circumstances are likely to recur.

    
    

18. The evidence in this case casts serious doubts upon the Petitioner's fitness and trustworthiness to engage in the business of insurance, which doubts are not resolved by the Petitioner's unsupported assertion that he has learned his lesson from his past misdeeds. To the contrary, the evidence in this case suggests that the Petitioner has not learned his lesson because he appears not to appreciate the seriousness of his past conduct. In his testimony at hearing he referred to events that led to his 1963 criminal charges and to his 1963 license revocation as a "minor incident thirty years ago." The misappropriation of $6,500.00 is not a minor incident, it is a serious offense, especially when committed by a person who seeks a license that entitles him to take custody of large sums of money that belong to other people. So long as the Petitioner continues to be of the view that the misappropriation of $6,500.00 is a "minor incident," there will be serious doubts as to the Petitioner's fitness and trustworthiness to engage in the business of insurance. It is clear that the Petitioner did not learn his lesson following his 1963 criminal charges and license revocation, because in 1986 he engaged in conduct that resulted in more serious criminal charges and a second license revocation. There is no persuasive evidence that the Petitioner learned more from his 1986 experiences than he learned from his 1963 experiences.

    
    

19. Such doubts also flow from the Petitioner's lack of candor regarding his 1963 criminal charges. Not only did he fail to mention those charges when he filed his application, he also refused to comply with the Department's specific requests for further information when the Department found out about the charges from another source. In his responses he described the 1963 charges as outdated, inaccurate, obsolete, and irrelevant. These actions by the Petitioner are consistent with an intent to conceal information from the Department and/or to mislead the Department as to the nature of the 1963 criminal charges. Such an intent casts serious doubts upon the Petitioner's fitness and trustworthiness to engage in the business of insurance.

    
    

20. The Petitioner did not offer any evidence of rehabilitation. The evidence shows that he has done what the criminal courts required him to do, but he has not provided any persuasive evidence of any change in the character traits that led him to twice become involved with the criminal courts.

    
    

21. In view of all of the foregoing, it must be concluded that the Petitioner has failed to show his fitness and trustworthiness to engage in the business of insurance by a preponderance of the evidence. Such being the case, his application should be denied.

RECOMMENDATION

On the basis of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance issue a Final Order in this case denying the Petitioner's application for a license as a life and health agent in the State of Florida.

DONE AND ENTERED this 4th day of April 1994 in Tallahassee, Leon County, Florida.

MICHAEL M. PARRISH

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 4th day of April 1994.

ENDNOTES

1/ This is a de novo proceeding at which the basic issue is whether, on the basis of the evidence submitted at the formal hearing, the Petitioner's application should be granted or denied. The Respondent appears to view this proceeding as some form of appeal or review of the Department's earlier decision to deny the application in which the issue would be whether, at the time it was made, and on the basis of the information then available, the Department's earlier decision was or was not correct. Such is not the case. Under Chapter 120, Florida Statutes, initial agency decisions which become the subject of Section 120.57(1) hearings, become tentative non-final decisions and the issue before the Hearing Officer is not whether the agency was initially correct, but, because of the de novo nature of the proceedings, the issue becomes: What should the agency do on the basis of the record in this proceeding? The proposed recommended orders submitted on behalf of the Department would be of greater assistance to the Hearing Officer if they approached the issue from a de novo, rather than a review, point of view.

2/ Included with the Petitioner's submission received on March 15, 1994, were various documents, including newspaper clippings and copies of letters which had not been submitted as evidence at the formal hearing. Because these additional documents were not offered at the hearing, and because there is no statute, rule, or order authorizing their submission after the hearing, the additional documents have not been considered during the preparation of this Recommended Order.

3/ In this regard it is important to note the difference between facts and opinions. The acceptance of the facts asserted by the Petitioner does not necessarily also include acceptance of the Petitioner's opinions regarding the significance of the facts.

4/ The Petitioner also submitted a letter dated March 14, 1994, which was received on March 17, 1994. The letter received on March 17, 1994, consists primarily of rebuttal argument addressed to the assertions in the Respondent's proposed recommended order. Such rebuttal documents are not authorized by statute, rule, or order, and in the normal course of events should be stricken from the record. Nevertheless, because the Petitioner is without legal counsel and is probably unfamiliar with the applicable procedural rules, an exception has been made and the arguments in the Petitioner's March 17, 1994, submission

have been considered during the preparation of this Recommended Order. In view of the recommended disposition of this proceeding, it did not seem necessary to provide the Respondent with an opportunity to file a surrebuttal document.

5/ The Petitioner is exempt from examination by reason of his CLU status.

6/ The Petitioner was discharged from probation by court order dated November 23, 1992. (See Petitioner's Exhibit No. 5)

7/ At the formal hearing the Petitioner testified regarding the 1963 criminal charges and also provided a certified court document reflecting the disposition of those charges.

8/ This conclusion is consistent with the interpretation of Section 626.641(2), Florida Statutes, adopted by the Department in the Final Order in DOAH Case No. 90-3408. This Hearing Officer has doubts as to whether this represents the most appropriate interpretation of the cited statute. Such interpretation is, however, permissible.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-6471

The following are the specific rulings on proposed findings of fact submitted by the parties.

Findings proposed by Petitioner:

As noted in the Preliminary Statement, the Petitioner submitted a post- hearing letter containing four pages of argument in support of his position. The arguments include assertions of fact relating to the Petitioner's career in the insurance business. The substance of most of those factual assertions have been included in the Findings of Fact. Assertions about comments made by the

Department's witness and the two paragraphs on page 3 that comprise section 3 of the Petitioner's arguments are rejected as irrelevant or as subordinate and unnecessary details.

Findings proposed by Respondent.

All of the findings of fact proposed by the Respondent have been accepted in substance with the exception of Paragraph 14. Paragraph 14 is rejected as subordinate and unnecessary details.

COPIES FURNISHED:

Mr. Edward L. Berger, CLU, pro se 19390 Collins Avenue, Apt. 725 North Miami Beach, Florida 33160

James A. Bossart, Esquire Department of Insurance

412 Larson Building

Tallahassee, Florida 32399-0300

Honorable Tom Gallagher

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Bill O'Neil, 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 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: 93-006471

Orders for Case No: 93-006471