STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 94-3731

)

JAMES BRIAN CANTWELL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a formal hearing in the above-styled case on January 10, 1995, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Allen R. Moayad, Esquire

Department of Insurance and Treasurer Division of Legal Services

612 Larson Building

Tallahassee, Florida 32399-0300 For Respondent: No appearance at hearing

STATEMENT OF THE ISSUE

At issue is whether respondent committed the offenses alleged in the administrative complaint and, if so, what disciplinary action should be taken.

PRELIMINARY STATEMENT

By a fifty-count administrative complaint dated May 9, 1994, petitioner charged that respondent violated the provisions of Sections 626.611(4), (7), (9) and (13), 626.621(2) and (6), 626.9541(1)(k)1, and 626.989(1), Florida Statutes, by submitting fifty fraudulent applications for insurance to Capital Security Life Insurance Company (Capital) for the purpose of inducing Capital to issue such life insurance policies, and that in reliance on such applications Capital issued the requested policies, paid respondent moneys in the form of commissions, progress and persistency bonuses, and service fees, and was therefore defrauded of such sums of money.

In response, respondent filed a timely election of rights disputing the allegations set forth in the administrative complaint, and the matter was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At hearing, petitioner called Charles Hall, Carol Sheridan and Russell Butts as witnesses, and its exhibits 1-56 were received into evidence.

Respondent did not appear at hearing, and no evidence was offered on his behalf.

The transcript of hearing was filed February 10, 1995, and the parties were accorded ten days from that date to file proposed recommended orders.

Petitioner elected to file such a proposal, and the proposed findings of fact contained therein are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. At all times pertinent hereto, respondent, James Brian Cantwell, was licensed by petitioner, Department of Insurance and Treasurer (Department) as an insurance agent.

   
   

2. At all times pertinent hereto, respondent was, pursuant to a written agreement of appointment dated January 11, 1993, appointed as an agent for Capital Security Life Insurance Company (Capital) to solicit applications for insurance on behalf of Capital. In exchange therefor, Capital obligated itself to pay respondent such commissions, progress and persistency bonuses, and service fees due under its schedule of compensation for policies issued as a result of applications submitted by respondent.

   
   

3. Following respondent's resignation in October 1993, Capital undertook an audit of respondent's accounts. Such audit revealed that between March 17, 1993, and September 23, 1993, respondent submitted to Capital fifty applications for insurance in the name of fictitious or non-existent persons, and that in reliance on each application Capital had issued a policy of insurance and had paid respondent the total sum of $4,035.09 in first-year commissions, progress and persistency bonuses, and service fees for securing such policies. 1/

   
   

4. Such audit further demonstrated that each of the fifty policies lapsed following issuance due to nonpayment of premium. As a consequence, Capital lost the premiums it would have earned had the policies been predicated on legitimate applications and had they remained in effect; however, the value of that loss is not of record. The out-of-pocket loss to Capital as heretofore noted, of

   $4,035.09, has, however, been established.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Sections 120.57(1) and 120.60(7), Florida Statutes.

   
   

6. At issue in this proceeding is whether respondent submitted fraudulent applications to Capital for the purposes of inducing it to issue life insurance policies and, consequently, pay him commissions, progress and persistency bonuses, and service fees, in violation of the provisions of Sections 626.611(4), (7), (9) and (13), 626.621(2) and (6), 626.9541(1)(k)1 and 626.989(1), Florida Statutes, as alleged in the administrative complaint. In cases of this nature, the petitioner bears the burden of proving its charges by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). "The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established." Slomowitz v. Walker, 492 So.2d 797, 800 (Fla. 4th DCA 1983).

7. Moreover, in determining whether the pertinent law has been violated, one "must bear in mind that it is, in effect, a penal statute . . . This being true, the statute must be strictly construed and no conduct is to be regarded as included within it that is not reasonably proscribed by it. Furthermore, if there are any ambiguities included such must be construed in favor of the . . . licensee." Lester v. Department of Professional and Occupational Regulations,

   348 So.2d 923, 925 (Fla. 1st DCA 1977). Finally, the disciplinary action taken can be based only upon the facts specifically alleged in the administrative complaint. See, Kenny v. Department of State, 501 So.2d 129 (Fla. 5th DCA 1987), and Hunter v. Department of Professional Regulation, 458 So.2d 842 (Fla. 2d DCA 1984).

   
   

8. Here, the administrative complaint charges that respondent's conduct violated the following statutory provisions:

   
   

   626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's, or claims investigator'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 person,

   if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:

   * * *

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

   * * *

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

   * * *

   (9) Fraudulent or dishonest practices in the

   conduct of business under the license or appointment.

   * * *

   (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 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's, or claims investigator's license or appointment.-- The department may, in its discretion, deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, solicitor, adjuster, customer

   representative, service representative, managing general agent, or claims investigator, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

   * * *

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

   * * *

   (6) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to

   be a source of injury or loss to the public or detrimental to the public interest.

   
   

   626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.--

   (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

   * * *

   (k) Misrepresentation in insurance applications.--

   1. Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance

   policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

   
   

   626.989 Division of Insurance Fraud; definition; investigative, subpoena powers; protection from civil liability; reports to division; division investigatory's power to execute warrants and make arrests.--

   (1) For the purposes of this section, a person commits a "fraudulent insurance act" if he knowingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief

   that it will be presented, to or by an insurer, self-insurer, self-insurance fund, servicing corporation, purported insurer, broker, or any agent thereof, any written statement as part of, or in support of, an application for the issuance of, or the rating of, any insurance policy, or a claim for payment or other benefit pursuant to any insurance policy, which he knows to contain materially false information concerning any fact

   material thereto or if he conceals, for the purpose

   of misleading another, information concerning any fact material thereto.

   
   

9. Here, the Department has demonstrated by clear and convincing evidence that respondent did, on fifty separate occasions between March 17, 1993, and September 23, 1993, submit fraudulent applications to his principal, Capital Security Life Insurance Company, for the purpose of inducing it to issue life insurance policies and, consequently, pay him commissions, progress and persistency bonuses, and service fees to which he was not entitled. Such conduct violates the provisions of Sections 626.611(4), (7), (9) and (13), 626.621(2) and (6), 626.9541(1)(k)1 and 626.989(1), Florida Statutes, as alleged in the administrative complaint.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a final order revoking the licenses

and eligibility for licensure of respondent, James Brian Cantwell.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 1st day of March 1995.

WILLIAM J. KENDRICK

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 1st day of March 1995.

ENDNOTE

1/ No useful purpose would be served in addressing each of the fifty applications (Counts 1-50) individually. Suffice it to observe that Capital's audit demonstrated clearly and convincingly that each of the applications referenced in Counts 1-50 of the administrative complaint, which were submitted to it by respondent, were fraudulent.

APPENDIX

The Department's proposed findings of fact are addressed as follows:

1 & 2. Addressed in paragraph 1.

3 & 4. Addressed in paragraph 2.

5 & 6. Addressed in paragraph 3.

7-207. Addressed in paragraphs 4 and 5, as well as endnote 1.

Otherwise unnecessary detail.

COPIES FURNISHED:

Allen R. Moayad, Esquire Department of Insurance

and Treasurer, Division of Legal Services

612 Larson Building

Tallahassee, Florida 32399-0300

James Brian Cantwell 4356 Northwest 5th Ave.

Pompano Beach, Florida 33064

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Dan Sumner

Acting 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 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 94-003731

Orders for Case No: 94-003731