STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 94-5263

)

LARRY DENSMORE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on June 22, 1995 in Melbourne, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Department of Insurance 612 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Charles J. Grimsley, Esquire

1880 Brickell Avenue

Miami, Florida 33129 STATEMENT OF THE ISSUES

Whether Respondent's insurance agent license and eligibility for licensure should be disciplined for the alleged violations of the Florida Insurance Code as set forth in the Administrative Complaint.

PRELIMINARY STATEMENT

The Petitioner filed a one-count Administrative Complaint charging Respondent, a Florida insurance agent licensed by Petitioner, with violations of various provisions of Chapter 626, Florida Statutes, and sought to impose disciplinary sanctions against Respondent's licenses and eligibility for licensure. The Complaint was served on Respondent on August 29, 1994 and he filed a Response, an Election of Rights and a request for a formal hearing, pursuant to Section 120.57(1), Florida Statutes on September 15, 1994. This matter was forwarded to the Division of Administrative Hearings on September 20, 1994 and this proceeding followed. This cause was set for hearing, but continued in order to permit newly retained counsel adequate time to prepare for hearing.

At the formal hearing, Petitioner presented the testimony of five (5) witnesses, and eleven (11) documents were admitted in evidence. Respondent testified in his own behalf and presented the testimony of one witness, and submitted one (1) exhibit in evidence. The hearing was recorded and the transcript was filed on July 11, 1995. By stipulation, the parties agreed to file proposed findings of fact and conclusions of law on or before July 28, 1995. Both parties timely filed their proposed orders which have been carefully reviewed in the preparation of this order. My specific rulings on the parties' proposals are set forth in the Appendix attached hereto.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Department of Insurance, is the state agency charged with the responsibility of licensing and monitoring the business activities of insurance agents to assure statutory compliance with the Florida Insurance Code.

   
   

2. The Respondent, Larry Densmore, is currently eligible for licensure and is licensed in this state as a life insurance agent, life and health insurance agent, health insurance agent, and variable annuity contracts salesman, and was so licensed at all times relevant to these proceedings.

   
   

3. The Respondent at all times relevant to these proceedings was licensed in this state to solicit insurance on behalf of Travelers Insurance Company (Travelers).

   
   

4. On or about November 15, 1992, the Respondent visited the offices of American Business Interiors of Melbourne, Florida (ABI) for the purpose of soliciting a Travelers Insurance group health care insurance plan.

   
   

5. ABI elected to purchase the group health insurance plan being solicited by Respondent. The Respondent left applications at the company for each employee to complete.

   
   

6. ABI distributed the application forms to its employees and collected them after they had been completed so that Respondent could submit the entire application package to Travelers.

   
   

7. Each employee, including Sara Perrers, Jo Anne Wallace, and Santiago Jusino, filled out the application completely and truthfully, fully disclosing any and all preexisting health conditions they may have had. Sara Perrers disclosed on her application that she had suffered in the past from a carcinoma of the cervix and had undergone treatment for depression.

   
   

8. Pre-existing medical conditions of an applicant would affect whether or not an insurance policy would be issued as well as the amount of premium charged. The Respondent knew or should have known this fact.

   
   

9. After being notified that the employee applications had been finished, the Respondent returned, collected the applications and took them to his office to complete the application package.

   
   

10. ABI made and retained a copy of each original application for its own records. At no time did the Respondent ever actually meet any of the prospective insureds.

11. Respondent was working on five (5) proposals simultaneously with the ABI proposal. He completed a total of three (3) Travelers' group health insurance submissions which included ABI's proposal and forwarded them to the Travelers' processing centers in Minneapolis, Minnesota and Naperville, Illinois in mid-November, 1992.

    
    

12. Upon review of ABI's employees applications, Respondent recognized that four of them disclosed pre-existing medical conditions. Respondent completed an application form for four (4) ABI employees, affixed their names and signatures to the applications and submitted them to Travelers for processing.

    
    

13. The applications submitted by the Respondent failed to disclose to Travelers the pre-existing medical conditions of four ABI employees. Other information contained in the applications of Jo Anne Wallace and Sara Perrers was also inaccurate. The Respondent submitted these substitute applications without the knowledge or consent of the four employees and with their signatures fraudulently affixed thereto.

    
    

14. The substituted applications submitted by the Respondent contained false information and were a material misrepresentation of fact, which resulted in the issuance of insurance coverage which may or may not have otherwise been issued.

    
    

15. Based solely upon the information contained in the applications submitted to Travelers by the Respondent, the group health insurance plan was duly issued to ABI.

    
    

16. The Respondent received a commission.

    
    

17. In the latter part of June, 1993, Sara Perrers received a letter from the Travelers dated June 23, 1993. It stated that she had failed to disclose certain health conditions, including her treatment for depression, on her insurance application. Sara Perrers' insurance coverage was rescinded for non- disclosure of the health conditions.

    
    

18. Had Travelers been aware of Sara Perrers' true health history, American Business Interior's group policy would not have been issued.

    
    

19. Understandably perplexed and concerned, ABI contacted the Respondent. The Respondent first represented that it was only a simple mistake and that he would look into it. Several days later, however, the Respondent came to ABI and asked to meet with Jack Drudy, the company comptroller, and Ralph Perrers, the company president as well as Sara Perrers' father, in order to discuss Sara Perrers' insurance.

    
    

20. Sara Perrers, in the meantime, had several medical claims that were unpaid because her health insurance had been cancelled. The Respondent paid these claims from his own private funds.

    
    

21. Ralph Perrers contacted Travelers about the Respondent's conduct. Travelers, upon investigation, did not consider Sara Perrers to be responsible for what had happened and reinstated her insurance.

    
    

22. The Respondent's assertions that the true applications were lost in the mail and that he was directed by an unknown Travelers underwriter to mail in

    the substituted applications with the unauthorized signatures for "identification purposes only" is unsupported by the evidence.

    
    

23. Travelers' policy does not allow agents to sign applicant's names to applications and the company underwriting guidelines reflect this. Only the applicant can sign his or her signature. If an application is lost, a new original application with the applicant's original signature must be procured. Copies are not acceptable.

    
    

24. Respondent has been a licensed insurance agent for over seventeen years and has not previously been disciplined by the Department.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

26. The standard of evidence to discipline an insurance license is that of clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

27. The following provisions of Chapter 626, Florida Statutes are relevant. The provisions provide as follows in pertinent part:

    
    

    626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, solicitor's, or adjuster's license or service representative's, supervising or managing general agent's or claims investigator's permit.

    * * *

    (5) Willful misrepresentation of any insurance policy 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.

    * * *

    1. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in

       the transactions authorized by the license or permit.

    3. Fraudulent or dishonest practices in the conduct of business under the license or permit.

    * * *

    (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, or adjuster's license or service representative's, supervising or managing general agent's, or claims investigator's permit.

    * * *

    (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.

    * * *

    (6) In the conduct of business under the license

    or permit, 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.

    * * *

    626.9521 UNFAIR METHODS OF COMPETIION AND UNFAIR

    OR DECEPTIVE ACTS OR PRACTICES PROHIBITED, PENALTIES -

    1. No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 626.951 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.

    2. Any person who violates any provision of this part shall be subject to a fine . . ..

    626.9541(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:

    (e) False statement and entries.--

    1. Knowingly

    1. Filing with any supervisory or other public official,

    2. Making, publishing, disseminating, circulating,

    3. Delivering to any person.

    4. Placing before the public,

    5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,

    any false material statement.

    
    

28. The Respondent knowingly and willfully misrepresented the insurance plan to the insureds by representing that all employees were eligible for insurance coverage.

    
    

29. Furthermore, the Respondent submitted applications without the knowledge or consent of the applicants to the insurance company. The applications contain false information and unauthorized and unauthentic signatures. These were material misstatements and misrepresentations made to Travelers as well as ABI. They resulted in the issuance of a group insurance policy which would not have otherwise been issued. It also resulted in the subsequent cancellation of Sara Perrers' policy and her loss of health insurance when the misrepresentations were discovered.

    
    

30. This conduct is a violation of Sections 626.611(5) and 626.9541(1)(e)1, Florida Statutes.

31. Respondent's conduct in its entirety indicates a lack of trustworthiness to sell insurance and is therefore a violation of Section 626.611(7), Florida Statutes.

    
    

32. Respondent's conduct in its entirety is dishonest and is therefore a violation of Section 626.611(9), Florida Statutes.

    
    

33. The Respondent's conduct in its entirety caused injury to Sara Perrers and is a detriment to the people of this state and is therefore a violation of Section 626.621(6), Florida Statutes.

    
    

34. Respondent's testimony in relation to his purpose and intent when he submitted the applications that he signed himself is not credible. The relevant policy file at the Travelers contains no notation or other evidence that the Respondent ever contacted the company at the time the original applications were submitted. No evidence was offered to indicate that Respondent made a search for the originals in November 1992; and neither ABI nor the applicants were asked by Respondent to re-submit valid forms. Respondent then failed to disclose the fact that he submitted substitute applications until a claim was submitted approximately six months later.

    
    

35. The evidence establishes that the actions of the Respondent violate the statutory sections cited herein.

    
    

36. Rule 4-231.030(6), Florida Administrative Code, sets forth the range of penalties appropriate in this case. Rule 4-231.160, Florida Administrative Code, sets forth aggravating and mitigation factors to be considered in determining penalties. There are no mitigating factors. Aggravating factors include the willfulness of the Respondent's conduct, the injury to the victim, motivation of the Respondent, and financial gain of the Respondent.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED as follows:

1. The Respondent, Larry Densmore, be found guilty of violations Sections 626.611(5), (7), (8), (9), 626.621(6), and 626.954(1)(e)1., Florida Statutes.

   
   

2. Pursuant to Rules 4-231.080 and 4-231.090, Florida Administrative Code, Respondent's licenses and eligibility for licensure be SUSPENDED for a period of one year, followed by a two year period of probation upon such reasonable conditions as the Commissioner may require.

DONE and ENTERED this 30th day of August, 1995, in Tallahassee, Florida.

DANIEL M. KILBRIDE

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 30th day of August, 1995.

APPENDIX

The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties.

Proposed findings of fact submitted by Petitioner.

Accepted in substance: paragraphs 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 12, 13,

14, 15, 16, 18 (in part), 19, 20, 21.

Rejected as not supported by clear and convincing evidence: paragraph 6.

Rejects as subsumed or irrelevant and immaterial: paragraphs 17, and 18 (in part).

Proposed findings of fact submitted by Respondent.

Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8 (in part), 10,

18, 27 (in part), and 28 (in part).

Rejected as not supported by credible evidence: paragraphs 8 (in part), 14, 15, and 16.

Rejected as subsumed or irrelevant and immaterial, paragraphs 9, 11, 12, 24, 25, 26, 27 (in part), 30, and 31.

Rejected as a comment on the evidence, conclusion of law or argument paragraphs 13, 17, 19, 20, 21, 22, 23, 24, 28 (in part) and 29.

COPIES FURNISHED:

James A. Bossart, Esquire Department of Insurance 612 Larson Building

Tallahassee, Florida 32399-0300

Charles J. Grimsley, Esquire 1880 Brickell Avenue

Miami, Florida 33129

Bill Nelson

State Treasurer and Insurance Commissioner

Department of Insurance and Treasurer 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 the 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 consult with the agency that will issue the final order in this case concerning their 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: 94-005263

Orders for Case No: 94-005263