STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
vs. ) CASE NO. 95-2690
)
DANIEL LEE ALISON, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Administrative Law Judge of the Division of Administrative Hearings, on January 10, 1996 and March 12-13, 1996, in Pensacola, Florida.
APPEARANCES
For Petitioner: Michael K. McCormick, Esquire
Department of Insurance Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0300
For Respondent: Charles J. Grimsley, Esquire
Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue
Miami, Florida 33129 STATEMENT OF THE ISSUES
The issues to be resolved in this proceeding concern whether the Respondent's licensure and appointment as a general lines insurance agent should be revoked, suspended, or whether other discipline should be imposed for purported violations of various provisions of Chapter 626, Florida Statutes, as delineated below.
PRELIMINARY STATEMENT
This cause arose upon the filing of an Administrative Complaint by the Petitioner, Department of Insurance (Department), alleging that the Respondent was guilty of various violations of Chapter 626, Florida Statutes, and that discipline for such violations should be imposed against his licensure. The allegations were denied by the Respondent, and a formal hearing was requested. The case was forwarded to the Division of Administrative Hearings and the undersigned Administrative Law Judge.
An Amended Administrative Complaint was filed, which alleged in 14 separate counts that the Respondent unlawfully sold "motor club memberships" or ancillary
coverages or products without the informed consent of the insureds purchasing insurance coverage at the time. It also alleges that the Respondent made false and misleading statements regarding coverages provided; falsely represented that fees for ancillary coverages were "insurance premiums"; illegally required insureds to purchase such motor club memberships as part of their automobile insurance purchase; failed to timely forward insurance applications and premiums to the insurers; and failed to properly cancel coverage when requested by the insureds.
In 11 of its counts, the Amended Administrative Complaint alleges that the Respondent engaged in the prohibited practice of "sliding" or adding additional coverages or products to an insurance package purchased by the insured without the informed consent of the applicant insured. In essence, in this regard, the Petitioner contends that the Respondent engaged in a regular business practice of including applications for unrequested coverages or for unrequested non- insurance ancillary products in with numerous other paper forms necessary for an insurance applicant to sign in order to effectuate the requested insurance coverages. He is said to have done this with the knowledge that most insureds do not closely read technical insurance-form language and typically trust and rely upon the agent's verbal assurances and explanations regarding the coverages they are purchasing, including reliance that the agent will only sell them what they have actually requested.
The cause came on for hearing as noticed. The Petitioner offered the testimony of 13 witnesses and eight composite exhibits, which were admitted into evidence. Additionally, the depositions of Christopher Camus, Laura O'Donohue, Terre Thompson, and Thomas A. Harris were admitted into evidence. The Respondent testified on his own behalf, called two witnesses, and had six exhibits admitted into evidence.
Subsequent to the hearing, the parties obtained a transcript thereof and agreed upon an extended briefing schedule. Thereafter, they agreed upon an additional extension of the time to submit Proposed Recommended Orders.
Proposed Recommended Orders were thereafter timely submitted.
Additionally, two Motions to Strike were filed by the parties after the filing of the Proposed Recommended Orders. The Respondent's Motion to Strike "excessively argumentative commentary in Petitioner's proposed findings of fact is granted, except where use of such adjectives as "misleading" or "deceptive" are taken from the relevant statutes or are contained in and a necessary part of the findings of fact of the Administrative Law Judge, as, for instance, because they are descriptive of the statutorily-proscribed conduct. The Petitioner's Motion to Strike the Notice of Supplemental Authority filed by the Respondent is denied, as the filing was not prejudicial and was helpful. The proposed findings of fact made by the parties are addressed in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein.
FINDINGS OF FACT
The Respondent is a licensed insurance agent licensed in the State of Florida as a general lines agent. He was the primary agent of Emerald Coast Insurance Agencies, Inc. (Agency) for Pensacola, Florida. The agency at all times pertinent to the events and times treated in the Amended Administrative Complaint was a general lines insurance agency incorporated under the laws of the State of Florida.
The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of insurance and regulating the practice of agents and other insurance professionals already licensed by the State of Florida, including the imposition of disciplinary measures.
The Respondent had been an insurance agent, as of the time of the hearing, for approximately four years. During that time, he has typically written 50-60 applications for automobile insurance and related coverage per week. The owner of the Agency would not allow the Respondent to issue checks from the Respondent's own office. All processing of insurance application files was completed at the Tallahassee, Florida office. The files with client information for insurance applicants, whose business was initiated by the Respondent, was sent by UPS to the Tallahassee, Florida office on the morning following the taking of the applications.
The forms, which the Respondent was required to have completed and asked customers to sign, were pre-printed and issued from the Tallahassee, Florida office. The Respondent had no part in the creation of these forms as to content, format, and the disclosures depicted on their face. The Respondent inquired of the Department's local office as to whether the forms comported with pertinent statutes and regulations, and the Department expressed no objection to them. Indeed, the forms in question do make disclosures of the coverage or products which the customer is purchasing and contain an acknowledgment, which the customer is required to sign, indicating that the coverage has been explained to the customer. In particular, the motor club product is depicted on the relevant form as being an optional product and that it has been explained to the customer, with a blank after that pertinent statement for the customer to sign an acknowledgment of that fact.
The issue in this case does not involve whether the customer paid for such a product without executing any consent but, rather, whether the customer was misled or whether the products sold were actually, in fact, explained fully to them; whether they were misled in making a decision to buy such coverage in the belief that it was required in order to obtain the insurance they knew they needed.
THE TRANSACTIONS AT ISSUE
No evidence was submitted as to Count I, concerning Cheryl Ginsterblum nor Count VIII, concerning Joseph Shelton. Therefore, no findings of fact can be made and these counts should be dismissed.
Pam Shivers of Gulf Breeze, Florida, required insurance coverage for her 1988 Dodge Caravan. Because the van was still financed with a lender, "full coverage" was required, that is, she needed personal injury protection (PIP), property damage (PD) coverage, comprehensive risk coverage, and collision damage coverage. On March 8, 1993, she went to the Respondent's Agency, and the Respondent handled the requested insurance transaction. She requested "full coverage", and the transaction was handled while she was standing at the counter, in just a few minutes.
PIP and PD insurance was placed with Security Insurance Company of Hartford (Security). Comprehensive and collision coverage was placed with Florida International Indemnity Company (FIIC). The premium for Security was
$350.00, and the premium for FIIC was $399.00. The purchase of this coverage was financed so that Ms. Shivers would not have to pay the entire $749.00
premium for all of the coverage at one time. In return for the premium financing arrangement, a $187.00 down payment was required for the insurance coverage. During the transaction, Ms. Shivers was quickly presented with approximately six documents to sign. Included in those documents was a document containing a disclosure that the motor club product which she purchased was optional, that is, not required by law; that she had been offered to purchase automobile insurance by the Agency without an optional motor club and chose to purchase that optional coverage of her own free will at an additional cost of
$150.00; that she examined the benefits being offered, and that it was her decision to request enrollment as a member of the motor club association.
It is true that Ms. Shivers signed these acknowledgments and disclosures, which on their face, would indicate that she had been informed about the nature of the motor club product or coverage and its cost, including the fact that it was not required by law and was optional. In fact, however, her apparent consent was not an actual, knowing and informed consent. She was presented with the six documents to sign hurriedly, with the places to sign simply marked for her to make quick signatures. She did not, in the course of the transaction, have significant time to read the documents or reflect on what she was signing, what her signatures obligated her for, and what specific products she was purchasing. She was not, in actual fact, informed that she was purchasing a motor club membership. She did not request that product, and the Respondent did not give her any actual explanation about it. She was not informed that she had any choice in whether or not to take that product. She later discovered that the product was optional and that it was, therefore, not an integral, unseverable part of the insurance coverage she did want to purchase. Moreover, Ms. Shivers was confused about the $749.00 premium quote and the amount she was actually required to pay.
Her confusion involved the $749.00 premium for insurance quoted to her because of the fact that she was actually required to pay an $899.00 purported "premium". The receipt issued at the end of the purchase transaction indicated a total "premium" of $899.00. In fact, however, the actual cost of the insurance was $749.00. The additional $150.00 was for a motor club membership which was hidden in the receipt amount and what was represented on the receipt as a "total premium". The down payment of $337.00 quoted to her was also deceptive because actually, only $187.00 of that was the down payment on the actual insurance coverage premium. This is shown by the premium finance agreement in evidence. The Respondent had concealed the cost of the motor club membership within what was purported to be the total insurance premium amount reflected on the receipt and included the entire $150.00 charge for that membership within the down payment, simply and misleadingly calling the down payment of $337.00 as the down payment on insurance coverage.
Thereafter, on March 21, 1993, Ms. Shivers went back to the Agency to cancel her insurance, related to the fact that her vehicle had been involved in an accident. Upon doing that, she left thinking that her insurance had been effectively cancelled. Later, she received notices from the premium finance company but was told by the Respondent to ignore them. On May 7, 1993, however, the Respondent informed her that she had to come back to the Agency and fill out a cancellation request. Thus, 47 days after she had attempted to cancel her coverage, her request was finally processed by the Agency. In the meantime, she was apparently being charged for premiums on the coverage she thought she had cancelled. Thus, from January 21, 1994, the premium finance company turned an amount it claimed was due of $43.26 over to its attorney for collection purposes, which impinged on Ms. Shivers' credit standing. She had already paid the Respondent $190.00 in premiums under the premium financing agreement, with
her down payment, but did not receive any returned unearned premium representing the period after she thought she had cancelled her policy but, instead, was billed the additional $43.26 directly due to the Respondent's 47-day delay in processing her cancellation request.
Count III
In June, 1993, Laura O'Donohue of Pensacola, Florida, purchased her first vehicle, a 1993 Chevrolet Cavalier. The automobile dealership, where she purchased the vehicle, gave her a card for the Respondent's insurance agency. Therefore, never having established a relationship with an insurance agency, she went to that Agency to purchase insurance. Her mother, Lynn O'Donohue, accompanied her to the Agency. Before coming to the Agency while at the automobile dealership, she had received a quote for the insurance she wanted from the Agency. When she arrived at the Agency, she informed Donald Grubb, an employee of the Agency and the Respondent, that she just wanted "basic coverage".
This was the first time she had purchased insurance, and she relied entirely for her decisions regarding that upon the representations of the Respondent and his colleague. Therefore, in a transaction, which took approximately 20 minutes, the Respondent and/or Mr. Grubb assisted her in filling out the paperwork required to place the insurance coverage she requested.
During the course of the brief insurance purchase transaction, Ms. O'Donohue learned that she would be required to pay a higher premium amount than the quote she had received from the Agency while she was at the automobile dealership earlier that day. This is consistent with the Agency's custom and practice, established by former agent, James Self's, testimony to the effect that motor club coverage was typically added to the normal insurance coverage requested by customers, which resulted in higher purported "premium" quotes and charges than had initially been quoted to the customer, typically by telephone, before a customer came to the Agency office. When Ms. O'Donohue and her mother arrived at the Agency after having received the lower quote earlier, they were thus not prepared to pay the higher amount of the so-called premium.
Ms. O'Donohue did not need a motor club because, through her mother, she was covered by AAA Motor Club for towing and other benefits. She had no knowledge that she had purchased a motor club product from the Respondent. All of the documents were presented to her, in response to her request for just basic insurance coverage, in the context that this was what the law required her to have and what she needed. She totally relied, as did her mother, upon the representations of the Respondent and his agent or employee, Mr. Grubb, concerning what the law required and what she needed in the way of insurance coverage. The testimony of Ms. O'Donohue's mother, Lynn O'Donohue, confirms the fact that they had no intent to purchase towing coverage or "auto club" because they already had a membership with AAA and wanted to pay nothing extra other than the basic insurance coverage.
The Respondent or his agent or employee, Mr. Grubb, indicated, as shown on page 91 of the transcript, that "towing was all part of it", that is, they meant that the basic insurance package sought by Ms. O'Donohue included towing as part of its coverage. In fact, that was not the case, and the motor club product was clearly optional, at extra cost, and not legally required. Ms. O'Donohue purchased it unknowingly, based upon the representations and business practice used by the Respondent in connection with her transaction, in spite of
the presence of her signatures on the disclosure portion of the application documents for the reasons referenced with regard to the Shivers transaction.
The insurance requested was placed with two insurance companies. The PIP and PD were issued by Security at a premium of $223.00. The comprehensive and collision coverage was placed with General Insurance Company (General) at a premium of $411.00. Thus, the premiums for actual insurance coverage, which is all Ms. O'Donohue wanted, totaled $634.00. That was financed by the ETI Premium Finance Company (ETI) on periodic installment payments, with a required down payment of $127.00. The Respondent, however, required Ms. O'Donohue to make a down payment of $277.00 on a purported total premium due of $784.00. This amount, unbeknownst to Ms. O'Donohue, happened to include a motor club purchase (Atlantic Travel Association), which cost $150.00, thus, the difference between the $634.00 actual insurance premium and the $784.00 purported premium due. The
$150.00 fee for motor club benefits was concealed in the "total premium" amount falsely represented to the customer by the Respondent.
The deceptive and misleading nature of this transaction is further pointed out by the form of the receipt issued to Ms. O'Donohue upon consummating the transaction. That receipt indicates that the "total premium" is $784.00. Actually, the cost of the insurance was only $634.00, as referenced above, and the additional $150.00 of that purported total premium amount was the motor club fee. Likewise, the down payment quoted to her of $277.00 was deceptive because only $127.00 of that was applied to the actual insurance coverage. The remaining amount was the motor club fee which the agent collected in its entirety at the beginning of the transaction, as part of the down payment, while the insurance premiums, in excess of the $127.00 actual down payment for insurance, were financed through ETI. The Respondent did this because, by collecting all of the motor club fee in a lump sum at the outset of the transaction, he could get his entire commission immediately. His motor club sales commission was at a considerably higher rate than the commission he earned on the sale of insurance itself. In fact, his commission was 90 percent of the
$150.00 motor club fee.
Since Ms. O'Donohue did not have the entire $277.00 at the time of the transaction, because she had been relying on the lower quote for the insurance given to her over the telephone, she only paid $200.00 down payment at the time of the transaction, with a balance owed of $79.00, as reflected on her receipt.
Her mother had reservations concerning the purchase of this insurance from the Respondent and told her daughter that she thought that because the insurance she purchased involved financing the premium, she could save money by going to GEICO insurance company. Therefore, the following day, she went to GEICO and secured new coverage at a lower premium rate and then called the Respondent's Agency to confirm that she could cancel her policy, with no penalty. They replied that she could cancel her policy just so long as she brought them proof that she had secured new insurance, since the law presently does not allow them to cancel the coverage until they are shown proof that the insured has obtained other coverage. Ms. O'Donohue, therefore, went to GEICO, purchased new insurance for her vehicle, and then brought proof to the Agency and requested that the Respondent cancel her insurance. This request was made on June 19, 1993. At that time, she requested a refund of the $200.00 down payment which she had made two days before and was assured that she would receive it within 60 days. In fact, she never received a refund and continued to receive past-due and delinquency notices from ETI, the premium finance company. She notified the Agency of this problem on numerous occasions to no satisfaction. Due to ETI's belief that her coverage was still in force and that
they were still owed the premium payments, her credit was endangered. This was all directly related to the Respondent's failure to properly and timely process her cancellation request.
On June 20, 1993, Terre Thompson of Pensacola, Florida, also went to the Respondent's Agency to purchase insurance for her 1993 GEO Metro automobile. The Respondent met her at the automobile dealership, where she purchased the vehicle. He had already prepared documents for the purchase of insurance to be underwritten by Security and General, along with a premium financing agreement and other documents. He had marked X's where Ms. Thompson was supposed to sign all contracts and disclosure forms. The Respondent filled out all of the information on the documents and merely told her, in effect, to "sign here, here and here". The transaction was conducted very quickly and with little or no explanation of coverage or benefits.
Although Ms. Thompson needed full coverage for her vehicle, because it was financed, she did not want towing and rental benefits. The Respondent, however, gave her to understand that it was required in the coverage package she purchased. Accordingly, on June 20, 1993, she made a down payment of $100.00, with an additional amount due of $51.00 by June 27, 1993. Although the receipt was dated June 20, 1993, Ms. Thompson did not actually receive it until June 27, 1993, when she returned to the Respondent's Agency to pay the $51.00 owed.
The receipt falsely depicts that the "total premium" was $834.00. Actually, the cost of the insurance was only $754.00. The additional $80.00 was for a motor club product, although the $80.00 was buried in and represented to be part of the total insurance premium for the transaction. The down payment of
$231.00 quoted, likewise, was deceptive because only $151.00 of that was actually applied to insurance coverage, which was all of the coverage that Ms. Thompson had requested.
The Respondent collected the $100.00 on June 20, 1993 and entered into a financing arrangement with the customer, Ms. Thompson, for the $51.00 to be paid on June 27, 1993. In fact, this was only enough to cover the down payment for the actual insurance coverage because the Respondent forgot to include the fee for the motor club coverage on the "front end" or in the down payment, as was his normal practice. This is why Ms. Thompson became upset when she learned she owed an additional $71.00 when she returned on June 27, 1993, when she thought she had only owed approximately $60.00. In any event, the receipt finally received by her reflected payments of $100.00, $60.00, and $71.00, which totals $231.00. This amount includes the $151.00 down payment for actual insurance coverage and the remaining $80.00 for motor club membership, which Ms. Thompson did not know she had purchased at the time and did not desire to purchase.
Indeed, Ms. Thompson, and the other customers referenced in the Amended Administrative Complaint, who testified, signed the disclosure in the standard package of documents presented to them by the Respondent. It indicated that they acknowledged that the motor club benefit or the "nations safe driver" medical benefit was an optional coverage, not required by law and that, after explanation of it, they had elected to purchase it. In fact, they signed those documents, albeit imprudently, without actual knowledge that they were obtaining that coverage and without explanation that it was not legally required. No disclosure was made to them that the purported "total premium" amount actually included payment for the motor club benefit, which was not actually part of the insurance premium and which, at least in the case of those customers with AAA memberships, was totally unnecessary.
Timothy Malden of Jacksonville, Florida, purchased a vehicle on or about August 31, 1993. He needed full coverage because the vehicle was financed, that is, he needed PIP, PD, comprehensive coverage, and collision coverage. He went to the Respondent's Agency on that date to purchase coverage on his 1986 Pontiac Fiero. During the course of the transaction, handled by the Respondent, Mr. Malden was asked if he had motor club coverage or benefits and he told the Respondent that he had AAA membership and showed the Respondent his AAA card.
The Respondent and Mr. Malden entered into a transaction to sell Mr. Malden insurance. The transaction involved approximately seven different documents and took a total of about 15 to 20 minutes. Mr. Malden merely signed the documents. The Respondent told him that he just needed his signature on the documents and the Respondent did not explain the coverage. The procedure seemed rushed or hurried to Mr. Malden.
Although Mr. Malden signed the disclosure (inadvertently, because apparently he did not read it) stating, in effect, that the motor club coverage was optional, not required and that after having it explained to him, he had decided to purchase it, he, in fact, did not know at the time that he had purchased the motor club coverage and it had not been explained to him. Moreover, as stated above, he had explained to the Respondent that he did not need it because he already had AAA motor club coverage. Nevertheless, the Respondent, knowing that Mr. Malden had AAA, still sold him the motor club coverage with the Atlantic Travel Association for an additional fee of $150.00. Mr. Malden made no informed consent to purchase that benefit.
The PIP and PD coverage was placed with Security at a premium of
$395.00. The comprehensive and collision coverage was placed with Continental American Insurance Company (Continental) for a premium of $525.00. The total premium for "insurance" was $920.00, with a $230.00 down payment. The premiums were financed by ETI. Mr. Malden, however, was required to pay a "down payment" of $380.00. The receipt issued to him reveals a "total premium" of $1,070.00.
The actual cost of insurance was only $920.00. The additional $150.00 was for motor club coverage, and the charge for that was hidden in what was represented on the receipt as "total premium". Likewise, the down payment of $380.00 was deceptive in nature because only $230.00 of it was actually a down payment for insurance coverage. The remainder of it, as explained above with regard to the other customers, was actually full payment for the unnecessary, unwanted motor club benefit.
On March 8, 1994, Karen Sigler of Pensacola, Florida, went to the Agency to purchase automobile insurance for a 1990 Plymough Voyager. She stated to the Respondent that she only wanted the minimum automobile insurance required by Florida law. She told the Respondent that she needed new insurance because her previous insurance company had gone out of business. The Respondent handled the transaction for her and she specified that she wanted only that coverage which the State of Florida required.
Ms. Sigler had been originally quoted a $324.00 premium amount. When she actually entered into the insurance transaction, however, an additional
$65.00 was added on to that amount because the Respondent sold her an additional "Nations Safe Drivers, Inc." enrollment. This is not an insurance product but, rather, is a form of supplemental medical benefit. Ms. Sigler had not requested this and did not understand the nature of it, believing that it was unnecessary because she was already qualified as a "safe driver" based upon her driver's
record. She was given no explanation as to what that enrollment form, and benefit was nor that there was an extra charge for it. Even as reflected on the enrollment form, Ms. Sigler merely thought that the Nations Safe Drivers membership was a part of the required insurance purchase package. This is not true, in fact, since only PIP and PD coverages are required by law. Ms. Sigler was thus sold a product she did not request, which was not required by law and which was not explained to her. The entire transaction took approximately one- half hour.
The receipt issued to Ms. Sigler shows that the "total premium" was
$324.00. In fact, however, the actual cost of insurance was a $259.00 premium. The additional $65.00 of the $324.00 amount was the fee for the Nations Safe Drivers membership, which was hidden in what was represented as a "total premium". Moreover, the down payment she paid of $98.00 was deceptive because only a part of it was applied to automobile insurance coverage and the remainder was the fee for the Nations Safe Drivers membership. The Respondent's business practice in this regard resultingly misled Ms. Sigler into believing that Nations Safe Drivers, Inc. was required by State law and that it was an insurance product, which it was not. Here, again, in spite of the disclosure she signed and the documents that she was hurriedly urged to execute by the Respondent, the clear and convincing evidence shows that she did not actually, knowingly consent to purchase the extra non-insurance product referenced above. The Respondent's business practice, the way he represented the nature of her insurance coverage and in the manner in which he conducted the transaction did not involve an actual explanation of the non-insurance product he misled her into purchasing. Thus, there was no informed consent to purchase that product.
Rosa Johnson went to the Respondent's Agency on March 21, 1994. She wanted to purchase the "minimum" automobile insurance required by State law for her 1971 Plymouth. She dealt with the Respondent and another gentleman who worked under the Respondent's direction and control. She told them she only wanted the basic, legally-required coverage. PIP and PD coverage was issued through Security. Ms. Johnson was also sold the Nations Safe Drivers product. This product was not actually explained to her, in spite of the fact that she may have signed a written disclosure that it had been, including the fact that it was an optional benefit and not part of the legally-required insurance coverage. She did not request this product nor was it explained to her so that its meaning and coverage was understood by her.
Upon conclusion of the transaction, Ms. Johnson had purchased PIP and PD coverage from Security for a premium of $248.00, plus an unrequested enrollment in Nations Safe Drivers, Inc. for a fee of $35.00. All of this amount was financed by ETI.
Here, again, as with the other customers, the receipt furnished to Ms. Johnson indicates a total "premium" of $283.00. The actual cost of insurance or true premium was $248.00. The additional $35.00 of the $283.00 amount was the cost of the Nations Safe Drivers, Inc. product, which was hidden in what was represented to her on the receipt as the "total premium". Likewise, the purported down payment of $85.00 was deceptive in the manner in which it was presented and required of Ms. Johnson, because only part of it was applied to insurance coverage, the remainder being the $35.00 fee for the added non- insurance product referenced above.
The Respondent's authority to bind coverage with Security Insurance Company had been terminated on March 14, 1994 due to excessive late submissions of insurance applications to the carrier. The problem was later alleviated and
his authority to bind insurance for Security was restored by that company. However, during the period of time his binding authority had been terminated, the Respondent kept taking applications and binding policies. This caused the insureds to believe that they had coverage when, in fact, they did not, because the carrier, Security, through its managing agent, U.S. Underwriters, did not, for a period of time, allow the Respondent to obligate that company for coverage. Accordingly, in due course, Ms. Johnson was notified by U.S. Underwriters, on behalf of Security, that she had no coverage. She became upset and filed a complaint with the Insurance Commissioner because she had understood that as soon as the transaction with the Respondent was completed, her coverage had been bound and timely filed and processed with the underwriting insurance carrier.
Charles Meadows of Gulf Breeze, Florida, required insurance on his 1986 Chrysler LeBaron. He wanted to purchase the minimum amount of legally- required coverage and went to the Respondent's Agency for that purpose on May 17, 1994. He needed the minimum amount of legally-required insurance so that he could obtain a tag for his automobile from the county tag office. He was in a hurry because he had taken leave from work and needed to get his insurance transaction consummated, as well as to obtain his automobile tag before 4:30
p.m. He conferred with a lady who was employed by the Respondent at the Agency who handled his transaction. She completed all of the documents, spread them across the counter, and marked and told him the places to sign to effect the binder of the coverage that day. The transaction occurred quickly, lasting only approximately 15 minutes. He received no effective explanation of any of the coverages. Rather, he relied on her representations that he was getting what he had asked for, that is, the minimum legally-required Florida insurance coverage.
The coverage he obtained was placed with Security as to the PIP and PD coverage. The premium for that coverage was $321.00. The total premium quoted to him was $421.00, which included a $100.00 membership in the Gulf Coast Travel Association, a motor or travel club. Mr. Meadows was not aware that he had this extra amount of coverage or membership until he conferred with Mr. Spencer of the Department at a later time, who informed him of such. If he had known that the agreements he was signing during the hurried, unexplained transaction with the Respondent's employee included the motor club coverage, he would have declined it because his wife already had coverage with AAA for towing and related benefits.
Mr. Meadows made a down payment of $190.00 on May 17, 1994. The receipt issued to him revealed a "total premium" of $421.00. The actual cost of insurance was $321.00, with the additional $100.00 being for the motor club, although the total amount was represented as "total premium". Additionally, the down payment of $190.00, which he paid, was deceptive in that only $90.00 was actually applied to insurance coverage and the remaining $100.00 was the total up-front fee for the motor club coverage, although it was represented to Mr. Meadows as being the $190.00 down payment on the insurance premium itself.
Later, Mr. Meadows learned that he had the motor club benefits which he did not want or need and so he demanded a refund of his money from the Respondent. He spoke to the Respondent personally about this but did not receive immediate satisfaction. There was a substantial delay in receiving his refund after the Respondent told him that he would receive one. The Respondent justified this by stating to him that it had to come from "another office" and that it would not come from his Agency itself.
Dorothy Weber of Pensacola, Florida, required automobile insurance for her 1986 Chevrolet Blazer and a 1978 Chevrolet Caprice. She went to the Respondent's Agency on June 15, 1994 and indicated to one of his employees that she was interested in the cheapest coverage available. She wanted nothing extra, except that required by law. She received very little explanation of the coverages and benefits, other than in response to questions she asked. The transaction of insurance was conducted in a similar manner to those referenced earlier in these Findings of Fact. The PIP and PD coverage was placed with the Florida Joint Underwriting Association. It carried a premium of $787.00. Despite Ms. Weber's request for only the minimum, legally-required insurance, she was also sold a motor club (Gulf Coast Travel Association) unbeknownst to her at the time at an additional fee of $150.00. In spite of the fact that Ms. Weber signed the disclosure concerning the optional nature of the motor club and related fee and so forth, as described in further detail in the above Findings of Fact, in actual fact, it was not explained to her. The fact that the fee for it was separate from the insurance premium for the insurance coverage was not explained to her and she effectively was not informed that she was purchasing that product.
During the transaction, she was informed that if her vehicle broke down, she could obtain wrecker service. Nothing was mentioned to her, however, about Gulf Coast Travel Association or that the $150.00 was an extra fee. She merely had all of the forms presented to her in rapid fashion and was asked to sign them. The explanation simply was that the "total policy" cost $937.00, and there was a down payment of $318.00 supposedly for premium only. The entire transaction took approximately one-half hour. Later, Ms. Weber discovered that she had been misinformed and complained to the Department and the Respondent's Agency, specifically indicating that she had not been informed that the $150.00 for the motor club was separate nor that she had purchased motor club coverage.
The receipt furnished to Ms. Weber concerning the amounts she paid to secure her coverage is misleading. It indicates a total premium of $937.00, when the actual cost of the insurance was $787.00. The additional $150.00 was for the undisclosed motor club coverage hidden in what was represented on the receipt as a "total premium". The down payment of $308.00 was deceptive or misleading in that only $158.00 of it was actually a down payment on insurance coverage.
Barry and Deeana Walker of Pensacola, Florida, needed automobile insurance for a 1990 Plymouth Laser. They wanted the cheapest coverage legally required and available to them. The Respondent dealt with the Walkers and was their agent of record. Mr. Walker remembers nothing being mentioned about a motor club, but Mrs. Walker remembers that the agent mentioned "Nations Safe Drivers, Inc."; however, she specifically informed him that she did not want it. In fact, Nations Safe Drivers is a non-insurance membership plan which includes a medical supplement coverage benefit. It is not a motor club.
The PIP and PD and bodily injury coverages were placed with Underwriters Guaranty Insurance Company (UGIC) for a premium of $641.00. The premium was originally financed by Underwriters Financial. Also executed on May 4, 1994 was another premium finance agreement with ETI. It provided for an insurance premium of $441.00 for a policy issued by UGIC and the financing of a Nations Safe Drivers enrollment for $100.00. This document was not signed by the Walkers. On May 4, 1994, the Walkers paid $150.00 by check and were required to pay an additional $143.00 by May 20, 1994. The $143.00 was paid; and subsequently, the Walkers received a notice of additional premium of $190.00 due and they paid an additional down payment of $76.00.
The Walkers made payments on the ETI premium financing agreement up until October, 1994, even though it had never actually been signed. They made down payments of $369.00 and monthly payments totaling $333.63, for a total of
$702.63. Sometime in October of 1994, they received a letter from the Department of Highway Safety and Motor Vehicles, Division of Drivers Licenses in Tallahassee, Florida, stating that Mr. Walker's driver's license was suspended because his insurance had been cancelled, effective July 16, 1994. The Walkers had received a notice from the insurance company of cancellation (because apparently that company would not insure co-owned vehicles) and had gone to the Respondent to see what to do about that problem. The Respondent told them to fill out a form which he gave them and that everything would be taken care of.
They filled out the form at his behest so as to indicate that Mr. Walker's father, the co-owner, would not be a driver of the vehicle. Accepting the Respondent's representation, they believed that that would take care of the cancellation of coverage problem, and they continued to make their monthly payments on their premium financing agreement until October of 1994 based upon what the Respondent told them.
In fact, the coverage was cancelled effective July 16, 1994; and soon thereafter, Mr. Walker's driver's license was suspended due to failure to carry valid insurance on his automobile. If the Respondent had acted with promptness in correcting the underwriting error, upon being apprised of the situation by the Walkers, the lapse in coverage and suspension of the driver's license need not have occurred and the payments on the original coverage need not have been made until October 11, 1994, when new coverage was finally obtained by the Respondent at the Walkers' behest. Although, on November 11, 1994, ETI credited the Respondent and the Walkers for $169.41 of unearned premium, the damage had already been done by that point in terms of the lapse of coverage and the suspension of Mr. Walker's driver's license, with attendant financial risk and inconvenience to Mr. Walker.
Moreover, the receipt issued to the Walkers in the original insurance transaction indicates a total premium of $741.00. As in the other situations, the actual insurance cost was $641.00, and the additional $100.00 was for the Nations Safe Drivers non-insurance medical payment product, wrapped up in what was represented as "total premium". The down payment of $293.00 was similarly misleading because only $193.00 of that applied to actual insurance coverage. The Respondent received his fee of $100.00 for the added-on product mentioned above entirely out of the up-front, down payment amount. Thus, the Respondent received the entire fee for the Nations Safe Drivers product within a purported "premium receipt" amount described to the customer as an insurance down payment.
On January 26, 1995, Ms. Betty Cook of Walnut Hill, Florida, needed to purchase insurance for her 1994 Thunderbird and her 1993 Chevrolet C1500 pickup truck. She went to the Respondent's Agency to accomplish her insurance renewal transaction. A lady by the name of Sonya handled the transaction for her that day. The Cooks' insurance was placed with UGIC for a premium of $1,123.00. The premium was financed through Underwriters Financial of Florida, Inc. The transaction was initiated on January 26, 1995 but ultimately concluded on January 28, 1995, after Mrs. Cook had received and signed all of the paperwork. Mrs. Cook made a premium down payment of $339.00 and mailed her first payment when it was due. She thereupon was sent a notice stating that no policy existed. She called the Agency to see what was wrong and someone at the Agency indicated to her that it would taken care of immediately. A lienholder on the pickup truck sent a notice to her that they had not been notified that the insurance had been renewed. Mrs. Cook became very concerned and the Respondent
offered to refund her premium; however, three months had evidently elapsed since she first renewed her insurance or thought she had. Thus, Mrs. Cook, without knowing at the time, was driving her automobiles without insurance coverage for approximately a three-month period.
Mrs. Cook contacted the Department and got her insurance reinstated and placed with another servicing agent. The policy was issued by UGIC, without requiring the payment of a premium down payment by the Respondent. The Respondent had still not forwarded the $339.00 down payment originally received from Mrs. Cook as of April 19, 1995. This lapse or failure to forward the insurance down payment obviously resulted in the coverage never being bound with the company. Therefore, the company had not issued and had no record of coverage for Mrs. Cook's vehicles. The agent for this company was required to account for and promptly forward insurance premium down payments, such as this, to the insurer he represented and on behalf of the insured he also represented in the transaction.
Christopher Camus of Pensacola, Florida, went to the Respondent's Agency to purchase insurance for a 1983 Oldsmobile Cutlass. He went to the agency on August 25, 1993, and the Respondent placed his coverage with Security. The total premium was quoted as $274.00. Mr. Camus signed an application on that date and paid the full amount to the Respondent. The Respondent failed to forward the application and premium to the insurance carrier, and the policy of insurance was not actually issued until November 30, 1993. Mr. Camus was thus left without coverage for approximately two months. He made repeated telephone calls to the Agency to no avail. Agency personnel maintained that the problem was occurring with the insurance company itself and was not the fault of the Respondent's Agency.
The Respondent deposited Mr. Camus' check in August of 1993, but the application for his insurance was never received by Security until December 23, 1993. The Respondent thus did not promptly and appropriately handle the insurance premium funds in question and forward the application so as to promptly bind the coverage for the customer. Indeed, it is noteworthy that this company revoked the Respondent's authority to bind coverage for customers on March 14, 1994 due to an excessive amount of such late submissions of insurance applications and premiums. In 1993, of the 1,299 applications taken by the Respondent and his Agency, only 58 percent reached the insurer's office within the required time period.
In summary, the evidence presented in this case indicates that the Respondent engaged in the general business practice of selling ancillary products to insureds without truly obtaining "informed consent" of those insureds. The pattern running through the testimony of the above-described witnesses, none of whom were shown to have any motive to falsify their testimony, was that, although they signed the various disclosures on the insurance underwriting or binding documents, indicating that they understood that the ancillary products were optional, were not insurance, and were not required to be purchased. They did not receive any significant explanation of the optional nature of those products concerning the advisability of their purchase (particularly as to those customers who had AAA coverage), nor the extra cost attributable to those products. Each insured witness consistently maintained that he or she had not read the numerous documents presented to them. Certainly, they should have, in an abundance of caution, read the documents and attempted to understand them. Their failure to do so, however, does not absolve the Respondent of his duty to specifically explain to each customer the exact nature of the coverage being offered, whether or not it was legally optional,
particularly, as to those customers who stated definitely that they only wanted the bare minimum coverage required by law, and the fact that it was optional at an extra cost, and was not included in the basic insurance coverage being sold. It is clear from these witnesses' testimony that none had requested motor club benefits or any other ancillary product and yet, in effect, these were automatically added to the policies involved in this proceeding in each transaction and were clearly not explained to the customers. The general business practice of the Respondent involved in the sale of the motor club and ancillary products belies the existence of "informed consent" on the part of the customers.
Mr. James Self is a former agent for the Respondent, who testified regarding the Respondent's business practices. He was trained by the Respondent and worked for the Agency from August, 1993 to June, 1994.
The Agency had a policy of giving telephone quotes for insurance premiums, without including the amount represented by motor club or other add-on optional products. The Agency would then add such products to the insurance package when the customer came in to purchase insurance. According to Mr. Self, any sort of explanation or disclosure of these add-on products to the customer would be merely to the effect that the insurance "quote" included towing or rental. There was little else explained about it. In many of the situations with witnesses in this case, the insureds only requested the minimum coverage and, therefore, no optional or ancillary products were justified without full explanation to the customer.
Mr. Self described how the Respondent specifically trained him in "clubbing", which meant adding motor club coverage to the insurance coverage requested by customers. The Respondent's own testimony shows the economic necessity for the pervasive sale of such motor club benefits to as many customers as possible, when he stated:
It's really the only way to exist . . . Q: So you're telling me that the only way for you to exist is to sell motor clubs?
A: Financially, it's -- really for most businesses in this market it's the only way to be able to survive.
Transcript, page 175.
The Respondent further acknowledged the pecuniary interest he had in selling travel or motor clubs since he described his average commission as being
90 percent of the fee for writing that coverage, which is higher than the commission on insurance products. Moreover, he recovered all of that money from the down payment the customers were making, supposedly for their insurance coverages. Therefore, his incentive was multiplied because he was getting the high commission percentage rate, plus he was getting all of it in cash on the initial portion of the transaction, the down payment.
Mr. Self also explained that salesmen would never tell the insured exactly how much the motor club cost. On occasions, when Mr. Self would try to partially disclose the motor club, the Respondent would tell him to "hurry up", that he was taking too much time in effecting the transaction. It was Mr. Self's experience that approximately 99 percent of the customers coming into the Agency for insurance left having purchased motor club benefits. Eventually, Mr. Self was terminated because he did not sell enough motor club products. The
overall gravamen of his testimony shows that he attempted to make some disclosure or explanation of the motor club and other ancillary products but was discouraged from doing so by the Respondent, with the implication being that this ultimately resulted in his termination from employment with the Respondent's Agency.
The evidence thus establishes that, for the most part, the insureds in question did not really know what "minimum coverage" or "full coverage" really consisted of when they came in to purchase such insurance. In making this lay description of the coverage they desired, they then relied on the agent, the Respondent or his employees, to sell them coverage which comported with their wishes and needs, since they were not schooled in the insurance business and related laws themselves. Since they were not so schooled, they almost totally relied on any explanation given to them by the Respondent or his agents or employees. In spite of the signing of the disclosure documents referenced in the above Findings of Fact, the reality of the situation, as a continuing, consistent pattern throughout the testimony adduced from these insureds, and from Mr. Self, reveals that no regular business practice of obtaining an informed consent from customers, such as these, was carried out by the Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties hereto pursuant to Section 120.57(1), Florida Statutes.
The Department seeks to impose disciplinary sanctions, up to and including revocation, against the licensure status and appointment qualification of the Respondent. In order to impose such sanctions in a penal proceeding such as this, the Department bears the burden of proving the violations charged to the standard of clear and convincing evidence. See Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).
The Respondent is charged with violating the following provisions of Chapter 626, Florida Statutes: Sections 626.611(4), 626.611(5), 626.611(7), 626.611(9), 626.611(13), 626.621(2), 626.621(6), 626.9521, 626.9541(1)(b), 626.9541(1)(e), 626.9541(1)(k)1., and 626.9541(1)(z)2. and 3., Florida Statutes. Those provisions provide as follows:
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.
If the license or appointment is will- fully used, or to be used, to circumvent any of the requirements or prohibitions of this code. [Section 626.611(4), Florida Statutes]
Willful misrepresentation of any insurance policy or annuity contract or will- ful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising. [Section 626.611(5), Florida Statutes]
Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]
Fraudulent or dishonest practices in the conduct of business under the license or appointment. [Section 626.611(9), Florida Statutes]
Misappropriation, conversion, or unlawful withholding of monies belonging to insurers or insureds or beneficiaries or to other received in the conduct of business under the license. [Section 626.611(10), Florida Statutes]
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. [Section 626.611(13), Florida Statutes]
626.621 Grounds for discretionary 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.
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. [Section 626.621(2), Florida Statutes]
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. [Section 626.621(6), Florida Statutes]
Knowingly, aiding, assisting, procuring advising or abetting any person in the violation of or to violate a provision of the insurance code or any order or rule of the department. [Section 626.621(12), Florida Statutes]
626.9521 Unfair methods of competition and unfair or deceptive acts or practices prohibited; penalties.
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 or s. 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.
Any person who violates any provision of this part shall be subject to a fine in an amount not greater than $2,500 for each
nonwillful violation and not greater than
$20,000 for each willful violation. Fines under this section may not exceed an aggregate amount of $10,000 for all nonwillful violations arising out of the same action or an aggregate amount of
$100,000 for all willful violations arising out of the same action. [The fines authorized by this subsection may be imposed in addition to any other applicable penalty]. [emphasis added] [Section 626.9521, Florida Statutes]
626.9541(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS
False information advertising generally: Knowingly making, publishing, dissemination, circulating, or placing before the public,
or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:
In a newspaper, magazine, or other publication,
In the form of a notice, circular, pamphlet, letter or poster,
Over the radio or television station, or
In any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading. [Section 626.9541(1)(b), Florida Statutes]
Knowingly:
Filing with any supervisory or other public official,
Making, publishing, disseminating, circulating,
Delivering to any person,
Placing before the public,
Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. [Section 626.9541(1)(e), Florida Statutes]
Made false or fraudulent statements or representation on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurer, agent, broker or individual. [Section 626.9541(1)(k)1., Florida Statutes]
Sliding: Sliding is the act or practice of:
* * *
Representing to the applicant that a specific ancillary coverage or product is included in the motor vehicle policy applied for without an additional charge
when such charge is required; or
Charging an applicant for a specific ancillary coverage or product, in addition to the cost of the motor vehicle insurance coverage applied for, without the informed consent of the applicant. [Section 626.9541(1)(z), Florida Statutes]
Pursuant to Section 626.561(1), Florida Statutes, all premiums, returned premiums, or other funds belonging to others are received by an insurance agent in a fiduciary capacity. They constitute trust funds and the agent is obligated to account for and pay such funds over to the insurer, the insured customer, or any other person lawfully entitled to them in the regular course of the agent's business. Moreover, pursuant to Section 626.592(2), Florida Statutes, the agent, the Respondent herein, is responsible and accountable for acts of the salaried employees who act under his direct supervision and control in the conduct of business while they act on behalf of the Agency, wherein he practices under his licensure. The fiduciary capacity of the agent is borne out by the interpretation placed upon his status by the court in Natelson v. Department of Insurance, 454 So.2d 31 (Fla. 1st DCA 1984), wherein the court acknowledged that the business of insurance is "greatly affected by the public trust". The court iterated that the holder of an agent's license operates in and occupies the status of a fiduciary and enters a fiduciary relationship with both his client and the insurance company he is representing in an insurance transaction. See Natelson, at page 31.
The Respondent sold Karen Sigler, Rosa Johnson, Charles Meadows, Dorothy Weber and Barry and Deeana Walker travel club products, when they had only requested the bare minimum legally-required insurance for their vehicles. Similarly, when Pam Shivers, Laura O'Donohue, Terre Thompson and Timothy Malden requested full coverage, in effect, PIP, PD, comprehensive and collision coverage, the Respondent added a motor club as an ancillary product, which they had not requested. In fact, none of these insureds who testified ever specifically requested that the Respondent sell them travel or motor club coverage or any other ancillary product. This product was, in effect, added to the insurance package by the Respondent automatically in the pertinent cases.
After being automatically added to the insurance package for the customer, without the customer's request, the character and nature of the transaction, as delineated in the above Findings of Fact, shows that the Respondent or his agents or employees filled out all of the pertinent information on the application forms and merely had the customers who testified sign at the blanks marked "X". Although they signed the disclosures or acknowledgments indicating that they understood that the motor club or medical supplement products were optional and not legally required and that they had, after explanation, made a decision to purchase these products, the common thread running through all these witnesses' testimony and not refuted by the Respondent's evidence, is that they were not truly informed about the fact that they were getting these ancillary products in their insurance coverage packages. They were unaware that the cost of them was extra and in addition to the amount truly required to purchase the insurance they really wanted. Thus, although the forms from the transactions in question, in evidence, show on their face that the insureds who testified "consented" to the purchase of these motor club and medical-supplement products sold by the Respondent, the clear and convincing evidence shows that it was not a knowing and informed consent to purchase these products under these circumstances. These were ancillary products, as provided for in Section 626.9541(1)(e), Florida Statutes.
Clear and convincing evidence has shown that the Respondent, for reasons asserted in the above Findings of Fact, violated Section 626.9541(1)(e)2. and 3., Florida Statutes, as to nine counts, for charging these insureds for ancillary products sold in conjunction with their automobile insurance, without their informed consent. Additionally, with respect to witnesses, insureds, Karen Sigler, Rosa Johnson, Charles Meadows, and Barry and Deeana Walker, who each requested the "minimum" or "cheapest" coverage required by law, the Respondent committed a violation of Section 626.9541(1)(e) and (k)1., Florida Statutes, by making a false or deceptive material statement regarding an application for insurance.
The Respondent placed before the insureds a misleading or deceptive statement by preparing the premium receipts provided to each insured, with each receipt containing a representation for a "total premium", which was not accurate and at the least, misleading. Actually, the total premium included a motor club or ancillary product (non-insurance) fee or purchase price.
Likewise, the down payment represented to these insureds as required for premium financing was misleading. The actual required down payment, which was reflected in the premium finance agreements, conflicted with the down payments listed in the receipts issued to these customers. The difference being the unexplained or disclosed cost of the motor club or other ancillary product. No doubt, the cost or fee for the ancillary products involved was "wrapped up" in what was represented as "total premium" so that the insureds would not realize that they were paying for something in addition to the insurance coverage, which was all they had asked for. Thus, the Respondent has violated Section 626.9541(1)(b), (e), and (k), Florida Statutes, as to nine counts.
Additionally, the Respondent sold the travel and motor club and ancillary products to the insureds in such a way so that as a matter of form and in terms of the "paper trail" related to each transaction, it would appear that he had secured the insured's consent to the purchase of and addition of these ancillary non-insurance products to their coverages. In fact, however, the clear and convincing evidence shows that the substance of the transaction was otherwise. Despite the fact that the insureds signed the forms that indicated that they were aware of what they had purchased in terms of these ancillary products, the overall tenor of the evidence, culminating in the above Findings of Fact, shows that they were not knowing and "informed" decisions concerning the acceptance of and purchase of these products; as to the nature of the products, as to the fact that they were optional or concerning the cost. Each of the transactions only lasted from 15-30 minutes. All of the paperwork involved was prepared by the Respondent or his employees and agents, with the insureds only required to sign at marked locations on the various documents. They were stacked up and quickly presented to them for signature, without significant explanation of the details of the coverages, benefits, costs, or the optional nature of the products. None of the insureds had read the documents, as they certainly should have done; however, that does not excuse the fact, under the agent's fiduciary duty, that he should have provided them with detailed information with respect to the non-insurance products which he was selling them.
This is the kind of transaction that the Legislature sought to forestall by the enactment of Section 626.9541(1)(e), Florida Statutes. Although certainly a prudent insurance purchaser should read each and every document he or she is requested to execute before entering into the agreement
such as these documents represent, the burden, in terms of fiduciary duty, is on the Respondent or any agent to obtain a truly knowing and informed consent of
that insured prior to selling an ancillary coverage or product. As delineated in the Natelson, supra. decision, referenced above, the law vests in an insurance agent a special fiduciary duty of trust in dealing with lay insureds and insurance matters upon which they are entitled to rely. It is particularly noteworthy in the instances established in the case at bar that none of these insureds had requested any ancillary products and five had specifically made it clear that they only wanted the bare minimum or cheapest insurance coverage. In fact, several, as referenced in the above Findings of Fact in more detail, already had a motor club product or coverage; and clearly, in that regard, the Respondent was on even more obvious notice that such insureds did not need the optional travel or motor club product.
The Respondent's position in this case concerning the issue of informed consent, as it relates to the "sliding" charge, is that the documents signed by the consumer witnesses relating to the travel or motor club memberships which they purchased create a conclusive presumption that they made an informed consent purchase under authority of Vasquez v. Bankers Insurance Co., 502 So.2d 894 (Fla. 1987). The Second District Court of Appeal, however, rejected the application of the Vasquez decision in a disciplinary action against two insurance agents. The case of Thompson v. Department of Insurance and Treasurer, 559 So.2d 419 (Fla. 2d DCA 1990), in its facts, is directly applicable to the instant case. In the Thompson case, the agents charged were accused of "sliding" motor club products, and they asserted that the consumers' signatures on election forms and on applications were sufficient to protect them from discipline under the above-referenced "sliding statute", because they demonstrated informed consent to voluntarily purchase those products. Id. at 420-421. The court, however, noted that Vasquez involved the relationship between a consumer insurance purchaser and the insurance company, whose policy he purchased, a pure contractual relationship, which did not involve his insurance agent. Contrarily, in the Thompson situation and in the instant case, the relationship involved in the chargeable conduct is that of a consumer insurance purchaser and his own insurance agent. The significance of this distinction is based upon the court's holding in Natelson, supra. The agent who represents both the consumer and the insurance company is in a fiduciary relationship to that consumer, as well as to the company, and the business of insurance he conducts on behalf of that insured consumer is clothed with the "public trust". This is different from the situation in Vasquez, where the relationship was between the consumer and the insurance company itself and not the agent who sold the insurance. In that situation, the relationship between the insurance company and the consumer insured is merely a matter of privity of contract. It does not involve the fiduciary trust relationship between the consumer and the insurance agent, who not only represents the company but also represents the consumer insurance purchaser as a fiduciary. Id. at 32.
Another important distinction from the Vasquez decision relied upon by the Respondent, versus the instant case situation and that of the Department's Thompson decision, upon which it relies, is that in Vasquez, the document signed by the customer-insured was a specific, statutorily-prescribed uninsured motorist form involving execution of a consent to rejection of uninsured motorist coverage. The statute at play in that case provided that signing that form raised a conclusive presumption that the insured had been informed of his rights under the statute (involving a voluntary, informed rejection of uninsured motorist coverage). No such statutory presumption exists in the case at bar. The procuring of signatures of the insureds on the documents presented as a multiple number of insurance forms in an insurance coverage package, hurriedly executed, in conjunction with purported disclosures of "insurance premiums" on receipts which concealed the cost of the ancillary, non-insurance products in
the "total premium" and in the required "down payment", demonstrates a method of doing business which belies the presence of "informed consent" and amounts to unfair and deceptive conduct.
This conduct was specifically proscribed by the Legislature as an unfair or deceptive trade practice under Section 626.9541(1)(z), Florida Statutes. It was this unfair and deceptive conduct which caused the consumers to pay for motor club memberships or other ancillary products, which they had not asked for, did not need or desire, and could not understand, given the misinformation or lack of explanation imparted to them by the Respondent in the course of the hurried transactions at issue. While the obtaining of signed acknowledgments on the various forms concerning the optional nature of the non- insurance products and the fact that they are not legally required to be purchased, etc. might be evidence of consent, it raises no presumption in favor of informed consent. There must be a knowing and intelligent decision, after explanation, to accept the purchase of such products before the informed consent standard in the above-referenced statute is satisfied. Here, the facts established by the clear and convincing evidence of record were not overborne by the Respondent's demonstration that the consumers insureds involved had perfunctorily signed the forms in question.
Other than that, there was no indicia of informed consent because the clear and convincing evidence shows that they received essentially no explanation of the coverage they were getting. They received such optional products automatically, even though, in some cases, they had even advised the Respondent or his agents or employees that they did not need any motor club coverage because they had AAA coverage and, at the very least, because none of them had requested such coverage. Therefore, there was no basis for the Respondent to assume that they wanted it, absent an explanation thereof.
The case of Parikh v. Cunningham, 493 So.2d 999 (Fla. 1986) involves an analogous situation concerning medical consent. In that case, the Florida Supreme Court was reviewing the validity of an informed consent statute applicable to physicians. That statute provided a conclusive presumption of consent for certain signed written releases. The lower court had declared the statute unconstitutional based upon a conclusive presumption. In pertinent part, on its review, the Supreme Court reversed the holding, finding that the signature itself on the consent form was of no consequence if, in fact, there had been no informed consent as required by other provisions of the statute. The court stated:
It is crucial therefore, that trial courts make clear to the trier of fact that the presumption becomes relevant only upon a jury finding that a valid [informed] consent had been obtained. [emphasis supplied]
Likewise, in the case of Valcin v. Public Health Trust of Dade County,
473 So.2d 1297 (Fla. 3d DCA 1984), the court held that there was no presumption of valid medical consent unless the consent is an informed consent.
Informed consent is a higher standard that a mere acknowledgment or standard rule that a signature represents a binding obligation. Informed consent is a high standard which cannot be ignored because a person has not read all of the documents presented to him for his or her signature. Black's Law Dictionary defines "informed consent" as a person's agreement to allow something to happen (such as surgery) that is based on a full disclosure of facts needed
to make the decision intelligently. The insureds are not complaining here about the insurance they purchased, the forms relating to which they admittedly did not read either, but instead are complaining about the uninformed purchase of the non-insurance ancillary products they never requested or even knew they had purchased until after the fact. While a signature on a document might create a binding contractual obligation between two arms-length contracting parties, it does not, standing alone, create conclusive evidence of informed consent, where the relevant statute requires it to be an informed consent, i.e., after the full disclosure which was not made in the instant transactions, and where the transactions were between the person whose consent is claimed and required and one who stands in a fiduciary relationship with that person, here the Respondent agent.
The Respondent also relies on Whitaker v. Department of Insurance and Treasurer, Case No. 95-2702 (21 FLW 1353, Opinion dated June 13, 1996). In that case, the court reversed on two points, which are not relevant to this case.
One dealt with a finding that there was a "refusal to insure" under the relevant statute by the refusal by the respondent in that case to finance premium for insurance policies. The court held that portion of Section 626.9541, Florida Statutes, unconstitutional because it was vague and did not clearly inform one situated as the Respondent that a refusal to premium-finance insurance policies, unless ancillary products were accepted by the insured, was prohibited. The second point of reversal in that case involved a holding by the court that Section 626.621(6), Florida Statutes, as to its last clause concerning the issue of detriment "to the public interest", was declared unconstitutional. That constitutional violation and one of two grounds for reversal in that appellate opinion are not germane to this case, however. The other statutory violations found in the Final Order were upheld.
In fact, the Hearing Officer in the Whitaker decision, in her Recommended Order, specifically determined that the practice of burying the cost of motor club coverage in the receipt of the premium down payment resulted in a false or misleading statement, which finding was upheld by the Department in the Final Order in that case. The Hearing Officer also found, and was upheld by the Department in the finding, that the disclosure of costs, monies paid, and for what purpose the monies already paid were being applied, was not clear and unambiguous. The receipts involved misrepresented and confused what was occurring with the monies paid.
The Hearing Officer therein also erroneously concluded that the signed writings were sufficient to prove informed consent. That conclusion of law was rejected in the Department's Final Order and that rejection was upheld in the appellate opinion. The Respondent was thus, in the Final Order, found guilty of three violations of Section 626.9541(1)(z), Florida Statutes, and that portion of the Department's Final Order in the Whitaker case was upheld by the appellate court.
The court specifically affirmed the Final Order with respect to the sliding violations and the Department's conclusion with regard thereto that signed disclosures are not themselves determinative of informed consent.
Section 626.611(9), Florida Statutes, provides for the compulsory suspension or refusal of an agent's license upon a finding that the agent has engaged in fraudulent or dishonest practices in the conduct of business under the license or appointment. First, the Respondent's misuse of the term "premium" was a practice that led some customers to falsely believe that their deposits against both motor club or ancillary products and insurance coverage
were down payments on the insurance policies alone. Secondly, the Respondent's standard business practice of combining the costs of insurance coverages with the cost of the motor club memberships and then calling all such costs "total premium" on the receipts issued to the customers constituted deceptive and misleading statements. Third, the Respondent's standard business practice of deducting all or part of the ancillary product fee "up front" in the transaction resulted in false statements on other documents to the effect that the full down payment for premium or financing of premium for insurance had been made, when, in fact, it had not. This resulted in customers having to pay additional monies over and above the normal premium finance payments at a later time after the transaction occurred. Thus, it has been established by clear and convincing evidence that the Respondent committed nine counts of violating Section 626.611(9), Florida Statutes.
By violating Section 626.9541(1)(b) and (1)(z), Florida Statutes, the Respondent has also violated Section 626.9521, Florida Statutes, which allows for additional fines beyond the suspension or revocation of the license. Also, these violations of the unfair or deceptive acts or practices prohibited by Part X of this Chapter constitute a violation of the still constitutional first portion of Section 626.621(6), Florida Statutes.
The Respondent has also violated Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance. This is shown by his failing to properly process requests for cancellation of coverage by Ms. Shivers and Ms. O'Donohue, his failure to forward Mr. Camus' application for insurance and premium in a timely manner; his conduct of purportedly binding insurance for Ms. Johnson, when he did not have binding authority, and his failure to properly replace the Walkers' insurance coverage due to its cancellation because the vehicle was co-owned. This last was after he had led the Walkers to believe that mere execution of the form, which he had supplied to the company, would cure the problem, when, in fact, it was never done, and despite the fact that they continued to make premium payments as if they did have coverage.
Finally, the Respondent has violated Section 626.561(1), Florida Statutes, by failing to forward the premium down payment received from Ms. Cook, which consequently left her without coverage. Because of the numerous violations established of Section 626.611, Florida Statutes, suspension or revocation of license is mandatory under the wording of those provisions. Section 626.611, Florida Statutes.
Rule 4-231.030(6), Florida Administrative Code, provides that the penalty for a count is equal to the highest provided by rule for any violation proven in each count, after which one considers the aggravating and mitigating factors referenced in Rule 4-231.160, Florida Administrative Code, in order to achieve an appropriate penalty under the circumstances. The Administrative Law Judge has considered those aggravating and mitigating factors and finds that the aggravating factors outweigh the mitigating factors, although the violations are mitigated by the fact that there was a relatively low minor gain to the agent or relatively low degree of actual injury to the victims; that refunds were made to most of the victims, and there was no evidence of any previous disciplinary orders or prior warnings by the Department. Accordingly, having considered these factors, including the recommendation of the Department in its Proposed Recommended Order in weighing these, it is determined that the Respondent's licensure and appointments should be revoked for a period of two years and that a $9,000.00 fine be imposed.
Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is
RECOMMENDED that the Respondent, Daniel Lee Alison, be found guilty of the violations set forth and discussed above, that his license as an insurance agent in the State of Florida be revoked for a period of two years and that he be ordered to pay a fine in the amount of $9,000.00, within a time to be set by the Department.
DONE AND ENTERED this 2nd day of October, 1996, in Tallahassee, Florida.
P. MICHAEL RUFF Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675 SUNCOM 278-9675
Fax Filing (904) 921-6847
Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 1996.
APPENDIX TO RECOMMENDED ORDER CASE NO. 95-2690
Petitioner's Proposed Findings of Fact
1-35. Accepted, except to the extent that they do not comport with the Administrative Law Judge's findings of fact on these
subject matters to which they are subordinate.
Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter.
Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter and because of the editorial comment.
Accepted, in part, but subordinate to the Administrative Law Judge's findings of fact on this subject matter and rejected, as to the editorial comment.
39-40. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter.
41-44. Accepted, in part, but rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter.
Respondent's Proposed Findings of Fact
1-13. Accepted, but not as materially dispositive of the issues presented for resolution.
Accepted, in part, but rejected, as subordinate and somewhat contrary to the Administrative Law Judge's findings of fact on this subject matter.
Accepted, but not itself materially dispositive to the issues presented for resolution in
this case.
16-17. Accepted.
18. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter.
19-25. Accepted, but not themselves materially dispositive to the resolution of the issues presented to the Administrative Law Judge.
26. Accepted.
27-29. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter.
30-32. Accepted.
33-36. Accepted, in part, but rejected, as to the overall material import and as subordinate
to the Administrative Law Judge's findings of fact on this subject matter.
37-43. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter and to some extent, as immaterial.
44. Accepted, as technically correct, but witness Self, a former employee and a witness who purchased insurance, did establish in his testimony that purchase of an ancillary product was a pre-condition to premium financing by Agency policy.
45-47. Accepted, in part, but otherwise rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter.
48. Accepted.
49-52. Accepted, but not in and of themselves dispositive of the material issues presented concerning this witness' transaction(s).
Rejected, as immaterial.
COPIES FURNISHED:
Michael K. McCormick, Esquire Department of Insurance Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0300
Charles J. Grimsley, Esquire
Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue
Miami, Florida 33129
Bill Nelson
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 and
Treasurer
The Capitol, PL-11
Tallahassee, Florida 32399-0300
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
================================================================= AGENCY FINAL ORDER
=================================================================
THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE
BILL NELSON
IN THE MATTER OF CASE NO.: 04688-93-A-MKM
DANIEL LEE ALISON DOAH CASE NO.: 95-2690
/
FINAL ORDER
THIS CAUSE came on before the undersigned Treasurer and Insurance Commissioner of the State of Florida for consideration and final agency action. On May 9, 1995, an Administrative Complaint was filed against the Respondent, DANIEL LEE ALISON, charging him with various violations of the Florida Insurance Code. The Respondent timely filed a request for formal proceeding pursuant to Section 120.57(1), Florida Statutes. On September 6, 1995, the Department of Insurance filed a fourteen count Amended Administrative Complaint. Pursuant to notice, the matter was heard before P. Michael Ruff, Hearing Officer for the Division of Administrative Hearings, on January 10, 1996 and March 12-13, 1996.
After consideration of the evidence, argument, and testimony presented at hearing, and subsequent written submissions by the parties, the Hearing Officer issued his Recommended Order (attached hereto as Exhibit A). The Hearing Officer recommended that a Final Order be entered revoking Respondent's license as an insurance agent in the State of Florida for a period of two years and that
he be ordered to pay a fine in the amount of $9,000.00. The Respondent filed six exceptions to the Hearing Officer's Recommended Order which have been addressed herein.
RULINGS ON RESPONDENT'S EXCEPTIONS
Respondent's one exception to the Hearing Officer's Findings of Fact is as follows:
The issue in the case, as regards the "sliding" counts, is whether the Respondent violated the provisions of section 626.9541(z), Florida Statutes. The issue as described in paragraph 5 of the Recommended Order does not accurately reflect the components of section 626.9541(z). This provision contains three ways in which an agent can be considered to be in violation of the statute: (i) the agent must represent that membership in an auto or travel club was part of the coverage required to receive auto insurance; (ii) the agent must "misrepresent" the fact that there is a charge for the ancillary product or (iii) the agent must charge an applicant for an ancillary product without the "informed consent" of the applicant. Unless this issue is accurately stated, the correct legal conclusions cannot be drawn from the facts in this case.
The Hearing Officer, at paragraph 5 of his Findings of Fact, has stated:
The issue in this case does not involve whether the customer paid for such a product without executing any consent but, rather, whether the customer was mislead or whether the products sold were actually, in fact, explained fully to them; whether they were mislead in making a decision to buy such coverage in the belief that it was required in order to obtain the insurance they knew they needed.
In essence, the Respondent claims that the Hearing Officer's failure to accurately quote Section 626.9541(z), F.S., will result in the drawing of incorrect conclusions of law. In rejecting the Respondent's exception, it is noted that the Hearing Officer's Findings of Fact came to this agency with a presumption of correctness which may only be rejected if there is no competent, substantial evidence for its support. Gruman v. Department of Revenue, 379 So.2d 1313 (Fla. 1st D.C.A. 1980. Respondent has failed to demonstrate that the Findings of Fact lack competent, substantial evidence. Instead, there is competent, substantial evidence supporting the Hearing Officer's Finding of Fact at paragraph 5 of his Recommended Order.
As to the quoting of the "sliding" statute, it is noted that the Hearing Officer, at paragraph 62 of his Conclusions of Law, has quoted the pertinent subparagraphs of Section 626.9541(z), F.S. Furthermore, the Respondent's
concerns about the Hearing Officer drawing incorrect legal conclusions are misplaced. The final determination as to the applicable law rests with the agency, subject to judicial review. Manasota 88, Inc. v. Tremor, 545 So.2d 439 (Fla. 2d D.C.A. 1989)
Respondent's second exception, which is his first exception to the Hearing Officer's Conclusions of Law, is as follows:
The Hearing Officer concluded that the "Receipts" that the witnesses received were misleading in that they concealed the entire cost of the ancillary product within what was purported to be the total insurance premium amount reflected on the receipt (Paragraphs 67, 81). However, the witnesses all testified that they received the receipt at the end of the transaction, just before they left the agency and that the receipt did not have any influence over the witnesses whatsoever in terms of the insurance or the ancillary product purchased. The transaction was complete at that point, the documents signed. This receipt cannot "represent" or "conceal" anything to the applicants in that it had no influence whatsoever as to their decisions on coverage and the purchase of an ancillary product. No witness relied on the receipt. Therefore the Respondent cannot be found to be in violation of either the "sliding" provisions of the Insurance Code or of Section 626.611(9), Florida Statutes.
The Hearing Officer, at paragraph 67 and at the pertinent part of paragraph
81 of his Conclusions of Law, has stated:
The Respondent placed before the
insureds a misleading or deceptive statement by preparing the premium receipts provided to each insured, with each receipt containing a representation for a "total premium", which was not accurate and at the least, misleading. Actually, the total premium included a motor club or ancillary-product (non-insurance) fee or purchase price.
Likewise, the down payment represented to these insureds as required for premium financing was misleading. The actual required down payment, which was reflected in the premium finance agreements, conflicted with the down payments listed in the receipts issued to these customers. The difference being the unexplained or disclosed cost of the motor club or other ancillary product.
No doubt, the cost or fee for the ancillary products involved was "wrapped up" in what was represented as "total premium" so that the insureds would not realize that they were
paying for something in addition to the insurance coverage, which was all they had asked for. Thus, the Respondent has violated Section 626.9541(1)(b), (e), and (k), Florida Statutes, as to nine counts.
... Secondly, the Respondent's standard business practice of combining the costs of insurance coverages with the cost of the motor club memberships and then calling all such costs "total premium" on the receipts issued to the customers constituted deceptive and misleading statements. ... Thus, it has been established by clear and convincing evidence that the Respondent committed nine counts of violating Section 626.611(9), Florida Statutes.
In essence, the Respondent claims that no insured relied on the receipt and thus the receipt did not "represent" or "conceal" anything. In rejecting the Respondent's exception, it is noted that the Hearing Officer has clearly and specifically addressed the issue of receipts in a much broader manner than which is now proposed by the Respondent. In paragraphs 67 and 81 of his Recommended Order, the Hearing Officer has dealt at length with the misleading and deceptive nature of the receipts, which upon application of the law satisfies the elements of Section 626.9541(1)(b), (e) and (k); and Section 626.611(9), Florida Statutes. Contrary to what the Respondent proposes, the Hearing Officer in applying Section 626.9541(1)(b), (e) and (k); and Section 626.611(9), Florida Statutes, is not required to conclude as a matter of law that insureds relied on receipts. After all, as pointed out by the Hearing Officer, the insureds did not realize that the receipts were deceptive and misleading.
Respondent's third exception, which is his second exception to the Hearing Officer's Conclusions of Law, is as follows:
The Hearing Officer also concluded the Respondent violated section 626.954(1)(b),
and (k)(sic)(Paragraph 67), as the receipts were misleading, [sic] Again, a close reading of these statutory provisions shows that the statements must be either "material" or that they must be for the purpose of obtaining a fee, etc. None of the receipts could have been "material" statements or have been for the purpose of obtaining a fee etc. in that they had no influence over the decision of the witnesses and were received at the end of the transaction.
In rejecting the Respondent's exception, it is noted that Respondent argues the Hearing Officer has incorrectly concluded that Respondent violated Section [626.954](1)(b), (e) and (k), F.S. [emphasis added] No such statute exists.
Furthermore, even if the Respondent meant to cite Section 626.9541(1)(b), (e), and (k), F.S., he is incorrect in asserting that the statutory provisions show the statements must be either "material" or for purposes of obtaining a fee, etc. ... Specifically, while Section 626.9541(1)(e) references "any false
material statement" and Section 626.9541(1)(k) does reference "fee", Section 626.9541(1)(b) makes no reference to "material" or "fee"; Section 626.9541(1)(e) makes no reference to "fee"; and Section 626.9541(1)(e) makes no reference to "material".
Certainly, Respondent's use of the word "material" is exceedingly narrow and fails to contemplate that a receipt is a "material" document that further evidences the transaction of insurance, regardless of whether or not it impacts an individual's initial decision to purchase insurance. Furthermore, the fallacy of the Respondent's argument is that if the insureds, at the time of the transaction, had been aware of the deceptive and misleading nature of the receipts, the receipts would have "materially" affected the insureds' decision.
Respondent's fourth exception, which is his third exception to the Hearing Officer's Conclusions of Law, is as follows:
The third part of the definition of "sliding" is charging an applicant for a product without the "informed consent" of the applicant. The Hearing Officer concluded that the transactions were hurriedly executed; the paperwork was prepared by the Respondent with the insured only required to sign at marked locations and that none of the insureds had read the documents (paragraph 68). While there is a certain degree of accuracy to this picture; it is not the whole picture and has been taken out of context and some evidence has been overlooked. The agency was operated as an "over the counter" operation. Some of the witnesses specifically requested a "quick" transaction. No witness seemed to have asked any questions at all and indeed, many appeared disinterested about what they were purchasing. The "consent" and "disclosure" documents involved in this case were printed in large print with words such as "PLEASE READ CAREFULLY". The summary of coverages is even in table form. This is not "fine print" that is deliberately meant to conceal.
The Hearing Officer, at paragraph 68 of his Conclusions of Law, has stated:
Additionally, the Respondent sold the travel and motor club and ancillary products to the insureds in such a way so that as a matter of form and in terms of the "paper trail" related to each transaction, it would appear that he had secured the insured's consent to the purchase of and addition of these ancillary non-insurance products to their coverages. In fact, however, the clear and convincing evidence shows that the substance of the transaction was otherwise. Despite the fact that the insureds signed the forms that indicated that they were aware of what
they had purchased in terms of these ancillary products, the overall tenor of the evidence, culminating in the above Findings of Fact, shows that they were not knowing and "informed" decisions concerning the acceptance of and purchase of these products; as to the nature of the products, as to the fact that they were optional or concerning the cost. Each of the transactions only lasted from 15-30 minutes. All of the paperwork involved was prepared by the Respondent or his employees and agents, with the insureds only required to sign at marked locations on the various documents. They
were stacked up and quickly presented, to them for signature, without significant
explanation of the details of the coverages, benefits, costs, or the optional nature of the products. None of the insureds had read the documents, as they certainly should have done; however, that does not excuse the facts, under the agent's fiduciary duty, that he should have provided them with detailed information with respect to the non-insurance products which he was selling them.
In rejecting the Respondent's exception, it is noted that Respondent has chosen not to emphasize the Respondent's fiduciary duty, but rather to narrowly focus on the "consent" and "disclosure" documents available to the insured. The Respondent's assumptions being that if the insureds had the documents in front them, they must have made an informed decision. As pointed out by the Hearing Officer, the Respondent failed to fulfill the fiduciary duty he owed to the insureds, a duty that goes beyond merely providing insurance documents.
In further discussing the concept of fiduciary duty, the Hearing Officer states at paragraph 69 of the Recommended Order:
Although certainly a prudent insurance purchaser should read each and every document he or she is requested to execute before entering into the agreement such as these documents represent, the burden, in terms of fiduciary duty, is on the Respondent or any agent to obtain a truly knowing and informed consent of that insured prior to selling an ancillary coverage or product.
Furthermore, it should not be forgotten that an insurance contract is said to be "uberrima fides", a phrase used to express the most abundant good faith and the absence of any concealment or deception, however slight. See Black's Law Dictionary. The Respondent, as found by the Hearing Officer, fell well short of this standard.
Respondent's fifth exception, which is his fourth exception to the Hearing Officer's Conclusions of Law, is as follows:
In paragraph 70 the Hearing Officer states that the Respondent's position is that the signed documents create a conclusive presumption as to informed consent relying on the Vasquez case. This is misstating the Respondent's position. The Respondent did not rely on this case and did not seek to raise a conclusive presumption. The Respondent sought to state that there are certain circumstances where some insured are simply "blind" as to the transaction in question. These insureds ignore the most clear and obvious statements about the nature of the transaction. The Respondent' position is that, in these types of circumstances, the agent should be allowed to rely on the clear and unambiguous nature of the written forms; how can informed consent be obtained otherwise with customers who are clearly
willing to ignore the essentials of a transaction?
The Hearing Officer, at paragraph 70 of his Conclusions of Law, has stated:
The Respondent's position in this case concerning the issue of informed consent, as it relates to the "sliding" charge, is that the documents signed by the consumer witnesses relating to the travel or motor club memberships which they purchased create a conclusive presumption that they made an informed consent purchase under authority of Vasquez v. Bankers Insurance Co., 502 So.2d 894 (Fla. 1987). The Second District Court of Appeal, however, rejected the application of the Vasquez decision in a disciplinary action against two insurance agents. The case of Thompson v. Department of Insurance and Treasurer, 559 So.2d 419 (Fla. 2d DCA 1990), in its facts, is directly applicable to the instant case. In the Thompson case, the agents charged were accused of "sliding" motor club products, and they asserted that the consumers' signatures on election forms and on applications were sufficient to protect them from discipline under the above- referenced "sliding statute", because they demonstrated informed consent to voluntarily purchase those products. Id. at 420-421.
The court, however, noted that Vasquez involved the relationship between a consumer insurance purchaser and the insurance company, whose policy he purchased, a pure contractual relationship, which did not involve his insurance agent. Contrary, in
the Thompson situation and in the instant case, the relationship involved in the chargeable conduct is that of a consumer insurance purchaser and his own insurance agent. The significance of this distinction is based upon the court's holding in Natelson, supra. The agent who represents both the consumer and the insurance company is in fiduciary relationship to that consumer, as well as to the company, and the business of insurance he conducts on behalf of that insured consumer is clothed with the "public trust". This is different from the situation in Vasquez, where the relationship was between the consumer and the insurance company itself and not the agent who sold the insurance. In that situation, the relationship between the insurance company and the consumer insured is merely a matter of privity of contract. It does not involve the fiduciary trust relationship between the consumer and the insurance agent, who not only represents the company but also represents the consumer insurance purchaser as a fiduciary. Id. at 32.
In rejecting the Respondent's exception, it is noted that Respondent argues the Hearing Officer has misstated the Respondent's position regarding Vasquez and the concept of conclusive presumption. However, statements by Respondent's Counsel indicate that he has failed to grasp the significance of the fiduciary relationship between an insurance agent and an insured, and the requirement for informed consent by the insured which goes beyond the written forms. Quite simply, the Respondent is not permitted to hide behind what is claimed to be "clear and unambiguous nature of the written forms", where the nature of these transactions, as expressed by the Hearing Officer at paragraph 71, "demonstrates a method of doing business which belies the presence of informed consent and amounts to unfair and deceptive conduct." That is the nature of sliding -- manipulating the consumer into signing disclosure forms, by means of misleading verbal representations and signature procedures, to purchase insurance products the consumer did not want, need, or know he was buying.
Respondent's sixth exception, which is his fifth exception to the Hearing Officer's Conclusions of Law, is as follows:
It is unclear from the Hearing Officer's conclusions whether the findings covered the case of Joseph Shelton. The evidence demonstrated that he had actually made a claim for towing services. Therefore, he was
not the victim of any "concealment" or "fraud".
In rejecting the Respondent's exception, it is noted that the Hearing Officer, at paragraph 6 of his Recommended Order, has clearly and specifically stated:
No evidence was submitted as to Count I, concerning Cheryl Ginsterblum nor Count VIII,
concerning Joseph Shelton. Therefore, no findings of fact can be made and these counts should be dismissed.
In summary, the Respondent has failed to articulate valid reasons for rejecting the Hearing Officer's Recommended Order, specifically his Finding of Fact at paragraph 5 and Conclusions of Law at paragraphs 67, 68, 70 and 81.
After careful consideration of the record in this matter, the submissions of the Parties, and being otherwise fully advised in the premises, it is
ORDERED:
The Findings of Fact of the Hearing Officer are adopted in full as the Department's Findings of Fact.
The Conclusions of Law of the Hearing Officer are adopted in full by the Department as the Department's Conclusions of Law, with the following modifications:
Due to apparent scrivener's error, the statutory citation contained in the last sentence of paragraph 65 should read Section 626.9541(1)(z), Florida Statutes.
Due to apparent scrivener's error, the statutory citation contained in the first sentence of paragraph 66 should read Section 626.9541(1)(z)2. and 3.
The Hearing Officer's Recommendation that a Final Order be entered finding the Respondent, Daniel Lee Alison, guilty of the violations set forth and discussed in the Recommended Order, that his license as an insurance agent in the State of Florida be revoked for a period of two years and that he be ordered to pay a fine in the amount of $9,000, within a time to be set by the Department, is hereby approved.
ACCORDINGLY, Respondent's licenses and eligibility for licensure are hereby REVOKED. Pursuant to Section 626.641(4), Florida Statutes, Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly or indirectly own, control, or be employed in any manner by any insurance agent or agency. Pursuant to Section 626.641(2), Florida Statutes, Respondent shall not have the right to apply for another license or appointment under the Insurance Code within 2 years from the effective date of such revocation or, if judicial review of such revocation as sought, within 2 years from the date of final court order or decree affirming the revocation. In addition, Respondent, pursuant to Section 626.9521, Florida Statutes, shall pay an administrative penalty in the amount of Nine Thousand ($9,000.00) Dollars within thirty (30) days of entry of this Final Order.
NOTICE OF RIGHTS
Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Fla.R.App.P. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency
clerk, at 612 Larson Building, Tallahassee, Florida, and a copy of the same with the appropriate district court of appeal within thirty (30) days of rendition of this Order.
DONE and ORDERED this 20th day of November , 1996.
BILL NELSON
Treasurer and Insurance Commissioner
COPIES FURNISHED:
Stephen C. Fredrickson, Esquire Department of Insurance Division of Legal Services
612 Larson Building
Tallahassee, Florida 32399-0333
Charles J. Grimsley, Esquire
Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue
Miami, Florida 33129
P. Michael Ruff, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
| Issue Date | Proceedings |
|---|---|
| Nov. 26, 1996 | Final Order filed. |
| Oct. 16, 1996 | (Respondent) Exceptions to Recommended Order filed. |
| Oct. 03, 1996 | Recommended Order sent out. CASE CLOSED. Hearing held 01/10/96 & 03/12-13/96. |
| Jul. 26, 1996 | Petitioner`s Response to Respondent`s Motion to Strike; (Petitioner) Motion to Strike Respondent`s Notice of Supplemental Authority filed. |
| Jul. 22, 1996 | (Respondent) Motion to Strike; Notice of Supplemental Authority filed. |
| Jun. 27, 1996 | Petitioner`s Proposed Recommended Order filed. |
| Jun. 26, 1996 | (Respondent) Proposed Recommended Order filed. |
| Jun. 17, 1996 | Letter to Hearing Officer from S. Fredrickson Re: Confirming agreements filed. |
| May 20, 1996 | Order sent out. (Proposed Recommended Order`s are Due in 30 Days) |
| May 17, 1996 | Joint Motion for Extension of Time to File Proposed Recommended Orders filed. |
| May 16, 1996 | Joint Motion for Extension of Time to File Proposed Recommended Order filed. |
| Apr. 26, 1996 | Transcript (3 Volumes) ; Notice of Filing filed. |
| Apr. 10, 1996 | Cover Letter to M. McCormick from PMR (& enclosed Ck#010566 payable to C. Cook) sent out. |
| Apr. 08, 1996 | Subpoena Duces Tecum (M. McCormick) Check for $8.00 (Check given to G. Greene to return) filed. |
| Mar. 28, 1996 | Deposition of Thomas A. Harris ; (Petitioner) Notice of Filing filed. |
| Mar. 22, 1996 | (Respondent`s Exhibit 1) Insurance License Application w/cover letter filed. |
| Mar. 12, 1996 | CASE STATUS: Hearing Held. |
| Mar. 08, 1996 | Amended Notice of Filing of Petitioner`s First Request for Admissions and Respondent`s Response to Petitioner`s First Request for Admissions; Petitioner`s First Request for Admissions filed. |
| Jan. 12, 1996 | Respondent's Notice of Compliance With Petitioner's Request for Production; Respondent's Notice of Compliance With Petitioner's First Request for Admissions; Respondent's Notice of Compliance With Petitioner'sFIrst Set of Ammended Interrogatories; Exhibi |
| Jan. 10, 1996 | CASE STATUS: Hearing Partially Held, continued to March 12-13, 1996;10:30am; Pensacola) |
| Jan. 10, 1996 | (Stephen Frederickson) Notice of Appearance (filed w/Hearing Officer at hearing) filed. |
| Jan. 09, 1996 | Order sent out. (Motion Granted, hearing will be bifurcated; continued portion of hearing set for 3/12/96; 10:30am; Pensacola) |
| Jan. 08, 1996 | Notice of Filing of Petitioner`s First Request for Admissions and Respondent`s Response to Petitioner`s First Request for Admissions; Respondent`s Response to Petitioner`s First Request for Admission filed. |
| Jan. 04, 1996 | (Petitioner) Notice of Filing Deposition filed. |
| Jan. 04, 1996 | The Deposition of Christopher Camus ; Deposition of Terre Thompson ; Deposition of Laura O'Donohue filed. |
| Jan. 04, 1996 | (Petitioner) Motion for Additional Time to Conduct Final Hearing and Entry of a Scheduling Order for the Second Portion of the Hearing filed. |
| Jan. 03, 1996 | Order sent out. (Respondent to answer outstanding discovery by 1/9/96) |
| Nov. 28, 1995 | (Petitioner) Motion to Compel filed. |
| Nov. 01, 1995 | Second Notice of Hearing sent out. (hearing set for 01/10/96; 10:30 a.m. (C.S.T.); Pensacola) |
| Oct. 03, 1995 | (Petitioner) Response to Order issued September 22, 1995 filed. |
| Sep. 22, 1995 | Order sent out. (hearing cancelled; parties to respond in 10 days) |
| Sep. 21, 1995 | (Respondent) Emergency Motion for Continuance filed. |
| Sep. 20, 1995 | Petitioner`s Response in Opposition to Respondent`s Emergency Motion for Continuance filed. |
| Sep. 12, 1995 | Notice of Service of Petitioner`sr`s Answers Respondent`st`s First Set of Amended Interrogatories filed. |
| Sep. 06, 1995 | Order sent out. (Motion Granted) |
| Aug. 15, 1995 | (Petitioner) Motion for Leave to Amend Administrative Complaint; First Amended Administrative Complaint filed. |
| Jul. 27, 1995 | (Respondent) Notice of Appearance filed. |
| Jun. 15, 1995 | Notice of Hearing sent out. (hearing set for 9/28/95; 9:30am; Pensacola) |
| Jun. 12, 1995 | (Petitioner) Joint Response to Initial Order filed. |
| Jun. 01, 1995 | Initial Order issued. |
| May 26, 1995 | Agency Referral Letter; Administrative Complaint; Election of Rights filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 20, 1996 | Agency Final Order | |
| Oct. 03, 1996 | Recommended Order | Petitioner established/although forms disclosing ancillary products were signed; that didn't equal "informed consent" regarding facts. Conceal fee for product in premium receipt deceptive |
DEPARTMENT OF INSURANCE vs JOHN MORRIS ALE, 95-002690 (1995)
DEPARTMENT OF INSURANCE vs RICHARD ROSENBLUM, 95-002690 (1995)
DEPARTMENT OF FINANCIAL SERVICES vs LAURA J. KING, 95-002690 (1995)
DEPARTMENT OF INSURANCE vs ROBERT CHARLES ANDERSON, 95-002690 (1995)
DEPARTMENT OF INSURANCE AND TREASURER vs. JON SCOTT ROBBINS, 95-002690 (1995)
