STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2757

)

MARIA AMELIA POU, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on November 5, 1996, at Miami, Florida, before Errol H. Powell, a duly designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Marc S. Nash, Esquire

Department of Insurance and Treasurer Division of Legal Services

612 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Charles J. Grimsley, Esquire

1800 Brickell Avenue

Miami, Florida 33129

STATEMENT OF THE ISSUE

The issue for determination is whether Respondent committed the offenses set forth in the administrative complaint and, if so, what action should be taken.

PRELIMINARY STATEMENT

On April 22, 1996, the Department of Insurance and Treasurer (Petitioner) filed a two-count administrative complaint against Maria Amelia Pou (Respondent). Petitioner charged Respondent with: Count I--violating Subsections 626.561(1), 626.611(1),

(4), (5), (7) - (10), and (13), 626.621(2) - (4), (6), and (12),

and 626.9541(1)(k)1, and (o)1 and 2, Florida Statutes; and Count II--violating Subsections 626.611(1), (4), (7), (9), and (13), and 626.621(2), (3), and (12), Florida Statutes. By an Election of Rights form, Respondent disputed the allegations of fact and requested a formal hearing. On June 10, 1996, this matter was referred to the Division of Administrative Hearings.

Prior to hearing, Petitioner filed a motion for sanctions predicated on Respondent failing to comply with an order compelling discovery. A hearing by telephone conference was held on the motion. Due to the shortness of time before the hearing, an oral order was rendered granting the motion. Respondent was ordered to pay Petitioner’s attorney's fees and costs associated with filing and arguing the motion, with Petitioner being ordered to file the appropriate document(s) evidencing its fees and costs. Subsequent thereto, Petitioner filed a motion to compel payment of attorney's fees and costs due to Respondent's failure to pay same. By Orders rendered equal date herewith, rulings are made regarding the issue of sanctions.

At hearing, Petitioner presented the testimony of three witnesses and entered 12 exhibits into evidence. Respondent testified in her own behalf, presented the testimony of three witnesses, and entered four exhibits into evidence. Petitioner objected to Respondent's Exhibits numbered 1,2,5, and 6, and the ruling on the Exhibits was reserved. Subsequently, Petitioner withdrew its objection to Respondent's Exhibit numbered 5, and it is hereby admitted into evidence. Having considered the argument of counsel regarding Respondent's Exhibits numbered 1,2, and 6, these exhibits are hereby rejected. Hence, Respondent entered a total of five exhibits into evidence, with one being deposition testimony.

A transcript of the hearing was ordered. The parties filed proposed findings of fact which have been considered in this recommended order.

FINDINGS OF FACT

1. At all times material hereto, Maria Amelia Pou (Respondent) was licensed as a general lines insurance agent.

2. Pursuant to Chapter 626, Florida Statutes, the Department of Insurance (Petitioner) has jurisdiction over Respondent’s insurance license and appointments.

3. At all times material hereto, Respondent was an officer of General Insurance Group, Inc. (GIG), located in Hialeah, Florida. GIG is a Florida incorporated general lines insurance agency.

4. At all times material hereto, Respondent was an officer of Victoria Insurance Agency, later changed to General Insurance Group II, both hereinafter referred to as GIG II, located at 4583 NW 7th Street, Miami, Florida 33126. GIG II is a Florida incorporated general lines insurance agency.

5. Respondent was, and is, personally and fully liable and accountable for the wrongful acts, misconduct, or violations of any provision of the Florida Insurance Code that she knew or should have known were committed by any person, over whom she had direct supervision and control, acting on behalf of GIG II.

6. Respondent was, and is, personally and fully liable and accountable for wrongful acts, misconduct, or violations of any provision of the Florida Insurance Code that she committed.

7. At all times material hereto, Respondent maintained an escrow account, with account no. 008-1027286, at Republic National Bank of Miami in Miami, Florida. Respondent had joint signatory authority over the escrow account.

8. Premiums, returned premiums, and other funds belonging to insureds, insurers, and others received in transactions under Respondent's license are trust funds held by Respondent in a fiduciary capacity.

9. On November 22, 1994, Carlos Vidal and his wife, Teresa Vidal, purchased a new vehicle from Ocean Mazda, a Mazda dealership located on Lejeune Road, Miami, Florida.

10. Before leaving the dealership with his new vehicle, Mr. Vidal attempted to obtain insurance coverage for the vehicle from his insurance company, State Farm. However, when he went to State Farm's office, no one was present and it appeared to be closed.

11. Mr. Vidal returned to the dealership and informed the dealer's salesperson, Mr. Munoz, of his problem. The salesperson called several insurance companies without success before reaching GIG II.

12. Mr. Munoz engaged in all communication over the telephone with GIG II. Neither Mr. Vidal nor Mrs. Vidal spoke with GIG II. Mr. Munoz obtained a quote of $997 from GIG II for the annual premium for the insurance coverage on the vehicle and informed Mr. Vidal of the cost. Mr. Vidal requested his wife to complete a check to GIG in the quoted amount. She complied. The check was given to and accepted by Mr. Munoz.

13. GIG II faxed an insurance binder to Mr. Munoz. He gave the binder to Mr. Vidal. The binder indicated that the insurance was to be issued by Clarendon National Insurance Company.

14. Having obtained the insurance binder, Mr. and Mrs. Vidal left the dealership with their new vehicle.

15. Although the premium was paid in full, GIG II completed an insurance premium finance contract (finance contract) to finance the premium with World Premium Finance Company (WPF), dated November 22, 1994, for Mr. Vidal.

16. Ninety-five percent of Respondent's premiums are premium financed.

17. The finance contract reflects the alleged signatures of Mr. and Mrs. Vidal. However, neither Mr. Vidal nor Mrs. Vidal signed the finance contract. An inference is drawn and a finding is made that GIG II signed the names of Mr. and Mrs. Vidal on the finance contract. Respondent signed the finance contract as the broker or agent.

18. Also, the finance contract reflects GIG II as the agent and the insured as both GIG II and Mr. and Mrs. Vidal, with only GIG II's address as the address for both GIG II and the Vidals.

19. Further, the finance contract reflects a premium of

    
    

    $907, cash down payment of $273, and three monthly payments of

    
    

    $225.18. The monies totaled $948.54 for the finance contract price.

20. The $997 check was deposited into GIG II's escrow account. At all times material hereto, the money remained in the escrow account.

21. GIG II completed an application for the insurance coverage, dated November 22, 1994, with Associated Insurance Brokers, Inc. (AIB) to be issued by Clarendon National Insurance Company. The application reflected a total policy premium of

    $907. Respondent signed the application as brokering agent.

    
    

22. Also, the application reflects the alleged signatures of Mr. and Mrs. Vidal. However, neither Mr. Vidal nor Mrs. Vidal

    signed the application. An inference is drawn and a finding is made that GIG II signed Mr. and Mrs. Vidal's names to the application.

23. Approximately, two to three days after November 22, 1994, Mr. Vidal brought the vehicle to GIG II for pictures to be taken of it for insurance purposes.

24. A Florida Motor Vehicle Preinsurance Inspection Report, dated November 22, 1994, reflects the alleged signature of Mr. Vidal. To the contrary, Mr. Vidal did not sign the Report.

25. Regarding the premium for the insurance, Respondent utilized computer software to compute the premium. The software requires a vehicle's VIN number. Respondent's software was not current due to her not having received, at the time of the transaction, the updated software which would reflect a recent rate increase. The total premium by the software was lower than the premium should have been.

26. It is customary in the insurance industry to use the computer software used by Respondent for the insurance premiums. Also, it is not unusual for a delay to occur for the updated software to be received by an insurance company after a rate increase is approved and effective.

27. In the insurance industry, it is not unusual for a miscalculation of a premium to occur. No gross miscalculation occurred in this instance which would cause the miscalculation to be unusual and suspect.

28. Due to the miscalculation of the premium, by letter dated January 12, 1995, AIB notified Mr. Vidal that an additional

    $120 was due on the premium. Further, the letter provided that he had three options: (1) pay the $120 by February 10, 1995; or

    (2) cancel the insurance policy by February 26, 1995, and demand return of unearned premiums; or (3) take no action and the insurance policy would be cancelled by February 26, 1995.

29. Mr. Vidal decided to cancel the insurance policy.

    
    

30. On January 30, 1995, Mr. Vidal went to GIG II and executed a Cancellation Request Form cancelling his insurance. Respondent's signature appears on the Form as the agent. At some point in time, the cancellation form was forwarded by GIG II to AIB.

31. By notice dated February 6, 1995, WPF notified Mr. Vidal, among other things, that he had ten days to pay his monthly installment ($225.18) due on February 1, 1995, 1 plus a late charge of $10, totaling $235.18 and that, if he failed to pay, his insurance would be cancelled. The address for Mr. Vidal on the notice was GIG II's address.

32. By notice dated February 16, 1995, WPF notified Mr. and Mrs. Vidal, among other things, that their insurance policy was cancelled due to nonpayment of the monthly installment. The address for Mr. and Mrs. Vidal on the notice was GIG II's address.

33. By letter dated February 14, 1995, to AIB, Mr. Vidal

    notified AIB that he had chosen to cancel his insurance policy and had executed a cancellation form on January 27, 1995, 2 and demanded a refund of the unearned premiums. Further, Mr. Vidal indicated in the letter that he had neither heard from AIB or received a refund and that he was notifying it of his cancellation and demand for a refund.

34. As a result of the cancellation by Mr. Vidal, AIB issued WPF a check dated February 22, 1995, in the amount of

    $549.67.

    
    

35. Subsequently, on or about March 1, 1995, WPF issued GIG II a check in the amount of $79.31

36. Even after Mr. Vidal cancelled the insurance coverage and Respondent had received a refund from WPF, Respondent failed to adjust her conduct to conform with the Vidals' situation which was that the insureds, the Vidals, had paid the quoted premium in full.

37. Not having received a refund, on April 17, 1995, approximately two and one-half months after signing the cancellation form, Mr. Vidal filed a request for assistance with Petitioner.

38. By check dated July 10, 1995, more than five months after Mr. Vidal signed the cancellation form, Respondent issued Mr. Vidal a refund in the amount of $239.33 for insurance coverage that he had in effect for a little over two months. The refund check was issued from GIG II's escrow account.

39. The refund monies included $49 which represented the difference between what the Vidals paid for the coverage ($997) and the finance contract price ($948.54). Consequently, Mr. Vidal was assessed the interest charged on a finance contract which never should have existed in his situation as the quoted premium was paid in full.

40. In a premium finance situation in which a refund is due an insured, it is customary in the insurance industry for a three-step process to take place: (1) the insurance company issues a check to the premium finance company for the refund and forwards the check to the premium finance company which may take at least 30 days; (2) the premium finance company issues a check to the agent for the refund and forwards the check to the agent which may take at least another 30 days; and (3) the agent issues a check to the insured for the refund and sends the check to the insured.

41. The same refund procedure was followed in this situation but with less time involved for steps (1) and (2). Moreover, in this instance, an important factor which makes this situation different is that Respondent had in her escrow account the full premium paid by the insureds, the Vidals.

42. After receiving Mr. Vidal's request for assistance, Petitioner conducted an investigation. At first, Petitioner determined that no violation of the Insurance Code had occurred and Petitioner closed its file. However, subsequently,

    Petitioner re-opened its investigation which led to the filing of the administrative complaint against Respondent.

43. After filing of the administrative complaint and more than one year after Respondent refunded the $239.33 to Mr. Vidal, Respondent acknowledged that more monies were due Mr. Vidal. Having reviewed the computations with Petitioner, Respondent refunded the additional monies to Mr. Vidal.

44. An individual who is not licensed by Petitioner may qualify for a license by experience. Petitioner prescribes the activities in which an unlicensed person may engage.

45. Over the years, Respondent has had unlicensed employees who were attempting to qualify for licensure by experience. Respondent identified two unlicensed employees, Maria Cancio and Maritza Inclant, who provided premium quotes to customers. Approximately ten percent of Ms. Cancio's time was devoted to providing premium quotes. However, more than ten percent of Ms. Martiza's time was devoted to providing premium quotes.

46. Petitioner presented no evidence as to the time periods, i.e., six months or twelve months to which the percentages were applicable.

    CONCLUSIONS OF LAW

    
    

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

48. License revocation proceedings are penal in nature. The burden of proof is on Petitioner to establish the truthfulness of the allegations in the administrative complaint by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

49. Section 626.561, Florida Statutes (1993), provides in pertinent part:

    1. All premiums, return premiums, or other funds belonging to the insurers or others received by an agent, solicitor, or adjuster in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity. An agent shall keep the funds belonging to each insurer for which he is not appointed, other than a surplus lines insurer, in a separate account so as to allow the department to properly audit such funds. The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.

50. Section 626.611, Florida Statutes (1993), provides grounds for mandatory disciplinary action against a license or appointment and provides in pertinent part:

    The department shall ... suspend, revoke ... the license or appointment of any applicant, agent, title agency, solicitor, ... managing general agent ... if it finds that as to the

    ... licensee ... any one or more of the following applicable grounds exist:

    1. Lack of one or more of the qualifications for the license or appointment as specified in this code.

       * * *

       1. If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of

          this code.

       2. Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.

       * * *

       1. Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance.

       2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

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

       4. Misappropriation, conversion, or unlaw-ful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.

       * * *

       (13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.

51. Section 626.621, Florida Statutes (1993), provides grounds for discretionary discipline against a license or appointment and provides in pertinent part:

    The department may in its discretion, ... suspend, revoke ... the license or appoint- ment of any applicant, agent, solicitor, ... managing general agent ... and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such ... suspension, revocation,

    ... is not mandatory under 626.611:

    * * *

    1. Violation of any provision of this code or any other law applicable to the business of insurance in the course of dealing under

       the license or appointment.

    2. Violation of any lawful order or rule the department.

    3. Failure or refusal, upon demand, to pay over to any insurer he represents or has represented any money coming into his hands belonging to the insurer.

    * * *

    (6) In the conduct of business under the license or appointment, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

    * * *

    (12) 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.

    
    

52. Subsection 626.9541(1), Florida Statutes (1993), defines unfair methods of competition and unfair or deceptive acts or practices and provides in pertinent part:

    1. Misrepresentation in insurance applications.-

       1. Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

          * * *

          1. Illegal dealings in premiums; excess or reduced charges for insurance.

             1. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided, or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy issued by an insurer as permitted by this code.

             2. Knowingly collecting as a premium or charge for insurance any sum in excess of or less than the premium or charge applicable to

          such insurance, in accordance with the applicable classifications and rates as filed with and approved by the department, and as specified in the policy; or, in cases when classifications, premiums, or rates are not required by this code to be so filed and approved, premiums and charges in excess of or less than those specified in the policy and as fixed by the insurer....

53. Rule 4-222.020, Florida Administrative Code, provides definitions and provides in pertinent part:

    1. "Incidental" means,

       1. Conduct by insurance agency personnel qualifies as "incidental" only if it meets the following three criteria:

          1. All the work done under the "incidental" exception, in terms of the amount of time the unlicensed employee spends doing it, is 10% or less of the employee's time compared to time spent on other tasks;

          2. The exact amount and timing of the work is unpredictable; and

          3. On an agency-wide aggregate level, all the work done by unlicensed employees under the "incidental" exception is 10% or less of such work as compared to the amount of such work done by agents, solicitors, and customer representatives in that office.

       2. Absent evidence of abuse of the "incidental" exception, the Department will evaluate "incidental" by looking at the operation of the agency over a 6 to 12 month period. For example, if it were shown that over the course of a year an agent's receptionist spent just 20 minutes a day doing work under the incidental exception, except that for four weeks during the year while the agent was hospitalized or on vacation the receptionist spent almost full- time taking applications and giving quotes, then this activity would still qualify as "incidental". Note that an agent's illness or vacation does not expand the types of activities unlicensed staff may conduct.

54. Rule 4-222.050, Florida Administrative Code, provides the types of conduct in which the unlicensed staff of an insurance agency may engage only if the conduct is "incidental" to the employee's main duties and provides in pertinent part:

    1. Giving quotes in the agent's office, as set out in rule 4-222.020, to persons calling or coming into the office and asking for a quote.

    2. Receiving premium at the agent's office. Receiving premium does not include the handling of premium by mail room personnel or other unlicensed personnel who handle mail.

55. Petitioner demonstrated that Respondent aided and abetted an unlicensed individual and non-employee, i.e., the car salesperson, to transact insurance by providing a premium quote over the telephone to the car salesperson who relayed the quote to the insureds and by allowing the salesperson to obtain the check for the insurance premium from the insureds and give the check to Respondent. Consequently, Petitioner demonstrated that Respondent violated Subsections 626.611(4), (7) and (13), and 626.621(2) and (12).

56. Petitioner demonstrated that Respondent willfully misrepresented the insurance premium by quoting a premium of $997 but listing a premium of $907 on the insurance application and premium finance contract and not providing a copy of the application and contract to the insureds. Hence, Petitioner demonstrated that Respondent violated Subsections 626.611(4), (5), (7) and (13), 626.621(2), and 626.9541(1)(k)1.

57. Petitioner demonstrated that Respondent willfully misappropriated, or unlawfully withheld the funds representing the insureds' fully paid insurance premium of $997. Although the premium was paid in full, Respondent financed the insurance at a premium of $907, with a down payment of $273 and three monthly installments of $225.18. Furthermore, Respondent failed to fully refund the insureds' unearned premium within a reasonable time after the insurance was cancelled, given that the premium monies were held in escrow and that there never should have been a premium finance contract, and charged the insureds interest on the premium finance contract. Consequently, Petitioner demonstrated that Respondent violated Subsections 626.561(1), 626.611(4), (7), (10) and (13), 626.621(2), and 626.9541(1)(o) 1 and 2.

58. Petitioner failed to demonstrate that Respondent aided and abetted her unlicensed personnel to transact insurance by allowing one of her employees to devote more than 10 percent of her (employee's) time to providing quotes, as compared to the employee's other tasks. An exception is allowed for unlicensed personnel to provide quotes if the quotes are provided as "incidental" to the employee's tasks. Rule 4-222.050. No showing was made that Respondent abused the incidental exception and, in the absence of abuse, no evidence was presented as to the incidental nature of the employee's tasks covering a six to twelve month period. Rule 4-222.020(2).

59. Regarding penalty in this case, the highest stated penalty is considered. Rule 4-231.040, Florida Administrative Code. The highest penalty for the violations committed is a nine-month suspension. Rules 4-231.030(6) and (7), 4-231.040(1) and (2), 4-231.080, 4-231.090, and 4-231.100, Florida Administrative Code.

60. Aggravating or mitigating factors, if any, are considered in reaching a final penalty. Rule 4-231.040(3), Florida Administrative Code. For this case, aggravating and mitigating factors are provided in Rule 4-231.160(1), Florida Administrative Code. As to aggravating factors, Petitioner has shown that Respondent's conduct was willful and that Respondent failed to make timely refund to the insureds. As to mitigating factors, Respondent cooperated with Petitioner in its investigation and Respondent has no prior disciplinary action. Considering the aggravating and mitigating factors, they should have no effect on the penalty as to its increase or decrease.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Insurance and Treasurer enter a final order

1. Finding in Count I that Maria Amelia Pou violated

   
   

   Subsections 626.561(1), 626.611(4), (5), (7), (10) and (13),

   
   

   626.621(2) and (12), and 626.9541(1)(k)1 and (o) 1 and 2;

2. Dismissing Count II; and

   
   

3. Suspending the license of Maria Amelia Pou for nine months.

DONE AND ENTERED this 15th day of April, 1997, in Tallahassee, Florida.

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 15th day of April 1997.

ENDNOTES

1/ The first payment of $225.18 was timely paid by GIG II.

2/ This date is incorrect. The evidence shows that the correct date is January 30, 1995.

COPIES FURNISHED:

Charles J. Grimsley, Esquire 1880 Brickell Avenue

Miami, Florida 33129

Marc S. Nash, Esquire Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

Bill Nelson

State Treasurer & Insurance Commissioner

Department of Insurance & Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel Department of Insurance & Treasurer The Capitol, LL-26

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.

Docket for Case No: 96-002757

Orders for Case No: 96-002757