STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND TREASURE, )

)

Petitioner, )

)

vs. ) Case Nos. 97-2915

) 97-3735

MATTHEW L. BRILLIS, and INSURANCE ) SCHOOL OF CONTINUING EDUCATION, )

INC., a dissolved Florida )

corporation, )

)

Respondents. )

)

) MATTHEW L. BRILLIS, and INSURANCE ) SCHOOL OF CONTINUING EDUCATION, )

INC., a dissolved Florida )

corporation, )

)

Petitioners, )

)

vs. ) Case No. 98-0631RX

) STATE OF FLORIDA, DEPARTMENT OF ) INSURANCE AND TREASURE, )

)

Respondent. )

)

RECOMMENDED ORDER IN CASE NOS. 97-2915 AND 97-3735

An administrative hearing was conducted in this consolidated proceeding on January 30 and March 4, 1998, in Tallahassee, Florida, before Daniel Manry, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: John R. Dunphy, Esquire

Joseph A. Robles, Esquire Department of Insurance Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

For Respondents: Cynthia S. Tunnicliff

Pennington, Moore, Wilkinson, Bell and Dunbar, P.A.

215 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2095

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent, Matthew Brillis ("Brillis"), and Respondent, Insurance School of Continuing Education (the "Insurance School"), violated Sections 626.611(7), (9), and (13), Sections 626.621(2), (3), (6), and

(12), and Sections 626.9521(1) and 626.9541(1)(e)1, Florida Statutes (1997), and Florida Administrative Code Rules 4- 228.040(2)(d) and (3)(b), 4.228-090(5), 4-228.100(2), 4-

228.160(1) and (6), and 4-228.170 by submitting invoice and roster forms to the state for a cancelled class of continuing education, and, if so, what, if any, penalty should be imposed. (All references to chapters and sections are to Florida Statutes (1997) unless otherwise stated. Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code in effect as of the date of this Order.)

PRELIMINARY STATEMENT

Petitioner filed administrative complaints against Brillis and the Insurance School on May 20 and 22, 1997, respectively. Respondents timely requested an administrative hearing. The matters were referred to the Division of Administrative Hearings ("DOAH") to conduct a hearing. The separate matters were consolidated on September 17, 1997.

At the hearing, Respondents challenged Rules 4-228.040(1), 4-228.040(2)(d) and (3)(b), 4.228-090(5), 4-228.100(2), 4-

228.160(1) and (6), 4-228.170, 4-228.210, and 4-228.220 as an

invalid exercise of delegated legislative authority. Pursuant to the agreement of the parties, the undersigned granted Respondents leave to file a rule challenge pursuant to Section 120.56, conducted an administrative hearing regarding the rule challenge on March 4, 1998, and issued separate recommended and final orders after the hearing regarding the rule challenge. The issues raised in the rule challenge are addressed in the separate Final Order issued on the same date as the date of this Recommended Order.

At the administrative hearing conducted pursuant to Section 120.57(1), Petitioner presented the testimony of seven witnesses, six of which were submitted in the form of depositions, and submitted three exhibits for admission in evidence. Brillis testified in his own behalf, called one additional witness, and submitted one exhibit for admission in evidence.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the transcript of the hearing filed with the undersigned on February 19, 1998. Respondents' timely filed their proposed recommended order ("PRO") on April 10, 1998. Petitioner timely filed its PRO on April 13, 1998.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for regulating life and health insurance agents. Brillis is licensed

   as a life and health insurance agent and teaches continuing education courses under the name of the Insurance School.

2. Section 626.2815 establishes requirements and standards for continuing education courses for persons licensed to sell insurance in Florida. Each licensee must complete 28 hours of continuing education every two years.

3. Petitioner interprets Section 626.2815 as authorizing Petitioner to regulate providers of continuing education courses.

   Petitioner claims that Section 626.2815 authorizes Petitioner to approve the instructors and school officials employed by such providers.

4. Petitioner requires providers to apply for approval for each course before the provider can offer the course. If

   Petitioner approves the course, Petitioner requires the provider to file with Petitioner a "schedule of classes." The schedule of classes contains a variety of information including the signature of the school official, the name of the course, the location of the class, and the number of credit hours requested.

5. After the course is completed, Petitioner requires a provider to file an "invoice and roster." The invoice and roster contains the name of the course, its location, the names of the persons who attended the course for credit, and the number of credit hours received by each person. Petitioner requires the provider to include a payment of $1.00 per person with each invoice and roster.

6. Petitioner enters the information from the invoice and

   roster into Petitioner's computer system. The computer assigns credit to each licensee listed in the invoice and roster.

7. In May 1995, the Insurance School filed three schedule of classes with Petitioner. The schedules notified Petitioner that the Insurance School would teach classes on Life Insurance Policies and Rules and Regulations on September 18, 1995, and a class on Government/Retirement Programs on September 19, 1995, at a Holiday Inn in West Palm Beach.

8. Each of the schedules were stamped with a replica of the signature of Brillis. The signature was stamped on the line requiring a signature of the school official.

9. Employees of the Insurance School routinely used a stamp with a replica or facsimile of Brillis' signature to complete the forms required by Petitioner. Brillis travels extensively while teaching continuing education courses. His signature stamp is reasonably necessary to comply with the filing requirements imposed by Petitioner. The Insurance School has been in operation and approved by Petitioner since 1991.

10. Employees at the Insurance School made arrangements with the Holiday Inn in West Palm Beach for a class room and lodging for the instructor for September 18 and 19, 1995. Prior to September 11, 1995, the Insurance School cancelled the classes due to an error in the flyers mailed out to promote the classes and consequent low attendance. On September 11, 1995, employees of the Insurance School cancelled the class room and the lodging for the instructor at the Holiday Inn in West Palm Beach.

11. Brillis instructed employees of the Insurance School, in a written memorandum, to call each person enrolled in the cancelled classes and notify him or her of the cancellation. Brillis also instructed his employees to offer each person the choice of a refund or a credit toward a future class and to notify the state that the classes had been cancelled.

12. Employees of the Insurance school carried out the instructions from Brillis. Attached to the written instructions left by Brillis, is a copy of the schedule of classes with a large "X" in the box next to the word "cancellation." In the upper right corner of the schedule is a notation written by an employee other than Brillis stating that the notice to the state was "sent 9/11."

13. Petitioner does not have any record that it ever received the notice of cancellation. Petitioner does have a request for course credit for the cancelled classes that was filed with Petitioner in error.

14. In May 1997, Petitioner notified Brillis that an invoice and roster had been sent to Petitioner for the cancelled classes. The invoice and roster requested course credit for the cancelled classes. Petitioner told Brillis that Petitioner had issued certificates of completion to the persons registered and listed on the invoice and roster.

15. A computer error at the Insurance School caused the invoice and roster to be sent to Petitioner. After a class is cancelled and the licensee is notified, standard procedure

    requires the appropriate employee at the Insurance School to input the word "cancelled" in the computer file for each person in the cancelled class. This procedure was not followed for the cancelled classes.

16. When the employee responsible for running the invoice and roster form for the Insurance School keyed the computer to collate the licensees that had attended the classes originally scheduled for September 18 and 19, 1995, the computer did not show that the classes had been cancelled. An employee would have no way of knowing that the classes had been cancelled unless the note of cancellation had been input into the computer file.

17. The invoice and roster form was erroneously generated, stamped with Brillis' signature, and sent to Petitioner. Although some portions of the invoice and roster contain handwritten information, none of the handwriting is the handwriting of Brillis. The handwriting remains unidentified.

18. The erroneous request for course credit for the cancelled classes is a single isolated incident caused by a computer error. The computer error was the result of an honest mistake committed by one or more employees of the Insurance School.

19. Brillis did not cause the computer error and did not instruct his employees to take action that resulted in the erroneous request for course credit. Rather, Brillis instructed his employees to take action that would have prevented the mistake by notifying Petitioner that the classes had been

    cancelled. If those instructions had been followed, there would have been no erroneous request for course credit.

20. Brillis has been licensed to sell insurance in Florida since 1964. In 34 years, Petitioner has never taken any disciplinary action against Brillis' license.

21. Brillis began teaching continuing education courses for insurance agents before 1991. Since 1991, there has never been any disciplinary action taken against Brillis' license.

22. The Insurance School was formed as a Florida corporation on May 31, 1991. It was dissolved on August 26, 1994. Since its dissolution, the Insurance School has not been a Florida corporation.

    CONCLUSIONS OF LAW

23. The Division of Administrative Hearings has jurisdiction over the subject matter and parties. The parties were duly noticed for the administrative hearing.

24. Petitioner has the burden of proof in this proceeding. Petitioner must show by clear and convincing evidence that

    Respondents committed the acts alleged by Petitioner and the reasonableness of any proposed penalty. Department of Banking and Finance, Division of Securities and Investor Protection vs. Osborne Stern and Company, 670 So. 2d 932, 935 (Fla. 1996).

25. Petitioner failed to satisfy its burden of proof. With the exception of the deposition testimony of Mr. William D. Hawkins, the evidence submitted by Petitioner is relevant to facts that are not disputed by Respondents.

26. This anomaly in the evidentiary record is illustrated by the depositions of five persons other than Mr. Hawkins. Four of the deponents testified that they did not attend the cancelled classes. However, Respondents never claimed the students did attend the cancelled classes.

27. One of the deponents testified that she did not receive a refund for the cancelled classes. However, she further testified that she did not request a refund because a taped message at the Insurance School informed callers that the classes would be rescheduled. Respondents admit that they offered students the choice of a credit toward future classes.

28. The only live witness called by Petitioner testified to the procedures Petitioner followed regarding the cancelled classes and to the content of documents submitted by Petitioner for admission in evidence.

29. Petitioner submitted Petitioner's Exhibit 1 to show that Brillis owns and operates the Insurance School. Brillis never contended that he did not own and operate the Insurance School.

30. The only remaining evidence submitted by Petitioner, other than the deposition testimony of Mr. Hawkins, consisted of Petitioner's Exhibits 2 and 3. Petitioner submitted Petitioner's Exhibits 2 and 3 to show that Respondents submitted a schedule of classes and invoice and roster before and after the cancelled classes. Petitioner's Exhibit 3 shows that a request was erroneously made for credit for persons on the roster who in fact

    did not attend the cancelled classes.

31. Respondents do not contest the facts evidenced in Petitioner's Exhibits 2 and 3. Rather, Brillis submitted credible and persuasive evidence explaining that the schedule of classes and invoice and roster in Petitioner's Exhibit 3, which erroneously requested course credit for the cancelled classes, were filed with Petitioner as a result of a computer error created by employees of the Insurance School. Brillis did not personally review the documents in Petitioner's Exhibit 3 before employees of the Insurance School erroneously filed the documents with Petitioner.

32. Brillis did not instruct his employees to request course credit for the cancelled classes. Rather, Brillis instructed his employees to notify Petitioner that the classes had been cancelled. As part of the evidence submitted by Respondents and in the deposition of Mr. Bob Proechel submitted by Petitioner, the handwritten memorandum written by Brillis to his employees specifically instructs his employees to call the students enrolled in the cancelled classes, offer them a refund or credit for future classes, and ". . . TELL [the] STATE TOO!!"

33. The deposition testimony of Mr. Hawkins was less than clear and convincing. In order for evidence to be clear and convincing:

    . . . evidence must be found to be credible, facts to which witnesses testify must be distinctly remembered, testimony must be precise and explicit, and witnesses must be lacking in confusion . . . . The evidence must be of

    such weight that it produces in the mind of the trier of fact a firm . . . conviction, without hesitancy, as to the truth of the allegations sought to be established.

    Slomowitz vs. Walker, 429 So. 2d 797, 799 (Fla. 4th DCA 1983).

34. The evidence submitted in the deposition testimony of Mr. Hawkins did not produce in the mind of the trier of fact a firm conviction, without hesitancy, as to the truth of the allegations Petitioner seeks to establish. The following excerpts from 25 pages of direct examination in the deposition speak for themselves:

    A I don't recall very much about - or anything about this whole transaction. But this is - checking with my wife Hallie, this appears to be the statement that we - or that I signed or wrote.

    
    

    * * *

    A As I stated before, I don't remember anything about this. It was over two years ago, and it's history.

    
    

    * * *

    A Mr. Robles, as I've told you before, I remember very little to next to nothing about this whole - about the specifics of this. I remember it as being an unpleasant experience. The affidavit brought some things back into focus that I obviously had forgotten the details. And I'm prepared to say that I signed the affidavit. The specifics, I couldn't have given you one of them until I read the affidavit.

    * * *

    Q So the affidavit did refresh your memory?

    A The affidavit plus talking to my wife. She says that seems to be what went on, based on her recollection.

    Q I'm asking you, Mr. Hawkins. . . . Did the affidavit refresh your memory?

    A I can't say that it refreshed my memory

    . . . .

    A Again, as I've stated over and over, I can only state that this is my - a true affidavit that I did and signed in September of 1995, and I don't have any personal recollection of the details at this time.

    * * *

    Q Did you . . . pay money to attend this particular class . . . ?

    A I don't recall.

    Q But you received a refund to attend these particular classes?

    A I don't recall.

    
    

    * * *

    A It does not appear that we paid anything in advance, because I wasn't asking for a refund. . . . But I certainly would have asked for a refund for a class I didn't get to go to if I - if I had paid in advance.

    Deposition Of William D. Hawkins, at 9-10, 14-15, 21-24, and 25.

35. The evidence was not clear and convincing that Respondents committed essential elements of the charges against them. License discipline cases are penal in nature. Penal statutes and rules must be strictly construed in favor of Respondents. Werner v. Department of Insurance and Treasurer, 689 So. 2d 1211, 1214 (Fla. 1st DCA 1997); Lester vs. Department of Professional and Occupational Regulations, State Board of Medical Examiners, 348 So. 2d 923 (Fla. 1st. DCA 1977).

36. Petitioner failed to show, even by a preponderance of the evidence, that Respondents committed any of the violations alleged in the administrative complaints. For example, Petitioner failed to show that Brillis "demonstrated a lack of fitness or trustworthiness to engage in the business of insurance," engaged in "fraudulent or dishonest practices," or engaged in the "wilful failure to comply . . . or violation of

    . . . any provision of this code" within the meaning of Sections 626.611(7), (9), or (13). A single incident of misconduct is not sufficient to demonstrate lack of fitness or trustworthiness.

    Werner, 689 So. 2d at 1214; Natelson v. Department of Insurance, 454 So. 2d 31 (Fla. 1st DCA 1984).

37. The deposition testimony of Mr. Hawkins was the only evidence submitted by Petitioner which arguably provided any basis to question Respondents' showing that Brillis instructed his employees to notify the state that the classes had been cancelled and that the erroneous request for course credit for cancelled classes was an honest mistake in a single isolated incident. However, Mr. Hawkins had no personal knowledge of the facts to which he was asked to testify. Petitioner submitted no evidence to support a finding that Mr. Hawkins had any present, personal knowledge of the matter, within the meaning of Section 90.604.

RECOMMENDATION

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

RECOMMENDED that Petitioner enter a Final Order finding Respondents not guilty of all of the allegations in the separate administrative complaints filed against them.

DONE AND ENTERED this 8th day of June, 1998, in Tallahassee, Florida.

DANIEL MANRY

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 8th day of June, 1998.

COPIES FURNISHED:

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Daniel Y. Summer General Counsel

Department of Insurance and Treasurer

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300

John R. Dunphy, Esquire Joseph A. Robles, Esquire Department of Insurance Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

Cynthia S. Tunnicliff Pennington, Moore, Wilkinson, Bell and Dunbar, P.A.

215 South Monroe Street, Suite 200 Tallahassee, Florida 32302-2095

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: 97-002915

Orders for Case No: 97-002915