vs. ) Case No. 99-3611
Respondent. )
A hearing was held in this case by video teleconference, on October 7, 1999, before Arnold H. Pollock, an Administrative Law Judge with the Division of Administrative Hearings. The Administrative Law Judge appeared from Tallahassee, Florida.
Respondent, counsel for both parties, and all witnesses appeared from Tampa, Florida.
For Petitioner: David W. Nam, Esquire
C. Laing Clark, P.A.
1958 West Dr. Martin Luther King Jr.
The issue for consideration in this case is whether Respondent's license as an all lines insurance adjuster in
Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
By Administrative Complaint filed in this case on July 21, 1999, Bill Nelson, Treasurer and Insurance Commissioner for the State of Florida, seeks to discipline Respondent's license as an all lines insurance adjuster in this state because, it is alleged, on or about July 30, 1997, Respondent submitted a fraudulent or misleading claim for additional living expenses with his insurance carrier. On August 20, 1999, through counsel, Respondent requested a formal hearing before the Division of Administrative Hearings, and this hearing followed.
At the hearing, Petitioner presented the testimony of LaShon Patrick, records verification clerk for the First Union National Bank of Florida in Tampa; Richard J. Green, a special investigator for USAA, an insurance company; Theodore P. Hammer, a law enforcement investigator II for the Department of Insurance; Linda K. Akins, a friend and owner of a townhouse rented by Respondent for a period of time pertinent to the issues herein; and Wanda D. McClendon, friend of Respondent and the individual with whom his children stayed for a period of time pertinent to the issues herein. Petitioner also introduced Petitioner's Exhibits 1 through 7. Respondent testified in his own behalf. He did not present any documentary evidence.
A Transcript of the proceedings was furnished to DOAH on October 18, 1999. Subsequent to the receipt thereof by the undersigned, only counsel for the Department submitted matters in writing which were carefully considered in the preparation of this Recommended Order.
At all times relevant to the issues herein, Petitioner, Department of Insurance, was the state agency in Florida responsible for the licensing of insurance agents and adjusters in this state and the regulation of the insurance profession therein. Respondent was licensed as an all lines insurance adjuster in Florida, and had been for approximately eight to ten years.
On May 15, 1997, Respondent's home, located at 6617 North 23rd Street in Tampa, Florida, was damaged by fire, making it temporarily uninhabitable by Respondent and his two sons. As a result, Respondent arranged for his two sons to reside temporarily with a friend, Ms. Wanda McLendan. Though no formal written agreement was entered into between them, Respondent claims he verbally agreed to pay her $45.00 per day for the housing of his two sons.
Respondent rented quarters for himself at the AmeriSuites Motel on North 30th Street in Tampa for the night of May 16, 1997, for which he was charged and paid $88.48. Commencing on May 17, 1997, Respondent moved into the DoubleTree
Guest Suites Motel near Busch Gardens in Tampa, for which he paid
$79.00 per night, plus tax. He remained at that facility until he checked out on June 9, 1997. Over the period he remained there, Respondent paid a total of $2,052.04 for room, taxes, and phone calls. All charges to both facilities were placed on Respondent's American Express card. Respondent submitted these charges to USAA, his insurance company, under that provision of his homeowner's policy which provided coverage for living expenses caused by property loss, up to $18,800 over a total of
12 months. These charges were reimbursed to him.
On July 27, 1997, Respondent forwarded to USAA a claim for further additional living expenses which allegedly arose out of the loss of use of the property due to the fire. In the cover letter which constituted the claim, Respondent indicated that on June 9, 1997, he and his family moved into a townhouse located at 5231 Tennis Court Circle in Tampa, which was owned by a friend, Linda Akins. Accompanying the letter was an extract of the pertinent insurance policy and a statement dated June 9, 1997, allegedly signed by both Respondent and Ms. Akins, whereby Respondent agreed to rent the subject property for $220.00 per day, including furniture and utilities. There was to be no deposit or lease. Also accompanying the claim letter were photo copies of four checks drawn on the First Union National Bank of Florida, numbers 1750, 1758, 1759, and 1761, in the amount of
$3,080, $3,080, $3,080, and $1,320 respectively, made payable to
Ms. Davis, signed by the Respondent, and dated June 22, and July 8, 21, and 26, 1997, all of which indicate they were in payment of rent for the property located at 5231 Tennis Court Circle.
On July 30, 1997, Respondent sent another letter to
Mr. Price at USAA in which he claimed additional living expenses for his two sons at the residence of a friend, Ms. McLendon, at a rate of $45.00 per day for the period from May 16, 1997, to
June 9, 1997. Accompanying that letter was a photocopy of check number 1752, dated June 15, 1997, in the amount of $945, drawn on the same bank as the others, and payable to Wanda McClendon.
This check bore the additional notation that it was for lodging for the two boys as alleged.
When these two claims were received by USAA, because the checks attached thereto did not appear to have been negotiated, the company initiated an investigation to be conducted by
Mr. Green, one of its investigators. Mr. Green reviewed the entire claim file and then interviewed both Respondent and Ms. Akins. Based on Green's review of the claim file and his interview of the individuals, he concluded that the claim was
false in that the expenses claimed had not been incurred. USAA requires that to be reimbursed to a policy holder, the expenses claimed have to have been actually incurred, but the policy does not define the term "incurred expenses."
At the hearing, Ms. Akins indicated that she had been contacted by Respondent about renting her townhouse in question and she agreed to do so. They initially agreed upon a rental of
$220.00 per day, she claims, but she also indicated Respondent agreed to pay to her in rent what he received from his insurance company. He gave her the checks which accompanied the claim, but asked her not to cash them because there was not enough money in the account to honor them, and she did not do so. She had rented the apartment to Respondent several years previously for a monthly rental of $400 to $475, but he contends, and she agrees, that this was only a part of the consideration paid for the rental. He also did some work around the property which, he contends, and she agrees, made up the balance of the consideration for the rental. No clear indication of what that work was, or its value, was presented, and it is found that the rental paid in the prior rental was considerably less that
$220.00 per day and a claim for that amount is both unreasonable and unrealistic. Ms. Akins contends she ultimately received a cashier's check for $3,000 in rent from Respondent.
Based on his conclusion that the claim was false, consistent with the requirements of the Department of Insurance, Theodore Hammer forwarded the claim to the Department for further action. Hammer, a fraud investigator for the Department, conducted additional inquiry into the claim, more specifically into the second claim regarding the payment to Ms. McClendon.
During the interview with Ms. McClendon, she indicated she had agreed to Respondent's sons staying with her for a while, but they did not discuss any fee for this and he did not give her the check for $945.00. At hearing, Ms. McClendon also contended that the agreement with Respondent called for him to pay her whatever he received from the insurance company. Respondent ultimately gave her a total of $225.00.
Respondent claims that when his home burned on May 15, 1997, he initially moved, with his sons, into a motel where they all stayed for several nights. He then made an arrangement with Ms. McClendon for his sons to stay with her for $45.00 per day. There was no written contract. Respondent remained in a motel until he had charged all his credit card would allow. However, the receipts offered into evidence reflect the credit card used was an American Express card, and there is usually no credit limit on a card from that company. This inconsistency was not explored by either party.
He reached an agreement, he claims, with Ms. Akins whereby he would pay her $225.00 per day for rent of her two- bedroom house which is what he asserts two rooms in a motel would cost. Review of the receipts for Respondent's stay at the AmeriSuites and the DoubleTree reflects a maximum of $88.00 per night at the former and about the same at the latter; a figure which, when doubled, will still total far less that $225.00.
However, if cost of food is included in the tabulation of motel living expense, Respondent's claim is not too far off.
Respondent estimated his stay in the Akins property would only be for a few weeks, but the repair process took far longer than expected. Finally, even though his house was not finished, he moved back in.
When, during the investigation, Mr. Green asked Respondent for the cancelled checks to support his claim, Respondent did not know what he was talking about. There were no cancelled checks. He admits he had written the checks in issue, but had given them, as appropriate, to Ms. Akins and
Ms. McClendon and had asked them not to cash them.
Respondent, an insurance adjuster for a significant period of time before this incident, claims he did not understand that he could not be reimbursed for money he had not actually spent. He claims he did not intend to misrepresent the situation to the insurance company or to make a profit from the deal. His difficulty, he claims, lay in his poor letter-writing skills which permitted him to indicate in the claim letter that the check copies he had enclosed were cancelled. Though he is not sure what the insurance company policy on payment of claims was, he contends he understood the company would pay for obligations he incurred, and he did not have to wait until he had satisfied these obligations before seeking reimbursement for them.
Respondent asserts that when he submitted both claims letters, he did not mean to imply that he had paid the sums represented by the checks or than they had been cancelled. Respondent indicated he had agreed to pay his friends the same amount he was paying at the motel, but a review of the receipts reflects he paid for only one room each night at a rate far less than $225.00 per night. He claims, and his friends confirmed at hearing, that he had agreed to pay only what the insurance company would reimburse him, yet the agreement he submitted with the claim, purporting to bear the signature of Ms. Akins, is a blatant forgery. Further, his claim that his letter referring to the checks as cancelled was an ignorant and inartful use of words is disingenuous and unbelievable.
Respondent's counsel contends that the policy in issue does not require the expenses claimed be actually paid before reimbursement, and that Mr. Green did not so indicate when he interviewed Respondent. However, at hearing Mr. Green unequivocally stated company policy that indicated they must be. In the balance, it is found that an insurance adjuster with the years of experience possessed by Respondent would know that. Further, Respondent's contention that the company's denial of the claim, and the resultant lack of loss to the company, when coupled with a lack of adjustment offer by the company, renders Respondent's conduct non-actionable is non-persuasive.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.
The Department seeks to discipline Respondent’s license as an all lines insurance adjuster because, it alleges, he filed a false claim for additional living expenses with his insurance carrier, thereby demonstrating his unworthiness to engage in the business of insurance, in violation of Sections 626.611(7)(8) and (13), and 626.954(l)(u)1, Florida Statutes. The burden of proof in this matter rests with Petitioner who must establish Respondent’s guilt of the matters alleged by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996).
Respondent does not deny that he submitted the claim in the amount alleged. He contends, however, that he had agreed to compensate Ms. McLendan for taking care of his two sons for a period of time, and to compensate Ms. Akins for the use of her condominium. He contends, and the two ladies now agree, that he agreed to pay them whatever the insurance company paid him, and that by doing so, he had incurred an obligation which was a proper matter for claim. This is simply not so, however. Though the terms of Respondent’s policy, as they relate to payable claims elements, were not introduced at the hearing, the insurance company’s investigator indicated that under company
policy, only out-of-pocket expenses actually incurred are compensable, and only after actual payment. Since Respondent did not pay either Ms. McLendan or Ms. Akins until after the inquiry into his claim was initiated, any payment for the amount he originally claimed would be inappropriate. Further, the amounts claimed, especially for the condo rental, bear little relationship to a reasonable value payment, and his assertion that he felt the amounts claimed, both as to amount and timing were acceptable, is disingenuous at best. A better description of his conduct in this instance is misrepresentation.
Petitioner has suggested that an appropriate penalty in this matter is suspension of Respondent’s license for a period of twelve months. It cites the provision of Rule 4-231.040, Florida Administrative Code, which calls for a license suspension of six months for each violation established. Two violations have been established in this case.
Under the circumstance of this case, it is clear that Respondent considers insurance companies fair game for personal enrichment. The property insurance business is for the purpose of making whole the losses sustained by policyholders. Those who work within its parameters must be scrupulously honest in dealing both with the company and the policyholders. Respondent in this case has demonstrated a significant lack of integrity which calls into serious question his trustworthiness to engage in the business of insurance.
Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a final order in this matter suspending Respondent’s license as an all lines insurance adjuster for a period of twelve months.
DONE AND ENTERED this 18th day of November, 1999, in Tallahassee, Leon County, Florida.
ARNOLD H. POLLOCK
Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1999.
David W. Nam, Esquire David Busch, Esquire Department of Insurance
C. Laing Clark, P.A.
1958 West Dr. Martin Luther King Jr.
Daniel Y. Sumner, General Counsel Department of Insurance
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.
