STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FREDERICK BENJAMIN HODGES, JR., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF INSURANCE, )

)

Respondent. )

Case No. 01-1134

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 5, 2001, in Panama City, Florida, before the Division of Administrative Hearings by its designated Administrative Law Judge, Diane Cleavinger.

APPEARANCES

For Petitioner: Frederick Benjamin Hodges, Jr., pro se

3600 Thomas Drive, Suite 109D Panama City, Florida 32408

For Respondent: Richard J. Santurri, Esquire

Division of Legal Services Department of Insurance 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

STATEMENT OF THE ISSUE

Whether Petitioner's application for licensure as a life, variable annuity, and health insurance agent should be granted.

PRELIMINARY STATEMENT

On June 1, 2000, Petitioner filed an application for a life, variable annuity, and health agent license with the Department of Insurance (Department). By letter dated

February 9, 2001, the Department denied Petitioner's application for licensure on the basis that Petitioner's prior activities while licensed as an insurance agent made him ineligible for licensure. Petitioner timely filed a request for a hearing.

The matter was forwarded to the Division of Administrative Hearings for formal hearing.

At the hearing, Petitioner testified in his own behalf and offered one composite exhibit into evidence. Respondent did not call any witnesses but offered one exhibit into evidence.

After the hearing, Respondent filed a Proposed Recommended Order on June 16, 2001. Petitioner did not file a proposed recommended order.

FINDINGS OF FACT

1. In 1995 and part of 1996 Petitioner was licensed by the Department as a life and health insurance agent in Quincy, Florida.

2. Around July 5, 1995, J.B. Price, M.D., a long-time friend and customer of Petitioner, filed a civil complaint against Petitioner for an unrefunded premium of $7,200 that was paid by Dr. Price to Petitioner for a life insurance policy.

   The life insurance policy was for a whole life policy and was intended to replace a term policy on Dr. Price. The insurance company rejected Dr. Price's application and the whole life policy was never issued. A final judgment was entered against Petitioner in the amount of the refund due on the failed policy.

3. Within about a month from the entry of the final judgment, Petitioner borrowed sufficient funds and paid the amount of the judgment to Dr. Price. However, Petitioner did not obtain a formal satisfaction of judgment from Dr. Price at the time he paid the judgment. Petitioner had also paid the premiums and kept in force the premiums on the insurance

   Dr. Price had hoped to replace with the rejected insurance policy.

4. Petitioner's license was suspended by the Department when it filed an Emergency Suspension Order dated May 21, 1996. The Emergency Suspension Order charged that Petitioner failed to refund a $7,200 premium to J.B. Price, M.D., a former customer in violation of Sections 626.561, 626.611(4), 626.611(7), 626.611(9), 626.611(10), 626.611(13), 626.621(2), and 626.621(6), Florida Statutes. Simultaneously with the Emergency Suspension Order, Petitioner filed an Administrative Complaint against Petitioner based on the same facts as the suspension order. Petitioner did not respond to the Administrative

   Complaint. Consequently, on July 7, 1996, Petitioner's license was revoked by the Department.

5. After Petitioner's license was revoked, Petitioner continued to engage in business for which a license is required under the insurance code. On August 1996, Petitioner prepared and signed, as broker, an application for insurance on Minnie and Henry Sudduth. The Suddaths were friends of Petitioner. However, Petitioner accepted and submitted the application even though he knew his license had been revoked.

6. Moreover, after revocation, during 1996-1999, Respondent had several convictions for passing worthless checks. One such incident occurred while Petitioner was on probation for an earlier sentence for passing worthless checks. Petitioner's

   bank ordinarily covered Petitioner's overdrafts. However, in these instances, the bank declined to cover the overdrafts.

7. On June 1, 2000, Petitioner filed an application for licensure with the Department. The Department discovered that a judgment had been entered in the Price suit and advised Petitioner that no satisfaction of judgment had been recorded. Petitioner immediately obtained a satisfaction of judgment from Dr. Price and recorded it.

8. All of these incidents demonstrate Petitioner is not qualified to engage in the business of insurance. Therefore, Petitioner's application for licensure should be denied.

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes.

10. As an applicant, Petitioner has the burden of proving entitlement to a license. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981). He bears this burden at each and every step of the licensure proceedings. Department of Banking and Finance v. Osborne Stern

    and Company, 670 So. 2d 932, 934 (Fla. 1996). Petitioner must show that he meets all of the relevant statutory criteria to satisfy this burden.

11. Section 626.611, Florida Statutes, states in pertinent part, that

    The Department shall deny . . . the license or appointment of any agent . . . if it finds that as to the applicant . . . 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 . . . .

       
       

    2. Material misstatement, misrepresentation or fraud in obtaining the license or appointment or in attempting to obtain the license or appointment . . . .

       * * *

       
       

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

          
          

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

       
       

12. Section 626.641, Florida Statutes, provides that:

    
    

    (2) No person or appointee under any license or appointment revoked by the department, nor any person whose eligibility to hold same has been revoked by the department, shall have the right to apply for another license or appointment under this code within 2 years from the effective date of such revocation or, if judicial review of such revocation is sought, within

    2 years from the date of final court order or decree affirming the revocation. The department shall not, however, grant a new license or appointment or reinstate eligibility to hold such license or appointment if it finds that the circumstance or circumstances for which the eligibility was revoked or for which the previous license or appointment was revoked still exist or are likely to recur; if an individual's license as agent, customer representative, or solicitor or eligibility to hold same has been revoked upon the ground specified in s. 626.611(12), the department shall refuse to grant or issue any new license or appointment so applied for.

    
    

13. Section 626.561, Florida Statutes, states that:

    
    

    1. All premiums, return premiums, or other funds belonging to insurers or others received by an agent, customer representative, solicitor, or adjuster in transactions under his or her license are

       trust funds received by the licensee in a fiduciary capacity. An agent shall keep the funds belonging to each insurer for which he or she 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.

       
       

14. Section 626.785, Florida Statutes, states that:

    
    

    1. The department shall not grant or issue a license as life agent to any individual found by it to be untrustworthy or incompetent, . . . .

       
       

15. Section 626.831, Florida Statutes, states that:

    
    

    1. The department shall not grant or issue a license as health agent as to any individual found by it to be untrustworthy or incompetent, . . . .

       
       

16. Petitioner has admitted that he failed to refund a returned premium payment to a former customer. Petitioner also admitted that after his license was suspended and revoked, he continued to engage in business for which a license is required under the insurance code and was convicted of passing worthless checks. These actions by Petitioner constitute violations of the insurance code and establish that Petitioner is not qualified for licensure.

17. Petitioner did not put forth in any evidence showing that he has rehabilitated himself and is qualified for licensure.

RECOMMENDATION

Based upon the foregoing findings of fact and Conclusions of Law, it is

RECOMMENDED that

A final order be entered denying Respondent's application for a license as a life, variable annuity, and health insurance agent.

DONE AND ENTERED this 26th day of July, 2001, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 26th day of July, 2001.

COPIES FURNISHED:

Frederick Benjamin Hodges, Jr. 3600 Thomas Drive

Suite 109-D

Panama City Beach, Florida 32408

Richard J. Santurri, Esquire Department of Insurance Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-0333

Honorable Tom Gallagher

State Treasurer/Insurance Commissioner Department of Insurance

The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300

Mark Casteel, General Counsel Department of Insurance

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307

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: 01-001134

Orders for Case No: 01-001134