STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) Case No. 01-1863PL

)

TIMOTHY GENE LEIGH, )

)

Respondent. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in

St. Petersburg, Florida, on July 31, 2001.

APPEARANCES

For Petitioner: David J. Busch

Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Jed Berman

Infantino and Berman Post Office Drawer 30

Winter Park, Florida 32790 STATEMENT OF THE ISSUE

The issue is whether Respondent's license as an insurance agent should be disciplined.

PRELIMINARY STATEMENT

By Administrative Complaint filed April 30, 2001, Petitioner alleged that Respondent was licensed as a general

lines and legal expense insurance agent. The Administrative Complaint alleges that Respondent operated as an insurance agent at two insurance agency locations: Cash Register Auto Insurance at 1107 34th Street South, St. Petersburg, and Cash Register Auto Insurance at 6251 U.S. Highway 19 North, Pinellas Park.

The Administrative Complaint alleges that Respondent was the designated primary agent for either of these two Cash Register Auto Insurance locations. The Administrative Complaint alleges that, as a primary agent, Respondent knew or should have known of the activities of employees under his supervision.

The Administrative Complaint alleges that Jennifer Lee Wilder, a licensed customer representative, began work at Cash Register Auto Insurance on April 10, 1998, frequently without any supervision from Respondent. The Administrative Complaint alleges that Ms. Wilder frequently wrote new insurance applications, bound coverage, prepared applications for mailing to carriers, and collected initial premiums outside Respondent's presence and without his supervision.

The Administrative Complaint alleges that Respondent directed Ms. Wilder to sell automobile/travel club policies and driver's protection legal plans with every insurance application, at additional expense to each insurance customer. The Administrative Complaint alleges that Ms. Wilder routinely practiced sliding by selling purchasers of motor vehicle

insurance ancillary legal expense contracts and towing and rental products without their informed consent.

The Administrative Complaint alleges that, although she was not a licensed insurance agent, Ms. Wilder regularly gave quotes over the telephone, took insurance applications, explained coverages, issued receipts, completed premium finance agreements, and accepted premiums for insurance coverages with Respondent's full knowledge and consent. Knowing that

Ms. Wilder was unlicensed, Respondent allegedly authorized her to give insurance quotes over the telephone, take applications, explain coverages, accept premium payments, and otherwise transact insurance.

Count I of the Administrative Complaint alleges that, on July 23, 1999, Ann and James Benjamin visited the Cash Register Auto Insurance agency in Pinellas Park to purchase insurance on a 1989 Ford and 1991 Pontiac automobile. Ms. Wilder allegedly quoted a premium of $769, and Mr. Benjamin gave her a $500 check to be applied to the premium. Ms. Wilder allegedly told the Benjamins that, if they paid the balance within 30 days, they would not have to pay any finance charge.

On August 3, 1999, the Benjamins allegedly returned to the insurance agency and paid the balance of $269 in cash. On October 10, 1999, the Benjamins allegedly reviewed the paperwork

and found that they had been charged for an automobile/travel club policy that they had never requested.

Count I alleges that the Benjamins cancelled their policies, but have yet to receive the refunded portion of their premium. On February 21, 2000, Equity Premium, Inc., allegedly returned $119.64 to the Cash Register Auto Insurance agency as a refund of the premium finance charge, but the Benjamins were unaware that they had incurred such a fee.

Count I alleges that Respondent implicitly or explicitly consented to the Benjamin transaction.

Count I alleges that Respondent therefore has violated Section 626.112(1) and (2), Florida Statutes, which prohibit a person from holding himself out as an insurance agent unless he is currently licensed and appointed; Section 626.621(12), Florida Statutes, which prohibits a licensee from knowingly aiding, assisting, procuring, advising, or abetting any person in the violation of any provision of the Insurance Code or any rule promulgated by Petitioner; Section 626.611(7), Florida Statutes, by a demonstrated lack of fitness or trustworthiness to engage in the business of insurance; Section 626.611(9), Florida Statutes, by fraudulent or dishonest practices in the conduct of business under the license or permit; Section 626.611(13), Florida Statutes, by a willful violation of any provision of the Insurance Code; Section 626.621(2), Florida

Statutes, by a violation of any provision of the Insurance Code or any other law applicable to the business of insurance in the course of dealing under the license or permit; Section 626.621(3), Florida Statutes, by a violation of any lawful rule of Petitioner; Section 626.621(6), Florida Statutes, by engaging in unfair methods of competition or unfair or deceptive acts or practices--as prohibited by Chapter 626, Part X, Florida Statutes--or having otherwise shown himself to be a source of injury or loss to the public, in the conduct of business under the license or permit; Section 626.9521, Florida Statutes, by engaging in a trade practice that is determined to be an unfair method of competition or unfair or deceptive act or practice involving the business of insurance; Section 626.9541(1)(a)1, Florida Statutes, by knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison that misrepresents the benefits, advantages, conditions, or terms of any insurance policy; Section 626.9541(1)(b), Florida Statutes, by knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any way, an advertisement, announcement, or statement containing any assertion, representation, or statement with

respect to the business of insurance that is untrue, deceptive, or misleading; Section 626.9541(1)(e)1, Florida Statutes, by knowingly making or causing, directly or indirectly, to be made any false material statement; Section 626.9541(1)(l), Florida Statutes, by knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for inducing or tending to induce any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer; and Section 626.112(1), Florida Statutes, which prohibits any person from acting as, advertising himself as, or holding himself out as an insurance agent unless she is currently licensed and appointed.

Count I also states the definition of "sliding," as found in Section 626.9541(1)(z), Florida Statutes.

Count IV alleges that, on September 29, 1998, Kelly Kuhnel Livingston visited the Cash Register Auto Insurance, Pinellas Park, to purchase automobile insurance. While there,

Ms. Livingston allegedly spoke to Ms. Wilder, who quoted her an

$886 annual premium for coverage from Superior Insurance Company. Count IV alleges that Ms. Livingston made a down payment of $171 and received a receipt for that amount signed by

"Tina Tageger." Ms. Livingston then allegedly signed the equity premium finance agreement for the balance of the premium.

When making the purchase, Ms. Livingston allegedly failed to notice the charge of $80 on the premium finance agreement and that only $151 of her $171 payment was applied to the insurance she was purchasing. Count IV alleges that Ms. Livingston signed a contract with Colonial Touring Association, Inc., for $20, even though she never discussed this purchase and did not wish to purchase this service.

When making the purchase, Ms. Livingston allegedly failed to notice that she was signing a contract with Sav-Cash Traffic Protector for $80, even though she never discussed this purchase and did not wish to purchase this service.

Count IV alleges that Ms. Livingston received in early November 1998 a cancellation notice stating that the policy was being cancelled due to nonpayment of premium. When she allegedly spoke with Ms. Wilder, Ms. Livingston learned that the cancellation would be avoided if she visited Cash Register Auto Insurance, Pinellas Park, and brought the account current on that day. On November 24, 1998, Ms. Livingston wrote and signed a check for $101.57 and a check for $91.57, both of which were payable to Equity Premium Company.

Count IV alleges that Ms. Livingston learned in early January 1999 that her policy was cancelled. However, she never

received a payment of any premium balance, nor had she received the $80 legal services fee and $20 Colonial fee.

Count IV alleges that Respondent therefore has violated the same provisions alleged in Count I.

Petitioner dropped Counts II, III, and V prior to the hearing.

At the hearing, Petitioner called two witnesses and offered into evidence nine exhibits: Petitioner Exhibits 2, 6 (pages 137-50 and 233-36), 8 (strictly for penalty), and 9-14.

Respondent called one witness and offered into evidence 42 exhibits: Respondent Exhibits 1-42. All exhibits were admitted.

The court reporter filed the transcript on August 16, 2001.

The parties filed their proposed recommended orders by August 31, 2001.

FINDINGS OF FACT

1. Respondent has been a licensed insurance agent continuously since October 15, 1986. At all material times, Respondent has been designated as the primary agent for the Cash Register Auto Insurance agency located at 6251 U.S. Highway 19, Pinellas Park, Florida (Cash Register).

2. Since April 10, 1998, Jennifer Lee Wilder has been a licensed customer representative, holding a 4-40 license.

3. After graduating from high school in 1991, Ms. Wilder has attended a local junior college to prepare for a career in nursing. However, she has had to work fulltime to support herself while in school. Ms. Wilder began working at Cash Register in May 1995 and left in May 2000. At the time of the hearing, she was working fulltime five days a week at Cash Register as the office manager.

4. Cash Register sells mostly nonstandard insurance.

   
   

   These insurers have lower underwriting standards to accommodate the needs of younger or high-risk drivers.

5. Ann Benjamin was born on January 22, 1927. She worked as a licensed practical nurse for 15 years prior to her retirement. However, she continues to read medical journals. Ms. Benjamin took one year of nursing school after obtaining her high school diploma. She manages her own checking account and pays her bills. At the time of the hearing, she worked at a LaQuinta Inn.

6. She and her husband needed insurance for their automobiles. Ms. Benjamin owned a 1991 Pontiac Grand Am, and her husband owned a 1989 Ford Econoline E-150 van. Ms. Benjamin telephoned three or four other agencies for quotes prior to calling Cash Register. A couple of days after speaking with a female employee at Cash Register, who quoted her a premium of

   $743, Ms. Benjamin visited the office to purchase the insurance.

7. At no time during any of her transactions with Cash Register did Ms. Benjamin have any contact with Respondent. When she first went to Cash Register, on July 23, 1999,

   Ms. Benjamin completed an application for insurance, an agreement for services from Colonial Touring Association, Inc. (Colonial Touring), a financing contract with Equity Premium, Inc. (Equity Premium), and a form confirming coverage. She received copies of these forms to examine at the office and later at home. However, the transaction at the busy office took place quickly, taking about ten minutes.

8. An important form in the marketing of insurance at Cash Register is the Three (3) Payment Options and Confirmation of Coverages. A Cash Register employee presents three options to the customer. The first option is the mandatory coverage of property damage liability and personal injury protection. Although other coverages exist on the form under the first option, they are optional, and Ms. Benjamin did not select them. The first option requires a cash payment of, in this case, $749. This figure is the quoted premium plus two motor vehicle reports totaling $6.

9. The second option provides the same coverage as the first option, but requires, in this case, a cash down payment of

   $601 and three monthly payments of $57.72 for a total price of

   
   

   $774.16.

10. The third option adds the Colonial Touring policy for an additional $50. The advantage of this option is the lowest down payment. In this case, Cash Register quoted $500 down and three monthly payments of $108.77 for a total of $826.31. There is no formula by which Cash Register calculates the higher downpayments that it requires to sell only the required coverage without the Colonial Touring policy. Ms. Benjamin chose the third option, which reduced her downpayment to $500 at the cost of adding $50 for the Colonial Touring coverage.

11. Ms. Wilder completed the top section of the application for insurance from Accredited Surety & Casualty. This information contains Ms. Benjamin's name, home address, job address, and one-year coverage term. Someone else in the office completed the rest of the application. Under vehicles, the application listed only the Pontiac, although it showed Mr. and Ms. Benjamin as drivers. The application also showed under Vehicle #1 $181 for $10,000 of property damage liability and

    $101 for personal injury protection with a $2000 deductible.

    
    

    The total for Vehicle #1 was $743. The number "282" was written in across two rows under Vehicle #2. However, no combination of these numbers totals $743.

12. On the second page of the application, Ms. Benjamin rejected uninsured motorist coverage and elected a $2000 deductible. At the bottom of the page, Ms. Wilder, as a

    "brokering agent," signed a statement binding coverage on that date. Under "Agent's Social Security Number," Ms. Wilder wrote in "A152865."

13. Mr. Benjamin had given Cash Register a check in the amount of $500. On the check, he wrote that it was for "Liability Ford Pont." All checks written by customers in this case cleared their banks.

14. Ms. Benjamin also signed a contract for automobile travel and accident benefits from Colonial Touring. The form provided $5000 in "amount of insurance" in return for a $50 payment. The travel benefits are largely insignificant, so the policy primarily provides limited accidental death and dismemberment coverage, but only if the insured is killed or suffers dismemberment by a private passenger automobile.

15. The Equity Premium finance agreement shows a total premium of $743 with a down payment of $444, leaving an unpaid balance of $299. The finance agreement calls for three payments of $109.80, starting August 23, 1999. The finance agreement gives the borrower the right to pay off in advance the full amount due and obtain a refund of unearned finance charges, as computed by the Rule of 78, after deducting a flat fee of $20. Ms. Wilder signed on the line marked, "Agent's or Broker's Signature." Among the representations that she made in doing so

    was that she was an "authorized agent of the insurance company shown above."

16. Ms. Benjamin testified that a female employee at Cash Register misinformed Ms. Benjamin that, if she returned with the full premium balance within 30 days, she would incur no finance charges. This would be an improbably long grace period, given that the term of the finance agreement was only 90 days.

    Ms. Benjamin testified that she told the female employee that she intended to return to pay off the balance in ten days, but the employee said that Ms. Benjamin should sign a finance agreement in case she was unable to pay the balance at that time. Most likely, someone told Ms. Benjamin that she could return and pay off the balance early to reduce her finance charge, but it is unlikely that anyone told her that 30 days were the same as cash on a 90-day obligation.

17. The discrepancy between the $500 that Mr. Benjamin paid on July 23 and the $444 reflected as paid on the finance agreement is due to the $50 paid to Colonial Touring and $6 for two motor vehicle reports.

18. On August 3, 1999, Ms. Benjamin cancelled the Colonial Touring policy. On the same date, Ms. Benjamin paid the balance of $269 due to Equity Premium on the finance agreement. This balance is derived by taking the original balance due of $299, reducing it by the $50 credit for the Colonial Touring policy

    cancellation, and increasing it by the $20 prepayment fee charged by Equity Premium.

19. On September 13, 1999, Cash Register paid Equity Premium $319, which represents Ms. Benjamin's payment of $269 and the $50 credit for the refund on the Colonial Touring policy. Notwithstanding the delay in forwarding the funds to Equity Premium, Ms. Benjamin suffered no additional expenses. In fact, on August 2, 1999, Cash Register also credited

    Ms. Benjamin's account for the interest accrued under the finance agreement, the documentary stamp taxes, and a late charge.

20. In October 1999, Mr. and Ms. Benjamin separated, and Ms. Benjamin did not want to continue carrying his Ford van on her insurance. When she made this request to Cash Register, the agency employees realized that they had failed to complete the paperwork properly on July 23. Although both vehicles were in fact covered, as reflected by separate declaration pages showing both vehicles, Cash Register had to add the Ford van on October 4, and then drop it one week later.

21. Despite Cash Register's repeated requests, Accredited Casualty & Surety did not issue the refund of $131.04 until January 27, 2000. Because the policy had originally been financed, Accredited credited Equity Premium, which, on February 21, 2000, credited Cash Register $119.64--after reversing the

    earlier credit/write-off of $11.40 for documentary stamp taxes and a $10 late charge. Ms. Benjamin owed the documentary stamp taxes, but the late charge did not accrue until August 28, 1999--over three weeks after Ms. Benjamin had paid off the obligation. This late charge arose entirely due to Cash Register's failure to forward the funds to Equity Premium until September 13, 1999.

22. Respondent Exhibit 26 is offered as evidence that Cash Register paid Ms. Benjamin $119.64 by check dated July 24, 2000. However, this exhibit is not a check and is inadequate documentation of the payment. It seems to be some sort of data printout of ledger information. Under the circumstances, including Cash Register's sloppy handling of money received and due in this account, Ms. Benjamin's testimony that she never received the refund is credited. Additionally, the refund should have been $10 more for the late fee that Cash Register's tardiness caused and greater by an undetermined amount for interest from the October 4, 1999, cancellation date to the claimed July 24, 2000, payment date (and actually to whatever date that Respondent or, if not he, Cash Register eventually pays this customer her money).

23. Kelly Kuhnel Livingston, who earned her high school diploma in 1988, recently earned her associate of science degree in computer science from a local technical school. She

    graduated with an average of 3.4 grade points out of a maximum of 4. She reads technical computer literature. She manages her own checking account and pays her own bills. At the time of the transaction, she was an assistant branch manager at a local bank, where she worked from 1997-99; she is now employed

    part-time as a bartender.

    
    

24. On September 29, 1998, Ms. Livingston visited Cash Register to purchase the minimum insurance on two vehicles that she owned. She had previously purchased insurance at Cash Register and had worked with Ms. Wilder. Her current insurance was expiring on the day that Ms. Livingston visited Cash Register. At no time during her transactions did Ms. Livingston have any contact with Respondent.

25. Ms. Wilder presented Ms. Livingston with the Three (3) Payment Options and Confirmation of Coverages form. The first option was for a cash price of $806 for the mandatory coverage of personal injury protection and property damage liability.

    The second option was for the same coverage, but for a down payment of $363 and six monthly payments of $81.90 for a total of $854.40.

26. The third option provided the mandatory coverage plus

    
    

    12 months of $2000 coverage for accidental death and dismemberment from Colonial Touring for $20 and a driver's protection plan covering certain legal services for $80. The

    third option required a down payment of $171 and nine monthly payments of $91.57 for a total of $995.13.

27. Ms. Livingston chose the third option. The Colonial Touring policy is the same one that Ms. Benjamin purchased, although the coverage is lower. The legal-services contract is from Peninsula State Legal Services Plan, Inc. (Peninsula), and is known as Sav-Cash Traffic Protectors. This contract provides that Peninsula, for one year, will "make available legal services at a reasonable cost to licensed drivers." Members are clearly entitled to a free consultation for driving under the influence, dissolution, and other general matters, but, due either to clever or poor draftsmanship, it is unclear whether the contract provides free legal services for traffic violations.

28. In any event, Ms. Livingston signed the same type of paperwork that Ms. Benjamin did. The record does not establish that Ms. Wilder signed the insurance application of premium finance agreement. Ms. Livingston paid a downpayment of $171, of which $20 went to Colonial Touring. As reflected on the premium financing agreement with Equity Premium, Ms. Livingston was credited with a net downpayment of $151 against a automobile insurance premium of $806 and a legal-services payment due Peninsula of $80. With a finance charge of $86.33 and documentary stamp taxes of $2.80, her monthly payment was

    $91.57. Her total sales price was $975.13, which, with the $20 paid to Colonial Touring, was the total stated on the form that presented her with three options.

29. The first payment was due October 29, 1998. According to the records of Equity Premium, which may be more favorable than Ms. Livingston's recollection, Ms. Livingston paid $91.57 in certified funds on October 28, 1998. This payment was timely, and she does not appear to have been assessed a late charge.

30. On November 5, 1998, the insurer issued a notice of cancellation, effective November 28, 1998. It is unclear why the insurer did this because Ms. Livingston was current in her payments. In any event, by checks dated November 24, 1998, payable to Equity Premium, Ms. Livingston paid the November payment and the December payment. The checks were in the respective amounts of $101.57, which included an unearned $10 late fee, and $91.57.

31. For some reason unknown to Ms. Livingston, the insurer cancelled her policy in late December 1998. According to the Equity Premium ledger, there would seem to have been a balance due Ms. Livingston, after a $44.26 credit for the Colonial Touring policy, of $22.79. However, it is unclear how this Colonial Touring credit, which is $24.26 greater than the original cost of the Colonial Touring product, arose, especially

    as Ms. Livingston did not finance this cost through Equity Premium. The only clear loss in this transaction is the $10 late fee that Ms. Livingston paid in November, even though her payment was not late.

32. In January, Ms. Livingston returned to Cash Register and purchased new automobile insurance. Cash Register never refunded to her any money in connection with the transaction that is the subject of this case, but this transaction is difficult to reconstruct. It is possible that Ms. Livingston was not entitled to any credit besides the $10 late fee. It appears that Ms. Livingston did not pay for more than the three months' motor vehicle coverage that she received, plus, of course, the Colonial Touring and Peninsula services for which she never demanded a refund.

33. If nothing else emerged from this record, it is a picture of a very busy office. It is inconceivable that

    Ms. Wilder signed the finance agreement or insurance application in the Benjamin case in an act that exceeded the authority that Respondent had delegated to her. If so, he should have testified to this effect. To the contrary, she appears only to have been doing her job in a very busy office and doing exactly what Respondent allowed her to do.

34. By a Consent Order entered August 26, 1986, Petitioner placed Respondent's license on probation for six months due to a

    failure to disclose certain information on his application for

    
    

    licensure.

    
    

    CONCLUSIONS OF LAW

    
    

35. The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)

36. Section 626.112(1) and (2) provides:

    
    

    1. No person shall be, act as, or advertise or hold himself or herself out to be an insurance agent, customer representative, solicitor, or adjuster unless he or she is currently licensed and appointed.

       
       

    2. No agent, customer representative, or solicitor shall solicit or otherwise transact as agent, customer representative, or solicitor, or represent or hold himself or herself out to be an agent, customer representative, or solicitor as to, any kind or kinds of insurance as to which he or she is not then licensed and appointed.

       
       

37. Section 626.592 provides in part:

    
    

    1. Each person operating an insurance agency and each location of a multiple location agency shall designate a primary agent for each insurance agency location and shall file the name of the person so designated, and the address of the insurance agency location where he or she is primary agent, with the Department of Insurance, on a form approved by the department. The designation of the primary agent may be changed at the option of the agency, and any

       change shall be effective upon notification to the department. Notice of change must be sent to the department within 30 days after such change.

       
       

    2. For the purpose of this section, a "primary agent" is the licensed agent who is responsible for the hiring and supervision of all individuals within an insurance agency location whether such individuals deal with the public in the solicitation or negotiation of insurance contracts or in the collection or accounting of moneys from the general public. An agent may be designated as primary agent for only one insurance agency location.

       
       

    3. For the purpose of this section, an "insurance agency" is a location where any agent is engaged in the business of insurance.

       
       

       * * *

       
       

       (5) The primary agent in an unincorporated agency, or the primary agent in an incorporated agency in which no officer, director, or stockholder is an agent, shall be responsible and accountable for the acts of salaried employees under his or her direct supervision and control, while acting on behalf of the agency. Nothing in this section shall be construed to render any person criminally liable or subject to any disciplinary proceedings for any act unless such person personally committed or knew or should have known of such act and of the facts constituting a violation of this chapter.

       
       

38. Section 626.611 provides in part:

    
    

    The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjuster, customer representative, service

    representative, or managing general agent, and it shall 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:

    
    

    (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    
    

    (9) Fraudulent or dishonest practices in the 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.

    
    

39. Section 626.621 provides in part:

    
    

    The department may, in its discretion, deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, solicitor, adjuster, customer representative, service representative, or 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 denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

    
    

    1. 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.

       
       

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

    (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 or herself to be a source of injury or loss to the public or detrimental to the public interest.

    
    

40. Section 626.9521(1) provides:

    
    

    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.

    
    

41. Section 626.9541(1) provides in part:

    
    

    1. Unfair methods of competition and unfair or deceptive acts.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

       1. Misrepresentations and false advertising of insurance policies.-- Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

          1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.

             * * *

       2. False information and advertising generally.--Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:

          1. In a newspaper, magazine, or other publication,

          2. In the form of a notice, circular, pamphlet, letter, or poster,

          3. Over any radio or television station, or

          4. 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.

             * * *

             1. False statements and entries.--

                1. Knowingly:

                   1. Filing with any supervisory or other public official,

                   2. Making, publishing, disseminating, circulating,

                   3. Delivering to any person,

                   4. Placing before the public,

                   5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,

             any false material statement.

             * * *

             (l) Twisting.--Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer.

             * * *

             1. Sliding.--Sliding is the act or practice of:

                1. Representing to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of motor vehicle insurance when such coverage or product is not required;

                2. 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

                3. 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.

             
             

42. Rule 4-213.100 provides:

    
    

    1. The designated supervising agent is jointly and severally accountable and responsible with the agency to the Department, for the acts and representations of the customer representative.

       
       

    2. An agent who is designated to supervise a customer representative thereby incurs the following obligations, in addition to those otherwise set out in this rule:

       1. The agent must supervise the customer representative, as described in this rule. This duty shall not be delegated. This duty remains on the designated supervising agent even when the customer representative is performing customer representative services for other agents within the agency.

       2. The agent must assure that the customer representative does not exceed the allowable scope of the customer representative's licensure, duties and authority.

          
          

    3. A designated supervising agent may terminate his or her status as designated supervising agent, at any time, as explained in this rule chapter.

       
       

43. Rule 4-213.110 provides:

    
    

    1. A customer representative shall comply with the lawful instructions and directions of the supervising agent as well as all applicable provisions of the Florida Insurance Code, and rules and orders of the Department.

    2. A customer representative has a duty to ensure that their appointment and supervision is in compliance with this rule chapter, with other rules of the Department, and with the Insurance Code.

       
       

    3. The customer representative shall exercise great care in not going beyond the licensure, training, expertise and experience of the customer representative. In the event of uncertainty as to whether the customer representative is competent to advise or perform regarding any insurance matter, the uncertainty shall be resolved in favor of referring the matter to the supervising agent.

       
       

44. Rule 4-222.020 provides:

    
    

    For purposes of this rule chapter the following definitions shall apply.

    
    

    1. "Giving a quote" refers to the basic tasks of obtaining certain basic underwriting answers from the inquirer, and then consulting written underwriting materials that state the rate. Giving a quote does not involve application of judgment, processing, binding, policy interpretation, signing an application, procedure explanation, or insurance advice and counsel, or similar activity.

       
       

    2. "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.

          
          

    3. "Taking an application" means filling in the blanks on an application form in response to information provided by the applicant, and then passing the application to an agent or customer representative for further application of judgment, processing, binding, policy interpretation, procedure explanation, or insurance advice and counsel, or similar activity. Taking an application does not include application of judgment, processing, binding, policy interpretation, signing an application, procedure explanation, or insurance advice and counsel, or similar activity.

       
       

45. Rule 4-222.040 provides:

    
    

    The following actions are allowable by unlicensed personnel at any time:

    
    

    1. Serving in the capacity of switchboard operator, receptionist, or secretary, when merely taking incoming calls and visitors and routing them to licensed staff or taking messages.

       
       

    2. Explaining claims procedures or advising claimants as to the procedural status of claims, so long as same merely requires the unlicensed staffer to read from agency records and files and does not require application of judgment or interpretation.

       
       

    3. Answering incoming calls from existing clients as to purely administrative matters, so long as same merely requires the unlicensed staffer to read from agency records and files and does not require application of judgment or interpretation, such as "Do your files show receipt of my June premium?" or "What do your files show as the current expiration date on my homeowners' policy?"

       
       

    4. At the direction of the agent, solicitor or customer representative:

       1. Calling back a specific person who had called the agent or customer representative or solicitor and setting up a solicitation meeting between the person and the agent or customer representative or solicitor.

       2. Conveying information to existing clients or claimants, such as "Agent Smith wanted me to call you and tell you he received your paperwork on your new car and it is covered under your existing policy effective immediately" or "Agent Smith asked me to let you know your claim has been allowed in full and you should get your check within 30 days."

          
          

46. Rule 4-222.050 provides:

    
    

    The following types of conduct by unlicensed staff are allowable as long as they are done only on a basis "incidental" to the employee's main duties:

    
    

    1. Taking an application for insurance in the agent's office, as set forth in rule

       4-222.020, for a person who has called or come into the office.

       
       

    2. 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.

       
       

    3. 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.

       
       

47. Rule 4-222.060 provides:

    
    

    The following actions are never allowable by unlicensed personnel.

    
    

    1. Comparing insurance products; advising as to insurance needs or insurance matters; or interpreting policies or coverages.

       
       

    2. Binding new, additional, or replacement coverage for new or existing customers; or binding coverage on or recording additional property under existing policies.

       
       

    3. Soliciting the sale of insurance by telephone, in person, or by other communication. However, the unlicensed person may telephone persons to set appointments for licensed and appointed agents, customer representatives, or solicitors, or to obtain basic policy information as to existing insurance coverage. The unlicensed person may not engage in a substantive discussion of insurance products.

       
       

48. Petitioner must prove the material allegations by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, Inc., 670 So. 2d 932 (Fla. 1996) and Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

49. Petitioner has failed to prove sliding. No one told Ms. Benjamin or Ms. Livingston that the additional items were required or free; this much is plain from the paperwork that they completed. Both customers gave their informed consent to the Colonial Touring service and, in the case of Ms. Livingston, the Peninsula legal services. Both witnesses appeared intelligent, alert, and capable of doing the little that was required to inform themselves of what they were purchasing. The economic reality may be that they did not really purchase these services that appear to be of little value, but instead purchased lower down payments, but the record does not establish these facts, nor do the sliding allegations, in this case at least, encompass economic duress.

50. Petitioner produced no evidence of twisting.

    
    

51. As to the Livingston transaction, Petitioner produced no evidence of any wrongdoing, except for the misbilling of the

    $10 late fee. The agency could have been more diligent in maintaining the customer's insurance, but the record does not explain why the insurance was cancelled. Significantly,

    Ms. Livingston returned to Cash Register and purchased new insurance a month later.

52. It is doubtful that Ms. Benjamin would return to Cash Register to do more business, although this fact lacks the small inculpatory force that the reverse holds, in exculpatory effect,

    in Ms. Livingston's case. Cash Register mishandled her payments and her refund, even without regard to the delays caused by the insurer and Equity Premium. Unlike the problem with listing both vehicles, which seems to have caused only a delay of a week in effecting the cancellation, the mishandling of premiums paid and refunded cost Ms. Livingston money. That she would purchase the Colonial Touring produce, to gain the lowest down payment, suggests that the amount of money was relatively great to her.

53. However, one instance--isolated, at least within this record--does not establish a lack of fitness or trustworthiness to engage in the business of insurance. And the evidence is even less close on the other allegations of fraud or dishonesty or willful violation of the law. Nor is there a showing of any grounds under the discretionary licensing statutes, such as the engaging in an unfair method of competition, such as, as already discussed, for twisting or sliding.

54. On the other hand, Petitioner has proved that

    
    

    Ms. Wilder engaged in practices for which she was required to be licensed as a general insurance agent. She signed the Benjamin application as "brokering agent," and she signed the Benjamin Equity Premium finance agreement as an "authorized agent of the insurance company." The evidence is close in the Livingston transaction, but does not quite establish that Ms. Wilder was exceeding what she could do on an isolated basis, as she did not

    seem to offer any advice to the customer. As a customer representative, however, Ms. Wilder clearly lacks the authority to sign the Benjamin documents in the stated capacities.

55. Ms. Wilder violated Section 626.112(1) and (2). By binding Ms. Benjamin's coverage, Ms. Wilder violated Rules

    4-222.020(3) and 4-222.060(2). By holding herself out to Equity Financing as a brokering agent, she violated Section 626.112(1) and (2) directly.

56. Respondent is responsible, under Section 626.592(2), for supervising Ms. Wilder. Under Rule 4-213.100(1), he is jointly and severally liable for her acts. Rule 4-213.100(2)(b) requires Respondent to assure that Ms. Wilder remains within the scope of her license.

57. Nothing in the record suggests that Ms. Wilder exceeded her authority on her own initiative. The clear picture that emerges in this case is that Ms. Wilder works hard in a very busy office with very little time for agent supervision. Ms. Wilder was likely an important revenue source in this Cash Register office, and it is impossible to infer that Respondent, who did not testify, was unaware of her activities, including those that exceeded her license.

58. Under the circumstances, Petitioner has proved that Respondent has violated the statute imposing upon him the responsibility for supervising a customer representative and has

thus violated Section 626.621(2). Rule 4-231.090(2) recommends a penalty of a three months' suspension for this violation. The prior discipline does not warrant increasing the penalty because it happened so long ago, as Respondent was entering the insurance profession. Also, the unlicensed acts of Ms. Wilder played no role in the losses suffered by Ms. Benjamin. The vicarious nature of the violation militates in favor of a shortening of the suspension.

RECOMMENDATION

It is

RECOMMENDED that the Department of Insurance enter a final order finding Respondent guilty of one violation of Section 626.621(2), Florida Statutes, by reason of his failure to adequately supervise a customer representative, in violation of Section 626.592(2), Florida Statutes.

It is further

RECOMMENDED that the final order impose the penalty of a three-month suspension; provided, however, if Respondent personally pays the amounts found in this recommended order still to be due to Ms. Benjamin, including interest at the rate she was charged in the finance agreement through the date of payment, then the suspension be reduced to the later of the date on which Respondent makes the payment or 30 days after the effective date of the final order.

DONE AND ENTERED this 18th day of September, 2001, in Tallahassee, Leon County, Florida.

ROBERT E. MEALE

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 18th day of September, 2001.

COPIES FURNISHED:

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

David J. Busch

Department of Insurance and Treasurer

200 East Gaines Street Tallahassee, Florida 32399-0333

Jed Berman Infantino and Berman

Post Office Drawer 30 Winter Park, Florida 32790

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 must be filed with the agency that will issue the final order in this case.

Docket for Case No: 01-001863PL

Orders for Case No: 01-001863PL