STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL ) SERVICES, f/k/a DEPARTMENT ) OF INSURANCE, )
)
Petitioner, )
)
vs. )
)
MARTHA SHOWS NAUGHTON, )
)
Respondent. )
___ )
Case No. 02-4763PL
RECOMMENDED ORDER
Notice was provided and on March 7, 2003, a formal hearing was held in this case. Authority for conducting the hearing is set forth in Sections 120.569 and 120.57(1), Florida Statutes. The hearing location was the City Hall, City Council Chambers, 245 South Mulberry Street, Monticello, Florida. The hearing was conducted by Charles C. Adams, Administrative Law Judge.
APPEARANCES
For Petitioner: David J. Busch, Esquire
Department of Financial Services Division of Legal Services
200 East Gaines Street 645A Larson Building
Tallahassee, Florida 32399-0333
For Respondent: David W. Collins, Esquire
Post Office Box 541 Monticello, Florida 32345
STATEMENT OF THE ISSUE
Should Petitioner impose discipline against Respondent's insurance licenses as a Life and Health (2-18) and General Lines Agent (2-20)?
PRELIMINARY STATEMENT
Petitioner, through an Administrative Complaint in Case No. 62279-02-AG, accused Respondent in a single count of violating various provisions in its regulatory code, Chapter 626, Florida Statutes. This Administrative Complaint was in association with an application for home owners insurance made by George Carswell to American Strategic Insurance Company (ASI). Respondent disputed the factual allegations in the Administrative Complaint and requested a hearing pursuant to Section 120.57(1), Florida Statutes, before the Division of Administrative Hearings (the Division).
On December 10, 2002, the Division received the request for formal hearing and assignment of an Administrative Law Judge. The case was scheduled and heard as described.
At hearing Petitioner presented the testimony of Corinn Marie Smith and Cynthia Elizabeth Gray. Petitioner's Exhibit numbered 1 was admitted as evidence. It is the deposition transcript of Rodney Dwayne Caan. Respondent testified in her
own behalf and presented the testimony of Corinn Marie Smith and Ferdinand Edward Naughton II. The parties' Joint Exhibits numbered 1 through 12 were admitted.
In response to a prehearing order the parties submitted a stipulation of facts. The stipulation of facts is accepted and those facts will be related in the fact-finding in the recommended order.
On March 26, 2003, the hearing transcript was filed with the Division. Pursuant to the agreement between counsel and the Administrative Law Judge, the time for filing proposed recommended orders was extended beyond the normal ten-day opportunity for post-hearing submissions. The due date for submitting the proposed recommended orders became May 7, 2003. Petitioner met that deadline. Petitioner's proposed recommended order has been considered. Although Respondent's proposed recommended order was filed May 8, 2003, it has also been considered. With the delay for filing proposed recommended orders the requirement that the recommended order be entered within 30 days of the receipt of the transcript has been waived. Rule 28-106.216(2), Florida Administrative Code.
FINDINGS OF FACT
Stipulated Facts:
Respondent is currently licensed in Florida as a Life and Health (2-18) and General Lines Agent (2-20), having (been assigned) license number A189702.
At all times pertinent to the dates and occurrences referred to in the Administrative Complaint, Respondent was licensed in Florida to transact property and casualty insurance.
The Department has jurisdiction over Respondent's insurance licenses and appointments.
Respondent was never an appointed agent with ASI.
Respondent's husband, Ferdinand Naughton II, was appointed as an insurance agent for ASI.
At all times pertinent to the allegations in the Administrative Complaint, Respondent was employed at Morrow Insurance of Monticello.
Respondent signed the name of her husband to the insurance application at issue.
Additional Facts:
The house upon which the insurance application was completed by Respondent had approximately 3,500 square feet of heated and cooled space. The home had an additional 1,500 square feet of porches and carports. The core of the house had been made of pine. It was constructed in the 1830s in Georgia and later transported from Georgia to Jefferson
County, Florida. The balance of the residence was constructed in the mid-1970s. The newer construction was a frame house.
The new portion was constructed not long after the original structure had been moved from Georgia to Florida.
George Carswell, the applicant for the subject insurance and his wife Caroline Carswell, owned the property upon which the house was located at the time the application was made.
The property had been deeded to the husband and wife about one year before the insurance application date. It was deeded by Virginia Carswell, George Carswell's mother, concerning the mother's life estate in the property. Aside from the life estate, George Carswell had purchased the property upon which the residence was found sometime in the early 1970s. The total acreage owned by George Carswell where the house was located consisted of four hundred-plus acres.
At the time the application for insurance was made on the home, Virginia Carswell held a mortgage and note from George and Caroline Carswell for $225,000.00.
The residence in question had an internal burglar alarm system in which doors to the residence were monitored and an audible sound was emitted if the space was violated. The power to operate the burglar detection system was through electric power provided to the house. In addition, two smoke
detectors were installed in the house that were battery operated. No devices to detect fires or burglars were installed and monitored off-site.
The Monticello Volunteer Fire Department is located approximately 4.8 miles from the residence related to the subject insurance application.
At the time the policy was applied for, the Carswells were not living in the home. The home was being painted and other improvements made.
From January 2001 until sometime prior to April 6, 2001, George Carswell had spent between $20,000.00 and
$25,000.00 in the refurbishment of the home.
As recently as the period August 2, 1996 through August 2, 1997, the Morrow Insurance Agency of Monticello had written a basic coverage policy through Allstate Insurance Company on the subject residence for the benefit of Virginia Carswell. The amount of the basic coverage was $225,000.00 reflecting the year the home was built as 1976. The Allstate coverage for Virginia Carswell on the home in question was not written by Respondent. Respondent was aware that the property had been insured by Allstate through the Morrow Agency in the amount stated with Virginia Carswell, policyholder.
Respondent knew that Virginia Carswell held the mortgage on the property in question that has been described.
Respondent was personally familiar with the home in question, having visited the home three to four times, as recently as March 8, 2001, for a birthday party.
While attending the birthday party at the home, Respondent observed beautiful oriental rugs in the home and antique furniture. Respondent was not aware of the value of the oriental rugs and antique furniture that she saw. She did not observe any on-going construction in the rooms that she saw on that visit. From what Respondent saw the kitchen had not been redone. The downstairs bathroom had not been redone, nor the dining room. The roof had not been replaced. The back porch had not been glassed-in or the carport closed-in. Respondent did observe that the kitchen cabinets had been refinished.
On December 1, 2000, George Carswell made an application with Affiliated Insurance Agency in Tallahassee, Florida, another ASI agent, to insure the subject property for a period from that date through December 1, 2001. The total premium quoted was $6,668.00. Pertinent data in the application indicated, consistent with reality, that fire protection offered in the home was by a smoke alarm locally placed and that the distance to the fire department was five miles or less. The type of policy being quoted was an HO3 for a frame-construction home. The year of the construction was
stated to be 1950. The value of the house was stated as
$500,000.00, for purposes of the insurance quotation related to basic coverage.
Subsequently, George Carswell made another application, the application at issue, through the Morrow Insurance Agency as agent for ASI, which was prepared by Respondent. Respondent was aware that George and Caroline Carswell were not living in the subject home on the date the policy period commenced through the application with Morrow Insurance Agency. The policy period commenced March 7, 2001, and ended on March 7, 2002, according to the application. Respondent prepared the application notwithstanding her lack of appointment as agent for ASI.
The arrangement for business between ASI and the Morrow Insurance Agency was one in which F.E. Naughton, II, alone was the agency principal and registered agent. More specifically, ASI had an agency arrangement with Morrow Insurance of Monticello, Inc., through F.E. Naughton, II. The application for contract had been made by F.E. Naughton, II, on January 18, 2001. On January 21, 2001, ASI Underwriters Corp. established the broker agreement with direct billing between ASI and Morrow Insurance of Monticello. In that document, F.E. Naughton, II, signed as agent as of January 18, 2001. The agreement was confirmed by a vice-president with
ASI, through a signature dated January 21, 2001. There was an addendum to the agreement, which set the commission's schedule, effective January 21, 2001, as executed by F.E. Naughton, II, and the ASI vice-president on January 18, 2001, and January 21, 2001, respectively.
The agreement between ASI and Morrow Insurance Agency in the person of F.E. Naughton, II, concerning the opportunities and responsibilities of F.E. Naughton, II, as the registered agent for ASI stated in pertinent part:
AUTHORITY OF AGENT
The Broker grants to the Agent the usual insurance agency authority subject specifically to the limitations and other terms and conditions of this Agreement to:
*Receive and accept proposals for insurance only as permitted within the classes and lines of business shown in the Commission Schedule and within limits and underwriting guidelines established by ASI;
*Countersign and deliver policies, endorsements, and binders of insurance;
*Collect and receive premiums due ASI for such insurance; and
*Bind risks, limited to the authority provided in the ASI binding guidelines and certain limitations that might be established at times to limit catastrophic loss potential.
All of the foregoing authority and powers shall be subject at all times to restrictions placed upon Broker and Agent by the laws or legally enforceable rules and regulations of the authorities of the state or states in which Agent is
authorized by Broker to write insurance and to the terms and conditions of this Agreement hereinafter set forth.
* * *
5. FIDUCIARY RESPONSIBILITY OF AGENT
Agent shall perform faithfully its duties as Agent in compliance with all-applicable state statutes and regulations, instructions of Broker, and shall protect and further at all times the best interests of Broker. All premiums received by Agent and due Broker, shall be held by Agent as trustee for Broker until delivered to Broker. . . .
Nothing about these terms contemplates the opportunity for Respondent to take the application from George Carswell for the subject property and to bind an insurance policy in substitution for her husband F.E. Naughton, II, the true agent for ASI.
Respondent realized that she had not been appointed by ASI to serve as agent; instead, ASI had made an arrangement with her husband to be its agent. At hearing, Respondent admitted that the fact that she was not appointed meant, "I shouldn't sign an application." Moreover, she admitted that she could not bind the policy with ASI, not being appointed as its agent whatever the specifics of the risk contemplated by the application.
Joint Exhibit 2 identified as the Division of Fraud Investigative Report is constituted of a synopsis of facts
about this case and refers to an e-mail on January 4, 2002, to Phil Fountain, Bureau Chief, Agency and Agency Investigations, Florida Department of Insurance, in which Mr. Fountain is said to have advised, "Unfortunately, it is often true and perhaps 'accepted practice' in the industry for one licensed agent to sign another's name to an application as producing agent, especially when you have a husband/wife situation." This report goes on to say "Mr. Fountain did believe that the Division of Agent and Agency could pursue this case filed administratively." Assuming Mr. Fountain made these remarks and the submission of the Joint Exhibit 2 for consideration, supports that assumption, taken out of context, it is unclear what Mr. Fountain meant. Did he mean that a husband or wife can sign another's name to an application as producing agent when both the husband and wife have been recognized by the insurance company as agent? It would be hard to imagine that his remarks can properly be understood to allow what has transpired in this case where Respondent has signed the George Carswell application for insurance on the subject property as
F.E. Naughton, when in fact the husband did not take the
application, and by the terms of the agreement between ASI and the Morrow Insurance Agency, Respondent would not be allowed to take the application for him, not being an agent for ASI.
F.E. Naughton, II, had never asked Petitioner if it would be
permissible for Respondent to sign his name on a policy application with ASI. In the end, Respondent may not rely on the remarks made by Mr. Fountain as a means to defend her action in executing the application from George Carswell and signing her husband's name when submitting the application for insurance to ASI. Moreover, the division of labor within the Morrow Insurance Agency in which F.E. Naughton, II, sold commercial insurance, Respondent sold homeowners and mobile home insurance and Ellen Kline, another agent in the agency, sold automobile insurance, does not create the opportunity for Respondent to take the application and sign her husband's name in the George Carswell matter. F.E. Naughton, II's, permission for his wife to fill out the application and sign his name does not legitimize the activity. Even if Respondent has made a habit of signing her husband's name to applications for insurance over 25 years, this does not justify signing his name on this occasion.
On March 16, 2001, George Carswell signed the
application for insurance from ASI. The day the application was signed by George Carswell, F.E. Naughton, II, was not in the office. F.E. Naughton, II, the agent for ASI, did not see the George Carswell application before it was signed. He was aware only that George Carswell was talking to Respondent about insuring the dwelling. Respondent signed the name F.E.
Naughton on the line for the agency signature under George Carswell's signature.
While anyone in the office may complete an application for insurance, such as in the George Carswell case, only the agent may sign the application.
Respondent in trying to explain the reason why the application for insurance was signed by George Carswell on March 16, 2001, but was reflected as effective March 7, 2001, stated, "I didn't really back date it. We started on 3/7. We did not finish that application until the day he signed it. That was when it was completed." Respondent did not believe that the different dates of March 7, 2001, and March 16, 2001, had any effect on the issuance of the policy where she commented that "It was not bound so you don't have to have it in 72 hours." This explanation does not effectively explain the discrepancy in the application concerning the date upon which the application was signed March 16, 2001, and the date described as commencing the policy period, March 7, 2001.
When the application was completed, in the blocks related to the issue of whether the policy was bound or not bound, no choice was made by checking the appropriate box.
On March 23, 2001, the application was received by the customer service department for ASI.
The ASI form application indicated that the policy was bound effective March 14, 2001, at 12:01 a.m. The premium amount was $5,159.00 of which $1,431.75 was paid at the time of the application.
Respondent also sent pictures of the house from the outside front and back with the application. As alluded to before, Respondent in consultation with George Carswell, executed the details within the application, having some knowledge of the house to be insured.
The application reflected that Virginia Carswell held the mortgage on the property. The application filled out by Respondent indicated that the dwelling had 1,900 square feet. The reason Respondent gave for putting 1,900 square feet instead of 3,500 square feet, which is the true number within the dwelling, is her contention that what is called for in the application she executed for George Carswell is the ground floor total square footage. The house has two floors. She compares the experience with ASI, for whom she had no authority to act as agent, to that of other companies wherein she states, "All the other companies I have require [sic] you to put in the ground square foot, the ground floor square foot, so that's what I put down, the ground floor square foot." She holds that view, recognizing that both the upstairs and downstairs are being insured and are part of the
heated and cooled space. She also acknowledges that the dwelling being described in the application is the total dwelling, not the first floor. In filling out the application, she acknowledges that it does not call for square footage of the ground floor as opposed to the square footage of the overall dwelling. Respondent's explanation for describing the square footage as 1,900, not the actual 3,500, is unpersuasive. Respondent misstated the square footage in the application.
The application completed by Respondent erroneously stated that the dwelling had fire protection reporting to a central station and burglar protection reporting to a central station.
In an earlier statement concerning the fire alarms and burglar alarms reporting to a central station, Respondent said, "Well, I'm the one who did this. But, I didn't put in [sic] there. More likely, I just didn't know mark that one [sic] . . . was marked. It would've been alright." Then at hearing Respondent testified that George Carswell had told Respondent that the fire alarms were in the house in every room and that the application referenced to a central system, ". . . it should not have been that, it should have been just the fire alarm," referring to an internal system, not one connected to a central station. Concerning the burglar alarm
system, Respondent, in her testimony at hearing stated, "I couldn't understand what he was saying. He was saying 'oh, you know those alarms'. Well, no and he never . . . that's all he ever told me was alarms, fire alarms." This was taken to mean that the George Carswell never told Respondent that there was a burglar alarm system reporting to a central station. On the whole, Respondent is found to have filled out the application to falsely reflect that fire protection and burglar protection were available in the dwelling reporting to a central station with a consequence that the applicant was given a substantial discount in the insurance premium that was unauthorized.
In the application, Respondent separately valued the dwelling at $775,000.00, when by contrast the BOECKH Residential Valuation Process performed by Respondent listed the value as $259,000.00. This is compared with the amount of basic coverage on the dwelling when Virginia Carswell was the insured in the period August 2, 1996 through August 2, 1997, amounting to $225,000.00.
In an attempt to explain the difference between the BOECKH value and the much larger amount in the application pertaining to general coverage for the dwelling, Respondent, in a statement given prior to hearing, refers to a letter from Maddog Construction in which that builder indicated that the
replacement cost for the house approached $200 per square feet. Respondent describes the letter where she states, "If the you read the letter from the builder, $200 is square foot times 3,500 feet . . . ." By extension of the Respondent's view that would mean the value would be $700,000.00, not
$775,000.00, accepting George Carswell's representations that the overall square footage in the house is 3,500 square feet. In her statement made before hearing concerning valuation, Respondent stated, "What I do know about the house is that its all hand-done. The wood has been cut. The floors were out of pine, antique floors. The baseboards were 12 inches high
hand-cut. Um, the wood, the wood paneling was hand-cut, laid and carved." Respondent acknowledges that none of these features in the house were part of the application.
Respondent refers to some conversation with an unnamed person in an unnamed location concerning the difference in the price of the BOECKH value and the higher general coverage information for the dwelling, whereas in the statement made before hearing, Respondent says, "This is what, this is what we were trying to tell some lady when we called about the differences. And, she said not to worry about it. That when the inspector came, he would see all of this and it would be okay. Just send it on in." This inspector is taken to mean an inspector from ASI. No inspector ever came to reconcile
the difference between the BOECKH value and the higher general coverage information for the dwelling as submitted by Respondent in the application. In another place in the statement made by Respondent prior to hearing in response to a question concerning what would make the house worth
$775,000.00, Respondent said, "Because of the woodwork in it." Respondent refers in her statement before hearing to the coverage from Allstate when Virginia Carswell had insured the dwelling at $225,000.00, compared to the request for coverage in the amount of $775,000.00 in the application at issue. The difference is attributable to the Maddog replacement value letter wherein through the earlier statement made, Respondent says, "Then I asked George for some sort of a appraisal to go with it and, when he got the appraisal from the builder, the one that had done it, he was the one that increased the value of it." Then in her statement made prior to hearing, Respondent refers to the cost of $200 a square foot value and the subject dwelling where she says, "I used $200 because the newer houses in Tallahassee that are very nice homes today, are being built for $200 a square foot. And they are not fancy homes." Later in that statement, she says, "We have general contractors. We have one who just finished his home and it was $200 a square feet [sic]. Westminster Oaks is building little brick houses and ten years ago they were
charging $200 a square foot." When confronted with the fact that $200 a square foot multiplied by 3,500 and equals
$700,000.00 not $775,000.00 in the application, Respondent then indicated in her earlier statement in explaining how the
$775,000.00 was arrived at, "Well, George told me the bank wanted $775,000." When asked what bank, Respondent stated, "Whoever it was. I don't know. So, that's what I did, and he knew it too, that when it was inspected, if this was not corrected, he would have to come down to whatever the inspector said." Ultimately, Respondent indicated in her earlier statement that the insured value went from $230,000.00 to $775,000.00 "because I had the letter from Maddog."
At hearing, in her testimony, when asked if she had a problem with placing $775,000.00 coverage value on it, she said, "Yes I did, yes I did." Nonetheless, she indicated she was duty-bound to pass the application along to the insurance company. She explained that duty to be associated with the belief that an ASI inspector would inspect the home to make certain the valuation was correct. At hearing Respondent testified that she told George Carswell several times that the policy would probably not be approved for the amount of
$750,000.00.
Having considered Respondent's explanations, there was no reasonable basis for filling out the application
indicating that the dwelling was worth $775,000.00 in relation to insurance coverage.
In the application, Respondent stated that the year that the dwelling was constructed was 1975. While additions were made to the home around that time, Respondent knew that the core of the home was constructed in the 1800s.
In explaining the reason why she indicated that the year of construction of the dwelling was 1975, in her statement prior to hearing, Respondent said, "That's when it was put there and re-plumbed, rewired, re-roofed. The whole thing was redone. So, according to the book, you count that as the age." The book referred to was from "ASI." Respondent commented in the statement prior to hearing, "It was completely rebuilt." Further she said, "Yeah. I mean, they came in, and there it was with the walls, no porches on it, no wiring in it. They had to replace everything in it just like building a new house from the ground up."
In testimony at hearing, Respondent refers to George Carswell's father and the changes made around 1975 to the dwelling where she stated, "When he brought the house in, he had it completely fixed. They added bedrooms on. They added porches, carports, and things, and a big deck in the back--- not a deck, but a brick area in the back to overlook the lake." She refers also to the provision of central heat and
air. Later in the hearing testimony, Respondent refers to the reason for stating that the house was built in 1975 as that date being "When they did all the additions, they added over
60 percent to the house."
Contrary to Respondent's representations concerning the expectation of the ASI Home Owner's Program Manual, in identifying the age of the dwelling, the dwelling in question would not be considered as constructed in 1975. The manual states in reference to the age of the dwelling:
Age is determined by subtracting the year in which construction of the residence was completed from the year in which the policy is effective.
If acceptable documentation demonstrates that a residence has been totally renovated, the year in which the total renovation began may be used as the date of construction. Total renovation will require totally new electrical, plumbing (above the slab), heating and A/C, roof and window systems, and must be verified by a certified inspector based on an onsite inspection. Submit Prior to Binding.
Whatever the nature of the additions and improvements at the dwelling, they were not verified by a certified inspector based on an onsite inspection as Respondent reports the facts. Such information from a certified inspector based on an onsite inspection was not submitted prior to the binding of the policy. Therefore, the age of the dwelling could not be considered as 1975.
The plan code for issuing the policy established by Respondent in the application was HO3. The ASI Homeowner's Program Manual calls for the policy to be written as an HO8 because under that manual it would be considered a home greater than 30 years old. Respondent would have realized the need to prepare the application under Plan Code HO8 had she properly utilized the manual.
In the application related to underwriting information on the line to describe the prior insurance carrier, Respondent indicated that the applicant for insurance, "just purchased home." This was not true.
When asked whether Respondent was aware of the date upon which George Carswell had been deeded an interest in the property, Respondent revealed that she was not aware of it at the time she filled out the application. That omission made it inappropriate for her to say that the property was just purchased when filling out the application.
Concerning underwriting information as to prior claims by the applicant George Carswell, Respondent indicated that there were no prior claims when completing the application. Respondent perceived this question on the application as pertaining to homeowner losses only. In a prior statement before hearing, when asked whether Respondent
had inquired of George Carswell about any prior claims, Respondent stated, "Not for homeowners I didn't because I know him. He's not had any homeowner's claims. I'm insuring the home period, I'm not insuring a car. I'm not insuring him a boat. I'm insuring his home." When asked whether the application being completed was specifically in relation to homeowner claims, in the earlier statement given by Respondent she said, "No, but if that's what I'm providing, then that's what I'm going to insure. That's what I'm interested in. I'm not interested in if he's had a car claim. I'm not interested in if he's had a boat claim. I'm interested in if he's had a homeowner's claim." In the testimony at hearing, Respondent continued to hold to the view that the question in the application concerning prior losses was "just dwellings." But Respondent knew that George Carswell had sustained other fire losses unrelated to dwellings. What exact knowledge Respondent had of other forms of losses suffered by George Carswell not for a home was not specifically identified in the record.
The Homeowner's Program Manual for ASI addresses
loss history where it states:
Risk with one previous property claim within the last three years may be bound based on agent's judgment.
Risks with any previous personal liability claims and/or two or more property claims
should be referred to company before binding.
Whether George Carswell's other property losses, not pertaining to a home, may have allowed this policy to be bound by Respondent or referred to the company for binding was not established. But this uncertainty in the record does not justify Respondent indicating that there were no prior claims by George Carswell.
In completing the application, Respondent, in describing general coverage information, listed the property as Protection Class 09. In accordance with the ASI's Homeowners' Program Manual, description of eligibility for underwriting purposes, homes located on more than five acres and located in Protection Class 09, are ineligible risks. Respondent, in testimony at hearing, stated "Mr. Carswell told me his mother had deeded him the house and from five to seven acres, more or less. The rest of the property was owned--was family." To the contrary, George Carswell, in his written statement, indicated that the property in question was on seven acres when his mother and father had insured the property, but denies that he would have told Respondent or her husband that the property being insured on this occasion was limited to seven acres. Having considered George Carswell's statement and Respondent's testimony, it is not accepted that Respondent was told by George Carswell that the property upon
which the house was located was of five or less acres, making it an eligible risk for underwriting purposes according to the Homeowners' Program Manual.
On March 23, 2001, the application for insurance on the George Carswell property was received by ASI, indicating on its face that the property was bound effective March 14, 2001. No indication was made on the signature page concerning whether the coverage was bound or not bound by checking the appropriate box. In a subsequent submission of the application to ASI faxed by the Morrow agency on April 6, 2001, the signature page indicated that the policy had not been bound by a check mark in that box, while the lead page to the application continued to say that the policy was bound effective March 14, 2001. Respondent had checked the "not bound" box with the resubmission of the application faxed April 6, 2001.
According to the ASI Homeowners' Program Manual, an agent could bind coverage for a maximum of $350,000.00, assuming that the risk met other eligibility/underwriting guidelines. As discussed, those guidelines were not met and yet the application was prepared and signed by Respondent, a person not appointed by ASI to write coverage, with some indication that the policy was bound.
As a result of the application prepared and submitted by Respondent, ASI issued the insurance as evidenced by the homeowners' declaration page in which the dwelling was insured for $775,000.00, effective March 7, 2001 through March 7, 2002. The ultimate decision to issue the policy made by ASI has not been explained in this record. It is without question that Respondent promoted the application leading to the issuance of a policy to George Carswell.
On or about April 6, 2001, the George Carswell home was destroyed by fire of undetermined origin. As a result of the fire, ASI deemed it necessary to pay the mortgage balance to Virginia Carswell in the amount of $225,268.49, constituted of $212,485.00 in principal plus interest related to the George Carswell mortgage and promissory note secured by the home.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter consistent with Sections 120.569 and 120.57(1), Florida Statutes.
Petitioner must prove the allegations in the Administrative Complaint by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996)
In turn, Respondent is accused of having violated the following provisions within Chapter 626, Florida Statutes (2001):
626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, or managing general agent's, license or appointment.--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:
* * *
(5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.
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Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.
Fraudulent or dishonest practices in the conduct of business under the license or appointment. . . .
626.621 Grounds for discretionary refusal, suspension, or revocation of agent's,
solicitor's, adjuster's, customer representative's, service representative's, or managing general agent's, license or appointment.--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, a 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:
* * *
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.
Violation of any lawful order or rule of the department.
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(7) Willful overinsurance of any property or health insurance risk.
626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.--
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:
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k) Misrepresentation in insurance applications.--
1. Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. . . .
As well, the Administrative Complaint contemplates consideration of the following provisions of Chapter 626, Florida Statutes (2001):
626.104 "Appointment" defined.--An "appointment" is authority given by an insurer or employer to a licensee to transact insurance or adjust claims on behalf of an insurer or employer.
626.0428 Agency personnel powers, duties, and limitations.--
* * *
No employee of an agent or agency may bind insurance coverage unless licensed and appointed as a general lines agent or customer representative.
No employee of an agent or agency may initiate contact with any person for the purpose of soliciting insurance unless licensed and appointed as a general lines agent, customer representative, or solicitor.
626.112 License and appointment required; agents, customer representatives, solicitors, adjusters, insurance agencies, service representatives, managing general agents.--
(1)(a) No person may 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.
626.441 License or appointment; transferability.--A license or appointment issued under this part is valid only as to the person named and is not transferable to another person. No licensee or appointee shall allow any other person to transact insurance by utilizing the license or appointment issued to such licensee or appointee.
The facts found on clear and convincing evidence prove that Respondent has violated the provisions of law cited with the exception of Section 626.621(3), Florida Statutes. Respondent had no appointment with ASI. Lacking authority, she still prepared the application for insurance knowing it contained false information. The information was willfully misrepresented and willfully deceived persons who would rely upon the application for its accuracy. At the same time, Respondent demonstrated a lack of knowledge and technical competence when completing the application. Through the application, Respondent willfully sought to over-insure the property. Her acts were dishonest. Her acts were fraudulent. Her acts demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, serving as a fiduciary for both her customer George Carswell and ASI. See Natelson v. Department of Insurance, 454 So. 2d 31 (Fla. 1st DCA 1984). The purpose which Respondent had in mind for executing the application can be inferred as being in the interest of obtaining a commission for the benefit of the Morrow insurance
agency of which she was a member.
Respondent is subject to the penalties described in Rules 4-231.080, Florida Administrative Code, as influenced by Rule 4-231.160, Florida Administrative Code, pertaining to aggravating and mitigating factors. Any suspension may not exceed two years. Section 626.641(1), Florida Statutes (2002).
Based on the facts found and the conclusions of law reached, it is
RECOMMENDED:
That a final order be entered finding the violations referred to and suspending Respondent's licenses in Life and Health (2-18) and General Lines (2-24) for one year.
DONE AND ENTERED this 20th day of June, 2003, in Tallahassee, Leon County, Florida.
CHARLES C. ADAMS
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 20th day of June, 2003.
COPIES FURNISHED:
David J. Busch, Esquire Department of Financial Services Division of Legal Services
200 East Gaines Street 645A Larson Building
Tallahassee, Florida 32399-0333
David W. Collins, Esquire Post Office Box 541 Monticello, Florida 32345
Honorable Tom Gallagher Chief Financial Officer
Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Mark Casteel, General Counsel Department of Financial Services The Capitol, Lower Level 11 Tallahassee, Florida 32399-0300
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 03, 2003 | Agency Final Order | |
| Jun. 20, 2003 | Recommended Order | Without authority, Respondent applied for insurance from a company in a fraudulent manner. |
DEPARTMENT OF INSURANCE AND TREASURER vs JOHNNY L. JOHNSON, 02-004763PL (2002)
DEPARTMENT OF INSURANCE AND TREASURER vs. FLORENCE MOUNTS WILLIAMS, 02-004763PL (2002)
DEPARTMENT OF FINANCIAL SERVICES vs LOTSOLUTIONS, INC., 02-004763PL (2002)
DEPARTMENT OF FINANCIAL SERVICES vs JIBRI KHALEID KNIGHT, 02-004763PL (2002)
DEPARTMENT OF INSURANCE vs ROBERT CHARLES ANDERSON, 02-004763PL (2002)
