STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 05-2728PL

)

FRANCOIS NOEL, )

)

Respondent. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing by videoconference in Miami and Tallahassee, Florida, on October 4, 2005.

APPEARANCES

For Petitioner: Robert Alan Fox

Department of Financial Services Division of Legal Services

612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Francois Noel, pro se

13285 Northeast Sixth Avenue, Apt. N104 North Miami, Florida 33161

STATEMENT OF THE ISSUES

The issues are whether Respondent is guilty of violating any of the below-cited provisions of the Florida Insurance Code and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

By Administrative Complaint filed April 15, 2005, Petitioner alleged that, at all material times, Respondent was licensed as a life, life and health, general lines, and property and casualty, and health agent. Count I of the Administrative Complaint alleges that Respondent was an officer of Florida Best Insurance Agency, Inc.

Count I of the single-count Administrative Complaint alleges that, on September 9, 2003, Respondent met with P. D. or

R. D. and discussed automobile insurance. Count I alleges that, on September 9, 2003, Respondent sold P. D. or R. D. an American Vehicle Insurance Company insurance policy. Count I alleges that Respondent identified the agent on the application as "Fed USA #1515" and identified the license number as "A135229."

Count I alleges that Fed USA Insurance and Financial Services is a fictitious name of JRS Gaetan Corporation, which operates an insurance agency under the name of Fed USA. The director of JRS Gaetan Corporation is allegedly Robert Gaetan. Count I alleges that neither of the business entities nor

Mr. Gaetan has a relationship with Respondent that would

authorize Respondent or Florida Best Insurance Agency, Inc., to broker insurance business, on their behalf, with American Vehicle Insurance Company. Count I alleges that neither Respondent nor Florida Best Insurance Agency, Inc., was authorized to do business with American Vehicle Insurance Company.

Count I alleges that, on September 10, 2003, Respondent received $100 in case from R. D. or P. D. as partial payment for their policy with American Vehicle Insurance Company. Count I alleges that Respondent provided them with insurance identification cards showing that, effective September 9, 2003, American Vehicle Insurance Company insured their vehicle. Count I alleges that, on September 20 and 23, 2003, Respondent received from K. D. $230 and $200, respectively, for the purpose of paying the premium on the insurance described above.

Count I alleges that, without the knowledge of R. D. or

1. D., Respondent failed to submit the American Vehicle Insurance Company policy application to the insurer's managing general agent or other representative and failed to remit any of the above-described funds to such agent or representative or to return the funds to R. D. or P. D. Count I alleges that these were trust funds received by Respondent in a fiduciary capacity and that Respondent converted, misappropriated, or wrongfully

   withheld these funds. Consequently, American Vehicle Insurance Company allegedly never issued the policy.

   Count I alleges that, on September 25, 2003, R. D. or P. D. was injured in a car accident, and R. D. has unpaid medical bills and lost wages due to Respondent's failure to obtain insurance.

   Count I alleges that Respondent has failed to obtain a separate appointment from each insurer that has appointed him as its agent, in violation of Section 626.331(2), Florida Statutes; failed to account for and pay all premiums and funds belong to insurers or others received by an agent in transactions under his license, in violation of Section 626.561(1), Florida Statutes; demonstrated lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by his license, in violation of Section 626.611(8), Florida Statutes; engaged in fraudulent or dishonest practices in the conduct of business under his license, in violation of Section 626.611(9), Florida Statutes; misappropriated, converted, or wrongfully withheld moneys belonging to insurers or insureds and received in the conduct of business under his license, in violation of Section 626.611(10), Florida Statutes; violated any law applicable to the business of

   insurance in the course of dealing under his license, in violation of Section 626.621(2), Florida Statutes; and shown himself to be a source of injury or loss to the public in the conduct of business under his license, in violation of Section 626.621(6), Florida Statutes.

   Count I states that the Chief Financial Officer intends to enter an order suspending or revoking the insurance licenses of Respondent or to impose such penalties as may be provided by law.

   At the hearing, Petitioner called three witnesses and offered into evidence 13 exhibits: Petitioner Exhibits 1-4 and 6-14. Respondent called one witness and offered into evidence no exhibits. All exhibits were admitted except Petitioner Exhibit 10, which was proffered.

   The court reporter filed the transcript on November 10, 2005. Petitioner filed its proposed recommended order on November 18, 2005. Respondent did not file a proposed recommended order.

   FINDINGS OF FACT

   
   

   1. At all material times, Respondent has been licensed as follows: life agent, life and health agent, general lines agent, and health agent (Licenses). Respondent's license identification number is A192740.

   2. At all material times, Respondent has owned Florida Best Insurance Agency, Inc. (Best). Best sells insurance. Rose Duverseau has previously purchased insurance from Best and Respondent. Respondent has previously sold her insurance even though Ms. Duverseau lacked the cash necessary to pay the premium, although the record does not reveal the specifics of their arrangements in such transactions.

   3. On September 9, 2003, Ms. Duverseau telephoned Respondent at Best's office to discuss the purchase of automobile insurance. Satisfied with the premium cited by Respondent, Ms. Duverseau told Respondent to prepare the paperwork, and she would come to the office to sign the papers and obtain the insurance.

   4. When she arrived at Best's office later that day or the following day, Ms. Duverseau revealed to Respondent that she lacked the funds to pay the entire premium of $530. Respondent accepted from her a payment of part of the premium--$100. In return, Respondent issued to her insurance identification cards, showing that, effective September 9, 2003, she had coverage with American Vehicle Insurance Company (American) for personal injury protection benefits, property damage liability, and bodily injury liability. Ms. Duverseau told Respondent that she would bring him the rest of the money later.

   5. On September 23, 2003, Ms. Duverseau returned to Best's office and gave Respondent an additional $200 toward the premium. On September 25, 2003, Ms. Duverseau sent a friend with the remaining $230 to complete payment of the premium.

      Ms. Duverseau sent a friend because, earlier on September 25, Ms. Duverseau was involved in an automobile accident while in the covered vehicle.

   6. As a result of the accident, Ms. Duverseau incurred over $11,000 of medical expenses, which, after negotiations, was later reduced to $6243.25. She paid this amount with the proceeds of a settlement with another party involved in the accident. Ms. Duverseau later demanded that Respondent pay her this sum and the $530 that she had paid him for the policy, but Respondent gave her only $200 and a used computer that broke shortly after he gave it to her.

   7. Respondent never submitted the insurance application or premium payments to American. He is not an authorized agent of American. As he had in other insurance transactions, Respondent had intended to submit the application and premium to Fed USA Insurance and Financial Services, which is an agent of American, but Respondent intended to do so only after Ms. Duverseau had completed paying the full amount. However, Respondent is not an employee or agent of Fed USA.

      CONCLUSIONS OF LAW

      
      

   8. The Division of Administrative Hearings has jurisdiction over the subject matter. §§ 120.569 and 120.57(1), Fla. Stat.

   9. Section 626.611(7)-(10), Florida Statutes, provides that Petitioner shall suspend or revoke a license for:

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

         
         

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

         
         

      3. Fraudulent or dishonest practices in the conduct of business under the license or appointment.

         
         

      4. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.

         
         

   10. Section 621.626(2) and (6), Florida Statutes, provides that Petitioner may suspend or revoke a license for:

       (2) 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.

       
       

       (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 IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public.

   11. Section 626.561(1), Florida Statutes, states:

       
       

       All premiums, return premiums, or other funds belonging to insurers or others received by an agent, insurance agency, customer representative, or adjuster in transactions under the license are trust funds received by the licensee in a fiduciary capacity. An agent or insurance agency shall keep the funds belonging to each insurer for which an agent is not appointed, other than a surplus lines insurer, in a separate account so as to allow the department or office 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.

       
       

   12. 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).

   13. Petitioner has proved a lack of fitness or trustworthiness to engage in the business of insurance, a lack of reasonably adequate knowledge to transact insurance business, fraudulent or dishonest practices in insurance, and the misappropriation of funds belonging to an insurer or insured. Respondent failed to advise Ms. Duverseau that she would not have coverage until she paid the entire premium, Respondent fraudulently delivered to her evidence of insurance that had not yet been issued, and Respondent failed to safeguard the premium

       payments that Ms. Duverseau made, so that he could at least refund them after the accident.

   14. Although there is some overlap in the violations, in terms of specific acts and omissions, Petitioner has proved two distinct violations. First, Respondent committed a fraudulent act in issuing a certificate of insurance before he had submitted the application and premium to Fed USA. Second, Respondent misappropriated the premiums paid by Ms. Duverseau.

   15. However, Florida Administrative Code Rule 69B-231.040(1)(a) and (b) provides:

       1. The Department is authorized to find that multiple grounds exist under Sections 626.611 and 626.621, F.S., for disciplinary action against the licensee based upon a single count in an administrative complaint based upon a single act of misconduct by a licensee. However, for the purpose of this rule chapter, only the violation specifying the highest stated penalty will be considered for that count. The highest stated penalty thus established for each count is referred to as the “penalty per count”.

          
          

       2. The requirement for a single highest stated penalty for each count in an administrative complaint shall be applicable regardless of the number or nature of the violations established in a single count of an administrative complaint.

       
       

   16. Florida Administrative Code Rule 69B-231.040(1)(a) clearly limits Petitioner to a single penalty for "a single act of misconduct" cited in a "single count," even though the single

       act of misconduct violates several provisions of Section 626.611 or 626.621, Florida Statutes. In this case, Petitioner has pleaded in a single count two distinct acts of misconduct-- fraudulently issuing the insurance identification card and misappropriating the premiums.

   17. As noted below, under Petitioner's rules, each of these violations calls for a nine-month suspension, and a single act constituting multiple violations in a single count is an aggravating factor. Implicitly, multiple acts constituting multiple violations in a single count is also an aggravating factor. As noted above, under Section 626.611, Florida Statutes, each of these violations is punishable by revocation. Although this Recommended Order treats the multiple acts as a single act, due to the single-count Administrative Complaint, the distinction is without much significance because the multiple acts and violations are aggravating factors and the statute authorizes revocation for either the fraud or misappropriation.

   18. Florida Administrative Code Rule 69B-231.080(7)-(10) provides for the suspension of a license for six months for a violation of Section 626.611(7) or (8), Florida Statutes, and nine months for a violation of Section 626.611(9) or (10), Florida Statutes.

   19. Florida Administrative Code Rule 69B-231.160 identifies aggravating and mitigating factors in assessing the appropriate penalty. The sole mitigating factor is the apparent absence of other discipline against Respondent. The aggravating factors are the injury suffered by Ms. Duverseau, the obvious potential for injury resulting from the fraudulent issuance of insurance certificates and misappropriation of premiums, the willfulness of Respondent's conduct, the failure of Respondent to make restitution, the financial gain resulting to Respondent, and the existence of secondary violations in this single-count case.

   20. In its proposed recommended order, Petitioner seeks only a nine-month suspension. This is inadequate given the gravity of the misconduct in this case. Respondent acted in callous disregard of the duties that he owed Ms. Duverseau to inform her when she would have insurance coverage and to return to her the premiums that he had never remitted to the insurer or other agency. Respondent acted in callous disregard of the duties that he owed the public to issue a certificate of insurance only when the named insured actually was insured. If Petitioner chooses to exercise its discretion not to revoke for this misconduct, the shortest reasonable suspension is five years.

RECOMMENDATION

It is

RECOMMENDED that Petitioner enter a final order suspending Respondent's Licenses for five years.

DONE AND ENTERED this 13th day of January, 2006, in Tallahassee, Leon County, Florida.

S

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 13th day of January, 2006.

COPIES FURNISHED:

Honorable Tom Gallagher Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Robert Alan Fox

Department of Financial Services

Division of Legal Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

Francois Noel

13285 Northeast Sixth Avenue, Apt. N104 North Miami, Florida 33161

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: 05-002728PL

Orders for Case No: 05-002728PL