STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 05-4640PL

)

MARGARET LOUISE HERGET, )

)

Respondent, )

)

and )

)

A & M INSURANCE, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case before Larry J. Sartin, an Administrative Law Judge of the Division of Administrative Hearings, on March 13, 2006, by video teleconference at sites in Lauderdale Lakes and Tallahassee, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Division of Legal Services Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Jed Berman, Esquire

Post Office Box 30

Winter Park, Florida 32790-0030

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Margaret Louise Herget, committed the offenses alleged in an Amended Administrative Complaint issued by Petitioner, the Department of Financial Services, on December 9, 2005, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On or about April 1, 2005, Petitioner issued a two-count Administrative Complaint, Petitioner's Case No. 80573-05-AG, alleging that Ms. Herget had violated certain statutory provisions governing the conduct of Florida insurance agents. Ms. Herget, through counsel, executed a document titled Election of Proceedings, disputing the factual allegations of the Administrative Complaint and requesting a hearing pursuant to Section 120.57(1), Florida Statutes (2005). A copy of the Administrative Complaint and the Election of Proceedings was filed with the Division of Administrative Hearings on April 19, 2005. The matter was designated DOAH Case No. 05-1469PL and was assigned to the undersigned.

On April 22, 2005, A & M Insurance, Inc., filed a Petition to Intervene. By Order entered May 12, 2005, the Petition was granted.

The final hearing was scheduled for June 28, 2005. On May 27, 2005, however, Petitioner filed a Motion to Relinquish

Jurisdiction and Close File in which it was represented that Petitioner intended to issue an amended administrative complaint due to the receipt of additional complaints against Ms. Herget. Without objection, the Motion to Relinquish Jurisdiction was granted by an Order Closing File entered May 31, 2005.

On December 9, 2005, Petitioner filed Department's Motion to Reassume Jurisdiction and Re-Set Final Hearing. Petitioner also filed a four-count Amended Administrative Complaint, a new Election of Proceeding form executed by counsel on behalf of Ms. Herget, and a pleading titled "DOAH Rule 28-107.004 Request for Hearing" filed with Petitioner by Ms. Herget. By Order entered December 27, 2005, DOAH Case No. 05-1469PL was reopened as DOAH Case No. 05-4640PL.

The final hearing was scheduled for March 13, 2006, by Notice of Hearing by Video Teleconference issued January 12, 2006. The hearing was scheduled to be conducted between Lauderdale Lakes, Florida, and the offices of the Division of Administrative Hearings in Tallahassee, Florida.

The undersigned conducted the final hearing from Tallahassee, Florida. Counsel for the parties, Ms. Herget, all witnesses, and the court reporter participated in the hearing from Lauderdale Lakes, Florida.

At the commencement of the final hearing, Petitioner dismissed Count III of the Amended Administrative Complaint.

Petitioner presented the testimony of Rosemary Mackay-Camp, Elric Parker, Carol Cipully, Tina Cipully, Lorna Delisser, and Marsha Watson. Petitioner also had admitted Petitioner's Exhibits numbered 1 through 9 and 10 through 19. Ms. Herget testified on her own behalf and had admitted "Defendant's" Exhibits numbered 6A, 6D, 6E, 6F, 6K, 7A, 7C, 7E, 7F, and 8B.

The official Transcript of the final hearing was filed on April 20, 2006. By Notice of Filing Transcript issued April 21, 2006, the parties were informed that their proposed recommended orders were due on or before May 22, 2006. Both parties timely filed Proposed Recommended Orders which have been fully considered in rendering this Recommended Order.

FINDINGS OF FACT

1. The Parties.

   
   

   1. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat.1

   2. Respondent Margaret Louise Herget was, at the times relevant, licensed in Florida as a general lines (property and casualty) insurance agent. Ms. Herget's license number is A117083.

   3. At the times relevant to this matter, the Department has had jurisdiction over Ms. Herget's insurance licenses and appointments.

   4. At the times relevant to this matter, Ms. Herget was the president and a director of A & M Insurance, Inc. (hereinafter referred to as "A&M"). A&M was incorporated in 1991 and has been operating as an insurance agency in Broward County, Florida.

   5. At the times relevant to this matter, A&M had a business bank account with Bank Atlantic of Ft. Lauderdale.

      Ms. Herget has been an authorized signatory on the account since 1998.

   6. At the times relevant to this matter, Ms. Herget maintained a contractual relationship with Citizens Insurance Company (hereinafter referred to as "Citizens"), an insurer. Pursuant to this contractual relationship, all applications and premiums for Citizens's products received by Ms. Herget were to be submitted to Citizens within five business days.

2. Albert Herget.

   
   

   1. Albert Herget,2 Ms. Herget's husband until their marriage was dissolved in September 2003, also maintained a contractual relationship with Citizens. Mr. Herget, who was licensed as a general lines agent by the Department, was

      appointed by Citizens to write Citizens' property and casualty insurance.

   2. Mr. and Ms. Herget were both authorized signatories on A&M's bank account from 1998 until June 2003. Ms. Herget continued as the sole authorized signatory on the account after June 2003.

   3. Mr. Herget was also an officer of A&M until October 6, 2003, when he resigned. A&M was named after "Albert" & "Margaret" Herget.

   4. The evidence failed to prove that Mr. Herget was under the direct supervision and control of Ms. Herget. The evidence also failed to prove that Ms. Herget knew or should have known of any act by Mr. Herget in violation of Chapter 626, Florida Statutes.

3. Count I: The Camp Transaction.

   
   

   1. In June 2002 Michael Camp and Rosemary Mackay-Camp went to A&M to purchase hazard, windstorm, and flood insurance.

   2. The Camps met with and discussed their needs with

      
      

      Mr. Herget. On or about June 11, 2002, the Camps paid $2,273.97 by check number 365 made out to "A & M Insurance" for "Flood, Wind & Home Insurance." The premium for the windstorm insurance amounted to $1,026.00. The check was given to Mr. Herget and was deposited in A&M's bank account on or about June 12, 2002.

   3. On or about June 11, 2002, the Camps were given a document titled "Evidence of Property Insurance," which indicated that they had purchased insurance on their home for the period June 14, 2002, through June 14, 2003. The windstorm insurance was to be issued by Citizens.

   4. Initials purporting to be those of Ms. Herget and a stamp of Ms. Herget's name and insurance license number appear in a box on the Evidence of Property Insurance form titled "Authorized Representative." Ms. Herget testified credibly that the initials were not placed there by her.3

   5. There is also a notation, "Paid in Full Ck # 365" and "Albert," written in Mr. Herget's handwriting on the Evidence of Property of Insurance form. Mr. Herget also gave the Camps the note evidencing the receipt of their payment.

   6. The Camps, merchant marines, left the country after paying for the insurance they desired on their home and did not return until sometime in 2003. Upon their return they inquired about why their windstorm insurance had not been renewed and discovered that they had never been issued the windstorm insurance coverage they had paid A&M for in 2002.

   7. The Camps attempted several times to contact

      
      

      Ms. Herget by telephone. Their attempts were unsuccessful. They wrote a letter of inquiry to Ms. Herget on October 29, 2003. Ms. Herget did not respond to their inquiry.

   8. Having received no response to their inquiry of October 29, 2003, Mr. Camp wrote to Ms. Herget on or about December 5, 2003, and demanded that she either provide proof of the windstorm policy the Camps had paid for or refund the premium paid therefor.

   9. By letter dated December 11, 2003, Ms. Herget informed Mr. Camp of the following:

      We have determined that your policy was submitted to Citizen's (Formerly FWUA) and was never issued due to a request for additional information which was not received.

      
      

      Ultimately the application and funds were returned to our agency.

      
      

      Enclosed please find our agency check for 1026.00 representing total refund of premium paid.

      
      

      Please advise if we can be of further assistance.

      
      

      Enclosed with the letter was a full refund of the premium which the Camps had paid for the windstorm insurance they never received. The Camps accepted the refund.

   10. While the hazard and flood insurance purchased by the Camps had been placed by A&M, the windstorm insurance had not been placed, as acknowledged by Ms. Herget in her letter of December 11, 2003.

   11. A&M's bank records indicate that a check for the windstorm insurance in the amount of $1,026.00 was written to

       Citizens on or about June 14, 2002, but that the check had never been cashed. Although this explanation appears contrary to the explanation given by Ms. Herget to the Camps in her letter of December 11, 2003, neither explanation was refuted by the Department. More importantly, regardless of why the windstorm insurance purchased by the Camps was not obtained by A&M, the weight of the evidence suggests that the fault lies not with Ms. Herget, but with Mr. Herget, who actually dealt with the Camps. The evidence also proved that it was not until sometime in late 2003 that Ms. Herget learned of the error and, upon investigating the matter, ultimately refunded in-full the amount paid by the Camps.

   12. The evidence failed to prove that any demand was made by Citizens for the premium for windstorm paid by the Camps or that she willfully withheld their premium.

4. Count II: The Cipully Transaction.

   
   

   1. Carol Cipully began purchasing homeowner's insurance from A&M in 1999.

   2. In July 2003 Ms. Cipully refinanced her home. She believed that her homeowner's insurance would continue after the refinancing with her current insurance carrier, Citizens, through A&M.

   3. First American Title Insurance Company (hereinafter referred to as "First American") handled the closing of the

      refinancing. First American was responsible for issuing a check to A&M after closing in payment for the homeowner's insurance policy.

   4. Closing took place July 23, 2003. By check dated July 30, 2003, First American paid $1,658.00 to A&M for

      Ms. Cipully's insurance coverage.4 Of this amount, $1,435.00 was for hazard insurance with Citizens and $223.00 was for flood insurance from Omaha Property and Casualty Insurance Company (hereinafter referred to as "Omaha Insurance"). The check was received and deposited in the bank account of A&M on August 4, 2003.

   5. An Evidence of Property Insurance form was issued by A&M for Ms. Cipully's insurance on or about July 25, 2003. The form was initialed by Ms. Herget.

   6. A month or so after the closing, a water leak, which had caused property damage, was discovered in Ms. Cipully's home. When she attempted to contact her homeowner's insurer she ultimately discovered that the premium payment made by First American had not been remitted to Citizens or Omaha Insurance by A&M and, therefore, she had no homeowner's insurance.

   7. Ms. Cipully contacted Ms. Herget by telephone and was assured by Ms. Herget that she had insurance.5

   8. Ms. Cipully's daughter, Tina Cipully, attempted to resolve the problem with Ms. Herget on behalf of her mother. In

      response to Tina Cipully's inquiries, Ms. Herget, rather than look into the matter herself, informed Tina Cipully that proof need to be provided to her by or on behalf of Ms. Cipully that would prove that a premium check had been sent to A&M from First American.

   9. Tina Cipully attempted to comply with Ms. Herget's request, contacting First American. An employee of First American faxed a copy of the cancelled check for $1,658.00 to Tina Cipully.6 A copy of the Evidence of Property Insurance dated July 25, 2003, from A&M was also faxed by First American to Tina Cipully.

   10. Tina Cipully sent a copy of the check she received from First American to Ms. Herget. She also sent a copy of a HUD-1 statement. When she later spoke to Ms. Herget, however, Ms. Herget told her she could not read the documents. The evidence failed to prove that Ms. Herget received a legible copy of the check. The copy of the HUD-1 form, while not totally legible, did evidence that $1,658.00 was to be withheld for payment of insurance premiums. Despite the fact that the check in the amount shown on the HUD-1 statement had been deposited in A&M's bank account, Ms. Herget continued to insist that

       Ms. Cipully prove her entitlement to redress. Had she made any effort, Ms. Herget should have discovered that a check in the

       amount of $1,658.00 had been deposited in A&M's bank account on August 4, 2003.

   11. Three and a-half months after having received the First American check, Citizens, after verifying that First American had paid for hazard insurance on behalf of Ms. Cipully, contacted Ms. Herget and requested payment of Ms. Cipully's insurance premium.

   12. Six months after being notified by Citizens,

       
       

       Ms. Herget paid Citizens the $1,435.00 insurance premium A&M had received in August 2003. The payment was made by check dated May 28, 2004. Ms. Herget did not explain why it took six months after being notified that Ms. Cipully had indeed paid her insurance premium to pay Citizens.

   13. Omaha Insurance had not been paid the $223.00 premium received by A&M in August 2003 at the time of the final hearing of this matter. Ms. Herget failed to explain why.

5. Count IV: The Parker Transaction.

1. On March 20, 2004, Elric Parker, who previously purchased homeowner's insurance from Citizens through A&M, went to A&M to renew his policy. He gave Ms. Herget a check dated March 20, 2004, for $1,064.00 in payment of six months of coverage.7 Ms. Herget gave Mr. Parker a receipt dated March 20, 2004, for the payment. The check was endorsed by Ms. Herget and

   deposited into the banking account of A&M on or about March 22, 2004.

2. After waiting approximately three months for the arrival of a renewal policy which Ms. Herget told Mr. Parker he would receive, Mr. Parker became concerned and decided to contact A&M. He was repeatedly assured, at least on one occasion by Ms. Herget, that the renewal policy would be received.

3. Mr. Parker subsequently contacted representatives of Citizens directly and was informed by letter dated January 8, 2005, that his insurance with Citizens had been cancelled in April 2004 for non-payment of the $1,064.00 premium Mr. Parker had paid to A&M.

4. Rather than attempt to resolve the problem with

   
   

   Ms. Herget and A&M, Mr. Parker continued to deal directly with Citizens. After providing proof to Citizens of his payment of the premium to A&M, Citizens offered to issue a new policy effective April 2004 upon payment by Mr. Parker of the second six-month premium or, in the alternative, to apply his payment in March 2004 to a new policy for 2005. Mr. Parker opted to have his payment applied toward the issuance of a new policy providing coverage in 2005. This meant that he had no coverage for most of 2004 and part of 2005.

5. Citizens notified Ms. Herget that the payment she had received from Mr. Parker should be remitted to Citizens.

   Ms. Herget investigated the matter and, when she confirmed that she had received his payment, paid Citizens $1,064.00 on or about February 10, 2005.

6. Ms. Herget and A&M failed to remit Mr. Parker's insurance premium payment received in March 2004 until payment was made to Citizens in February 2005. That payment was made only after inquires from Mr. Parker and, ultimately, Citizens. While Ms. Herget speculated that Mr. Parker's file was misfiled and not properly processed, the failure to remit Mr. Parker's premium payment for almost a year was not explained by either party.

7. The evidence failed to prove, however, that Ms. Herget failed to remit the premium to Citizens willfully or that she failed to remit the premium once it was determined that A&M had failed to so and demand was made by Citizens.

   CONCLUSIONS OF LAW

   
   

   1. Jurisdiction.

      
      

8. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2005).

   1. The Burden and Standard of Proof.

      
      

9. The Department seeks to impose penalties against Ms.

   
   

   Herget through the Amended Administrative Complaint that include mandatory and discretionary suspension or revocation of her licenses. Therefore, the Department has the burden of proving the specific allegations of fact that support its charges by clear and convincing evidence. See Department of Banking and Finance, Division of Securities and Investor Protection v.

   Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); and Pou v. Department of

   Insurance and Treasurer, 707 So. 2d 941 (Fla. 3d DCA 1998).

   
   

10. What constitutes "clear and convincing" evidence was described by the court in Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA 1989), as follows:

    . . . [C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

    Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

    
    

    See also In re Graziano, 696 So. 2d 744 (Fla. 1997); In re

    Davey, 645 So. 2d 398 (Fla. 1994); and Walker v. Florida Department of Business and Professional Regulation, 705 So. 2d 652 (Fla. 5th DCA 1998)(Sharp, J., dissenting).

    1. The Department's Charges.

       
       

11. Section 626.611, Florida Statutes, mandates that the Department suspend or revoke the license of any insurance agent if it finds that the agent has committed any of a number of acts specified in that Section.

12. Section 626.621, Florida Statutes, gives the Department the discretion to suspend or revoke the license of any insurance agent if it finds that the agent has committed any of a number of acts specified in that Section.

13. The Amended Administrative Complaint in this case contains three counts. In Count I it is alleged that Ms. Herget violated the following statutory provisions: Sections 626.561(1); 626.611(7), (8), (9), and (10); and 626.621(4), Florida Statutes. Counts II and IV, which involve similar factual allegations but different complainants from Count I and each other, also contain essentially the same alleged statutory violations. The only difference in the statutory cites is that Counts II and IV allege a violation of Section 626.611(4), Florida Statutes, rather than Section 626.621(4), Florida Statutes. Given the location of the reference to Section 626.611(4), Florida Statutes, in Counts II and IV8 and the fact

    that both parties have addressed Section 626.621(4), Florida Statutes, rather than Section 626.611(4), Florida Statutes, in their proposed recommended orders as the alleged violation for all three Counts, it is concluded that the reference in the Amended Administrative Complaint to Section 626.611(4), Florida Statutes, is a scrivener's error.

14. Section 626.561(1), Florida Statutes, imposes the following duty on insurance licensees:

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

    
    

15. While this provision does not specifically authorize the Department to take disciplinary action against an insurance licensee, Section 626.611(13), Florida Statutes, provides the Department with disciplinary authority if it is shown that the licensee is guilty of: "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." Although

    the Amended Administrative Complaint did not specifically allege such a violation, Ms. Herget was sufficiently put on notice of the alleged violation.

16. Section 626.611, Florida Statutes, provides, in pertinent part, the following:

    The department shall . . . suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, 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:

    
    

    . . . .

    
    

    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.

       
       

       . . . .

17. It appears from the Department's Proposed Recommended Order that the allegations of Counts I, II, and IV that

    Ms. Herget violated Section 626.611(8), Florida Statutes, have been abandoned. The Department did not include this alleged statutory violation in its statement of the issue nor address the alleged statutory violation in its proposed conclusions of law. The alleged violations of Section 626.611(8), Florida Statutes, therefore, will not be addressed in this Recommended Order other than to conclude that the Department failed to prove clearly and convincingly that Ms. Herget "[d]emonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment."

18. Finally, Section 626.621(4), Florida Statutes, provides:

    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, 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:

    
    

    . . . .

    
    

    (4) Failure or refusal, upon demand, to pay over to any insurer he or she represents

    or has represented any money coming into his or her hands belonging to the insurer.

    
    

    1. Count I: The Camp Transaction.

       
       

19. The Department proved clearly and convincingly that the windstorm insurance premium collected on behalf of Citizens from the Camps in June 2002 was not remitted to Citizens and that Ms. Herget did not reimburse the Camps until December 2003.

20. The Department, however, failed to prove clearly and convincingly that it was Ms. Herget who received the Camps' premium payment or, more importantly, that she failed to remit the payment when received to Citizens. Instead, the evidence proved that it was her husband, also an insurance licensee, agent for Citizens, and officer of A&M who received the payment and failed to remit it. Therefore, if any violation of Chapter 626, Florida Statutes, was committed, it was committed by an individual who was not under the direct supervision or control of Ms. Herget. See § 626.734, Fla. Stat.

21. The evidence also failed to prove that, when

    
    

    Ms. Herget learned of the failure to remit, she unreasonably withheld reimbursement of the payment. It was only a short period of time after Mr. Camp wrote to Ms. Herget in December 2003 that she refunded the premium.

22. The alleged violations of Sections 626.611(7), (9), (10), and (13), Florida Statutes, all require specific intent on

    the part of the licensee. See Bowling v. Department of Insurance, 394 So. 2d 165 (Fla. 1st DCA 1981). Having failed to prove the requisite intent on the part of Ms. Herget or anyone under her direct supervision and control to remit to Citizens the premium payment paid by the Camps, the Department has failed to prove:

    1. That Ms. Herget demonstrated a "lack of fitness or trustworthiness to engage in the business of insurance" in violation of Section 626.611(7), Florida Statutes;

    2. That Ms. Herget engaged in "dishonest practices in the conduct of business under the license or appointment" in violation of Section 626.611(9), Florida Statutes;

    3. That Ms. Herget is guilty of "[m]isappropriation, 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" in violation of Section 626.611(10), Florida Statutes; or

    4. That Ms. Herget is guilty of "[w]illful failure to comply with, or willful violation . . . of any provision of this code", in particular, Section 626.561(1), Florida Statutes, in violation of Section 626.611(13), Florida Statutes.

23. Finally, the evidence failed to prove clearly and convincingly that Ms. Herget violated Section 626.621(4), Florida Statutes. No "demand" was ever made by Citizens to Ms.

    Herget to remit the insurance premium received on its behalf from the Camps. The only demand came from the Camps, and Ms. Herget met their demand by reimbursing them for their premium payment.

    1. Count II: The Cipully Transaction.

       
       

24. The Department proved clearly and convincingly that the insurance premium collected on behalf of Citizens from Ms. Cipully on or about August 4, 2003, was not remitted to Citizens until six months after demand was made of her by Citizens. Additionally, the Department proved clearly and convincingly that Ms. Herget did not act reasonably in placing the burden on Ms. Cipully to prove that she had made payment when Ms. Herget's records could have been checked to verify receipt of the payment.

25. Based upon the facts involving this Count, it is inferred that Ms. Herget willfully failed to remit to Citizens and Omaha Insurance the premiums payment paid by Ms. Cipully. It is, therefore, concluded, that the Department proved that Ms. Herget is guilty of "[w]illful failure to comply with, or willful violation . . . of any provision of this code", in particular, Section 626.561(1), Florida Statutes, in violation of Section 626.611(13), Florida Statutes.

26. The evidence also proved clearly and convincingly that Ms. Herget violated Section 626.621(4), Florida Statutes. Once

    "demand" was made by Citizens to Ms. Herget to remit the insurance premium received on its behalf from Ms. Cipully, it took Ms. Herget six months to comply.9

27. The Department, despite the foregoing, failed to prove clearly and convincingly:

    1. That Ms. Herget demonstrated a "lack of fitness or trustworthiness to engage in the business of insurance" in violation of Section 626.611(7), Florida Statutes;

    2. That Ms. Herget engaged in "dishonest practices in the conduct of business under the license or appointment" in violation of Section 626.611(9), Florida Statutes; or

    3. That Ms. Herget is guilty of "[m]isappropriation, 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" in violation of Section 626.611(10), Florida Statutes.

    1. Count IV: The Parker Transaction.

       
       

28. The Department proved clearly and convincingly that the insurance premium collected on behalf of Citizens from Mr. Parker in March 2004 was not remitted to Citizens until demand was made of her by Citizens in February 2005. The evidence also proved that it was Ms. Herget who received the payment from Mr. Parker.

29. While Ms. Herget failed to provide any credible explanation for why Mr. Parker's premium payment was not paid to Citizens timely and indeed testified essentially that she had no idea what caused the error, it was the Department's burden to prove that she intentionally withheld or misappropriated the payment. Given Ms. Herget's unrebutted explanation that the nonremittance was an apparent honest mistake, it is concluded that the Department failed to prove clearly and convincingly that Ms. Herget failed to remit the payment intentionally.

30. Having failed to prove the requisite intent on the part of Ms. Herget to remit to Citizens the premium payment paid by Mr. Parker, the Department has failed to prove:

    1. That Ms. Herget demonstrated a "lack of fitness or trustworthiness to engage in the business of insurance" in violation of Section 626.611(7), Florida Statutes;

    2. That Ms. Herget engaged in "dishonest practices in the conduct of business under the license or appointment" in violation of Section 626.611(9), Florida Statutes;

    3. That Ms. Herget is guilty of "[m]isappropriation, 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" in violation of Section 626.611(10), Florida Statutes; or

    4. That Ms. Herget is guilty of "[w]illful failure to comply with, or willful violation . . . of any provision of this code," in particular, Section 626.561(1), Florida Statutes, in violation of Section 626.611(13), Florida Statutes.

31. Finally, the evidence failed to prove clearly and convincingly that Ms. Herget violated Section 626.621(4), Florida Statutes. The evidence failed to prove that, once the demand was made by Citizens, Ms. Herget paid the premium to Citizens and the Department, having failed to prove when Citizens made the demand, failed to prove that her response to Citizens' demand was not reasonable.

    1. Penalty.

    
    

32. Florida Administrative Code Rule Chapter 69B-231 provides guideline penalties for violations of Sections 626.611 and 626.621, Florida Statutes. Florida Administrative Code Rule 69B-231.080(3) provides for a suspension of six months for a violation of Section 626.611(13), Florida Statutes. Florida Administrative Code Rule 69B-231.090(4) provides for a suspension of nine months for a violation of Section 626.621(4), Florida Statutes.

33. Florida Administrative Code Rule 69B-231.040, provides the following with regard to the calculation of the appropriate penalty where multiple violations are found:

    1. Penalty Per Count.

       
       

       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.

       
       

    2. Total Penalty. Each penalty per count shall be added together and the sum shall be referred to as the “total penalty”.

       
       

    3. Final Penalty. The final penalty which will be imposed against a licensee under these rules shall be the total penalty, as adjusted to take into consideration any aggravating or mitigating factors, provided however the Department shall convert the total penalty to an administrative fine and probation in the absence of a violation of Section 626.611, F.S., if warranted upon the Department’s consideration of the factors set forth in rule subsection 69B-231.160(1), F.A.C.

    
    

34. Florida Administrative Code Rule 69B-231.160 provides the following relevant aggravating and mitigation factors:

    (1) For penalties other than those assessed under Rule 69B-231.150, F.A.C.:

    1. Willfulness of licensee’s conduct;

    2. Degree of actual injury to victim;

    3. Degree of potential injury to victim;

    4. Age or capacity of victim;

    5. Timely restitution;

    6. Motivation of agent;

    7. Financial gain or loss to agent;

    8. Cooperation with the Department;

    9. Vicarious or personal responsibility;

    10. Related criminal charge; disposition;

    11. Existence of secondary violations in counts;

    12. Previous disciplinary orders or prior warning by the Department; and

    13. Other relevant factors.

    
    

35. Applying the foregoing rules to this case, it is concluded that Ms. Herget's license is subject to suspension for the maximum period of nine months for the violation of Section 626.621(4), Florida Statutes. Considering the aggravating and mitigating factors, that penalty should be reduced to six months.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Margaret L. Herget violated the provision of Chapter 626, Florida Statutes (2003), described, supra, and suspending her license for six months.

DONE AND ENTERED this 29th day of June, 2006, in Tallahassee, Leon County, Florida.

S

LARRY J. SARTIN

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 29th day of June, 2006.

ENDNOTES

1/ The events at issue in this case took place in 2002, 2003, and 2004. The pertinent Florida Statutes during this period of time remained materially the same. All references, unless otherwise noted, will be to the statute applicable to the events for which findings of fact or conclusions of law are made.

2/ Albert Herget died in October 2004.

3/ Although there was no expert testimony on the point, the initials which appears on the Evidence of Property Insurance form appear very different from other documents containing what appears to be Ms. Herget's initials.

4/ While there was testimony about an amount of money that was being held in escrow awaiting instructions to pay those funds, that testimony was hearsay. Therefore, no findings of fact concerning these alleged funds have been made in this Recommended Order. Most of Ms. Herget's proposed finding of fact 18 is apparently based upon this hearsay evidence and is, therefore, rejected as not supported by competent substantial evidence.

5/ While Mr. Herget may have been involved in this matter initially, the evidence failed to prove that Ms. Cipully or her anyone on her behalf dealt with anyone other than Ms. Herget.

6/ Although Tina Cipully was also told that a copy of the check would also be sent directly to A&M, that evidence was hearsay and did not prove that a copy of the check was actually sent to A&M.

7/ On direct examination, Mr. Parker indicated that he gave the check to, and dealt with, Ms. Herget. Transcript, page 37, lines 7-11. On cross-examination, Mr. Parker was asked about whether he had dealt with Anthony Ali on March 20,2004, who took over some of Mr. Herget's responsibilities after he left A&M, and Mr. Parker answered: "I have talked with him in my inquiries about my policy, yes." Transcript, page 49, lines 19-

20. Although somewhat confusing, it has been concluded that Mr. Parker's direct examination testimony was more convincing and precise as to who he met with on March 20, 2004.

8/ The statutory references of the Amended Administrative Complaint are in numerical order. In Count I the statutory references appear in this order: Sections 626.561(1); 626.611(7); 626.611(8); 626.611(9); 626.611(10); and 626.621(4),

Florida Statutes. In Counts II and IV, the statutory references appear as follows: :Sections 626.561(1); 626.611(7);

626.611(8); 626.611(9); 626.611(10); and 626.611(4), Florida

Statutes "

9/ This conclusion is limited to the portion of the premium paid by Ms. Cipully for coverage from Citizens. Having failed to prove that Omaha Insurance made "demand" to Ms. Herget, no violation with regard to the premium paid for the Omaha Insurance coverage was proved.

COPIES FURNISHED:

James A. Bossart, Esquire Division of Legal Services Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

Jed Berman, Esquire Post Office Box 30

Winter Park, Florida 32790-0030

Honorable Tom Gallagher Chief Financial Officer

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

Carlos G. Muñiz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 05-004640PL

Orders for Case No: 05-004640PL