STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 06-1187PL

)

JOANNE ATHENA MANOL, )

)

Respondent. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in Fort Lauderdale, Florida, on October 31, 2006.

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: Thompkins W. White

White & Chang, P.A.

1650 Summit Lake Drive, Suite 1013

Tallahassee, Florida 32317 STATEMENT OF THE ISSUES

The issues are whether Respondent is guilty of various violations of the Insurance Code and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

By Administrative Complaint dated May 26, 2005, Petitioner alleged that Respondent committed numerous violations of the Insurance Code. By letter dated April 6, 2006, Petitioner transmitted to the Division of Administrative Hearings the Administrative Complaint and Respondent's Response to Administrative Complaint and Demand for Formal Hearing.

The Administrative Complaint alleges that, at all material times, Respondent was licensed as a Life & Variable Annuity Agent (2-14), Life, Health and Variable Annuity Agent (2-15), Life Agent (2-16), Life and Health Agent (2-18), General Lines, Property and Casualty Agent (2-20), and Health Agent (2-40).

The Administrative Complaint alleges that Respondent holds license number A164221.

The Administrative Complaint alleges that, at all material times, Respondent was a corporate officer and director of Accredited Insurance Associates, Inc. (AIA). The Administrative Complaint alleges that Respondent was fully liable for any wrongful acts, misconduct, or violations of the Insurance Code committed by any licensee or any person under her direct supervision and control while acting on behalf of AIA, if Respondent knew or should have known of the acts and facts constituting a violation of the Insurance Code.

Count I of the Administrative Complaint alleges that, on November 6, 2001, F. G. purchased general liability and workers' compensation insurance from AIA with an effective date of November 6, 2001. Count I alleges that, as the producer, Respondent signed F. G.'s application. Count I alleges that, on January 2, 2002, Respondent sent a certificate of liability, or should have known that a licensee or person under her direct supervision and control, while acting on behalf of AIA, sent a certificate of liability, to Universal Drywall & Plastering.

Count I alleges that the certificate of liability stated that FUBA insured F. G. under policy number 214257, effective November 6, 2001, through November 6, 2002.

Count I alleges that FUBA did not bind the account until December 31, 2001, so that F. G.'s policy was not in effect on November 6, 2001. Count I alleges that "214257" is not a number that FUBA uses to identify policies. Count I alleges that, at all material times, AIA did not have a primary agent appointed with Petitioner.

Count I alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8),

Florida Statutes; showed herself to be a source of injury or loss to the public, in the conduct of business under the license or appointment, in violation of Section 626.621(6), Florida Statutes; and engaged in unfair methods of competition or unfair or deceptive acts or practices, in the conduct of business under her license or appointment, in violation of Sections 626.9541(1)(e)1.b. and c., and 626.9541(1)(k)1., Florida Statutes.

Count II of the Administrative Complaint alleges that, on October 30, 2002, AIA received a check in the amount of $910 from Stephen J. Allocco, P.A., and that AIA deposited the check into its bank account at Wachovia Bank. Count II alleges that AIA was to use the proceeds from the check to pay for homeowners' insurance for M. L., with an effective date of November 8, 2002. Count II alleges that AIA was to purchase the insurance from United Property & Casualty Insurance Company.

Count II alleges that AIA had quoted M. L. the cost of $910 for the insurance, but the actual cost was $810. Count II alleges that, on February 26, 2003, United Property & Casualty Insurance Company received a check in the amount of $810 from AIA for the insurance. Count II alleges that the contract between Respondent and United Property & Casualty Insurance Company required Respondent to submit all premiums within five days after the earlier of the inception date of the coverage or the

date on which the application was taken. Count II alleges that Respondent failed to timely submit the premium to United Property & Casualty Insurance Company. Count II alleges that, as a result of Respondent's actions, United Property & Casualty Insurance Company canceled M. L.'s insurance. Count II alleges that, on February 26, 2003, United Property & Casualty Insurance Company returned the $810 AIA check to AIA, but Respondent has not refunded any money to M. L. Count II alleges that Respondent has converted, misappropriated, or wrongfully withheld fiduciary funds belong to an insurer or insured.

Count II alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; and showed herself to be a source of injury or loss to the public, in the conduct of business under the license or appointment, in violation of Section 626.621(6), Florida Statutes.

Count III alleges that, on October 11, 2002, AIA received a check in the amount of $3278 from Capital Abstract & Title and that AIA deposited the check into its bank account at Wachovia Bank. Count III alleges that AIA was to use the proceeds of the check to pay for homeowners' insurance for G. K., with an effective date of November 11, 2001. Count III alleges that AIA was to purchase the insurance from United Property & Casualty Insurance Company and was to obtain $518,000 of coverage. Count III alleges that AIA had quoted G. K. the cost of $3278 for the insurance, but the actual cost was $1890. Count III alleges that, on November 12, 2002, United Property & Casualty Insurance Company received a check in the amount of $1777 from AIA for insurance with coverage of only $300,000. Count III alleges that G. K. paid the balance due of $113 to increase the coverage to $518,000, but that G. K. was entitled to a refund of $1501, which Respondent did not make until February 24, 2003. Count III alleges that Respondent converted, misappropriated, or wrongfully withheld fiduciary funds belonging to an insurer or insured.

Count III alleges that Respondent failed to account for and pay to the insurer, insured, or other appropriate person all premiums, return premiums, or other funds belonging to insurers or others and held by an agent, customer representative, or adjuster, which funds are trust funds received by the licensee

in a fiduciary capacity, in violation of Section 626.561(1), Florida Statutes; demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; and misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes.

Count IV alleges that, on April 15, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1361.03 and that, on May 2, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count III alleges that $117.21 of the amount of the check represented unearned commission related to an insurance transaction between AIA and E. G., who was entitled to this sum. Count IV alleges that, on May 10, 2004, Respondent sent E. G. a check for $117.21.

Count IV alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and

technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count V alleges that, on May 31, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1538.36 and that, on June 10, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count V alleges that $43.83 of the amount of the check represented unearned commission related to an insurance transaction between AIA and S. C., who was entitled to that sum. Count V alleges that, on April 17, 2004, Respondent sent S. C. a check for $43.83.

Count V alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

The Administrative Complaint omits a Count VI.

Count VII alleges that, on June 15, 2003, Pro Premium Finance Company sent AIA a check in the amount of $720.38 and that, on July 8, 2003, AIA deposited the check into its bank

account at Wachovia Bank. Count VII alleges that $347.35 of the amount of the check represented unearned commission related to an insurance transaction between AIA and M. P., who was entitled to that sum. Count VII alleges that, on April 5, 2004, Respondent sent M. P. a check for $347.35.

Count VII alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of

Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count VIII alleges that, on June 30, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1729.80 and that, on July 8, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count VIII alleges that $380.40 of the amount of the check represented unearned commission related to an insurance transaction between AIA and F. G., who was entitled to that sum. Count VIII alleges that, on April 7, 2004, Respondent sent F. G. a check for $380.40.

Count VIII alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of

notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count IX alleges that, on August 31, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1552.84 and that, on September 9, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count IX alleges that $102.07 of the amount of the check represented unearned commission related to an insurance transaction between AIA and G. R., who was entitled to that sum. Count IX alleges that, on May 7, 2004, Respondent sent G. R. a check for $102.07.

Count IX alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10),

Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count X alleges that, on August 31, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1552.84 and that, on September 9, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count X alleges that $169.06 of the amount of the check represented unearned commission related to an insurance transaction between AIA and G. D., who was entitled to that sum. Count X alleges that, on April 17, 2004, Respondent sent G. D. a check for $169.06.

Count X alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8),

Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count XI alleges that, on November 30, 2003, Pro Premium Finance Company sent AIA a check in the amount of $4994.25 and that, on December 9, 2003, AIA deposited the check into its bank account at Wachovia Bank. Count XI alleges that $143.18 of the amount of the check represented unearned commission related to an insurance transaction between AIA and B. A., who was entitled to that sum. Count XI alleges that, on May 7, 2004, Respondent sent B. A. a check for $143.18.

Count XI alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of

insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count XII alleges that, on December 15, 2003, Pro Premium Finance Company sent AIA a check in the amount of $3881.67 and that, on January 13, 2004, AIA deposited the check into its bank account at Wachovia Bank. Count XII alleges that $488.83 of the amount of the check represented unearned commission related to an insurance transaction between AIA and D. P., who was entitled

to that sum. Count XII alleges that, on April 15, 2004, Respondent sent D. P. a check for $488.83.

Count XII alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count XIII alleges that, on December 31, 2003, Pro Premium Finance Company sent AIA a check in the amount of $1988.58 and

that, on January 13, 2004, AIA deposited the check into its bank account at Wachovia Bank. Count XIII alleges that $294.60 of the amount of the check represented unearned commission related to an insurance transaction between AIA and A. N., who was entitled to that sum. Count XIII alleges that, on May 12, 2004, Respondent sent A. N. a check for $294.60.

Count XIII alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count XIV alleges that, on January 31, 2004, Pro Premium Finance Company sent AIA a check in the amount of $3260.03 and that, on February 10, 2004, AIA deposited the check into its bank account at Wachovia Bank. Count XIV alleges that $886.74 of the amount of the check represented unearned commission related to an insurance transaction between AIA and G. De., who was entitled to that sum. Count XIV alleges that, on May 7, 2004, Respondent sent G. De. A check for $886.74.

Count XIV alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated

insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

Count XV alleges that, on February 15, 2004, Pro Premium Finance Company sent AIA a check in the amount of $4750.53 and that, on March 9, 2004, AIA deposited the check into its bank account at Wachovia Bank. Count XV alleges that $343.38 of the amount of the check represented unearned commission related to an insurance transaction between AIA and L. R., who was entitled to that sum. Count XV alleges that, on May 7, 2004, Respondent sent L. R. a check for $343.38.

Count XV alleges that Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes; demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment, in violation of Section 626.611(8), Florida Statutes; misappropriated, converted, or unlawfully withheld moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under the

license or appointment, in violation of Section 626.611(10), Florida Statutes; failed to return unearned premium, commission, or other funds due the insured, or, with the insured's approval, apply the unearned premium or commission to other regulated insurance products, within 15 days after the receipt of notification, as outlined by Florida Administrative Code Rule 69O-196.010(2)(a) and the receipt of credit of any unearned premium, in violation of Florida Administrative Code Rule

69O-196.010(2)(b); and violated any lawful order or rule of Petitioner, in violation of Section 626.621(3), Florida Statutes.

The factual record includes facts established by admissions contained in the Response to Administrative Complaint and Demand for Formal Hearing and the Joint Pre-Hearing Stipulation, which was filed August 23, 2006.

At the hearing, Petitioner called five witnesses and offered into evidence 38 exhibits: Petitioner Exhibits 3-4,

7-10, 13-15, 24-25, 27, 32-33, 39, 42-46, 49-52, 56-69, and 71.

Respondent called no witnesses and offered into evidence no exhibits. Petitioner withdrew Petitioner Exhibit 57. All other exhibits were admitted except Petitioner Exhibits 3 (pages 1-2 admitted; page 3 admitted only as marked), 9 (admitted only as proof of what Universal Drywall provided FUBA, not otherwise for

truth of contents), 49-52, 56, and 58-69. Petitioner proffered those exhibits or portions of exhibits that were excluded.

The court reporter filed the transcript on November 3, 2006. The Petitioner filed its Proposed Recommended Order on November 13, 2006.

FINDINGS OF FACT

1. At all relevant times, Respondent has been licensed as a Life & Variable Annuity Agent (2-14), Life, Health and Variable Annuity Agent (2-15), Life Agent (2-16), Life and Health Agent (2-18), General Lines, Property and Casualty Agent (2-20), and Health Agent (2-40). Respondent holds license number A164221.

2. Petitioner has disciplined Respondent on two prior occasions. By Consent Order filed November 28, 2000, Petitioner imposed an administrative fine of $7500 against Respondent and placed her licenses on probation for two years. The Consent Order arose out of allegations that Respondent failed to place insurance coverage and failed to supervise adequately her employees. By Consent Order filed April 30, 2002, Petitioner imposed an administrative fine of $2000 against Respondent. The Consent Order does not describe the underlying allegations.

3. At all relevant times, Respondent has been a director, officer, and sole owner of AIA. She has owned the corporation since 1993. At all relevant times, Respondent was the only

   signatory on the AIA bank accounts. Customarily, Respondent markets the insurance and then sends customers to one of the AIA customer service representatives. A high-volume agency with over 15,000 active clients, AIA, which employs 10 persons, has issued about 50,000 policies since November 2001.

4. For most, if not all, of the relevant period, AIA employed Tony Decambre as the primary agent, and customer service representatives performed much of the work in processing insurance applications. Petitioner attempted to prove that Respondent was the primary agent. Rather than produce copies of forms by which Respondent may have designated herself as the primary agent, Petitioner offered only copies of prints of screens of data maintained by Petitioner. The Administrative Law Judge excluded from evidence these data compilations. Respondent testified that Mr. Decambre was the primary agent. Petitioner's investigator testified that Respondent was the primary agent, at least the last time that he had checked. The investigator's testimony failed to establish by clear and convincing evidence that Respondent was the primary agent.

5. On December 28, 2001, Fernando Gomez visited AIA to pay for a workers' compensation insurance policy to be issued by Florida United Businesses Association/Workers Compensation (FUBA). Respondent met with Mr. Gomez, who required the presence of another employee to translate into and from Spanish.

   As the producer, Respondent signed the application. FUBA bound the coverage on December 31, 2001.

6. Among the three persons present on December 28, only Respondent testified. The application bears the date "December 28, 2001," although this handwriting is lighter than the remainder of the handwriting on the application and could

   have been written at a date subsequent to the date on which the application was taken.

7. Petitioner contends that Respondent took the application on November 6, 2001, or somehow tried to bind FUBA as of November 6, 2001. The sole evidentiary basis for this contention is Petitioner Exhibit 9, which purports to be a certificate of liability insurance, bearing a date of December 28, 2001, but showing effective dates for general liability and workers' compensation coverage for Mr. Gomez of November 6, 2001. The certificate holder is stated to be

   Universal Drywall & Plastering, and the producer is stated to be AIA. The workers' compensation insurer is stated to be FUBA.

8. Petitioner Exhibit 9 was admitted solely to prove what Universal Drywall & Plastering sent to FUBA to confirm the existence of Mr. Gomez's workers' compensation coverage. The certificate is false because it confirms workers' compensation insurance as of a date that neither FUBA nor AIA contends is correct. However, the failure to obtain testimony from

   Mr. Gomez, the AIA employee who translated, or an employee of Universal Drywall & Plastering who could explain how he or she obtained a copy of the certificate precludes a determination that Respondent is in any way responsible for the production or transmission of this false certificate.

9. The certificate suggests that the person responsible for its preparation may not have had Respondent's presumed level of familiarity with FUBA. The person preparing the false certificate used a policy number that is not of a type used by FUBA to identify the workers' compensation policies that it issues. The false certificate bears an expiration date of November 6, 2002. In fact, the actual coverage issued by FUBA ended on April 1, 2002, because all of its workers' compensation policies expire each year on April 1.

10. It appears that Universal Drywall & Plastering presented the false certificate to FUBA on January 2, 2002, so, as of that date, Mr. Gomez had workers' compensation coverage from FUBA. The record also fails to disclose why Mr. Gomez might have desired an earlier effective date. The information might have facilitated a determination of who was responsible for the fraudulent preparation of the certificate.

11. Petitioner has failed to prove the material allegations of Count I.

12. On October 25, 2002, AIA issued an Evidence of Property Insurance to Meryl Levin, showing an effective date of October 25, 2002 for homeowners and flood insurance in the amount of $114,000. The document states that "United" would provide the homeowners insurance at $910 per year and flood insurance at $247 per year.

13. On October 30, 2002, AIA received a check in the amount of $910 from Stephen J. Allocco, P.A., and AIA deposited that check into its noninterest-bearing bank account at Wachovia Bank. On November 8, 2002, United Property & Casualty Insurance Company (United) sent Mr. Levin a notice that he owed $810 for his insurance policy, which bore an effective date of

    November 8, 2002. The due date is "upon receipt." On

    
    

    January 14, 2003, United canceled the insurance because it never had received the $810.

14. United received a check for $810 on February 26, 2003, but the accompanying package failed to contain a "no loss" statement, which would have assured United that the insured had not suffered a loss between the purported coverage date and the date of receipt of the premium check. Absent such an assurance, United routinely declines to provide coverage because it will not cover losses retroactively. United thus returned the check.

15. Mr. Levin did not testify as to this transaction, nor did anyone from AIA except Respondent, who disclaimed any direct

    involvement with the matter. There is no evidence of any loss suffered by Mr. Levin, nor is there any evidence of any intentional wrongdoing by Respondent.

16. The determination as to whether Respondent negligently failed to satisfy all applicable duties imposed on her is frustrated by Petitioner's failure to call an expert witness who could have explained office practices in insurance agencies and proved what is reasonable and unreasonable to expect of Respondent. The record does not establish that United sent a copy of its November 8 statement to AIA. Count II portrays a single case in which AIA failed to pay a premium to an insurer for over three months--nothing more. The determination of whether Respondent has demonstrated unfitness for this omission is impossible absent a basis for determining an appropriate minimum standard of agency office practice.

17. Petitioner has failed to prove the material allegations of Count II.

18. On October 9, 2002, Respondent sent a letter to Gerald Kirby bearing the letterhead of AIA stating that "we" have reviewed your homeowner needs and "determined the best possible rate for you." Showing homeowners coverage of

    $518,000, as well as associated coverages, the letter quotes a total policy premium of $3278. The letter warns that "this quotation is an estimate and is not legally binding." At the

    bottom of the letter is: "Thanks!!!Joanne." The record reveals no other persons employed at AIA named "Joanne" besides Respondent.

19. On the same date, AIA produced an evidence of property insurance, which shows homeowners and flood insurance with the same effective date of October 11, 2002, in the respective amounts of $518,000 and $250,000, and bearing respective premiums of $3278 and $411 annually.

20. On October 11, 2002, AIA received a check in the amount of $3278 from Capital Abstract & Title and deposited that check into its noninterest-bearing bank account at Wachovia. AIA was to use these funds to purchase homeowners insurance from United, with coverage of $518,000 and an effective date of November 11, 2002 (according to the parties' stipulation, which misstates the year as "2001"). However, the premium for

    $518,000 of coverage from United was $1890 at the time.

    
    

21. The proper amount of premium due for $518,000 of coverage was mooted by the fact that AIA, like all of United's agents at the time, lacked authority to bind United to more than

    $300,000 coverage without specific approval from a United representative. Such approval required, among other things, documentation of the value of the insured property.

22. AIA sent United a check for $1777, which United received on November 12, 2002. This check was the proper

    premium for $300,000 of coverage. At the same time, AIA sent paperwork for the issuance of coverage to $587,000, but failed to send the documentation that United required. Thus, United issued only $300,000 of coverage, and Mr. Kirby was due a refund of $1501, which is the difference between the premium that he paid and the cost of the insurance that he received. AIA paid Mr. Kirby $1501 on February 24, 2003.

23. After AIA or a United marketing representative submitted the required documentation, United approved on February 19, 2003, the increase of coverage to $518,000. It is unclear who paid the additional premium--AIA or Mr. Kirby.

24. For the same reasons discussed in Count II, Petitioner has failed to prove the material allegations of Count

    III. Although AIA's handling of the Kirby transaction was flawed, again, the acts and omissions are not so stark as to eliminate the necessity of expert testimony to establish the minimum standard, against which to measure Respondent's performance of her duties. Mr. Kirby appears to have suffered no loss, and there is no evidence of intentional wrongdoing. Even though, as to this transaction, Respondent clearly had some personal involvement, it is impossible to determine her degree of responsibility for the uneven handling of the insurance transaction and short delay in sending the refund to Mr. Kirby

    or even whether these two aspects of the transaction demonstrate unfitness to transact insurance business.

25. The remaining counts involve refunds from Pro Premium Finance Company (Pro Premium) to AIA and refunds from AIA to its customers. Pro Premium provides financing to persons purchasing insurance. Several customers of AIA borrowed money from Pro Premium to pay for insurance they were buying through AIA. For various reasons--typically, the cancelation of coverage--Pro Premium refunded portions of the premium to AIA, which subsequently refunded the unearned portion of the commission to the customer. Every two weeks, Pro Premium sends AIA refunds and statements, which clearly identify the insured, date of cancelation, amount of refund, and amount due the insured. The time that elapsed from when AIA received the refunds from Pro Premium to when AIA sent the customers their share of the refunds ranged from two to twelve months. AIA received the refunds from Pro Premium between April 15, 2003, and

    February 15, 2004, and AIA sent its customers their shares of the refunds between April 5, 2004, and May 12, 2004. The customer refunds are concentrated in a relatively short period of time because AIA discovered all of the unrefunded monies during a self-audit that it conducted during this six-week period. AIA performed the self-audit due to an audit underway at Pro Premium.

26. Except as noted below, Respondent was not personally involved in any of these refund transactions. At the time of all of the Pro Premium transactions described in this recommended order, the policy of AIA was for the customer service representative to write the client within one week of receiving the refund from Pro Premium and ask for directions whether to apply the refund to new or existing insurance or to pay it to the customer. The customer service representatives were supervised by the agency manager, not Respondent. It is unclear what AIA's policy was if the customer did not respond. When AIA paid refunds, its policy at the time was for the agency manager to prepare the refund check, which Respondent would sign. In May 2004, AIA changed its handling of refunds by directing all Pro Premium refunds directly to the bookkeeper, who expedites the preparation of the refund checks, which can now be signed by Respondent or one of two other employees.

27. As to Count IV, on April 15, 2003, Pro Premium sent AIA a check in the amount of $1361.03, which AIA deposited on May 7, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$117.21--represented unearned commission, which was due the insured, Erikna Guzman. By letter sent within one week of obtaining the Pro Premium refund, AIA informed

    Ms. Guzman of the refund and asked her to instruct AIA as to whether to apply it to new insurance or send her a refund.

    Ms. Guzman did not respond. On May 10, 2004, AIA sent

    
    

    Ms. Guzman a check for $117.21. Twelve months elapsed from when AIA received the refund and when it sent Ms. Guzman the money due her.

28. As to Count V, on May 31, 2003, Pro Premium sent AIA a check in the amount of $1538.36, which AIA deposited on

    June 10, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$43.83--represented unearned commission, which was due the insured, Shannon Campbell. By letter sent after obtaining the Pro Premium refund, AIA informed

    Ms. Campbell of the refund and asked her to instruct AIA as to whether to apply it to new insurance or send her a refund.

    Ms. Campbell did not respond. On April 17, 2004, AIA sent Ms. Campbell a check for $43.83. Ten and one-half months elapsed from when AIA received the refund and when it sent Ms. Campbell the money due her.

29. As to Count VII, on an unspecified date, Pro Premium sent AIA a check in the amount of $720.38, which AIA deposited on July 8, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$347.35--represented unearned commission, which was due the insured, Marie Philippe. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Ms. Philippe of the refund and asked her to instruct AIA as to whether to apply it to new insurance or send

    her a refund. Ms. Philippe did not respond. On April 5, 2004, AIA sent Ms. Philippe a check for $347.35. At least nine months elapsed from when AIA received the refund and when it sent

    Ms. Philippe the money due her.

    
    

30. As to Count VIII, on June 30, 2003, Pro Premium sent AIA a check in the amount of $1729.80, which AIA deposited on July 8, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$380.40--represented unearned commission, which was due the insured, Fernando Garcia. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Mr. Garcia of the refund and asked him to instruct AIA as to whether to apply it to new insurance or send her a refund. The first letter was returned by the postal service as undeliverable. Mr. Garcia had sold his house and moved. However, on April 7, 2004, AIA sent Mr. Garcia a check for

    $380.40. Nine months elapsed from when AIA received the refund and when it sent Mr. Garcia the money due him.

31. As to Count IX, on August 31, 2003, Pro Premium sent AIA a check in the amount of $1552.84, which AIA deposited on September 9, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$102.07--represented unearned commission, which was due the insured, Girline Reid. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Ms. Reid of the refund and asked her to instruct AIA as

    to whether to apply it to new insurance or send her a refund. Respondent testified that Ms. Reid instructed AIA to apply the refund to insurance issued to her husband, which AIA did.

    However, Respondent did not testify when AIA applied the refund to the account of Ms. Reid's husband. On May 7, 2004, AIA sent Ms. Reid a check for $102.07. Eight months elapsed from when AIA received the refund and when it sent Ms. Reid the money due her.

32. As to Count X, on August 31, 2003, Pro Premium sent AIA a check in the amount of $1552.84, which AIA deposited on September 9, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$169.06--represented unearned commission, which was due the insured, Guillermo Diaz, who is a significant customer of AIA. Respondent spoke with him shortly after AIA received the refund, and he instructed her to apply the refund to other insurance issued to him. Again, Respondent did not testify when Mr. Diaz instructed her to apply the refund to other insurance, but, given his importance as a repeat customer, he probably spoke with her shortly after AIA received the refund. However, on April 17, 2004, AIA sent Mr. Diaz a check for $169.06, to which he may not have been entitled. Eight and one-half months elapsed from when AIA received the refund and when it sent Mr. Diaz the refund check.

33. As to Count XI, on November 30, 2003, Pro Premium sent AIA a check in the amount of $4994.25, which AIA deposited on December 9, 2003, into its noninterest-bearing account at Wachovia. Part of these funds--$143.18--represented unearned commission, which was due the insured, Bernardo Archibald. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Mr. Archibald of the refund and asked him to instruct AIA as to whether to apply it to new insurance or send her a refund. Respondent testified that Mr. Archibald directed AIA to keep the money to apply to insurance for which he owed additional premium because he had not yet obtained a four-point inspection (heating, wiring, roofing, and plumbing) of an older home, so as to be entitled to a reduced premium. However, Respondent did not testify when AIA received this direction from Mr. Archibald, although only five months elapsed from AIA's receipt of the refund from Pro Premium to its issuance, on

    May 7, 2004, of a check to Mr. Archibald for $143.18.

    
    

34. As to Count XII, on an unspecified date, Pro Premium sent AIA a check in the amount of $3881.67, which AIA deposited on January 13, 2004, into its noninterest-bearing account at Wachovia. Part of these funds--$488.83--represented unearned commission, which was due the insured, Danette Piscopo. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Ms. Piscopo of the refund and asked her to instruct

    AIA as to whether to apply it to new insurance or send her a refund. Respondent testified that AIA sent a refund check, but Ms. Piscopo never cashed it. However, Respondent did not testify when it sent the earlier check, although only about three months elapsed from AIA's receipt of the refund from Pro Premium to its issuance on April 15, 2004, of a check to

    Ms. Piscopo for $488.83.

    
    

35. As to Count XIII, on December 31, 2003, Pro Premium sent AIA a check in the amount of $1988.58, which AIA deposited on January 13, 2004, into its noninterest-bearing account at Wachovia. Part of these funds--$294.60--represented unearned commission, which was due the insured, Allam Masief. Respondent testified that AIA mistakenly issued two policies to Mr. Masief for the same coverage from two insurers and mistakenly paid Pro Premium twice, even though Mr. Masief paid only one premium. Both policies were canceled. Mr. Masief asked AIA to reinstate one policy, but it was unable to do so. Respondent did not testify when these discussions with Mr. Masief took place, but only four and one-half months elapsed from AIA's receipt of the refund from Pro Premium and to its issuance, on May 12, 2004, of a check to Mr. Masief for $294.60.

36. As to Count XIV, on January 31, 2004, Pro Premium sent AIA a check in the amount of $3260.03, which AIA deposited on February 10, 2004, into its noninterest-bearing account at

    Wachovia. Part of these funds--$886.74--represented unearned commission, which was due the insured, Geraldine DeStefanis. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Ms. DeStefanis of the refund and asked her to instruct AIA as to whether to apply it to new insurance or send her a refund. Respondent testified that Ms. DeStefanis "probably" asked AIA to try to reinstate the canceled policy, but AIA was unable to do so. On May 7, 2004, AIA sent

    Ms. DeStefanis a check for $886.74. Three months elapsed from when AIA received the refund and when it sent Ms. DeStefanis the money due her.

37. As to Count XV, on an unspecified date, Pro Premium sent AIA a check in the amount of $4750.53, which AIA deposited on March 9, 2004, into its noninterest-bearing account at Wachovia. Part of these funds--$343.38--represented unearned commission, which was due the insured, Leslie Ramrattan. By letter sent within one week of obtaining the Pro Premium refund, AIA informed Ms. Ramrattan of the refund and asked her to instruct AIA as to whether to apply it to new insurance or send her a refund. Respondent testified that Ms. Ramrattan asked AIA to try to reinstate the policy, but AIA was unable to do so. On May 7, 2004, AIA sent Ms. Ramrattan a check for $343.38. About two months elapsed from when AIA received the refund and when it sent Ms. Ramrattan the money due her.

38. Petitioner has failed to prove the material allegations of Counts IV-V and VII-XV, with one exception each as to Counts VI, V, and VII. In general, there is no evidence of any intentional wrongdoing by anyone at AIA, nor is there evidence that Respondent should have known of the failure of her staff to promptly refund the monies due their insureds. In several of these transactions in which AIA held the customers' refunds for relatively long periods of time, the record demonstrates that this was in accordance with the customers' directions or otherwise justified. For the shorter periods-- five months or less--the record provides no basis for determining that Respondent should have known of this failure within this relatively short period of time.

39. In several counts, AIA failed to meet its obligation, under Florida Administrative Code Rule 69O-196.010(2)(b), which is cited below, to refund or apply the unearned commissions within 15 days of receipt of the refund and statement from Pro Premium. These are Counts IV, V, VII, XIV, and XV. It is impossible to determine if AIA violated this rule in Count VIII, where the insured had moved; Counts IX-XI, where the insureds told AIA to apply the refunds to new or other insurance and presumably AIA did so, perhaps within the required 15 days; and Count XIII, where AIA appears to have paid for one policy out of its own funds and the insured may have received a windfall.

40. As to Counts IV, V, VII, XIV, and XV, the question is whether Respondent is professionally responsible for the violations by AIA. These counts fall into two groups. In Counts IV, V, and VII, AIA wrongfully retained the refunds for long periods--12 months, 10 and one-half months, and at least nine months, respectively. In Counts XIV and XV, AIA wrongfully retained the refunds much shorter periods--less than three months and less than two months, respectively. Perhaps expert testimony could have established that Respondent should have detected, within a period of less than 90 days, the wrongfully retained funds, but, absent such testimony, an inference to this effect is impossible, especially when the standard is clear and convincing evidence.

41. However, expert testimony is unnecessary to establish Respondent's professional responsibility for failing to detect this situation for 9-12 months. Given the long durations of time, the clarity of the Pro Premium's refund statements, the relatively small number of employees, Respondent's integral involvement in the daily operations of AIA as the only person authorized to sign checks, and the importance of restoring funds of customers to customers promptly, it is a reasonable inference that Respondent should have known that AIA staff had wrongfully failed to send these refunds to its customers for 9-12 months. Any suggestion by Respondent that the absence of a response from

    these customers justified retaining these moneys fails to account for the fact that AIA later sent the refund checks to the customers, even though they had still not contacted AIA, according to the record.

42. Thus, for Counts IV, V, and VII, Petitioner has proved by clear and convincing evidence that Respondent has demonstrated her unfitness to transact insurance business.

    CONCLUSIONS OF LAW

    
    

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

    44. Section 626.611(7), (8), and (10) provides:

    
    

    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, 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.

* * *

(10) 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.

45. Section 626.621(3) and (6) 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:

* * *

(3) Violation of any lawful order or rule of the department, commission, or office.

* * *

(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.

46. Sections 626.9541(1)(e)1.b. and c., and 626.9541(1)(k)1., Florida Statutes, provide:

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

   
   

   * * *

   
   

   1. 1. Knowingly:

      
      

      * * *

      
      

      1. Making, publishing, disseminating, circulating,

      2. Delivering to any person,

* * * any false material statement.

* * *

(k) 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.

1. Section 626.561(1) provides:

   
   

   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.

2. Florida Administrative Code Rule 69O-196.010(2)(a) and (b) provides:

   Upon receipt of a cancellation notice from a premium finance company, the insurer shall within thirty (30) days, refund the

   unearned premium to the premium finance company and notify the insured, agent and premium finance company of the amount of unearned premium which is being returned to the premium finance company and the amount of the agent’s unearned commission held by the agent. The notice must indicate to the insured that the amount of unearned premium refunded to the premium finance company and the amount of unearned commission that is held by the agent quoted in this notice will be used by the premium finance company to satisfy the insured’s loan balance and other obligations under the premium finance agreement prior to the refund to the insured.

   1. Within 15 days of receipt of the funds, if the premium finance company chooses to refund or credit to the agent, the premium finance company shall notify the insured and agent of the refunded amount and return or credit said funds to the insurance agent.

   2. Within 15 days of receipt of the notification as outlined above and the receipt or credit of any unearned premium, the agent shall return the unearned premium including any unearned commission or other funds due the insured or, with written approval of the insured, apply the unearned premium and unearned commission to other insurance products regulated by the department. Under no circumstances may the agent withhold the return of the unearned commission or unearned premium to the insured after notification by the insurer and premium finance company.

3. Section 626.734, Florida Statutes, provides:

   
   

   Any general lines insurance agent who is an officer, director, or stockholder of an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any provisions of this code committed by such licensee or by any person under his or her direct supervision and control while acting on behalf of the corporation. Nothing in this section shall be construed to render any person criminally liable or subject to any disciplinary proceedings for any act unless such person personally committed or knew or should have known of such act and of the facts constituting a violation of this chapter.

   
   

4. Section 626.7354(5), Florida Statutes, provides:

   
   

   All business transacted by a customer representative under his or her license shall be in the name of the agent or agency by which he or she is appointed, and the agent or agency shall be responsible and accountable for all acts of the customer representative within the scope of such appointment.

   
   

5. 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).

6. In Ganter v. Department of Insurance, 620 So. 2d 202 (Fla. 1st DCA 1993), the court interpreted Section 626.734, Florida Statutes (1989), which consisted of the first sentence (with some minor differences), but not the second sentence in

   current Section 626.734, as quoted above. The reasoning of the decision applies equally to Section 626.7354(5), Florida Statutes, which is also quoted above.

7. In Ganter, the Department of Insurance entered a final order imposing a six months' suspension of an insurance license of the president, director, and resident agent of a corporation that operated an insurance agency in Brandon. The licensee had hired an unlicensed person to run the Brandon insurance agency during the four days weekly that the licensee operated another agency in Cape Coral; otherwise, the unlicensed person worked "directly under the supervision and control" of the licensee.

8. Over a two-month period, four different customers purchased insurance from the unlicensed person in the Brandon office. On each of these occasions, the unlicensed person misrepresented the insurance policies sold to the customer by adding an unwanted auto service contract to the purchase. The licensee testified that he had had no contact with any of these four customers, and he had had no knowledge that the customers had failed to sign applications for auto service contracts. The licensee testified that it was agency policy to explain auto service coverage to customers and that he had never told the unlicensed person to sign a customer's name to any auto service contract.

9. The hearing officer found that a "simple review of business written and a follow-up of client files by Respondent" would have uncovered the wrongful acts of the unlicensed person and given Respondent a chance to correct them, but there was no evidence that Respondent had ever made the "slightest effort to properly oversee his employees." The hearing officer concluded that the licensee had not violated Section 626.611, Florida Statutes, due to the lack of "personal misconduct," but his "cavalier approach" to supervision left him exposed to discipline under Section 626.621, Florida Statutes.

10. The court noted that the hearing officer had implicitly found constructive knowledge on the part of the licensee of his unlicensed employee's negligence, although there was no evidence "concerning the appropriate minimum standards of conduct either by adopted rule, communicated agency policy, or expert testimony against which the licensee's misconduct could be judged." 620 So. 2d at 204. Holding that discipline must be predicated upon some personal misconduct of the licensee, the court held that "implied knowledge" of others' acts or omissions is sufficient for discipline. 620 So. 2d at 205.

11. The record in Ganter lacked rule, policy, or expert testimony explicitly establishing appropriate minimum standards of conduct, against which to measure the licensee's acts and

    omissions. However, the court concluded that such authority was unneeded in the case before it:

    there is no evidence that the appellant took any measures to attempt to discourage violations. In fact, the evidence demonstrated a complete lack of supervision. In addition, the nature of the violations were such that a reasonable review of the files would have revealed the misconduct. [Footnote omitted.] There is also evidence which demonstrates that the violations remained unreported or undetected for over nine months after they occurred. Under these circumstances, there was clear and convincing evidence to support the hearing officer's determination that the agent knew or should have known of the misconduct of his employees.

    
    

    620 So. 2d at 205-06.

    
    

12. The Ganter decision comprises majority, concurring, and dissenting opinions. The concurring opinion emphasizes that the record proves more than a complete lack of supervision of employees, but also unlawful use of an unlicensed person to conduct business requiring a license. The concurring opinion states that this fact estopped the licensee from denying implied knowledge of the wrongful acts and omissions of the unlicensed employee.

13. The dissenting opinion in Ganter points out that the agency charged the licensee under a theory of strict liability or respondeat superior, not with negligent supervision of the unlicensed employee in terms of what the licensee knew or should

    have known of the unlicensed employee's misconduct. Specifically, the agency charged the licensee as though it were charging the unlicensed person. The alleged violations were a failure to account for premiums held in a fiduciary capacity, in violation of Section 626.561(1), Florida Statutes; willful misrepresentation of a policy, in violation of Section 626.611(5), Florida Statutes; a demonstrated lack of fitness or trustworthiness, in violation of Section 626.611(7), Florida Statutes; fraudulent or dishonest practices, in violation of Section 626.611(9), Florida Statutes; misappropriation, conversion, or unlawful withholding of monies belonging to an insurer or insured, in violation of Section 626.611(10), Florida Statutes; willful failure to comply with an order, rule, or provision of the Insurance Code, in violation of Section 626.611(13), Florida Statutes; violation of any provision of the Insurance Code, in violation of Section 626.621(2), Florida Statutes; engaging in unfair methods of competition, in violation of Sections 626.621(6) and 626.9521, Florida Statutes; making false or fraudulent statements regarding an insurance policy, in violation of Section 626.9541(1)(k)1, Florida Statutes; and knowingly collecting a premium for which insurance is not issued, in violation of Section 626.9541(1)(o), Florida Statutes.

14. The dissenting opinion disagrees that the evidence was sufficient to show the licensee knew or should have known of the misconduct of the unlicensed employee. What the hearing officer might have, if given another opportunity, characterized as inference based on the evidence, the dissenting opinion brands as conjecture based on counsel's argument. But the key point of this part of the dissent is the observation that the hearing officer was requiring the licensee to prove that he supervised his employees, rather than requiring the agency to prove by clear and convincing evidence that he would or should have learned of the unlicensed employee's misconduct if the licensee had not been guilty of negligent supervision of the employee. 620 So. 2d at 209. The dissenting opinion then engaged in inference, not conjecture, that the licensee may have decided not to present evidence of his supervision due to the theory of strict liability set forth in the administrative complaint. The dissenting opinion noted that the agency, in its final order, expressly relied on strict liability, explicitly declining to consider whether the record established that the licensee had negligently supervised the unlicensed employee.

15. The Ganter concurring opinion is inapplicable to this case. Essentially, the concurring opinion states that Petitioner's burden to show what a licensee should have known is easier to satisfy when the licensee delegates his professional

    responsibilities to an unlicensed person. In this case, all of the persons performing the work had the appropriate licenses or certificates.

16. In one respect, the Ganter dissenting opinion is inapplicable to this case. This point of the dissent emphasizes the important principle that, in a disciplinary proceeding, the administrative complaint must allege the factual grounds for liability because a licensee may not be disciplined for an act or omission not charged in the complaint. See, e.g., Trevisani v. Department of Health, 908 So. 2d 1108 (Fla. 1st DCA 2005). However, in the present case, Petitioner has adequately pleaded its theory that Respondent is guilty on the basis of what she should have known.

17. In another respect, the dissenting opinion is applicable to the present case. The dissent reminds us that, absent statutory or judicial authority, no agency or Administrative Law Judge may effectively shift the burden of proof in a disciplinary proceeding, so as to require a licensee to prove his or her innocence, by applying an evidentiary presumption or invoking the principle of a prima facie case. See, e.g., McDonald v. Department of Professional Regulation, 582 So. 2d 660 (Fla. 1st DCA 1991).

18. However, drawing a permissible inference is not the same as applying an evidentiary presumption or invoking the

    principle of a prima facie case. For example, in Conda v. Plain, 222 So. 2d 417 (Fla. 1969), the defendant in a negligence action involving a rear-end collision produced evidence to rebut the presumption of negligence that attaches to the driver of the trailing vehicle. The court reversed the ruling of the trial court, which, after the jury had found for the plaintiff, had entered a judgment notwithstanding verdict. The court noted that it is the function of the jury to weigh the evidence, especially

    in negligence cases where reasonable men often draw varied conclusions from the same evidence. In a case of this nature, unless the evidence as a whole with all reasonable deductions to be drawn therefrom, points to but one possible conclusion, the trial judge is not warranted in withdrawing the case from the jury and substituting his own evaluation of the weight of the evidence.

    
    

    222 So. 2d at 418.

    
    

19. In administrative proceedings, the Administrative Law Judge is responsible to consider the evidence, which includes drawing "permissible inferences from the evidence," in order to make findings of fact. See, e.g., Heifetz v. Department of Business and Professional Regulation, 475 So. 2d 1277 (Fla. 1st DCA 1985). If "reasonable people can differ about the facts, an agency is bound by a hearing officer's reasonable inference based on the conflicting inferences arising from the evidence," at least as to factual issues not infused with policy

    considerations. Packer v. Orange County School Board, 881 So. 2d 1204 (Fla. 5th DCA 2004). And, of course, the Ganter

    decision recognizes the role of inference in a disciplinary proceeding.

20. Applying this case law to the present case, Petitioner has proved numerous facts, by clear and convincing evidence, that Respondent has demonstrated her unfitness to conduct insurance business. Unlike the record in Ganter, the present record provides three instances of failures, over about three months, to promptly send refunds to customers, and each of these failures extended over at least nine months, under circumstances, as set forth in the Findings of Fact, that support the inference, by clear and convincing evidence, that Respondent should have known of these failures and that her failure to have learned of them sooner demonstrates unfitness to conduct insurance business.

21. Florida Administrative Code Rule 69O-231.080(7) provides that, for a violation of Section 626.611(7), Florida Statutes, the penalty is six months' suspension. Florida Administrative Code Rule 690-231.160 lists aggravating and mitigating factors, including the willfulness of the violation, degree of injury to the victim, degree of potential injury to the victim, timely restitution, financial gain or loss to the agent, cooperation with Petitioner, vicarious versus personal

responsibility, and previous discipline. All but the last factor are mitigating factors. The total sum of refunds due the three customers totaled only $508.39. On the other hand, at least one of the prior Consent Orders is for the failure to adequately supervise her employees, and fines totaling $9500 do not seem to have had the intended effect. It is also troubling that the latter Consent Order was entered just one year prior to the receipt of the three refunds that have resulted in the present discipline. Progressive discipline indicates that a short suspension is appropriate. But any discipline must reflect the minor sums involved and the absence of any evidence of fraud or theft.

RECOMMENDATION

It is

RECOMMENDED that the Department of Financial Services enter a final order dismissing Counts I-III and VIII-XV of the Administrative Complaint; finding Respondent guilty of three violations (Counts IV, V, and VII) of demonstrating unfitness to engage in the insurance business, in violation of Section 626.611(7), Florida Statutes; and suspending her insurance licenses for 30 days.

DONE AND ENTERED this 15th day of November, 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 15th day of November, 2006.

COPIES FURNISHED:

Honorable Tom Gallagher Chief Financial Officer

Department of Financial Sevices 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

Robert Alan Fox

Department of Financial Services Division of Legal Services

612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

Thompkins W. White White & Chang, P.A.

1650 Summit Lake Drive, Suite 1013

Tallahassee, Florida 32317

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: 06-001187PL

Orders for Case No: 06-001187PL