Petitioner: DEPARTMENT OF INSURANCE
Respondent: JOHN WILLIAM HAY
Judges: FRED L. BUCKINE
Agency: Department of Financial Services
Locations: Tampa, Florida
Filed: May 14, 2001
Status: Closed
Settled and/or Dismissed prior to entry of RO/FO on Friday, March 8, 2002.
Latest Update: Dec. 23, 2024
THE TREASURER OF THE STATE OF FLORIDA
DEPARTMENT OF INSURANCE
Lo Ve
TREASURER AND
INSURANCE COMMISSIONER
Docketed by: eat
ToM GALLAGHER
IN THE MATTER OF:
JOHN WILLIAM HAY CASE NO. 21239-97-A
/
Ol- 1VIPC
ADMINISTRATIVE COMPLAINT
TO: JOHN WILLIAM HAY
108 S. Cooper Place
Tampa, Florida 33609-2604
JOHN WILLIAM HAY
New England Financial Group
4830 W. Kennedy Blvd. Suite 550
Tampa, Florida 33609-2562
You, JOHN WILLIAM HAY, are hereby notified that the
Insurance Commissioner of the State of Florida has caused to be
made an investigation of your activities while licensed as an
insurance agent in this state, as a result of which it is
alleged:
GENERAL ALLEGATIONS
1. You, JOHN WILLIAM HAY, are currently licensed in this
state as a health agent, a life and health agent, a life and
“Me
variable annuity, and a life, health, and variable annuity
insurance agent.
2. At all times pertinent to the dates and occurrences
referred to herein, you, JOHN WILLIAM HAY, were licensed in this
state as an insurance agent.
3. Pursuant to Chapter 626, Florida Statutes, the Florida
Department of Insurance has jurisdiction over your insurance
licenses and appointments.
COUNT_I
4. The above general allegations are hereby realleged and
fully incorporated herein by reference.
5. On or about January 14, 1987, you, JOHN WILLIAM HAY,
met with Daniel M. Falvey (then 66 years old), of St. Petersburg,
Florida, for the purpose of selling him a life insurance policy.
You then completed an insurance application for an ordinary life
policy having a death benefit of $75,000. The application
providing for a single lump sum premium of $26,500.00 to be
underwritten by New England Mutual Life Insurance Company was
prepared and executed.
6. You, JOHN WILLIAM HAY, advised Mr. Falvey that the
above-described life insurance policy would have the following
features: (1) it would be an ordinary whole life policy with a
“paid up for life” death benefit of no less than $75,000.00; (2)
it would require a single premium payment of $26,500.00; and (3)
all future premiums would be paid from the policy’s yearly
dividends. This life insurance policy was supposed to have been
designed to compliment an important retirement pension election
then facing Mr. Falvey, regarding benefits payable and waiver of
survivorship benefits by Mr. Falvey’s wife, Betty Falvey.
7. You, JOHN WILLIAM HAY, prepared a premium schedule
illustration and gave that document to Mr. Falvey in order to
convince him of the benefits of this proposed insurance policy.
That document misrepresented the performance of this life
insurance product, because the schedules presented only very
favorable projections, and did not include any of the lower, but
guaranteed minimum results. Also, this illustration schedule did
not reveal the payment of an annual premium of $4,229.50 in
policy years eleven (11) and beyond, that you knew or should have
known would likely be required to keep the insurance coverage in
force.
8. On January 16, 1987, you, JOHN WILLIAM HAY, prepared a
premium offset election form and gave that document to Mr. Falvey
for his perusal and signature. Accompanying that document was a
letter from you designed to obscure and diminish the disclosure
contained in the New England Mutual Life Insurance Company form,
that speaks to policy performance and the likelihood that
dividends may not be sufficient to pay future year premiums.
This letter suggested that the reason for-the execution of the
form was simply to advise the Company that Mr. Falvey did not
intend to make future premium payments beyond the original
$26,500.00 lump sum payment.
9. Shortly thereafter, New England Mutual Life Insurance
Company did issue, on February 25, 1987, a Preferred Standard
whole life policy (number 8249505) in the amount of $75,000.00 on
Mr. Falvey's behalf.
10. %In March of 1987, you, JOHN WILLIAM HAY, again
presented another similar premium schedule illustration and gave
that document to Mr. Falvey. That document also misrepresented
the performance of this life insurance product, because the
schedules presented only very favorable projections and not the
guaranteed minimum results.
11. For the next nine years, Mr. Falvey received no request
for any additional annual premium payments on the policy. Then,
during January of 1997, Mr. Falvey received an invoice from New
England Mutual Life Insurance Company in the amount of $4,229.50,
for an annual premium that was due and payable on or before
February 25, 1997.
12. Shortly thereafter Mr. Falvey contacted New England
Mutual Life Insurance Company and discovered that his policy
called for continued premium payments to avoid complete
dissipation of his premium already paid (totaling $26,500.00) to
cover the future expense of the current death benefit.
13. Upon learning of these details from the company
representatives of New England Mutual Life Insurance Company, Mr.
Falvey, under protest, chose to surrender the policy and receive
the cash value of $25,116.44, because he could not afford to make
annual premium payments of $4,229.50.
14. As a consequence of your dishonest actions and
deliberate misrepresentations to Mr. Falvey with respect to this
life insurance policy, you, JOHN WILLIAM HAY, caused Mr. Falvey
financial injury occasioned by the loss of funds consumed by the
charges imposed upon his surrender of the policy and the loss of
the valuable insurance death benefit that was critical to Mr.
Falvey’s retirement and estate planning on behalf of Mr. Falvey’s
wife, Betty Falvey.
IT IS THEREFORE CHARGED that you, JOHN WILLIAM HAY, have
violated or are accountable under the following provisions of the
Florida Insurance Code and Rules of the Department of Insurance
which constitute grounds for the suspension or revocation of your
licenses and appointments as an insurance agent:
(a) If the license or permit is willfully used, or to be
used, to circumvent any of the requirements or prohibitions of
this code. [Section 626.611(4), Florida Statutes];
(b) Willful misrepresentation of any insurance policy or
annuity contract or willful deception with regard to any such
policy or contract, ‘done either in person or by any form of
dissemination of information or advertising. [Section
626.611(5), Florida Statutes];
(c) Demonstrated lack of fitness or trustworthiness to
engage in the business of insurance. [Section 626.611(7),
Florida Statutes] ;
(ad) Fraudulent or dishonest practices in the conduct of
business under the license or permit. [Section 626.611(9),
Florida Statutes] ;
(e) 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. [Section 626.611(13),
Florida Statutes];
‘(f) Violation of any provision of this code or of any other
law applicable to the business of insurance in the course of
dealing under the license or permit. [Section 626.621(2),
Florida Statutes] ;
(g) In the conduct of business under the license or permit,
engaging in unfair methods of competition or in unfair or
deceptive acts or practices, as prohibited under part X of this
chapter, or having otherwise shown himself to be a source of
"injury or loss to the public. [Section 626.621(6), Florida
Statutes];
(h) Knowingly making, issuing, circulating, or causing to
be made, issued, or circulated, any estimate, illustration,
circular, statement, sales presentation, omission, or comparison,
which misrepresents the benefits, advantages, conditions, or
terms of any insurance policy. [Section 626.9541(1) (a)1.,
Florida Statutes];
(i) 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. [Section 626.9541(1)(k), Florida
Statutes].
COUNT IT
15. The above general allegations are hereby realleged and
fully incorporated herein by reference.
16. On or about July 31, 1987, you, JOHN WILLIAM HAY, met
with Mr. R. Wayne Stewart (then 62 years old), of St.
Petersburg, Florida, for the purpose of selling him a life
insurance policy. You prepared an insurance application for the
issuance of an ordinary life policy having a $25,000 death
benefit and a single lump sum premium of $7,000.00 to be
underwritten by New England Mutual Life Insurance Company. This
whole life policy was to replace Mr. Stewart’s existing term life
insurance policy.
17. You, JOHN WILLIAM HAY, advised Mr. Stewart that the
life insurance policy would have the following proposed features:
(1) it would be an ordinary whole life policy with a “paid up for
life” death benefit of no less than $25,000.00; (2) it would
require only a single premium payment of $7,000.00; and (3) there
would be no need for future premium payments because future
premiums would be paid from yearly dividends earned by this new
policy.
18. You, JOHN WILLIAM HAY, also prepared a premium schedule
illustration and gave that document to Mr. Stewart to further
convince him of the benefits of this policy. That document
misrepresented the performance of this life insurance product
because the schedule presented only very favorable projections
and did not include any of the lower, but guaranteed minimum
results. Also, this illustration schedule did not present the
payment of annual premiums of $1,063.75 in policy years eleven
(11) and beyond, that you knew or should have known would likely
be required to keep the insurance coverage in force.
19. Shortly thereafter, New England Mutual Life Insurance
Company did issue, on July 31, 1987, a Preferred Standard whole
life policy (number 8099457) in the amount of $25,000.00 on Mr.
Stewart's behalf. That policy made no mention of the large lump
sum funding and no schedules of minimum guaranteed earnings on
,such funds.
20. For the next nine years, Mr. Stewart received no
request for any additional annual premium payments. Then, during
June, 1997, Mr. Stewart received an invoice from New England
Mutual Life Insurance Company in the amount of $1,063.75, for
annual premium that was due and payable on or before July 2,
1997, for his life insurance policy.
21. Mr. Stewart then contacted New England Mutual Life
Insurance Company and discovered that his policy called for
continued premium payments to avoid complete dissipation of his
premium already paid (totaling $7,000.00) to cover the future
expense of the current death benefit. Mr. Stewart was not able
to pay any further premium payments. The New England Mutual Life
Insurance Company eventually reached a settlement with Mr.
Stewart so as to have his existing policy function as a paid up
whole life policy with a death benefit of exactly $25,000.00.
IT IS THEREFORE CHARGED that you, JOHN WILLIAM HAY, have
violated or are accountable under the following provisions of the
Florida Insurance Code and Rules of the Department of Insurance
which constitute grounds for the suspension or revocation of your
licenses and appointments as an insurance agent in this state:
Sections 626.611(4), 626.611(5), 626.611(5), 626.611(9),
626.611(13), 626.621(2), 626.621(6), 626.9541(1) (a)1l., and
626.9541(1) (k), Florida Statutes, which are set forth
specifically in Count I above and are hereby realleged and fully
incorporated herein by reference.
WHEREFORE, you, JOHN WILLIAM HAY, are hereby notified that
the Treasurer and Insurance Commissioner intends to enter an
Order suspending or revoking your licenses and appointments as an
insurance agent or to impose such penalties as may be provided
under the provisions of Sections 626.611, 626.621, 626.681,
626.691, and 626.9521, Florida Statutes, and under the other
referenced sections of the Florida Statutes as set out in this
Administrative Complaint. You are further notified that any
order entered in this case revoking or suspending any license or
eligibility for licensure held by you shall also apply to all
other licenses and eligibility held by you under the Florida
Insurance Code.
10
NOTICE OF RIGHTS
Pursuant to Sections 120.569 and 120.57, Florida Statutes and
Rule 28-106, Florida Administrative Code (F.A.C.), you have a
right to request a proceeding to contest this action by the
Department. You may elect a proceeding by completing the
attached Election of Rights form|or filing a Petition. Your
Petition or Election of a proceeding must be in writing and must
be filed with the General Counsel acting as the Agency Clerk,
Department of Insurance. If served by U.S. Mail the Petition or
Election should be addressed to the Florida Department of
Insurance at 612 Larson Building} Tallahassee, Florida 32399-
0333. If Express Mail or hand delivery is utilized, the Petition
or Election should be delivered to 612 Larson Building, 200 East
Gaines Street, Tallahassee, Florida 32399-0300. The Petition or
Election must be received by, and filed in the Department within
twenty-one (21) days of the date|of your receipt of this notice.
YOUR FAILURE TO RESPOND TO THIS
ADMINISTRATIVE COMPLAINT WITHIN TWENTY-ONE
(21) DAYS WILL CONSTITUTE A WAIVER OF YOUR
RIGHT TO REQUEST A PROCEEDING ON THE MATTERS
ALLEGED HEREIN AND AN ORDER OF REVOCATION
WILL BE ENTERED AGAINST YOU.
If a proceeding is requested and there is no dispute of fact
the provisions of Section 120.57(2), Florida Statutes would
apply. In this regard you may submit oral or written evidence in
opposition to the action taken by this agency or a written
statement challenging the grounds
relied.
of a dispute of fact, if you feel
will be conducted in Tallahassee,
conference call upon your request.
‘If you dispute material fact
agency's action you may request a
pursuant to Sections 120.569 and
you request this type of proceedi
all of the requirements of Rule 2
upon which the agency has
While a hearing is normally not required in the absence
that a hearing is necessary one
Florida or by telephonic
s which are the basis for this
formal adversarial proceeding
120.57(1), Florida Statutes. If
ng, the request must comply with
8-106, F.A.C. and contain
a) A statement identifying with particularity the
allegations of the Depa
nature of the dispute;
b) An explanation of what
believe you are entitle
rtment which you dispute and the
relief you are seeking and
d to;
c) Any other information which you contend is material.
These proceedings are held before
judge of the Division of Administ
majority of witnesses are located
request that the hearing be condu
If a hearing is requested, y
represented by counsel, or other
12
a State administrative law
rative Hearings. Unless the
elsewhere the Department will
cted in Tallahassee.
ou have the right to be
qualified representative, to
take testimony, to call and to cross-examine witnesses, and to
have subpoena and subpoena duces tecum issued on your behalf.
You are hereby notified that
120.573, Florida Statutes, is not
mediation under Section
available.
Pailure to follow the procedure outlined with regard to your
response to this notice may result in the request being denied.
All prior correspondence in this matter shall be considered
freeform agency action, and no such correspondence shall operate
as a valid request for an administrative proceeding.
Any request
for administrative proceeding received prior to the date
of this notice shall be deemed abandoned unless timely renewed in
compliance with the guidelines as
set out above.
DATED and SIGNED this 27th day of April , 2001.
\
K EY SHIPLEY
13
Deputy Insurance Commissioner
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the
foregoing ADMINISTRATIVE COMPLAINT has been furnished by U.S.
Certified Mail to: JOHN WILLIAM HAY, 108 s. Cooper Place, Tampa,
Florida 33609-2604; JOHN WILLIAM HAY, New England Financial
Group, 4830 W. Kennedy Blvd. Suite 550, Tampa, Florida 33609-2562
this 27th day of April , 2001.
Busch
Division of Legal Services
612 Larson Building
Tallahassee, FL 32399-0333
(850) 413-4146
14
STATE OF
FLORIDA
DEPARTMENT OF INSURANCE
IN THE MATTER OF:
JOHN WILLIAM HAY
21239-97-A
ELECTION OF RIGHTS
I have received and have read the
Administrative Complaint filed against
me including the Notice of Rights contained therein and I understand my
options. I am requesting disposition
(Choose one)
1.
C ]
I do not desire a proceeding.
of this matter as indicated below.
The Department may enter a
final order revoking my license (s) .
and I hereby elect an
accordance with section 120.57(2), Florida Statutes.
I do not dispute any of the Department's factual allegations
informal proceeding to be conducted in
In this
regard I desire to (Choose one):
{ 1
submit a written
or
conference call,
I do dispute the Depa
statement and documentary evidence
attend an informal hearing to be held in Tallahassee;
attend an informal hearing by way of a telephone
rtment's factual allegations. I have
attached to this form a statement indicating the specific
issues of fact whic
information indicated|
hare disputed and other required
in the Notice of Rights. I hereby
request a formal adversarial proceeding pursuant to Sections
120.569 and 120.57(2),
Florida Statutes to be held before the
Division of Administrative Hearings.
DATE:
TO PRESERVE YOUR RIGHT TO A Name:
Signature of Petitioner
PROCEEDING, YOU MUST RETURN
THIS FORM WITHIN TWENTY-ONE
(21) DAYS OF RECEIPT TO THE
DEPARTMENT OF INSURANCE AT
Address:
-———_______
THE ADDRESS INDICATED IN
THE NOTICE OF RIGHTS. Phone:
Docket for Case No: 01-001862PL
Issue Date |
Proceedings |
Mar. 08, 2002 |
Order Closing File issued. CASE CLOSED.
|
Mar. 05, 2002 |
Motion to Relinquish Jurisdiction filed by Petitioner.
|
Jan. 16, 2002 |
Status Report filed by Petitioner.
|
Nov. 13, 2001 |
Order Granting Respondent`s Motion to Abate and Denying Respondent`s Motion to Dismiss issued (Petitioner shall provide a status report no later than 60 days from the date of this order).
|
Nov. 02, 2001 |
Order on Respondent`s Motion to Compel Answers to Interrogatories issued.
|
Oct. 31, 2001 |
Deposition (of R. Wayne Stewart) filed.
|
Oct. 31, 2001 |
Deposition (of D. Falvey) filed.
|
Oct. 31, 2001 |
Notice of Filing Depositions (of R. Wayne Stewart and D. Falvey) filed.
|
Oct. 31, 2001 |
(Proposed) Order on Respondent`s Renewed Motion to Compel filed.
|
Oct. 24, 2001 |
Petitioner`s Response to Renewed Motion to Compel filed.
|
Oct. 22, 2001 |
Respondent`s Reply Brief in Support of His Motion to Abate and Dismiss (filed via facsimile).
|
Oct. 08, 2001 |
Petitioner`s Memorandum in Opposition to Respondent`s Motion to Dismiss filed.
|
Sep. 24, 2001 |
Notice of Change of Address filed by Respondent.
|
Sep. 24, 2001 |
Memorandum of Law in Support of Respondent`s Motion to Abate and Dismiss filed by Respondent.
|
Sep. 20, 2001 |
Memorandum of Law in Support of Respondent`s motin to Abate and Dismiss (filed by Respondent via facsimile).
|
Sep. 13, 2001 |
Transcript filed. |
Sep. 13, 2001 |
Notice of Filing Original Transcript filed.
|
Sep. 13, 2001 |
Notice of Hearing issued (hearing set for November 9, 2001; 9:00 a.m.; Tampa, FL).
|
Sep. 12, 2001 |
Respondent`s Unopposed Motion to Reschedule Final Hearing and Motion to Clarify and Set Dates for Supplemental Briefing (filed via facsimile).
|
Aug. 27, 2001 |
Order Granting Continuance and Re-scheduling Hearing issued (hearing set for October 23, 2001; 9:00 a.m.; Tampa, FL).
|
Aug. 24, 2001 |
CASE STATUS: Hearing Held; see case file for applicable time frames. |
Aug. 22, 2001 |
Motion to Abate and Dismiss (filed by Respondent via facsimile).
|
Aug. 22, 2001 |
Respondent`s Request for Compulsory Judicial Notice filed.
|
Aug. 20, 2001 |
Order on Pending Motions issued.
|
Aug. 20, 2001 |
Respondent`s Response to Order of Pre-Hearing Instructions filed.
|
Aug. 17, 2001 |
Respondent`s Motion to Compel Answers to Interrogatories filed.
|
Aug. 17, 2001 |
Amended Notice of Taking Depositions D. Falvey, B. Falvey, R. Stewart filed.
|
Aug. 15, 2001 |
Petitioner`s Motion to Quash Respondent`s Interrogatories or for Protective Order filed.
|
Aug. 13, 2001 |
Notice of Serving Respondents` First Interrogatories to Petitioner filed.
|
Aug. 13, 2001 |
Motion to Dismiss filed by Respondent
|
Aug. 10, 2001 |
Pettioner`s Response to Motion to Dismiss filed.
|
Aug. 10, 2001 |
Petitioner`s Notice of Additional Witness for Final Hearing filed.
|
Aug. 08, 2001 |
Notice of Appearance (filed by T. Cerio via facsimile).
|
Jul. 12, 2001 |
Notice of Appearance (filed by P. Antonacci).
|
Jul. 12, 2001 |
Motion for Continuance filed by Petitioner.
|
Jul. 12, 2001 |
Order Granting Continuance and Re-scheduling Hearing issued (hearing set for August 24, 2001; 9:00 a.m.; Tampa, FL).
|
Jul. 11, 2001 |
Letter to J. Studdard from P. Antonacci (regarding postponement of hearing) filed via facsimile.
|
Jul. 06, 2001 |
Petitioner`s Response to Order of Prehearing Instructions filed.
|
Jun. 18, 2001 |
Notice of Production of Documents filed.
|
May 31, 2001 |
Order of Pre-hearing Instructions issued.
|
May 31, 2001 |
Notice of Hearing issued (hearing set for July 19, 2001; 9:00 a.m.; Tampa, FL).
|
May 25, 2001 |
Response to Initial Order filed by Petitioner.
|
May 15, 2001 |
Initial Order issued.
|
May 14, 2001 |
Notice of Unavailability filed.
|
May 14, 2001 |
Election of Rights filed.
|
May 14, 2001 |
Administrative Complaint filed.
|
May 14, 2001 |
Agency referral filed.
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