STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 80-343

)

TIMOTHY ESTEL CURTIS, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Orlando, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton, II, on December 2, 1980. The Division of Administrative Hearings received the transcript of the hearing on January 7, 1981, petitioner's [proposed] recommended order on January 21, 1981, and the depositions of Clara

H. Shackett, Sylvia C. Barnard, and Ralph P. Barnard on January 21, 1981. The parties stipulated to extend the time for entry of the recommended order until February 13, 1981. At the hearing, the parties were represented by counsel:

APPEARANCES

For Petitioner: Daniel Y. Sumner, Esquire

David Yon, Esquire

Larson Building, Room 428-A Tallahassee, Florida 32301

For Respondent: Ronald W. Black, Esquire

112 South Lake Avenue Orlando, Florida 32801

ISSUES

By amended administrative complaint dated July 18, 1980, petitioner alleged, in seven counts, that respondent violated various statutes and rules while licensed by petitioner as an insurance agent. At the hearing, petitioner voluntarily dismissed Counts I, V, and VI.

In Count II, the amended administrative complaint alleges that respondent sold a Medicare Supplement Health Insurance Plan to Ralph P. Barnard "on or about May 30, 1979," that, "on or about June 18, 1979, upon delivering the" policy, respondent told Mr. Barnard and his wife falsely that it was mandatory that they each purchase an Emergency Medical Information Card and that they did buy the cards on the strength of respondent's representations, and that respondent "knew or should have known that the" insurer had not authorized him to sell the cards or "make representations regarding the [cards] in conjunction with the sale of insurance" contrary to "Sections 626.611(4), 626.611(5), 626.611(7), 626.611 (9), 626.611(13), 626.621(2), 626.621(3), 626.621(6), and

626.621 (9), Florida Statutes..."

In Count III, the amended administrative complaint alleges that respondent sold insurance policies to Clara H. Shackett to whom on or about June 1, 1979, [he] represented...that the insurance company required her to purchase an Emergency Medical Information Card, and/or that she needed the Emergency Medical Information Card because it was going to be required by all insurance companies"; that Ms. "Shackett, relying upon the representations made by [respondent] purchased" a card for $60.00; and that respondent "knew or should have known, that the ...[card] was not required of Clara H. Shackett for any purpose"; that respondent "on or about July 2, 1979, took from Clara H. Shackett, three insurance policies...in which [respondent] had no right to possession...[including a policy that] lapsed while in [respondent's] possession", contrary to "Sections 626.611(4), 626.611(5), 626.611)7), 626.611

(9), 626.611(13), 626.621(2), 626.621(3), 626.621(6), and 626.621 (9), Florida

Statutes..."

In Count IV, the amended administrative complaint alleges that respondent sold insurance policies to Lesbia Davis "on or about August 14, 1979, September 26, 1979, February 26, 1980, April 29, 1980, February 27, 1980, and July 1, 1980...[which] represented replacement of existing...policies issued to Lesbia Davis by the American Sun Insurance Company"; that Ms. Davis purchased the replacement policies in reliance on respondent's representations that "the American Sun Insurance Company was in financial difficulty and his agency felt that...a change in companies...[was in] Ms. Davis' best interest" although he "knew or should have known that the statements made regarding the American Sun Insurance Company [to induce replacement of existing policies] were untrue, deceptive, false, misleading, derogatory [sic] or defamatory" contrary to Sections 626.611(4), (5), (7), (8), (9), and (13), 626.621(2) and (3), and

626.9541(3) and (12), Florida Statutes (1979). At the hearing, petitioner moved ore tenus to amend the fourth policy number in Paragraph 2 of Count IV to state 10145156 rather than 10134156; and the motion is hereby granted.

Finally, in Count VII, the amended administrative complaint alleges that respondent has "with such frequency as to indicate a general business practice...[e]ngaged in unfair methods of competition or in unfair or deceptive acts or practices involving the business of insurance...[k]nowingly made false or fraudulent statements or representations in or with reference to any application or negotiation for insurance...[k]nowingly caused to be made, published disseminated or delivered to an insured false material statements...[k]nowingly collected a sum as premium or charge for insurance in excess of the premium or charge applicable...[made] misleading representations or incomplete or fraudulent comparisons of...insurance policies or insurers...intending to induce any person to...terminate...any insurance policy or to take out a policy of insurance in another insurer..."; and thereby "engaged in unfair methods of competition or in unfair or deceptive acts or practices as prohibited under Part VII of Chapter 626, Florida Statutes."

FINDINGS OF FACT

1. At all pertinent times, respondent was a licensed insurance agent employed by an insurance firm doing business under the name Consumer Service Health Agency (CSHA). At one time or another, CSHA represented American Sun Life Insurance Company (American Sun) and Reliable Life and Casualty Company (Reliable). Respondent was licensed to sell ordinary life and health insurance including disability insurance, at all pertinent times.

2. Roland Weiner, an officer of American Sun, made Emergency Medical Cards (cards) available to general agents, including CSHA, at American Sun's cost of

   42 cents per card. Mr. Weiner advised American Sun's general agents by memorandum that the cards were to be used for promotional purposes and were not to be sold to the public. American Sun furnished its general agents forms which would-be cardholders filled out, supplying information about medical history and characteristics. The completed form was then "reduced to microfilm chip and sealed in a handsome plastic information card." Respondent's Exhibit No. 2. Medical information on the card could not be read with the naked eye.

   
   

3. Respondent sold several of these cards on behalf of CSHA for $60.00 each. He tried to sell one to each of his customers. (T. 112-113.) Every time he sold a card, respondent earned $30.00.

   
   

4. On May 30, 1979, respondent sold an insurance policy to Ralph P. Barnard. When respondent returned to the Barnard residence, a mobile home, to deliver the policy, he sold cards to Mr. and Mrs. Barnard, after telling them that possession of such cards would be mandatory in the future. The next day the Barnards thought better of their purchase and asked the bank on which Mrs. Barnard had written a check for $120.00 to stop payment.

   
   

5. Respondent first visited Clara H. Shackett on May 2, 1979, and sold her an insurance policy which he delivered to her home on June 1, 1979. On that occasion he sold Ms. Shackett a second insurance policy, which he returned a third time to deliver, on June 28, 1979. On the third visit, respondent sold Ms. Shackett a card for $60.00, after telling her such a card was going to be required by all insurance companies. Deposition of Clara H. Shackett, p. 29. When he left, he took with him three insurance policies issued by National States Insurance Company, two overlapping cancer policies and a nursing home policy. Mr. Shackett asked, "Where are you going with those policies?" to which respondent replied, "They're no good to you...You've taken out the new insurance." Deposition of Clara H. Shackett, p. 20. After the National States policies lapsed, the insurance salesman who had sold them to Ms. Shackett called on her, in August of 1979, and the National States policies were subsequently reinstated.

   
   

6. After insurance salesmen employed by CSHA had sold certain American Sun policies to Lesbia J. Davis, CSHA ceased representing American Sun, and respondent called on Ms. Davis. In response to the question whether he was "recontacting all the previous customers that had bought policies with American Sun", respondent answered, "Not necessarily." (T. 127.) In any event, respondent sold Ms. Davis Reliable policies to replace American Sun policies on August 14, 1979 (No. 10110802, effective September 1, 1979), on September 26, 1979 (No. 10118435, effective October 15, 1979), on February 27, 1980 (No. 145368), on February 28, 1980 (No. 10145156, effective March 17, 1980) and a Reliable cancer insurance policy effective May 12, 1980 (No. 10154286).

   
   

7. Respondent induced Ms. Davis to change insurance companies by telling her that American Sun was having financial difficulties. American Sun is a wholly owned subsidiary of Future Florida Corporation which is wholly owned by Southland Capital Investors, Inc. American Sun itself, which is 80 percent coinsured by INA, was never financially impaired or in financial difficulty (from at least as early as May of 1979 until at least December of 1979); however, Southland Equity proportion, which, at the time of the hearing, owned

   18 percent of Southland Capital Investors, Inc., was insolvent, from at least as early as May of 1979 until at least December of 1979.

   CONCLUSIONS OF LAW

   
   

8. Petitioner is authorized and required to suspend or revoke "the license of any agent...[and] the eligibility to hold a license or permit...if it finds...one or more of the following...grounds.

   
   

   1. If the license...is willfully used...to circumvent any of the require ments or prohibitions of [Chapter 626, Florida Statutes (1979)]

   2. Willful misrepresentation of any insurance policy...or willful deception with regard to any such policy or contract, done either in person or by any form of dis semination of information or advertising.

      1. For demonstrated lack of fitness

         or trustworthiness to engage in the business of insurance.

      2. For demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license...

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

      (13)...[W]illfull violation of any provision of [Chapter 626, Florida Statutes (1979)]. Section 626.611, Florida Statutes

      (1979).

      
      

      Petitioner is authorized, but not required, to suspend or revoke "the license of any agent...[and] the eligibility to hold a license or permit...if it finds...one or more of the following ...grounds...under circumstances...[where] suspension [or] revocation...is not mandatory under Section 626.621:

      
      

      1. Violation of any...law applicable to the business of insurance in the course of

         dealing under the license...

      2. Violation of any lawful order or rule or regulation of the department [of insurance]

      (6) If in the conduct of business under the license...he has engaged in

      ...unfair or deceptive acts or practices, as prohibited under Part VII of [Chapter 626, Florida Statutes (1979)], or has other wise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

      (9) If a life agent, he has violated the code of ethics.

      
      

      Unfair methods of competition and unfair or deceptive acts or practices are defined to include:

      
      

      (3) DEFAMATION.--Knowingly making, publishing, disseminating, or circulating,

      directly or indirectly, or aiding, abetting, or encouraging the making, publishing, dis seminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, which is false or maliciously critical of, or derogatory to, any person and which is calculated to injure such person.

      (5)(a) Knowingly:

      1. Filing with any supervisory or other public official,

      2. Making, publishing, disseminating, circulating,

      3. Delivering to any person,

      4. Placing before the public,

      5. Causing, directly or indirectly, to be made, published, disseminated, circu lated, delivered to any person, or placed before the public,

      any false material statement.

      (1)(b) Any agent, solicitor, examin ing physician, applicant, or other person

      who knowingly makes any false and fraudulent statement or representation in, or with ref erence to, any application or negotiation for insurance, in addition to any other penalty provided in this act, shall, upon conviction, be guilty of a misdemeanor of the second degree, punishable as provided

      in s. 775.082, s. 775.083, or s. 775.084.

      (12) TWISTING.--knowingly making any misleading representations or incomplete or fraudulent comparisons of any insurance policies or insurers for the purpose of in ducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer.

      (15)(b) Knowingly collecting as a pre mium or charge for insurance any sum in excess of or less than the premium or charge appli cable to such insurance, in accordance with the applicable to such insurance, in accor dance with the applicable classifications

      and rates as filed with and approved by the department, and as specified in the policy; or, in cases when classifications, premiums, or rates are not required by this code to

      be so filed and approved, premiums and charges in excess of or less than those specified in the policy and as fixed by the insurer. This provision shall not be deemed to prohibit the charging and collection, by surplus lines agents licensed under part VI of this chapter, of the amount of applicable state and federal taxes in addition to the

      premium required by the insurer. Chapter 626.9541, Florida Statutes (Supp. 1980).

      
      

      Finally, the amended administrative complaint cites Section 626.9521, Florida Statutes (1979) , which forbids licensees like respondent from engaging in unfair methods of competition and unfair or deceptive acts or practices involving the insurance business.

      
      

9. In providing that respondent systematically tried to sell Emergency Medical Cards, by representing to elderly customers on at least two occasions that such cards would soon be required by insurance companies, petitioner established that respondent was guilty of "[f]raudulent or dishonest practices in the conduct of business under [his] license", Section 626.611(9), Florida Statutes (1979), and demonstrated respondent's "lack of fitness or trustworthiness to engage in the business of insurance. Section 626.611(7), Florida Statutes (1979)

   
   

10. The evidence did not establish the allegations that respondent sought to extract the price of the cards as part of the premiums per se.

    
    

11. It was not clear from the evidence whether the insurance policies respondent took from Ms. Shackett lapsed before or after respondent took them.

    
    

12. The evidence did not establish that respondent's derogatory remarks about American Sun's financial position were made in bad faith.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That petitioner revoke respondent's license and eligibility for licensure. DONE AND ORDERED this 13th day of February, 1981, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 1981.

COPIES FURNISHED:

Daniel Y. Sumner, Esquire and

David Yon, Esquire

Larson Building, Room 428-A Tallahassee, Florida 32301

Ronald W. Black, Esquire

112 South Lake Avenue Orlando, Florida 32801

Docket for Case No: 80-000343

Orders for Case No: 80-000343