STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1582

)

ALBERT WADE ANDERSON, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Fort Myers, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton II, on October 28, 1981. The Division of Administrative Hearings received a transcript of the proceedings on November 18, 1981. At the hearing, the parties were represented by counsel:

For Petitioner: David A. Yon, Esquire

428-A Larson Building Tallahassee, Florida 32301

For Respondent: Thomas F. Woods, Esquire

1030 East Lafayette Street, Suite 112

Tallahassee, Florida 32301

By administrative complaint dated May 22, 1981, petitioner alleged that respondent was, at all pertinent times, "the general lines agent of record for the Atlas Insurance Agency, Inc. Ft. Myers a [Florida] corporation . . ."; that "on or about June 10, 1980 Jeanne A. Whyte . . . requested . . . the least expensive automobile insurance policy for which she was qualified"; that respondent "02 someone under [his] control or supervision, sold to Jeanne A. Whyte policy number C-1-826686 with the Kenilworth Insurance Company; that respondent "received from Ms. Whyte a check [for $275] represent[ing] payment .

. . represented to Ms. Whyte as being due on her . . . policy with the Kenilworth Insurance Company . . [even though] the correct premium . . . for said policy was" $186; that respondent "or someone under [his] supervision or control, used [$75] of said excess premium payment to purchase a motor club membership with American Touring Association on behalf of Ms. Whyte [which she] neither requested nor desired" and without in forming her; and that respondent "or someone under [his] supervision or control used misleading and deceptive practices in selling a motor club membership to Ms. Whyte . . . [and] unlawfully withheld, misappropriated or converted funds belonging to Jeanne A. Whyte"; all in violation of Sections 626.561(1), 626.611(5), (7), (9), (10), (13),

626.621(2), (6), 626.9521, 626.9541(1)(a) and (2), Florida Statutes. In Count Two, petitioner alleges that "Chris Robinson came into [respondent's] office to purchase automobile insurance . . . [and] requested that she be sold the automobile insurance advertised in [a radio] commercial"; that respondent "or someone under [his] control or supervision, sold to Chris Robinson an insurance policy . . . with the American Specialty Insurance Company" namely, "a personal

injury protection policy with an . . . [$8,000] deductible . . . [which she] did not request . . . [and was not] aware she was receiving"; that "on or about May 5, 1980 [respondent] received from Ms. Robinson a premium payment in the amount of" $50; that "on or about May 21, 1980 [respondent] received from Chris Robinson a . . . [$48] premium payment" for the same insurance policy even though "the correct premium payment due for said policy was" $25; that the "excess premium payment [was used] to purchase a motor club membership with American Touring Association on behalf of Ms. Robinson" without her knowledge and against her wishes; and that respondent "or someone under [his] supervision or control used misleading and deceptive practices in selling a motor club memberships to Ms. Robinson . . . [and] unlawfully withheld, misappropriated or converted funds belonging to Chris Robinson; all in violation of Sections 626.561(1), 626.611(5), (7), (9), (10), (13), 626.621(2), (6), 626.9521,

626.9541(1)(a) and (2), Florida Statutes. In Count Three, petitioner alleged that "on or about August 11, 1980 James Michael Hanney . . . came into [respondent's] office . . . [and] requested that he be sold an insurance policy which provided the minimum coverage necessary to meet the statutory requirements for the purchase of license plates"; that respondent "or someone under [his] control or supervision, sold to . . . [Mr. Hanney policy numbered A-P-1-10- 02821 with the Fortune Insurance Company a personal injury protection policy with an . . . [$8,000] deductible"; that "Mr. Hanney did not request, nor was he aware that he was receiving an eight thousand dollar . . . deductible in his policy"; that respondent "received from Mr. Hanney [$66] . represented to Mr.

Hanney as being due on his insurance policy with the Fortune Insurance Company"; that "the correct premium payment due for said policy was" $31; that the "excess premium payment [was used] to purchase a motor club membership with Nation Motor Club on behalf of Mr. Hanney . . . [even though] Mr. Hanney neither requested nor desired . . . [such] a membership" and did not know he was purchasing such a thing; and that respondent "or someone under [his] supervision or control, used misleading and deceptive practices in selling a motor club membership to Mr.

Hanney . . . [and] unlawfully withheld, misappropriated or converted [Hanney's] funds"; all in violation of Sections 626.561(1), 626.611(5), (7), (9), (10),

(13), 626.621(2), (6) , 626.9521, 626.9541(1)(a) and (2), Florida Statutes. In

Count Four, petitioner alleged that "on or about May 2, 1980, Mary Lavern Davis

. . . came into [respondent's] office . . . [and] requested that she be sold [automobile] liability and collision insurance"; that respondent "or someone under [his] supervision or control, sold to [Ms.] Davis . . . policy numbered 700114 with the Integrity Insurance Company . . . [and] policy numbered C-1- 824650 with the Kenilworth Insurance Company . . . [and] represented to Ms.

Davis that the total premium due for said policies was" $561; that "the correct premium payment due for said policies was" $486; that "the excess premium payment [was used] to purchase a motor club membership with American Touring Association on behalf of Ms. Davis . . [which she] neither requested nor desired" and without her knowledge; and that respondent "or someone under [his] supervision or control, used misleading and deceptive practices in selling a motor club membership to Ms. Davis . . . [and] unlawfully withheld, misappropriated or converted [her] funds"; all in violation of Sections 626.561(1), 626.611(5), (7), (9), (10), (13), 626.621(2), (6) 626.9521,

626.9541(1)(a) and (2), Florida Statutes. In Count Five, petitioner alleges that in May of 1980 "Barbara J. Gonzalez (now Barbara Jane Foster) and James A. Foster . . . requested that they be sold the minimum insurance coverage necessary to satisfy the requirements of the Florida Statutes for purchasing license tags"; that respondent or someone under [his] control or supervision, sold to Mr. and Mrs. Foster . . . policy numbered PA-020359 with the American Specialty Insurance Company . . . [and] received from Mr. and Mrs. Foster a premium payment . . . of approximately $120.00 . . . represented to Mr. and Mrs. Foster as being due on their insurance policy"; that "the correct premium

payment due for said policy was" $44; that the "excess premium payment [was used] to purchase a motor club membership with American Touring Association on behalf of Mr. and Mrs. Foster . . . [which they] neither requested nor desired" and without their knowledge; and that respondent "or someone under [his] supervision or control, used misleading and deceptive practices in selling a motor club membership to Mr. and Mrs. Foster . . . [and] unlawfully withheld, misappropriated or converted [their] funds"; all in violation of Sections 626.561(1), 626.611(5), (7), (9), (10), (13), 626.621(2), (6), 626.9521,

626.9541(1)(a) and (2), Florida Statutes.

Without objection, petitioner was granted leave to amend the administrative complaint to allege that the conduct charged in each count also violated Section 626.9541(15)(a) and (b), Florida Statutes. At the final hearing, counsel for petitioner abandoned Counts Two and Four of the administrative complaint.

FINDINGS OF FACT

1. Respondent Albert Wade Anderson holds a business degree from Washington University and a theology degree from Princeton University. After six years, he left the ministry to sell insurance. In 1965, he was licensed to sell life insurance in Minnesota, and continued selling life insurance after he moved to Fort Myers, Florida, in 1967. Respondent is licensed in Florida as an ordinary life, including disability, insurance agent and as a general lines agent. Petitioner's Exhibit No. 1.

   
   

2. In May of 1980, Mr. Anderson, newly licensed by petitioner to sell property and casualty insurance, took a job with Atlas Insurance Agency's Fort Myers office. Atlas Insurance Agency paid respondent a weekly salary of $200 plus "$6.75 per program or deal," (T. 62), i.e., per customer. Almost invariably, respondent sold a motor club membership to any customer who bought a personal injury protection policy; Mr. Anderson could not recall with certainty a single exception. (T. 66.)

   
   

3. "A motor club is an organization which provides certain designated services to motorists, including such things as guaranteed arrest bond certificates, towing and labor for disabled automobiles, map drawing services, often accidental death benefits, and similar related services . . . [for] motorists." Deposition of Andrew M. Beverly (Deposition), p. 6. Among motor club membership benefits are many services which are not included in "standard coverage." Deposition, p. 7. Motor club membership is "an important coverage .

   . . [An] insured should be made aware of this coverage." Deposition, p. 9. An insurance agent "should explain the different [motor club] coverages and options to a potential insured." Deposition, p. 19.

   
   

   COUNT ONE

   
   

4. Jeanne Whyte, assistant head nurse at Lee Memorial Hospital on the 11- to-7 shift, came into the Fort Myers office of Atlas Insurance Agency on June 10, 1980. Ms. Whyte graduated from high school and has attended about a year's worth of college courses from time to time, in addition to her training as a nurse.

   
   

5. When she went to the Atlas Insurance Agency, it was with the intent to purchase the least expensive automobile insurance available. She was already a member of the American Automobile Association. Respondent Anderson persuaded her, however, that she should also purchase liability insurance to protect her home and other assets. In explaining her potential benefits, Mr. Anderson said

   "something about towing, but [Ms. Whyte] didn't connect it with . . . a club or anything." (T. 27.) Before she left the office, she wrote a check for $275, and signed documents, including a membership application for American Touring Association, Inc., Respondent's Exhibit No. 1. Of the $275, $186 was used to purchase bodily injury liability, property damage liability, and personal injury protection, in the form of a combination automobile policy from Kenilworth Insurance Company, No. C-1-826686, Petitioner's Exhibit No. 3; $75 was used to purchase a membership in American Touring Association, Petitioner's Exhibit No. 4; and $14 was not accounted for by the evidence. When Ms. Whyte discovered that $75 had been used to purchase a membership in American Touring Association, she tried to obtain a refund from Atlas Insurance Agency, originally without success; but she eventually obtained a $75 refund, after contacting the Insurance Commissioner's office.

   
   

6. This experience notwithstanding, Ms. Whyte purchased automobile insurance a year later from respondent, who by that time was employed with another insurance agency, "because [she didn't really think it was his idea to put [her] in the American Touring Club." (T. 29.)

   
   

   COUNT THREE

   
   

7. When James Hanney, a high school graduate, entered Atlas Insurance Agency's office in Fort Myers, on or about August 11, 1980, he was under the impression that his parents' membership in the American Automobile Association inured to his benefit. Whether this impression was accurate was not clear from the evidence. In any case, Mr. Hanney told the woman he found in the Atlas Insurance Agency office that he wanted minimal insurance coverage. She sold him a $10,000 personal injury protection policy with an $8,000 deductible, issued by Fortune Insurance Company, No. AP 1-10-02821 with a premium of less than $50, and a membership in the Nation Motor Club for $35. Respondent and Mr. Hanney each signed the insurance policy. Petitioner's Exhibit No. 7. Among other documents, Mr. Hanney signed an application for membership in the Nation Motor Club, Inc., Respondent's Exhibit No. 2.

   
   

   COUNT FIVE

   
   

8. On or about May 17, 1980, James Allen Foster, a high school graduate, went to the Fort Myers office of the Atlas Insurance Agency to buy whatever insurance was necessary to register the car he and Barbara Gonzalez (now Foster) had recently purchased. He did not ask for a motor club membership and would not have purchased such a membership if he had known it was optional. He did, however, sign an application for membership in the American Touring Association, Inc., Respondent's Exhibit No. 3, among other documents. After telling Mr. Foster and Ms. Gonzalez about potential benefits, including "towing and lost key coverage, Mr. Anderson sold them a $10,000 personal injury protection policy with an $8,000 deductible written on the American Specialty Insurance Company, No. PA 02 03 59, Petitioner's Exhibit No. 9, with a premium of $44, in addition to the membership in the American Touring Association.

   
   

9. Howard Vogel and Kevin Cox were the principals of Atlas Insurance Agency, a Florida corporation owned by Cox, Vogel, Inc., during the time respondent Anderson worked for the agency. They instructed respondent to attempt to sell motor club memberships along with every automobile insurance policy he might sell, and told him how to go about it. The "technique was to package the benefits and quote one price," (T. 56; Testimony of Respondent), the aggregate of the motor club membership fee and the policy premium. Respondent was told by his employers "to not emphasize" the motor club memberships.

10. Jeanne Whyte, James Hanney, and James Allen Foster each signed a form application for motor club membership, but only the application Mr. Hanney signed listed the membership fee or otherwise indicated that a separate fee or premium was being charged for the motor club membership. Respondent deliberately withheld this fact from Ms. Whyte and Mr. Foster when making his oral presentation and no document furnished to Ms. Whyte or to Mr. Foster disclosed the fact. Neither did respondent offer either of these customers a choice between memberships in different motor clubs.

    
    

11. An insurance "agent has an absolute duty to the insured to explain to him what he is selling him and what it does for him," Deposition, p. 14, although the name of the policy is not nearly as important as the explanation of the coverage. Simply omitting the formal policy name would not fall below "the minimum standards of the business, the industry." Deposition, p. 16. "[T]he important thing is to explain to the insured he's buying something, and that what he is paying for is this." Id. Before making a sale, the insurance "agent owes it to the insured to explain each coverage and tell him he's paying for it and what the benefits of the coverage are." Deposition, p. 22.

    
    

12. Both petitioner's recommended order to hearing officer and respondent's proposed order have been given careful consideration. Findings proposed by the parties which are not included in the foregoing findings of fact have been rejected as inconsistent with the evidence or omitted as irrelevant.

    
    

    CONCLUSIONS OF LAW

    
    

13. Petitioner has accused respondent of "making . . . [a] statement, sales presentation [or] omission . . . which . [m]isrepresents the . . . conditions or terms of any insurance policy," Section 626.9541(1)(a), Florida Statutes (1979), and of "[k]nowingly making . . . [a] statement with respect to the business of insurance, which is untrue, deceptive, or misleading." Section 626.9541(2), Florida Statutes (1979). In addition, petitioner has alleged that respondent has violated the requirements of Section 626.561(1), Florida Statutes (1979), which provides:

    
    

    All premiums, return premiums or other funds belonging to insurers or others received by an agent, solicitor or adjuster in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity, and 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.

    
    

    For these alleged violations, petitioner contends, respondent is subject to discipline pursuant to Sections 626.611(13) and 626.621 (2) and (6), Florida

    Statutes (1979).

14. Petitioner argues that it has a mandatory duty to suspend or revoke respondent's license on the following grounds:

    
    

    (5) 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.

    * * *

    (7) For demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    * * *

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

    2. 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.

    * * *

    (13) Willful failure to comply with, or willful violation of, any proper order, rule, or regulation of the department or willful violation of any provision of this code. Section 626.611, Florida Statutes (1979)

    
    

    In addition, petitioner claims that discretionary suspension or revocation is authorized on the following grounds:

    
    

    (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.

    * * *

    (6) If in the conduct of business

    under the license or permit he has engaged in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part VII of this chapter, or has otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. Section 626.621, Florida Statutes (1979).

    
    

    Among the "unfair or deceptive acts or practices, as prohibited under part VII" are the violations of Section 626.9541, Florida Statutes (1979), set forth above.

    
    

15. The evidence clearly established that respondent acted, at his employers' direction, to mislead customers, including Jeanne Whyte and James Allen Foster, by inducing them to believe that motor club benefits were part and parcel of the personal injury protection or other automobile insurance they intended to purchase; by concealing the fact that motor club memberships need not be purchased along with automobile insurance; and by concealing the amount

    of the motor club membership fee and what benefits were available for that fee. Petitioner has grounds, therefore, for disciplinary action against respondent pursuant to Section 626.611(13), and 626.621(2) and (6), Florida Statutes (1979).

    
    

16. For the same reasons, respondent has been shown to be guilty of willful misrepresentation of the terms of the insurance policies he sold Ms. Whyte and Mr. Foster, in violation of Section 626.611(9), Florida Statutes. The evidence does not, however, make out a case of misappropriation within the meaning of Section 626.611 (10), Florida Statutes (1979), with requisite clarity. Cf. Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981). Proof that respondent was "sliding motor clubs" in strict adherence to his employers' instructions falls short of a showing that respondent has a "demonstrated lack of fitness or trustworthiness" ever to engage in the insurance business, within the meaning of Section 626.611(7), Florida Statutes (1979). See Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981).

    
    

17. The present case resembles Office of Treasurer, Insurance Commissioner

v. Jeffrey Allan Azis, No. 80-1278 (DOAH; RO entered June 3, 1981), only in the broadest outlines. In the Azis case, the customers had each signed a statement that "I understand the Nation Motor Club (NMC) membership applied for this date

. . . is a separate item . . . I understand the additional charge is included with my down payment." In the present case, the customers were intentionally kept in the dark on precisely this point. See Office of Treasurer and Insurance Commissioner v. Harry Joseph Finn, No. 80-1291 (DOAH; RO entered February 13, 1981).

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That petitioner suspend respondent's licensure under Chapter 626, Florida Statutes (1979), for a period of sixty (60) days.

DONE AND ENTERED this 16th day of December, 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 16th day of December, 1981.

COPIES FURNISHED:

David A. Yon, Esquire Department of Insurance 428-A Larson Building

Tallahassee, Florida 32301

Thomas F. Woods, Esquire Suite 112

1030 East Lafayette Street Tallahassee, Florida 32301

The Honorable Bill Gunter State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32301

Docket for Case No: 81-001582

Orders for Case No: 81-001582