STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2585

)

MANUEL AMOR, )

)

Respondent. )

)

FINDINGS OF FACT, CONCLUSIONS OF LAW AND RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted in this matter on January 26, 1982, in Miami, Florida. The following appearances were entered: David A. Yon, Tallahassee, Florida, appeared on behalf of the Petitioner, Florida Department of Insurance. The Respondent, Manuel Amor, appeared on his own behalf.

On or about September 25, 1981, the Department of Insurance issued an Administrative Complaint against the Respondent. The Respondent requested a formal hearing, and on October 14, 1981, the Department forwarded the matter to the office of the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of the hearing. The final hearing was scheduled as set out above by notice dated November 17, 1981.

At the hearing, the Department offered its Exhibits 1 through 10 into evidence, and they were received. The Respondent testified as a witness on his own behalf, and Respondent's Exhibits 1 and 2 were received into evidence. The parties were given an opportunity to file post-hearing legal memoranda. The Respondent has filed no memoranda. The Department has filed a proposed recommended order.

The issue in this matter is whether the Respondent has violated provisions of the Florida Insurance Licensing Procedures Law, Part I, Chapter 626, Florida Statutes; and, if so, whether his license as an insurance agent should be revoked or suspended, or whether be should be otherwise disciplined.

FINDINGS OF FACT

1. The Respondent has been licensed by the Department of Insurance as an insurance agent since 1966. Prior to the initiation of this proceeding, he has not been the subject of any disciplinary action by the Department. The Respondent has had a successful career as an insurance agent, and has been an active member of his community.

   
   

2. During 1977 the Respondent actively marketed membership in a program known as the National Business Conference Employee Benefit Association (NBCEBA). The program offered by NBCEBA constituted a health insurance plan, and as such was subject to regulation under the Florida Insurance Code. The NBCEBA program

   operated as if it were exempt from state regulation under the Federal Employee Retirement Income Security Act (ERISA), Chapter 18, United States Code, Sections 1001, et seq. Qualified plans under ERISA were not subject to regulation under state insurance codes. The plan offered by NBCEBA did not qualify as an ERISA plan. Such plans could only be offered by employee organizations. NBCEBA solicited members who were employed by diverse employers, and who participated in diverse occupations. Membership in NBCEBA thus lacked the commonality of employment status among members required of employee organizations under ERISA. Since the plan offered by NBCEBA did not qualify as an ERISA plan, it was subject to regulation by the State of Florida as a program of insurance.

   Indeed, the essence of the NBCEBA plan was to offer a program of insurance to its "members." NBCEBA has never held a certificate of authority to transact an insurance business in the State of Florida.

   
   

3. The Department of Insurance became aware of the plan being offered by NBCEBA to Florida citizens. The Department came to the conclusion that the plan constituted Insurance program not subject to exemption from state regulation under ERISA. By letter dated September 26, 1977, the Department advised Florida agents who were selling memberships in the NBCEBA program of its opinion that the program did not qualify for exemption from state regulation under ERISA, and that NBCEBA was acting as an unauthorized insurer in Florida. The letter requested that the agents cease and desist from further solicitation of prospective members of the plan. This letter was sent to the Respondent. The Respondent received it in the ordinary course of the mail. Shortly after sending this letter, the Department requested an opinion from the United States Department of Labor as to whether the NBCEBA program was exempt from state regulation. During March, 1978, the Department received a response in which the United States Department of Labor advised that in its opinion, NBCEBA was not a qualified program under Chapter 18, United States Code, and that the NBCEBA plan was subject to regulation by the State of Florida.

   
   

4. After receiving the letter from the Department advising him of its opinion that the NBCEBA plan was not a qualified insurance program, the Respondent discussed the letter with Mr. Robert Klein, the owner of Planned Marketing Systems. Planned Marketing Systems was the general agent for the NBCEBA program in Florida. Mr. Klein advised the Respondent that the plan would eventually be approved in Florida. The Respondent did not cease marketing the NBCEBA plan. On or about October 31, 1977, he completed an application and accepted a premium payment for membership in the plan on behalf of Mr. Rafael Sanchez. Sanchez had been a friend of the Respondent and had used the Respondent as his insurance agent. The premiums on Sanchez's health insurance policy had increased dramatically during 1977. Membership in the NBCEBA plan was considerably cheaper than premiums that Sanchez needed to pay for other health insurance programs. Sanchez did not appear as a witness at the hearing, and the evidence would not support a finding as to what, if any, representations were made by the Respondent to Sanchez respecting the failure of NBCEBA to qualify as an insurance plan under the laws of the State of Florida. The evidence would not support a finding as to whether Respondent advised Sanchez as to his correspondence from the Department relating to NBCEBA.

   
   

5. During May, 1978, Sanchez made an application to NBCEBA for benefits. NBCEBA did not honor the claim, and has since filed for bankruptcy in the United States District Court for the District of Oregon. Sanchez has thus been left liable to pay medical expenses that should have been covered under the NBCEBA plan.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Sections 120.57(1), 120.60, Florida Statutes.

   
   

7. The Department has charged the Respondent with violating or failing to comply with numerous sections of the Florida Insurance Code. The Department has charged the Respondent with violating the provisions of Florida Statutes, Sections 626.611(4) and (13), 626.621(2), and 626.901(1), predicated upon the Respondent's sale of a membership in the NBCEBA plan to Rafael Sanchez.

   
   

8. Florida Statutes, Section 626.401, provides that no person shall act as an insurer in Florida except as authorized by a certificate of authority issued by the Department of Insurance, and that no insurer or its agents are permitted to solicit insurance applications without a certificate of authority issued by the Department. The plan offered by NBCEBA constituted an insurance plan within the meaning of the Florida Insurance Code. NBCEBA was, through its memberships, acting as an insurer within the State of Florida without having been issued a certificate of authority by the Department. The plan offered by NBCEBA was not exempt from the requirement that it obtain a certificate of authority. The plan did not qualify as a valid plan under the Federal Employee Retirement Income Security Act, Chapter 18, United States Code, Sections 1001, et seq. NBCEBA was not an "employee organization" within the meaning of the federal act. National Business Conference Employee Benefit Association v. Howatt, Civil Action No. 77-

   544 (United States District Court, District of Oregon, Opinion dated December 27, 1977); Bell v. Employee Security Benefit Association, 437 F. Supp. 382 (D. Kan. 1977). After the Respondent received notification from the Department as to its opinion that the NBCEBA plan was subject to state regulation and had not been issued a certificate of authority, the Respondent was on notice as to the failure of the NBCEBA to meet requirements for doing business in Florida. The Respondent's calling his general agent, and receiving assurance that the plan would eventually qualify, does not change this conclusion. When the Respondent sold a membership in the NBCEBA plan to Rafael Sanchez, he solicited an insurance application and transacted insurance business for an insurer who did not hold a certificate of authority. Accordingly, he committed acts which constitute grounds for disciplinary action under the provisions of Florida Statutes, Sections 626.611(4) and (13), 626.621(2), and 626.901(1)

   
   

9. In its Administrative Complaint, the Department charged that the Respondent violated the provisions of Florida Statutes, Sections 626.611(5), (7) and (8), 626.621(6), 626.9521, and 626.9541(1)(a) and (d), predicated upon misrepresentations that the Respondent allegedly made to Rafael Sanchez in connection with the sale of a membership in the NBCEBA plan to Sanchez. The evidence does not sustain these allegations. Sanchez did not testify as a witness at the hearing, and the evidence does not reveal what, if any, representations were made by the Respondent to Sanchez respecting whether the NBCEBA plan was properly operating within the State of Florida. The Department has therefore not sustained its allegations of violations of these statutes.

   
   

10. Florida Statutes, Section 626.611, provides that the Department shall suspend or revoke the license of any agent found to have engaged in any of the acts enumerated in the fourteen subparagraphs of the section. Section 626.621 provides that the Department may suspend or revoke the license of an agent who engages in any of the conduct enumerated in the subparagraphs of that section. Section 626.681, Florida Statutes, provides that the Department may, in its discretion, in lieu of suspending or revoking an agent's license, impose an

administrative penalty in the amount of five hundred dollars if the misconduct is found to be willful. The Respondent's conduct in selling an insurance policy for an insurer that had not received a certificate of authority constitutes a willful violation of the provisions of the Insurance Code enumerated in Paragraph 2 of these Conclusions of Law.

RECOMMENDED ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law it is, hereby,

RECOMMENDED:

That a final order be entered by the Florida Department of insurance finding the Respondent guilty of violating provisions of the Insurance Code as set out in Paragraph 2 of the above Conclusions of Law, and not guilty of violating provisions of the Insurance Code as set out in Paragraph 3 of the above Conclusions of Law; suspending the Respondent's license to practice as an insurance agent within the State of Florida for a period of ninety days; and imposing an administrative penalty against the Respondent in the amount of five hundred dollars, provided that if the Respondent fails to pay the penalty within thirty days of the date of the Department's final order, that the Respondent's license be suspended for a total period of six months.

RECOMMENDED this 25th day of February, 1982, in Tallahassee, Florida.

G. STEVEN PFEIFFER

Division of Administrative Hearings Department of Administration

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 25th day of February, 1982.

COPIES FURNISHED:

David A. Yon, Esquire Department of Insurance and Treasurer

The Capitol

Tallahassee, Florida 32301

Mr. Manuel Amor Post Office Box 85 Riverside Station Miami, Florida 33135

The Honorable Bill Gunter Insurance Commissioner The Capitol

Tallahassee, Florida 32301

Docket for Case No: 81-002585

Orders for Case No: 81-002585