STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
vs. ) CASE NOS. 83-1600
) 83-1601
LINDA SHARI STEVENS, JEFFREY MARK ) 83-1602
TURNER, ROGER GEORGE PELTIER, ) 83-1846
and KEVIN MICHAEL STEVENS, )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings on January 17 and February 3, 1984, in Orlando, Florida and Tallahassee, Florida. The appearances were as follows:
APPEARANCES
For Petitioner: Curtis A. Billingsley, Esquire
Department of Insurance and Treasurer 413-B Larson Building
Tallahassee, Florida 32301
For Respondent: Thomas F. Woods, Esquire
WOODS and CARLSON
1030 East Lafayette Street, Suite 112
Tallahassee, Florida 32301
These cases arose on administrative complaints filed against the respective Respondents by the Petitioner, State of Florida, Department of Insurance and Treasurer, charging multiple violations of the Florida Insurance Code as to each Respondent. At the outset of the hearing conducted in these proceedings, however, Cases No. 83-1600, 83-1601 and 83-1602 against Respondents Linda Shari Stevens, Jeffrey Mark Turner and Roger George Peltier were voluntarily dismissed. Accordingly, the Division of Administrative Hearings files' in those cases shall be closed. The remaining Respondent, Kevin Michael Stevens, in Case No. 83-1846, has been charged by the Petitioner with numerous violations of the Florida Insurance Code in a 25-count 1/ complaint served on May 16, 1983.
Counts 13, 14 and 16 were voluntarily dismissed at the outset of the hearing herein. No evidence whatever was offered to support Counts 6 through 11, nor Count 25, so those counts are deemed unproven and should be dismissed. The Petitioner is seeking to revoke the Respondent's licensure as a General Lines Property, Casualty, Surety and Miscellaneous Agent, or to impose other disciplinary sanctions against his licensure status for various alleged violations of the Florida Insurance Code, Chapter 626, Florida Statutes.
Count I of the complaint charges that Respondent violated the Insurance Code by allowing Linda Gets, an unlicensed employee, to complete insurance applications, collect premiums and sign the Respondent's name to insurance applications, and, that in addition to her salary, paid her a commission on all policies she wrote in the office located at 832 Irma Avenue, Orlando, Florida. It is charged that the Respondent instructed Linda Getz to require purchase of motor club membership or accidental death and dismemberment (AD&D) coverage from each customer who merely wished to purchase personal injury protection (PIP) coverage from the agency.
It is further charged that the Respondent required Linda Getz to obtain customer signatures on applications for PIP coverage, motor club and AD&D coverage without any explanation to the insured regarding the coverages purchased.
Finally, as to Count I it is charged that the Respondent instructed Linda Getz to add the premium cost of the AD&D or motor club coverage to the PIP protection premium quotation without explaining such to the insured. The conduct described in Count I is charged to be in violation of numerous provisions of Chapter 626, Florida Statutes, the "Florida Insurance Code" enumerated in that count.
As to Count II of the complaint it is charged that the Respondent trains all new agents and employees or delegates their training to an individual in his agency. It is charged that all training includes instructions to add the cost of AD&D coverage or motor club membership coverage in all price quotations given for auto insurance. It is charged that the required training given by the Respondent includes instructions to never complete a premium finance agreement in the presence of the insured, and also to tell the insured that the price of PIP coverage includes the AD&D coverage as a package. This conduct is also charged as violative of Section 624.11, Florida Statutes, as well as the numerous subsections of Sections 626.611, 626.621,626.421, 626.736, 626.9521 and 626.9541, Florida Statutes (cited more particularly in the complaint).
At the outset of the hearing it was stipulated that the general allegations at the outset of the administrative complaint are true with the exception of those in paragraph 2. Thus, it was stipulated that the Respondent is the owner, director, and registered agent of United No-Fault Agency, Inc. doing business as Allied Auto Insurance, or Allied Insurance Agency, Inc. at 832 Irma Avenue, Orlando, Florida; 4950 Silver Star Road, Orlando, Florida; 2610 Curry Ford Road, Orlando, Florida. It was stipulated as well that Roger George Peltier, licensed registered agent at all material times at the Allied Agency at Silver Star Road, exercised supervision and control over the employees at that agency. It was stipulated that James Leroy Morris was licensed resident agent at all material times at the Allied Auto Insurance or United No-Fault Agency at 832 Irma Avenue in Orlando, Florida; and that he exercised supervision and control over all employees at that agency. It was further stipulated that Jeffrey Mark Turner, was licensed resident agent at the Allied Auto Insurance Agency at 2601 Curry Ford Road in Orlando, Florida, and exercised supervision and control over all employees at that agency. Paragraph 2 of the general allegations at the outset of the complaint is not stipulated to and concerns whether Kevin Stevens, the Respondent, exercised himself, or should have exercised, supervision and control over all agents and employees at those businesses listed at the above addresses.
It is then charged as to Counts 3, 4, 5, 12, 15, 17, 18, 19, 20, 22, 23 and
24, that between November 10, 1981 and May 8, 1982, the Respondent or someone under his direct control and supervision, sold 12 combination personal injury
protection (PIP) and accidental death and dismemberment policies (AD&D) to individuals named in those counts, who in fact, only wished to purchase the minimum PIP automotive coverage. It is alleged that the Respondent or his agents sold the AD&D coverage to these individuals without explaining to them that they were buying a separate policy, or that the premiums quoted included the additional coverage which they had not requested, and in general failed to disclose the details and terms of the additional coverage which the individual insureds had not requested. These acts, are known in the insurance industry as "sliding," and the Respondent is charged with violating numerous subsections of the above-cited sections of Chapter 626, F.S. in this regard.
Respondent denied each of the allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. Pursuant to notice, this matter was set for hearing on January 17, 1984, and for further hearing on February 3, 1984.
At the final hearing, the Petitioner offered Exhibits 1 through 18 which were admitted into evidence, and Respondent offered Exhibit A which was admitted into evidence. Thirteen insureds testified as petitioner's witnesses, as well as Agents James Morris, Roger George Peltier and Linda Getz, former employees of the Respondent. Phyllis Waddell, Jeffrey Turner, John Hoback, Andrew Beverly and the Respondent himself, testified on Respondent's behalf.
At the conclusion of the hearing, the parties elected to obtain a transcript of the proceeding and availed themselves of the right to file proposed findings of fact and conclusions of law. In conjunction therewith, the parties waived the 30-day requirement for rendition of the Recommended Order after the transcript provided by Rule 28-5.402, Florida Administrative Code. On May 16, 1984, the Petitioner filed a Notice of Intent to Rely on Additional Authority. That additional authority being the case of Lloyd Eldo Register v.
Department of Insurance, Case No. AV-449, (Fla. 1st DCA 1984). The Respondent moved to strike that additional authority on grounds of relevancy and on the ground that the decision cannot be relied upon as it is a per curiam affirmed decision. The Petitioner's response to that motion to strike was timely filed fly 25, 1984. That case, and the Hearing Officer's opinion and the final order to which it relates (DOAH Case No. 82-2048) is germane to this proceeding, although not of pivotal precedential value. The motion to strike should be denied.
The parties timely submitted proposed findings of fact and conclusions of law. All proposed findings of fact and conclusions of law and supporting arguments have been considered. To the extent that they are in accordance with the findings, conclusions and views stated herein, they are accepted. To the extent that the proposed findings, conclusions and arguments asserted are inconsistent herewith, they are rejected. Certain proposed findings and conclusions are omitted as not relevant nor as necessary to a proper determination of the material issues presented. To the extent that the testimony of various witnesses is not in accord with the findings herein, it is not credited. See, Sonny's Italian Restaurant v. Department of Business Regulation, 414 So. 2d 1156, 1157 (Fla. 3d DCA 1982); Sierra Club v. Orlando Utilities Commission, 436 So. 2d 383 (Fla. 5th DCA 1983).
In view of the voluntary dismissal of certain counts of the administrative complaint against Kevin Michael Stevens, there remain at issue Counts 1, 2, 3, 4, 5, 12, 15, 17 through 24, and the issue in this proceeding now concerns whether Respondent should be disciplined for those remaining allegations in the Administrative Complaint if it be determined they are proven.
FINDINGS OF FACT
At all times pertinent hereto, the Respondent has been a licensed General Lines-Property, Casualty, Surety and Miscellaneous Insurance Agent in the State of Florida. The Respondent is the owner and registered agent of United No-Fault Agency, Inc. d/b/a Allied Insurance Agency, Inc. (Allied) , at 832 Irma Avenue; 4950 Silver Star Road; and 2410 Curry Ford Road, all Orlando, Florida addresses.
Linda Get was employed with Allied Insurance Agency, Inc. from August, 1978 to July, 1981. She has one year of college education, but is not trained in the insurance field and was not a licensed insurance agent at times pertinent hereto. Ms. Getz helped market insurance at the 832 Irma Avenue office, at which there was no licensed agent employed from April, 1981 to July, 1981. Ms. Getz met with customers, assisted them in completing insurance applications and collected premiums from them, including helping to write and complete insurance applications for customers. The record does not reflect that she signed the Respondent's name on any insurance applications. Ms. Getz was paid a salary for these duties. She was not paid a commission for all policies she wrote for the office, and did not split any commissions with the Respondent. When the agency was profitable, however, she did receive a bonus in addition to her regular salary, representing a percentage of the profits of the agency for that particular month. These bonuses were not related to any commission percentage arrangement attributable to the sale of each individual policy however. Linda Getz was instructed by the Respondent to sell PIP and AD&D coverage together, that is, to quote the premium as one premium to prospective customers. Towing coverage, motor club coverage and AD&D coverage however, was not offered as mandatory to the customers and the customer could elect not to take it if he was informed of the difference in the policies. Ms. Getz did not explain coverages to customers unless she was specifically asked, however, and quoted the premium for both PIP which the subject customers requested and the AD&D coverage, which the Respondent told her to market in a package with the PIP, as one premium. After customers bought the policies or applied and paid their premium, the applications were sent to the insurer companies involved, the policies were prepared and then returned with all related documents to Respondent's agency, whereupon they would be mailed with related documents to the insured-customers. See, Section 624.425(3), Florida Statutes (1983).
The Respondent, in training and instructing his subordinates, including Linda Getz and the other agents at each of the three offices, instructed them to add the cost of AD&D coverage or motor club membership coverage in all price quotations given for automobile insurance if the policy requested by the prospective customer was a minimum PIP "tag insurance" type coverage. His instructions to his employees and agents also included telling customers that the price of PIP coverage included the price of AD&D coverage as a package, and that they would not sell PIP coverage alone.
In order to purchase an automobile license plate or tag in Florida, a driver must, at a minimum, show evidence of having personal injury protection (PIP) coverage. This type of insurance coverage is commonly termed "tag insurance." The Respondent's agency sold this type of insurance and others, including AD&D, auto club policies and liability.
On or about December 30, 1981, Mr. William B. Salman went to the Allied Insurance Agency in response to a billboard he had observed that indicated that PIP coverage could be obtained for $47 premium. He considered that to be a good
price and went to the Allied Agency to get such PIP coverage, for obtaining "car tags." He arrived at the Curry Ford Road agency of the Respondent and requested "car tag" insurance in response to the advertisement. He requested no other forms of insurance. He was given two applications to complete which he just signed, supplying no information. It was presumably completed by a member of the Respondent's staff. He then paid by check for the coverage and left the agency believing that he had gotten the minimum coverage he had requested. One of the papers he signed was an application (Exhibit 4) which at the top has printed the words:
AFRICAN TRAVELERS ASSOCIATION
Travel/Accident Benefits Including
ACCIDENTAL DEATH & DISMEMBERMENT COVERAGE
Application
Mr. Salman understands the meaning of the term death and dismemberment, but did not have any such death and dismembership coverage explained to him while at the agency and during the course of his purchase of insurance. He does not recall being hurried or pressured to sign any papers. He only, however, intended to buy the minimum amount of insurance necessary to obtain his automobile tag' and left the agency believing that that was all he had gotten, because no explanation otherwise was given him. He thought nothing amiss by the required payment of $47 because he still considered that to be a good price for the PIP coverage alone. Although he clearly signed an AD&D coverage application and designated a beneficiary therefor, he did not read and understand the policy at the time, and did not have it explained to him, therefore he was unaware, until informed during Petitioner's investigation, that he had bought an AD&D policy in addition to the PIP coverage he had originally requested. At no time was it explained that he was buying a separate policy in addition to the requested PIP coverage. The policies were ultimately delivered to Mr. Salman by mail from the Respondent.
On or about November 19, 1981, Marsh H. Polson, was sold automobile insurance coverage by Jeffrey Mark Turner, or someone acting under his supervision or control at the Curry Ford Road agency. Mr. Polson had called the agency by telephone to obtain an insurance quote and was quoted a price of $45. He merely wanted PIP coverage and considered $45 to be a favorable rate, so he went to the agency for the purpose of obtaining it. He was given application forms to execute and signed them, but paid little attention to the specifics of the papers he was signing. He was not pressured or rushed by the Respondent or any of his agents or employees, but merely did not take the time to read the applications and other documents. He only asked for PIP coverage because he wanted the minimum amount necessary to obtain car tags. In fact, however, he had been sold two separate policies, an AD&D policy, as well as the PIP coverage which would have cost approximately $20 by itself. The purchase of the AD&D policy involved signing a separate form entitled:
AMERICAN TRAVELERS ASSOCIATION
Travel/Accident Benefits Including
ACCIDENTAL DEATH & DISMEMBERMENT COVERAGE
Application
The remaining $25 of the $45 premium amount represented the cost of the AD&D policy. He was asked to name a beneficiary and dice so, but paid little attention to the specifics of the forms he signed. At no time was Polson
informed by the person he dealt with at the agency that he was purchasing something other than "tag insurance." He left the premises under the impression he had only purchased tag insurance or PIP coverage. No one ever explained the details of his coverages and he was not aware, until he learned through the department's investigation, that he had bought an AD&D policy as well as a PIP policy, which he had not intended to do when he went to the Respondent's place of business. His policies were ultimately delivered by mail by the Respondent's agency.
On or about November 10, 1981, Mr. James C. Fine, wishing to buy minimum auto tag/PIP insurance, went to the Curry Ford Road agency for purposes of inquiring about such coverage. He dealt with Jeffrey Mark Turner or someone else operating under the supervision and control of Respondent at that agency, being on the premises a total of 15 to 20 minutes. He was quoted a price for "driver license insurance," agreed to purchase it, and paid the premium amount, ("less than $50"), signing certain applications. Indeed, he bought both a PIP and an AD&D policy. He was aware he was getting death benefits however, because he provided his brother's name as beneficiary. It was not explained to him, however, that the AD&D coverage was optional and that the minimum legal requirement for PIP insurance did not include a requirement that he obtain death coverage. Mr. Fine (and each of the customers involved in this proceeding) purchased an AD&D policy which involved signing a separate form under the caption of the language quoted above. At no time was Mr. Fine told by any of the Respondent's personnel or the Respondent, that he was specifically purchasing something other than mere "tag insurance. He left the premises under the impression that he had only purchased the minimum legally required tag insurance, and was not informed that the death benefits he had purchased (AD&D coverage) were not legally required. Ultimately, the policies were mailed to Mr. Fine, although he did not actually receive them because his address had changed, and so they were returned to the Allied Agency, uniformed. Mr. Fine has a four-year college education and understood that he had some sort of death benefit because he was required to name a beneficiary, but he still did not understand that the AD&D coverage was not legally required of him, nor that it was not a requisite part of the minimal "tag insurance" he intended to buy when he arrived at the agency, and thought he had bought when he left.
On or about November 27, 1981, Mabel L. Dobbins wished to purchase automobile insurance coverage for her son's car and her own. She went to the Allied Agency and dealt with either Jeffrey Mark Turner or persons unknown who were employed by the Respondent under his direction and control, and, upon inquiring about minimum PIP insurance, was quoted a premium of $47. She inquired about liability insurance for one of the cars and was quoted the fee of
$60 as a downpayment with a total premium for liability of $151, and a total payment of $180, representing, in part, a finance fee. As to the PIP coverage, she only wanted the minimum car tag insurance, but Jeffrey ark Turner or others under the supervision and control of Respondent, charged Ms. Dobbins for an AD&D policy written by American Travelers Association, which was included in the price of her PIP coverage without her knowledge or consent. Ms. Dobbins is employed as a cook and has a 10th grade education. She was not familiar with the specifics or terms of the coverage she was buying, just merely signed a place marked "x" and believed she was getting, as she intended, the minimum PIP "tag insurance." The fact that she was buying a separate policy for AD&D at a greater price than mere PIP coverage was not explained to her. Both separate policies or coverages were "packaged" under one premium charge without her knowledge as was the case with the other customers involved in this proceeding. The import of her signing two different policy applications was not explained to
her. She was charged $47 premium for her PIP coverage and was not informed that
$25 of that premium represented the AD&D policy she had not requested.
On or about March 18, 1982, Roger Walton visited the Respondent's agency at 4950 Silverstar Road in Orlando, Florida. That agency was managed by Roger George Peltier, a licensed agent who was resident agent at that office at the time. Mr. Walton spoke with Mr. Peltier and requested "tag insurance." He was sold an AD&D policy as well as a PIP policy. He was quoted one premium by the Respondent's agent which included AD&D coverage and was not informed that the AD&D coverage was optional. He was given the impression by the Respondent's agent that the price he paid was for PIP coverage in a minimum amount and that there were no cheaper or less encompassing options available in order for him to have the legally required PIP coverage. He was given to understand that the death benefit portion was automatically mandatorily included. Indeed, if Mr. Walton had known that the AD&D coverage was optional, he would not have bought it, inasmuch as he already had similar coverage. In any event, he signed applications for both types of coverage, without realizing he only had the option to buy just the PIP coverage, paid the agent and left the office. His policies were ultimately mailed to him. Although the agent explained the coverage to some extent to him, the agent never explained that the packaged PIP and AD&D coverage could have been purchased separately with the PIP coverage costing less than the above-mentioned $47 rate for both. Mr. Walton would not have normally purchased AD&D coverage at additional cost, but did so in the belief that it was part of what he was legally required to purchase.
On or about March 3, 1982, Jacquelyn Tillman went to Respondent's agency on Silver Star Road seeking to purchase "tag insurance." She was quoted a price by Roger Peltier or someone under the Respondent's supervision and control, of $47 for the requested PIP coverage. Indeed, the $47 included the PIP policy as well as an AD&D policy written by American Travelers Association. Ms. Tillman paid the required premium and signed applications for both type policies in the course of her meeting with the Respondent's representative. She was not informed that the $47 she paid included anything more than PIP coverage, when indeed it included an AD&D policy. Had she known that the AD&D policy was included in that premium rate which she paid, she would not have purchased it. Thus, the coverage she actually purchased was not fully explained to her and the purpose of the fees charged was not explained. Although the AD&D policy was indeed optional, she was not informed that she had the option to select it or refuse it, in the process or purchasing the minimum legally required PIP coverage.
On or about April 15, 1982, Mr. Frank A. Walliman went to the Irma Avenue office of the Respondent's agency for the purpose of buying minimum liability coverage for his car. He only wanted and believed he only bought, liability insurance, as well as PIP coverage which he knew to be legally required at the time. Indeed, he was sold an AD&D policy as well. The fact that the PIP and liability coverage he bought also included for the total price, an AD&D policy, was not disclosed to him. He neither requested nor desired to pay additional money for an AD&D policy, and would not knowingly have purchased it at additional cost.
In March, 1981, Mr. George Justus visited the Allied Agency at Irma Avenue for the purpose of buying minimal PIP or "tag insurance. On that date, from an unknown agent of Respondent, Mr. Justus bought insurance for a premium of $57. The extent, types, terms and details of his coverage were not explained to him, although he did sign applications for an AD&D policy, as had the other customers discussed above, as well as a PIP policy, for which he paid the total
of $57. He neither requested nor desired an AD&D policy at extra cost. The fact that the AD&D policy from American Travelers Association was at extra cost over and above the PIP coverage he originally desired was not explained to him, nor was the fact that it was legally optional coverage explained to him.
On or about March 13, 1982, Mr. Johnny Moore visited the Irma Avenue office of the Respondent's agency. Mr. Moore wanted to buy minimum "car insurance." He paid approximately $50 for PIP coverage as well as an AD&D policy. He signed applications for both policies, although his original desire when he went to the agency was to buy minimal car insurance. Mr. Moore testified however, that he did want as much coverage as he could afford and he bought the two policies with the awareness that he was also getting an AD&D policy. Thus, in some fashion, the fact that he was getting an AD&D policy as well as a PIP policy was disclosed to him in this instance.
On or about April 14, 1982, Mr. David R. Lowe visited the Respondent's agency at Irma Avenue for the purpose of buying minimum PIP coverage for purposes of buying his automobile tag. Just as in the case of the other customers, Mr. Lowe was also sold an AD&D policy which he did not request nor intend to purchase when he went to the agency. The fact that he had purchased, on a separate application, an AD&D policy was never explained to him. Indeed, although Mr. Lowe recalls filling out the forms, his testimony reveals that his wife actually filled out the application forms for him because he is largely illiterate. In any event, he-did not understand that he had purchased an AD&D policy, nor did he understand that such a policy was optional and not legally required of him in order to purchase the minimum legally required PIP insurance.
Sometime in late 1981, Cynthia Zellers visited the Irma Avenue office of the Respondent's agency and conversed with Mr. Jim Morris, the Respondent's resident licensed agent. She informed him that she wanted the minimum legal coverage for her automobile and paid the premium quoted. Indeed, she purchased unbeknownst to her, an AD&D policy, as well as the minimum PIP coverage, although she clearly informed Mr. Morris she wanted nothing more than the minimum legal coverage. She had her discussion with Mr. Morris in the afternoon at his office at the Respondent's agency, and was in no particular hurry to process her application. Still no one at the agency informed her that the AD&D policy she was purchasing was optional and not legally required, and had she known that she would not have purchased the AD&D coverage at additional cost.
Mr. Robert Scheer also went to the Irma Avenue office of the Respondent seeking minimum PIP coverage. He specifically informed the employee or agent (name unknown) that he wanted only minim; PIP coverage, and that he wanted the cheapest insurance possible for two cars, so that he could get his automobile license plates. Indeed, Mr. Scheer signed applications for both AD&D coverage as well as PIP coverage. The fact that he had purchased AD&D coverage was never disclosed to him, nor was the fact that it was optional coverage (under the law) ever explained to him. Mr. Scheer would not have purchased the AD&D coverage for an extra premium amount had he known it was an optional coverage, not legally required to be included with the PIP coverage.
On approximately May 8, 1982, Mr. Lawrence S. Ternest went to the Allied Agency on Irma Avenue and told an unindentified man employed there, that he merely wanted to purchase PIP coverage, the minimum necessary for purchase of his automobile tags. He was quoted a premium of $47 by Respondent's agent or employee. No mention was made to him that that amount included the premium for an AD&D policy. He signed the pertinent applications in evidence, and thought that he had merely purchased PIP coverage as he had desired to do, and the fact
that he purchased AD&D benefits included in that $47 premium was not explained to him, nor was the fact that such was not legally required. Had he known he had purchased AD&D coverage and that it was not legally required in order to obtain his automobile tag, he would not have bought it at extra cost above the premium attributable to PIP coverage.
Witnesses Peltier and Morris, who were agents of the Respondent operating two of the three offices at times pertinent hereto, as well as Linda Getz, established that the Respondent gave his agents in charge of all offices specific instructions that no one was to market PIP coverage without packaging it with AD&D coverage. This directive was carried out by the agents and employees working under Respondent's supervision and control by charging one premium when a person requested PIP auto tag coverage and including in that premium an additional AD&D insurance policy and thereby charging enough premium to cover the costs and profit margins attributable to both types of policy. These witnesses also established that they did not habitually explain coverages to customers such as those discussed above, but rather answered questions if the customer asked regarding any coverage details.
"Sliding" is the practice of tricking insureds into buying coverages other than those they wish to purchase. In a typical sliding scenario, an agent who engages in the practice, generally gives the insured a single document containing more than one policy, so that the insured believes he is only applying for and purchasing one policy. In the case at bar, the customers were provided separate application documents for each of the two pertinent policies. The types of policies were identified in large bold-faced print, i.e. the AD&D policy was identified at the top of its application form as an AD&D policy. The customer's signatures were required on each policy application, and a beneficiary had to be named, which designation each customer was aware of. Receipts were provided to the customers for both policies and most of the insureds read the agreements prior to signing them.
As established by an accepted expert witness, Andrew M. Beverly, the Respondent's policy of packaging PIP coverage with AD&D coverage does not, in itself, amount to sliding or dishonest and fraudulent practice. Many insurance agents and agencies do this in order to economically justify their sale of the minimal type of PIP coverage requested by the type of customers involved in the case at bar. Insurance agents ad agencies cannot economically and profitably sell PIP coverage alone, as Mr. Beverly clearly established, rather, it must be packaged with some other type of coverage in order for the sale to the customer to generate sufficient revenue for the agency to cover the cost of writing the coverage, and "opening" the file on that customer, plus some modicum of profit margin. Mr. Beverly established that such an agent as the Respondent may ethically package policies and sell multiple policies for packaged rates as here, and may ethically refuse to sell single, minimal PIP coverage, when the premium revenue received will not justify the cost of writing the coverage.
Mr. Beverly extensively reviewed the Respondent's files regarding the subject customers and others and concluded that the files were reasonably well- kept and were representative of a reasonably well-run insurance agency of this nature. The files reflected that the customers were indeed sold packaged AD&D and PIP coverage, but signed separate policy applications. Mr. Beverly stressed however, that when a customer comes in requesting only one type of coverage, such as PIP, and the agent or other person servicing sells him some other coverage or coverage in addition to that requested, then the complete details regarding that coverage, including disclosure of any additional price, and all other ramifications to the customer regarding the addition of coverage, and
charging therefor, in addition to that originally requested, must be fully explained and disclosed.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and parties to these proceedings. Subsection 120.57(1), Florida Statutes.
Count 1 of the complaint charges that the Respondent violated the provisions of the Insurance Code cited herein by allowing Linda Getz, an unlicensed employee, to complete insurance applications and collect premiums. It is additionally charged that the Respondent unlawfully paid Ms. Getz a commission on the policies which she completed or "split" commissions with her. While the testimony of record establishes that Ms. Getz did complete insurance applications, serve clients and handle premium monies, this activity is not proscribed by the Insurance Code. See, Section 624.425(3), Florida Statutes (1983). Further, Petitioner failed to establish, in the face of the testimony of Ms. Getz and Respondent, that she split any commission with the Respondent.
Indeed, when the agency was doing well financially and making a certain level of profit, she did receive bonuses in addition to her regular salary. This bonus was, in a sense, representative of how many policies she sold during a particular past month because the number of policies sold had a relationship to the profitability of the agency in that month, which profitability was the basis for the calculation of her bonuses. The bonus, however, did not represent the splitting of commissions on any particular policy or policies, however, as a direct, identifiable commission or apportionment between the Respondent and Ms. Getz. Indeed, during some months, she received no bonus at all.
Although in paragraph Q of count one of the complaint it is charged that the Respondent failed to have a place of business established in the active, full-time charge of a licensed general lines agent, presumably related to the fact that Ms. Getz was not a licensed agent at times pertinent hereto, this charge has not been proven since Ms. Getz' unrefuted testimony established that she was indeed supervised at all times by a licensed general lines agent, while she was employed there even though she herself was not licensed, thus a violation of Section 626.747, Florida Statutes, has not been established. The remaining statutory subsections charged in Count 1 have simply not been proven, and a substantial number of them are wholly irrelevant to the factual allegations charged in Count 1.
Count 2 charges that all training performed by the Respondent for his agents and employees, included instructions to add the cost of AD&D coverage or motor club membership coverage into all price quotations given for automobile insurance. It was proven that the Respondent did instruct his agents and subordinates to package AD&D coverage with PIP and other forms of automobile coverage and to only sell it in that format or "package." This instruction, in itself, is not illegal, however, under the statutory authority charged. The violations alleged in the other points arise if full disclosure of the particulars of the packaging, including price itemization, is not made. The remaining factual allegation of Count 2 involving alleged instructions to never complete a premium finance agreement in the presence of a proposed insured individual was not proven.
The Respondent is charged with illicit conduct on 13 separate occasions involving 13 different purchases of insurance. That conduct is described in Counts 3, 4, 5, 12, 15, 17, 18, 19, 20, 21, 22, 23 and 24. Counts
13, 14 and 16 were voluntarily dismissed at the outset of the hearing. No proof whatever was offered in support of Counts 6 through 11, as well as Count 25, and accordingly, those counts should be dismissed with prejudice. Remaining to be resolved is the issue of whether the transactions involving the customers named in the above Findings of Fact related to the above-described remaining counts of the complaint at issue, constitute violations of Subsection 626.611(4), (5), (7), (9), (10) and (13); Subsection 626.621(2), (3) and (6); Subsection
626.9541(1)(a), (5), (11), (15)(b) and (24)(c); Subsection 626.421 and
Subsection 627.736(1), Florida Statutes, as Petitioner alleges in those counts.
The standard of proof in insurance license revocation proceedings is greater than that required in other forms of actions involving state regulatory authority. Such proceedings are penal in nature. That is to say, where the loss of a valuable professional license and livelihood is at stake, the "critical matters in issue must be shown by evidence which is indubitably as
`substantial' as the consequences. Bowling v. Department of Insurance, 394 So. 2d 165, 171, 172 (Fla. 1st DCA 1981). The evidence necessary to prove the charges in a penal proceeding such as this must be proven by evidence of a substantially greater weight than that necessary to prove a particular or set of allegations in non-penal administrative or civil proceedings. Indeed, the evidence must rise to a standard of clearly and convincingly establishing guilt of the charges asserted in the administrative complaint. Reid v. Florida Real Estate Commission, 188 So. 2d 846 (Fla. 2d DCA 1966), Walker v. Board of Optometry, 322 So. 2d 612 (Fla. 3d DCA 1975), and Gans v. De of Professional and Occupational Regulation, 390 So. 2d 107 (Fla. 3d DCA 1980).
The evidence of record reveals that the customers involved in the transactions described in the above Findings of Fact with the exception of Mr. Johnny Moore, did not understand that they were purchasing anything other than the minimum legally required "tag insurance." Their testimony convincingly demonstrates that although many of them read and signed the accidental death and dismemberment applications, as well as the personal injury protection insurance applications, and even knew that they had designated a beneficiary, they none the less assumed that the AD&D coverage was part of the required basic PIP policy. As found above, their testimony clearly and convincingly demonstrates that although they knew they had designated beneficiaries, and in some cases, knew or remembered that they had signed two different insurance applications, they never had it explained to them that the AD&D coverage for which they designated a beneficiary, was optional, that its purchase was not legally required in conjunction with purchasing legally required minimum PIP coverage which was the only form of coverage each had originally requested, and that it was not a type of coverage automatically included in PIP "tag insurance. Moreover, Respondent and his agents did not disclose that the total premium rate quoted them included two distinct insurance policies, one of which was optional and that the premium rate for PIP itself was less (even though Respondent is not legally required to sell PIP alone at the lower, potentially unprofitable rate if he chooses not to).
During the course of cross examination Respondent's counsel repeatedly asked these customers concerning their abilities to read the English language and whether they had read their policy applications and other related documents at the time they contracted for the insurance involved herein. The Respondent thus raises an issue concerning whether the Respondent should be absolved from disciplinary liability on the theory that the maker of a contract is presumed to understand the contents of the contract he has read and signed. In this vein, the Respondent cites a number of cases in support of this proposition. John Deere Industrial Equipment Company v. Roberts, 362 So. 2d 65 (Fla. 1st DCA
1978); Bennett v. Burke, 400 So. 2d 484 (Fla. 3d DCA 1981); General Insurance Company v. Sutton, 396 So. 2d 855 (Fla. 3d DCA 1981); Sutton v. Crane, 101 So. 2d 823 (Fla. 2d DCA 1958). While these decisions support the proposition asserted by the Respondent that the maker of a contract is deemed to understand the contents of the contract he has executed, this theory is inappropriate in the case at bar which concerns the circumstances, methods and manner in which the insurance was sold. Here, the insureds are not seeking to enforce the provisions of the accidental death and dismemberment policy contracts, nor to deny that such contractual coverage exists. If that were the case, then the foregoing decisions would come into play since the issue in that event would be the enforceability of the policy contracts. Here there is no question that valid, enforceable insurance policy contracts were entered into. If that defense were valid as Respondent claims, then the mere fact than an insured is presumed to have read and understood a contract which he has voluntarily signed, would serve to excuse any fraud, misrepresentation or deceptive practice by a licensee if he could establish that the insureds had voluntarily read and signed the policies. Here, however, the customers, although they knew they had signed two policy applications, and some had read the application forms either before or after signing, clearly did not truly understand that they had bought two separate insurance policies in each of the above instances, the particulars of what they had purchased for the premium amount charged them, nor the fact that the AD&D coverage was not legally required (as opposed to Respondent's marketing requirement) , because the fact that the AD&D coverage and the premium amount attributable to it was not part of the required basic "auto tag" coverage was not disclosed to them. Indeed, with regard to witnesses Peltier and Getz' demonstration that the typical practice in serving such customers was not to explain the coverage but rather to answer any particular questions the customer might direct to them, it must be borne in mind that many of these customers had no particular experience with different types of insurance, and some of them were of a rather low educational attainment and sophistication as it relates to their ability to understand the details of such business transactions. Such a circumstance is not conducive to cogent questions being asked of the Respondent or his agents so that the customers could obtain the information not voluntarily disclosed to them. The precise nature of the two distinct types of coverage sold the customers, the fact that one was optional and the fact the premium charged included the total price for two distinct policies when each customer had only ordered minimum PIP coverage alone, never having been disclosed to them, it is concluded that the Respondent's method of selling the two types of policies involved was inappropriate under the insurance code as more particularly revealed below.
In the case of customer Moore, however, it was established that he went to the agency merely desiring to buy "all the car insurance he could afford." He happened to have learned at that time that he had also bought the AD&D coverage in addition to his PIP coverage, thus, witness Moore was not misled or sold coverage which he did not really desire. Witness Moore was aware at the time he signed the applications, that he was paying approximately $50 for both PIP and accidental death coverage and assented to that arrangement. Thus, the charges asserted in Count 20, have not been proven and that count should be dismissed with prejudice.
The methods and manner by which these customers were sold the insurance policies involved herein, having been established to be improper under the Florida Insurance Code, the remaining task, and a formidable one, is to determine which of the multitudinous statutory violations charged have actually been violated by Respondent. In this regard, the department has, in essence, filed a "shotgun" complaint asserting that each of the transactions involving
the above customers constituted a violation of no less than 17 separate statutory provisions. Five of the 17 "buckshot" have hit the mark. That is to say, the facts herein do not establish that in any of the transactions, Respondent Stevens (a) wilfully circumvented a provision of the code (Section 626.611(1) Florida Statutes), 2/ (b) made a willful misrepresentation of any insurance policy (Section 626.611(5), Florida Statutes (F.S.)), (c) demonstrated a lack of fitness or trustworthiness to engage in the business of insurance (Section 626.611(7), F.S.)) 3/ (d) demonstrated a lack of reasonably adequate knowledge and technical competence to engage in such transactions (Section 626.611(8), F.S.), (e) misappropriated, converted or unlawfully withheld monies belonging to others (Section 626.611(10), F.S.), 4/ (f) willfully failed to comply with provisions of the code (Section 626.611(13), F.S.), (g) violated a department regulation, rule or order (Section 626.621 (3), F.S.), (h) misrepresented the benefits, advantages, conditions or terms of any policy (Section 626.9541(1)(a), F.S.), 5/ (i) knowingly making a statement which is untrue or misleading or a false material statement, or misrepresentation (Section 626.9541(2), (5) and (11)(a), F.S.), 6/ (j) collected a premium in excess of that applicable to a policy (Section 626.9541(15)(b), F.S.), 7/ (k) refused to insure any individual because of that individual's failure to place collateral business with the insurer (Section 626.9541(24)(c), F.S.), 8/ or (1) failed to deliver policies to insureds (Subsection 626.421, F.S.)
The evidence of record does establish, however, that he engaged in a dishonest practice in the conduct of business under his license (Section 626.611(9), F.S.) , committed a violation of a provision of the code (Subsection 626.621(2), F.S.), engaged in unfair or deceptive acts or practices (Subsection 626.621(6), F.S.), transacted insurance without complying with applicable provisions of the code (Section 624.11, F.S.) and required the purchase of other motor vehicle coverage as a condition for the purchase of personal injury protection coverage (Subsection 627.736(1), F.S.).
Petitioner contends that the case of Department of Insurance v. Lloyd Register, DOAH Case No. 82-2048 (Final Order entered October 27, 1983) is factually the same as the case at bar, and that in that case the accused was give a one-year suspension of his license. Petitioner herein seeks a revocation of the Respondent's license. In the Register case, the Respondent was found guilty of 14 different offenses of "sliding" in giving specific, willful, instructions to his employees to follow that procedure. Here, 12 instances have been proven, but the conduct proven did not involve specific, willful intent to engage in illicit conduct. There was no showing of a consistent design or intent to deceive his customers, rather, he merely elected to package the policies in such a way as to guarantee profitability with regard to customers who came in typically requesting minimal "tag insurance" and failed to explain to those customers that he was selling them something more than they requested for a higher price than they could (conceivably) obtain mere PIP coverage. With this in mind, prior agency practice dictates that a lesser penalty be imposed herein than was assessed in the Register case, supra. Cf. 120.68(12)(b), Florida Statutes.
Having considered the foregoing Findings of Fact and Conclusions of Law, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, and the evidence of record, it is, therefore
RECOMMENDED that Respondent be found guilty of violating Subsection 626.611(9), 626.621(2), 626.621(6), 624.11, and 627.736 (1), Florida Statutes,
as to Counts 3, 4, 5, 12, 15, 17, 18, 19, 21, 22, 23 and 24 of the Administrative Complaint, and that his insurance license be suspended for 60 days. All other charges should be dismissed.
DONE and ENTERED this 17th day of August, 1984, in Tallahassee, Florida.
P. MICHAEL RUFF 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 August, 1984.
ENDNOTES
1/ In the complaint, the Petitioner has mistakenly numbered two counts as "Count XXII." Thus, the final three counts are wrongly numbered and the number one should be added to each of those counts in order to number them properly.
These counts will accordingly be referred to hereinafter by the proper number.
2/ There was no evidence to show that Respondent willfully violated the law, nor that he had given the above-described instructions to his agents and employees and, either himself or through agents or employees, sold the policies in the manner involved herein with any intentional design or scienter to engage in an illicit act within the purview of the insurance code. There was no evidence that his employees were acting on instructions made with a considered intent to deceive his customers. This consideration is applicable to all allegations involving charges that Stevens willfully violated the law.
3/ The above transactions do not themselves demonstrate that the Respondent, as an insurance agent, is unfit or untrustworthy. He did not sell policies to these customers which were facially illegal, which contained misrepresentations, and indeed, he saw to it that the customers received the insurance coverage for which they paid. He and his employees failed to explain the coverage that the customers were actually getting, as opposed to what they had requested, for the purpose of enhancing or protecting the profitability of his business. The customers got what they paid for, they simply did not intend to pay for that much coverage and would not have, had full disclosure been made. In short, something more is required before unfitness and untrustworthiness can be proven. The above facts are not sufficient.
4/ There is no evidence whatever to show that Respondent converted any premiums received from these customers to his own use or otherwise misappropriated the premiums in question.
5/ The employees of the Respondent and the Respondent himself, did not misstate the terms and conditions of any policy sold. The customers merely did not know
they were paying for the additional coverage and did not request the additional coverage, and had they known the price for the additional coverage and that it was optional, would not have bought it.
6/ Here again, there is insufficient evidence to show that Respondent's conduct was "willful" or done "knowingly." See, Bowling, supra at 172.
7/ Indeed, the Respondent charged the appropriate premiums for each policy as did his employees and agents, and this fact was noted on the receipts given to each customer.
8/ It was not demonstrated that any "collateral" business was available from these insureds who went into the agency merely requesting minimal "tag insurance," in any event, the Respondent did not fail to insure any of these individuals. He gave them the coverage they requested and just supplied them with some additional coverage they did not freely choose to purchase and charged them for it without explaining the circumstances surrounding the provision of the additional coverage.
COPIES FURNISHED:
Curtis A. Billingsley, Esquire Department of Insurance and Treasurer 413-B Larson Building
Tallahassee, Florida 32301
Thomas F. Woods, Esquire WOODS and CARLSON
1030 East Lafayette Street Suite 112
Tallahassee, Florida 32301
Honorable William Gunter State Treasurer and
Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Aug. 20, 1984 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 20, 1984 | Recommended Order | Teacher guilty of serving alcohol at class party should be issued a formal reprimand. |
DEPARTMENT OF TRANSPORTATION vs. C. A. MILLER AUTO TRUCK SERVICE, 83-001600 (1983)
DEPARTMENT OF TRANSPORTATION vs. FUQUA AND DAVIS, INC., 83-001600 (1983)
DEPARTMENT OF TRANSPORTATION vs. FUQUA AND DAVIS, INC., 83-001600 (1983)
DEPARTMENT OF TRANSPORTATION vs. LAMAR ADVERTISING COMPANY, 83-001600 (1983)
