STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT ) OF INSURANCE, )

)

Petitioner, )

)

v. ) CASE NO. 83-1684

)

THOMAS HOLLIDAY VEAL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on October 6, 1983, in Orlando, Florida.

APPEARANCES

For Petitioner: Franz Eric Dorn, Esquire

413-B Larson Building Tallahassee, Florida 32301

For Respondent: Thomas F. Woods, Esquire

1020 East Lafayette Street, Suite 112

Tallahassee, Florida 32301 BACKGROUND

This proceeding was initiated when petitioner, Department of Insurance, filed an administrative complaint on May 13, 1983 charging respondent, Thomas Holliday Veal, a licensed general lines agent, with having violated a number of provisions within Chapter 626, Florida Statutes. In brief, it is generally alleged that between May 7 and September 13, 1982 respondent, or someone under his direct control and supervision, sold nine combination personal injury protection (PIP) and accidental death and dismemberment policies to individuals who in fact only wished to purchase PIP coverage. It is also alleged that on November 11, 1981 respondent, or one of his employees, sold an accidental death and dismemberment policy to a customer who had requested PIP coverage on a second automobile. For these acts, which are known in the trade as "sliding", respondent is charged with violating Subsections 626.561(1), 626.611(4), (5),(7)(8), (9), (10) and (13), 626.621(2), (3) and (6) and 626.9541(1)(a)(2),

1. , (11)(a) and (15)(b), Florida Statutes.

   
   

   Respondent filed an answer denying each of the allegations and requesting a formal hearing pursuant to Subsection 120.57(1) Florida Statutes. The matter was referred by petitioner to the Division of Administrative Hearings on June 1, 1983 with a request that a Hearing Officer be assigned to conduct a hearing. By notice of hearing dated June 15, 1983 the final hearing was scheduled for August 16, 1983 in Orlando, Florida. At the request of respondent, and without

   objection by petitioner, the final hearing was rescheduled to October 6, 1983 at the same location.

   
   

   At the final hearing petitioner presented the testimony of Timothy L. Lake and George D. Morris, and offered petitioner's exhibits 1-13; only exhibits 1, 3 and 5 were received in evidence. Respondent offered respondent's exhibit 1 which was received in evidence. That exhibit is the deposition of Andrew M. Beverly, an expert in the field of insurance.

   
   

   The transcript of hearing was filed on October 24, 1983. Proposed findings of fact and conclusions of law were filed by the parties on November 10 and 14, 1983, and have been considered by the undersigned in the preparation of this order. Findings of fact not included in this order were considered irrelevant, immaterial to the results reached, or were not supported by competent and substantial evidence.

   
   

   At the conclusion of its case-in-chief, petitioner voluntarily dismissed counts 1, 5, 8, 9 and 10 of the administrative complaint. At issue herein is whether respondent should be disciplined for the remaining allegations in the administrative complaint.

   
   

   Based upon all of the evidence, the following findings of fact are determined:

   
   

   FINDINGS OF FACT

   
   

   1. At all times relevant hereto, respondent, Thomas Holliday Veal, held a license as a general lines agent issued by

      petitioner, Department of Insurance. He currently resides at 2515 South Atlantic, No. 203, Cocoa Beach, Florida. When the events herein occurred, Veal owned and operated Mr. Auto Insurance, Pine Hills, Inc., located at 1449 Pine Hills Road, Orlando, Florida.

      
      

   2. In order to purchase a tag for an automobile, a driver must, at a minimum, show evidence of having personal injury protection (PIP) coverage. This type of coverage is commonly referred to as tag insurance. Respondent's agency sold this type of insurance, and others, including accidental death and dismemberment policies.

      
      

   3. On or about May 28, 1982, Timothy L. Lake visited Mr. Auto Insurance for the purpose of purchasing PIP coverage for his 1969 Ford. He spoke with an unidentified lady, who apparently worked for Veal, and asked for tag insurance. She quoted a price of $44. The cost of the PIP coverage was actually $20 while the remaining $24 was the cost of a $2000 accidental death and dismemberment policy. She then handed him a series of documents which included forms for purchasing an accidental death policy as well as the PIP coverage. Upon her request, Lake named a beneficiary, and was told that in the event be was killed, his beneficiary would receive $2,000. He then read and signed both applications. In the line immediately above his signature on the accidental death application appeared the following: "Fee $20.00". He also received a written receipt indicating he had purchased "PIP; (8000 ded) No lia, No UM, Acc. death" for a total of $44. In addition, he signed the following statement:

      
      

      I understand the accidental death benefit through life insurance company is a separate item, that pays in addition to my auto insurance policy. I understand the

      additional charge for this coverage is included in with my down payment.

      
      

      The accidental death policy contained the following words in hold face type at the top of the document: Accidental Death and Dismemberment Coverage". However, at no time was Lake specifically told by the lady that he was buying a separate policy in addition to the PIP coverage that he had requested. He left the premises believing that he had only purchased PIP coverage. At the final hearing, Lake admitted he was not rushed, and that he understood what an accidental death policy was. An investigation of Veal was later conducted by the Department. After a Department investigator visited Lake, and both reviewed his coverage, Lake claimed that for the first time, he realized he had also purchased an accidental death policy.

      
      

   4. On or about August 3, 1982, George D. Morris visited Mr. Auto Insurance for the purpose of purchasing tag insurance. He spoke with a lady who apparently worked for Veal and asked for PIP coverage so that be could purchase tags for his two automobiles. The lady quoted a price of $69. The actual cost of the PIP coverage was only $39. The remaining $30 represented the cost of a $10,000 accidental death and dismemberment policy. Morris was handed a series of forms to fill out and was asked to name a beneficiary in the event he was accidentally killed. The employee explained to him that the beneficiary would receive $10,000 if be died. Morris then read and signed the accidental death application. In the line immediately above his signature appeared the following: "Fee $30.00." He also received a written receipt indicating that he bad paid $39 for PIP coverage and $30 for an accidental death policy. In addition, he read and signed the following statement:

      
      

      I understand the accidental death benefit through life insurance company is a separate item, that pays in addition

      to my auto insurance policy. I understand that the additional charge of this

      coverage is included in with my down payment.

      
      

      At no time, however, was Morris told by the lady that he was specifically purchasing something other than tag insurance. He left the premises under the impression he had only purchased PIP coverage. In the course of a later investigation of Veal, a Department investigator visited Morris and reviewed the coverage he had purchased from Veal. After meeting with the Department investigator, Morris claimed that for the first time he realized he had purchased an accidental death policy.

      
      

   5. Sliding is the practice of tricking insureds into buying coverages other than those that they wished to purchase. According to an expert in the field of insurance, an agent engaged in sliding generally gives the insured a single document containing more than one policy so that the insured believes he is only purchasing one. In the case at bar, because (a) both Lake and Morris were given separate documents for each policy, (b) the types of policies were identified in large bold face print, (c) their signatures were required on each policy, (d) a beneficiary had to be named, (e) receipts for both policies were given, and (f) the insured read the agreements prior to signing the same, the expert concluded that no sliding had occurred, especially where both Lake and Morris appeared to have reasonable intelligence.

      CONCLUSIONS OF LAW

      
      

   6. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

      
      

   7. Respondent is charged with illicit conduct on five occasions. The conduct is described in Counts 2, 3, 4, 6 and 7 of the administrative complaint. All other counts have been voluntarily dismissed. At the final hearing, there was no evidence whatsoever concerning counts 3, 6 and 7, and accordingly that part of the charges must be dismissed. Remaining at issue is whether the Lake and Morris transactions constitute a violation of Subsections 626.561 (1) 626.611(4), (5), (7), (8), (9), (10) and (13), 626.621(2), (3) and (6), and 626.9541(1)(a), (2), (5), (11)(a), and (15)(b) Florida Statutes, as petitioner alleges in counts 2 and 4.

      
      

   8. The standard of proof in insurance license revocation proceedings is greater than that required in conventional forms of regulatory action. Bowling

      v. Department of Insurance, 394 So.2d 165, 171 (Fla. 1st DCA 1081). That is to say, where the loss of a professional license is at stake, the "critical matters in issue must be shown by evidence which is indubitably as 'substantial' as the consequences." Howling, 394 So.2d at 172. Therefore, the evidence will be reviewed in this light.

      
      

   9. The evidence reveals that neither Lake nor Morris understood that they were purchasing something other than the requested tag insurance. Their testimony convincingly shows that, while they read and signed the accidental death and dismemberment applications, and even designated a beneficiary, they nonetheless assumed that the accidental death coverage was a part of the required basic PIP policy. The primary issue requiring resolution is whether respondent is absolved from disciplinary liability on the theory that a maker of a contract is presumed to understand the contents of the contract he has signed. In this vein, Veal cites a number of cases to support this proposition. John Deere Industrial Equipment Co. v. Roberts, 362 So.2d 65 (Fla. 1st DCA 1978); Bennett v. Berk, 400 So.2d 484 (Fla. 3rd DUA 1981); General Insurance Co. v. Sutton, 396 So.2d 855 (Fla. 3rd DCA 1981); Sutton v. Crane, 101 So.2d 823 (Fla. 2nd DCA 1958). After reviewing these cases it is concluded that they have no application to the case at bar. Here, the insureds are not seeking to enforce the provisions of the accidental death policies, or conversely to deny that such coverages actually exist. Were that the case, only then would the foregoing decisions come into play. Moreover, if such a defense were valid as Veal claims, it would automatically excuse any fraud, misrepresentation, or deceptive practice by a licensee if he could show that the insured signed and read the policy. Accordingly, it is concluded that Lake and Morris purchased the two policies believing they had bought only one, and that such conduct is inappropriate under the Insurance Code.

      
      

   10. The only remaining task, and one not so small, is to determine which of the multitude of alleged statutory violations Veal has actually violated. In this regard, the Department has alleged that each transaction constituted a violation of no less than sixteen separate statutory provisions. The facts herein d9 not establish that in either transaction Veal (a) failed to report or account for funds (626.561(1), F.S.), (b) willfully circumvented a provision of the code (626.611(1), F.S.), 1/ (c) made a willful misrepresentation of any insurance policy (626.611(8), (d) demonstrated lack of fitness or trustworthiness to engage in the business of insurance (626.611(7),F.S.), 2/

       (e) demonstrated a lack of reasonably adequate knowledge and technical

       competence to engage in such transactions (626.611(8), F.S.), (f) misappropriated, converted or unlawfully withheld monies belonging to others (626. 611(10), F.S.), 3/ (g) willfully failed to comply with a provision of the code (626.611(13), F.S.), (h) violated a Department regulation, rule or order (626.621(3), F.S.), (i) misrepresented the benefits, advantages, conditions or terms of any policy (626.9541(1)(a), F.S.) 4/ (j) knowingly making a statement which is untrue or misleading, or a false material statement or misrepresentation (626. 9541(2),(5) and (11)(a), F.S.), 5/ and (k) collected a premium in excess of that applicable to a policy (626.9541(15), F.S.). 6/ The evidence does support a finding that Veal has violated the remaining statutes cited in the administrative complaint. These include a dishonest practice in the conduct of business under his license (626.611(9), F.S.), a violation of a provision of the code (626.621(2), F.S.), and engaging in unfair or deceptive acts or practices (626.621(6), F.S.).

       
       

   11. Petitioner suggests that Veal's license be suspended for one year. In so doing, it relies upon the recent case of Department of Insurance v. Lloyd Register, DOAH Case No. 82-2048, Final Order entered 10/27/83, and contends the cases are factually the same. In Register, the accused was also given a one year suspension of his license. But Register was found guilty of fourteen separate offenses of sliding and had given specific instructions to his employees to follow that procedure. Here we ate concerned with only two sales, and no confirmation that the employees were complying with instructions from Veal. Accordingly, prior agency practice dictates that a lesser penalty be imposed. Cf. 120.68 (12)(b), Florida Statutes. It is recommended that Veal's license be suspended for a period of twenty days.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be found guilty of violating subsections

626.611(9), 626.621(2) and 626.621(6), Florida Statutes, on two separate occasions and that his insurance license be suspended for twenty (20) days. All other charges should be DISMISSED.

DONE and ENTERED this 7th day of December, 1983, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 7th day of December, 1983.

ENDNOTES

1/ There was no evidence to show that Veal willfully violated the law, or that he had scienter that his conduct was illicit. Neither was there any evidence

that his employees were acting on instructions with a purposeful intent to deceive his customers. This is applicable to all allegations that Veal willfully violated the law.

2/ Two isolated transactions alone involving two small policies do not render an insurance agent unfit or untrustworthy. Something more than this is required.

3/ There is no evidence to show that Veal converted the Lake and Morris premiums to his own use or otherwise misappropriated the $50 in question.

4/ Veal's employee did not misstate the terms and conditions of either policy sold. Indeed, both policies were explained, although Morris and Lake did not know they were paying for the additional coverage.

5/ Again, there is insufficient evidence to show, from a license disciplinary standpoint, that the conduct in question was "willful" or done "knowingly".

Bowling, 394 So.2d at 172.

6/ Indeed, Veal charged the appropriate amounts for each policy, and so noted this fact on the receipts given to Lake and Morris.

COPIES FURNISHED:

Franz E. Dorn, Esquire

Department of Insurance and Treasurer 413-B Larson Building

Tallahassee, Florida 32301

Thomas F. Woods, Esquire

1030 E. Lafayette Street, Suite 112

Tallahassee, Florida 32301

Bill Gunter

Insurance Commissioner The Capitol

Tallahassee, Florida 32301

Docket for Case No: 83-001684

Orders for Case No: 83-001684