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DEPARTMENT OF INSURANCE AND TREASURER vs. ROOSEVELT KING JONES, 83-002151 (1983)

Court: Division of Administrative Hearings, Florida Number: 83-002151 Visitors: 19
Judges: K. N. AYERS
Agency: Department of Financial Services
Latest Update: Oct. 30, 1990
Summary: Agent didn't timely forward insurance applications, causing persons to go months uninsured. Recommend revocation.
83-2151

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


STATE OF FLORIDA, )

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 83-2151

)

ROOSEVELT KING JONES, )

)

Respondent. )

)


RECOMMENDED ORDER


Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K.N. Ayers, held a public hearing in the above- styled case on August 2, and September 26, 1983, at Tampa, Florida.


APPEARANCES


For Petitioner: Edwin R. Hudson, Esquire

Department of Insurance 413-B Larson Building

Tallahassee, Florida 32301


For Respondent: Isaac Nunn, Esquire

524 South Andrews Avenue Suite 204-E

Fort Lauderdale, Florida 33301 and

Wayne Johnson, Esquire 1216-49th Street

St. Petersburg, Florida 33207 (Withdrew as counsel before

September 26 proceedings)


By Administrative Complaint dated May 25, 1983, the State of Florida, Insurance Commissioner, petitioner, seeks to revoke, suspend, or otherwise discipline the license of Roosevelt King Jones, Respondent, as an Ordinary Life Insurance Agent, as an Ordinary Life, including Disability, Insurance Agent, and as a General Lines Agent. As grounds there for, it is alleged that Respondent, as President of Heart of Florida Insurance Agency, failed to promptly forward the applications of some eight insureds who applied for automobile insurance through Respondent's agency, as a result of which they were without automobile insurance for several months; that he failed to properly handle the premium finance agreements involving some of these insureds who financed the premiums, as a result of which their policies were cancelled; that dates on applications were changed without the knowledge of the applicants; that in some of these cases the signature of the applicant was forged by an employee of Respondent at Respondent's direction; and that he misappropriated funds belonging to insureds and/or the insurers. These acts are alleged to demonstrate a lack of fitness or

trustworthiness to engage in the insurance business, to constitute fraudulent and dishonest practices, to constitute a failure to properly handle funds received in a fiduciary capacity, to constitute false representations regarding an application for insurance, to constitute unfair or deceptive acts, and to have shown Respondent to be a source of injury or loss to the public or detrimental to the public interest. These acts are alleged to violate Sections 626.561, 626.611, 626.621, and 626.9541, Florida Statutes.


At the hearing Petitioner called 15 witnesses; Respondent called three witnesses, including Respondent; and 68 exhibits were admitted into evidence. Objection to Exhibit 16 on grounds of hearsay was sustained.


The parties' proposed findings, to the extent incorporated herein, are adopted; otherwise, they are disregarded as unsupported by the evidence, unnecessary to the resolution of the issues, or a mere recitation of the testimony presented at the hearing.


FINDINGS OF FACT


  1. By Emergency Suspension Order dated May 23, 1983, Petitioner suspended Respondent's Florida licenses as an Ordinary Life Insurance Agent, as an Ordinary Life, including Disability Insurance Agent, and as a General Lines Insurance Agent. At all times material to the charges in the Administrative Complaint, Respondent held those licenses above-noted. During the times of the hearing he was under the Emergency Suspension. The continuance of the hearing from August 2 to September 26, 1983, was requested by Respondent.


  2. Roosevelt King Jones is the owner of Heart of Florida Insurance Agency, Tampa, Florida, and was the sole owner of that agency at all times here relevant.


  3. All of the charges relate to automobile insurance policies. Respondent employed an underwriter, who does not require licensing by petitioner, to assist in the preparation of applications for insurance, quote rates to applicants, take deposits, give receipts for payments, issue cards to show insurance in effect for applicant, and make changes in policies as necessary; a secretary; receptionist; and an office manager. At times more than one underwriter was employed. Respondent testified that a former employee, Shirley Cook, was licensed and authorized to accept applications for the agency, but Cook was not in the employ of Respondent at the time the transactions here involved occurred.


  4. Respondent is also President of Heart of Florida Bank Supply and Heart of Florida Mining Company, and he is involved with the creation of the National Association of Federated Churches. Respondent spent two or three hours per day at the insurance agency where he signed the applications and handled complaints his secretary or underwriter were unable to resolve. Respondent was the only person authorized to accept the applications on behalf of the insurance company after Cook's employment had been terminated. The office procedure was for the receptionist/secretary to refer a person seeking insurance to the underwriter who would look up the rates for the coverage desired, advise the applicant, prepare the application form for the signature of the applicant, accept applicant's payment, or down payment if the premium was to be financed, and, if so, prepare the premium finance agreement. The underwriter would issue an insurance card to the applicant, give applicant a receipt for any moneys received, call the insurer for a Binder number if required by the insurer, and, when all of the documents were completed, put them on Respondent's desk, with the payment received, for Respondent's signature.

  5. Respondent was the only person authorized to draw checks on the agency's bank account, although he testified that while Shirley Cook was employed she had "banking authority." The quoted phrase was not explained, so it is unclear that Cook could write checks against this account. After Respondent bad checked the application file placed on his desk and signed the necessary documents, a check would bed cut to be signed by Respondent to forward to insurer with the application.


  6. Henry C. Daniels was notified by Heart of Florida Insurance Agency that his automobile insurance was up for renewal. He went to the agency on February 1, 1983, paid $335 cash for which he was issued a receipt (Exhibit 1). Daniels never received a policy. When an investigator from the Department of Insurance visited Daniels on May 8, 1983, the latter was unaware that he did not have insurance on his car. Daniels contacted Respondent to ask why he had not received a policy and Jones told him the company had not sent out the policies. Respondent, on May 10, 1983, executed an insurance Binder on Integrity Insurance Company effective February 1, 1983 (Exhibit 1). When Associated Insurance Brokers, who represented Integrity Insurance Company, was contacted in May, 1983, no record of an application from Daniels could be found in their files and they had not issued a policy. Before the August 2 hearing, Associated Insurance Company again checked their files and found an application for Daniels dated May 10, 1983 (Exhibit 2). A policy was issued to Daniels for one year effective May 16, 1983. Associated Insurance Company does not issue Hinders. When their agents call in an application, the agent is given a Binder number which is good only after the insurer gets the application and premium payment. Respondent corroborated Daniels' testimony that the latter visited him on May 10, 1983, with the news that the Department of Insurance had advised Daniels he was without automobile insurance, that he, Jones, checked the file and found his application had not been sent in, that he had Daniels execute another application dated May 10, 1983, which was sent in and the policy was issued. Respondent provided no explanation for the failure to submit Daniels' original application.


  7. Darlene Thompson went to Heart of Florida Insurance Agency for automobile insurance on July 30, 1982. She paid the premium of $125.30 by check dated July 30, 1982 (Exhibit 6) and was given a receipt (Exhibit 7). She was told her policy would be received In three to four weeks. When the policy did not arrive, she called the agency several times and was assured the policy was in the mail. She finally went down to Heart of Florida Insurance Agency and talked to Jones. She was shown an application dated September 27, 1982, on which she recognized her signature was forged (Exhibit 4) and was told she owed additional premiums. She demanded her policy be cancelled and her money refunded. By letter dated October 27, 1982 (Exhibit 8) Jones refunded $76.00 to Ms. Thompson as her prorata share of the premium for the period 7/31/82 to 12/31/82. Her check (Exhibit 6) was deposited by Heart of Florida Insurance Agency October 19, 1982. Heritage Insurance Company, on whose application form Thompson's signature had been forged, never issued a policy to Ms. Thompson (Exhibit 9). Following an inquiry by petitioner's branch office, Respondent remitted the additional $49.30 to Thomspon (Exhibit 65).


  8. Patrick Mulkins went to Heart of Florida Insurance Agency on September 23, 1982, and made a cash payment of $449 for automobile insurance to be paid in installments (Exhibit 12). The application was prepared on Allstate Insurance Company as a member of Florida Joint Underwriting Association. A couple of months later Mulkins was advised by the bank that was financing his car that he had no insurance. He went to Heart of Florida agency and was issued a Binder

    (Exhibit 15) dated January 4, 1983. When his bank again notified Mulkins he had no insurance he again advised the agency. At this time a forged application dated April 18, 1983, was prepared and forwarded to the insurance company with the proper payment, and the insurance policy was issued--some seven months after Mulkins initial application. By letter dated May 26, 1983 (Exhibit 23) Allstate Insurance Company notified Mulkins that his policy was void because the check accompanying the application drawn on the account of Heart of Florida group was dishonored. Respondent testified that when be learned his employee, Hunt, who prepared Mulkins' application, had not forwarded the $449 to the carrier, he referred the matter to the State's Attorney apparently claiming Hunt had absconded with the funds. No evidence was submitted that Mulkins received a policy or refund of the $449 paid by him to Respondent.


  9. Lisa Vallenga went to Heart of Florida Insurance Agency on December 15, 1982, to procure automobile insurance for her husband, Perry Vallenga. She paid

    $56 for the coverage, was issued an insurance identification card (Exhibit 17) with effective date of 12-15-82, and a receipt for the $56 paid (Exhibit 18). Vallenga never received a policy for the coverage his wife purchased, but was unaware he did not have coverage until he received his policy from Allstate Insurance Company in May, 1983, showing coverage from April 16, 1983, to April 16, 1984 (Exhibit 19). The application Mrs. Vallenga had signed December 15, 1982 (Exhibit 20) had been altered to show the date of 4-15-83 vice 12-15-82. By letter dated 5/18/83 (Exhibit 21) Allstate advised Vallenga the policy previously issued to him (Exhibit 19) was declared void because the Heart of Florida check in the amount of $56 which accompanied the application was stamped Check Returned Uncollected Funds." In explanation of the Vallenga transaction, Respondent only stated the policy shows Vallenga was issued PIP coverage and the signature on the application was not that of Respondent. No evidence was submitted that Vallenga received the insurance for which he paid Respondent or a refund of the premium.


  10. Mary Coy went to Hear of Florida Insurance Agency in April, 1982, to purchase automobile insurance. She completed an application, paid $66 and executed a premium finance agreement whereby she agreed to make monthly payments to Insurance Services, Inc., to cover the balance of tee premium of $155 plus interest (Exhibit 30). The application was forwarded to Florida International Indemnity Company, who issued a policy (Exhibit 26) covering the period 5/22/82 to 5/22/83. By check dated 5-25-82 Insurance Services, Inc., sent $312 to Heart of Florida Insurance (Exhibit 29) to cover the premiums of $155 for Coy's policy. Coy made the monthly payments to Insurance Services, Inc., in compliance with her agreement to do so (Exhibit 27). By Notice of Cancellation dated 10-28- 82, Florida International Indemnity notified Ms. Coy that the policy was cancelled effective 11-9-82 for nonpayment of premium (Exhibit 28). Florida International Indemnity's witness claimed his company was never notified the policy was financed, and that when policies are financed the carrier is usually paid by the premium finance company. Respondent testified that once his company submits the application for a premium finance policy they have no further input in the process unless there is a change to the policy. He presented no reason for not forwarding the $155 premium received from Insurance Services, Inc., for Coy's policy, but contended the carrier had no right to cancel Coy's policy because Respondent was the representative of the carrier and their dispute should have been with him rather than the policyholder.


  11. Eloise Philyor went to Heart of Florida Insurance Agency on February 2, 1983, to purchase automobile insurance. She made a down payment of $102 (Exhibit 32), executed a premium finance agreement with Insurance Services, Inc. (Exhibit 34) and was issued an insurance Binder effective 2-3-83 (Exhibit 33) on

    Integrity Insurance Company by Respondent. Integrity Insurance Company received the Philyor application dated 5/10/83 on May 16, 1983. Before the application was processed Capital Premium Plan, Inc., on whom Respondent had written the draft for the financed premium payment cancelled the draft and Integrity did not issue a policy. In the interim Ms. Philyor was making payments to Insurance Services, Inc. When the latter realized no policy had been issued, they returned Ms. Philyor's payment by check dated May 18, 1983 (Exhibit 38). A copy of the application that should have been signed by Philyor on February 3, 1983, was not produced. What was produced was a copy of a combination car policy application dated 5-10-83 written on Associated Insurance Brokers, Inc., who represents Integrity Insurance Company. What is clear from the evidence is that on February 3, 1983, Ms. Philyor applied for insurance, executed a premium finance agreement, paid $102 to Heart of Florida Insurance Agency as the difference in the cost of the premium over that part of the premium financed, commenced payment to the premium finance company, but was not issued the insurance policy for which she had paid.


  12. Freddy McGruder went to Heart of Florida Insurance Agency on January 3, 1983, to purchase automobile insurance. He paid $59 to the agency (Exhibit 41), was issued an automobile insurance identification card (Exhibit 42), executed a premium finance agreement dated 1-3-83 (Exhibit 43) which was later changed to 3-3-83 without the knowledge or consent of McGruder, and signed an application for an insurance policy to commence 1-4-83 on Allied Fidelity Insurance Company. This application was signed by Respondent as brokering agent. After about two months had passed, McGruder received a premium payment book, but no policy. When he went to make his second payment to the finance company, he was advised he might not have been issued a policy and it was suggested he contact the Department of Insurance. McGruder called the Heart of Florida Insurance Agency and requested his policy be cancelled. McGruder has not received the policy. A combination car policy application form dated 5-9-83 (Exhibit 48) has McGruder's name in the applicant's signature spaces. This is not McGruder's signature and no portion of the premium he paid has been returned to him. Respondent could give no explanation for failure of the insurer to issue a policy to McGruder. The automobile insurance identification card given to McGruder has the insurer's name, Allied Fidelity Insurance Company, typed thereon. Allied Fidelity issues such a card with its name printed there on only after it receives and approves the application. It then sends the card to the agent for delivery to the insured. Agents of Allied Fidelity are not authorized to issue identification cards until the policy is accepted.


  13. Andrew Archible went to Heart of Florida Insurance Agency on January 5, 1983, to purchase automobile insurance. He paid $51 down (Exhibit 50), executed a premium finance agreement dated 1-5-83 to finance the balance of the premium (Exhibit 53) and was given an automobile identification card dated 1-5-

    83 (Exhibit 51)(on the same card form used for McGruder) The original application was subsequently offered into evidence as Exhibit 59. This exhibit clearly shows the dates opposite McGruder's signature on the back of the document to have been altered, as the dates 3-3-83 (in-three places) have been written over white-out. The gold copy of the premium finance agreement (Exhibit

    55) also clearly shows the dates to have been altered. Exhibit 52 appears to be a facsimile copy of Exhibit 55. Archible made two payments on the Premium finance agreement, but has not received a copy of his policy.


  14. Casualty Underwriters, to whom Archible's and McGruder's applications should have been sent (as agent for Allied Fidelity Insurance Company) had no record of these applications. Their date stamp of March V, 1983, is contained on the original applications of Philyor, McGruder, and Achible. The procedure in

    effect at the time the applications of Philyor, McGruder, and Archible were presented was for the agent (Respondent) to write a draft to the insurance company on Insurance Services, Inc., and to send this draft with the application. When the draft is presented to the bank, the bank calls Insurance Services, Inc., to clear the draft before honoring it. Insurance Services never received the call from the bank to clear a draft for the McGruder or Archible policies. Respondent offered into evidence a draft dated 1-3-83 payable to Autosure Underwriters in the amount of $136 for applicant Freddy McGruder (Exhibit 57). This draft was marked "VOID" and there was no indication it had ever been presented for payment. A check drawn on Heart of Florida group dated 3-3-83 payable to Autosure Underwriters, Inc., in the amount of $50.15, signed by Respondent for the policy of Freddy McGruder, was admitted as Exhibit 60.

    This check was also marked "VOID" and showed no evidence that it had ever been presented for payment.


  15. Shirley Cook was office manager for Respondent from August, 1981, until June, 1982. Cook was a licensed 220 agent. She and Respondent had disagreements which led to her departure. Cook complained to the Department of Insurance about office practices resulting in clients not receiving policies and about bad checks being written by Heart of Florida group. After her departure Respondent forwarded to Petitioner documents tending to show Richard Heaney, another former employee of Respondent and son of Cook, had filed a fraudulent insurance claim (Exhibit 63) and suggested the claim be forwarded to the fraud division.


  16. As a result of Cook's complaints and consumer complaints regarding Heart of Florida Insurance Agency, Petitioner commenced an investigation In August, 1982. Bobbie Graham started working for Respondent in September, 1982, as an underwriter. When she began getting threatening calls from clients about not receiving policies, she called the local office of Petitioner to ascertain what problems she might be subject to as a result of her work for Respondent. She was contacted by the investigator and she provided names of individuals, including those named in the charges involved in this Administrative Complaint, who had not received policies they had paid for. When called as a witness by Respondent; Graham denied she had ever withheld policies, wrongfully taken or withheld any money, failed to deliver all applications to Respondent with all moneys received, ever took policies or files from the office, or ever changed the date on any application or other form without being directed to do so by Respondent. Graham further testified she made timely entries in a "binder" book or ledger regarding policies. Respondent was unaware there was such a ledger book in the agency and if there was one, testified it was not authorized by him, but was personal to the underwriter.


  17. The investigator in charge of the investigation of Respondent was also called as a witness by Respondent. This agent met with Respondent in August, 1982, and told Jones that he was investigating complaints received about Heart of Florida Insurance Agency. Respondent's testimony, that he first became there was any problem with the Archible policy was when he saw the charge in the Administrative Complaint, is not credible.


  18. Respondent also testified that after Ms. Cook left he was the only one in the agency authorized to accept applications and all application files were put on his desk for his signature. A review of the applications admitted into evidence in these proceedings show only three were signed by Respondent, three were signed by employee Leamon Hunt, and someone in the agency wrote Respondent's name on the other two. One of the three Binders admitted into evidence was signed on behalf of the agency by Delores Janacek, the secretary;

    the other two were signed by Respondent. These facts, plus the limited time Respondent spent at the office, lend credibility to Respondent's testimony that he let the people he hired run the business.


    CONCLUSIONS OF LAW


  19. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.


  20. Section 626.561(1), Florida Statutes, provides:


    1. 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.


  21. Failure to promptly forward applications for insurance and payments accompanying such applications to the insurers not only violated the above- quoted statutes but also left these applicants uninsured for several months during which time they were led to believe they were covered by insurance.


  22. As the only one in the office authorized to accept applications, Respondent had a duty to see that these applications were properly filled out and expeditiously handled. As the owner of Heart of Florida Insurance Agency, Respondent was responsible for overseeing and supervising the work of his employees and also responsible for their actions in handling applications for insurance. This is particularly true where, as here, Respondent spent little time in the office and left the running of the agency to his unlicensed employees.


  23. From the evidence presented it is clear that Respondent either directed the date changes made on the applications on which those dates were changed and the forged signatures on applications bearing dates subsequent to the dates on which the applicants had paid for insurance, or he was aware of these changes and forgeries.


  24. By failure to properly account for and handle trust funds of the insureds which came into his possession, Respondent violated Sections 626.561(1); 626.611(7), (9), (10), and (13); and 626.621(2), (4), and (6), Florida Statutes.


  25. By causing Binders to be issued to persons who were not covered, by causing dates to be altered on applications and related documents, by issuing proof of issuance to persons who were not covered, and by affixing the names of applicants to the applications without their knowledge or consent, Respondent violated Sections 626.611(7), (9), and (13); 626.621(2) and (6); and 626.9541(5)(a) and (b), (11)(a) and (b), and 21(b), Florida Statutes.


  26. From the evidence submitted it is clear and convincing that Respondent knowingly failed to timely forward applications for insurance to the underwriters with the inevitable result that these applicants were uninsured for

several months during which time they reasonably thought they were insured. By these actions Respondent not only misused trust funds that came into his possession, but also exposed his clients to risks against which they thought they were insured. It is


RECOMMENDED the insurance license of Roosevelt King Jones be REVOKED. ENTERED this 1st day of November, 1983, at Tallahassee, Florida.


K.N. AYERS Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675


Filed with the Clerk of the Division of Administrative Hearings this 1st day of November, 1983.


COPIES FURNISHED:


Edwin R. Hudson, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301


Isaac Nunn, Esquire

524 South Andrews Avenue Suite 204-E

Fort Lauderdale, Florida 33301


Wayne Johnson, Esquire 1216-49th Street

St. Petersburg, Florida 33207


Honorable Bill Gunter Treasurer and Insurance Commissioner

The Capitol

Tallahassee, Florida 32301


Docket for Case No: 83-002151
Issue Date Proceedings
Oct. 30, 1990 Final Order filed.
Nov. 01, 1983 Recommended Order sent out. CASE CLOSED.

Orders for Case No: 83-002151
Issue Date Document Summary
Nov. 29, 1983 Agency Final Order
Nov. 01, 1983 Recommended Order Agent didn't timely forward insurance applications, causing persons to go months uninsured. Recommend revocation.
Source:  Florida - Division of Administrative Hearings

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