Judges: D. R. ALEXANDER
Agency: Department of Financial Services
Latest Update: Oct. 30, 1990
Summary: Where there was no intent to deceive, violation of law did not occur.
83-3303.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
v. ) CASE NO: 83-3303
)
KENNETH EARL WEST, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings, by its duly designated Hearing Officer, DONALD R. ALEXANDER, in Ocala, Florida on December 15, 1983.
APPEARANCES
For Petitioner: William W. Tharpe, Jr., Esquire
413-B Larson Building Tallahassee, Florida 32301
For Respondent: Dock Blanchard, Esquire
Post Office Box 24 Ocala, Florida 32678
In an Administrative Complaint filed on September 22, 1983 petitioner, Department of Insurance, has charged that respondent, Kenneth Earl West, a licensed insurance agent, had violated Subsections 626.611(2),(7) and (14), and 626.621(1) and (8), Florida Statutes, by failing to give a true and correct answer to a question on his application for filing for examination as ordinary life including disability agent filed on March 21, 1979.
Respondent disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred by petitioner to the Division of Administrative Hearings on October 21, 1983 with a request that a Hearing Officer be assigned to conduct a hearing.
By Notice of Hearing dated November 30, 1983 a final hearing was scheduled for December 13, 1983 in Ocala, Florida. By agreement of the parties this date was later changed to December 15, 1983.
At the final hearing petitioner offered petitioner's exhibits 1-3; all were received in evidence. Respondent testified on his own behalf and offered respondent's exhibit 1 which was received in evidence.
There is no transcript of hearing. Proposed findings of fact and conclusions of law were filed by respondent and petitioner on December 2O and 28, 1983, respectively, and have been considered by the undersigned in the
preparation of this Order. Findings of fact not included in this Order were considered irrelevant to the issues, immaterial to the results reached, or were not supported by competent and substantial evidence.
The issue here is whether respondent's insurance license should be disciplined for the alleged violations set forth in the Administrative Complaint.
Based upon all the evidence the following findings of fact are determined: FINDINGS OF FACT
At all times relevant hereto, respondent, Kenneth Earl West, was licensed by respondent, Department of Insurance as an ordinary life, including disability agent.
On February 27, 1979, respondent was charged by information by the state attorney for the Fifth Judicial Circuit of Florida in Marion County with the crime of grand theft in violation of Section 812.014, Florida Statutes.
On February 28, 1979, respondent was charged by information by the state attorney for the Fifth Judicial Circuit of Florida in Marion County with the crime of grand larceny in violation of Section 812.014, Florida Statutes.
Sometime between March 5 and April 16, 1979 respondent pled guilty to the above charges and was placed on probation for a period of five years and required to pay certain court costs and make restitution. Adjudication of guilt in both cases was withheld. This order was formally entered by the circuit court on April 16, 1979. The record is unclear as to the exact date when respondent pled guilty, but it appears from the court records it was probably March 5, 1979. Because he made restitution, the probation condition was removed prior to the expiration of five years.
After March 5 but before March 21, 1979 respondent, who was then unemployed and searching for work, accepted a job offer from Fred W. Lemar, a licensed insurance agent in Ocala, Florida. West explained his legal difficulties to Lemar, but was told this would be no impediment to licensure. With the assistance of Lemar, West filled out an application for filing for examination as ordinary life, including disability agent to be filed with petitioner. The application was dated March 21, 1979. Question 15 on the application read as follows: "Have you ever been charged with or convicted of a felony?" Because he had not been convicted of a felony since adjudication had been withheld, Lemar told West he should answer the question in the negative. West relied upon Lemar's advise and answered the question in that manner. He did so since Lemar was a licensed insurance agent and West believed Lemar knew what was required in order to meet licensure requirements. He did not intend to deceive the Department in procuring his license.
West subsequently received his insurance license on May 1, 1979 and has been engaged in the insurance business in Ocala, Florida, since that time. For the last several years he has owned and operated his own agency. There is no evidence of any other complaints against West or that he has in any way brought discredit upon the insurance profession. West indicated he enjoys his work and sincerely desires to remain in this profession. He is presently involved in a number of civic activities, devotes a part of his time to the Boy Scouts, and operates a successful and reputable business.
Through a complaint the Department later learned of West's prior difficulties and filed the complaint herein. That prompted the instant proceeding.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.
By failing to disclose his arrest on the application form, respondent is charged with making a material misrepresentation in obtaining his license (626.611(2), F.S.) and with having demonstrated a lack of fitness or trustworthiness to engage in the insurance business (626.611(7), F.S.). Because of his felony arrest and subsequent plea, he is also charged with having pled guilty to a felony which involves moral turpitude (626.611(14), F.S.), committing an act which constituted a ground upon which licensure could have been denied (626.621(1), F.S.), and with having pled guilty to a felony in this state (626.621(8), F.S.). For this, petitioner suggest that respondent's insurance license be revoked.
Initially, it should be noted that respondent does not deny that he was arrested for grand larceny and grand theft in 1979, or that he subsequently pled guilty to both charges.
Subsection 626.611(2) provides that a licensee may be disciplined if he has made a "(m)aterial misstatement, misrepresentation, or (committed) fraud in obtaining the license." In order to establish a violation under this subsection, it must be shown that West intended to deceive the
Department when he incorrectly responded to question
15. See Grantham v. Department of Insurance, DOME Case No. 82-3196, Final Order entered May 13, 1983 (holding that an identical provision governing limited surety agents in Subsection 648. 45(1)(c), Florida Statutes, required scienter on the part of the licensee in order to establish a violation.) There being no scienter on the part of West, or a conscious effort to deceive the Department in procuring his license, this allegation
must be dismissed. In reaching this conclusion, it is noted there was no evidence of record presented by the Department to support a result inconsistent from that reached in Grantham. Accordingly, the same interpretation should apply, and the allegation dismissed. Cf. Amos v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1984, Case No. AB-99, op. filed 1/6/84); Subsection 120.68(12)(b), Florida Statutes.
It is next alleged that West's conduct demon- strated a lack of fitness or trustworthiness to engage in the business of insurance within the meaning of Subsection 626.611 (7), Florida Statutes. But one must equate an unintentional incorrect answer on an application form with a "demonstrated lack of fitness or trustworthiness to engage in the
business of insurance' in order to substantiate this charge. There being no evidence of this nature in the record, and because the response to question 15 was not intended to deceive the Department, it is concluded that no violation of Subsection 626.611(7) has occurred.
The alleged violations of Subsections 626.611
(14) and 626.621(8), Florida Statutes, may be grouped together for they both involve West's arrest and plea of guilty to criminal charges prior to licensure. The dispositive question is whether an agency may consider acts of misconduct which occurred prior to licensure when taking disciplinary
action against a licensee. There is no definitive judicial ruling on this question, but the First District Court of Appeal recently declined to extend the rule of Gould v. State, 127 So. 309 (Fla. 1930) to agency disciplinary proceedings against licensees. Farzad v. Department of Professional Regulation, So.2d (Fla. 1st DCA 1983, Case No. AP-337, op. filed 12/30/83). In Gould, the Supreme Court had permitted disciplinary action against an attorney based upon misconduct which occurred prior to admission to the Bar. In distinguishing Gould, the Court noted that licensees are governed by statute vis a vis the Supreme Court, that penal statutes must be strictly construed in favor of the licensee, and that the misconduct in Farzad occurred approximately three years prior to licensure.
Accordingly, it declined to extend the Gould rule to an agency action against a physician. Although West's misconduct occurred only a few months prior to licensure, the reasoning in Farzad is no less applicable when a strict construction of Sections 626.611 and 626.621 is made. A strict construction of the applicable statutes requires an interpretation that agency action against a licensee under Subsections 626.611(14) and 626.621(8) can be initiated only when the licensee is convicted or pleas guilty to a crime involving moral turpitude or a felony after he is licensed. Any other interpretation would do violence to the plain meaning of the statute and fly in the face of the "strict construction" doctrine. Accordingly, these charges in the Administrative Complaint should be dismissed.
Finally, West is charged with violating
Subsection 626.621(1), Florida Statutes, in that his conduct constituted "cause for which issuance of the license...could have been refused had it then existed and been known to the department." Again, it is clear that the statute is referring to illicit conduct by a licensee which occurs after licensure but which would have constituted grounds for denying an application had it existed and been known by the Department before the license was issued. Since the conduct took place prior to licensure the statute
has no application to the case at bar. While this distinction may seem technical in nature, it is consistent with the long-established doctrine that penal statutes must be strictly construed. Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1980); Farzad, supra. Therefore, the final allegation must also fail.
RECOMMENDATION
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all charges against respondent be DISMISSED.
DONE and ENTERED this 16th day of January, 1984, in Tallahassee, Florida.
DONALD R. ALEXANDER
Hearing Officer
Department of Administration 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 16th day of January, 1984.
COPIES FURNISHED
William W. Tharpe, Jr., Esquire Department of Insurance
Larson Building Tallahassee, Florida 32301
Dock Blanchard, Esquire Post Office Box 24 Ocala, Florida 32678
The Honorable Bill Gunter Insurance Commissioner and
Treasurer The Capitol
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
================================================================= DEPARTMENT OF INSURANCE AND TREASURER
IN THE MATTER OF: CASE NO: 83-L-216BT
DOAH CASE NO: 83-3303
KENNETH EARL WEST
/
FINAL ORDER
THIS CAUSE came before the undersigned Insurance Commissioner of the State of Florida, for consideration and final agency action. On December 15, 1983, a formal administrative proceeding (DOAH Case No: 83-3303) was conducted in Ocala, Florida, before a Hearing Officer for the Division of Administrative Hearings pursuant to Section 120.57(1), Florida Statutes. The record of the administrative proceeding is recorded in the Transcript of Proceedings certifies on February 9, 1984. Both the Petitioner and the Respondent prepared and submitted Proposed Findings of Fact, Conclusions of Law, and Recommendations to the Hearing Officer. On January 16, 1984, the Hearing Officer filed with this agency a Recommended Order, a copy of which is attached hereto. Upon a complete review of the entire record and being otherwise fully advised in the premises, it is
ORDERED:
That the Findings of Fact contained in the Hearing Officer's Recommended Order are hereby adopted.
Paragraphs 1 and 2 of the Hearing Officer's Conclusions of Law are hereby adopted. The remainder of Hearing Officer's Conclusions of Law (paragraphs 3.A. through 3.D.) are hereby rejected to the extent specified herein. After a review of the complete record, the following legal conclusions are rendered by this agency pursuant to subsection 120.57(1)(b)(9), Florida Statutes:
The first subsection which the Department of Insurance charged that the Respondent
violated is Section 626.611(2), Florida Statutes.
Section 626.611(2), Florida Statutes, provides:
The Department shall deny, Suspend, revoke, or refuse to renew or continue the license of any agent, solicitor or adjuster, or the permit of any service representative, su- pervising or managing general agent, or claims investigator, and it shall suspend or revoke the eligibility to hold a license or permit of any such person if it finds that as to the applicant, licensee, or permittee, any
one of the following applicable grounds exists:
* * *
(2) Material misstatement, misrepresentation, or fraud in obtaining the license or
permit, or in attempting to obtain the same.
The Hearing Officer concluded that the Respondent had not violated this subsection. The Hearing Officer's conclusion was based on the premise that this subsection implicitly includes a requirement of scienter and that since he found that the Respondent did not intend to deceive the Department (in his application) there was no violation. To support his position that Section 626.611(2), Florida Statutes, contains the scienter requirement, the Hearing Officer cites Grantham v. Department of Insurance, 5 FALR 2169-A (Final Order filed May 13, 1983) in which the DOAH recommended order was adopted as this agency's final order. While the statutory section construed in that case was virtually the same as the wording of Section 626.611(2), Florida Statutes, it should be pointed out that the Grantham case involved alleged violations of Chapter 648, Florida Statutes, regulating limited surety agents (bail bondsmen). It should also be noted that since the Grantham final order was entered, Section 626.611(2), Florida Statutes, was specifically interpreted in Hamin v.
Department of Insurance; Department of Insurance v. Hamin, 6 FALR 753 (Final Order filed December 27, 1983). The Hamin final order held that the requirement of scienter does not exist throughout Section 626.611(2), Florida Statutes.
While it may be true that intent is a prerequisite for fraud, it is erroneous to assume that intent is a prerequisite to the two other factual grounds listed in this statutory subsection. Since this statute uses the disjunctive "or" it must be construed to mean that the Department can deny, revoke or suspend a license when any of the three listed grounds exist, i.e., where there is a material misstatement, misrepresentation or fraud. One must, therefore, conclude that a violation of Section 626.611(2), Florida Statutes, exists when, by substantial competent evidence, it is shown that an applicant made a material misstatement (whether intentional or not) in obtaining the license or permit, or in attempting to obtain the same.
The record clearly indicates that West gave a negative answer to question #15 on his application which asked: "Have you ever been charged with or convicted of a felony?" West had, in fact, been charged with, and pleaded guilty to, two felonies (both for grand theft) less than two months prior to submitting his application to the Department. This negative answer was not only a misstatement but a "material misstatement". It is therefore concluded that the Respondent, KENNETH EARL WEST, is guilty of violating Subsection 626.611(2), Florida Statutes.
The next provision of the Florida Insurance' Code which the Department of Insurance charged that the Respondent violated is Section 626.611(7), Florida Statutes, (that Respondent's conduct demonstrated a lack of fitness or trustworthiness to engage in the business of insurance). The Hearing Officer found that Respondent did not intend to deceive the Department when he gave a negative answer to the question concerning whether or not Respondent had ever been charged with or convicted of a felony. The Hearing Officer therefore concluded that there was no violation of Section 626.611(7), Florida Statutes. The question "Have you ever been charged with or convicted of a felony?" does not appear to be ambiguous. However, the record reflects that there exists enough of a question concerning the Respondent's intent as to prevent the
Hearing 0fficer's findings from being erroneous. Therefore, the Hearing 0fficer's recommendation that the charge of untrustworthiness leveled against Agent West be dismissed is hereby accepted. It is therefore concluded that the Respondent, KENNETH CARL WEST is not guilty of violating Section 626.611(7), Florida Statutes, and said charge is hereby dismissed.
The next statutory subsection which the Department of insurance charged that the Respondent violated is Section 626.621(8), Florida Statutes.
Section 626.621(8), Florida Statutes provides: The Department may, in its discretion,
deny, suspend, revoke, or refuse to renew or
continue the license of any agent, solicitor, or adjuster or the permit of any service representative, supervising or managing general agent, or claims investigator, and it may Suspend or revoke the eligibility to hold a license or permit of any such person, if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under 626.611:
* * *
(8) Having been found guilty of, or having pleaded guilty or nolo contendere to, a felony in this state or any other state, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of such cases.
There is no dispute concerning the fact that West was charged with two felonies (both for grand theft) or that he entered pleas of guilty to each of said felonies. The Hearing Officer concluded, however, that because Respondent's plea of guilty to the felonies occurred prior to his being licensed, that his current licenses cannot now be revoked. In support of this conclusion, the Hearing 0fficer cited the case of Gould v. State, 127 So. 309 (Fla. 1930) and Farzad v. Department of Professional Regulation, 443 So.2d 373 (Fla. 1st DCA 1983). In Gould the Florida Supreme Court stated that an attorney could be disbarred for misconduct which occurred prior to his licensure. In Farzad the 1st DCA affirmed a final order of the Department of Professional Regulation, Board of Medical Examiners, holding that the Board had sustained administrative charges against Farzad for practicing fraud and deceit in her application for licensure. In that case Farzad had falsely used her sister's name while taking a medical exam for her sister in another state. Later in her own application for licensure in Florida, Farzad falsely stated that she had never used any name other that her own married name. She did not advise the Board that she had ever used her sister's name when taking an exam for her sister. The 1st DCA in Farzad compared the facts of that case with the facts in Gould and states the issue at 376:
Next, we address appellant's contention that Florida is without jurisdiction to invoke disciplinary measures since the 1972 incident occurred three years before her licensure. In response, appellee relies on
Gould v. State, 9 Fla. 662, 127 So. 309 (1930), in which the Supreme Court stated that an attorney could be disbarred for misconduct which occurred prior to his licensure. See also State ex rel. Turner v.
Earle, 295 So. 2d 609 (Fla. 1975). Similarly, appellee reasons that it may consider acts of misconduct which occurred prior to licensure when taking disciplinary action against a licensee.
However, we are constrained to point out that there is a distinction between attorney disbarment proceedings and disciplinary proceedings against a physician under Chapter
458. Disciplinary proceedings against an attorney are within the exclusive jurisdic- tion of the Florida supreme Court Art. V, S 15, Fla. Const. As recognized in Gould v. State, 127 So. at 311, the court has inherent power vested in it to control the conduct of its own affairs and to maintain its own dignity.
On the other hand, disciplinary proceed- ings against physicians are governed by statute, and the rule is clear that where statutes authorizing revocation of a license
to engage in the practice of a profession are invoked, the provision of the statutes must be strictly construed and strictly followed, because the statute is penal in nature.
State ex rel. Jordan v. Pattishall, 99 Fla. 296, 126 So. 147 (1930).
With this distinction in mind, we are reluctant to extend the rule of Gould v. State to cover the situation presented here. In Gould, the misconduct occurred immediately preceding Gould's admission to the bar; whereas, in this case, the misconduct occurred three years prior to licensure. We note also that while the Gould court
permitted disciplinary action against an attorney based on misconduct which occurred prior to admission to the Bar, other jurisdictions are split on this issue. Annot. 92 A.L.R.3d 807 (1979). However, we need not decide this
issue in order to affirm the Board's order.
The Court addressed but never answered the issue, and a statement in dicta that a court is "reluctant" to decide an issue in a certain way is hardly adequate precedent for any holding.
It should further be pointed out that if one carefully reads subsections 626.611(14) and 626.621(8), Florida Statutes, and applies a strict construction thereto, it is clear that the same factors which constitute grounds for
suspension and revocation of a license also constitute grounds for denial or refusal. The record is clear that the Respondent was charged with and pleaded guilty to two felony charges of grand theft. It is therefore concluded that the Respondent, KENNETH EARL WEST, is guilty of violating Section 626.621(8), Florida Statutes.
Finally, the Department of Insurance changed aged the Respondent with violating Section 626.621(1), Florida Statutes, which provides:
The Department may, in its discretion,
deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjuster or the permit of any service representative, supervising or managing general agent, or claims investigator, and it may suspend or revoke the eligibility to hold a license or permit for any such person, if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist under circumstance for which such denial, suspension, revocation
or refusal is not mandatory under s. 626.611:
Any cause for which issuance-of the license or permit could have been refused had
it then existed and been known to the Department.
Here again the Hearing Officer concluded that this charge must also be dismissed for the reason that the misconduct occurred before the Respondent became a licensed agent. For the same reasons stated above, the Hearing Officer's conclusion is incorrect.
If West's answer to question #15 on his application had been truthful, the Department could have refused to allow West to take the exam to become a licensed agent. Because his answer was not true (even if not intentionally false) the Department was not aware of the two felonies of grand theft to which West entered pleas of guilty. Not being made aware of these facts, the Department allowed West to take the examination to become licensed as an insurance agent. To put it another way, the Department's decision (to allow West to be examined for licensure) was not made on the basis of the actual facts. The fact that West pleaded guilty to two felonies constitutes a "cause" which "then existed" but was not "known to the Departments. If the Department had allowed West to be examined to become an agent with the knowledge of his felony pleas, the Department could well be estopped from subsequently attempting to revoke West's licenses based on those previous guilty pleas. But it is an incorrect interpretation of the statute to say that the Department may not discipline a licensee because the Department allowed a license to be issued based upon facts which were withheld from the Department (due to the applicant's material misstatement). Such a construction of these statutes would place this Agency in the position of being powerless to discipline insurance agents who "unintentionally" withhold information concerning prior criminal activity in their applications for licensure. It is therefore concluded that the Respondent, KENNETH EARL WEST, is guilty of violating Section 626.621(1), Florida Statutes.
Based upon the foregoing, it is hereby concluded that the Respondent, KENNETH EARL WEST, did violate Sections 626.611(2), 626.621(1), and 626.621(8), Florida Statutes.
IT IS THEREFORE ORDERED that the Respondent, KENNETH EARL WEST, be placed on probation for a period of one (1) year.
DONE and ORDERED this 18th day of April, 1984, in Tallahassee, Florida.
BILL GUNTER
Insurance Commissioner and Treasurer
WILLIAM D. RUBIN
Assistant Insurance Commissioner and Treasurer
Docket for Case No: 83-003303
Orders for Case No: 83-003303
