STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

v. ) CASE NO. 86-1214

)

CHARLES LEE ANDERSON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on July 30, 1986 in Miami, Florida.

APPEARANCES

For Petitioner: William M. Tharpe, Jr., Esquire

413-B Larson Building Tallahassee, Florida 32301

For Respondent: Charles Lee Anderson, pro se

2291 Northwest 12th Court Pompano Beach, Florida 33060

BACKGROUND

By administrative complaint filed on March 26, 1986, petitioner, Department of Insurance and Treasurer, has charged that respondent Charles Lee Anderson, licensed by petitioner as a insurance agent, had violated various provisions within Chapter 626, Florida Statutes (1985). Generally, it is alleged that while petitioner was the general lines agent of record for Payless and Save Insurance Underwriters Corporation in 1983-84, he sold an automobile insurance policy and homeowners insurance on six dwellings to two individuals, and that he failed to forward the premiums and applications to the insurance companies, thereby leaving the individuals without coverage or their policies.

Respondent disputed the above allegations and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes (1985). The matter was referred to the Division of Administrative Hearings by petitioner on April 15, 1986, with a request that a Hearing Officer be assigned to conduct a final hearing. By notice of hearing dated May 12, 1986, the final hearing was scheduled for June 23, 1986 in Miami, Florida. At petitioner's request the matter was continued until July 30, 1986 at the same location.

At final hearing petitioner presented the testimony of Blanche Jones, Joseph V. Baxter, Charles B. Hart and Dennis Leyva and offered petitioner's exhibits 1-5. All were received in evidence. Respondent testified on his own behalf.

The transcript of hearing was filed on August 15, 1986. Proposed findings of fact and conclusions of law were filed by petitioner on September 2, 1986. A ruling on each proposed finding of fact is made in the Appendix attached to this order.

At issue herein is whether respondent's insurance agent license should be disciplined for the alleged violations set forth in the administrative complaint.

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

FINDINGS OF FACT

1. Introduction

   
   

   1. At all times relevant hereto, respondent, Charles Lee Anderson, was licensed as a general lines insurance agent by petitioner, Department of Insurance and Treasurer. Respondent presently resides at 2291 Northwest 12th Court, Pompano Beach, Florida. He has been licensed by petitioner since 1968, and, prior to this proceeding, had no blemishes on his record.

      
      

   2. When the events herein occurred, Anderson was the president and director of Payless and Save Insurance Underwriters Corporation (Payless), an insurance agency located and doing business at 2401 Northwest 21st Avenue, Fort Lauderdale, Florida. Anderson was also the general lines agent of record for the corporation.

      
      

2. Count I

   
   

   1. In early January, 1984 Anderson was working from midnight until 8:00

      a.m. as a security guard. Because of this, he hired one Mamie Baugh as an independent contractor to operate his insurance agency. Anderson authorized Baugh to sell policies and sign his name on insurance applications and other documents. Anderson would drop by his office two or three times a week to "check on (Baugh)" and "look at the paperwork."

      
      

   2. On or about January 3, 1984 Blanche Jones went to Payless to purchase an automobile insurance policy. She chose Payless because it was located just around the corner from her home in Fort Lauderdale, and was more convenient than her former insurance agent in Hallandale. Because Anderson was not present, Jones met with Baugh and discussed her insurance needs. Baugh filled out an application on behalf of Jones for automobile insurance with Industrial Fire and Casualty Insurance Company (Industrial) in Hollywood, Florida. Anderson was a licensed agent with Industrial, and authorized to act as a brokering agent for that company. Baugh signed Anderson's name on the application as brokering agent. Jones then gave Baugh a check for $456 as payment for the policy and was given a receipt.

      
      

   3. In February Jones had not received her policy or any evidence that she was insured. Her husband decided to visit the Payless office and obtain an insurance identification card in the event they had an accident. He met with

      Anderson who promised to give him a card. The following day, Anderson went to Jones' house and dropped off a business card. 1/ While there, Jones told Anderson she had paid for a policy but had never received anything. Anderson promised to "check into the particulars."

      
      

   4. After not hearing from Anderson for two months, Jones' husband went to Payless' office and found it closed. Jones thereafter went to her old insurance agent in Hallandale, and then to Public Insurance Agency (Public) in Hollywood. Public was the managing general agent for Industrial, the insurance company with whom Jones thought she had a policy. Public had no record of having received Jones' application or the $456 premium paid to Anderson. It also had no record of Anderson having telephoned Public on its "application telephone", a procedure that Anderson should have followed in order to have a binder issued on the policy. Consequently, Public never issued a policy insuring Jones.

      
      

   5. In late 1985 Jones was reading a copy of the Hollywood Sun Tattler, a local newspaper, and noticed an article about Anderson, who was then running for chief of police in Dania. She contacted the reporter who wrote the story who in turn contacted Anderson. Respondent telephoned Jones the next day and promised to return her money. A week later (January 10, 1986) Jones received a $456 money order from Anderson.

      
      

   6. A representative of Public established that Anderson was given a copy of an underwriting guide which contained explicit instructions on how to bind coverage and fill out applications. Among other things, the guide required that Anderson, and not his surrogate, sign all applications. Therefore, he was not authorized to allow Baugh to sign in his stead.

      
      

3. Count II

   
   

   1. On or about December 20, 1983 Joseph V. Baxter visited Payless for the purpose of purchasing insurance coverage on various rental properties he owned. Baxter met with Anderson who prepared six "Homeowners Application for Quotation Only" with International Bankers Insurance Company (IBIC). Baxter gave Anderson a check for $818 as payment for the coverage. Anderson later endorsed the check.

      
      

   2. On January 11, 1984 Baxter returned to Payless and made application for a seventh insurance policy on another rental property. He gave Anderson a

      $318 check which Anderson subsequently endorsed. At that time Baxter was given a certificate of insurance indicating coverage with Great Southwest Fire Insurance Company (GSFIC).

      
      

   3. Several months later Baxter received a telephone call from a representative of the lending institution which held the mortgages on his property. Baxter then instructed Anderson to contact the institution and certify that Baxter had coverage on his properties. Anderson telephoned the institution in Baxter's presence and told the representative that Baxter was insured.

      
      

   4. Sometime later Baxter was again contacted by the mortgagee concerning his insurance coverage. Baxter attempted to visit Anderson but found Payless had closed its offices and gone out of business. Baxter then filed a complaint with petitioner. He never received insurance policies from IBIC or GSFIC.

      
      

   5. On January 10, 1986 Anderson repaid Baxter $1,136, the amount received by Anderson some two years earlier.

   6. A representative of IBIC established that Anderson never remitted the premiums or mailed the six quotation forms to the home office. It was further established that although GSFIC quoted a rate for Anderson on Baxter's seventh piece of property, it never received the follow-up application or premium.

      
      

4. Respondent's Case

1. Respondent blamed the Jones mishap on Baugh, who he claimed may have misplaced the application and taken the money. According to Anderson, she now lives in California and was unable to attend the hearing. However, he had no explanation for failing to follow up on Baxter's applications. Anderson said he closed his business in February, 1984 after a series of break- ins at his office, and left a note on the door giving a telephone number where he could be reached. However, he made no effort to personally contact those persons who held policies. Anderson further stated that he was unaware of the Jones and Baxter complaints until contacted by the newspaper reporter and petitioner, and then promptly repaid all monies due.

   
   

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1985).

   
   

3. The administrative complaint alleges Anderson violated six provisions within the Insurance Code. They include Subsection 626.561(1) and Subsections 626.611(5), (7), (8), (9), and (10), Florida Statutes (1985). Those provisions read as follows:

   
   

   626.561 Reporting and Accounting for funds.

   
   

   (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 an pay the same to the insurer, insured, or other person entitled thereto.

   * * * 626.611 Grounds for compulsory refusal,

   supervision, or revocation of agent's, solicitor's, or adjuster's license or service

   representative's, supervising or managing general agent's, or claim's investigator's permit.

   * * *

   (5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any

   form of dissemination of information or advertising.

   * * *

   1. Demonstrated lack of fitness or trustworthiness

      to engage in the business of insurance.

   2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transaction authorized by the license or permit.

   3. Fraudulent or dishonest practices in the conduct of business under the license or permit.

   4. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers

   or insureds or beneficiaries or to others and received in conduct of business under the license.

   
   

4. Also relevant to this proceeding is Section 626.734, Florida Statutes (1985), which reads as follows:

   
   

   Any general lines insurance agent who is an officer, director, stockholder, or employee of an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any provisions of this code committed by such licensee or by any person under his direct supervision and

   control while acting on behalf of the corporation.

   
   

   This provision makes the officer or director of an incorporated general lines insurance agency, such as Payless, responsible for violations of the Insurance Code by persons acting under the agent's direct supervision and control.

   Because Baugh was acting under Anderson's direct supervision and control, Anderson is responsible for her acts. This is consistent with the general proposition that a general lines agent is responsible for all operations conducted and monies received under the authority of his license. Department of Insurance v. Teresa Jean Watson, DOAH Case No. 85-0188, Final Order dated May 26, 1986, 8 FAIR 3477.

   
   

5. The evidence reveals that with respect to the Jones transaction Anderson has violated Subsection 626.561(1) by failing to account for Jones' premium. He has also violated Subsections 626.611(5), (7), (9) and (10) by:

   (a) failing to obtain coverage for Jones once he was put on notice that she had purchased a policy, (b) demonstrating a lack of fitness or untrustworthiness to engage in the insurance business, (c) engaging in a dishonest practice under his license, and (d) unlawfully withholding Jones' money for some two years.

   
   

6. In conducting the Baxter transaction, the evidence demonstrates that Anderson violated the same statutory provisions by (a) failing to account for Baxter's premium, (b) failing to obtain coverage for Baxter after taking his moneys, (c) demonstrating a lack of fitness or untrustworthiness to engage in the insurance business, (d) engaging in a dishonest practice under his license, and (e) unlawfully withholding Baxter's money for two years.

   
   

7. Given the nature of the violations herein, revocation of Anderson's license is appropriate.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of the violations set forth in

the Conclusions of Law portion of this order, and that his license and eligibility for licensure be REVOKED.

DONE and ORDERED this 10th day of September, 1986, 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 10th day of September, 1986.

ENDNOTE

1/ Anderson was apparently a "jack of all trades" for his business card identified him as "Dr. Charles Anderson" and listed the following professions or businesses: attorney, insurance broker, mortgage broker, notary, real estate, liquor license, apartment locator and rental locator.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1214

Petitioner:

COPIES FURNISHED:

William M. Tharpe, Jr., Esquire 413-B Larson Bldg.

Tallahassee, Florida 32301

Charles Lee Anderson 2291 N.W. 12th Court

Pompano Beach, Florida 33060

Honorable William Gunter

State Treasurer & Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32301

Docket for Case No: 86-001214

Orders for Case No: 86-001214