STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FAMILY SERVICES LIFE )

INSURANCE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 87-1361

) DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on October 29, 1987, at Tallahassee, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. At the hearing the parties were represented by the following counsel:

FOR PETITIONER: Douglas A. Mang, Esquire

Steven Malono, Esquire Mang, Rett, & Collette, P.A. Post Office Box 11127

740 Barnett Bank Building Tallahassee, Florida 32392-3127

FOR RESPONDENT: Michele Guy, Esquire

Gabriel Mazzeo, Esquire Department of Insurance 413-B Larson Building

Tallahassee, Florida 32399-0300 ISSUES AND INTRODUCTION

The basic issue in this case is described as follows in the parties' prehearing stipulation:

The controversy centers on the Department's disapproval of Petitioner's Burial Protection Policy Form 01285-NV, Certificate Form 01285- NV-3, and 24 month Burial Protection Form.

The Department based its disapproval on Section 626.9541(1)(n)1, Florida Statutes, which prohibits the offer of free insurance as an inducement to the sale or purchase of real or personal property or of services directly or indirectly connected with such real or personal property.

At the hearing, all parties presented the testimony of witnesses and offered documentary exhibits. Thereafter, on December 3, 1987, a transcript of the proceedings at hearing was filed and the parties were allowed until January 4, 1988, (later extended to January 8, 1988) within which to file their proposed recommended orders. Both parties filed timely proposed recommended orders, which have been carefully considered in the preparation of this recommended order. Specific rulings on all findings of fact proposed by all parties are contained in the Appendix which is attached to and incorporated into this recommended order.

FINDINGS OF FACT

Based on stipulations of the parties and on the testimony and exhibits presented at the hearing, I make the following findings of fact:

Findings based on stipulations

1. According to current records of the Department of Insurance, the Petitioner currently possesses a Certificate of Authority to do business in the State of Florida as a life insurer.

   
   

2. Family Services Life Insurance Company Policy Form No. 01285-NV and Certificate No. 01285-NV-3 constitute out-of- state group forms filed and approved in the State of Nevada.

   
   

3. The Petitioner filed its request for approval of its out-of-state group trust plan and certificate pursuant to section 627.5515(2), Fla. Stat. on September 29, 1986.

   
   

4. The Department denied Petitioner's filing March 2, 1987.

   
   

5. Petitioner gives a Certificate of Insurance at no cost to the consumer providing for 24 months of burial protection in exchange for their agreement to listen to a sales presentation on pre-need cemetery care.

   
   

6. There is no requirement that the consumer actually purchase a pre-need cemetery plan to receive the Certificate of Insurance.

   
   

7. The pre-need cemetery plan consists of the sale-of real or personal property and services connected therewith respecting an individual's burial.

   
   

8. There is no identifiable and additional charge for the insurance which is given to all consumers attending the pre-need cemetery presentation.

   
   

   Findings based on evidence adduced at the hearing

   
   

9. The Certificate of Insurance providing for 24 months of burial protection is provided to the prospective customer before the sales presentation, but the prospective customer must listen to the sales presentation. An additional condition to receipt of the Certificate of Insurance is non-ownership of other local cemetery property.

   
   

10. The sales personnel of Service Corporation International ("SCI"), the Petitioner's parent company, use the 24 month burial protection plan in the actual sales presentation. At the close of the sales presentation, potential customers are shown what the average cost of burial services and products will be at death and are shown what those costs will be if they happen to purchase

    the cemetery plan and can factor in the 24 month coverage provided for by the plan. The 24 months of free burial protection insurance is used for price comparison purposes.

    
    

11. SCI is offering the 24 month burial protection plan as a marketing tool to obtain entry into a prospective customer's home in order to make a sales presentation on pre-need cemetery property and services.

    
    

12. The Certificate of Insurance is offered as an inducement to the sale of real or personal property and services connected therewith.

    
    

13. The benefits of the 24 month burial protection plan are guaranteed by Certificate of Insurance Form No. 01285-NV-3, issued under the master group policy of insurance Form No. 01285- NV.

    
    

    CONCLUSIONS OF LAW

    
    

    Based on the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.

    
    

14. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding.

    
    

15. Section 626.9541, Florida Statutes, defines numerous unfair methods of competition and unfair or deceptive acts or practices, all of which are prohibited by other statutory provisions. Among the unfair methods, acts, and practices so defined is the following from Section 626.9541(1)(n)1 and 2, Florida Statutes:

    
    

    1. Free insurance prohibited.--

       1. Advertising, offering, or providing free insurance as an inducement to the purchase or sale of real or personal property or of services directly or indirectly connected with such real or personal property.

       2. For the purposes of this paragraph, "free" insurance is:

          1. Insurance for which no identifiable and additional charge is made to the purchaser of such real property, personal property, or services.

          2. Insurance for which an identifiable or additional charge is made in an amount less than the cost of such insurance as to the seller or other person, other than the insurer, providing the same.

             
             

16. It is clear from the facts in this case that the Petitioner proposes to advertise, offer, and provide burial insurance. It is equally clear from the facts in this case that such advertising, offering, and providing is to be done for the purpose of inducing the purchase of real or personal property or of services directly or indirectly connected therewith. Finally, it is clear that the burial insurance the Petitioner proposes to advertise, offer, and provide has no identifiable and additional charge and is, therefore, "free" insurance within the meaning of Section 626.9541(1)(n)1 and 2, Florida Statutes.

RECOMMENDATION

Based on all of the foregoing, it is recommended that the Department of Insurance and Treasurer enter a final order in this case disapproving Petitioner's Burial Protection Policy Form 01285-NV and Certificate Form 01285- NV-3.

DONE AND ENTERED this 15th day of March, 1988, at Tallahassee, Florida.

MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1988.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 87-1361

The following are my specific rulings on all findings of fact proposed by the parties.

Findings proposed by the Petitioner: Paragraphs 1 and 2: Accepted.

Paragraph 3: Rejected as subordinate and unnecessary details.

Paragraph 4: Rejected as irrelevant. Paragraphs 5, 6, and 7: Accepted in substance.

Paragraphs 8, 9, and 10: Accepted. Paragraph 11: Rejected as irrelevant.

Paragraphs 12, 13, and 14: Rejected as subordinate and unnecessary details. Paragraph 15: Accepted.

Paragraph 16: Rejected as irrelevant.

Paragraph 17: Rejected as subordinate, unnecessary, and irrelevant. Paragraph 18: Rejected as subordinate and unnecessary details and as not

Supported by persuasive competent substantial evidence.

Paragraphs 19, 20, 21, and 22: Rejected as subordinate and irrelevant details.

Paragraphs 23 and 24: Rejected as irrelevant.

Paragraphs 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, and 36: Rejected as subordinate and unnecessary details.

Paragraphs 37, 38, 39, and 40: Rejected as irrelevant.

Paragraph 41: Rejected as irrelevant and as not supported by persuasive competent substantial evidence.

Paragraphs 42, 43, 44, 45, 46, and 47: Rejected as irrelevant and because Dr. Downs' ultimate conclusions are not persuasive.

Paragraphs 48 and 49: Rejected as irrelevant.

Paragraph 50: Rejected as irrelevant and because it lacks persuasive competent substantial evidence.

Paragraphs 51, 52, 53, 54, 55, 56, 57, and 58: Rejected as subordinate, unnecessary, and irrelevant.

Paragraph 59: Rejected as subordinate and unnecessary and as not Supported by persuasive competent substantial evidence. Further, the proposed interpretation conflicts with the clear language of the statute.

Paragraph 60: Rejected as subordinate, unnecessary, and irrelevant.

Paragraphs 61 and 62: Rejected because the opinion proposed is contrary to the greater weight of the evidence.

Paragraphs 63, 64, 65, 66, and 67: Rejected as subordinate and unnecessary details.

Paragraph- 68: Rejected as contrary to the greater weight of the evidence.

Paragraphs 69, 70, 71, 72, and 73: Rejected as subordinate and unnecessary details.

Paragraphs 74, 75, and 76: Rejected as subordinate, unnecessary, and irrelevant.

Paragraphs 77, 78, 79, 80, 81, 82, and 83: Rejected as irrelevant.

Findings proposed by the Respondent:

Paragraphs 1, 2, 3, and 4: Accepted. Paragraph 5: Accepted in substance. Paragraphs 6 and 7: Accepted.

Paragraph 8: Rejected as subordinate and unnecessary details. Paragraphs 9 and 10: Rejected as irrelevant.

Paragraphs 11, 12, 13, and 14: Accepted.

Paragraphs 15, 16, 17, and 18: Rejected as subordinate and unnecessary details.

Paragraph 19: Rejected as redundant.

Paragraph 20: Rejected as subordinate, irrelevant, and redundant. Paragraphs 21, 22, and 23: Rejected as subordinate and unnecessary details.

Paragraph 24: The bottom line opinion is accepted, but most of the details in this paragraph have been omitted as subordinate and unnecessary.

Paragraphs 25, 26, 27, 28, 29, 30, 31, and 32: Rejected as subordinate and unnecessary details.

COPIES FURNISHED:

Douglas A. Mang, Esquire Mang, Rett & Collette, P.A.

P. O. Box 1019 Tallahassee, Florida 32302

Michele Guy, Esquire Legal Division

413-B Larson Building Tallahassee', Florida 32399-0300

Honorable William Gunter State Treasurer and Insurance

Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Don Dowdell General Counsel

Department of Insurance and Treasurer

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Docket for Case No: 87-001361

Orders for Case No: 87-001361