STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 88-4553

)

VIRGINIA LOUISE WILLIAMSON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled case on April 27, 1989, in Fort Myers, Florida.

FINDINGS OF FACT

For Petitioner: Robert C. Byerts, Esquire

Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Michael S. Moreland, Esquire

Post Office Box 1992

Fort Myers, Florida 33902 STATEMENT OF THE ISSUES

Whether the Respondent committed the alleged multiple violations of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint.

PRELIMINARY STATEMENT

In an Administrative Complaint dated August 16, 1988, the Petitioner, Department of Insurance and Treasurer (hereinafter the Department), charged Respondent, Virginia Louise Williamson (hereinafter Williamson), a general lines agent and officer of Midtown Insurance Agency with a series of violations of Chapter 626, Florida Statutes. Essentially, the Respondent Williamson is charged with using deceptive sales practices in the conduct of business as an insurance agent. Customers who went to the insurance agency to purchase automobile insurance were charged for motor club memberships without their knowledge or consent. The Department seeks to discipline the Respondent's licenses as a result of the alleged violations.

The Respondent answered the Administrative Complaint and timely requested a formal administrative hearing.

Prior to hearing, the parties filed a Prehearing Statement in which preliminary allegations set forth in the Complaint were stipulated to by the parties. During hearing, the Petitioner called eight witnesses and identified fifteen exhibits. All but Petitioner's Exhibit 12 was admitted into evidence. The Respondent identified seven exhibits and testified on her own behalf. Only Respondent's Exhibit 1 was moved and received into evidence.

The transcript of hearing was filed on May 30, 1989, and the parties were granted leave until June 21, 1989 to file proposed findings of fact and conclusions of law. The requirement that a recommended order be filed within thirty days of the transcript filing was waived by the parties. Rulings on the proposed findings of fact submitted by the parties are in the Appendix of the Recommended Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with licensing insurance agents of all types, regulating licensure status, and enforcing the practice standards of licensed agents within the powers granted by the Legislature in Chapter 626, Florida Statutes.

   
   

2. At all times material to these proceedings, the Respondent was licensed as a General Lines Insurance Agent, a Life Insurance Agent, and a Health Insurance Agent. Respondent was also registered with the Department as an Automobile Inspection and Warranty Salesperson.

   
   

3. Respondent Williamson conducted business through Midtown Insurance Agency (hereinafter Midtown) in Fort Myers, Florida. Midtown is an incorporated general lines insurance agency which sells automobile insurance and related products through a licensed agent and unlicensed sales personnel. The unlicensed sales personnel act through the supervision and control of the licensed general lines agent of record at Midtown. The Respondent is also a director and treasurer of the insurance agency. All of Midtown's personnel who sold the insurance coverages at issue in this proceeding acted under the supervision and control of Respondent.

   
   

   Count I

   
   

4. On March 24, 1986, Jean Dahlberg went to Midtown to obtain the minimum PIP and liability insurance for her automobile, a 1968 Volkswagen. During the signing of applications for the requested insurance, Ms. Dahlberg was misled into signing an application for enrollment in the American Traveler's Association, Inc. (hereinafter ATA). The application was among the papers signed by Ms. Dahlberg to attain the requested insurance. She did not read the forms she signed as she had done business with Midtown in the past, and had received the coverage she requested. The agency was familiar with her insurance requirements for this automobile.

   
   

5. ATA is a travel club, which in return for a fee, provides travel accident benefits, including accidental death and dismemberment insurance if an insured dies in a travel accident. The benefits of an ATA membership were not mentioned or explained to Ms. Dahlberg. As a seven year member of AAA, another travel club, she did not want to purchase the membership. Ms. Dahlberg unknowingly paid an additional $40.00 to Midtown for a travel club membership she did not request and did not want. She was unaware that the purchase was made.

   Count II

   
   

6. On May 16, 1986, James MacConnel went to Midtown to purchase the minimum insurance required in order to obtain a tag for a 1966 Plymouth. Mr. MacConnel had purchased the vehicle as an "around town" car due to its poor condition. During the purchase of the insurance, Mr. MacConnel was given a number of documents to sign. An application for enrollment to the ATA was included by the salesperson in the stack of documents to be signed by the customer. The enrollment fee of $35.00 was not placed on the application before it was signed by Mr. MacConnel. He was unaware that a purchase of travel club membership had been made by him in addition to his purchase of the statutorily required automobile insurance. He was misled to believe that the forms signed and the monies paid were for the automobile coverage he had requested.

   
   

   Count III

   
   

7. In June 1986, Terry Padilla went to Midtown to renew his car insurance. Mr. Padilla sought the same coverage he had acquired on his automobile the year before. During the purchase, the customer was given a number of papers to sign. In his cursory review of the documents, Mr. Padilla noticed that one form was for a travel policy. Although he had already signed the form, he told the salesperson he did not want a travel policy when he gave her his money. The enrollment fee had been left blank on the application, and Mr. Padilla was not aware that the money paid by him to Midtown included a $50.00 fee for enrollment in ATA. Mr. Padilla was misled to believe that he had paid only for the automobile insurance coverage requested, and that he would not be enrolled in ATA.

   
   

   Count IV

   
   

8. On or about July 31, 1986, Alfred Calciano went to Midtown to purchase the minimum automobile insurance allowed by law for the purpose of obtaining a license tag for his truck. Among the papers signed for his purchase was an application for enrollment in ATA, even though he never asked for or desired the membership. Mr. Calciano was misled to believe that the quote he had been given was for the coverage he had requested. He was never informed that he had been enrolled in ATA, and had benefits from the enrollment. If he had been given the coverage he requested, he would have paid $35.00 less than what he was charged by Midtown.

   
   

   Count V

   
   

9. On August 4, 1986, Jeannie Kaminski (nka Jeannie Kaminski Bertram) went to Midtown to purchase PIP insurance. She had received a price quote over the phone from Midtown for $100.00 when she asked how much this particular insurance purchase would cost. Unbeknown to the customer, the price quote included a

   $50.00 enrollment fee for a membership to ATA. When Ms. Kaminski purchased insurance, she was misled to believe that she had received only the coverage she had specifically requested. She was not made aware of her membership in ATA, and that the membership had cost one half of the money charged by Midtown.

   
   

   Count VI (Withdrawn) Count VII

10. On October 31, 1986, Catherine McCabe Watts (nka Catherine McCabe) went to Midtown to purchase the automobile coverage which was necessary under

    the statutes and her financing agreement with the bank on her new truck. She did not request enrollment in a travel club, and a purchase of a membership was never mentioned by the salesperson. The customer was already a member of the Cross Country Auto Club by virtue of her recent truck purchase.

    
    

11. Among the papers signed at the agency was an application for enrollment in ATA. In addition to the payment to Midtown for the coverage requested, Ms. Watts unknowingly paid $45.00 for ATA membership.

    
    

    Count VIII

    
    

12. On November 7, 1986, Melody Baer went to Midtown to obtain liability and PIP insurance. Ms. Baer, who had previously done business with Midtown, had called days earlier to obtain a price quote for PIP insurance and liability coverage with 10/20/10 limits. Ms. Baer did not request enrollment in an automobile or traveler's club, and she was not informed that the price quote included a fee for club enrollment. During her insurance purchase at the quoted price, Ms. Baer was given a number of documents and was instructed by the salesperson to sign by the "x" on each document. Among the papers signed was an application to the ATA. The benefits of an ATA membership were not explained to Ms. Baer. She was misled to believe that the forms she signed and the monies paid were for the PIP and liability coverage she had requested. Ms. Baer unknowingly paid an additional $40.00 to Midtown for enrollment into ATA.

    
    

13. The financing agreement, which was explained to Ms. Baer, represented that her total policy premium for automobile insurance was $311.00. This did not alert Ms. Baer that an overpayment had been made by her, as she read and signed the document after she had given an employee of Midtown the amount of money that had been requested from her as a down payment.

    
    

    Count IX

    
    

14. November 13, 1986, Kathleen Nagorski went to Midtown to renew her automobile insurance policy. Among the papers laid in front of her for her signature was an application for membership in ATA. Ms. Nagorski was not made aware that she had signed an application for enrollment into a motor club, which she did not want to purchase. As a result of having been misled into the enrollment, Ms. Nagorski paid Midtown $40.00 more than her automobile premiums for an enrollment which was neither requested nor consented to by her. Ms. Nagorski was never notified by Midtown that the purchase had been made.

    
    

    Count X

    
    

15. February 12, 1987, Daniel R. Inmenso went to Midtown to purchase automobile insurance. After explaining to the salesperson that he wanted to purchase the cheapest, and least amount of insurance allowed in Florida, the salesperson laid a number of papers in front of him to sign. These papers included enrollment in ATA which Mr. Inmenso does not remember having explained to him. He was unaware that he had purchased the motor club membership or that he paid an additional $50.00 for it, along with his insurance premium for PIP insurance. Mr. Inmenso was never informed by Midtown or ATA of his enrollment.

    
    

16. In each of the foregoing transactions, a Midtown representative obtained the customer's signature on numerous forms without explaining that an ATA membership was being purchased contemporaneously with an automobile insurance policy. There was no interconnection between the transaction, such as a special group automobile insurance policy provided to ATA members. The

    enrolling documents were presented in such a manner that customers reasonably assumed that what they signed comported with the coverage they requested.

    
    

17. In furtherance of the deception, Midtown did not send customers the approved certificates of insurance, discount coupons, or other documents provided by ATA, which would evidence enrollment. Even the copy of the ATA application was not given to each customer, unless it was specifically requested.

    
    

18. Respondent Williamson participated in the training of agency personnel regarding the specific sales practices used to market ATA memberships. She was aware of the paperwork procedures, and all other practices which obscured the fact that the automobile club membership was not part of the automobile insurance the agency's customers sought to purchase.

    
    

19. In return for the enrollment of new members into ATA, Midtown received ninety percent of the first year's membership fee.

    
    

20. In mitigation of the alleged violations, it should be noted that assistance was sought by Respondent to determine if the procedures used within the agency complied with the Department's requirements. She was unable to obtain an answer.

    
    

21. All of the sales personnel were told to remove the enrollment, if requested by the customer.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 120.57(1), Florida Statutes.

    
    

23. In a proceeding to discipline a professional license, the Petitioner has the burden of proof, and must prove by clear and convincing evidence that the Respondent committed the violations set forth in the administrative complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

24. The proof adduced at hearing established that Midtown's salespersons engaged in the practice of contemporaneously selling automobile club membership with requested automobile insurance policies, without the customer's knowledge or consent on nine different occasions between March 1986 and March 1987. Evidence of purchase was not provided to customers, and the benefits of membership were-not explained. As a result of this practice, the agency received ninety percent commissions from the automobile club. As none of the nine customers were aware that such an enrollment had taken place, the monies paid inured to Midtown and ATA.

    
    

25. Section 626.611, Florida Statutes, provides, as follows in pertinent part:

    
    

    626.611 The department shall ... suspend, revoke or refuse to renew the license of any agent, if it finds that as to the agent ... any one or more of the following grounds exist:

    * * *

    (5) Willful misrepresentation of any insurance policy ... 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.

    * * *

    (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    * * *

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

    2. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or others and deceived in the conduct of business under the license.

    * * *

    (13) Willful failure to comply with, oar willful violation of, any proper order or rule of the department or willful violation of any provision of this code.

    
    

26. The administrative complaint alleges that the manner in which business was conducted at Midtown during the nine transactions resulted in violations of all of the provisions of Section 626.611, Florida Statutes, as enumerated above. However, because many of the alleged violations are cumulative or unsubstantiated by the evidence presented, the Respondent is guilty of nine violations of Section 626.611(9), Florida Statutes. Section 626.734, Florida Statutes, places the accountability for such fraudulent or dishonest practices upon the general line agent or agents who are employed by an incorporated general lines agency and who have direct supervision and control of salespersons who act on behalf of the corporation. Accordingly, it is Respondent Williamson's licenses which are disciplined as a result of the nine violations. Russell v. Eckert, 195 So.2d 617 (Fla. 2d DCA 1967); Patek v. Associated Underwriters, Inc., 167 So.2d 721 (Fla. 3d DCA 1964).

    
    

27. In addition to the powers enumerated in Section 626.611, Florida Statutes, the Department has been granted the power to discipline licenses under Section 626.621, Florida Statutes, which provides:

    
    

    626.621 The department may, in its discretion ... revoke, suspend, or refuse to renew the license of any agent ... if it

    finds that as to the ... agent ... any one or more of the following applicable grounds exist under circumstances for which such ... revocation or refusal ... is not mandatory under s. 626.611:

    * * *

    (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.

    * * *

    (6) In the conduct of business under the license or permit, engaging in unfair or deceptive acts or practices, as prohibited under part X of this chapter...

28. Unfair or deceptive acts or practices are defined in Section 626.9541(1), Florida Statutes, as follows:

    
    

    The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

    1. Knowingly making, issuing,

       circulating, or causing to be made, issued, or circulated any estimate, illustration, circular, statement, sales presentation, omission, or comparison which uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof.

       
       

29. The evidence presented demonstrates that sales representatives under Respondent's supervision made misrepresentations and used deceptive practices in the course of nine insurance transactions to gain customer enrollment and membership fees. These deceptive practices were committed on the basis of Respondent Williamson's training and instructions to present and acquire the automobile club memberships in this manner. As a result, the Respondent is guilty of nine violations of Section 626.621(6), Florida Statutes. However, because the same nine transactions are involved, the discipline taken against Respondent's licenses should not increase in severity because of the additional violations under the Unfair Insurance Trade Practices Act.

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

That Virginia Louise Williamson be found guilty of nine violations of Section 626.611(9), Florida Statutes, and nine violations of Section 626.21, Florida Statutes, as alleged in the Administrative Complaint.

That Respondent's licenses as General Lines Insurance Agent, Life Insurance Agent, and Health Insurance Agent and eligibility for licensure be suspended for a period of one year.

DONE and ENTERED this 24th day of July, 1989, in Tallahassee, Leon County, Florida.

VERONICA D. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1989.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-4553

Petitioner's proposed findings of fact are addressed as follows:

1. Accepted. See HO #2.

2. Accepted. See HO #2.

3. Accepted. See HO #3.

4. Accepted. See HO #5.

5. Accepted.

6. Accepted. See HO #17.

7. Accepted. See HO #3 and #18.

8. Accepted. See HO #12 and #13.

9. Accepted. See HO #15.

10. Accepted. See HO #14.

11. Accepted. See HO #8.

12. Accepted. See HO #4.

13. Accepted. See HO #7

14. Accepted. See HO #6.

15. Accepted. See HO #9.

16. Accepted. See HO #10.

17. Rejected. Improper Summary.

Respondent's proposed findings of fact are addressed as follows:

1. Accepted. See HO #2.

2. Accepted. See HO #3.

3. Rejected. See HO #3. (Respondent's answer and prehearing statement.)

4. Rejected. Conclusion of Law.

5. Accepted. See HO #4.

6. Accepted.

7. Accepted. See HO #4. 8.-10. Accepted.

1. Rejected. See HO #5.

2. Rejected. Conclusion of Law. Contrary to existing law. See White v. Allstate Insurance Company, 530 So.2d 967 (Fla. 1st DCA 1988).

13.-16. Accepted.

17.-28. Accepted. See HO #6.

29.-34. Accepted. See HO #7.

35.-36. Rejected. Contrary to fact. See HO #7.

37. - 43. Accepted. See HO #8.

44. Rejected. See HO #8.

45-50. Accepted. See HO #9.

51.-52. Accepted.

53.-64. Accepted. See HO #10 and #11.

65.-76. Accepted. See HO #12 and #13.

77.-83. Accepted. See HO #14.

84.-91. Accepted. See HO #15.

COPIES FURNISHED:

Robert C. Byerts, Esquire Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

Michael S. Moreland, Esquire Post Office Box 1992

Fort Myers, Florida 33992

Honorable Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol

Tallahassee, Florida 32399-0300

Don Dowdell, Esquire General Counsel Department of Insurance The Capitol

Tallahassee, Florida 32399-0300

Docket for Case No: 88-004553

Orders for Case No: 88-004553