STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
vs ) CASE NO. 88-4927
)
GARY STEVEN WOLFE, )
)
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 May 25 and 26, 1989, in Fort Myers, Florida.
APPEARANCES
For Petitioner: S. Marc Herskovitz, Esquire
Office of Legal Services
412 Larson Building Tallahassee, Florida 32399-0300
For Respondent: Joseph D. Stewart, Esquire
Hardt & Stewart
801 Laurel Oak Drive
Suite 705, Sun Bank Building Naples, Florida 33963
STATEMENT OF THE ISSUES
Whether the Respondent's insurance licenses should be disciplined on the basis of the alleged multiple violations of Chapter 626, Florida Statutes, as set forth in the Administrative Complaint.
PRELIMINARY STATEMENT
In an Administrative Complaint dated September 9, 1988, the Petitioner, Department of Insurance and Treasurer (hereinafter the Department), charged Respondent, Gary Steven Wolfe (hereinafter Wolfe), with a series of violations of Chapter 626, Florida Statutes. Essentially, the Respondent Wolfe is charged with failing to remit funds collected in a fiduciary capacity to the insurers named in the Administrative Complaint. As a result of the Respondent's failure to remit these funds, the potential insured did not receive the coverage sought through their dealings with the Respondent. These incidents allegedly occurred either through the actions of Respondent Wolfe, or someone acting under his direct supervision and control. The Department seeks to discipline the Respondent's licenses as a result of the alleged violations. The Respondent
contests the factual allegations in the complaint. A formal administrative hearing was held to resolve the factual dispute.
During the hearing, the Petitioner presented the testimony of ten witnesses and submitted twenty-three exhibits. All but Petitioner's Exhibit 9 were received into evidence. The Respondent called six witnesses and testified in his own behalf. Of the twelve exhibits offered by Respondent, only Respondent's Exhibit 12 was not admitted into evidence.
The transcript of the hearing was filed on July 28, 1989. Proposed Recommended Orders were timely filed by both parties. Rulings on the proposed findings of fact are in the Appendix of the Recommended Order.
FINDINGS OF FACT
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.
At all times material to these proceedings, Respondent Wolfe was licensed as an insurance agent in the following areas: Ordinary Life, Ordinary Life including Disability Insurance, General Lines, and Disability. Respondent was also registered with the Department as an Automobile Inspection and Warranty Salesperson.
Respondent Wolfe conducted his insurance business through Edison Insurance Agency, Inc. (hereinafter Edison), which is located in Fort Myers, Florida. The Respondent is the President, the Director, and sole shareholder of the insurance agency. All of Edison's personnel who collected funds in a fiduciary capacity, on behalf of the insured named in the Administrative Complaint, acted through the supervision and control of Respondent Wolfe, the licensed general lines agent of record at Edison.
One of the services provided to customers who sought insurance through Edison was the agency's processing of premium financing applications. If an insurance customer decided to finance premium payments, the Respondent or agency personnel, would arrange premium financing for the customer through Regency Premium Finance Company (hereinafter Regency). Once the insurance customer's application to Regency was processed, Regency would issue a check for the financed portion of the premium. The check would name Edison as the payee, and would be sent to the agency's offices. The Respondent or agency personnel acting through his licenses, were then required to remit the money to the insurance company to obtain the insurance coverage selected by the proposed insured.
Count I
On October 7, 1986, Regency issued a check in the amount of eleven thousand eighty four dollars and twenty five cents to Edison. Upon receipt of the check, Edison paid the outstanding balance of the premiums owed to Canal Insurance Company by Shirley Turlington, who became insured with the company through Edison on July 16, 1986, under policies numbered P02 31 71, and 14 43 39.
On November 7, 1986, a Notice of Cancellation was sent by Regency to the insurer as the insured did not pay an installment payment, as agreed, by
October 16, 1986. The insurance policies were cancelled by the insurer, and an unearned premium of ten thousand one hundred and twenty four dollars was credited to Edison's account with Dana Roehrig & Associates, an authorized representative of Canal Insurance Company.
Pursuant to the Premium Finance Agreement signed by the insured Shirley Turlington, Regency was assigned all unearned premiums returned by the insurance company on these specific policies. Shirley Turlington was not entitled to the unearned premiums credited to Edison's account by Canal Insurance Company through Dana Roehrig & Associates. A determination of Regency's entitlement to the unearned premium refund is currently pending in a civil action.
Count II
On March 16, 1987, Regency issued a check in the amount of nine thousand four hundred and forty one dollars to Edison. The purpose of the check was to have Edison pay the outstanding balance of the premium owed to Canal Insurance Company by Guillermo Rodriguez for a commercial automobile liability policy numbered 152 656. In reality, the amount of money necessary for payment to Canal Insurance Company had already been earmarked in the account maintained by Dana Roehrig & Associates which shows the credits and debits placed on Edison's business transactions with Dana Roehrig & Associates. The premium was paid, and the policy was issued by Canal Insurance Company with an effective date of February 2, 1987.
In the premium finance agreement completed on behalf of Mr. Rodriguez in Edison's Offices, the inception date of the policy was projected for March 29, 1987. Respondent Wolfe and Edison personnel were unable to bind Canal Insurance Company so that an actual policy number and policy inception date were unknown by Edison at the time the finance agreement with Regency was completed at the agency. As the commercial automobile liability market was very active at Dana Roehrig & Associates during this time period, it is unknown what basis was used for the projected inception date of the policy.
On May 27, 1987, a Notice of Cancellation was sent by Regency to the insurer as the insured did not pay an installment payment, as agreed, on April 29, 1987. The policy was cancelled September 25, 1987. No evidence was presented at hearing to demonstrate what happened to the unearned premium refund.
Count III
On March 24, 1987, Regency issued a check in the amount of twenty one thousand four hundred thirty five dollars to Edison. The purpose of the check was to pay the outstanding balance of the premium on a commercial automobile liability policy from Lumbermans Mutual Insurance Company which had been applied for by Thomas Gleason through Edison.
Edison did not purchase an insurance policy for Mr. Gleason with the funds sent to Edison by Regency for that purpose. The check from Regency was cashed, and the funds were commingled with other funds in the agency's account number 632717.
Count IV
On April 21, 1987, Regency issued a check in the amount of twenty five thousand one hundred and fifty eight dollar and seventy five cents to Edison.
The agency was to apply these funds against the outstanding balances on premiums for Clayton Olding, Inc., a trucking firm. The proposed insured had applied for insurance coverage from Canal Insurance Company and Cadillac Insurance Company. Edison paid for policy number 155941 with Canal Insurance Company with check number 7120. The premium amount and the inception date listed on the Regency premium finance agreement were correct.
A notice of cancellation was sent to Canal Insurance Company on July 1, 1987, as Clayton Olding had failed to pay the installment due Regency on June 13, 1987. However, the policy had already been cancelled by the insured on June 1, 1987. A credit of nineteen thousand one hundred seventeen dollars and eighty cents was placed against Edison's account with Dana Roehrig & Associates, the authorized representative for Canal Insurance Company.
Paperwork given to Clayton Olding, Inc. represented that the company was insured by Cadillac Insurance Company through Edison. Edison was the authorized agent of Cadillac Insurance Company and was able to temporarily bind the company. However, the money which was to be given to Cadillac Insurance Company as the down payment on the insurance premium was never sent to the insurer. Instead, Rose Delaney, an employee of Edison, created interagency documents which reflected that the money had been sent, and took the money for her own personal use. When Clayton Olding, Inc. notified Ms. Delaney to cancel the policy on June 1, 1987, this customer believed that Edison had acquired the insurance policy requested with Cadillac Insurance Company.
Clayton Olding, Inc. received a refund from Edison after the cancellation of the two policies in the amount of approximately one thousand dollars. It was not revealed at hearing whether the refund related to the Canal Insurance Company policy or the Cadillac Insurance Company policy, or both transactions.
Count V
On April 28, 1987, Regency issued a check in the amount of four thousand five hundred and sixteen dollars to Edison for payment of the outstanding balance of the premium purportedly owed by Arthur Farquharson to Canal Insurance Company through Edison.
Edison did not purchase an insurance policy for Mr. Farquharson with the funds sent to Edison by Regency for that purpose. The check from Regency was cashed, and the funds were commingled with the funds in the agency's checking account numbered 632717. The policy requested by Mr. Farquharson was never obtained by Edison on his behalf.
Counts VI through VIII
Count VI through Count VIII of the Administrative Complaint involve requests from proposed insured to purchase insurance through Edison. The proposed insured were Clinton Roole, Bertel Alexander Prince, and A & E Young Trucking, Inc, respectively. In each application for insurance, the proposed insured requested premium financing through Regency. Regency issued checks on behalf of these proposed insured to Edison. The agency was to pay the outstanding balances on insurance premiums in the policies purportedly obtained by Edison on behalf of these customers.
Edison did not properly apply the funds sent to the agency by Regency because the requested policies were never purchased by Edison on behalf of these
customers. The checks from Regency were cashed by the agency, and commingled with other funds in the agency's checking account numbered 632717. The customers did not receive the benefits requested from Edison, their insurance agency.
Count IX
On May 7, 1987, Regency issued a check in the amount of thirty two thousand one hundred and nine dollars to Edison. The agency was to apply the funds against the outstanding balances on three policies which were purportedly applied for from the following companies through Edison: Canal Insurance Company, Cadillac Insurance Company, and South Atlantic Council. The proposed insured was Charles Bernardo d/b/a ABX, Inc.
A binder of insurance was issued by Canal Insurance Company to Mr. Bernardo for a fifteen day period which expired on April 28, 1987. A full policy was never purchased by Edison on behalf of Mr. Bernardo with the funds sent to Edison by Regency for that purpose.
No information was provided at hearing regarding the purported application for insurance from South Atlantic Council on behalf of Mr. Bernardo through Edison.
The check from Regency to Edison was cashed, and the funds were commingled with other funds in the agency's checking account numbered 632717.
Mitigation
All of the insurance transactions involved in the Administrative Complaint were conducted by Rose Delaney, an employee of Edison. During the months of March 1987 through May 1987, this employee was involved in a complex embezzlement and document falsification scheme in which she embezzled funds from the insurance agency and created phoney insurance policies and premium financing agreements, as well as false agency control documents, to cover her misdeeds.
Respondent Wolfe was unable to discover this embezzlement scheme until May 23, 1987. His inability to detect the scheme was based upon a number of extraordinary factors, in spite of his reasonable attempts to supervise his insurance business and the employees with the high degree of care commensurate with his responsibilities as an insurance agent. These extraordinary factors were: the rapid and intense growth of Respondent's business during this time period; the redesign of the computerized accounting program by the agency's accountant, who failed to recognize that he had disabled an account reconciliation function within the program; the sophistication of Ms. Delaney's embezzlement scheme, and her ability to generate false documents within the agency setting which hid her crimes from the supervisory reviews conducted by Respondent Wolfe over a two and one half month period.
Rose Delaney, the perpetrator of the embezzlement and documentation falsification scheme, is currently being treated in a mental health institution for mental illness. She has been diagnosed as having major depression with psychotic features as well as suffering from latent schizophrenia, paranoid type. Based upon the professional opinions of the two psychiatrists who examined Ms. Delaney, she was insane during the time she handled the insurance transactions set forth in the Administrative Complaint. The McNaughton standard was applied by both of the experts, and no evidence to the contrary was presented during the administrative hearing.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding, pursuant to Section 120.57(1), Florida statutes.
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).
The proof adduced at hearing on Counts I and II was contrary to the allegations set forth in the complaint, which alleged that the requested insurance was not purchased on behalf of the insured by Edison. Accordingly, the charges that Respondent Wolfe violated various provisions of Chapter 626, Florida Statutes, by failing to acquire the requested insurances with the funds given to Edison for that purpose, should be dismissed.
In the seven remaining counts, the department was able to prove by clear and convincing evidence that Rose Delaney, an employee of Edison, failed to purchase the insurance requested by these seven agency customers. Downpayments were accepted from these customers, and premium financing was arranged by Ms. Delaney on behalf of these customers in order to complete the requested insurance transactions. The monies accepted by Ms. Delaney on behalf of the agency customers were placed in one of the agency's checking accounts, but were not paid to the insurers, as directed by these customers.
While it is possible that many of the applications for insurance were not requested by customers but were "created" by Ms. Delaney, the authenticity of the documents evidencing these insurance transactions was not challenged at hearing. As a result, the presumption that actual customers requested the insurance coverages evidenced by the agency's business records was maintained during these proceedings.
Ordinarily, accountability for fraudulent or dishonest practices committed by agency employees is placed upon the general lines agent who has direct control of salespersons who act on behalf of the corporation. Russell v. Eckert, 195 So.2d 617 (Fla. 2nd DCA 1967); Patek v. Associated Underwriters, Inc., 167 So.2d 721 (Fla. 3rd DCA 1964). However, the employee in this case whose activities violated the provisions of the Insurance Code, was insane at the time the violations occurred. To hold Respondent Wolfe accountable for Ms. Delaney's actions would be improper, as such action by the Department would be based upon an incorrect presumption that Ms. Delaney could be controlled or supervised. The Respondent Wolfe submitted proof at hearing which established that Ms. Delaney was insane. The Department did not dispute or rebut this evidence.
The Respondent Wolfe discovered Ms. Delaney's activities within a three month period. Based upon the complexity of her scheme, which has not been completely uncovered, Respondent Wolfe's discovery demonstrated that he has reasonably adequate knowledge and technical competence to engage in transactions authorized by his licenses. No competent evidence to the contrary was presented at hearing.
Based upon the foregoing, it is RECOMMENDED:
That the Respondent, Gary Stephen Wolfe, be found not guilty of all nine counts set forth in the Administrative Complaint.
DONE and ENTERED this 5th day of September, 1989, at Tallahassee, Florida.
VERONICA E. DONNELLY
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1989.
APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-4927
Petitioner's proposed findings of fact are addressed as follows:
Accepted. See HO# 2.
Accepted. See HO# 2.
Accepted. See HO# 3.
Accepted. See HO# 3.
Petitioner's findings do not contain a number 5.
Accepted. See HO# 3.
Accepted.
Accepted. See HO# 4.
Accepted.
Accepted. See HO# 5.
Rejected. See HO# 27.
Accepted. See HO# 5.
Accepted, but for further exposition of the facts, see HO# 7.
Accepted. See HO# 5.
Accepted. See HO# 6 and # 7.
Accepted.
Accepted.
Rejected. See HO# 27.
Accepted. See HO# 8.
Rejected. Irrelevant. See HO# 8.
Rejected. See HO# 10.
Accepted.
Accepted.
Rejected. See HO# 27.
Accepted. See HO# 11.
Accepted. See HO# 12.
Accepted. See HO# 12.
Accepted.
Accepted.
Rejected. See HOC 27.
Accepted. See HO# 13.
Rejected. Irrelevant. See HO# 13.
Rejected. Irrelevant to pleadings. See HO# 13.
Rejected. Irrelevant to pleadings. See HO# 13.
Accepted. See HO# 14.
Accepted. See HO# 14.
Accepted. See HO# 14.
Accepted.
Accepted.
Rejected. See HO# 27.
Accepted. See HO# 17.
Accepted. See HO# 18.
Accepted. See 1O# 18.
43.-48. Not provided to the Hearing Officer.
Accepted. See HO# 18.
Accepted.
Accepted.
Rejected. See HO# 27.
Accepted. See HO# 19.
Accepted. See HO# 20.
Accepted. See HO# 20.
Accepted.
Accepted.
Accepted. See HO# 19.
Accepted. See HO# 20.
Accepted. See HO# 20.
Accepted.
Accepted.
Rejected. See HO# 27.
Accepted. See HO# 19.
Accepted. See HO# 20.
Rejected. Cumulative.
Rejected. Improper summary.
Rejected. Cumulative.
Rejected. See HO# 25 and #27.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant and immaterial.
Rejected. Irrelevant.
Accepted. See HO# 25.
Rejected. See HO# 27.
Rejected. Irrelevant. Improper shifting of burdens of proof. Not an ultimate issue in these proceedings.
Rejected. Immaterial. Outside the scope of the pleadings.
Rejected. Contrary to fact. A co-signer was required on any checks signed by Ms. Delaney.
Rejected. Outside the scope of the pleadings.
Accepted that Respondent Wolfe was not personally involved in the wrongdoings committed by Ms. Delaney. See HO#
25. The rest of paragraph 84 is rejected as argumentative.
Rejected. Irrelevant - Argumentative.
Rejected. Improper summary.
Rejected. Argument as opposed to proposed finding of fact. Improper summary.
Respondent's proposed findings of fact are addressed as follows:
Accepted. See HO# 2.
Accepted. See HO# 3.
Rejected. Irrelevant.
Accepted the first statement in paragraph 4. See HO# 9. The rest is rejected a- irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Accepted.
Rejected. Irrelevant.
Rejected. Irrelevant.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted. See HO# 26.
Accepted.
Rejected. Irrelevant.
Rejected. Not established by competent evidence.
Accepted.
Rejected. Improper summary with many factual conclusions that are immaterial to the allegationS in the Administrative Complaint.
Rejected. Irrelevant to these proceedings.
Rejected. Irrelevant.
Accepted.
Accepted.
Accepted.
Rejected. Not established by competent evidence.
Rejected. Irrelevant to these proceedings.
Accepted.
Accepted. See HO# 27.
Accepted.
Accepted. See HO# 25.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Irrelevant.
Rejected. Improper summary. For rulings on each transaction, refer to Findings of Fact in the Recommended Order.
Accepted. See HO# 25.
COPIES FURNISHED:
S. Marc Herskovitz, Esquire Office of Legal Services
412 Larson Building Tallahassee, Florida 32399-0300
Joseph D. Stewart, Esquire Hardt & Stewart
801 Laurel Oak Drive
Suite 705, Sun Bank Building Naples, Florida 33963
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
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE
IN THE MATTER OF:
CASE NO. 88-L-359SMH
GARY STEVEN WOLFE DOAH CASE NO. 88-4927
/
FINAL ORDER
THIS CAUSE came on before the undersigned Treasurer and Insurance Commissioner of the State of Florida for consideration and final agency action. On September 9, 1988, an Administrative Complaint was filed against GARY STEVEN WOLFE, Respondent, charging various violations of the Insurance Code. On September 29, 1988, the Respondent filed a petition for formal hearing in accordance with Section 120.57(1), Florida Statutes. Pursuant to notice, a
formal hearing was held on May 25 and 26, 1989, in Fort Myers, Florida, before the Honorable Veronica Donnelly, Hearing Officer for the Division of Administrative Hearings. After consideration of the evidence and argument presented at the hearing, and after further consideration of the proposed Findings of Fact and Conclusions of Law submitted by the parties, the Hearing Officer, on September 5, 1989, issued a Recommended Order (attached as Exhibit
to the Treasurer and Insurance Commissioner. The Hearing Officer recommended that a final order be issued finding the Respondent not guilty of the nine counts in the Administrative Complaint.
On September 15, 1989, the Petitioner filed Exceptions to Recommended Order. On September 18, 1989, Respondent filed Exceptions to Recommended Order.
RULINGS ON RESPONDENT'S EXCEPTIONS
Respondent's Exceptions to Recommended Order are rejected as untimely filed. In accordance with Rule 4-38.043, Florida Administrative Code, each party was allowed 10 days from the date of rendition of the Recommended Order in which to file exceptions. Respondent's Exceptions were served on September 18, 1989, three days late.
RULINGS ON PETITIONER'S EXCEPTIONS TO FINDINGS OF FACT
Paragraph 1 of Petitioner's Exceptions takes exception to the Preliminary Statement in the Recommended Order which states that all of Petitioner's Exhibits except Number 9 were admitted. Petitioner's Exception is denied as irrelevant and immaterial.
Paragraph 2 of Petitioner's Exceptions takes exception to the statement in the Hearing Officer's Finding of Fact number 7 that "Shirley Turlington was not entitled to the unearned premiums credited to Edison's account by Canal Insurance Company through Dana Roehrig & Associates." Since Petitioner agrees that Shirley Turlington was not entitled to the unearned premium, Petitioner's exception is denied.
Paragraph 3. of Petitioner's Exceptions takes exception to the Hearing Officer's Findings of Fact, numbered 8 through 10, which address Count II in the Administrative Complaint. A review of the material on Guillermo Rodriguez in Petitioner's Exhibit 9 and the testimony of Ms. Powers-Stasko, records custodian for Canal Insurance at pages 209 through 211 of the transcript indicates confusion in the records of Canal Insurance Company as to whether Canal ever issued policies of insurance to Guillermo Rodriguez. Petitioner's Exception in Paragraph 3 is therefore denied.
Paragraph 4 of Petitioner's Exceptions to Recommended Order takes exception to the Hearing Officer's Findings of Fact numbered 14 and 15, regarding Count IV of the Administrative Complaint. Petitioner's Exception in paragraph 4 is denied as irrelevant and immaterial.
Petitioner's Exception in paragraph 5, regarding the Hearing Officer's failure to make any finding on Respondent's personal responsibility for the funds received by Edison Insurance Agency, will be addressed in conjunction with Petitioner's Exception in paragraph 9, in the section on Conclusions of Law.
Paragraphs 6 and 7 of Petitioner's Exceptions to Recommended Order are not exceptions to any of the Hearing Officer's Findings of Fact but rather
address the question of the amount of money that was paid by various insureds and by Regency Premium Finance Company to Edison Insurance Agency, the amount which was allegedly embezzled by Rose Delaney, and any amount which may be unaccounted for. Petitioner's Exceptions in paragraphs 6 and 7 are therefore denied.
Paragraph 8 of Petitioner's Exceptions to Recommended Order takes exception to the Hearing Officer's Finding of Fact number 27 on the grounds that the Finding of Fact is not supported by competent, substantial evidence and is actually a Conclusion of Law rather than a Finding of Fact. The Hearing Officer states in paragraph 27 of the Recommended Order that Rose Delaney is currently being treated for mental illness. That statement is not in contention. The Hearing Officer further states that Ms. Delaney "was insane during the time she handled the insurance transactions set forth in the Administrative Complaint." The Hearing Officer bases this statement on the professional opinions of the two psychiatrists who examined Ms. Delaney. The psychiatric reports are contained in Respondent's Exhibit 7; the deposition of Dr. Parsons, one of the examining doctors, was entered as Respondent's Exhibit 6; the testimony of Mr. Roland Reis, Assistant State Attorney for the 20th Judicial Circuit also concerned this issue (transcript pages 286 through 323).
Based on a review of the materials cited above, as well as the relevant Rules of Criminal Procedure, the Hearing Officer improperly concluded that Rose Delaney was insane at the time the alleged embezzlements occurred. That determination is not a proper subject for an administrative proceeding under Chapter 120, Florida Statutes. Under Rule of Criminal Procedure 3.216, a defendant in a criminal proceeding has the right to raise the defense of insanity. The rule then provides procedures to be followed in making psychiatric assessments and in presenting evidence at trial. No trial of Ms.
Delaney on the embezzlement charge has been held. The only proceeding in connection with the embezzlement charge which has been held thus far has been the determination that Ms. Delaney is presently incompetent to stand trial.
That was the purpose for which Ms. Delaney was examined by the psychiatrists. That is the import of Respondent's Exhibits 6 and 7. Mr. Reis stated explicitly (transcript, page 307) that no trial had been held and that the cover letter in Respondent's Exhibit 7 is not a legal finding. Insanity is a defense in a criminal proceeding and is determined by the trier of fact at that proceeding.
The doctors' opinions introduced by the Respondent and relied upon by the Hearing Officer are unsubstantiated hearsay in an administrative proceeding in which the alleged insane person was neither on trial nor present. Petitioner was under no obligation to present evidence as to the psychiatric condition of a third person not a party to the administrative proceeding. Petitioner is correct that the doctors' opinions are unsubstantiated hearsay not used to supplement or explain any other evidence, in violation of Section 120.58(1)(a), Florida Statutes. See also Harris v. Game and Fresh Water Fish Commission, 495 So.2d 806, 808 (Fla. 1st DCA 1986). Therefore, Petitioner's Exception in paragraph 8, which is actually an exception to a conclusion of law, is accepted.
Paragraphs 5 and 9 of Petitioner's Exceptions to Recommended Order take exception to the failure of the Hearing Officer to find any fiduciary responsibility on the part of the Respondent. These matters are more properly considered in the section on Conclusions of Law. Petitioner's Exceptions in paragraphs 5 and 9 are therefore denied.
RULINGS ON PETITIONER'S EXCEPTIONS TO CONCLUSIONS OF LAW
Petitioner's Exceptions to Conclusions of Law, as well as those earlier exceptions in the Findings of Fact section which were in fact actually exceptions to Conclusions of Law, will be considered below by addressing three issues: the alleged insanity of Rose Delaney; the missing money; and Respondent's fiduciary responsibility.
Paragraphs 10 and 11 of Petitioner's Exceptions to Recommended Order take exception to the last full paragraph on page 11 of the Recommended Order in which the Hearing Officer states, as a Conclusion of Law, that the "proof adduced at hearing on Counts I and II [Turlington and Rodriguez] was contrary to the allegations set forth in the complaint, which alleged that the requested insurance was not purchased on behalf of the insured by Edison." Petitioner's Exception is denied based on the earlier rulings on Petitioner's Exceptions to Findings of Fact.
Paragraphs 12, 13, and 14 of Petitioner's Exceptions to Recommended Order will be considered together. The Hearing Officer's Conclusion of Law to which these paragraphs are addressed is found in the paragraph beginning near the bottom of page 12 and continuing to the top of page 13 of the Recommended Order. The Hearing Officer has concluded that Ms. Delaney was insane at the time the acts of embezzlement were committed and that therefore the Respondent could not control her and that finally the Respondent could not be held accountable for her acts, even though, with case citations, the Hearing Officer states at the beginning of that paragraph in the Recommended Order: "Ordinarily, accountability for fraudulent or dishonest practices committed by agency employees is placed upon the general lines agent who has direct control of salespersons who act on behalf of the corporation." [Citations omitted]
Petitioner is correct that there has been no legal finding that Ms. Delaney is insane, either now or at the time the alleged embezzlements were committed.
The only judicial determination which has been made thus far is that Ms. Delaney is not presently competent to stand trial. See discussion at paragraph 7, above. Therefore, the Hearing Officer's conclusion on page 12 of the Recommended Order that "the employee [Ms. Delaney] ... was insane at the time the violations occurred" is rejected.
Similarly, the Hearing Officer's conclusion at pages 12 and 13 of the Recommended Order that "the Respondent Wolfe submitted proof at hearing which established that Ms. Delaney was insane ... [and that] the Department did not dispute or rebut this evidence" is also rejected. As discussed in paragraph 7, above, insanity is a defense in a criminal proceeding. That proceeding has not been held. Ms. Delaney was not a party to this administrative proceeding, which is in any event not the proper forum to determine the sanity or lack thereof of a person accused of a crime, and the Department was not required to dispute or rebut the doctor's opinions on this issue.
Further, the Hearing Officer's conclusion on page 12 of the Recommended Order that Ms. Delaney could not be "controlled or supervised" by the Respondent is rejected. Petitioner's Exception in paragraph 14 is well-taken. Petitioner states: "Whether she [Ms. Delaney] was insane or not is simply irrelevant. The actions were not insane... This is not a situation where an employee went berserk and assaulted a customer." I conclude that the insanity or not of the employee is not only not determined, but is irrelevant to the resolution of this matter. Assuming that the employee was an embezzler, the actions she took to
misappropriate funds and then to conceal the misappropriation were obviously logical and rational since the thefts had been going on for some time and were discovered only by accident.
The thrust of the Administrative Complaint is that a significant amount of money was entrusted to Respondent in his fiduciary capacity as a licensed insurance agent and that that money is missing. As alluded to in Petitioner's Exceptions in paragraphs 6 and 7, Petitioner contends that the amount taken in by the agency is known, that the amount embezzled by Rose Delaney is known, and that there is an amount unaccounted for which is a conversion or an unlawful withholding of funds directly attributable to the Respondent. The Hearing Officer did not address these various amounts in the Recommended Order. The testimony of the records custodian for Regency Premium Finance Company is that approximately $120,000.00 was issued to Edison Insurance Agency by Regency Premium Finance Company as a result of the premium finance contracts entered into by the nine persons or companies who are the subjects of the nine counts in the Administrative Complaint. These amounts were sent to Edison between March and May of 1987 and no amount has been returned to Regency even though the testimony is clear that no policies were issued in regard to some of the counts and that some policies were issued but did not run full term for other counts. See transcript at pages 124 and 125. Petitioner's Exhibit 7 and the testimony of Mr. Lagan transcript, page 84) indicate that the criminal investigation accounted for about $27,900.00 allegedly embezzled by Rose Delaney. In his testimony at the hearing, the Respondent stated that Ms. Delaney had embezzled approximately $87,000.00 from his agency, but that he did not have any figures to show at the hearing as to how he arrived at that number. (See transcript at pages 446 and 447.)
The record contains competent, substantial evidence to show that fiduciary funds in the amount of at least $120,000.00 were paid to the Edison Insurance Agency and that while some portion of that was probably embezzled by Rose Delaney, at least $33,000.00 remains unaccounted for. (The $33,000.00 is derived by subtracting the $87,000.00 which the Respondent says Ms. Delaney embezzled from the Agency from the $120,000.00 which Mr. Waksman says Regency Premium Finance issued to the Agency; see transcript at pages 124, 125, 446, and 447.)
It is in any event clear that the $19,117.80 retained by Edison on the Olding account was not part of the embezzled funds because that amount was retained after Rose Delaney had been fired. (See transcript at page 217.)
The Hearing Officer's Conclusion on page 12 of the Recommended Order that Ms. Delaney could not be "controlled or supervised" by the Respondent is also rejected based on the Respondent's obligation to receive funds entrusted to him in a fiduciary capacity and to treat those funds with special care. After a thorough review of the transcript, the exhibits offered by both parties, and the depositions entered into evidence, the record is uncontroverted that the Respondent knew about Ms. Delaney's past criminal history (transcript, at pages 428-429). In Petitioner's Exhibit 8, Respondent presents a narrative of his employment and termination of Rose Delaney. This statement was signed on June 16, 1987, and contains as its heading: "This statement is being written of my own free will without duress in the hopes of aiding in the prosecution of Rose Marie Delany, [sic] whose address is 107 Waterview Ave., Lehigh, Lee, Florida 33936 and whose social Security Number is 267-94-3105." Respondent states that Ms. Delaney was hired in September, 1985, as a personal lines customer service representative; that near the end of calendar year 1985 Ms. Delaney told Respondent about her embezzling funds from a State Farm Insurance agent; that
that same information was shortly thereafter confirmed by Ms. Delaney's probation officer; that Respondent promoted Ms. Delaney in February, 1986, to office manager; that Respondent promoted Ms. Delaney again in June, 1986, to a job which entailed handling the truck accounts, including taking and issuing checks.
Prior to hiring Ms. Delaney, the Respondent did not check out any of her references (transcript, pages 424-426). The recruiter at the People Place, the employment agency which sent Ms. Delaney to Mr. Wolfe as a possible employee, stated that as a general rule, her agency did not check references and that it was her understanding that the employer was to do the checking. (See deposition of Joann Clark Foster at pages 27, 39, 51, and 57.) The Respondent testified that the only checking he did on Ms. Delaney was with a co-worker at a company called Insurance Management (transcript, pages 423 and 424). He never checked with either the Mitch Collier Insurance Agency or with State Farm regarding Ms. Delaney's earlier embezzlement (transcript, page 435). Ms. Delaney told the Respondent, during her discussion with him in late 1985 about her previous embezzlement, that "she had a guilty conscience and had turned herself in.
Further that this was the only reason she been caught [sic] [emphasis in original]." (See page 1 of Petitioner's Exhibit 8.)
The Respondent's supervision of the outside accountant hired to implement a computer system was minimal. The transcript at page 440 contains the following exchange: "Q: Did you have a good idea what was coming in and going out? A:
I left a large portion of that to Dave Carey who was our accountant to tell me whether we were, in fact or not profitable." It is clear, therefore, that the Respondent had ample notice, prior to his promoting her, that Ms. Delaney had embezzled a significant amount of money from another insurance agency and was still on probation for that crime. More important, Ms. Delaney had effectively warned the Respondent of her skill at embezzling when she told him that the only reason the previous embezzlement was discovered was that she had confessed. (Petitioner'S Exhibit 8).
Under these circumstances, the Respondent's already-existing fiduciary duty to those who entrusted money to him should have been of paramount concern to him. Regardless of his personal feelings for Ms. Delaney, the Respondent should have instituted any of many well-known and widely-used supervisory controls to ensure that his trust in this employee was not misplaced. Similarly, additional controls should have been instituted when an outside consultant was hired to install a computer system. Sound business practice requires constant vigilance when the usual routines are disrupted and requires special vigilance when fiduciary funds are involved.
RULING ON PETITIONER'S EXCEPTION TO RECOMMENDATION
Paragraph 15 of Petitioner's Exceptions to Recommended Order takes exception to the recommendation of dismissal in the Recommended Order. Based on the foregoing rulings on Exceptions to the Hearing Officer's Findings of Fact and Conclusions of Law and the record citations contained therein, I reject the Hearing Officer's recommendation.
The Hearing Officer absolved the Respondent from responsibility for the missing money based on the alleged insanity of the alleged embezzler. As discussed earlier, the insanity of the alleged embezzler is irrelevant to a determination of the Respondent's culpability in this matter. The fact remains that a considerable amount of money is missing and some of it cannot be
accounted for by the actions of the alleged embezzler. The business of insurance is very heavily regulated to protect the public. Since insurance contracts are lengthy legal documents, the public must rely on the expertise and professionalism of the insurance agents with whom they transact business. Large sums of money are often involved, especially, as here, for commercial coverages. Under Florida law, the insurance agent's fiduciary responsibility is clear.
Respondent's culpability in promoting a known embezzler into a position giving her access to the agency's funds and bank accounts and in failing to implement even the most minimal of supervisory controls warrants disciplinary action.
IT IS THEREFORE ORDERED:
That the Findings of Fact of the Hearing Officer are adopted.
That the Conclusions of Law of the Hearing Officer are adopted with the exceptions noted above.
That the recommended dismissal of the Hearing Officer is rejected.
That the Respondent shall pay a cumulative administrative fine of
$2500.00 for all violations, and is placed on probation for a period of two years from the date of this Order. The administrative fine shall be paid to the Department within 30 days of the date of this Order.
Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Fla.R.App.P. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, Florida 32399-0300, and a copy of the same with the appropriate district court of appeal within thirty
(30) days of the rendition of this Order.
DONE AND ORDERED this 22nd day of December, 1989.
TOM GALLAGHER
Treasurer and Insurance Commissioner
COPIES FURNISHED:
Honorable Veronica D. Donnelly, Hearing Officer Division of Administrative Hearings
The DeSoto Building 1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
Joseph D. Stewart, Esq. Hardt & Stewart
801 Laurel Oak Drive
Suite 705, Sun Bank Building Naples, Florida 33963
Gary Steven Wolfe
2250 Iris Way Southeast Fort Myers, Florida 3390
Gary Steven Wolfe
4113 Palm Beach Boulevard Fort Myers, Florida 33905
S. Marc Herskovitz, Esq. Division of Legal Services Department of Insurance
412 Larson Building Tallahassee, Florida 32399-0300
| Issue Date | Proceedings |
|---|---|
| Sep. 05, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 22, 1989 | Agency Final Order | |
| Sep. 05, 1989 | Recommended Order | Insurance agent not liable for acts of employee when evidence showed employee was legally insane when theft of premium funds occurred |
DEPARTMENT OF FINANCIAL SERVICES vs MARGARET LOUISE HERGET, 88-004927 (1988)
DEPARTMENT OF INSURANCE AND TREASURER vs. WILLIAM JOHN HARTNETT, 88-004927 (1988)
DEPARTMENT OF INSURANCE vs STEPHEN PETER ALICINO, 88-004927 (1988)
DEPARTMENT OF INSURANCE AND TREASURER vs RUTH ANNE WASHBURN, 88-004927 (1988)
IN RE: MARCH 8, 2019, PETITION FOR DECLARATORY STATEMENT, ELIAS MAKERE vs *, 88-004927 (1988)
