STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1530

)

STEVEN COURTNEY THOMAS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Don W. Davis, on June 20, 1989, in Clearwater, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Robert V. Elias, Esquire

Office of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For Respondent: Thomas F. Woods, Esquire

1709-D Mahan Drive Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issue for determination is whether Respondent made or is accountable for misrepresentations that were made in the course of sales of automobile personal injury protection insurance policies to various consumers; thereby committing violations of Chapter 626, Florida Statutes, sufficient to subject Respondent's licensure as general lines insurance agent to disciplinary action.

PRELIMINARY STATEMENT

On March 9, 1989, Petitioner issued an Administrative Complaint containing allegations that Respondent, or his subordinates, made certain misrepresentations in the sale of automobile personal injury protection to 11 different individuals and thereby committed various violations of Chapter 626, Florida Statutes, sufficient to support the imposition of disciplinary sanctions against Respondent's license as a general lines insurance agent.

Respondent requested an administrative hearing on the charges contained in the Administrative Complaint that he, or subordinates at the Mr. Auto Insurance Company of St. Petersburg, Inc., located in St. Petersburg, Florida, sold memberships in the Colonial Touring Association, a motor club, to individuals

who had requested only the purchase of personal injury protection insurance policies. Subsequently, the matter was transferred to the Division Of Administrative Hearings to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At hearing, the parties jointly moved to consolidate this matter, solely for the purpose of final hearing, with Division Of Administrative Hearings case number 89-1545. In that case, Respondent's sister faces similar charges with regard to the operation of offices of Mr. Auto Insurance of Clearwater Inc., located in Clearwater, Florida. The motion was granted.

At the final hearing, Petitioner presented the testimony of Kathy L. Byers, Deborah Archambeault, James Royle, Phil Adamo and Rachel Lareau. James Royle testified by deposition. Petitioner also presented six evidentiary exhibits.

Respondent testified on his own behalf and presented one evidentiary exhibit, which was not admitted in evidence.

The transcript of the hearing was filed with the Division Of Administrative Hearings on June 30, 1989. The parties requested and were granted leave to file posthearing submissions more than 10 days after the filing of the transcript and, in accordance with Rule 221-6.031, Florida Administrative Code, waived provisions of Rule 28-5.402, Florida Administrative Code.

Proposed findings of fact submitted by the parties are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Respondent is Steven Courtney Thomas, currently licensed and eligible for licensure by Petitioner as a general lines insurance agent. Respondent has held such licensure status since December 28, 1983.

   
   

2. At all times pertinent to these proceedings, Respondent was the president and general lines agent of record for Mr. Auto Insurance of St. Petersburg Inc., (Mr. Auto) located in St. Petersburg, Florida.

   
   

3. On May 1, 1987, Deborah Archambeault of St. Petersburg, Florida, went to the office of Mr. Auto to purchase PIP insurance. Upon her arrival, she handed her driver's license to the salesperson, a female, who, to the best of Archambeault's recollection was named Lisa or Leslie. As a result of a previous telephone call to the agency by Archambeault regarding the type of coverage desired, little conversation ensued during this visit with the exception that Archambeault provided the name of her son when that information was requested by the sales person. Upon completion of all necessary paperwork, Archambeault received a receipt reflecting her total payment of $65.

   
   

4. During her visit, Archambeault signed an application to Banker's Insurance Company for $10,000 PIP coverage with a $2,000 deductibility provision. She also initialed the portion of the application form indicating the deductibility selection. The application reflects the initial premium for that policy was $35. In addition, she signed a form, bearing the name of the Colonial Touring Association, Inc., which designated her son as the beneficiary of travel and accident benefits, including automobile accidental death coverage, totalling $6,000. Notably, the salesperson had no discussion with Archambeault regarding whether she wanted to purchase a membership in the Colonial Touring Association.

5. A preprinted form containing numerous provisions was also presented to Archambeault. On that form, she affixed her signature to a form statement affirming her rejection of bodily injury and property damage liability coverage; a form statement affirming her election of the $2,000 PIP deductibility provision, which also contained language noting such election was permitted only if she had additional disability insurance; a form statement declining uninsured motorist insurance; a form statement rejecting collision coverage of her own vehicle; and a form statement attesting to the voluntary election of the motor club membership at a cost of $30. Archambeault was also required to initial the portions of the form devoted to election of the PIP deductibility in two places; the uninsured motorist coverage declination and the election of motor club membership. At the bottom of the form, she signed the preprinted certification that she had read and had the form explained to her and understood all the signed and initialled provisions.

   
   

6. Archambeault's testimony establishes that she did not request to purchase the $30 membership in the Colonial Touring Association and did not acquire the motor club towing and accidental death benefit coverage as the result of informed consent or voluntary action. Respondent's testimony that such provisions are explained to all customers is not credited with regard to Archambeault since there is no proof that Respondent, while responsible for representations made by his business' employees, was present or dealt with Archambeault on this occasion.

   
   

7. On January 30, 1987, Kathy Byers went to Respondent's office to purchase PIP insurance. Byers talked with a saleswoman named Lisa. Byers asked for the cheapest insurance available in order to procure a tag for her automobile. While she had no recollection of being specifically informed by the saleswoman of the necessity of joining the Colonial Touring Association, the $69 paid by her upon completion of all paperwork included a membership in the association at a cost of $30. She provided the salesperson with a name to serve as beneficiary of the association membership's life insurance benefits, although Byers was not informed that such information or touring association membership was not required in order to obtain PIP coverage. The correct premium for the PIP insurance coverage which she initially requested to purchase was only $35.

   
   

8. The agency was closing and Byers was in a hurry to leave Mr. Auto. Before leaving, she signed and initialled, without reading, a form provided by the salesperson attesting to her rejection of bodily injury and property damage liability coverage; a statement reaffirming her election of the $2,000 PIP deductibility provision, which also contained language noting such election was permitted only if she had additional disability insurance; a statement declining uninsured motorist insurance; a statement rejecting collision coverage of her own vehicle; and a statement attesting to the voluntary election of motor club membership at a cost of $30. Byers was also required to initial the portions of the form devoted to election of the PIP deductibility in two places; initial the uninsured motorist coverage declination; initial the election of motor club membership; and finally to sign a certification that she had read and had the form explained to her and understood all the signed and initialled provisions. No discussion of the nature of the PIP insurance deductibility provisions or other health insurance was had with Byers by anyone at Mr. Auto.

   
   

9. It is found that Byers did not request to purchase the $30 membership in the Colonial Touring Association and did not voluntarily purchase the accidental death benefit and motor club towing coverage.

10. On August 6, 1987, James Earl Royle went to Mr. Auto to purchase automobile insurance. He stated basically that he wanted PIP coverage, and a price was quoted to him which he paid. No discussion was had with Royle regarding purchase of membership in the Colonial Touring Association or insurance deductibility amounts. Royle received a receipt for his total payment of $95 which reflected a premium payment for PIP coverage of $65. The actual premium for this coverage was $55. The receipt also reflected payment of $30 for accidental death benefit and motor club towing coverage. Royle also provided his signature and initials on Respondent's form documenting rejection of bodily injury and property liability coverage; election of a $2,000 deductibility in PIP coverage; rejection of uninsured motorist coverage; rejection of collision coverage; and election of accidental death and motor club towing benefits.

    
    

11. Royle did not request to purchase the membership in the Colonial Touring Association; the subject was not discussed with him; and he did not voluntarily purchase the accidental death benefit and motor club towing coverage.

    
    

12. The proof establishes that customers requesting to purchase only PIP insurance from Mr. Auto, a corporation duly organized under the laws of the State of Florida, were quoted a price for that coverage inclusive of cost of membership in the Colonial Touring Association. Further, such membership, while offering accidental death benefits, does not constitute an insurance policy.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

14. The Administrative Complaint contains 11 counts charging Respondent with violations of Chapter 626, Florida Statutes. No direct admissible evidence was presented with regard to counts one through four and counts seven through ten. Consequently, Respondent is not guilty of the violations alleged in those counts.

    
    

15. As to the allegations contained in counts five, six and eleven, Petitioner bears the burden of proving by clear and convincing evidence that Respondent committed those offenses. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

16. Respondent was the general lines agent of record for the corporation known as Mr. Auto. As such agent, he was accountable for the actions of his subordinates acting on behalf of the corporation. Section 626.734, Florida Statutes.

    
    

17. The proof is clear and convincing with regard to counts five, six and eleven of the Administrative Complaint, that salespersons at Mr. Auto engaged in the practice of "sliding" insurance coverages, and collecting premiums which included payment for membership in the Colonial Touring Association, without the consent of their customers. Such practices violated provisions of Sections 626.611(5), (7), and (9); 626.621(2) and (6); 626.9541(1)(a)1 and (1)(o)1, Florida Statutes, which proscribe such willful misrepresentation and dishonest practices by an insurance licensee. Therefore, Respondent, as the general lines agent for the corporation, is guilty of these violations as set forth in counts five, six and eleven.

18. Petitioner correctly notes that proven violations of Sections 626.611(5), (7), and (9), Florida Statutes, mandate a period of suspension or revocation of licensure.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered suspending Respondent's license and eligibility for licensure as an insurance agent for a period of one year.

DONE AND ENTERED this 19th day of July, 1989, in Tallahassee, Leon County, Florida.

DON W. DAVIS

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 19th day of July, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings. 1-21. Addressed.

Respondent's Proposed Findings.

Respondent's proposed findings of fact consisted of two unnumbered paragraphs. The first paragraph is addressed in substance. The second paragraph is rejected as not being supported by the weight of the evidence.

COPIES FURNISHED:

Robert V. Elias, Esq. Office of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Thomas F. Woods, Esq. 1709-D Mahan Drive Tallahassee, FL 32308

Honorable Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol

Tallahassee, FL 32399-0300

Don Dowdell, Esq.

The Capitol, Plaza Level Tallahassee, FL 32399-0300

Docket for Case No: 89-001530

Orders for Case No: 89-001530