vs. ) CASE NO. 89-5022
Respondent. )
A hearing was held in this case in Clearwater, Florida, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings, on May 29, 1990, and through depositions testimony taken by counsel without the Hearing Officer, on June 13, 1990.
For the Respondent: John L. Waller, Esquire
100 2nd Avenue North, Suite 210 St. Petersburg, Florida 33701
The issue for consideration is whether the Respondent's license as an insurance agent should be disciplined because of the misconduct alleged in the Administrative Complaint filed herein.
On July 7, 1989, Tom Gallagher, Insurance Commissioner and Treasurer for the State of Florida, filed an Administrative Complaint herein in which he alleged that the Respondent, Shirley Ann Cramer, had been guilty of conduct in violation of Chapter 626, Florida Statutes, involving, primarily, misrepresentation, fraud, and misappropriation of funds. Respondent, by letter dated September 1, 1989, requested formal hearing, and on September 12, 1989, the case was referred to the Division of Administrative Hearings for referral to a Hearing Officer. After response to the Initial Order was received from counsel , the undersigned, by Notice of Hearing dated October 2, 1989, set the case for hearing in Clearwater on December 8, 1989. After several continuances, requested by both parties, the hearing was held on May 29, 1990.
Petitioner dismissed Counts I, II, and III of the Administrative Complaint prior to hearing and no evidence was presented with reference to them.
At the hearing, Petitioner presented the testimony of Mercedes Wescott, Respondent's former client, and introduced Petitioner's Exhibits 1 - 6.
Respondent did not testify at that hearing, nor did she present any documentary exhibits. However, the parties agreed that since the testimony of another Petitioner witness would be taken by deposition, Respondent would reserve her testimony until the time of that deposition at which she would also testify.
This procedure was acceptable to both parties, and a deposition of both Respondent and Thomas Secondo, another client of Respondent, testifying for Petitioner was taken on June 13, 1990 in the office of Respondent's counsel. Several exhibits were offered by both parties at that deposition session, and they are all admitted into evidence.
A transcript of both the original session and the deposition session was presented. Only counsel for Petitioner submitted Proposed Findings of Fact which have been accepted and are incorporated in this Recommended Order.
At all times pertinent to the issues herein, Respondent, Shirley Ann Cramer, was licensed as a life, health and general lines insurance agent in Florida, and was the sole owner and operator of Consolidated Insurance Associates, Inc., an incorporated general lines life and health insurance agency in Clearwater, Florida. The Department of Insurance was and is the state agency responsible for the licensing and regulation of insurance professionals in this state.
In February, 1987, Mercedes Wescott went to the Respondent's agency in Clearwater where she spoke with whom she assumed to be an employee, an individual named Jack. "Jack" is Jack Jarr, Respondent's former husband and a licensed insurance professional who works in a different agency from Respondent, but who was licensed with Respondent's agency at the time in question as well.
Ms. Wescott wanted a policy of life insurance, and after talking with Jack, wrote and delivered a check for $167.00, payable to Consolidated Insurance Associates, Inc., as initial down payment therefor. About a week later, she took the required insurance physical but never received the policy she had bought. She called the agency several times about the matter and was repeatedly told the policy was coming. Finally, in June, 1987, she received a letter from American Health and Life Insurance Company, the company with whom, apparently, she was to be insured, advising her that her application for insurance was being cancel led because certain required information was not received.
When she called the agency, (Jack), to get her money back, he promised to send it but never did. As a result, she finally called Respondent who, in November, 1987, mailed her a check on the account of Consolidated Insurance Associates, Inc., dated November 24, 1987, in the amount of $117.00, $50.00 less than the initial payment. Ms. Wescott admittedly did not deposit that check immediately. For one thing, it was not for the correct amount, and in addition, she overlooked it. When she finally did deposit it for collection, it was dishonored and returned because of insufficient funds, and she was charged a
$12.00 service charge.
On January 9, 1988, Ms. Wescott wrote to Respondent outlining what had happened and requested a replacement check in the amount of $179.00, ($167.00 plus $12.00). In this letter, which was mailed to Respondent's home address since the agency had, in the interim, been sold, Ms. Wescott recited the lack of Respondent's response to prior calls and threatened to report the matter to the
Insurance Commissioner. Even with this, she received no response from Respondent. Ms. Wescott determined that Respondent was working at a real estate office and when called there, too, failed to return calls.
Ms. Wescott ultimately received a check for the entire amount from, she believes, the Department of Insurance. Though she is not sure from whom the check was received, she is certain it was not Respondent or Respondent's agency. When she contacted the new owner of the agency, her request for reimbursement was denied and the new owner suggested she contact the Department.
Admittedly, Ms. Wescott dealt only with Mr. Jarr up until the time the cancellation letter was received. Only at that point did she talk with Respondent, and the check, purportedly in reimbursement for the premium paid, which was dishonored, was signed by Respondent. Respondent claims that she was only the subagent for the company with whom Mr. Jarr placed Ms. Wescott but paid Ms. Wescott back herself with a check she claims was good when written.
However, since the check in question is dated November 24, and even though held by Ms. Wescott for a while, it had been deposited and dishonored by January 9, 1988 when Ms. Wescott's letter to Respondent was written. This accounts for a total time of 46 days from date of check to date of letter, and with mail times and bank processing times deducted, the time the check was held before deposit cannot be considered unreasonable.
Ms. Cramer sold the agency in December, 1987 to an individual who was to assume all the agency liabilities. At the time she sent Ms. Wescott the check for $117.00, she was, she claims, unsure of the amount owed since she no longer had the books in her possession. Considering the probabilities of her testimony and it's corroboration or lack thereof by other evidence of record, it is considered unworthy of belief.
On April 4, 1988, Thomas J. Secondo, who was, at the time, having a personal relationship with the Respondent, went to her to get insurance on his two automobiles. He wrote a check that day for $1,641.00 for what he believed was the total premium for the coverage sold and gave it to Respondent personally. He never received a policy of insurance for his money but on June 9, 1988, was notified that his coverage would be cancelled on June 18, 1988 for "underwriting reasons." Somewhat before that time, he also received a book of payment coupons, the reason for which he could not fathom, since it was his understanding he had paid for his policy in full by the check he had given Respondent.
Documents introduced into evidence by the parties reflect that on May 18, 1988, Mr. Secondo's policy, purportedly with American United Insurance Company, was to be financed through Express Premium Finance, Inc. in Hollywood, Florida. Mr. Secondo denies having signed the premium finance agreement which bears what is purported to be his signature, and examination of that document clearly reveals that the signature thereon is not his.
Just as all this was happening, Respondent contacted Mr. Secondo in writing on June 15, 1988 and requested he come to the office to sign a new application for the requested coverage. Enclosed with that request was a copy of an insurance binder for auto coverage with Bankers Insurance Company, to be effective on June 18, 1988. Again, Mr. Secondo was sent a premium finance notice by Bankers representing a total premium of $1,358.00. This notice, dated August 29, 1988, reflected the first premium of $14.30, due on August 12, 1989, the second in the amount of $193.34, and the remainder, also at $193.34, due on the 28th of each month thereafter.
By memo of August 19, 1988, Bankers Insurance Company notified Mr. Secondo that his policy was being cancelled for nonpayment of the initial $14.30 premium. However, by notice of September 1, 1988, the company reinstated the coverage and included a new billing schedule reflecting a slightly higher monthly premium of $197.54.
On August 16, 1988, Respondent wrote to Mr. Secondo informing him of a change in policies and noting that the new policy was somewhat less expensive than the former. Notwithstanding this, by letter dated September 25, 1988, she advised him of the need for him to pay an additional $171.31. Mr. Secondo did not understand the reason for this additional charge in light of the fact that the second policy, that issued, was less costly than the first which was never issued. This discrepancy was not successfully explained at hearing nor has it yet been clearly explained. Notwithstanding his confusion, on the advice of a representative from the Department's St. Petersburg office, Mr. Secondo paid the additional sum requested.
Ms. Cramer claims that all she asked from Mr. Secondo at the time she sold him the insurance was the down payment on the policy. However, he insisted on giving her more money to impress her with how much money he had. She further claims she put the balance over the down payment in the account of ASAP Insurance, (not further identified). On examination, she claimed this was a unique situation and she never does business this way.
Ms. Cramer has been licensed as an insurance agent in Florida for almost 20 years and claims never to have had a problem with the Department before now. There is no evidence of any prior complaints against her or of prior disciplinary action. She had known Mr. Secondo for about 3 months before he came to her for insurance on his vehicles. She admits to having received his check for $1,641.00 for the premium for that coverage. Because of some difficulty with his driver's license, which she discussed with him at the time, she processed the application, sending in only the required 30% down payment so that if the application was rejected, he would not have to wait to get back the full amount of his premium. She claims to have advised him at the time there might be a problem and that the policy, when issued, might carry a higher or lower premium.
When she sent the deposit for the auto insurance to the broker with whom she was dealing, he required a premium finance agreement which she filled out and sent in without, she claims, affixing Mr. Secondo's signature thereto. She claims to have no knowledge as to who signed it, but this is unworthy of belief.
The automobile insurance was not issued by the first company because of some underwriting problem. Respondent claims she told Mr. Secondo this but by then he had received a payment schedule and was upset about that. Ms. Cramer claims that Mr. Secondo had been fully advised that only a part of the $1,641.00 he had paid originally was to go to payment of premium, but she does not explain where the balance went, other than into the account of ASAP. She also claims to have procured insurance for him from Bankers Insurance Company without financing any part of the premium, but it is clear from the documents introduced that this coverage was financed as well. Her exculpatory comments are confusing and far less than convincing, and are not believed.
Respondent asserts she made the premium payments for Mr. Secondo, (presumably from the sums deposited to ASAP), until she got an accounting from
the company. She then wrote to Mr. Secondo, (their personal relationship having dissolved by then), and claimed the amount she felt was due her, (the $171.31). She admits that in the interim, while she was awaiting the refund from the first policy deposit, she neglected to make the initial $14.30 premium payment on the second policy, causing it to be cancelled. At that point, she made the payment to have the policy reinstated. The reinstatement notice, however, does not show the policy paid in full, but calls for continuing installments.
Ms. Cramer now claims that the $1,641.00 figure she gave Mr. Secondo was tentative and subject to change and that he knew it. She claims the discrepancy involving his policy was a bookkeeping error, and at no time did she intend to take his money and not get him insurance. The evidence, however, shows otherwise.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.
Discipline of license holders is, by statute, treated in two separate ways. For some proven infractions, the action to be taken by the Department is mandatory, and for others, the action to be taken is optional.
Section 626.611, Florida Statutes, provides, in pari materia, that the Department shall take suspension or revocation action, inter alia, against a licensee if it can establish, on the part of the licensee:
(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Fraudulent or dishonest practices in the conduct of business under the license or permit.
Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in the conduct of business under the license
Section 626.621(2), Florida Statutes, provides, in pari materia, that the Department may take suspension or revocation action, inter alia, if it can establish, on the part of the licensee:
(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.
In that connection, Section 626.561(1), Florida Statutes, provides:
All premiums, return premiums, or other funds belonging to insurers or others received by an agent, ... 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 and pay the same to the insurer, insured, or other person entitled thereto.
In the Administrative Complaint, Petitioner has alleged Respondent has violated numerous provisions of Sections 626.611 and 626.621 by failing to forward the premium payments received from Ms. Wescott and Mr. Secondo to the companies from whom their insurance was to be purchased and by converting, misappropriating or otherwise withholding the same received in a fiduciary capacity in the course of licensed business; by failing to pay over to Mr. Secondo, a return premium credit to which he was entitled; and by representing to Mr. Secondo that he owed an additional premium of $171.31 when such representation was false and a material misstatement of fact.
With regard to Ms. Wescott, her initial dealings were with Mr. Jarr, whose actual relationship with Ms. Cramer's agency is cloudy, but who represented himself, apparently with Respondent's knowledge and permission, as an employee. Ms. Cramer is, as a principal in the agency, responsible for his misdeeds. Further, she issued a check to Ms. Wescott in the furtherance of her insurance business, which was dishonored.
Though Respondent did not accept the premium and there is no indication she was personally responsible for the failure to submit the required information which resulted in the cancellation of Ms. Wescott's application, she was professionally responsible for actions taken by employees in the name of her agency, and she is also personally and professionally responsible for uttering a check in the course of her business activities, which was, within a reasonable time after being written, dishonored upon presentment for insufficient funds. Her actions constitute a clear violation of the statutes as alleged.
As to Mr. Secondo, the evidence is clear that she badly mismanaged the transaction with him. He paid in full, in advance, for a policy he had every right to expect to be issued. It was not, and the premium he paid in was not returned. Respondent claims Mr. Secondo was covered at all times, for 14 months after he paid the premium, but the evidence did not show that. Instead, he was given a confusing story of policies at a lesser cost which resulted in his having to pay more money. If not outright fraud and misrepresentation, Respondent's conduct constitutes, at best, gross negligence and incompetence, and is a clear violation of the statute.
Having determined that misconduct took place which constituted a violation of the statute requiring disciplinary action, the question remains as to what that action should be. Either suspension or revocation are called for, but here, in light of the fact that Respondent has no prior record of misconduct, and that both clients were, eventually, made whole, revocation action does not seem appropriate. However, action sufficient to impress upon Respondent the need to employ the highest standard of care and professionalism in the insurance profession is called for.
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:
RECOMMENDED that the Insurance Commissioner issue a Final Order in this case suspending Shirley Ann Cramer's license and eligibility for license as an insurance agent of any kind in Florida for one year.
RECOMMENDED this 6th day of August, 1990, in Tallahassee, Florida.
ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building
Filed with the Clerk of the Division of Administrative Hearings this 6th day of August, 1990.
Robert V. Elias, Esquire Department of Insurance Division of Legal Services
John L. Waller, Esquire
St. Petersburg, Florida 33701
Office of the Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
