vs. ) CASE NO. 89-5556
Respondent. )
A hearing was held in this case in Sarasota, Florida on December 1, 1989, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.
For the Petitioner: C. Christopher Anderson, III, Esq.
412 Larson Bldg.
For the Respondent: Michael E. Sweeting, Esquire
Pflaum, Dannheisser and Sweeting, P.A.
The issue for consideration is whether Respondent's license or eligibility for licensure as an insurance agent in Florida should be disciplined because of the Administrative Complaint filed herein, and whether Respondent should be denied a resident license to represent various insurance companies in this state because of the misconduct alleged in the Administrative Complaint.
On September 8, 1989, Tom Gallagher, Treasurer and Insurance Commissioner for the State of Florida, filed an Administrative Complaint in this case against the Respondent, Michael Eugene Best, seeking to discipline his license or eligibility for licensure as a life insurance agent, life and health insurance agent, and/or health insurance agent in this state on the basis of several alleged instances of misconduct which, it is claimed, constitute violations of Chapter 626, Florida Statutes, and render him ineligible for continued licensure.
By letter dated September 29, 1989, counsel for Mr. Best notified the Department of his request for a formal administrative hearing, and on October 9, 1989, the file was forwarded to the Division of Administrative Hearings for appointment of a hearing officer. By letter of October 24, 1989, counsel for Mr. Best advised the undersigned, to whom the case had been referred for hearing, that on September 20, 1989, the Department had denied Mr. Best's application for a resident license to represent certain insurance companies in Florida as a life insurance agent, life and health insurance agent, and health insurance agent because of the reasons outlined in the Administrative Complaint.
Counsel for Mr. Best requested that his protest of the denial be consolidated for hearing with his request for hearing on the allegations contained in the Administrative Complaint, and on November 3, 1989, consistent with the dates suggested by counsel, the undersigned set the case for hearing in Sarasota on December 1, 1989, at which time it was heard as scheduled. Upon inquiry of the Hearing Officer, she parties stipulated that both the denial and the discipline cases would be heard together.
At the hearing, the Department presented the testimony of Ms. Dorothy Clark, a customer for insurance from Mr. Best, and her attorney, Murray Kanetsky. Petitioner introduced Petitioner's Exhibits 1 through 3 and 6 through 10. Petitioner's Exhibits 4 and 5 were identified but not offered.
Mr. Best testified in his own behalf and presented the testimony of Mrs. Ann Ward, another customer to whom he sold insurance. He also introduced Respondent's Exhibit A.
Subsequent to the hearing a transcript was submitted and Petitioner filed Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order
At all times pertinent to the allegations contained herein, Michael Eugene Best was either licensed or eligible for licensure as a life insurance agent, a life and health insurance agent, and a health insurance agent in the State of Florida, and was engaged in the sale and brokerage of insurance, doing business as M. E. Best Investments.
The Department of Insurance is the state agency responsible for the monitoring and regulation of the insurance business in this state.
Ms. Dorothy Clark, a 73 year old woman, has known and done business with Mr. Best in the insurance area for approximately ten years. In August, 1988, she met with him to discuss her possible purchase of some kind of insurance. She cannot recall what kind of insurance it was. She gave him some money to pay for the insurance in question, which was to be procured from some insurance company, the name of which she could not initially remember, but subsequently recalled to be American Sun Life Insurance Company. The premium payment which she gave to Mr. Best was in the amount of $1,200.00, but she cannot recall whether he was obliged to use that money for the purchase of insurance from that particular company, or whether he had the option to place the insurance with another company.
To the best of her limited recollection, Mr. Best did get a policy for her from American Sun Life Insurance Company, but she cannot recall if she kept that policy or if it was changed to another company. She does not recall
requesting him to change companies, however, but does recall that she ultimately received a policy issued by United American Life Insurance Company and that Mr. Best was the agent who procured it for her. At hearing she denied ever attempting to cancel the United American policy though she claims she did not want it. She claims that she never received a refund check from United American, however, a check payable to her in the amount of $799.90 was issued to her by that company with address shown as her home of record. The check bears what purports to be her endorsement on the back thereof, followed by the endorsement of Mr. Best's company, but at first she claimed she did not place it there. When shown the check at the hearing, however, she admitted the signature on the endorsement was hers and that she most likely signed it.
This check was issued as a result of her unremembered direction to Mr. Best to cancel the policy. She claims she did not authorize Mr. Best to take the money it represented and use it for his purposes. She claims that the check was subsequently deposited by her to her account and that Mr. Best never got possession of it or the money. This is patently wrong, however, inasmuch as Mr. Best admits that he did have the check and placed his company's endorsement on it. He subsequently used the check, with her agreement, to apply toward a policy with another company, and to his recollection, she voluntarily endorsed the check to him.
Ms. Clark also purchased a $30,000.00 annuity policy through Mr. Best with another company, the name of which she cannot recall, at about the same time as the first policy mentioned herein. To get this policy she issued a check to Mr. Best in the amount of $30,000.00. When the policy was issued, she requested that it be cancel led because by the time she received it, she had reconsidered and determined that she did not want it. She notified Mr. Best of her desires that the policy be cancelled, but claims she never communicated directly with the company. The company has a letter reputedly from her, however, which complains of Respondent's purported trickery and deceit. It is found that this latter letter was prepared for her signature by someone else. When Ms. Clark told Mr. Best she did not want the policy, and requested him to cancel it, he asked her to wait awhile, for some reason which was unclear to her. Instead, she indicated to him then that she did not want to do so but wanted her money back.
Some time after this discussion, but before the policy was cancelled, Mr. Best came to see her and though she cannot recall if he got her to sign anything, she identified her signature on a letter to the company which had issued the annuity policy in question , which indicated that she was satisfied with the policy and withdrawing her request to cancel. She recalls Mr. Best requesting that she sign the letter, but cannot recall what he said at the time. As she remembers, he appeared normal when he came to see her, and she voluntarily signed the letter of her own free will.
It is obvious, however, that Ms. Clark did not understand what was being said to her or what she was signing because, she claims, she still wanted the policy cancelled. Her recollection of the incident is shaky - and unsure. She cannot recall if Mr. Best made her sign the letter, and she cannot recall where she signed it. It may have been at her home or at some other location, but she does not know for certain. In addition, she cannot recall if the letter was typed when she signed it, or if the paper was blank.
Though she contends Mr. Best tried to keep her from cancelling this annuity policy, at this time she cannot recall what he told her; what reasons he gave her; or why he wanted her to wait. Whenever she dealt with Mr. Best, he
was not rude to her. She did not feel she was being forced by him to take out any insurance from him or to do any of the things or sign any of the documentation that she did.
Ms. Clark filed the complaint against Mr. Best because she was told by someone that he had forged her name on a check. At the time she signed the complaint, and at the time of the hearing, she did not know whether he did it or not, nor does she know which check he is supposed to have forged. In fact, Ms. Clark finds it difficult to recall much of what had happened and is not sure of any of the facts to which she testified. She does know, and it is found, that all the money she paid to Mr. Best was reimbursed to her and she has lost nothing as a result of her dealing with him.
Ms. Clark recalls that about this time, upon the advice of her attorney, Mr. Kanetsky, she engaged in dealings with another insurance agent who advised her to cancel the annuity policy and, in fact, wrote the letter of cancellation to the insurance company for her.
Mr. Kanetsky, an attorney practicing in Venice, Florida, has worked with Ms. Clark for approximately ten years, primarily in the area of estate planning for her and her sister. Over the years, he has discussed with Ms. Clark various insurance policies and other financial products, and is aware of the insurance dealings involved in this case which he learned about from his discussions with his client.
He claims that in August or September, 1988, Ms. Clark called his office and solicited advice from him as to how she could get rid of an insurance policy she did not want. He advised her to come in with all her papers to discuss it and at their first meeting, found that she had purchased the
$30,000.00 annuity on the life of a niece, and also a health policy, from Respondent. The annuity policy was a single premium annuity, and the health policy had a $1,200.00 premium, for both of which, she had written checks.
During this discussion Ms. Clark was quite sure that she did not want to keep the annuity policy. She was somewhat confused about the health policy, but was also satisfied that she didn't want it, though she could not elaborate why.
Due to Ms. Clark's conditions, both financial and otherwise, Mr. Kanetsky felt she would be better off in a liquid position rather than having such a large annuity outstanding, and since she apparently wanted to cancel both policies, he agreed to help her. To do so, he first contacted an individual in the insurance business who was aware of Mr. Best and his operation. Upon advice of this individual, Mr. Kanetsky then contacted the insurance company on which the annuity policy had been written and requested that it be cancelled. Mr. Kanetsky also referred Ms. Clark to another insurance agent to get the health policy cancelled and a new policy issued. He also contacted Mr. Best to have him refund the $400.20 difference between the $1,200.00 which Ms. Clark had paid in as a premium on the health policy, and the $799.80 which had been refunded to her by the company when the first policy was cancelled.
There is some misunderstanding as to how that first $799.80 check was handled. On its face, the check reflects it was sent to Ms. Clark who, in turn, endorsed it over to Mr. Best to be applied toward another policy. Mr. Kanetsky, on the other hand, indicates the check, though addressed to Ms. Clark, was actually sent to Mr. Best, who had Ms. Clark endorse it and who applied it to another policy. In any event, since Ms. Clark wanted that policy cancel led and
apparently intended to do no further business with Mr. Best, Mr. Kanetsky requested that Best refund all monies paid. Mr. Best immediately issued his check for $400.20. The insurance company, apparently concluding it had sent the first check to Mr. Best by mistake, issued another check to Ms. Clark in the amount of $799.80, which represents the actual premium cost, with the balance being the agent's legitimate commission. Since Mr. Best had already forwarded his check for $799.80, when the second insurance company check was received it was immediately refunded to Mr. Best. The $30,000.00 paid in for the annuity policy was refunded to Ms. Clark directly by the insurance company.
Mr. Kanetsky contends that notwithstanding he had written to Mr. Best to advise him to stay away from Ms. Clark, there is some indication that Best thereafter came to Ms. Clark's residence to discuss the annuity policy with her. Mr. Best does not deny having gone to Ms. Clark's home on several occasions; once to talk to her about the health and accident policy, and another time, to talk about the annuity. In both cases, however, this is a standard practice in the insurance industry, suggested by the company, to attempt to "conserve" the business by making a follow-up call in an effort to dissuade a policy holder from cancelling. It is found that no improper pressure was applied by Mr. Best in his efforts to conserve his sales.
Over his years of experience with Ms. Clark, Mr. Kanetsky has found that she confuses easily, and though she is competent, she is extremely limited in business experience and understanding. She does not have a guardian of her property, but is clearly not equipped emotionally to handle many of her financial affairs. It is found that her recollection of the incidents in question here is so poor as to render her testimony almost irrelevant and without merit, and though she is quite sure she did not want the insurance she bought, and attempted to cancel it, she is totally unsure of the circumstances surrounding her relationship with Respondent and the details of any conversations and transactions she may have had with him. Consequently, her testimony, the only direct testimony regarding the issue of what transpired between her and Mr. Best, is, for all purposes here, worthless.
Mr. Best denies threatening Ms. Clark or attempting to coerce her into purchasing insurance from him. When he saw her in August, 1988, it was the first time he had seen her for a while and had, in fact, forgotten about her until she came into his office to file a claim. At that point, he made an appointment with her for a review of her policy status.
At that time Ms. Clark had no Medicare coverage, (she does now), and he offered to attempt to get her medical coverage, to which she agreed. She wrote a check for a policy to be issued by American Sun Life Insurance Company which, subsequently, rejected her. When the rejection came through, Mr. Best immediately notified her of that fact and told her then he would convert to another company, to which she agreed. Mr. Best is satisfied Ms. Clark understood he would apply the refund check he received from American Sun to the second policy issued by United American Life, and he did this. She thereafter cancelled that policy.
After Mr. Best received notice of the cancellation, he went to her home to explain everything to her. At no time, however, did he threaten her, a fact to which she agrees. He claims she had received the initial refund from united American for $799.80, which she agreed he could apply toward a policy with another company, and she voluntarily endorsed the check over to him. She also cancelled this second policy.
With regard to the annuity policy, when she notified the company that she was cancelling it, he received notice of this from the home office which suggested he do what he could to conserve the business. When he went to see her about it, she agreed, he claims, that she would keep the policy. At that time he wrote out, by hand, a note to be signed by her indicating her satisfaction with the policy and her desire it be maintained. When the company thereafter indicated it preferred a typed statement to that effect, he went to her with a typed notice which said the same thing, and which Ms. Clark signed. No threats were made, and Ms. Clark agrees to this.
Mr. Best also sold an insurance policy to an Ann Ward, which she cancelled for a reason totally unrelated to the Respondent. When Mr. Best found out she had cancelled the policy, he went to see her to inquire as to her reasons. At that time, as in all her dealings with him over a period of time, he was not, and she has never found him to be, overbearing, unprofessional, or coercive. In all their transactions together, he has always fully explained his product, and on the basis of their relationship, she would be happy to deal with him again.
When Ms. Ward cancelled her policy, the company wrote to Mr. Best and advised him of this fact and that he must refund a portion of the premium which it had paid to him as a commission. When he received this letter, he called the company and authorized it to withhold from the amount owed to him for renewal commissions, any amount the company claimed as reimbursement. He claims to have believed this procedure, a standard action within the industry, satisfied his obligation to the company. He was, therefore, quite surprised when the company complained and he immediately wrote a check to the company to cover the balance due it which is now paid in full. However, the evidence of record shows he was sent several notices of delinquency, even several for the balance after he authorized the company to take his earned commissions, without his taking any action and the company ultimately, on December 22, 1988, terminated his agency. His failure to pay over is found to be more negligent than willful, however.
Mr. Best has been in the insurance business since 1979 and claims he has had no prior administrative complaints filed against him since that time. The Department showed none.
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.
In its Administrative Complaint, Petitioner has outlined three Counts of alleged misconduct by the Respondent; two relating to his handling of the account of Ms. Clark, (Counts I and II), and one relating to his failure to return an unearned premium to an insurance company upon cancellation of the policy, (Count III).
In Count I, dealing with the refund check for the health insurance policy for Ms. Clark, the Department alleges the Respondent to be guilty of:
failing to account for and pay to the appropriate party funds received while acting as an insurance agent, (Sect. 626.561(1), Florida Statutes)
willful misrepresentation, (Sect. 626.611(5), Florida Statutes)
a lack of fitness or trustworthiness to engage in the insurance business, (Sect. 626.611(7), Florida Statutes)
a lack of adequate knowledge and technical competence, (Sect. 626.611(8), Florida Statutes)
fraudulent or dishonest practices, (Sect. 626.611(9), Florida Statutes)
misappropriation, conversion, or unlawful withholding of funds, (Sect. 626.611(10), Florida Statutes)
willful failure to comply with an order or rule of the department or a willful violation of the code, (Sect. 626.616(13), Florida Statutes)
violation of any provision of the code or of any law applicable to the insurance business in the course of such business, (Sect. 616.621(2), Florida Statutes)
In Count II, dealing with the circumstances surrounding the cancellation of the annuity policy sold to Ms. Clark, Petitioner has alleged that many of the same statutory provisions charged in Count I were also violated here. These include, specifically, willful misrepresentation, (Sect. 626.611(5)); lack of fitness and trustworthiness, (Sect. 626.611(7)); lack of competence, (Sect. 626.611(8)); fraud or dishonest practices, (Sect. 626.611(9)); willful failure to comply with an order or rule of the department, or a willful violation of the code, (Sect. 626.611(13)); and a violation of any provision of the [insurance) code, (Sect. 626.621(2)).
The burden of proof is upon the Petitioner to establish its allegations of misconduct against the Respondent by clear and convincing evidence, Ferris v. Turlington, 510 So.2d 292, 295 (Fla. 1987).
In support of its allegations in Count I, Petitioner relies on the testimony of Ms. Clark, that of her attorney, and documentation purporting to show that a refund check was sent to Ms. Clark which subsequently was deposited to the Respondent's bank account. The parties have stipulated that Ms. Clark was a client of the Respondent; that he agreed to get her a health insurance policy and received a premium check of $1,200.00 from her of which a portion was his commission; that he got her a policy from a company other than the one he had indicated he would use; and that thereafter, Ms. Clark cancelled the policy. Pursuant to the cancellation notice, the company sent Ms. Clark a refund of that portion of her premium check which had been forwarded to it - excluding Respondent's commission portion, and that premium refund somehow ended up in Respondent's bank account.
Ms. Clark's testimony was, at best, confused and unreliable. She could recall so little of the contacts she had with Respondent that her testimony is basically without merit. Respondent, on the other hand, clearly outlined his version of what happened, and there was no evidence to contradict his story. Ms. Clark clearly indicated that at no time did Respondent coerce, threaten, or pressure her in any way, and with regard to that, her testimony can
be believed. Though she cannot recall details of the transactions, she should recall something as significant as coercion or threats.
There is no evidence to indicate that the Respondent in any way misled Ms. Clark as to the health insurance coverage she was to receive. If there was any discrepancy, it was with regard to the company with whom the coverage was placed and there would appear to be no deceit or fraud involved therein. As the evidence indicated, that company with whom Respondent first tried to get her coverage rejected her, and according to Respondent, she agreed to a change of company. Ms. Clark cannot recall to the contrary, and there is no indication she was charged twice for the coverage.
Only with regard to the authenticity of Ms. Clark's signature on the refund check is there any question. Ms. Clark identified the endorsement thereon as her signature, but she cannot recall how the check ended up with Mr. Best. His story as to that issue is not controverted.
Taken together, the evidence as to Respondent's guilt of any of the offenses alleged in Count I is not clear and convincing. Petitioner has failed to satisfy its burden with regard to this Count.
As to Count II, relating to the annuity policy, the primary allegation of misconduct relates to Respondent's purported harassment or threatening of Ms. Clark in an effort to get her to withdraw her cancellation and his getting her to sign a letter to the company indicating her desire to keep the policy.
Again, Ms. Clark is very unsure in her testimony, even as to how her signature, which she recognizes, got on the letters in question. She is, however, sure of one thing - that Respondent in no way threatened or tricked her, notwithstanding the comment regarding "trick and deceit" in "her" letter to the insurance company.
On the other hand, Mr. Best, whose testimony is again uncontradicted, relates that after he spoke with Ms. Clark in an effort to "conserve" the policy, she agreed to keep it and signed first a handwritten letter and then, when the company wanted it typed, a blank sheet on which Respondent subsequently typed the same message as was on the handwritten letter.
In both this instance and that outlined in Count I, there is a bona fide question as to what happened. However, here, as with regard to Count I, the burden to establish the Respondent's commission of the improprieties alleged is on the Petitioner which must prove its allegations by clear and convincing evidence. It has failed to do that in either case. Since it has been found that Respondent neither forged Ms. Clark's signature to the refund check nor changed companies without permission, as alleged in Count I, nor coerced or threatened Ms. Clark in an effort to get her to keep the annuity policy, nor tricked her into signing a letter agreeing to keep it, as alleged in Count II, he cannot be found guilty of either Count.
Turning to Count III, relating to the alleged refusal by Respondent to refund the commission paid him by American Financial on the Ward policy, there is no dispute of the fact that the policy was cancel led and the commission paid by the company thereon unearned. When the company thereafter advised him of this, Respondent, after several notices, ultimately authorized it to deduct the sum in question from commissions earned but not yet paid. However, the amount owed Respondent by the company was not sufficient to offset the total
unearned commission, and Respondent still owed the company the difference of
$65.39. There is, however, evidence to show that when called upon to repay the balance, he failed to do so until after the company terminated his agency. By failing to timely pay over, upon demand, the money owed to the company, Respondent has been shown to be guilty of at least an unlawful failure to, upon demand, pay over to an insurer he represented any money belonging to that insurer, in violation of Section 626.621(4), Florida Statutes, and under the terms of that statutory provision, the Department may deny, suspend, revoke, or refuse to continue an existing license, or the eligibility for licensure of any person found to be guilty of a violation of that statute.
Under the provisions of Section 626.681(1). Florida Statutes, if the Department finds that one or more grounds exist for suspension or revocation, it may, in its discretion, and except on a second offense, impose an administrative fine of $500.00, or $2,500.00 if the violation is willful.
Here, since the Respondent's failure to pay over has been found to be negligent rather than willful, and since there is no record of prior misconduct resulting in disciplinary action, a fine of $500.00 is considered more appropriate than revocation or suspension as to his existing licenses. However, in connection therewith, Respondent's application for additional licenses should be denied, without prejudice to reapplication at some future time.
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:
RECOMMENDED that Counts I and II of the Administrative Complaint relating to the Respondent, Michael Eugene Best, be dismissed; and that as to Count III, he pay an administrative fine of $500.00. It is further RECOMMENDED that Mr.
Best's applications to represent World Insurance Company, Travellers Life Insurance Company, and American Integrity Insurance Company be denied, such denial to be without prejudice to re-filing of the applications at a later time to be set by the Department.
ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building
The following constitutes my specific rulings pursuant to S 120.59(2), Florida Statutes, as to all of the Proposed Findings of Fact submitted in this case.
1. - 3. Accepted and incorporated herein.
17. Accepted and incorporated herein, with the understanding that the failure to deal with American Sun Life was not due to any misconduct of Respondent but because of the Company's rejection of Ms. Clark.
18.-20. Rejected as not supported by the evidence. 21.-24. Accepted and incorporated herein.
25.-27. Rejected as not supported by the evidence. 28.-31. Accepted and incorporated herein.
32.&34. Accepted and incorporated herein.
35. Accepted and incorporated herein.
C. Christopher Anderson, III, Esquire Office of Legal Services
Michael E. Sweeting, Esquire Pflaum, Dannheisser and
Sweeting, P. A.
