STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 90-4428

)

WANDA SUE DIRKS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on January 23, 1991, in Fort Pierce, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Department of Insurance and Treasurer

Division of Legal Services

412 Larson Building Tallahassee, Florida

32399-0300

For Respondent: Wanda Sue Dirks, pro se

25 North Causeway Drive Ft. Pierce, Florida 34946

STATEMENT OF THE ISSUE

Whether Respondent committed the offenses alleged in the Administrative Complaint and, if so, the penalties, if any, that should be imposed.

PRELIMINARY STATEMENT

On July 13, 1990, Petitioner filed an Administrative Complaint against Respondent, an insurance agent licensed by Petitioner. The Administrative Complaint contained two counts involving two separate transactions and alleged that Respondent committed multiple violations of the regulatory provisions found in Chapter 626, Florida Statutes. Petitioner voluntarily dismissed Count II of the Administrative Complaint during the course of the formal hearing. The gravamen of the remaining count of the Administrative Complaint was that Respondent sold an insurance policy to an insured who was not eligible for the policy and that the application for this policy was prepared by Respondent and contained intentional, material misrepresentations of fact. Respondent disputed the allegations of the Administrative Complaint and this proceeding followed.

At the formal hearing, Petitioner presented the testimony of five witnesses and offered 12 exhibits, each of which was accepted into evidence. Respondent testified on her own behalf and offered 38 exhibits, each of which was accepted into evidence.

A transcript of the proceedings has been filed. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At the times pertinent to this proceeding, Respondent, WANDA DIRKS, was licensed in the State of Florida as a health insurance agent and was authorized to solicit health insurance policies on behalf of National States Insurance (National States) and on behalf of American Integrity Insurance Company (American Integrity).

   
   

2. John Rickard was born March 18, 1905, and, at the times pertinent to this proceeding, lived in Fort Pierce, Florida. On February 25, 1988, Respondent sold to Mr. Rickard a Medicare supplement policy and a nursing home insurance policy, both issued through National States. On March 28, 1988, Respondent sold to Mr. Rickard a cancer insurance policy and a medical expense insurance policy, both issued through National States.

   
   

3. In December 1988, Mr. Rickard suffered a stroke which left him partially paralyzed and which resulted in his having a colostomy. Following his hospitalization he was placed in a rehabilitation center. In February 1989, Mr. Rickard was transferred from the rehabilitation center to the Fort Pierce Care Center, which is a nursing home. Mr. Rickard was a continuous resident of that nursing home (except for a brief hospitalization which is not pertinent to the disposition of the issues herein) from the date of his admission to his death on December 22, 1989. Friends took Mr. Rickard on day trips away from the nursing home on occasion. From February 1989 until his death, Mr. Rickard was confined to a wheelchair and required assistance with his activities of daily living.

   Mr. Rickard had poor vision, but he could occasionally read with the assistance of a large magnifying glass.

   
   

4. Prior to his admission to the nursing home, Mr. Rickard resided in his mobile home located at 164 Port St. Lucie Boulevard, Fort Pierce, Florida.

   
   

5. Dee James was a friend and former coworker of Mr. Rickard who assisted him with the payment of his bills. Ms. James was the primary beneficiary of Mr. Rickard's estate. In April 1989, Ms. James' grandson and his girlfriend were living in Mr. Rickard's mobile home.

6. On April 18, 1989, National States cancelled all of its policies of insurance that Respondent had sold to Mr. Rickard. The letter of cancellation provided, in pertinent part, as follows:

   
   

   During the course of routine investigation into your claims, it has come to our attention that the health history portions of the applications for your coverage are inaccurate and incomplete.

   Specifically, health history was not shown on the application. Had we been aware of your medical conditions we would not have issued this coverage. Consequently, we have no alternative but to rescind your coverage as of its effective date and to make full

   premium refund. Accordingly, we are enclosing our check in the amount of $4,005.80.

   
   

7. Between April 18, 1989, and April 24, 1989, Respondent was contacted by Ms. James and advised of the cancellation of Mr. Rickard's policies of insurance by National States. Ms. James, at the request of Mr. Rickard, asked Respondent for her assistance and set up a meeting between Respondent and Mr. Rickard.

   
   

8. On April 24, 1989, Respondent met with Mr. Rickard and prepared an application for a Medicare supplement policy of insurance to be issued by American Integrity. The application for the American Integrity policy contained the following caveat: "IF THE ANSWER TO ANY OF THE FOLLOWING QUESTIONS IS 'YES', THE APPLICANT IS NOT ELIGIBLE FOR COVERAGE". All of the questions that followed pertained to the medical history of the applicant and were answered in the negative. Respondent answered the questions on the application form based on information given to her by Mr. Rickard. The following were among those questions:

   
   

9. Are you presently confined to a hospital or nursing home, or have you been hospitalized

   4 times or more in the past 2 years?

10. Are you presently bedridden or wheelchair confined?

1. The location of this meeting between Respondent and Mr. Rickard is in dispute. Petitioner contends that the meeting occurred at the nursing home. This contention is based on evidence that Mr. Rickard was a continuous resident of the nursing home from the date of his admission except for the brief hospitalization. If Petitioner's contention is accepted, it follows that Respondent knew that Mr. Rickard was in the nursing home when she filled out the application. Respondent contends that the meeting occurred at Mr. Rickard's residence at 164 Port St. Lucie Boulevard, Fort Pierce and that she had no knowledge that Mr. Rickard was a nursing home patient when she filled out the application. Her contention is supported by evidence that friends took Mr. Rickard from the nursing home on occasion and by Respondent's testimony. The dispute is resolved by finding that Petitioner failed to establish by clear and convincing evidence that the meeting between Respondent and Mr. Rickard on April 24, 1989, occurred at the nursing home. Respondent's version of the meeting is accepted, and it is concluded that the meeting between Respondent and Mr. Rickard occurred at the mobile home Mr. Rickard owned at 164 Port St. Lucie

   Boulevard, Fort Pierce. It is further concluded that the evidence failed to establish that Respondent had actual knowledge that Mr. Rickard was residing in the nursing home when she filled out the American Integrity application.

   
   

2. Ms. James set up the meeting between Respondent and Mr. Rickard, but neither she nor anyone other than Mr. Rickard was present when Respondent arrived at Mr. Rickard's mobile home on April 24, 1989. Respondent reviewed the American Integrity policy with Mr. Rickard and filled out the application that was submitted. Both Respondent and Mr. Rickard signed the application and he paid for the premium in the amount of $1,045.00 with a check that had been given to him by Ms. James.

   
   

3. On April 24, 1989, Mr. Rickard was unable to ambulate and was confined to a wheelchair. He was unable to come to the door when Respondent knocked and he remained in a wheelchair during the meeting. It should have been apparent to Respondent when she completed the application for the American Integrity policy that Mr. Rickard was confined to a wheelchair. She knew or should have known that the application contained a false representation as to Mr. Rickard's physical condition and that he was not eligible to purchase this policy.

   
   

4. The following appears on the application form above the Respondent's signature:

   
   

   I hereby certify that I have (1) accurately recorded the information supplied by the applicant; and (2) given an Outline of Coverage for the policy applied for and a Medicare Supplement Buyer's Guide to the applicant.

   
   

5. Respondent testified that she read the questions on the application to Mr. Rickard, that he answered the questions, and that she wrote his answer on the application. She further testified that he reviewed the completed application with the use of his magnifying glass.

   
   

6. The American Integrity policy would not have been issued had Respondent answered question 10 of the application in the affirmative. The American Integrity policy was subsequently issued. It was rescinded on November 11, 1989, after Ms. James notified American Integrity that Mr. Rickard resided in a nursing home, and Mr. Rickard received a full refund of the premium he had paid.

   
   

7. Mr. Rickard and Ms. James filed no complaint with the Petitioner regarding Respondent. Neither blamed Respondent for the cancellation of the National States policies and both appreciated her efforts to be of assistance. The investigation into Respondent's actions was triggered by a complaint that Mr. Rickard, with the assistance of Ms. James, filed against National States.

   
   

8. There was no evidence that Respondent's licensure had been subject to discipline prior to this proceeding. Respondent has a favorable reputation for service to her community and to her clients.

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.

   
   

10. Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So.2d 112 (Fla. 1st DCA 1989). Evans Packing, supra, 550 So. 2d 112, 116, fn. 5, provides the following pertinent to the clear and convincing evidence standard:

    
    

    That standard has been described as follows:

    [C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses must be lacking in confusion as to the facts

    in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief of (sic) conviction, without hesitancy, as to the truth of the allegations sought to be established.

    Slomowitz v. Walker, 429 So.2d 797, 800 (Fla.

    4th DCA 1983).

    
    

11. Count I of the Administrative Complaint alleges that, in connection with the transaction involving Mr. Rickard and the American Integrity policy, Respondent violated the following provisions of Chapter 626, Florida Statutes: Sections 626.611(5), (7), (8), (9) and (13) and Sections 626.621(3) and (6)(h), (i), and (j).

    
    

12. Section 626.611, Florida Statutes, provides certain compulsory grounds for the discipline of an insurance agent's license and provides, in pertinent part, as follows:

    
    

    The department shall deny, suspend, revoke, or refuse to renew the license of any agent

    ... and it shall suspend or revoke the eligibility to hold a license or permit of any such person, if it finds that as to ... the licensee ... any one or more of the following applicable grounds exist:

    * * *

    (5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.

    * * *

    1. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.

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

    * * *

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

    
    

13. Section 626.621, Florida Statutes, provides certain discretionary grounds for the discipline of an insurance agent's license and provides, in pertinent part, as follows:

    
    

    The department may, in its discretion, deny, suspend, revoke, or refuse to renew the license of any agent ... and it may suspend or revoke the eligibility to hold a license

    or permit of any such person, if it finds that as to ... the licensee ... any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

    * * *

    (3) Violation of any lawful order or rule of the department.

    * * *

    (6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.

    
    

14. The provisions of Section 626.9541, Florida Statutes, which are found in Part X of Chapter 626, Florida Statutes, and which Petitioner contends Respondent violated, provide, in pertinent part, as follows:

    
    

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

       * * * (e)1. Knowingly:

       1. Filing with any supervisory or other public official:

       2. Making, publishing, disseminating, circulating,

       3. Delivering to any person,

       4. Placing before the public,

       5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,

          any false material statement.

          * * *

          (k)1. Knowingly making false or fraudulent statements or representations on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

          
          

15. Chapter 4-46, Florida Administrative Code, contains certain rules promulgated by the Petitioner pertinent to the solicitation and sale of Medicare supplemental insurance policies. Respondent has been accused of violating the provisions of Rule 4-46.003(2), Florida Administrative Code, which provides, in pertinent part, as follows:

    
    

    It shall be deemed an unfair or deceptive act or practice in the direct solicitation or sale of Medicare supplement insurance policies, to:

    * * *

    (2) Make any misrepresentation or incomplete comparison by the insurance company or agent, by commission or omission, for the purpose of inducing or which would reasonably be expected to induce Medicare eligible persons to purchase, amend, lapse, forfeit, non-renew, change, duplicate coverage already in force, replace a policy that is only technically at variance with the policies being offered, or otherwise surrender existing insurance.

    
    

16. Petitioner has established by clear and convincing evidence that Respondent knew or should have known that Mr. Rickard was confined to a wheelchair at the time she completed the American Integrity application. Her response to question 10 on the application was a false or fraudulent statement on an application for an insurance policy as proscribed by Section 626.9541(1)(k)1, Florida Statutes, and, consequently, a violation of Section 626.621(6), Florida Statutes. Respondent is not entitled to rely on any answer Mr. Rickard may have given to the question regarding wheelchair confinement when she knew or should have known that the answer was false.

    
    

17. It is concluded that the record fails to establish that Respondent violated the provisions of Section 626.611, Florida Statutes, providing for compulsory discipline of her licensure, as alleged by Petitioner. There is no factual basis for finding a violation of Section 626.611(5), Florida Statutes. The findings of facts relating to this single transaction are insufficient to support a conclusion that Respondent violated the provisions of Section 626.611(7), (8), and (13), Florida Statutes.

    
    

18. In recommending the penalty to be imposed, it is appropriate to consider that Respondent's licensure has not been previously disciplined.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which finds that Respondent

violated the provisions of Section 626.621(6), Florida Statutes, and which suspends her licensure and her eligibility for licensure for a period of three months.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 29th day of April, 1991.

CLAUDE B. ARRINGTON

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 29th day of April, 1991.

APPENDIX TO THE RECOMMENDED ORDER

The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner.

1. The proposed findings of fact in paragraphs 1-8 and 10-12 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in the first sentence of paragraph 9 are adopted in material part by the Recommended Order. The remaining proposed findings of fact in paragraph 9 are rejected as being unsubstantiated by the evidence and as being contrary to the findings made.

The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent.

1. The proposed findings of fact in paragraphs 1-3, 5-6, 9, and 18 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraphs 4, 7, 14, 26-27, 29, 33-34, 36- 37, 39, 41-42, 45-52, 58-61 are rejected as being unnecessary to the conclusions reached.

3. The proposed findings of fact in paragraphs 8, 10, 13, 15, and 17 are adopted in part by the Recommended Order and are rejected in part as being either subordinate to the findings made or as being unnecessary to the conclusions reached.

4. The proposed findings of fact in paragraphs 11-12, 16, 19-22, 24-25, 28. 35, and 53 are rejected as being either unnecessary to the conclusions reached or as being subordinate to the findings made.

5. The proposed findings of fact in paragraph 23 are rejected as being argument and as being unnecessary to the conclusions reached.

6. The proposed findings of fact in paragraphs 43 and 44 are rejected as being argument and as being subordinate to the findings made.

7. The proposed findings of fact in paragraphs 30 and 40 are rejected as being contrary to the findings made.

8. The proposed findings of fact in paragraphs 31 and 32 are rejected as incomplete recitations of testimony.

9. The proposed findings of fact in paragraph 57 are rejected as being argument based on unsubstantiated facts.

COPIES FURNISHED:

James A. Bossart, Esquire Department of Insurance and

Treasurer

Division of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300

Wanda Sue Dirks

25 North Causeway Drive Ft. Pierce, Florida 34946

Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neil General Counsel

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-004428

Orders for Case No: 90-004428