STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 91-2100

)

ROMA ROBERTS CAFFEY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in this matter before Diane Cleavinger, a duly designated Hearing Officer of the Division of Administrative Hearings, on August 7, 1991, in Tallahassee, Florida.

APPEARANCES

FOR PETITIONER: David D. Hershel, Esquire

Department of Insurance Division of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300

FOR RESPONDENT: Roma Roberts Caffey, pro se

Route 3, Box 59

Perry, Florida 32347 STATEMENT OF THE ISSUES

The issue in this matter is whether Respondent's license as an insurance agent should be disciplined for violation of Chapter 626, Florida Statutes.

PRELIMINARY STATEMENT

On February 4, 1991, Petitioner, Department of Insurance and Treasurer, filed a one-count Administrative Complaint (Case No. 91-L-18C&S) against the license of Respondent, Roma Roberts Caffey. That Administrative Complaint alleged that Respondent had violated various provisions of the Florida Insurance Code, Chapter 626, Florida Statutes. On February 25, 1991, Respondent filed an answer to the Administrative Complaint and requested a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. Respondent's request was forwarded to the Division of Administrative Hearings.

At the hearing, Petitioner called one witness and introduced five exhibits into evidence. Respondent testified in her own behalf but did not offer any exhibits into evidence. Additionally, Petitioner's motion to amend paragraph ten of the Administrative Complaint to change the figure of $1,186.77 to

$1,137.71 was granted.

Petitioner filed its Proposed Recommended Order on August 21, 1991.

Respondent did not file a Proposed Recommended Order. Petitioner's proposed Findings of Fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cummulative or subordinate. Specific rulings on Petitioner's Proposed Findings of Fact are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent, Roma Roberts Caffey, is currently licensed and eligible for licensure and appointment in this state as an insurance agent. She has been so licensed since 1988.

   
   

2. On December 2, 1988, Respondent was employed as a debit agent for American General Life and Accident Insurance Company and Gulf Life Insurance Company. Pursuant to her employment, Respondent entered into a field representative employment agreement with American General Life and Accident Insurance Company/Gulf Life Insurance Company. The agreement required Respondent "to hold all monies collected or received on behalf of the company in a fiduciary capacity, and to pay over all said monies to the company at the times designated by its authorized officers and employees, or immediately upon request."

   
   

3. Part of Respondent's responsibilities as a debit agent was to collect premium monies from insureds on a periodic basis. At the time she collected a premium from an insured, Respondent would indicate the payment in that insured's premium/receipt book. The premium receipt book is kept by the insured.

   
   

4. Respondent was assigned to service the Perry district and proceeded to collect premiums from insureds in that district.

   
   

5. During her tenure as a debit agent, Respondent would use one insured's premium to pay for another insured's insurance. Respondent utilized these funds without the knowledge or consent of the insured who had paid his or her premium for his or her policy. Respondent admitted her handling of the premiums she collected, but felt compelled to use those funds in such a manner in order to keep her lapse ratio down. The lapse ratio was important to the company. Additionally, Respondent did not keep any records of the premiums she used on another insured's account. This conduct demonstrated that Respondent did not understand the very fundamentals of her relationship and duty to the insured and her employer and was generally not fit to engage in the business of insurance for which she was licensed and lacked a reasonable level of knowledge and skill about the area of insurance for which she was licensed. Respondent's conduct also demonstrated she misappropriated several insureds' money and otherwise acted dishonestly in the debit insurance business. All of the above are very serious violations of Chapter 626, Florida Statutes.

   
   

6. On May 7, 1990, Respondent's employment with American General Life and Accident Insurance Company/Gulf Life Insurance Company was terminated.

   
   

7. After Respondent's termination, an audit of Respondent's debit accounts was conducted by American General Life and Accident Insurance Company/Gulf Life Insurance Company.

8. The audit of Respondent's debit accounts consisted of a review of records submitted to the company by the agent and a comparison of those records with premium receipt books which were maintained by the individual policyholders.

   
   

9. The audit of Respondent's activities confirmed that Respondent had improperly used premiums paid to her by numerous insureds and that she had failed to hold those monies in a fiduciary capacity and forward those premium monies to American General Life and Accident Insurance Company/Gulf Life Insurance Company as required. At that time the amount of money which Respondent was short was approximately $2,421.22. The shortage has since been reduced to $1,137.71 by application of Respondent's cash bond and final paychecks. Again, Respondent's failure to account for these premiums constituted very serious violations of Chapter 626, Florida Statutes.

   
   

10. The amount due the company was not reimbursed by Respondent and on April 24, 1991, was reduced to a final judgment against Respondent in the County Court in and for Taylor County. As of the date of the hearing, Respondent had not paid the judgment primarily because she does not have the money.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

12. The Administrative Complaint alleged that Respondent violated Sections 626.561(1); 626.611(4), (7), (8), (9), and (10) and (13); and 626.621(2), (4) and (6), Florida Statutes. Those provisions provide as follows:

    
    

    626.561 Reporting and accounting for funds-

    1. All premiums, return premiums, or other funds belonging to insurers or others received by an agent, solicitor, or adjuster 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.

    * * * * 626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, solicitor's, or adjuster's license or ... permit.--The department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjuster

    ... and it shall suspend or revoke the eligibility to hold a license or permit of any ... applicant, licensee, or permittee any

    one of the following applicable grounds exist:

    (4) If the license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.

    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 or business under the license or permit.

    4. Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in 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.

    * * * * 626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, or adjuster's license or ... permit -- The Department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjuster ... 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 applicant, licensee, or permittee anyone 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:

    (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.

    (4) Failure or refusal, upon demand, to pay over to any insurer he represents or has represented any money coming into his hands belonging to the insurer.

    (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.

    
    

13. Petitioner has the burden to show by clear and convincing evidence that Respondent violated the Florida Insurance Code and should be disciplined for those violations. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

    
    

14. The evidence in this case clearly and convincingly shows that Respondent violated all of the above statutory provisions with the exception of

    Section 626.611(4). As a debit agent, Respondent was required to collect premium payments from policyholders and forward those premiums to the company. She failed to perform that function by improperly applying one insureds paid premium to another insured's policy, thereby failing to hold premiums as required. Such actions on Respondent's part demonstrate that she either does not comprehend or does not observe the requirements of Chapter 626 in regards to her fiduciary responsibilities to both her employer and the insured.

    
    

15. Respondent's knowing misappropriation of premium moneys and failure to hold premiums as required by Section 626.561(1), Florida Statutes, necessitates the conclusion that Respondent is unfit or untrustworthy to engage in the business of insurance and has shown herself to be a source of injury or loss to the public or detrimental to the public interest. The only remedy for such violations is the revocation of Respondent's license

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that the Department enter a Final Order finding that

Respondent's licenses and eligibility for licensure and appointment be revoked.

DONE AND ENTERED this 20th day of September, 1991, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 20th day of September, 1991.

APPENDIX TO RECOMMENDED ORDER

The facts contained in paragraphs 1, 3, 4, 5, 6, 7 and 8 of Petitioner's Proposed Findings of Fact are adopted .

The facts contained in paragraphs 2, 9 and 10 of Petitioner's Proposed Finding of Fact are subordinate.

COPIES FURNISHED:

David D. Hershel, Esquire Department of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300

Roma Roberts Caffey Route 3, Box 59

Perry, Florida 32347

Tom Gallagher

State Treasurer and Insurance Commissioner

Department of Insurance The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Bill O'Neil, Esquire General Counsel Department of Insurance 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: 91-002100

Orders for Case No: 91-002100