STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 91-3046

)

JOHN W. GANTER, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tampa, Florida on August 27, 1991, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: David D. Hershel, Esquire

Department of Insurance Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For the Respondent: Orrin R. Beilly, Esquire

The Citizens Building, Suite 705

105 S. Narcissus Avenue

West Palm Beach, Florida 33401 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether the Respondent's licenses and registrations with the Department of Insurance should be disciplined because of the matters set out in the Administrative Complaint filed herein.

PRELIMINARY MATTERS

On April 8, 1991, Tom Gallagher, Insurance Commissioner for the State of Florida, signed an eight Count Administrative Complaint against the Respondent in which, as to variousindividuals as alleged, Respondent was claimed to have engaged in numerous incidents of illegal activity in violation of several sections of Chapter 626, Florida Statutes. Thereafter, on April 29, 1991, Respondent denied the material allegations in the Administrative Complaint and requested a formal hearing. By letter dated May 14, 1991, the file was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer, and on June 11, 1991, after the parties' responses to the Initial Order entered herein were received, the undersigned, by Notice of

Hearing, set the matter for hearing in Tampa on August 27, 1991, at which time it was held as scheduled.

At the hearing, Petitioner indicated its intention to voluntarily dismiss Counts VI and VII of the Complaint. The parties entered into a written stipulation which resolved many issues of fact. Nonetheless, the Petitioner also presented the testimony of Phil Adamo, an Analyst II in the Commissioner's St. Petersburg office and the individual who investigated the matters in issue here; Angela Thompson, an employee of Century Auto Service, a motor club; JoAnne

S. Coleman, Kathy Jo Gall, Nellie Irene Wynperle Henry, and Lucinda L. Romano, all individuals who purchased the insurance in issue herein; Pamela Ann Brown Packer, an employee of Action Insurance Agency which moved into the offices previously occupied by Respondent's firm at the time in issue; and Suzanne M. Clark, an employee of the bank used by Respondent's concern at the time in issue. Petitioner also introduced Petitioner's Exhibits 1 - 15 and 17 - 19. Petitioner's Exhibits16 and 20 were not received into evidence. No evidence was introduced as to Count VIII of the Complaint.

Respondent testified in his own behalf and introduced Respondent's Exhibits A and D. Respondent's Exhibits B and C were not received into evidence.

A transcript was provided and subsequent to the hearing, both counsel submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the allegations contained herein, the Petitioner, Department of Insurance, (Department), was the state agency responsible for the licensing and registration of insurance agents in Florida and for the regulation of the insurance industry in this state.

   
   

2. At the same time, Respondent was licensed in Florida as a general lines agent, a life and health (debit) agent, a life and health agent, and as a dental health care services contract salesman. He was president, director and registered agent of, and was the only licensed insurance agent working at, Devor of Brandon, a general lines insurance agency located in Brandon, Florida.

   
   

3. At the times in issue, Respondent employed Jay Schetina, not a licensed insurance agent in Florida, to work as a salesman at the Brandon office. Mr. Schetina worked directly under the supervision and control of the Respondent and was in charge of the Brandon office when Respondent, who worked four days a week at the other office he owned in Cape Coral, Florida was not there.

   
   

4. On January 11, 1989, Nellie Wynperle Henry went to the Respondent's Brandon agency to buy automobile insurance. She dealt with Mr. Schetina who sold her a policy to be issued by Underwriters Guarantee Insurance Company for an annual premium of $1,288.00, and to be effective January 17, 1989. She gave Mr. Schetina a $429.00 down payment and ultimately was issued policy no. 12207947. The policy reflected Respondent as agent for the company.

   
   

5. Though she was not told what it was and does not recall signing it, an application for an auto service contract, to be issued by Century Auto Service, was also prepared and bears what purports to be her signature. That application was prepared and submitted without her knowledge or permission. The fee for the policy was $40.00, of which the agency got to keep 90%. Since she was already a member of AAA and had their service coverage, Ms. Wynperle did not need the

   service club policy sold to her at Respondent's agency and, in fact, had told Mr. Schetina so. Though she was charged for the service policy, she never received a copy of it and did not know she had it.

   
   

6. At the time she applied for the auto insurance, Ms. Wynperle also applied to finance the unpaid balance due over and above the down payment through Underwriter's Financial of Florida, Inc., a premium finance company.

   The premium finance agreement includes the amount of the unwanted service policy, and is also incorrect in that it reflects that the down payment tendered by Ms. Wynperle was only $389.00.

   
   

7. Dorothy Lunsford purchased auto insurance from the Respondent's agency on January 18, 1989. The premium for her policy, also with Underwriters Guarantee, was $707.00 and she made a down payment, by check, of $217.00. She financed the balance but the application for financing showed a down payment of only $177.00. On the same day, an application form for an auto service policy was also submitted in Ms. Lunsford's name. The cost of this policy was $40.00.

   
   

8. On January 31, 1989 Joanne Coleman applied for automobile insurance at Respondent's agency. She was to be insured by two companies' policies, one issued by United Guarantee and one by Hamilton Insurance Company. The total combined premium was $670.00. Both policies were issued and Respondent's agency was listed as agent on both. She paid for the policies with a check for

   $687.00. No explanation was given for the difference.

   
   

9. At the same time she applied for the auto insurance, though she had had no discussion with the clerk with whom she dealt at the agency about it, an application for an auto service policy was also filled out in her name, carrying a premium of $20.00. She did not receive a service policy. She neither authorized or consented to the submittal of the service club application in her name. Ms. Coleman's memory of the events, however, was not clear, but it is clear that she did not want the service policy she was charged for.

   
   

10. On February 9, 1989, Kathy Gall applied for auto insurance with the Respondent's agency. The annual premium was$733.00 and at the time, she gave the agent a check for the down payment in the amount of $240.00. She applied to finance the balance but when prepared at the agency, the application form reflected a down payment of only $220.00. This was in error. However, at that same visit, an application for an auto service policy was also filled out in Ms. Gall's name. The policy bore a premium of $20.00. At no time did Ms. Gall authorize that service policy nor, in fact, was it ever discussed with her and she did not know she was purchasing it.

    
    

11. Finally, on February 6, 1989, Lucinda Romano applied with the Respondent's agency for an automobile insurance policy with Allegheny Mutual Casualty Company. At that time, she gave Devor a check for $61.80. Though at the time she went into the agency she did not intend to purchase an auto service contract because she was having financial problems and wanted only the most basic lawful coverage, and did not sign the application for it, she was charged for an auto service policy at a cost of $20.00. She thought she was purchasing only PIP coverage which cost $60.00. Ms. Romano subsequently requested a refund of the amount she paid for the auto service policy and the payment was refunded by check on May 19, 1989 from Jay Schetina.

    
    

12. Sometime after the Devor agency was taken over by Sam Capitano/Action Insurance Agency, and the latter's employees were servicing the company's files, Ms. Brown-Parker, an employee of Action found the auto service policies,

    including those issued in the name of Ms. Romano, Ms. Gall, Ms. Coleman, and Ms. Wynperle,and Ms. Lunsford, which had not been transmitted to the policyholders. Both copies of the policy were in the file.

    
    

13. Respondent is also the subject of a Consent Order issued on February 26, 1990, subsequent to the date of the matters in issue herein. The Settlement Stipulation For Consent Order, on which the Order is based, refers to the matters in issue here which relate to Respondent's allowing his non-licensed employees to use his license to practice insurance, and allowed the agency to operate, at least at times, without an active, full time agent in charge.

    
    

14. At paragraph 10(c), the Stipulation provides, in part:

    
    

    ... If the Department has good cause to believe that, after the issuance of the Consent Order in this cause, unlicensed individuals are transacting insurance at any agency at which Respondent operates as a general lines agent ..., or that any agency at which Respondent operates ... is not at all times after issuance of the Consent Order in this cause under the active, full-time charge of a general lines agency, the Department shall initiate proceedings to

    suspend or revoke the licenses and eligibility for licensure and registrations of the Respondent based upon the original grounds as alleged in the Administrative Complaint referred to herein.

    
    

15. The original charges referred to, supra, relate to Respondent's alleged authorization of unlicensed employees to transact insurance, and his alleged authorization of the agency to, at times, operate without an active, full-time agent in charge. It did not refer to the incidents alleged herein, to wit: theimproper charges for undesired auto club membership and the preparation of false premium finance applications.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

17. In an Eight Count Administrative Complaint, the Petitioner has alleged that the Respondent has, through the actions of his subordinates and employees, fraudulently sold unwanted automobile service policies to customers who came to him for automobile insurance and in some cases, consistent therewith, fraudulently completed premium finance agreements which understated the amount of down payment made by the insured. These actions are alleged to be in violation of various sections of the Insurance Code of the State of Florida.

    
    

18. In order to succeed in its prosecution, the Petitioner has the burden of proof to establish each element of the offenses alleged against the Respondent by clear and convincing evidence, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

7 19. Section 626.611, Florida Statutes, in pertinent part provides:

The Department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent, solicitor, or adjustor ... and it shall suspend or revoke the eligibility to

hold a license or permit of any ... applicant, licensee, or permittee [if] any one of the following applicable grounds exist:

* * *

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

form of dissemination of information or advertising.

* * *

(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

* * *

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

2. 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.

* * *

(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 code.

1. Section 626.621, Florida Statutes, provides:

   
   

   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 any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory ....

   (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.

   * * *

   (6) In the course 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 otherwise having shown himself to be a source of injury or loss to the public or detrimental to the public interest.

   
   

2. Section 626.9521, Florida Statutes provides:

   
   

   No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. Any person who violates any provision of this part shall be subject to the penalties provided in s.

   627.381.

   
   

3. Section 626.9541, Florida Statutes, defines misrepresentation in insurance applications at s.626.9541(1)(k)1. as:

   
   

   ...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 an insurer, agent broker or individual,

   
   

   and illegal dealings in premiums at s. 626.9541(1)(o)2 as:

   
   

   Knowingly collecting as a premium or charge for insurance, any sum in excess of or less than the premium or charge applicable to such insurance....

   
   

4. Here the evidence is clear that, as to Ms. Wynperle, Ms. Lunsford, Ms. Gall, Ms. Romano and Ms. Coleman, all of whom went to the Respondent's agency to purchase automobile insurance, each was sold an automobile service club policy which they did not want,did not need, and in several cases, did not know they were getting. At the very least, this constitutes misrepresentation, the use of deceptive and unfair practices, and is a dishonest practice. Further, under the circumstances shown, it also constitutes misappropriation. In addition, Respondent knowingly collected sums as a premium for insurance which were not requested by the clients or authorized by them.

   
   

5. In addition, Respondent's employee also failed to credit the client, in several of the cases, with the full premium deposit paid, choosing instead to omit so much of the total premium as related to the auto service policy. This, too constitutes a violation. The question for resolution, however, is not what was done or whether that misconduct constitutes actionable misconduct, but whether that misconduct, clearly not perpetrated by the Respondent, can be attributed to him and he be held liable therefor so as to permit discipline of his license.

   
   

6. The resolution of this issue is resolved by existent law. Section 626.734, Florida Statutes, 1989, states:

   Any general lines insurance agent who is an officer, director, stockholder, or employee on an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or violations or any provisions of this code committed by such licensee or by any person under his direct supervision and control while acting on behalf of the corporation.

   
   

7. Examining the facts shown to exist here in light of that statute it is clear that Devor Auto Insurance of Brandon, Inc. was an incorporated general lines agency and that Respondent was thepresident, director, and registered agent of the agency. He was the only licensed general lines insurance agent employed at or working at Devor of Brandon. The evidence also shows that Jay Schetina, an unlicensed individual, was working as a salesperson at the agency and was the person who dealt with all the clients involved herein. Clearly, Mr. Schetina was running the agency for the Respondent during the four days per week that Respondent was working out of the Cape Coral office.

   
   

8. The evidence clearly establishes that Respondent did not, personally or directly, commit any of the misconduct which is charged here. He was, however, in charge. Mr. Schetina worked for him and was under his supervision, and as is aptly pointed out by counsel for Petitioner, a simple review of business written and a follow-up of client files by the Respondent would have disclosed Schetina's improprieties and afforded an opportunity to correct them. There is no indication that at any time during the period in issue, did Respondent make even the slightest effort to properly oversee his employees. In fact, the Department took action against him for that very failure even though the action, in the form of a Consent Order, did not come about until after the misconduct here shown.

   
   

9. Respondent relies on the action taken by the Legislature in the 1990 session whereby Section 626.734 was changed to read:

   
   

   Nothing in this section shall be construed to render any person criminally liable or subject to any disciplinary proceedings for any act unless such person personally committed or knew or should have known of such act and of the facts constituting a violation of this chapter.

   
   

10. Under even this latest statute, however, action can be taken against a licensee who did not personally commit acts of misconduct if that person knew or should have known of those acts.

    
    

11. Sections 626.611 and 626.621 are disciplinary statutes and permit revocation of a license under particular circumstances. Respondent is correct when he points out that such statutes must be strictly construed, Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1 DCA 1979).

    
    

12. Clearly, Respondent did not personally commit the misconduct alleged and he cannot, therefore, be disciplined under the provisions of Section 626.611. However, his laissez faire management approach to the running of Devor, and his almost cavalier approach to supervising the non-licensed

    individuals he had running the operation in his absence, make him clearly a candidate for action under Section 626.621 if he can be found to fall within the purview of that portion of the statute which holds the principal liable if he should have known, [emphasis supplied] what his employees were doing. Without doubt he does.

    
    

13. The evidence shows that Respondent, through his unsupervised employee, made fraudulent statements relative to the applications for the auto service polices for the clients outlined for the purpose of increasing his fee, (Sec. 626.9541(1)(k)1 and engaged in unfair and deceptive acts in the business of insurance, (Sec.626.9521). Both constitute violations of the Insurance Code and are also violations of Section 626.621 (2) and (6), Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that a Final Order be issued dismissing the allegations that Respondent, John W. Ganter, violated Section 626.611, Florida Statutes, but finding him guilty of violations of Section 626.621, 626.9521 and 626.9541(1)(k)1, Florida Statutes, as to Ms. Wynperle, Ms. Gall, Ms. Coleman, Ms. Romano, and Ms. Lunsford, and imposing a suspension of his licenses and eligibility for licensure for a period of one year. However, under the provisions of Section 626.691, it is further recommended that in lieu of the suspension, the Respondent be placed on probation for a period of two years under such terms and conditions as specified by the Department.

DONE and ENTERED in Tallahassee, Florida this 10th day of October, 1991.

ARNOLD H. POLLOCK

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 10th day of October, 1991.

APPENDIX TO RECOMMENDED ORDER

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

1. - 5. Accepted and incorporated herein.

6. & 7. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. - 12. Accepted and incorporated herein.

13. - 16. Accepted and incorporated herein.

17. - 19. Accepted and incorporated herein.

20. - 22. Accepted and incorporated herein.

23. & 24. Accepted.

25. Not a Finding of Fact.

FOR THE RESPONDENT:

1. & 2. Accepted and incorporated herein.

1. Accepted expect for the representation that Petitioner presented no evidence as to Count II. The Stipulation of the parties clearly makes detailed reference to the allegations regarding Ms. Lunsford.

2. Accepted as to Counts VI, VII & VIII. Rejected as to Count II.

3. Accepted and incorporated herein.

4. - 8. Accepted and incorporated herein.

1. Rejected.

2. - 14. Accepted and incorporated herein.

1. Rejected.

2. - 20. Accepted and incorporated herein.

1. Rejected.

2. & 23. Accepted and incorporated herein.

1. Accepted.

2. Accepted.

3. Accepted.

4. Rejected.

5. - 34. Accepted as to the actual dealings of the Respondent.

COPIES FURNISHED:

David D. Hershel, Esquire Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

Orrin R. Beilly, Esquire

The Citizens Building, Suite 705

105 S. Narcissus Avenue

West Palm Beach, Florida 33401

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 writtenexceptions 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 consult with the agency which will issue the

Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should b e filed with the agency which will issue the Final Order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF:

DOAH CASE NO. 91-3046

JOHN W. GANTER CASE NO. 9l-L-I00DDH

/

FINAL ORDER

THIS CAUSE came before the undersigned Treasurer and Insurance Commissioner of Insurance of the State of Florida, for consideration and final agency action. On April 8, 1991, an eight-count Administrative Complaint was filed against the Respondent, JOHN W. GANTER, charging him with various violations of the Insurance Code and Rules of the Department of Insurance. The Respondent timely filed a request for a formal proceeding pursuant to Section 120.57(1), Florida Statues. Pursuant to notice, the matter was heard before Arnold H. Pollock, Hearing Officer for the Division of Administrative Hearings, on August 27, 1991.

After consideration of the evidence, argument and testimony presented at hearing, and subsequent written submissions by the parties, the hearing officer issued his Recommended Order (attached hereto as Exhibit A). The hearing officer recommended that a Final Order be issued dismissing the allegations that Respondent violated Section 626.611, Florida Statutes, but finding him in violation of Sections 626.621, 626.9521, and 626.9541(1)(k)1, Florida Statutes, as to five counts of the Department of Insurance's Administrative Complaint.

The hearing officer recommended that the Respondent be suspended for a period of one year or, in lieu of suspension, that he be placed on probation for a period of two years under such terms and conditions as the Department may specify. The Respondent timely filed four exceptions to the hearing officer's Recommended Order which have been considered and addressed herein.

RULINGS ON RESPONDENT'S EXCEPTIONS

1. Respondent first objects to Paragraph 9 of the hearing officer's Findings of Fact concerning the sale of an automobile service policy to Joanne Coleman. That Paragraph stated:

   
   

   9. At the same time she applied for the auto insurance, though she had had no discussion with the clerk with whom she dealt at the agency about it, an application for an auto service policy was also filled out in her name, carrying a premium of $20.00. She did not receive a service policy. She neither authorized or consented to the submittal of the service club application in her name. Ms. Coleman's memory of the

   events, however, was not clear, but it is clear that she did not want the service policy she was charged for.

   
   

   Respondent argues that since the last sentence to this finding suggests that Ms. Coleman's memory of the events was unclear, the hearing officer could not have found that the evidence clearly and convincingly supported the finding that she did not want the service policy.

   
   

   Ms. Coleman's direct testimony clearly and convincingly revealed that she did not intend to purchase an automobile service policy from the Respondent.

   Her testimony showed that she understood the nature of such contracts. In fact, she purchased an automobile service contract from AAA after her insurance transaction with the Respondent (T. 70). She entered into her contract with AAA only after she decided to take a long distance trip with a friend (T. 83-84).

   Otherwise, Ms. Coleman rarely used her car for significant distances and, thus, felt no need for a service contract before her trip (T. 72).

   
   

   Ms. Coleman answered in the negative each time counsel asked her whether she intended to purchase an automobile service contract from Respondent's insurance agency, Respondent personally, or from anyone on the day that she transacted insurance with the Respondent (T. 71). She buttressed her testimony on cross-examination when posed with the question of why she was called to testify at the final hearing by stating, "I feel like that he charged me for an auto policy that I didn't get" (T. 74). Counsel for Respondent then asked Ms. Coleman specific questions regarding the progression of events which led to her purchase of automobile insurance from the Respondent. She testified that she could not remember in response to some of these questions (T. 76-79). Though the hearing officer may have found that Ms. Coleman's recollection of the order of events was less than clear, the questioning as to whether Ms. Coleman wanted the service policy clearly and convincingly established that she did not want that contract. The hearing officer's finding was based upon competent and substantial evidence. This fact remained unaffected by counsel for Respondent's questioning of whether Ms. Coleman visited Respondent or mailed a renewal application to the Respondent on a particular day. Any confusion on the part of Ms. Coleman failed to overcome the hearing officer's finding that Ms. Coleman never desired to purchase an automobile service contract from the Respondent.

   
   

   Accordingly, Respondent's first exception is hereby REJECTED.

   
   

2. Respondent next objected to part of the hearing officer's Conclusions of Law where the officer stated, on page 10, that

   
   

   the evidence is clear that, as to Ms. Wynperle, Ms. Lunsford, Ms.

   Gall, Ms. Romano and Ms. Coleman, all of whom went to the Respondent's agency to purchase automobile insurance, each was sold an automobile service club policy which they did not want, did not need, and in several cases, did know they were getting.

   
   

   The Respondent correctly asserts that Ms. Lunsford's name was erroneously included with these other consumers as she did not testify at the final hearing

   in this matter and, therefore, no positive evidence established that she did not want such a policy.

   
   

   Accordingly, this Final Order does not adopt that portion of the Recommended Order which refers to Ms. Lunsford, and Respondent's second exception is hereby ACCEPTED.

   
   

3. The Respondent further takes exception to another portion of the hearing officer's Conclusions of Law, where, on page 12, the officer stated, "...and as is aptly pointed out by counsel for Petitioner, a simple review of business written and a follow-up of client files by the Respondent would have disclosed Schetina's improprieties and afforded an opportunity to correct them." The Respondent asserts: a) This statement is a purported finding of fact rather than a conclusion of law; b) No evidence supports this conclusion; and, c) No findings of fact in the proposed recommended order support this conclusion.

   
   

   The hearing officer's phrase falls within the general discussion of Respondent's capacity as supervisor at Devor Auto Insurance, Inc. This discussion shows how counsel for the Petitioner clearly established that Respondent's activities met the terms of Section 626.734, Florida Statutes, which makes general lines agents strictly and personally liable for the misconduct of their subordinates. Thus, the hearing officer's phrase qualifies as a legal conclusion.

   
   

   Further, the evidence clearly supports the conclusion that the Respondent had supervisory responsibilities over Jay Schetina. The record as a whole in this cause supports this conclusion; and, in particular, the Respondent himself stated of Mr. Schetina, "He's my employee. He worked for me for over two years, probably three years" (T. 182). Thus, the hearing officer properly applied the statute. That the hearing officer delved into Respondent's style of supervision is inconsequential to his conclusion of Respondent's violation.

   
   

   Finally, the Respondent asserts that the hearing officer erred when he discussed an issue which was not addressed in a proposed recommended order. The hearing officer bears no duty to avoid a particular issue when a party fails to address a finding or conclusion in a proposed recommended order. The Florida Administrative Code does not require that parties submit proposed recommended orders. Rather, Rule 22I-6.031, Florida Administrative Code, states, "All parties may submit proposed findings of fact, proposed conclusions of law, proposed recommended orders, and legal briefs on the issues within the time designated by the Hearing Officer." The hearing officer in the present case reiterated the non-mandatory nature of these filings (see T. 196 ("I'm willing to give you ten days ... to submit to me matters in writing if you wish to do so"). Certainly, the hearing officer would not be bound to silence if neither party submitted proposed findings of fact or conclusions of law.

   
   

   Accordingly, Respondent's third exception is hereby REJECTED.

   
   

4. The Respondent posits a final exception to the hearing officer's Conclusions of Law. On page 13, the hearing officer stated:

   
   

   Clearly, Respondent did not personally commit the misconduct alleged and he cannot, therefore, be disciplined under the provisions of Section 626.611. However, his laissez faire management approach to

   the running of Devor, and his almost cavalier approach to supervising the non-licensed individuals he had running the operation in his absence, make him clearly a candidate for action under Section 626.621 if he can be found to fall within the purview of that portion of the statute which holds the principal liable if he should have known, [emphasis supplied] what his employees were doing. Without doubt he does.

   
   

   The Respondent avers that the record lacked evidence to support the conclusion that Respondent should have known of the activities which transpired in his office because Respondent was the licensed agent at Devor, or that a review of the files would have revealed his employee's misconduct. The Respondent argues that, as a prerequisite to discipline, it must be proven that Respondent "should have known" of the unlawful conduct. The Respondent's exception then includes analysis of Bach v. Board of Dentistry, 378 So. 2d 34 (Fla. 1st DCA 1979), to require that there be evidence in the record that Respondent was fully informed of or approved of his employee's conduct in order for the hearing officer to conclude that Respondent "should have known" of that conduct.

   
   

   Respondent's argument is unavailing because the paragraph to which he takes exception relates to new language, i.e., the "should have known" language, which the Florida Legislature added to Section 626.734, Florida Statutes, in its 1990 session. The events at issue in this case occurred in 1989, before the 1990 amendment. The hearing officer properly concluded on page 11 of his Recommended Order, "The resolution of this issue is resolved by existent [1989] law." He then proceeded to find Respondent in violation of that law which held the general lines agent strictly liable for the acts of his subordinates. Thus, any comments by the officer in an attempt to address the concerns of Respondent that he might be found innocent under a different statute is inconsequential to this cause and constitutes dicta.

   
   

   Accordingly, Respondent's last exception is hereby REJECTED.

   
   

5. The hearing officer also recommended a conclusion of law that stated: "Clearly, Respondent did not personally commit the misconduct alleged and he cannot, therefore, be disciplined under the provisions of Section 626.611."

This conclusion implied that a lack of personal involvement in an infraction, or misconduct which brought the licensee in violation of the Insurance Code by virtue of Section 626.734, Florida Statutes, precluded application of 626.611, Florida Statutes. This conclusion contradicts precedent. See Thomas v.

Department of Insurance and Treasurer, 559 So. 2d 419, 421-22 (Fla. 2d DCA 1990) (626.611 held applicable where insurance consumers unknowingly bought auto club memberships from licensee's employee); Hartnett v. Department of Insurance, 432 So. 2d 155, 157 (Fla. 3d DCA 1983) (licensee held personally accountable for misappropriation where employees committed misconduct). Accordingly, a licensee could be held in violation of Section 626.611, Florida Statutes, where he did not personally commit the misconduct alleged, and that portion of the hearing officer's Conclusions of Law contradicting this principle is hereby REJECTED.

After careful consideration of the balance of the record in this matter, the submissions of the parties, and being otherwise advised in the premises, it is

ORDERED:

1. The Findings of Fact of the hearing officer are adopted in full as the Department's Findings of Fact.

   
   

2. The Conclusions of Law of the hearing officer are adopted in full as the Department's Conclusions of Law, except for that portion which would prevent discipline of licensees under Section 626.611, Florida Statutes, if they did not personally commit the misconduct. Rather, licensees may be subject to such discipline regardless of their personal involvement.

   
   

3. The following hearing officer's recommendations are approved and accepted as the appropriate disposition of this case:

   
   

   1. The Department's allegations that Respondent, JOHN

      W. GANTER, violated Section 626.611, Florida Statutes, are hereby DISMISSED;

   2. Respondent, JOHN W. GANTER, is hereby found in violation of Sections 626.621, 626.9521, and 626.9541(1) (k)1, Florida Statutes, pertaining to his insurance transactions with JoAnne S. Coleman, Kathy Jo Gall, Nellie Irene Wynperle Henry, and Lucinda L. Romano.

      
      

4. The Respondent's licensure as a life and health agent, life and health debit agent, general lines agent, and as a dental health care services contract salesman is suspended for a period of six months.

ACCORDINGLY, Respondent's licenses and eligibility for licensure are hereby suspended for a period of six months beginning ten calendar days from the date of the filing of this Consent Order. Pursuant to Section 626.641(4), Florida Statutes, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or permit is required under the Insurance Code or be employed in any manner by an insurance agent or agency during his period of suspension. Pursuant to Section 626.641(1), Florida Statutes, Respondent's licensure shall not be reinstated except upon request for such reinstatement, and the Respondent shall not engage in the transaction of insurance until his licensure is reinstated. The Department shall not grant reinstatement if it finds that the circumstance or circumstances for which Respondent's licenses were suspended still exist or are likely to recur.

Any party to these proceedings adversely affected by this order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a Notice of Appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, Florida 32399- 0300, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of rendition of this Order.

DONE and ORDERED this 8th day of January, 1992.

Tom Gallagher Treasurer and Insurance Commissioner

COPIES FURNISHED:

Arnold H. Pollock Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

David D. Hershel, Esquire Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

Orrin R. Beilly, Esquire

The Citizens Building, Suite 705

105 S. Narcissus Avenue

West Palm Beach, Florida 33401

=================================================================

DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

JOHN W. GANTER, NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED.

vs. CASE NO. 92-263

DOAH CASE NO. 91-3046

DEPARTMENT OF INSURANCE,

Appellee.

/ Opinion filed May 28, 1993.

An appeal from an order of the Department of Insurance. Orrin R. Beilly of West Palm Beach for appellant.

David D. Hershel, Division of Legal Services, Tallahassee, for appellee.

WOLF, J.

This is an appeal from a final order of the Department of Insurance (department) which suspended for six months the insurance license of appellant, John W. Ganter. Appellant asserts that the department improperly suspended his license for the misconduct of an unlicensed corporate employee where there was insufficient evidence that appellant knew or should have known of the employee's misconduct. The department asserts that there was no requirement that it prove appellant had knowledge of his employee's misconduct under section 626.734, Florida Statutes (1989), as it existed at the time of the alleged misconduct.

Appellee also asserts that there were sufficient findings of fact and evidence in the record to support the suspension based on appellant's implied knowledge of the alleged misconduct. We find that the department was required to prove that appellant knew or should have known of the misconduct of his employee under section 626.724 as it existed at the time of the misconduct, 1/ but that the record contains clear and convincing evidence to support the hearing officer's determination of appellant's knowledge. We affirm.

Appellant was the president, director, and registered agent of Devor Auto Insurance of Brandon, Inc. (Devor). At the times in issue, the appellant employed Jay Schetina, not a licensed insurance agent in Florida, to work as a salesman at the Brandon office. Mr. Schetina worked directly under the supervision and control of the appellant and was in charge of the Brandon office when the appellant, who worked four days a week at the other office he owned in Cape Coral, Florida, was not present.

In January and February of 1989, the four consumers whose underlying insurance transactions resulted in the discipline of appellant's licenses, dealt directly with Mr. Schetina. The hearing officer found that Schetina in dealing with these consumers misrepresented the terms and conditions of certain insurance policies by causing these consumers to purchase auto service contracts without their authorization or consent. An employee of the agency who purchased Devor 2/ testified at hearing that at the time of the purchase (which occurred subsequent to the transactions with those consumers) numerous auto service contracts were found in the Devor files, and the copies of those contracts which were to be sent to the consumers were still attached.

The department proceeded against appellant based upon the procurement of the unauthorized auto service contracts. An administrative hearing was held on April 27, 1991. Mr. Ganter testified at the final hearing that he had no personal contact with these consumers regarding the purchase of their insurance coverages, and that he had no knowledge that the auto service contract applications were not signed by some of these consumers. Mr. Ganter also testified that it was agency policy to explain the auto service contract options to consumers, and that he never instructed Jay Schetina or any employees at Devor to sign other people's names to an auto service contract.

Within the conclusion of the law section of the recommended order, the hearing officer stated the following:

The evidence clearly establishes that Respondent did not, personally or directly, commit any of the misconduct which is charged

here. He was, however, in charge. Mr. Schetina worked for him and was under his supervision, and as is aptly pointed out by counsel for Petitioner, a simple review of business written and a follow-up of client files by the Respondent would have disclosed Schetina's improprieties and afforded an opportunity to correct them. There is no indication that at any time during the period in issue, did Respondent make even the slightest effort to properly oversee his employees. In fact, the Department took action against him for that very failure even though the action, in the form of a Consent Order, did not come about until after the misconduct here shown.

Later, in the same section of the order, the hearing officer states as follows:

Clearly, Respondent did not personally commit the misconduct alleged and he cannot, therefore, be disciplined under the provisions of section 626.611. However, his laissez faire management approach to the running of Devor, and his almost cavalier approach to supervising the non-licensed individuals he had running the operation in his absence, make him clearly a candidate for action under section 626.621 if he can be found to fall within the purview of that portion of the statute which holds the principal liable if he should have known [emphasis supplied] what his employees were doing. Without doubt he does.

These purported conclusions of law actually contain many findings of fact concerning appellant's constructive knowledge of his employee's negligence. 3/ These findings are supported by the evidence. Evidence presented at the hearing showed appellant spent four days a week at his Cape Coral office and did not employ a licensed agent to supervise personnel in the Brandon office. There was also evidence that a review of the insurance files would reveal the misconduct involved. No evidence was presented, however, concerning the appropriate minimum standards of conduct either by adopted rule, communicated agency policy, or expert testimony against which the licensee's misconduct could be judged.

While appellant was cited and later entered into a consent order with the department in regard to improper supervision, these actions occurred after the improprieties on which the suspension was based.

Section 626.734, Florida Statutes (1989), states

Any general lines insurance agency who is an officer, director, stockholder, or employee on an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts,

misconduct, or violations or any provisions of this code committed by such licensee or by any

person under his direct supervision and control while acting on behalf of the corporation.

In Hartnett v. Department of Ins., 432 So.2d 155 (Fla. 3d DCA 1983), rev. denied, 440 So.2d 352 (Fla. 1983), the court upheld the statute against constitutional attack and determined that an insurance agent could be liable for actions of his employee notwithstanding lack of knowledge.

In Pic N' Save Central Florida v. Department of Business Regulation, Div. of Alcoholic Beverages and Tobacco, 601 So.2d 245 (Fla. 1st DCA 1992), this court recognized the distinction between imposing liability under the theory of respondeat superior and revoking a party's right to conduct business. In Pic N' Save, supra, the court held that while the governing statute itself did not require proof of licensee's knowledge that in order to suspend a party's liquor license, the department must establish that the licensee knew or should have known of the misconduct of its employee. The court went on to acknowledge that this construction of the statute is consistent with the idea "that one's license to engage in an occupation is not to be taken away except for misconduct personal to the licensee." Pic N' Save, supra at 250. There is no rational basis for not imposing the same standard for revocation of an insurance license. 4/ The closer issue is whether this evidence and the hearing officer's subsequent findings are sufficient to justify disciplinary action against the appellant based upon implied knowledge. In Pic N' Save, supra at 249, the court stated that a business license is subject to suspension or revocation only upon clear and convincing evidence of the alleged violation. Ferris v. Turlington,

510 So.2d 292 (Fla. 1987), and Evans Packing Co. v. Department of Agriculture,

550 So.2d 112 (Fla. 1st DCA 1989). Only when the employees act in a "persistent and practiced manner" so as to justify being described as "flagrant," is "the factual inference that the violations were either fostered, condoned, or negligently overlooked by the licensee" justified. Id. at 253-254.

The imposition of personal responsibility on the licensee for the illegal sales by its employees requires proof of minimum standards of conduct, either by adopted rules, communicated agency policy or expert testimony against which the licensee's alleged misconduct can be judged.

Pic N' Save, supra at 256. The court went on, however, to say that "a licensee may not remove himself from the responsibility by not being present on the premises by claiming ignorance of repeated violations."

While there is a lack of evidence of minimum standards of conduct in the instant case, the facts in this case are markedly different than those concerning the alleged violation in Pic N' Save.

In the instant case, unlike Pic N' Save, there is no evidence that the appellant took any measures to attempt to discourage violations. In fact, the evidence demonstrated a complete lack of supervision. In addition, the nature of the violations were such that a reasonable review of the files would have revealed the misconduct. 5/ There is also evidence which demonstrates that the violations remained unreported or undetected for over nine months after they occurred. Under these circumstances, there was clear and convincing evidence to support the hearing officer's determination that the agent knew or should have known of the misconduct of his employees.

Affirmed.

KAHN, J., concurring with written opinion; ZEHMER, J., dissenting with written opinion.

ENDNOTES

1/ It is, therefore, unnecessary for us to address the retroactive applicability of ch. 90-363, section 70, Laws of Fla., which amended section 626.734 to specifically require knowledge on the part of the employer prior to suspension of license based upon an employee's misconduct.

2/ It appears transfer occurred in October, 1989, although it is not absolutely clear from the record.

3/ This misdesignation of findings of fact as conclusions of law did not in any way materially impair the fairness or correctness of the proceeding. Schomer v. Department of Professional Regulation, 417 So.2d 1089 (Fla. 3d DCA 1982); Cullen

1. Florida Audubon Society, 582 So.2d 1241 (Fla. 3d DCA 1991). In addition, while the charging document did not allege that appellant knew or should have known of his employee's misconduct, we are unable to ascertain how holding appellee to the stricter standard results in prejudice to appellant, especially where the charge was defended on the basis that appellant had no reason to know of the employee's misconduct. Farzad v. Department of Professional Regulation, 443 So.2d 373 (Fla. 1st DCA 1983).

   
   

   4/ See Woodham v. Williams, 207 So.2d 320, 322 (Fla. 1st DCA 1968), which identified insurance as a highly regulated business and determined that the right to sell insurance constituted a privilege. This is similar to regulation of sales of alcohol.

   
   

   5/ In the sale of alcohol to minors cases, there is no continuing evidence of the violation which would alert the licensee.

   
   

   KAHN, J., concurring.

   
   

   I concur in affirming the suspension of Mr. Ganter's insurance license.

   This case presents more, however, than merely a complete lack of supervision by Mr. Ganter of his employees. Mr. Ganter, in violation of Florida law, methodically and regularly allowed an employee of his agency to utilize his general lines agent license for the purpose of transacting business when the employee was in fact not licensed in Florida to transact such business. Mr.

   Ganter further allowed his agency to regularly operate without an active, full- time agent in charge. During Mr. Ganter's frequent absences, the employee, Schetina, sold numerous auto service contracts to unknowing insurance customers, and utilized premium financing arrangements to further obscure these transactions. In my view, an agent such as Mr. Ganter, having willfully violated the law by leaving an unauthorized employee in charge of his insurance business, should be estopped to deny his implied knowledge of the employee's transgressions.

   
   

   Mr. Ganter, relying upon Bach v. Florida State of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979), argues that he had no duty to make inquiries as to whether his employee, Schetina, had properly carried out his responsibilities. Ganter

   further argues, again relying upon Bach, that unless he was fully informed of and ratified Schetina's actions, his license may not be jeopardized. In effect, Mr. Ganter has argued to this court that because he violated the law and left Schetina to mind the store, he (Ganter) is effectively shielded from allegations based upon Schetina's misconduct, absent direct proof that Ganter actually participated in such misconduct. I completely reject the notion that an insurance agent may protect his license from allegations that he has violated one portion of the insurance code by merely demonstrating that he has, in fact, violated another portion.

   
   

   ZEHMER, J. (Dissenting)

   
   

   I agree that the Department of Insurance is obligated by the applicable case and statutory law to prove that Ganter personally "knew or should have known" of the alleged acts of misconduct committed by his salesman Schetina. Under the authorities cited in the majority opinion, the Department of Insurance is authorized to impose civil penalties involving the suspension or revocation of a person's license to engage in an occupation only upon proof by clear and convincing evidence that the licensee personally participated in alleged acts of misconduct or, when the alleged acts of misconduct are shown to have been committed by a subordinate salesman or employee, that the licensee was guilty of personal misconduct in the sense that he either "knew or should have known" of such acts of misconduct in sufficient time to have taken action to prevent or correct it. 1/

   
   

   I do not agree, however, that the evidence and findings of fact are legally sufficient to satisfy the Department's burden of demonstrating, by clear and convincing evidence, that appellant Ganter was guilty of personal acts of misconduct because he knew or should have known of Schetina's misconduct and thereby establish the alleged violations of the insurance code warranting the suspension of Ganter's license. I reach this conclusion for the following reasons.

   
   

   First, it is necessary to note that this case was charged and tried on the premise that the 1989 version of section 626.734 was controlling on Ganter's personal liability for Schetina's wrongful acts, and that the Department construed that statute as imposing strict legal liability on Ganter for Schetina's wrongful acts charged in the complaint. This is made indisputably evident by the general allegations applicable to all counts of the Department's administrative complaint:

   
   

   6. Pursuant to Section 626.734, Florida Statutes, as a licensed general lines insurance agent and corporate officer of DEVOR OF BRANDON, you, JOHN W. GANTER, were and remain personally and fully liable and accountable for any wrongful acts, misconduct or violation of any provisions of the Florida Insurance Code which you, JOHN W. GANTER, or any person under your supervision and control commit while acting on behalf of the corporation.

   
   

   The administrative complaint does not contain any allegations that Ganter is guilty of specific acts of negligent supervision because he knew or should have known of Schetina's acts of misconduct; on the contrary, all counts except the

   first allege that Ganter personally solicited and procured the insurance and auto service contracts arid received the monies paid therefor, and that these acts constituted violation of chapter 626. 2/ While the first count alleges that Schetina committed the charged acts, it further alleges that Ganter was absolutely liable therefor as if he had personally committed such acts. In other words, the complaint is couched solely in terms of Ganter's liability in the nature of respondeat superior for the acts of another as a matter of law under the Department's construction of section 626.734.

   
   

   Consistent with this theory of strict liability, the hearing officer's recommended order finds Schetina's acts violated chapter 626 and then recites, "The question for resolution, however, is not what was done or whether that misconduct constitutes actionable misconduct, but whether that misconduct, clearly not perpetrated by the Respondent [Ganter], can be attributed to him and he be held liable therefor as to permit discipline of his license." The hearing officer's recommended resolution of this question relies on the 1989 version of section 626.734, construing this statute as imposing strict liability on Ganter for Schetina's acts as a matter of law, as the following excerpt from the recommended order shows:

   
   

   The resolution of this issue is resolved by existent law. Section 626.734, Florida Statutes 1989, states:

   
   

   Any general lines insurance agent who is an officer, director, stock- holder, or employee of an incorpora- ted general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or viola- tions or any provisions of this code committed by such licensee or by any person under his direct supervision and control while acting on behalf of the corporation.

   
   

   Examining the facts shown to exist here in light of that statute it is clear that Devor Auto Insurance of Brandon, Inc., was an incorporated general lines agency and that Respondent was the president, director, and registered agent of the agency. He was the only licensed general lines insurance agent employed at or working at Devor of Brandon. The evidence also shows that Jay Schetina, an unlicensed individual, was working as a sales person at the agency and was the person who dealt with all the clients involved herein.

   Clearly, Mr. Schetina was running the agency for the Respondent during the four days per week that Respondent was working out of the Cape Coral office.

   
   

   The evidence clearly establishes that Respondent did not, personally or directly, commit any of the misconduct which is charged

   here. He was, however, in charge. Mr. Schetina worked for him and was under his supervision, and as is aptly pointed out by counsel for Petitioner [Department], a simple review of business written and a follow-up of client files by the Respondent would have disclosed Schetina's improprieties and afforded an opportunity to correct them.

   There is no indication that at any time during the period in issue, did Respondent make even the slightest effort to properly oversee his employees. In fact, the Department took action against him for that very failure even though the action, in the form of a Consent Order, did not come about until after the misconduct here shown. [Emphasis added.]

   
   

   Respondent relies on the action taken by the Legislature in the 1990 session whereby Section 626.734 was changed to read:

   
   

   Nothing in this section shall be construed to render any person criminally liable or subject to any disciplinary proceedings for any act unless such person personally committed or knew or should have known of such act and of the facts constituting a violation of this chapter.

   
   

   Under even this latest statute, however, action can be taken against a licensee who did not personally commit acts of misconduct if that person knew or should have known of those facts.

   
   

   Sections 626.611 and 626.621 are disciplin- ary statutes and permit revocation of a license under particular circumstances.

   Respondent is correct when he points out that such statutes must be strictly construed, Bach

   1. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1 DCA 1979).

      
      

      Clearly, Respondent did not personally commit the misconduct alleged and he cannot, therefore, be disciplined under the provisions of Section 626.611. However, his laissez faire management approach to the running of Devor, and his almost cavalier approach to supervis- ing the non-licensed individuals he had run- ning the operation in his absence, make him clearly a candidate for action under section 626.621 if he can be found to fall within the purview of that portion of the statute which holds the principal liable if he should have

      known, [emphasis in original] what his employees were doing. Without doubt he does.

      
      

      The evidence shows that Respondent, through his unsupervised employee, made fraudulent statements relative to the applications for the auto service policies for the clients outlined for the purpose of increasing his fee, (Sec. 626.9541(1)(k)1 [sic] and engaged in unfair and deceptive acts in the business of insurance (Sec. 626.9521). Both constitute violations of the Insurance Code and are also violations of Section 626.621(2) and (6), Florida Statutes.

      
      

      There are no findings of fact relating to any specific acts showing that Ganter knew or should have known, or even when he knew or should have known, of Schetina's misconduct. There are no findings as to what Ganter could or should have done but failed to do so as to gain such knowledge and prevent or cure Schetina's wrongful acts. I am unable to determine from the record or the order precisely what the evidence shows about Ganter's knowledge or how he should have gained such knowledge. I do not find any detailed findings of fact supported by competent, substantial evidence that are legally sufficient to support a basis for holding Ganter legally liable for the misconduct of his employee, Schetina, under the correct legal standard. Cf. Pic N' Save Central Florida v. Department of Business Regulation, 601 So.2d 245 (Fla. 1st DCA 1992). Whether Ganter could or should have discovered Schetina's acts of misconduct and fraudulent representations by making a review of the files covering the transactions in question is purely a matter of conjecture, for there was no evidence and no specific findings of fact on this issue. The hearing officer's recommended order merely recites in the "conclusions of law" that, "as is aptly pointed out by counsel for Petitioner [the Department], a simple review of business written and a follow-up of client files by the Respondent [Ganter] would have disclosed Schetina's improprieties and afforded an opportunity to correct them. There is no indication that at any time during the period in issue, did Respondent make even the slightest effort to properly oversee his employees." [Emphasis added.] But the recommended order contains no findings of fact based on matters in evidence that support these conclusions, nor do I know what record evidence the hearing officer is referring to in making these statements. Rather, these statements are based either on argument by counsel for the Department or the absence of evidence indicating that respondent made any effort to oversee or supervise his employee. This rationale reveals that the hearing officer was requiring Ganter to prove that he supervised his employees rather than requiring the Department to prove by clear and convincing evidence that Ganter would or should have learned of Schetina's improper conduct had he not been guilty of conduct amounting to negligent supervision of Schetina. It may well be that Ganter did not present any evidence regarding the adequacy of his supervision in respect to the wrongful acts specifically charged because the administrative complaint only charged that Ganter was strictly liable as a matter of law for Schetina's wrongful acts, not that Ganter was guilty of negligent supervision of his employee.

      
      

      In any event, this alternative theory of negligent supervision fashioned in the hearing officer's recommended order is not properly before this court as a basis for affirming the appealed final order. This is so because the Department's final order explicitly ruled that the hearing officer's statements in the conclusions of law were properly characterized as such and were not

      findings of fact. Ganter timely filed exceptions to the conclusions of law in the hearing officer's recommended order. One of the exceptions urged a total lack of competent, substantial evidence and findings of fact to support the hearing officer's statements in the conclusions of law that "... as is aptly pointed out by counsel for Petitioner, a simple review of business written and a follow-up of client files by the Respondent would have disclosed Schetina's improprieties and afforded an opportunity to correct them." The Department overruled Ganter's exception to these statements, explaining:

      
      

      The hearing officer's phrase falls within the general discussion of Respondent's capacity as supervisor at Devor Auto Insurance, Inc. This discussion shows how counsel for the Petitioner [Department] clearly established that Respondent's activities met the terms of Section 626.734, Florida Statutes, which makes general lines agents strictly and personally liable for the misconduct of subordinates. Thus the hearing officer's phrase qualifies as a legal conclusion.

      
      

      Further, the evidence clearly supports the conclusion that the Respondent had supervisory responsibilities over Jay Schetina. The record as a whole in this cause supports this conclusion; and, in particular, the Respondent himself stated of Mr. Schetina, "He's my employee. He worked for me over two years, probably three years." (T. 182) Thus, the hearing officer properly applied the statute. That the hearing officer delved into Respondent's style of supervision is incon- sequential to his conclusion of Respondent's violation.

      
      

      (R. 6)(emphasis added). The Department determined only that the record contained competent, substantial evidence to prove that Ganter was Schetina's supervisor; it refused to determine whether the record contained clear and convincing evidence legally sufficient to prove that Ganter's personal conduct was a violation under chapter 626. Rejecting Ganter's exception, the Department explicitly declined to consider whether Ganter's personal acts of supervision over Schetina were legally deficient, and determined only that he should be held absolutely liable as a matter of law for Schetina's wrongful acts under a strict application of section 626.734 without regard to any personal acts of misconduct.

      
      

      Consistent with this theory of absolute liability, the final order also rejected the hearing officer's recommended conclusion of law that since Ganter did not personally commit the misconduct alleged he could not be disciplined under section 626.611, making the following explanation:

      
      

      This conclusion [in the hearing officer's recommended order] implied that a lack of personal involvement in an infraction, or misconduct which brought the licensee in violation of the Insurance Code by virtue of

      Section 626.734, Florida Statutes, precluded application of section 626.611, Florida Statutes. This conclusion contradicts precedent. See Thomas v. Department of Insurance and Treasurer, 559 So.2d 419, 421-22 (Fla. 2d DCA 1990)(626.611 held applicable where insurance consumers unknowingly bought auto club memberships from licensee's employee); Hartnett v. Department of Insurance, 432 So.2d 155, 157 (Fla. 3d DCA 1983)(licensee held personally accountable for misappropriation where employees committed misconduct). Accordingly, a licensee could be held in violation of Section 626.611, Florida Statutes, where he did not personally commit

      the misconduct alleged, and that portion of the hearing officer's Conclusions of Law contra- dicting this principle is hereby REJECTED.

      
      

      Based on this view of the law, the Department ruled that Ganter was subject to discipline regardless of his personal involvement in Schetina's wrongful acts, or whether the record contained competent, substantial evidence to support findings of fact that, by reason of his own personal acts of misconduct, Ganter "knew or should have known" of Schetina's misconduct. On this basis, the Department ordered Ganter's license suspended. This is not the legal basis for the majority opinion's affirmance of the final order, however. The majority opinion does not address the legal propriety of the ruling in the final order under review, although that is the principal error Ganter raises on this appeal. In holding that "there was clear and convincing evidence to support the hearing officer's determination that the agent knew or should have known of the misconduct of his employee," the majority opinion ignores the legal and factual basis of the Department's final order, approves the Department's rejection of Ganter's exception to the conclusions of law that are now characterized as findings of fact, implicitly disapproves the Department's characterization of that statement as a "conclusion of law" rather than a "finding of fact," and determines that the record contains clear and convincing evidence to prove facts not specifically found in the recommended order despite the Department's refusal to make that analysis and determination. The majority opinion errs because the hearing officer's statement that Ganter "knew or should have known" of Schetina's misconduct by reason of Ganter's failure to personally provide required supervision is seemingly predicated on argument by the Department's counsel rather than specific evidence and findings of fact so identified in the recommended order; and the Department has never made a ruling on the sufficiency of the record evidence to support this statement as a finding of fact (the Department characterized it as a conclusion of law and refused to treat it as a finding of fact as the majority opinion does). Moreover, the administrative complaint does not charge either negligent supervision or that Ganter, by reason of acts of personal misconduct, "knew or should have known" of Schetina's wrongful acts; it alleges only that Ganter is strictly liable as a matter of law for his employee's misconduct. Affirming Ganter's guilt on this legal and factual basis not alleged in the administrative complaint and not relied on by the Department's final order is manifest error for obvious due process reasons.

      
      

      For these reasons, I would reverse the final order and remand for further proceedings consistent with this opinion.

      ENDNOTES

      
      

      1/ I also believe that 1990 amendments to section 626.734 are applicable to this case because that version of the statute was in effect when the hearing officer's recommended order and the Department's final order were entered. But we need not be concerned with such retroactive application of the 1990 amendment to this case, since that amendment merely codified what has been the law under prior court decisions.

      
      

      2/ The complaint charges the following statutory violations in the first count, and references the same statutory violations in each of the remaining counts:

      
      

      IT IS THEREFORE CHARGED that you, JOHN W.

      GANTER, have violated or are accountable under the following provisions of the Florida Insurance Code, which constitute grounds for the suspension or revocation of your license and registrations as an insurance agent in this state:

      
      

      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. [Section 626.561(1), Florida Statutes]

         
         

      2. 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. [Section 626.611(5), Florida Statutes]

         
         

      3. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]

         
         

      4. Fraudulent or dishonest practices in the conduct of business under the license or permit. [Section 626.611(9), Florida Statutes]

         
         

      5. 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. [Section 626.611(10), Florida Statutes]

         
         

      6. 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. [Section 626.611(13), Florida Statutes]

         
         

      7. 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. [Section 626.621(2), Florida Statutes]

         
         

      8. 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.

         [Section 626.621(6), Florida Statutes]

         
         

      9. No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to 626.9561 to be, an unfair method or competition or an unfair or deceptive act or practice involving the business of insurance. Any person who violates any provision of this part shall be subject to the penalties provided in 627.381. [Section 626.9521, Florida Statutes]

         
         

      10. Made false or fraudulent statements or representation 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. [Section 626.9541(1)(k)1., Florida Statutes]

          
          

      11. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided, or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy issued by an insurer as permitted by this code.

[Section 626.9541(1)(o), Florida Statutes]

Docket for Case No: 91-003046

Orders for Case No: 91-003046