STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 91-7548

)

MICHAEL T. MASON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on February 27, 1992, in Orlando, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Dept. of Insurance & Treasurer Division of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Jason G. Reynolds, Esquire

Post Office Box 5428

Daytona Beach, Florida 32118 STATEMENT OF THE ISSUES

An Administrative Complaint dated November 18, 1991, alleges that Respondent, Michael Mason, committed a series of violations of Chapter 626, F.S., the Florida Insurance Code. The issues in this proceeding are whether those violations occurred, and if so, what discipline is appropriate.

PRELIMINARY STATEMENT

The administrative complaint at issue alleges that Respondent, Michael Mason, failed to forward insurance policy applications and remit premiums pursuant to an agreement with the insurer. The complaint alleges that the Respondent, through IAU, continued to sell to Florida insurance consumers after being notified that the insurer had curtailed underwriting in Florida, and that the Respondent, through IAU, misrepresented to consumers that they were insured, causing the consumers to not receive requested insurance and causing financial loss to the consumers.

Through counsel, Respondent answered the administrative complaint and requested an expedited formal hearing. At the hearing, Petitioner presented the testimony of Robert Williams, John Traver, Kenneth Nyman, John Brady, Jr.,

Amorette Givens, Sharon Thomas, and Maurice Rutty. Petitioner's exhibits #1-25 were received in evidence, with exhibits #19 and #20 and #22-25 received over objections based on hearsay and relevance.

Respondent testified in his own behalf and presented exhibits #2-11, received in evidence without objection. His exhibit #1 was withdrawn.

After the hearing, on March 23, 1992, counsel for Respondent filed a letter of closing argument. The transcript was filed on March 30, 1992; and Petitioner's proposed recommended order was filed on April 13, 1992. These have all been considered in the preparation of this recommended order and specific rulings on the findings of fact proposed by Petitioner are included in the attached appendix.

FINDINGS OF FACT

1. At present, and at all times relevant, Michael Mason is, and has been president of International Assurance Underwriters, Inc. (IAU), 2600 Maitland Center Parkway, Maitland, Florida.

   
   

   Respondent Mason was licensed as an insurance agent in the State of Florida in 1978 and continued to be licensed at all times relevant to this proceeding. He is currently eligible for licensure as a surplus lines insurance agent and general lines insurance agent.

   
   

   Prior to its emergency temporary suspension in this proceeding, Mason's license has not been subject to discipline.

   
   

2. IAU was incorporated on or about March 11, 1991. Its directors were Michael Mason, John Erb and Robert Campbell.

   
   

3. Shortly thereafter, a Limited Binding Authority Agreement was made between Assicurazioni Generali, S.P.A. (Generali), an international insurance company with a branch in London, and Leslie & Godwin Special Risks Ltd., London, (Leslie & Godwin) authorizing Leslie & Godwin to bind insurances, issue certificates of insurance, and settle claims on behalf of Generali. M.C. Rutty, Citadel Insurance Services, Ltd., London (Citadel), was designated as intermediary.

   
   

   Article II of the agreement provides, in pertinent part,"... the binding of insurances hereunder shall be the responsibility of one of the persons named in Section B.2 herein...." (Petitioner's Exhibit #16)

   
   

   Section B.2 provides, in pertinent part:

   2. Persons authorized to use this Limited Binding Authority

   
   

   It is a condition of this Agreement that all insurances submitted hereunder must be first accepted and approved by the following persons:

   
   

   Michael T. Mason John K. Erb

   [names handwritten and initialled by Barry West, Director of Leslie & Godwin, and Maurice Rutty] (Petitioner's exhibit #16)

   
   

4. The agreement provided for Generali to insure hospitality businesses (hotels, motels, restaurants, bars, taverns and the like) in the United States, for property limits up to $1,000,000 per location, general liability limits up to $1,000,000 and liquor legal liability up to $1,000,000.

   
   

   Under the arrangement, IAU, as approved producing agent, obtained requests for insurance from its subagents and other brokers or companies. Requests were forwarded to Generali, through Citadel and Leslie & Godwin. Generali was the ultimate authority to approve the risk, but Leslie & Godwin and IAU had some limited authority to bind the company on a temporary basis.

   
   

   Each month a bordereau, or list, was to be submitted by IAU through Citadel and Leslie & Godwin showing what policies were written that month. Premiums were due thirty (30) to forty-five (45) days from the end of the month.

   
   

5. IAU immediately began providing insurance business for Generali, primarily involving insureds in Florida, and primarily through three Florida insurance companies: Hull & Company, Hummel Co., and Southeast Insurers, Inc.

   
   

   Except for delays in getting copies of policies in some cases, representatives from these companies noted nothing out of the ordinary in their dealings with IAU or Michael Mason. Claims were made and paid; premiums were paid by the companies to IAU.

   
   

   Sometime around the end of October or early November 1991, the companies learned that a cease and desist order had been entered by the Florida Department of Insurance against IAU. Maurice Rutty and attorneys representing Leslie & Godwin and Citadel met with the companies and obtained lists of policies obtained for them by IAU.

   
   

   At the time that the cease and desist order was entered, the companies had on hand premium funds due to be paid to IAU for Generali policies. Those funds have not been paid and allegedly remain in the companies' accounts.

   
   

6. Notwithstanding the risk limits in the Limited Binding Authority Agreement, a substantial number of policies were written by IAU for more than

   $1,000,000. Ocean Properties was an account involving multiple properties, mostly hotels, with an aggregate risk of $300 to $400 million. A single building in the Bahamas was insured with $45 million property coverage.

   
   

   Maurice Rutty claims that Generali never approved the coverage beyond the $1 million limit, but instead obtained excess coverage beyond the limit after Generali learned of IAU's actions. Rutty admits that Generali routinely approved limits beyond $1 million, but only to $1.2 or $1.5 million. Michael Mason claims that he properly forwarded the paperwork to Citadel, that he never dealt directly with Generali, but that the policies were approved.

   
   

7. In June 1991, Generali informed Citadel that it would no longer write policies in Florida as it was concerned about windstorm liability. This change was conveyed to Michael Mason by telephone by Maurice Rutty and by facsimile transmission from Eve Russell, Rutty's partner. In a telephone call with Rutty,

   Mason argued that the limitation would cripple IAU as most of its work was in Florida. Mason also provided a list of Florida policies showing what he believed was an acceptable ratio of coastal to inland properties.

   
   

   Mason continued to approve policies for Generali on Florida properties. Mason believed that he and Generali, through communication with Citadel, had gotten around the problem of windstorm hazards.

   
   

   The Limited Binding Authority Agreement includes a section styled "underwriting guidelines". One such guideline is that "...a wind exclusion or deductible may apply to risks located within one mile from the coastline." (Petitioners exhibit #16) Mason considered that a discretionary guideline and included windstorm deductibles on some risks located by the ocean.

   
   

8. The bordereaux, or lists, submitted by Mason to Citadel were reasonably appropriate, according to Maurice Rutty, except for one or two premium discrepancies, which is normal. The premiums submitted to Citadel for Generali's policies from IAU and other producers were net premiums, after the commissions were deducted.

   
   

   At some point Mason learned that someone in his office had bound risks that were not originally submitted on his list. A supplemental list was filed for those six policies and the premiums were submitted.

   
   

9. After Maurice Rutty learned that the bank account set up by Citadel in the United States for receipt of premiums was frozen by the Florida Department of Insurance, he traveled to Florida to meet with the various companies who were providing business to IAU for Generali. He found what he claimed were approximately 140 policies which were written through IAU but were never approved by Generali.

   
   

   With one exception, eventually all of those policies were covered by Generali. The exception was a large policy for the Catholic Diocese of Nassau, Bahamas, which Generali cancelled after a 3-month notice. The policy was beyond the scope of the hospitality program described in the Limited Binding Authority Agreement.

   
   

10. No one from Generali nor Leslie & Godwin testified, and the exact nature of the relationship between those companies and IAU was not clearly established. Michael Mason was not a signatory to the Limited Binding Authority Agreement. Rutty's testimony regarding what was approved or disapproved by Generali was unclear. He insisted that Generali did not approve the coverage beyond $1 million, but excess policies were acquired by Generali for the additional amounts. He conceded that facsimile notices of those policies and the Florida policies written after June 1991 could have been received by Citadel, but he did not explain how the coverage denial by Generali was communicated to Mason or IAU. He insisted that coverage was ineffective prior to approval by Generali or by Barry West, but the language of the Limited Binding Authority Agreement appears to delegate some approval responsibility to Mason and Erb.

    
    

11. Evidence on what premiums are still due from IAU is also unclear. The Florida companies providing business to IAU concede that they are holding some premium funds. Mason has over $1 million in bank accounts that are frozen by the Florida Department of Insurance. He argues that these funds are sufficient to pay any premiums that were due from IAU when the emergency agency action was taken the end of October 1991.

    Counsel for the agency concedes that no audit was done, but he has added the premiums for all the policies written by IAU for Generali that were submitted by Hull & Company, Hummel Company and Southeast Insurers, Inc., and those premiums exceed the funds available in Mason's accounts.

    
    

    This exercise does not prove a misappropriation by Mason. It fails to take into account funds still being held by the three companies and funds which even Maurice Rutty concedes were paid for premiums up to the liability limits of $1 million (see transcript, p. 145, lines 11-12).

    
    

12. No Florida insurance consumer testified as to failure to receive requested insurance or the incurrence of financial losses, and evidence by the three company representatives did not establish these alleged violations by Mason.

    
    

13. The evidence did establish that a once cordial and informal relationship between Citadel and IAU deteriorated by October 1991. Mason also conceded that some problems existed with staff in his office, but except for the delayed submittal of six policies, the nature of the problems was not defined.

    
    

    No witness explained how those internal problems constituted violations of the Florida Insurance Code.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Section 120.57(1), F.S.

    
    

15. The administrative complaint alleges Respondent's actions constitute various violations of Chapter 626, F.S., the Florida Insurance Code, specifically:

    
    

    Section 626.561(1), F.S., failure to account for and pay funds belonging to the insurer; Section 626.611(7), F.S., lack of fitness or trustworthiness to engage in the business of insurance;

    Section 626.611(9), F.S., fraudulent or dishonest practices in the conduct of business under the license;

    Section 626.611(10), F.S., misappropriation, conversion, or unlawful withholding, etc.; Section 626.611(13), F.S., willful failure to comply with a rule or order of the department, or the code;

    Section 626.621(2), F.S., violation of the code or other law applicable to the business of insurance;

    Section 626.621(4), F.S., failure or refusal, upon demand, to pay over to the insurer any money belonging to the insurer; and

    Section 626.621(6), F.S. engaging in unfair methods of competition or unfair or deceptive acts or practices prohibited under part X of

    Chapter 626, F.S., or otherwise showing himself to be a source of injury or loss to the public or detrimental to the public interest.

    
    

16. In this case where the agency seeks revocation or other discipline of a professional license, the agency must prove the alleged violations with evidence that is clear and convincing. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987)

    
    

17. The agency failed to meet its burden of proof, and proved only a contract dispute or misunderstanding between Respondent and the insurer, Generali, or the insurer's intermediary, Citadel. See Webb v. Dept. of Professional Regulation, Bd. of Professional Engineers, 17 FLWD804 (Fla. 5th DCA opinion dated March 27, 1992).

There was no competent, clear evidence of the relationship between Generali and the Respondent or its requirements as to approval of risks, submittal of premiums and the writing of policies on Florida properties.

In the absence of an audit of the premiums collected, paid to Generali through Citadel, still owing from IAU's sub-agents, and still owing from IAU, it is impossible to determine that Mason, through IAU or otherwise, misappropriated funds or failed to pay over premiums.

No Florida consumer testified as to financial loss or inability to obtain the requested insurance. The testimony of Maurice Rutty established that, with the exception of the Catholic Diocese of Nausau, the insureds were covered by Generali or through excess coverage obtained by Generali.

Michael Mason did have problems in his office, and apparently some policies were sold without his knowledge. Section 626.734, F.S., provides that any general lines insurance agent who is an officer or director of an incorporated general lines agency is personally liable and accountable for wrongful acts, misconduct or violations committed by persons under his direct supervision and control while acting on behalf of the corporation. However, that section also provides;

* * *

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 fo this chapter.

The agency failed to prove that Respondent knew or should have known of any violations by others.

RECOMMENDATION

Based on the foregoing, it is hereby, recommended that the Administrative Complaint dated November 18, 1991, be dismissed.

RECOMMENDED this 1st day of May, 1992, in Tallahassee, Leon County, Florida.

MARY CLARK

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 1st day of May, 1992.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-7548

The following constitute rulings on the findings of fact proposed by Petitioner:

1. Adopted in paragraph 1.

   
   

2. Adopted in paragraph 2.

   
   

3. Adopted by implication in paragraphs 3 and 5.

   
   

4. Adopted in part in paragraph 4, otherwise rejected as unsupported by the evidence.

5.-6. Rejected as contrary to the weight of evidence.

1. Adopted in paragraph 4.

   
   

2. Adopted in part in paragraph 4, otherwise rejected as unsupported by the weight of evidence. The actions of the parties, including Generali and Citadel, as well as IAU were not in strict compliance with the Limited Binding Agreement and it is apparent that other agreements, written or oral, existed to govern those actions.

9.-10. Adopted in paragraph 4.

11. Adopted in paragraph 7.

12.-13. Adopted in paragraph 8.

1. Adopted by implication in paragraph 9.

   
   

2. Addressed, but not adopted, as unsupported by competent clear evidence.

   
   

3. Adopted in paragraph 5.

COPIES FURNISHED:

James A. Bossart, Esquire Dept. of Insurance & Treasurer Division of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Jason Reynolds, Esquire

1. Box 5428

   Daytona Beach, FL 32118

   
   

   Tom Gallagher

   State Treasurer & Insurance Commissioner

   The Capitol, Plaza Level Tallahassee, FL 32399-0300

   
   

   Bill O'Neil, General Counsel Dept. of Insurance & Treasurer The Capitol, PL-11 Tallahassee, FL 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.

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

   AGENCY FINAL ORDER

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

   
   

   OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

   
   

   IN THE MATTER OF:

   
   

   MICHAEL T. MASON CASE NO: 91-L-527JB DOAH NO: 91-7548

   /

   
   

   FINAL ORDER

   
   

   THIS CAUSE came on before the undersigned Treasurer of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration and final agency action. On November 18, 1991, an Administrative Complaint was filed charging Respondent with various violations of the Insurance Code. The Respondent timely filed a request for a formal proceeding pursuant to Section 120.57(1), Florida Statutes. Pursuant to notice, the matter was heard before Mary Clark, Hearing Officer for the Division of Administrative Hearings, on February 27, 1992 in Orlando, Florida.

   
   

   After consideration of the evidence, argument and testimony presented at hearing, and subsequent written submissions by the parties, the hearing officer issued a Recommended Order. (Attached as Exhibit A). The hearing officer recommended that a Final Order be entered dismissing the Administrative Complaint filed against Respondent. The Petitioner filed timely exceptions to the Recommended Order. The Respondent filed no exceptions to Recommended Order.

   
   

   RULINGS ON PETITIONER'S EXCEPTIONS TO FINDINGS OF FACT

   
   

   1. Petitioner takes exception to the hearing officer's Findings of Facts #4 and #10. The Hearing Officer states that "...IAU had some limited authority to bind the company on a temporary basis" (#4) and "the language of the Limited Binding Authority Agreement appears to delegate some approval responsibility to Mason and Erb" (#10).

      
      

      Section B, paragraph 2. of the Limited Binding Authority Agreement provides that:

      
      

      Persons authorized to use this Limited Binding Authority.

      It is a condition of this Agreement that all insurance submitted hereunder must be first accepted and approved by the following persons:

      Michael T. Mason John W. Erb

      & others as may be agreed

      B. West (names handwritten)

      Section A, Article II entitled "DELEGATION OF LIMITED BINDING AUTHORITY" states that "[t]he binding of insurance hereunder shall be the responsibility of one of the persons named in Section B.2 herein." This section clearly delegates some binding authority to Mason and Erb, the sole officers of IAU, (Pet. Ex. 2) and is substantial and competent evidence in the record which supports the Hearing Officer's findings in paragraphs 4 and 10 of the Recommended Order. Accordingly, Petitioner's exception 2 is rejected.

      
      

   2. Petitioner takes exception to Finding of Fact #5 so far as it determines that insurance claims were made by either Hull & Co., Hummel Co., or Southeast Insurers. Petitioner's exception is well taken in that there is no record of payment of claims.

      
      

   3. Petitioner takes exception to Finding of Fact #10 in its entirety. The relationship between Leslie & Godwin, Citadel, and IAU is set out in the Limited Binding Agreement but it is far from clear. No representative of Leslie & Godwin or Generali, the actual parties to the agreement, testified

      concerning their relationship with IAU or Respondent. There is no dispute that Generali covered the insurance policies which were submitted by Respondent in excess of the $1,000,000 limit set forth in the agreement when made aware of such policies. In addition, Generali covered the policies bound by Respondent after the date that Respondent was notified that Generali would no longer write in Florida. Accordingly, Petitioner's exception 3 is rejected.

      
      

      Petitioner's exception to the finding that IAU had limited binding authority is rejected for the reasons set forth in Paragraph 1 above.

      
      

   4. Petitioner excepts to Finding of Fact #11 in its entirety. - It is not clear from the evidence presented what premiums are still due from IAU to Citadel and Mr. Rutty did not testify as to any specific amount due. No representative of Generali testified. Representatives from Hull & Co., Hummel Co., and Southeast Insurers testified that they are still holding premium funds which they did not forward to IAU after its bank accounts were frozen. Since Respondent's accounts were frozen on October 29, 1991, premiums which were due from Respondent's producers could not be deposited into Respondent's account. Such amounts are still due to be paid to Respondent as premiums for business transacted prior to October 29, 1991 and as such are not irrelevant. Petitioner's exception 3 is therefore rejected.

      
      

   5. Petitioner excepts to Findings of Fact #11 and Appendix 19-21 and 23-24 that the evidence of the $990,900.68 in unaccounted for fiduciary funds is irrelevant. There is no dispute that the bank accounts of Respondent were frozen on October 29, 1991 and that Respondent was unable to conduct business after that date. Clearly if any amounts were due to be paid to IAU by Hull & Co., Hummel, and Southeast Insurers, they are not contained in the frozen accounts. Testimony of representatives of these entities stated that they are still holding monies due to IAU which could not be deposited due to the freezing of IAU accounts and as such, it is not irrelevant. They did not testify as to any specific amounts. Although Petitioner correctly asserts that these amounts are not fiduciary funds for which Respondent is required to provide an accounting, it is not clear from the record in this matter whether any of the policies for which Hull & Co., Hummel, and Southeast Insurers are holding funds because of IAU's frozen accounts are included in the amount of premiums determined to be due to Citadel. Petitioner did not present any accounting of these amounts. Since Respondent could not conduct business after its accounts were frozen, any funds held by Hull & Co., Hummel, and Southeast Insurers, which are due to be paid to Respondent, are from business produced prior to October

      29, 1991 and should be considered in any calculation of amounts due and owing to an insurer. For this reason, Petitioner's exception 4 is rejected.

      
      

   6. Petitioner excepts to Finding of Fact #12. Evidence shows that policies were bound without Generali's approval, however, coverage was provided by Generali on those policies. This is a violation of the agreement with Generali. No evidence was presented at the hearing nor did any Florida consumer testify as to the failure to receive the requested coverage or of any financial loss incurred. No representative of Generali testified as to any financial losses. Petitioner's exception 5 is rejected.

      
      

   7. Petitioner excepts to the Hearing Officer's failure to make a finding of fact that per the agreement and the custom of the parties all communications and premium payments were to be made by IAU to Generali through Citadel. This exception is rejected as irrelevant.

RULINGS ON PETITIONER'S EXCEPTIONS TO CONCLUSIONS OF LAW

1. Petitioner excepts to Conclusion of Law #4. In determining that the agency failed to meet its burden of proof and proved only a contract dispute or misunderstanding between Respondent and the insurer,

   Generali, or the insurer's intermediary, Citadel, the Hearing Officer failed to take into account the testimony presented by Mr. Rutty of Citadel and Respondent, and the terms of the Limited Binding Authority Agreement which set out the relationship between Respondent and Citadel.

   
   

   The Limited Binding Authority Agreement states that premiums are to be paid to the intermediary, Citadel, "within 60 days of the expiry of the month." Testimony of Respondent (T. 182) and Mr. Rutty (T. 102) indicated that bordereau was submitted to Citadel by IAU after placing of the risk and payment of premiums was to be made to Citadel (T. 103). Mr. Rutty further testified that Citadel had not received premium payments for any of the risks covered by the premiums submitted by Hummel to IAU as indicated in Petitioner's Ex. 4. There are approximately $776,004.00 in premium funds paid by Hummel to Respondent as evidenced in Petitioner's Ex. 4 which were older than 60 days and should have been paid by IAU to Citadel in the regular course of business prior to October 29, 1991. In addition, as of October 29, 1991, there are approximately $605,754.84 in premium funds paid by Hull to Respondent as evidenced in Petitioner's Ex. 8 which were older than 60 days and approximately

   $61,500.00 in premium funds paid by Southeast Insurers to Respondent as evidenced in Petitioner's Ex. 10 which were older than 60 days. These funds were not submitted to Citadel in the applicable regular course of business and constitute a violation of Sections 626.561(1) and 626.621(2), Florida Statutes, by Respondent.

   
   

   The Hearing Officer also relied on the fact that "No Florida consumer testified as to financial loss or inability to obtain the requested insurance" and that "...with the exception of the Catholic Diocese of Nassau, the insureds were covered by Generali or through excess coverage obtained by Generali." The Hearing Officer has neglected to recognize the consequences of these Florida insureds not having the total amount of coverage bound or not having the coverage requested until such time as Generali obtained excess coverage or wrote the policies. It is not a prerequisite for violation of the Florida Insurance Code that an insured be harmed. However, in this matter, the potential exposure for Florida insureds by having their agent write policies in excess of his binding limitation or bind coverage which has not been approved by an insurer according to their agreement is unlimited, especially after

   consideration of the extensive coverage written for hotels and restaurants in Florida in excess of contract limitations or for which no approval had been received from the insurer. Respondent's actions in binding coverage in excess of his contractual limitations and without the approval of the insurer is clearly detrimental to the public interest and constitutes a violation of Section 626.621(6), Florida Statutes.

   
   

   Pursuant to Section 626.621, Florida Statutes, the Department may deny, suspend, revoke, or refuse to renew or continue the license of any agent if it finds that any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under Section 626.611:

   
   

   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 appointment. (Section 626.621(2), Florida Statutes)

   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)

   
   

2. Petitioner excepts to the hearing officer's failure to make a determination that the Respondent violated sections 626.611(7), 626.611(9), 626.611(10), 626.621(4), and 626.621(6). The hearing officer found that "[t]he agency failed to meet its burden of proof and proved only a contract dispute or misunderstanding ..." The hearing officer further states in Conclusions of Law #4 that it was impossible to determine if Respondent misappropriated funds. As such, the hearing officer generally addressed Sections 626.611(7), 626.611(9), 626.611(10), and 626.621(4), Florida Statutes, without specific statutory reference. Therefore, Petitioner's exception with respect to Sections 626.611(7), 626.611(9), 626.611(10), and 626.621(4), Florida Statutes, is rejected.

However, Petitioner's exception to the hearing officer's failure to make a determination that the Respondent violated Section 626.621(6), Florida Statutes, is well taken and accepted for the reasons set forth in paragraph 1 above.

Upon consideration of the foregoing and the entire record, 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 as the Department's Findings of Fact, except for paragraph 2.

   
   

2. The Conclusions of Law of the hearing officer are adopted, except for paragraph 4 and with respect to the hearing officer's failure to make a determination that Respondent violated Sections 626.561(1), 626.621(2), and 626.621(6), Florida Statutes.

   
   

3. The hearing officer's recommendation that the Administrative Complaint be dismissed is rejected. A penalty is required in this case, based upon the following:

   1. The record shows that Respondent bound coverage in excess of an agreed limitation with an insurer, wrote policies without the approval of an insurer, and further failed to forward premiums in the applicable regular course of business, clearly in violation of the Limited Binding Authority Agreement.

      In this case, no evidence was presented as to any harm that came from this breach. However, the potential harm to Florida insureds had the insurer not provided excess coverage or written policies would have been insurmountable. Respondent's actions in this matter are clearly detrimental to the public interest.

      
      

   2. "Insurance is a business greatly affected by the public trust, and the holder of an agent's license stands in a fiduciary relationship to both the client and the insurance company" Natelson v. Dept. of Ins., 454 So.2d 31, 32 (Fla. 1st DCA 1984). By virtue of his license as an insurance agent, Respondent has a fiduciary duty. Respondent bound coverage for Florida insureds in excess of his authorized limit without the approval of the insurer in violation of his contract with the insurer. Until coverage was extended by the insurer to these insureds, they were without the coverage they requested and for which they paid a premium to Respondent. The fact that no harm to insureds occurred in this instance is purely fortuitous and should not be the determining factor in this case. Respondent bound policies, without approval, for millions of dollars in coverage which was not immediately provided by the insurer. Had any claims on these hospitality policies, issued to restaurants and hotels in Florida, occurred during this period, Florida insureds and the general public could have been irreparably harmed.

      
      

   3. Agencies are afforded wide discretion in the interpretation of a statute which it administers and will not be overturned on appeal unless clearly erroneous. Natelson v. Debt. of Ins., 454 So.2d 31, 32 (Fla. 1st DCA 1984).

      
      

   4. The penalty recommended by a hearing officer may be augmented, within the penalties allowed by statute, when valid reasons appear on the record for the augmentation of the penalty. Debt. of Professional Regulation v. Bernal, 531 So.2d 967 (Fla. 1988); Florida Real Estate Commission v. Webb, 367 So.2d 201 (Fla. 1978)

The penalty shall be as follows:

That Michael T. Mason, a surplus lines insurance agent and a general lines insurance agent in this state, shall be placed on probation for a period of one

(1) year, which term shall commence on the date of the rendition of this Order.

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 petition or notice of appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, - Florida, and a copy of the same with the appropriate district court of appeal within thirty (30) days of rendition of this Order.

DONE and ORDERED this 30 day of July , 1992.

TOM GALLAGHER

Treasurer and Insurance Commissioner

COPIES FURNISHED TO:

HONORABLE MARY CLARK

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

JASON G. REYNOLDS, ESQUIRE

Post Office Box 5428

Daytona Beach, Florida 32118

JAMES A. BOSSART, ESQUIRE

Division of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

Docket for Case No: 91-007548

Orders for Case No: 91-007548