vs. ) CASE NO. 92-3634
RAYMOND J. LEPRIOL, )
Respondent. )
Upon due notice, the Division of Administrative Hearings, by its duly- assigned Hearing Officer, William R. Cave, held a formal administrative hearing in the above-captioned case on September 24, 1992, in Sarasota, Florida.
For Petitioner: James A. Bossart, Esquire
Whether Respondent's license as a life insurance agent and life and health insurance agent and his eligibility for licensure in the state of Florida should be revoked, suspended or otherwise disciplined.
By an Administrative Complaint dated May 19, 1992, and filed with the Division of Administrative Hearings on June 18, 1992, the Petitioner, Department of Insurance and Treasurer (Department), seeks to revoke, suspend or otherwise discipline Respondent's license as a life insurance agent and life and health insurance agent and his eligibility for such licensure. As ground therefor, the Department alleges that: (a) the Respondent failed to effectuate the change of beneficiary on an annuity policy after being requested to do so by the insured;
(b) the Respondent, without the knowledge or consent of the insured caused the annuity policy to be "cashed in"; (c) the Respondent had the check for the cash surrender value mailed to his address and deposited said check in an account controlled by the Respondent with the signature of the insured falsely and fraudulently affixed to the check without the insured's knowledge or consent;
(d) the Respondent submitted to Financial Benefit Life Insurance Company (Benefit Life) an application for a new annuity policy with the insured of the
original annuity policy as the beneficiary without the knowledge or consent of the insured and submitted the monies received for the cash surrender value of the original annuity policy as the premium payment; (e) the Respondent made a false and material misrepresentation of fact when he answered "no" to Question 7 of the Benefit Life application which asks "Is this annuity applied for to replace any existing insurance or annuity policy?"; (f) the Respondent received a commission of $6,500.00 from Benefit Life upon the annuity policy being issued by Benefit Life and; (g) the Respondent has refused to return the insured's original annuity or to return to her the cash surrender value of the original annuity policy even though the insured has made such a demand upon the Respondent, and Respondent has thereby violated Section 626.611(5)(7)(9)and (13), Florida Statutes, Section 626.621(2)(6), Florida Statutes, and Section 626.9541(1)(a)1.,(1)(e)1.,(1)(k)1.,and (1)(l), Florida Statutes. The Respondent disputed these allegations and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. By letter dated June 17, 1992, the Department transferred the matter to the Division of Administrative Hearings requesting the assignment of a Hearing Officer and the conduct of a formal hearing. The matter was assigned to a Hearing officer and scheduled for hearing and heard on September 9, 1992, in Bradenton, Florida.
At the hearing, the Department presented the testimony of Jo Nell Morris, Lena Pinkerman, Jennifer M. Asewicz, and David R. Thomas. Department's exhibits
1 through 15 were received as evidence in this case. Respondent testified in his own behalf but presented no other witnesses. Respondent's exhibits 1, 2, and 3 were received as evidence in this case.
A transcript of the proceedings was filed with the Division of Administrative Hearings on October 20, 1992. The parties have filed their proposed findings of fact and conclusions of law. A ruling on each proposed finding of fact submitted by the parties has been made as reflected in an Appendix to the Recommended Order.
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:
At all times material to this proceeding, the Respondent was licensed as a life insurance agent and a life and health insurance agent, carrying Agent Number 262984024, and is currently eligible for licensure.
On or about June 11, 1991 Lena B. Pinkerman, an 85 year old widow, residing in Bradenton, Florida, was insured under the provisions of a National Western Life Insurance Company (National Western) Single Premium Endowment Policy Number 0100510100. Policy Number 0100510100 was owned by Arthur Pinkerman, Lena Pinkerman's deceased husband. Lena Pinkerman owned other National Western insurance policies. These policies had been sold to Lena Pinkerman, and apparently also to her husband, by the Respondent.
The Respondent's agency with National Western terminated on March 10, 1991.
On or before June 11, 1991 Lena Pinkerman requested the Respondent to effectuate the change of beneficiaries on one or more of the policies with National Western.
On June 11, 1991 Respondent contacted National Western by telephone requesting the necessary forms for such change. The record of the telephone call to National Western by Respondent kept by National Western indicates that the Respondent requested forms for change of beneficiary and ownership to be sent to Respondent or the insured (Lena Pinkerman).
By letter dated June 19, 1991, addressed to Lena B. Pinkerman at Respondent's address, 410 15th Street West, Bradenton, Florida 34205, National Western advised that only policy number 0100510100 would need an ownership and beneficiary change effectuated since it was the only policy owned by Arthur Pinkerman, Lena Pinkerman's deceased husband. The balance of the policies were owned by Lena Pinkerman.
On June 24, 1991 Lena Pinkerman signed a letter that the Respondent had printed in ink for Lena Pinkerman's signature advising National Western that she desired to "cash-in" one of her policies to pay off some debts and to send the money to her temporary address, 410 15th St. W., Bradenton, FL 34205.
Along with Lena Pinkerman's letter of June 24, 1991, referred to in the above Finding of Fact, National Western received a completed copy of its Policyowner's Change Request and Endorsement of Policy form signed by Lena B. Pinkerman, as the insured, requesting a change in ownership from Arthur Pinkerman to Lena B. Pinkerman. Also along with the June 24, 1991 letter National Western received a completed copy of its Surrender Request signed by Lena B. Pinkerman, as owner, requesting full cash surrender and advising National Western to mail the check to, Lena B. Pinkerman, 410 15th St. W., Bradenton, FL. 34205. Since Lena B. Pinkerman was "cashing-in" the National Western policy, there was no need to change the beneficiary. However, a change in ownership was required and was the reason for submitting the form.
Policy Number 010510100 was originally purchased for a single premium payment of $100,000.00 and had a surrender value of $129,525.94 representing an increase in value of $29.525.94. There was testimony that the increase in value would be subject to the federal income tax since the gain had been paid, as well as testimony that since the increase in value was reinvested in a like annuity that it would not be subject to federal income tax at this time. None of this testimony rises to the level of being competent evidence upon which one could rely. Therefore, there is insufficient evidence to determine whether the gain is taxable or not taxable.
A check made payable to Lena B. Pinkerman dated July 5, 1991 drawn on National Western in the amount of $125,727.55, the cash surrender value ($129,525.94) minus the amount withheld by National Western for taxes ($3,798.39), was received by the Respondent at the address given in the Surrender Request.
The check referred to in the above Finding of Fact was endorsed by Lena B. Pinkerman and below her signature the Respondent wrote "For Deposit only to National Benefit Life". The check was deposited by Benefit Life on July 10, 1991. The Respondent had no control over the account into which the funds were deposited.
By application dated July 8, 1991, signed by David R. Thomas as Annuitant and signed by Lena B. Pinkerman, as Owner, with Respondent signing as Agent, a Flexible Premium Deferred Annuity policy number 821962 in the amount of
$125,727.55 was issued to Lena B. Pinkerman, as owner, with David R. Thomas, as the Annuitant by Benefit Life. The cash surrender check referred to in the
above Finding of Fact deposited to the account of Benefit Life was used to pay the single premium of $125,727.55.
The Respondent received $6,286.38 from Benefit Life as a commission on the sale of the policy. The commission paid by Benefit Life to the Respondent did not reduce the amount of the annuity policy issued to Lena B. Pinkerman by Benefit Life.
On July 22, 1991, the Respondent prepared a letter printed in ink addressed to National Western requesting that National Western send the taxes withheld on the surrender of policy number 0100510100 to Lena Pinkerman at 410 15th St. W., Bradenton, FL 34205. This letter was signed by Lena Pinkerman.
On July 30, 1991 National Western caused to be issued in the name of Lena B. Pinkerman a check in the amount of $3,7978.39 which represented the amount of taxes withheld earlier by National Western for taxes. This check was endorsed by Lena B. Pinkerman, with "For Deposit Only To Financial Benefit" written by the Respondent beneath the signature of Lena Pinkerman. This check was deposited in the Benefit Life account on September 9, 1991. There was no evidence that Respondent caused the delay in this check being deposited by Benefit Life. The amount of this policy was added to the original premium for the annuity policy.
Question 7 on the Benefit Life application is addressed to the proposed annuitant and owner asks "Is this annuity applied for to replace any existing insurance or annuity policy?". Both David R. Thomas, the proposed annuitant and Lena B. Pinkerman, the owner, answered "no" to Question 7 and represented their answer to be true and correct to the best of their knowledge and belief by affixing their signatures to the application.
The question asked of the agent on the Benefit application is "Do you have knowledge or reason to believe that the annuity applied for by this application will replace or change any insurance or annuity currently in force on the life of the proposed Annuitant?". Respondent answered "No". There was no evidence of any insurance or annuity currently in force on the life of David
R. Thomas, the proposed Annuitant, which was being replaced by this annuity policy.
There is competent substantial evidence to establish facts to show that Lena B. Pinkerman had knowledge of, and gave informed consent to, all of the Respondent's actions which resulted in Lena B. Pinkerman surrendering annuity policy number 0100510100 issued by National Western and using the funds received to purchase the Flexible Premium Deferred Annuity issued by Benefit Life, including but not limited to, submitting the Policyowner's Change Request And Endorsement of Policy, the Request for Surrender, the letters prepared for Lena Pinkerman's signature by the Respondent including the request to send monies withheld for taxes, the endorsement of all checks and the deposit of those checks with Benefit Life and the application to Benefit Life for the Flexible Premium Deferred Annuity, notwithstanding the testimony of Lena B. Pinkerman and David Thomas to the contrary.
There is no evidence that Lena B. Pinkerman suffered any financial loss as a result of Respondent's action. In fact, there was unrebutted testimony that Benefit Life was a more stable company than National Western and the Benefit Life policy would in the long run yield more return for the policyholder than would the National Western policy.
When Lena B. Pinkerman made a demand on the Respondent for the return of National Western annuity policy number 0100510100 or the funds received therefrom, the Respondent attempted to work out an arrangement with Benefit Life for the return of the commission which was a condition for the return of the premium payment. Benefit Life would not accept any thing other than full return of the commission before the return of the premium payment. At the time, Respondent was not financially able to return the full commission. There was no duty upon Benefit Life to return the premium or for the Respondent to return the commission since at the time of the demand the ten-day (look-see) waiting period had expired. Additionally, there was sufficient information on the policy and other documents to alert Pinkerman as to who to contact regarding this policy.
The main concern of Lena B. Pinkerman was that the gain received on the surrender of National Western policy number 0100510100 would be subject to federal income tax.
Although there was evidence to show that Lena Pinkerman did make a trip out of state for a period of time during June or July, 1991, there was insufficient evidence to establish the exact period of time she was out of state.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding, pursuant to Section 120.57(1), Florida Statutes.
Section 626.611, Florida Statutes, empowers the Department to deny, suspend, revoke, or refuse to renew or continue the eligibility to hold a license of any such agent if the Department finds, as to the agent, that any one or more of those grounds enumerated in Section 626.611(1) through (15), Florida Statutes, exists.
The Department alleges that the Respondent has violated Section 626.611(5)(7)(9) and (13), Florida Statutes, which provides as follows:
(5) Willful misrepresentation of any insurance policy 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.
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(7) Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance.
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(9) Fraudulent or dishonest practices in the conduct of business under the license or permit.
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(13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.
Additionally, Section 626.621, Florida Statutes, empowers the Department to deny, suspend, revoke, or refuse to renew or continue the license of any agent, and may suspend or revoke the eligibility to hold a license of
such agent if it finds, as to the agent, that any one or more of those grounds enumerated in Section 626.621(1) through (12), Florida Statutes, exist.
The Department also alleges that the Respondent has violated Section 626.621(2) and (6), Florida Statutes, which provides as follows:
(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 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.
The Department further alleges that Respondent has violated Section 626.9521, Florida Statutes, which provides as follows:
No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to Section 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 Section 627.381, Florida Statutes.
And Section 626.9541 (1)(a)1., (1)(e)1., (1)(k)1., and (1)(l), Florida Statutes, which provides as follows:
(1)(a)1. Knowingly making, issuing, circulating or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which
misrepresents the benefits, advantages, conditions, or terms of any insurance policy.
(1)(e)1. Knowingly:
Filing with any supervisory or other public official,
Making, publishing, disseminating, circulating,
Delivering to any person,
Placing before the public,
Placing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement.
(1)(k)1. Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for
an insurance policy for purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.
(1)(l) Knowingly making any misleading representa- tions or incomplete or fraudulent comparisons of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer.
In a disciplinary proceeding, the burden is upon the regulatory agency to establish facts upon which its allegations of misconduct are based. Balino
8. Proposed finding of fact 17 is not material or relevant to the conclusion reached in the Recommended Order. Also it is unnecessary.
The Respondent's proposed findings of fact are set out in eleven numbered paragraphs which addresses each paragraph of the Administrative Complaint and mixes argument, discussion and proposed findings of fact. However, the findings of fact that can be "ferreted out" are adopted in substance as modified in findings of fact 1 through 21.
James A. Bossart, Esquire Department of Insurance
ALL PARTIES HAVE THE RIGHT TO SUBMIT TO THE AGENCY WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST TEN 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 CONCERNING ITS RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER.
