STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4366

)

HAROLD RUSH LEIFFER, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Orlando, Florida on October 20, 1992 before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: James A. Bossart, Esquire

Division of Legal Services

412 Larson Building Tallahassee, FL 32399-0300

For the Respondent: Harold Rush Leiffer, pro se

2026 St. George Avenue Winter Park, FL 32789

STATEMENT OF THE ISSUES

The issue for consideration in this hearing is whether the Respondent's licenses as an insurance agent in Florida should be disciplined because of the matters set forth in the Administrative Complaint filed in this case.

PRELIMINARY MATTERS

By Administrative Complaint dated June 18, 1992, the Insurance Commissioner has alleged that Respondent, in his capacity as an insurance agent, entered into an agreement with a client to obtain a performance and payment bond for that client, accepted a check in payment of the bond premium, failed to thereafter provide the bond, and failed to return the unearned premium. This is alleged as misconduct under various subsections of Chapter 626, Florida Statutes. On July 7, 1992, Respondent, requested a formal hearing and, on July 17, 1992, the matter was forwarded to the Division of Administrative Hearings for the appointment of a Hearing Officer.

By Notice of Hearing dated September 8, 1992, after the parties' responses to the Initial Order herein, Hearing Officer Mary W. Clark set the matter for hearing in Orlando on October 20, 1992 at which time it was heard as scheduled by the undersigned to whom the case was transferred in the interim.

At the hearing, Petitioner presented the testimony of Donna L. Devor, President and owner of Cobra Construction Company, the applicant for the bond in issue; Mary Stone, Assistant Vice-President of the Orange Bank in Winter Park; and Gerald C. Leach, Vice-President for security operations for Pinnacle Insurance. Respondent testified in his own behalf. Petitioner introduced Petitioner's Exhibits 1 through 6 and Respondent introduced Respondent's Exhibits A through E.

No transcript was provided. Only Petitioner's counsel submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order. Respondent submitted a letter enclosing two notarized statements relating to the issue of whether Ms. Devor could find Respondent at home.

Copies of this submittal was furnished by Respondent to Counsel for Petitioner who submitted nothing in opposition thereto.

FINDINGS OF FACT

1. At all times pertinent to the allegations contained herein, the Department of Insurance was the state agency in Florida responsible for the licensing of insurance professionals and the regulation of the insurance industry in this state. Respondent, Harold R. Leiffer, was licensed by the state as a life and health (debit) agent, a life agent, a life and health agent, a general lines agent, and a public adjuster (for fire and allied lines, including marine casualty and motor vehicle damage and mechanical breakdown insurance), and was engaged in the practice of the insurance profession under those licenses in Florida.

   
   

2. In January, 1991, Donna L. Devor, at the time, the owner of Cobra Construction Co., a corporation, was contacted by the Respondent after she received a bid for the construction of a fire station in Florida. Ms. Devor had previously known the Respondent as an insurance agent through a company she was associated with to which he had provided construction bonds in the past. On this occasion, in January, 1991, according to Ms. Devor, Respondent called to say he was with a new company and could get her the bond she needed to support the bid she had been awarded. Ms. Devor invited him over to talk about it and they discussed it. Again, he indicated he would be able to get her the bond she needed.

   
   

3. The next day, when he came back with the preliminary paperwork, he asked for a check in the amount of $850.00. According to Ms. Devor, he indicated that of that sum, $500.00 was to cover setup fees and other fees by the bonding company and $300.00 was to go to DSI, his agency.

   
   

4. In response, Ms. Devor gave him a check for $850.00 made payable, at his request, to ICI, Respondent's other company, after which he left with the forms she had signed, some in blank. When he left, he promised to process the paperwork immediately in response to her stressing the urgency of the need for the bond.

   
   

5. After several days passed with no response, Ms. Devor attempted to contact Respondent by phone but was unable to reach him. When she finally was able to speak with him, he asked her to come to his office to discuss the bonding company's requirement that she place her house as collateral for the bond. Ms. Devor immediately declined to do this but nonetheless went to his office at DSI to talk with him. When she arrived, he immediately called the bonding company which again requested she place her house as security, and she again refused. When this happened, Respondent asked her to come back the next

   day as he would try another source for the bond. When she contacted him the following day, he indicated he could get the bond from an Atlanta firm but she would have to go there to pick it up. She agreed to do this and Respondent, in addition, asked for a financial statement which she arranged to have provided.

   
   

6. Ms. Devor flew to Atlanta and was met there by Respondent who drove her to the bonding company's office. When she met with company officials, she was told they imposed a coinsurance requirement of $100,000.00 in the company's name be put up by her and she did not have this cash available. Respondent, she claims, knew this. Nonetheless, she was furnished an office and a telephone to try to get the money but was unable to do so and as a result, the bonding company declined to issue the bond.

   
   

7. After that failure, she returned to Orlando and, realizing that Respondent was apparently unable to help her, started to look for another bonding company. She called Respondent's secretary several times attempting to reach him to get her money back but, when she was unable to do so, finally sent him a letter requesting the return of her $850.00 payment. Respondent failed to respond to that letter and she continued to try to reach him, unsuccessfully, by phone. Finally, she was able to contact DSI's owner who indicated she had never heard of Ms. Devor and asked she be shown proof that the bond premium was paid. When Ms. Devor sent a copy of the check she had given to Respondent, the owner evidenced some dissatisfaction with Respondent but failed to refund the money.

   
   

8. Ms. Devor continued to try to reach Respondent by phone without success. When she found where he lived, she wrote him another letter asking not only for the return of the amount she had paid him but also for reimbursement of expenses she had incurred in flying to Atlanta. She received neither. However, about a week or so later, she received a call from Respondent on her answering machine which left no return number. She was thereafter unable to again contact Respondent nor did she ever receive reimbursement of her payment to him.

   
   

9. The $850.00 check was endorsed by Respondent with his own name and deposited to his personal account, Number 1307004115, at the Orange Bank in Winter Park, Florida.

   
   

10. According to Mr. Leach, Vice-President of security operations for Pinnacle Insurance in Carrolton, Georgia, the company to which Ms. Devor flew at Respondent's request, the company file for Cobra Corporation shows no bond was ever issued to that company. Florida does not allow a charge for setup fees in any case, and he would not have received one in connection with this application even if the bond had been issued. It is company policy not to charge a fee of any kind if a bond is not issued. Only if the application is approved and the applicant then withdraws is a fee charged. In any case, the premium on a

    $100,000.00 bond such as that sought here would be $2,500.00.

    
    

11. Respondent at one point owned Statewide Insurance and sold it to DSI, the company with whom he was associated at the time he took the bond application from Ms. Devor. His story of the transaction differs somewhat from that of Ms. Devor, however, in that he denies calling her to solicit her business. Instead, he claims, she called him and begged that he get her the bond she needed for this contract. In fact, he claims, she said she'd do anything she had to do, or pay any fee necessary, to get the bond. When he explained what the fees would be, she agreed to them.

    
    

12. Respondent contends he got the bond through United American Security in Boston, which charges a setup fee of $500.00. When Ms. Devor, however, could

    not live with the company's conditions, indicating she could not get the required additional credit from her bank, she rejected that condition and Respondent agreed to try with Pinnacle. It is, he claims, Ms. Devor, who suggested they go to Atlanta where Mr. Mathieson, the representative of the insurance company at the time, imposed the requirement for collateral. He also contends she agreed to this.

    
    

13. Afterwards, he asserts, Ms. Devor claimed to have gotten a bond without collateral from a company in Ft. Lauderdale which she presented to the contracting party.

    
    

14. From the check for $850.00 which Respondent received from Ms. Devor, he paid $500.00 to United American as its setup fee, and $250.00 to Pinnacle for its fees. Respondent did not provide a cancelled check as evidence of either payment, however. He cannot account for the additional $100.00. In any case, he contends, after Ms. Devor requested a refund, he contacted both United American and Pinnacle to request reimbursement, but both refused because, they claimed, they had accepted her and had done credit checks on her.

    
    

15. Respondent claims that Ms. Devor was offered two bonds, both of which she rejected because she did not want to put up the collateral or security requested by the bonding companies. He went to the companies under those conditions because, he contends, she had previously stated she would accept conditions, implying she would do anything necessary to get the bonds.

    
    

16. In support of Mr. Leiffer's assertions, he introduced an enrollment form with United American Contractor's Association signed by Ms. Devor which indicates Cobra Construction Corp. applied for enrollment in the association and submitted a check for $500.00 as an enrollment fee. He also introduced a contractor's questionnaire reflecting the payment of a $250.00 application setup fee with Pinnacle to cover underwriting reviews and efforts in establishing a bond account. Ms. Devor, however, while admitting her signature appears thereon, does not recall having signed either document, contending that they may have been among those documents Respondent asked her to sign at the beginning of their relationship regarding this bond, some of which she signed in blank.

    
    

17. Respondent, who had previously been with DSI and had just recently gone with ICI, nonetheless could give no reasonable justification for placing the $850.00 fee paid to him by Ms. Devor in his personal bank account and not in the account of one of the two companies.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

19. The Department has alleged in its Administrative Complaint that Respondent is guilty of several violations of Chapter 626, Florida Statutes, in that his acceptance of the $850.00 premium from Ms. Devor for the purpose of obtaining a performance bond for her company, his subsequent failure to obtain the subject bond, and his failure to return the unused premium, instead converting it to his own use, constitutes a demonstrated lack of fitness or trustworthiness to engage in the insurance business; a lack of reasonably adequate knowledge and technical competence; fraud; misappropriation, conversion, or unlawful withholding of money belonging to an insured. If established as a violation of Section 626.611, the misconduct requires

    compulsory suspension or revocation of the license. If established under Section 626.621, the misconduct constitutes grounds for discretionary action.

    
    

20. To permit disciplinary action, either compulsory or discretionary, the evidence of record must clearly and convincingly establish Respondent's guilt. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987)

21 In the instant case, the evidence clearly establishes that Respondent and Ms. Devor agreed he would procure a performance bond for her company to support a government contract the firm had been awarded and that he was paid

$850.00 toward that end. The check Ms. Devor cut to ICI for that sum, and subsequently endorsed by Respondent reflects, in the lower left corner, that it was for "membership." This is consistent with Respondent's claim that she paid him for membership in the United American Contractor's Association as a part of the application process for the bond with that agency. The other form submitted by Respondent, bearing Ms. Devor's signature, indicates the sum of $250.00 was to be paid as a setup fee for the application for bond. The document reads that if an offer of security is not made, the fee would be refunded.

1. It is here that the parties' stories diverge. Ms. Devor claims she was not offered any bond and that the "fee" she paid should be refunded. Respondent contends the bonds were offered but she refused the conditions placed thereon by the sureties. If she is correct, some refund was perhaps due, though this is by no means clear under the state of the evidence. If he is accurate, then she refused the offer of suretyship and the fees are not refundable.

   
   

2. Here,the evidence, leaving many questions unanswered, fails to clearly and convincingly demonstrate that Respondent committed the offenses alleged. It cannot fairly be said that Respondent's actions conform to any of the allegations of misconduct contained in the Administrative Complaint.

RECOMMENDATION

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

RECOMMENDED that the Administrative Complaint in this case, alleging misconduct by Respondent, Harold Rush Leiffer, be dismissed.

RECOMMENDED this 10th day of December, 1992, in Tallahassee, Florida.

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 December, 1992.

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.

   1. Accepted and incorporated herein.

   2. & 8. Accepted and incorporated herein.

      1. Accepted and incorporated herein.

      2. First sentence not a FOF. Second sentence accepted but evidence was presented by Respondent to show that Respondent signed an application for membership in UACA ($500.00) and with some other unspecified concern for 1

         $250.00 setup fee. Balance of paragraph accepted.

      3. Rejected as unproven by clear and convincing evidence.

FOR THE RESPONDENT:

No Proposed Findings of Fact submitted.

COPIES FURNISHED:

James A. Bossart, Esquire Department of Insurance

412 Larson Building Tallahassee, Florida 32399-0300

Harold R. Leiffer

2026 St. George Avenue Winter Park, Florida 32789

Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neill General Counsel

Department of Insurance The Capitol, PL-11

Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should 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 be filed with the agency which will issue the Final Order in this case.

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AGENCY FINAL ORDER

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OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF:

CASE NO. 92-L-27IJB

HAROLD RUSH LEIFFER 92-4366

/

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 June 18, 1992, 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 Arnold H. Pollock, Hearing Officer, Division of Administrative Hearings, on October 20, 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 his Recommended Order on December 10, 1992. (Attached as Exhibit A).

The hearing officer recommended that the Administrative Complaint, alleging misconduct by Respondent, Harold Rush Leiffer, be dismissed. Petitioner timely filed three (3) exceptions to the Recommended Order on December 17, 1992, which have been considered and addressed herein:

RULINGS ON PETITIONER'S EXCEPTIONS TO CONCLUSIONS OF LAW

1. Petitioner's exception one (1) concerns the hearing officer's Conclusion of Law that the Petitioner did not clearly and convincingly prove that the Respondent converted, misappropriated, or wrongfully withheld fiduciary funds belonging to the complainant, Donna Devor.

   
   

   The hearing officer determined that the Respondent received $850.00 from Donna Devor for the purpose of securing a surety construction bond. (Findings of Fact 4, 9) These monies were later deposited into Respondent's personal bank account without a reasonable justification. (Findings of Fact 17) Of the

   $850.00 Respondent received from Donna Devor, the hearing officer found that Respondent paid $500.00 to United American Contractor's Association for setup fees, and paid $250.00 to Pinnacle for its fees, but could not account for the additional $100.00. (Findings of Fact 14, 16, 21) The hearing officer concluded that the Petitioner failed to clearly and convincingly establish the violations alleged in the Administrative Complaint because there was conflicting evidence as to whether a bond was offered to Donna Devor and she refused the conditions placed on such bond, or whether a bond was ever offered at all. Notwithstanding this conclusion, the evidence clearly and convincingly establishes that the

   Respondent failed to account for $100.00 of the monies he received from Donna Devor. Section 626.561(1), Florida Statutes, dictates that all premiums, return premiums, or other funds received by an agent shall be trust funds so received by the licensee in a fiduciary capacity and that the licensee shall account for and pay the same to the insurer, insured, or other person entitled thereto.

   Contrary to the hearing officer's conclusions, failure to account for fiduciary funds is a violation of Section 626.561(1), Florida Statutes, and also constitutes a violation of Section 626.621(2), Florida Statutes. Accordingly, Petitioner's exception one (1) relative to a violation of Sections 626.561(1), and 626.621(2), Florida Statutes, is ACCEPTED. Petitioner's exception one (1) as it relates to the Respondent misappropriating, converting, or improperly withholding monies belonging to Donna Devor, a violation of Section 626.611(10), Florida Statutes, is REJECTED.

   
   

2. Petitioner's exception two (2) generally addresses the hearing officer's Conclusion of Law that the Respondent failed to account for $350.00 of fiduciary funds and thus has violated the Insurance Code. As noted above, the hearing officer determined that Respondent accounted for $750.00 of the $850.00 he received from Donna Devor. Accordingly, Petitioner's exception two (2) is REJECTED.

   
   

3. Petitioner's exception three (3) asserts that the facts establish that the Respondent failed to account for fiduciary funds and has misappropriated or otherwise wrongfully withheld funds belonging to the insured in violation of Section 626.611(10), Florida Statutes. While the Findings of Fact of the hearing officer establish that the Respondent failed to account for $100.00 of funds, the Petitioner has not proven by clear and convincing evidence that the Respondent misappropriated, converted, or unlawfully withheld monies belonging to Donna Devor in violation of Section 626.621(10), Florida Statutes. Accordingly, Petitioner's exception three (3) is REJECTED.

RULING ON PETITIONER'S EXCEPTION TO RECOMMENDATION

Petitioner files exception to the recommendation of the hearing officer that all charges in the Administrative Complaint be dismissed. Petitioner recommends that the Respondent's license be suspended for a period of six (6) months and that Respondent be required to return to Donna Devor $350.00.

Inasmuch as the above modifications to the hearing officer's Conclusions of Law have been made, and violations of various sections of the Insurance Code found, it is inappropriate to dismiss the Administrative Complaint. Accordingly, Petitioner's exception to the hearing officer's recommendation of dismissal of the charges set forth in the Administrative Complaint is ACCEPTED. Petitioner's recommended penalty is REJECTED.

Upon a complete and careful consideration of the entire record, the submissions of the parties and being otherwise fully advised in the premises, it is hereby determined that the Respondent, Harold Rush Leiffer, has violated Sections 626.561(1), and 626.621(2), Florida Statutes. Pursuant to Section 626.621, Florida Statutes, the Department may, in its discretion, suspend or revoke the license of an agent found to have violated any of the provisions enumerated therein. Further, pursuant to Section 626.691, Florida Statutes, in lieu of suspending or revoking an agent's license, the Department may place the offending licensee on probation. In view of the violations cited herein, it would be inappropriate to forego any sanctions entirely. It is therefore

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, as modified by this Order, are adopted as the Department's Conclusions of Law.

   
   

3. The hearing officer's recommendation that the Administrative Complaint, alleging misconduct by Respondent, Harold Rush Leiffer, be dismissed is rejected.

ACCORDINGLY, the hearing officer's recommendation that the Administrative Complaint filed against Respondent, Harold Rush Leiffer, be dismissed is REJECTED and the Respondent shall be placed on probation pursuant Section 626.691, Florida Statutes, for a period of one (1) year. As a condition of probation, Respondent shall strictly adhere to all provisions of Chapter 626, Florida Statutes, and Rules of the Department of Insurance and Treasurer. If during the period of probation, the Department has good cause to believe that the Respondent has violated the terms or conditions of his probation, it shall suspend or revoke the license(s) of Respondent.

NOTICE OF RIGHTS

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, Fla.R.App.P. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 612 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 18th day of March, 1993.

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

Harold R. Leiffer

2026 St. George Avenue Winter Park, Florida 32789

James A. Bossart, Esquire Department of Insurance 612 Larson Building

Tallahassee, Florida 32399-0300

Docket for Case No: 92-004366

Orders for Case No: 92-004366