STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-4569

)

GARY LEE BAKER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William F. Quattlebaum, held a formal hearing in the above-styled case on November 16, 1993, in Ft. Myers, Florida.

APPEARANCES

For Petitioner: Joseph D. Mandt, Esquire

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0333

For Respondent: Carl Joseph Coleman, Esquire

Smith, Geraghty & Coleman Post Office Drawer 8

Fort Myers, Florida 33901 STATEMENT OF THE ISSUE

Whether the allegations of the Administrative Complaint are correct and, if so, what penalties should be imposed.

PRELIMINARY STATEMENT

By Administrative Complaint filed July 2, 1993, the Petitioner alleges that the Respondent solicited a workers compensation insurance application from Debi and Pete Valencia of Port Charlotte, Florida, accepted their check in payment, and then failed to submit said application in a timely manner to the insurer.

The Respondent filed a request for a formal hearing which was forwarded to the Division of Administrative Hearings for further proceedings.

At the hearing, the Petitioner presented the testimony of three witnesses, and had exhibits numbered 1-5 admitted into evidence. The Respondent presented the testimony of one witness, testified on his own behalf, and had exhibits numbered 1-7 admitted into evidence.

No transcript of the hearing was filed. Both parties filed proposed recommended orders. The proposed findings of fact are ruled upon as set forth in the Appendix which is attached and hereby made a part of this Recommended Order.

FINDINGS OF FACT

1. At all times material to this case, and at the time of the hearing, Gary Lee Baker ("Respondent") was licensed in Florida as a life and variable annuity agent, health and variable annuity agent, life agent, life and health agent, general lines agent, and health agent. The Respondent was a stockholder and officer in the "Murdock Insurance Agency, Inc.".

   
   

2. Pete and Debi Valencia are the owners of the "Growing Concern," a floral shop. In 1991, the Growing Concern had obtained workers compensation (WC) coverage through Allstate Insurance. According to the Allstate policy, the coverage was effective from July 18, 1991 to July 18, 1992. The premium for the policy was $1,235.00.

   
   

3. As of November, 1991, Mr. Valencia believed that Allstate Insurance was going to terminate his WC insurance coverage. The belief apparently was based on local gossip. There is no evidence that, absent payment of premium, Allstate intended to cancel the Valencia's WC insurance coverage prior to the expiration date set forth in the policy.

   
   

4. Mr. Valencia contacted the Respondent, who was a business acquaintance of Mrs. Valencia, to discuss WC coverage. At the time of the initial meeting, Mr. Valencia offered to place all his insurance business with the Respondent if the Respondent could obtain satisfactory WC insurance rates for the Valencia's business. Mr. Valencia provided a copy of the then-current Allstate policy to the Respondent.

   
   

5. Based on information provided by Mr. Valencia, the Respondent completed portions of a WC insurance application on behalf of Growing Concern on November 21, 1991.

   
   

6. The application was to be submitted to the National Council of Compensation Insurance (NCCI) Atlantic Division upon receipt of additional information from Mr. Valencia and upon the lapse of the Allstate coverage.

   
   

7. Among the information required by the NCCI was a copy of a Growing Concern quarterly tax filing (Form 941) from Mr. Valencia. The form is used by NCCI to verify the Growing Concern payroll, the basis of calculation of the WC premium.

   
   

8. Pursuant to this meeting, Mrs. Valencia provided a check dated November 21, 1991, numbered 3737, for $360.00 as an initial payment on the WC premium. The Respondent deposited the check into his trust account and awaited receipt of the additional documentation.

   
   

9. By January, 1992, the Respondent had not received the additional information. He contacted Mr. Valencia to obtain the copy of Form 941 and to obtain an additional premium payment of $121.00.

10. On several occasions during January and February, 1992, the Respondent and his assistant attempted to contact Mr. Valencia to obtain the premium payment and information. Neither the information nor the payment was forthcoming.

    
    

11. On March 8, 1992, Mrs. Valencia submitted a check numbered 3948 for

    $121.00 as payment of the additional premium. However, the Valencia's still failed to submit a signed copy of the Growing Concern's most recent Form 941.

    
    

12. Although the Respondent assumed that the application would be rejected for the failure to include all the required information, the Respondent submitted the application on March 31, 1992 (without the required Form 941) to NCCI.

    
    

13. A check on the account of Murdock Insurance Agency dated March 31, 1992, numbered 144, for $962.00 accompanied the application as payment of the premium due at that time. Although he had yet to collect such an amount from the Valencias, he believed their relationship was such that he could "front" the premium payment on their behalf.

    
    

14. By letter dated April 24, 1992, NCCI informed the Respondent that the application would not be processed without the form which would permit verification of the payroll.

    
    

15. On May 20, 1992, Mr. Valencia provided a signed copy of the Form 941 to the Respondent.

    
    

16. By letter dated May 26, 1992, NCCI informed the Respondent that an additional premium payment of $423.00 was required. The total premium for the Growing Concern WC policy was $1,385.00

    
    

17. The Respondent contacted Mr. Valencia and requested the additional premium payment. Mr. Valencia directed the Respondent to void the transaction and to return the premium paid by the Growing Concern.

    
    

18. The premium was returned by NCCI to the Respondent. Immediately upon receipt of the premium, the Respondent refunded $481.00, the amount paid by the Growing Concern, to Mr. Valencia on June 4, 1992.

    
    

19. At all times, Mr. Valencia's premium funds were maintained in the Respondent's trust account until such time as they were submitted to NCCI.

    
    

20. At no time did Mr. Valencia inform the Respondent that the Growing Concern's Allstate WC coverage had lapsed.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

22. The Petitioner has the burden of proving, by clear and convincing evidence, the allegations of the Administrative Complaint. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987). The burden has not been met. The evidence in this case fails to establish that the Respondent violated the statutes referenced in the Administrative Complaint filed in this case and cited below.

23. All premiums, return premiums, or other funds belonging to insurers or others received by an agent, solicitor, or adjuster in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity and the licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto. 626.561(1), Florida Statutes.

24. Section 626.611, Florida Statutes, in relevant part provides: The department shall deny, suspend, revoke,

    or refuse to renew or continue the license of any agent,...and it shall 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:

    * * *

    (5) 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.

    * * *

    (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 conduct of business under the license.

    * * *

    (13) Willful failure to comply with, or willful violation of any proper order or rule of the department or willful violation of any provision of this code.

25. Section 626.621, Florida Statutes, in relevant part provides: The department may, in its discretion,...

    suspend, revoke, or refuse to renew or

    continue the license of any agent,...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...licensee...any one or more of the following applicable grounds

    exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

    * * *

    (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.

    * * *

    (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.

    
    

26. Part X include section 626.9521(1), Florida Statutes, which in relevant part 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 s. 626.951 or

    s. 626.9561 to be an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.

    
    

27. Part X also includes section 626.9541, Florida Statutes, which in relevant part provides as follows:

    
    

    1. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

       * * *

       1. Misrepresentation in insurance applications.--

          
          

          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 the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

       * * *

       1. Illegal dealings in premiums; excess or reduced charges for insurance.--

          1. 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.

28. The evidence fails to establish that the Respondent has violated the above cited statutes. The facts are that the Respondent completed an application for insurance on behalf of the Growing Concern and then waited for the applicants to furnish additional information which was required for the processing of the application. The Valencias were not forthcoming with the additional information. Further the Allstate insurance policy appeared to be in effect at all times material to this case. The Respondent was never informed of any cancellation of the Allstate policy.

    
    

29. The premium funds which were obtained from the applicants and deposited into the Respondent's trust account remained there until they were forwarded to the insurer with the application. The premiums were refunded immediately upon receipt from NCCI by the Respondent. The evidence does not establish a misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds.

    
    

30. There is no credible evidence that the Respondent made any misrepresentations to the Valencias regarding their workers compensation insurance. There is no demonstrated lack of fitness or trustworthiness to engage in the business of insurance. There is no evidence of fraudulent or dishonest practices or unfair methods of competition or in unfair or deceptive acts or practices on the Respondent's part.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Department of Insurance enter a Final Order dismissing the administrative complaint filed against Gary Lee Baker.

DONE and RECOMMENDED this 4th day of January, 1994, in Tallahassee, Florida.

WILLIAM F. QUATTLEBAUM

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of January, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4569

The following constitute rulings on proposed findings of facts submitted by the parties.

Petitioner

The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order, except as follows:

1. Rejected, contrary to the greater weight of the evidence which establishes that the delay in submission of the application was based on the insured's failure to provide the requested information. The premium was refunded to the insured on June 4, 1992, (not January 4, 1992) immediately upon the receipt by the Respondent.

2. Rejected, immaterial. The Allstate policy lapsed through no act by the Respondent, who was never informed of such lapse.

Respondent

The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows:

9. Rejected, hearsay uncorroborated by other competent evidence.

COPIES FURNISHED:

Tom Gallagher

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Bill O'Neil, General Counsel Office of State Treasurer The Capitol, PL-11

Tallahassee, Florida 32399-0300

Joseph D. Mandt, Esquire Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0333

Carl Joseph Coleman, Esquire Smith, Geraghty & Coleman Post Office Drawer 8

Fort Myers, Florida 33901

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 ten 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.

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AGENCY FINAL ORDER

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

OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF:

Case No. 93-L-316JDM

GARY LEE BAKER DOAH Case No. 93-4569

/

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 July 2, 1993, the Florida Department of Insurance and Treasurer (hereinafter the "Department"), filed an Administrative Complaint seeking to revoke or suspend the insurance agent license(s) and eligibility for licensure of GARY LEE BAKER (hereinafter "Respondent"), based upon the Respondent's alleged failure to remit premium funds, unlawful withholding of monies belonging to insurers and misrepresentation of an insurance policy.

On or about August 9, 1993, Respondent submitted his request for formal hearing pursuant to Section 120.57(1), Florida Statutes. The matter was heard before William F. Quattlebaum, Hearing Officer, Division of Administrative Hearings on November 1, 1993 in Ft. Myers, Florida. No transcript of the proceedings was filed.

After consideration of the evidence, the argument and testimony at hearing, and subsequent written submissions of the parties, the hearing officer issued his Recommended Order on January 4, 1994 to the Treasurer and Insurance Commissioner. (Exhibit "A", attached.) The hearing officer recommended that the department enter a final order dismissing the administrative complaint filed against the Respondent. No exceptions to the Recommended Order were filed by the parties.

Upon careful consideration of the record, the submissions of the parties, and being otherwise fully advised in the premises, it is hereby ORDERED:

1. That the hearing officer's Findings of Fact are adopted in full as the DEPARTMENT'S Findings of Fact.

   
   

2. That the hearing officer's Conclusions of Law are accepted in full as the DEPARTMENT'S Conclusions of Law.

   
   

3. That the Recommendation of the hearing officer is accepted by the DEPARTMENT as being the appropriate disposition of this case.

ACCORDINGLY that the administrative complaint filed against Gary Lee Baker shall be and hereby is DISMISSED.

NOTICE OF RIGHTS

Any party to these proceedings adversely affected by this order is entitled to seek review of this order pursuant to s. 120.68, Florida Statutes, and Florida Rules of Appellate Procedure Rule 9.110. 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, 32399- 0300, and a copy of same with the appropriate District Court of Appeal, within thirty (30) days of the rendition of this order.

DONE AND ORDERED this 10th day of May, 1994.

TOM GALLAGHER

Treasurer and Insurance Commissioner

COPIES TO:

William F. Quattlebaum, Hearing Officer Division of Administrative Hearings

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Carl Joseph Coleman, Esquire Smith, Geraghty & Coleman Post Office Drawer 8

Fort Myers, Florida 33901

Joseph D. Mandt, Esquire Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0333

Docket for Case No: 93-004569

Orders for Case No: 93-004569