STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
vs. ) CASE NO. 93-5436
)
KENNETH MICHAEL WHITAKER, )
)
Respondent. )
)
RECOMMENDED ORDER
Upon due notice, this cause came on for formal hearing on November 18 and 21, 1994, in Tallahassee, Florida, before Ella Jane P. Davis, a duly assigned hearing officer of the Division of Administrative Hearings.
APPEARANCES
For Petitioner Department of Insurance
David D. Hershel, Esquire Daniel T. Gross, Esquire Michael K. McCormick, Esquire Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
For Respondent Kenneth Michael Whitaker
Robert S. Cohen, Esquire Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302
STATEMENT OF THE ISSUE
Whether Petitioner should be disciplined pursuant to a nine count administrative complaint, each count containing allegations of multiple violations of the Insurance Code.
PRELIMINARY STATEMENT
On August 24, 1993, the Department of Insurance (DOI) charged Respondent with multiple violations of the Insurance Code.
The nine count administrative complaint alleged that the Respondent, individually and through his employees, engaged in a practice commonly called "sliding", which is defined as the sale of ancillary products such as motor clubs or death and dismemberment coverage to consumers without the consumers'
informed consent; that the consumers were required to purchase the ancillary products as a pre-condition to obtaining premium financing; and that Respondent engaged in the practice of allowing unlicensed employees to transact insurance.
At formal hearing, DOI presented the oral testimony of David Kelly Register, James Register, Jacque Flowers, Christine Maddux Vollenweider, Sebrena McPhaul, Diedre Ann Hawks Johnson, Candy Lyn Bassett, Steve Reeves, Paul Wettrich, Cynthia Mann, and Phillip White, and had nine exhibits admitted in evidence.
Respondent testified on his own behalf and had two exhibits admitted in evidence.
The Prehearing Stipulation and an addendum thereto were admitted in evidence. Answers to requests for admission have also been considered.
A transcript was filed. All timely-filed proposed findings of fact have been ruled upon in the appendix to this recommended order, pursuant to Section 120.59(2) F.S.
FINDINGS OF FACT
Emerald Coast Insurance Agencies, Inc. (Emerald Coast) is a nonstandard automobile insurance agency, insuring high risk drivers who normally have a difficult time procuring insurance.
Emerald Coast advertises. Some customers named in the administrative complaint responded to advertisements featuring "high risk, low down payment."
At all times material, Respondent was licensed as a life agent, as a life and health agent, and as a general lines agent and was the corporate president, director and registered agent of Emerald Coast.
Respondent was present and actively overseeing all of the applications involved in this case, even when information was written on forms by the customer, another agent, or an unlicensed employee. Most of the complaining witnesses were able to identify Respondent as being present and/or assisting while their forms were made out. DOI did not affirmatively prove that any unlicensed employee of Emerald Coast spent more than 10 percent of his employment time interacting with customers.
Prior to these proceedings, DOI has never taken action against Emerald Coast or Respondent.
Respondent went to DOI on two occasions prior to the filing of this administrative complaint and discussed optional coverages in an effort to avoid situations that might lead to disciplinary action.
Emerald Coast has four offices in three cities. All of the events underlying the charges herein occurred in Tallahassee.
Emerald Coast has written between 15,000 and 18,000 automobile insurance policies in the three years it has been open.
Approximately 70 percent of Emerald Coast's customers who purchase automobile insurance policies cancel those policies prior to the renewal date. Eighty percent of these cancelled policies are cancelled for nonpayment of
premium. Among these cancellations are individuals called "tag runners." Tag runners purchase the minimum required insurance for receipt of an automobile license tag, with the intent of having the policy cancelled after they have made one or two payments and taking the chance that the Division of Highway Safety and Motor Vehicles will not catch up with them to suspend their licenses because insurance cancellations may take up to six months, even for non-payment.
Once the policy information is taken from the customer, it is entered in a computer and, within three to five days, checks are written from Emerald Coast to the insurance carriers for initial premiums. If the proposed insured fails to make a payment or stops payment on a check, the agency loses money on the transaction because the agency has already forwarded the money to the insurance company.
Emerald Coast provides the option of financing a premium if a customer cannot pay it in a lump sum annually.
When a customer cannot pay in full for an insurance policy, Emerald Coast offers the option of purchasing an ancillary product like an auto club for a set price in addition to paying for the insurance with a low down payment.
The club cost is in addition to the total insurance premium, and the low down payment for the insurance premium is conditional upon the customer's paying for the club's product.
If the customer does not want the auto club product, Emerald Coast still permits him to finance his insurance premium with a 50 percent down payment.
Emerald Coast's purpose of requiring a 50 percent down payment or payment in full, or the purchase of the auto club when a small down payment is made, is to offset cancellation rates and the agency's losses incurred thereby.
The premium finance companies which finance insurance policies require fees. There are no premium finance companies that require Respondent to sell auto clubs in order to sell their premium finance products. The insurance carriers charge a premium for the risk they assume with the contract of insurance. There are no insurance carriers that require Respondent to sell auto clubs in order to sell their insurance.
Approximately 60 percent of the people to whom Emerald Coast has sold policies also purchased auto clubs, including towing and rental features.
The larger the fee paid by the customer for the club, the greater the towing, rental and other benefits that the club provides and the greater amount the seller makes. Respondent received a 90 percent commission from Atlantic Travel Association of North Florida, Inc. for the auto clubs he sold and sent to them. Respondent also sold American Travelers Association death and dismemberment benefit contracts at a similar commission.
Respondent and Emerald Coast used to sell Atlantic Travelers Association, Inc. auto clubs. As of January 1, 1992, they switched to selling Atlantic Travelers Association of North Florida, Inc. clubs. The two clubs are not associated in any way. By agreement with the new club's owner, Respondent and Emerald Coast continued to use the old forms bearing the wrong company name and submitted them to the new club. The forms do not provide the address of the club, and members are expected to submit claims through Emerald Coast. Atlantic Travelers Association of North Florida, Inc. is a valid auto club and pays valid
claims. Atlantic Travelers Association of North Florida, Inc.'s owner testified that his company was prepared to honor each misnamed form that Respondent sent to him with a fee, but it is probable that the form issued in the wrong name would not be legally binding. If the form was never received by the new club, Emerald Coast's customer would have an even more tenuous claim. Therefore, Respondent's auto club customers were protected only at the new club's whim as to whether or not a contract they paid for would be honored, and each form issued by Respondent or Emerald Coast with the wrong auto club name on it constituted a misrepresentation, deceptive to the customer on several levels.
Respondent also continued to use the Atlantic Traveler's Association, Inc. name on all the acknowledgments he asked his customers to sign, signifying that they understood that the auto club cost was optional and in addition to their automobile insurance. The use of the wrong name on these acknowledgment forms also was a misrepresentation. Due to space considerations, and for greater clarity, Atlantic Traveler's Association, Inc. will hereafter be referred to as "the old auto club," and Atlantic Traveler's Association of North Florida, Inc. will hereafter be referred to as "the new auto club."
None of the customers named in the administrative complaint lost money as a result of any auto club sold by Respondent or Emerald Coast.
The auto club contracts offered 38 different choices of benefit levels. Each of the benefit levels was an option which should have been discussed with and knowingly accepted by the customer. Respondent gave the individuals selling the auto clubs no instructions on which of the options they should sell to a customer or how they should judge which option(s) a customer needed. Routinely, neither Respondent nor any of his employees ever offered all
38 options to each customer. Rather, dependent upon the car insurance coverage the customer selected, or upon the unbridled discretion of the salesperson, each salesperson sold what he felt like.
Respondent and Emerald Coast use an acknowledgment form to let the customer know he is purchasing an ancillary product, that the total cost of the ancillary product is in addition to insurance premiums, and that the ancillary product is optional and not required by law. They use a document called an "affidavit" to inform the customer of other coverages and when the coverages will go into effect and to hopefully insure that the information received from the customer is accurate. These so-called "affidavits" are neither notarized nor attested-to by anyone.
Respondent acknowledged that the DOI and the insurance industry consider the word, "premium," as applying to insurance premiums only, not ancillary products such as auto clubs. See, Section 627.041(2) F.S. Laymen likewise regard the word "premium" as reflecting the cost of insurance.
Respondent and Emerald Coast use generic receipts which say "premium," not "insurance premium." Where insurance premium collections and ancillary product sales were conducted simultaneously, Respondent used the word "premium" on these receipts to cover the total amount tendered by each customer as a down payment on both the insurance policy premium and on the ancillary product. He then listed only the insurance premium down payment (total amount tendered by the customer minus ancillary product full fee or down payment) on the insurance premium finance agreement because only insurance premiums can be financed on those forms. Where receipts specified "total premium" he lumped in the cost of the ancillary product. Respondent thus misused the word "premium" on receipts issued to customers. Accordingly, the receipts provided to Respondent's customers were misrepresentations and deceptive. One result of the misuse of
the term "premium" was that customers sometimes were led to believe that their deposits against both auto clubs or death and dismemberment policies and insurance coverage were down payments on the insurance policies alone, even where the receipts specified "premiums" and "deposit." Accordingly, Respondent's deductions of all or part of the ancillary product fee up front resulted in false statements on other documents that the full down payment for premium or financing of premium had been made when it had not.
Respondent testified that his standard operating procedure was for himself or another licensed insurance agent to explain the coverages on each of the policy application forms executed at Emerald Coast; that where marks occurred on the summary of coverage pages, they were made by himself or another Emerald Coast representative during these explanations; that he explained the cost coverage breakdown for each customer he saw; and that he instructed each customer he saw to read all documents before signing. However, the juxtaposition of the "total" space block and the column where premiums and other costs are added on the "summary of coverages and cost breakdown" form makes it impossible for the customer to quickly add up the premiums for each type of insurance coverage and the cost of ancillary product in a straight line. Also, due to the confusion of Respondent's use of the word "premium" for different purposes on different documents, the figure for total "premium" frequently cannot be reconciled among the receipt, the financing document, the insurance application, and/or the summary of coverages and cost breakdown form. Even a reasonably attentive customer would be confused by the several forms. Reading the summary before signing it would not necessarily have revealed what funds were being applied to which purpose. In some instances, more specifically set out by customer and count infra., the completed summary of coverages and cost breakdown forms were misleading or unexplainable as to what amounts were being charged to the customer.
Count I (David K. Register)
On January 31, 1992, David K. Register went to Emerald Coast to purchase insurance. The applications made out at that time were executed by Respondent as brokering agent. Mr. Register signed all documents without reading them. Nonetheless, he understood that he was purchasing personal injury protection, property damage coverage, comprehensive and collision coverage, and what the deductibles were at the time he signed the documents. He also knew he was purchasing an auto club at the cost of $150.
The total cost of the insurance coverage he was seeking was approximately $750. Respondent required Mr. Register to purchase an auto club contract as a condition of obtaining premium financing for his insurance policies.
Respondent completed a premium finance agreement for financing the unpaid premiums for the policies showing that Mr. Register had tendered a $197 premium down payment. Respondent advised Mr. Register that he owed an additional $135, due February 14, 1992. Respondent issued a receipt to Mr. Register showing the total premium was $937.
When he applied with Emerald Coast, Mr. Register had four offenses on his driving record, three for unlawful speed and one for violation of the alcoholic beverage open container law. His complete driving record was not disclosed on the documents prepared. If it had been disclosed, an additional premium would have been charged. The testimony is in direct conflict on whether or not Mr. Register orally disclosed his prior violations to Emerald Coast: Mr.
Register maintained that he did; Respondent maintained that he did not. There is no direct evidence to show which witness was accurate on this issue.
Circumstantially, there was no reason Respondent should fail to write down violations told him by Mr. Register since Respondent was prepared to write insurance in the high risk category anyway and one way or another Respondent could have insured Mr. Register for the amount Mr. Register was prepared to pay that day.
Subsequently, Mr. Register made a down payment and executed an insurance application with Progressive Insurance through Swann Insurance Agency on which he also failed to disclose his entire driving record. He did so with the explicit understanding at that time that the new carrier would run a license check on him and an additional premium would be required due to his bad driving record which he had disclosed orally to Swann Insurance Agency. The "safety net" when a bad driving record is not disclosed on an application is that carriers routinely run independent driving license checks and adjust the premium upward or refuse coverage if they discover an undisclosed bad driving record. What Swann Insurance Agency and its carrier did after the carrier researched David Register's driving history is not clear on the record. When Emerald Coast and its carrier discovered his history, they demanded a higher premium.
The evidence falls short of showing that Respondent deliberately left information provided by Mr. Register off his application at Emerald Coast.
On February 6, 1992, Armor, the carrier with whom Emerald Coast had placed Mr. Register's PIP and property damage coverage, notified Mr. Register and Respondent that the policy binder would be cancelled if required photographs of the vehicle were not received. On February 10, Mr. Register took the vehicle to Emerald Coast for photographs.
On February 13, Respondent wrote Mr. Register a letter threatening to cancel his "policy" if the $135 "premium" were not paid by February 14. Respondent testified that the letter referred to cancellation of the auto club towing "policy" and therefore he was not threatening to cancel Mr. Register's automobile insurance policy for failure to pay for an ancillary product. However, on its face, the letter was misleading. Respondent's unique "wordology" had the effect on Mr. Register of a threat to cancel his automobile insurance policy for non-payment of the ancillary product fee.
On February 14, David Register and his father wrote Respondent requesting cancellation of the insurance policies and return of all money paid, since they had purchased duplicate coverage at Swann Insurance Agency. Respondent did not forward the cancellation request to Nu-Main, general agent for the carrier with whom he had placed Mr. Register's comprehensive and collision policy.
Respondent did not forward the car photographs to Armor. As a result of the photographs not being received, on February 18, Armor cancelled its binder to David Register.
On March 9, 1992, the finance company sent David Register and Emerald Coast its cancellation notice for nonpayment of premiums.
David Register never paid the additional $135 due on February 14 for the auto club and the new auto club had no record of his old auto club form being received.
Due to his February 14 cancellation, Respondent eventually refunded Mr. Register $140 of the $212 he had paid on January 31, 1992. Mr. Register's father testified that the $72 difference was accounted for by the cost of coverage from January 31 to February 14 and cancellation fees charged by the carriers.
Count II (Diedre Hawks Johnson)
On August 15, 1992, Diedre Hawks went to Emerald Coast to buy minimum insurance for a used car she had just purchased and financed. She executed an application for property damage, comprehensive, collision, and PIP insurance coverages. These coverages are more than the minimum required by law, but may not be more than the minimum required by the financing of Baldwin-Foster Motors, where Ms. Hawks had just purchased the car. The record is unclear on this distinction. Ms. Hawks tendered $165.
Respondent actively supervised Dan Allison, a licensed insurance agent, during this transaction.
Contrary to Ms. Hawks' testimony, it is found that she understood on August 15 that she had purchased an auto club.
Although she did not read them at the time, Ms. Hawks executed the premium finance agreement to obtain financing for the remainder of the automobile insurance policy premium and the application for an auto club at
$150. Ms. Hawks likewise signed both an acknowledgment showing she knew she was getting an auto club for $150 and an "affidavit." She also signed a summary of coverages and cost breakdown acknowledging that Emerald Coast employees had explained the coverages, that she fully understood them, and that she had received a completed copy of that document. Her explanation at formal hearing for why she did not read what she signed was that she was in a hurry because it was late in the day and the Emerald Coast employees were rushing to get out.
However, she acknowledged that Respondent gave her an opportunity to read the documents which clearly set out that she was buying an auto club for $150.
However, even if she had read them, the documents presented to Ms. Hawks were ambiguous as to what the amounts paid or owing were to cover. The enumerated coverages on the cost breakdown form add up to $745 (including a $150 auto club) plus a policy fee of $25 and a "grand total" of $770. The financial agreement shows a $620 premium total with $465 financed, a $155 down payment and
$65.49 per month due in monthly payments. The receipt issued to Ms. Hawks by Emerald Coast on August 15 showed that she had tendered a $165 deposit, was paying for a $770 annual premium, and owed an additional $140 deposit.
Upon the foregoing, Ms. Hawks' testimony was convincing that even though she initialled the receipt requiring the additional deposit, she did not know that she still owed a $140 down payment when she left Emerald Coast and that she believed that she only had to pay her premium in monthly increments of
$65.49.
The next day, August 16, 1992, Underwriters Guaranty Insurance Company issued Ms. Hawks an insurance policy with an annual premium of $620.
The difference of $150 between the $770 and $620 figures was the total
$150 cost of the auto club which she was required to buy in order to get financing with Emerald Coast. Ms. Hawks signed a contract with the old travel club. Emerald Coast sent the contract to the new travel club. Ten dollars of
Ms. Hawks' initial $165 had been applied by Emerald Coast as a down payment on the auto club. No paper specifically shows this diversion of funds.
On September 8, Emerald Coast wrote Ms. Hawks that she must come in and pay $140 more on her down payment for "premium" or her insurance would be cancelled. Ms. Hawks purposefully ignored the letter since communications with the carrier clarified that the money was actually to be applied to the auto club fee. Beginning September 13, Respondent telephoned her several times to come in and make the payment. Ms. Hawks still did not pay the $140. Therefore, Respondent refused to turn over to her a copy of her automobile insurance policy when it was issued.
Ms. Hawks again dealt with the carrier directly and the carrier assigned her to a new agent. She never paid the auto club fee.
Count III (Christine Maddux Vollenweider)
On March 16, 1992, Christine Maddux asked to finance part of a $242 premium. Respondent told her that the additional cost of financing insurance with the $242 annual premium would be $317. Respondent also told her that Emerald Coast had a condition of financing which required her to buy an auto club.
Ms. Maddux executed an application for a PIP and property damage automobile insurance policy with a total annual premium of $242.
Respondent told her that she must pay a $143 down payment. Ms. Maddux had only $80 with her, so she tendered $80 to Respondent, who told her she must pay the remaining $68 the following week. On her first visit, the "total premium" was $317 on the receipt ($80 received and $68 deposit due). She paid the $68 the following week, as agreed. That amount was also receipted as "total premium."
On March 16, Ms. Maddux executed a premium finance agreement to obtain premium financing on the balance of the premium amount and applied for an auto club. The premium financing agreement showed that she had tendered only $73 down payment on the insurance premium. The $7 balance of her $80 went for the auto club, but no document specifically shows that diversion of funds.
Ms. Maddux did not read the summary of insurance coverages and cost breakdown prior to signing it. She was not told that she could not read the document, and she signed a statement acknowledging that the coverages had been explained to her, that she fully understood them, and that she had received a completed copy of the document. All of the documents except the financing agreement consistently reflect the $75 for the auto club.
Ms. Maddux applied for the auto club at a cost of $75 even though she already received equal or better auto club benefits from AAA-Plus, and had told Respondent so. No one at Emerald Coast told Ms. Maddux that she was required by law to purchase it. She applied for the auto club only because of Respondent's specific agency business practice to require an auto club purchase of any customer who had to finance insurance premiums after a down payment of less than half of the entire annual premium. The auto club contract Ms. Maddux signed was with the old club showing a cost of $75. Emerald Coast sent the contract to the new club.
Ms. Maddux was issued a policy by Security Insurance Company of Hartford.
Count IV (Candy Bassett)
On March 16, 1993, Candy Bassett wanted to purchase the minimum required non-owner's automobile insurance to get back her driver's license, which had been suspended.
She incorrectly stated to Emerald Coast that she had only four points on her driving record, when in fact she had twelve points. The points had been accumulated for speeding tickets, for driving under the influence of alcohol (DUI) with serious bodily injury, and for a conviction for failure to identify upon an accident.
Ms. Bassett signed Emerald Coast's summary of coverages and cost breakdown form and the policy application form, stating therein that her violations and offenses as revealed by her were accurate and acknowledging that the coverages had been explained to her and were fully understood by her.
Ms. Bassett executed both a cost breakdown and summary and an acknowledgment. The cost breakdown and summary showed she was purchasing a travel club including accidental death coverage for $100. Her acknowledgment showed she was purchasing a motor club including towing and rental reimbursement for $187.
Ms. Bassett executed an application for an automobile insurance policy to be issued by Underwriters. The application listed the total annual premium as $334. Ms. Bassett tendered her down payment check in the amount of $187.
The receipt showed the "total premium" to be $449 and the amount received to be
$187.
Ms. Bassett executed a premium finance agreement to obtain financing for the remainder of the policy premium. It showed that Ms. Bassett had tendered only an $87 down payment on a total premium of $349.
Underwriters issued Ms. Bassett an insurance policy for an annual term.
Respondent actively supervised her transaction and executed the policy application as brokering agent.
As part of this transaction and as part of a specific Emerald Coast business practice, Respondent required Ms. Bassett to execute an American Travelers Association, Inc. accidental death and dismemberment benefits contract reflecting a fee of $100, not a towing contract as reflected on some of her other paperwork. The $100 for this death and dismemberment product constituted the difference between the $87 shown on the finance agreement as the amount tendered and the $187 check Ms. Bassett actually tendered.
There is no evidence as to the status of American Travelers Association Inc. or whether it received Ms. Bassett's contract.
Contrary to other documents she executed, Ms. Bassett signed an acknowledgment form to the effect that she knew the club, including towing and rental reimbursement, were optional at a fee of $187 separate from her automobile insurance and that she understood that it was not insurance.
Ms. Bassett testified that she thought the death and dismemberment benefits were included in her insurance, that she was not informed that she would have to pay an additional $100 for those benefits, and that she did not intend to pay any monies for such benefits.
The foregoing testimony is not entirely credible in light of the rest of the evidence. Ms. Bassett also specifically testified that she was told that the travel/accident feature was "included in the -- I can't remember how much the premium was, it was four hundred and something, he said it was included in that." (Emphasis supplied.) She also signed an acknowledgment indicating the towing fee would be in addition to the insurance premium and a paper showing the amount for financing the insurance premium totalled only $349, and she was asked to name, and did name, a beneficiary on the death and dismemberment form. Further, she admitted that she understood that she was receiving travel/accident benefits through American Travelers, and that it was required for premium financing.
However, she is credible and clear that all the amounts she had paid and was going to have to pay were not fairly represented to her and that Respondent made out forms showing she was being charged $187 for an auto club or towing feature which, having no car she could not very well use, as well as forms showing she was purchasing a death and dismemberment feature at $100, purely as a requirement of financing automobile insurance.
Count V (Cynthia Mann)
On January 24, 1992, Cynthia Mann made application for full coverage automobile insurance. Respondent actively supervised her transaction. Respondent was the brokering agent for the policy.
Ms. Mann tendered a check for $180 and was advised that an additional down payment of $95 was due on the policy. She tendered the additional $95 down payment to Respondent on February 3, 1992. Charter American Casualty Insurance Company issued her standard automobile policy.
Ms. Mann also executed a premium finance agreement to obtain premium financing for the policy. This agreement indicated that the total down payment for the policy was $165.
Respondent required Ms. Mann to execute an old auto club contract in order to get the financing. She signed an acknowledgment that she had been offered an opportunity to purchase insurance from Emerald Coast without any auto club. The new auto club had no record of receiving Ms. Mann's Atlantic Travel Association, Inc. contract. The record is silent as to whether or not the old auto club received her contract.
The annual fee specified on the old auto club contract was $110. Emerald Coast took $110 from Ms. Mann's $180 deposit and applied it to the auto club contract.
Ms. Mann signed an application form, an acknowledgment form similar to those signed by the other complainants, and an "affidavit."
Ms. Mann contended that Respondent had told her that she had a towing benefit as part of the automobile insurance policy purchased. The reconciled and understandable portion of her paperwork shows otherwise.
She was not told she could not read the documents placed before her for reading and signature, but she did not read any of the documents prior to signing. She did not want to spend additional time reading documents because she "knew [she] had to have insurance." However, reading the documents would not have eliminated some of the contradictory and therfore false statements as to what constituted insurance premium.
Count VI (Jacque Flowers)
Respondent was actively involved in both of Jacque Flowers' transactions.
At all times material, Paul Wettrich, an unlicensed employee of Emerald Coast, spent less than ten percent of his time actually filling out forms for customers or taking information from customers.
On December 31, 1992, Jacque Flowers went to Emerald Coast to purchase automobile insurance and executed an application for various coverages for two automobiles.
On December 31, 1992, Ms. Flowers tendered $160 as a down payment to Mr. Wettrich. Mr. Wettrich signed a receipt as "salesman," and assisted Ms. Flowers in filling out the required forms. The receipt showed a total premium of $849. The Respondent executed the application as brokering agent.
Mr. Wettrich never signed any of the applications on behalf of Respondent or any other licensed agent.
Also, on December 31, 1992, Ms. Flowers executed an Underwriters Financial premium finance agreement to obtain financing for the remainder of the policy premium. Respondent executed that agreement as agent of record. The agreement incorrectly specified that a $187 down payment already had been made.
As part of the December 31, 1992 transaction, and pursuant to Emerald Coast's standard business practice, Ms. Flowers was required to contract with Atlantic Travel Association, Inc. for an auto club at a $100 fee. The $100 auto club fee was deducted from the $160 cash payment made on that date.
On December 31, 1992, Ms. Flowers was in a hurry to complete her transaction because she had her three-year-old child with her. Without reading them, Ms. Flowers signed an application form, a premium finance agreement, an acknowledgment form, an Atlantic Travel Association, Inc. form, and a summary and cost breakdown form, acknowledging the truth and accuracy of the statements contained in each document, that the coverages had been fully explained to her, and that she understood them.
Effective January 1, 1993 and pursuant to the policy application, Underwriters issued to Ms. Flowers a policy with a total annual premium of $749.
On January 27, 1993, pursuant her agreement on December 31, 1992, Ms. Flowers tendered to Respondent an additional $127. ($160 plus $127 would equal
$287 paid up to that date.)
Also on January 27, 1993, Ms. Flowers deleted one car from the policy.
On February 15, 1993, Ms. Flowers deleted the second car from the policy and added a third car. This resulted in an increased premium and an addendum to the policy which had been issued January 1. Ms. Flowers paid $92 more to Respondent's brother Scott, an unlicensed employee of Emerald Coast, who signed the receipt. The addendum stated that the additional policy premium was
$167, and that $67 had been the cash down payment. Respondent executed the addendum as brokering agent.
In accord with its standard business practice, Emerald Coast, through Scott Whitaker, required Ms. Flowers to execute an accidental death and dismemberment contract with American Travelers Association, Inc. Twenty-five dollars for this item was taken from her $92 paid that day.
The receipts and other documents provided Ms. Flowers at this time were inconsistent, and Respondent was unable to explain the inconsistencies at formal hearing.
Although Ms. Flowers testified that the two ancillary product packages (auto club and death and dismemberment benefits) were never explained to her and that she would never have purchased either package if she had understood that there were additional charges therefor, her paperwork shows otherwise. Also, she specifically testified that when she went to Emerald Coast the first time, on December 31, 1992, her insurance had just been cancelled by Florida Farm Bureau due to her husband's driving record, and that when she requested full coverage, she understood "full coverage" to include towing, based on her experience with Florida Farm Bureau. Therefore, it is concluded that she wanted the towing benefit however she could get it. She also admitted that each paper was explained to her before she signed on December 31, 1992. Therefore, she knew on December 31, 1992 that she was getting towing and was paying for it through an auto club, even though the totality of the paperwork is misleading as to what amounts were paid for each purpose, and even though the several options within each type of ancillary product were not explained to her and the Emerald Coast employees chose what benefit amount to sell her each time.
The December 31, 1992 old auto club package was sent to the new auto club. The record is silent as to what became of the February 15, 1993 American Travelers Association, Inc. death and dismemberment form.
Count VII (Sebrena McPhaul)
On September 21, 1992, Sebrena McPhaul went to Emerald Coast to purchase automobile insurance and executed applications for bodily injury, property damage, and PIP coverages with Underwriters and for physical damage coverage with Nu-Main, for a total premium of $651, to be divided appropriately between the two carriers as they required.
Ms. McPhaul executed a finance agreement stating that the down payment for her insurance policies was $163.
Ms. McPhaul tendered a $163 down payment check with the understanding that she would tender an additional $100 in two subsequent $50 installments.
Ms. McPhaul also signed an Atlantic Travel Association, Inc. form, even though she informed Emerald Coast employees that she did not need an auto club since she had AAA. The application she signed was for an auto club at a cost of $130, a portion of which was to be taken from the down payments to be made by Ms. McPhaul.
Ms. McPhaul signed a summary of coverages and cost breakdown form which stated that an auto club was covered, including payment for bail bonds, towing and labor and owner protection at a cost of $130, but she did not read it before she signed it.
Ms. McPhaul admitted that the coverages had been explained to her by Scott Whitaker, an unlicensed employee of Emerald Coast, prior to her signing the summary of coverages and cost breakdown form, but maintained that he had not adequately explained that the $130 for the auto club was in addition to her insurance premium instead of part of it.
Ms. McPhaul signed an acknowledgment form concerning the purchase of the auto club and an "affidavit" concerning the truthfulness of her responses, but she read neither of them, either. She conceded that if she had taken the time to read the acknowledgment form instead of just signing it, she would have understood the difference.
Scott Whitaker issued her a receipt showing her total premium was
$781.
Respondent was in charge of the office, was actively involved in her transaction, and signed the applications as brokering agent.
Emerald Coast sent the old club form to the new club.
Ms. McPhaul executed a premium finance agreement to obtain financing for the remainder of the premiums for her policies which were executed by Respondent as agent of record.
Ms. McPhaul was issued insurance policies for her purchased coverages, on September 21 and 22, respectively.
At this point, Ms. McPhaul understood that she was paying $130 for an auto club above and beyond her premiums and financing costs. Previously, she had thought that towing was part of her standard automobile insurance contract. She blamed the misunderstanding upon misrepresentations made by Scott Whitaker, but the acknowledgment she signed is clear on this portion of the disclosure.
Ms. McPhaul stopped payment on a check she had used to pay the down payment on her insurance. Emerald Coast thereby incurred a loss of $90 it had forwarded to the carriers, and also lost the cost of processing her applications.
The receipts and other documents provided Ms. Flowers were inconsistent. Respondent was unable to explain the inconsistencies.
Count VIII (Steve Reeves)
On March 20, 1993, Steve Reeves went to Emerald Coast to purchase automobile insurance for a new truck he was leasing. He did so because he had unilaterally formed the opinion that his current truck insurance would not cover a new truck he had just leased.
Mr. Reeves tendered to Emerald Coast a down payment of $175 with the understanding that he would make an additional $45 premium payment to Emerald Coast. That additional premium payment was paid by Mr. Reeves at a later date.
Mr. Reeves executed a premium finance agreement to obtain financing for the remainder of his policy premium. The financing agreement showed the down payment was $120, not $175. This is the only significant discrepancy among Mr. Reeves' documents except for the wrong use of the word "premium" on the receipt and the wrong auto club being named in the acknowledgment and auto club form.
Respondent executed the policy application as agent of record. The application stated that the premium was $453 plus a $25 policy fee for a total of $478. The receipt to Mr. Reeves for the down payment lists the total premium as $578, as does the cost breakdown form. The $100 difference was applied to an auto club fee.
Mr. Reeves also purchased an auto club from Emerald Coast. He knew he had purchased the auto club as a condition of getting his insurance from Emerald Coast. His companion suggested going elsewhere for cheaper insurance without the auto club, but Mr. Reeves declined this suggestion because it was late in the day and he wanted to get his truck insured right then and drive it home.
The auto club contract reflected a fee of $100 and bore the name of the old auto club. It was sent to the new auto club.
Mr. Reeves signed an acknowledgment form which also reflected a $100 auto club fee, an "affidavit," a summary and coverage cost breakdown form, and a travel association form, but did not fully read them.
Executive Insurance Company issued a policy to Mr. Reeves, which he paid on monthly for five or six months. He eventually allowed the policy to lapse for non-payment because he got in a dispute with Emerald Coast about the agency's refusal to accept payments made in its office by way of a third party check.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1) F.S.
The burden of proof required of the Petitioner in this cause is to establish each charge by clear and convincing evidence. See, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).
The violations charged in Count I (David K. Register) are: Sections 626.611 (4), (5), (7), (9), (10) and (11); 626.621 (2) and (6); 626.9561; 627.381; 626.9541(1)(b), (e), (g)2., and (k)1; 624.124, and 626.9541(1)(x)4. F.S.
The violations charged in Count II (Dierdre Hawks Johnson) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), and (1)(k)1. F.S. All statutes listed in Count I were realleged.
The violations charged in Count III (Christine Maddux Vollenweider) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), (1)(g)2., (1)(k)1., and (1)(x)4. F.S. All statutes listed in Count I were realleged.
The violations charged in Count IV (Candy Bassett) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), (1)(k)1., and (1)(z)3. F.S. All statutes listed in Count I were realleged.
The violations charged in Count V (Cynthia Mann) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), (1)(g)2., (1)(k)1., and (1)(x)4. F.S. All statutes listed in Count I were realleged.
The violations charged in Count VI (Jacque Flowers) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), (1)(k)1., and (1)(z)3.; 626.041(2)(a), (2)(b), and (2)(c); and 626.621(12) F.S.
The violations charged in Count VII (Sebrena McPhaul) are: Sections 626.611(4), (5), (7), (9), (10), and (13); 626.621(2) and (6); 626.9521; 626.9541(1)(b), (1)(e), and (1)(k)1.; 626.041(2)(a), (2)(b), and (2)(c); 626.112(1) and 626.621(12) F.S.
The violations charged in Count VIII (Steve Reeves) are: Sections 626.041(2)(a), (2)(b), and (2)(c); 626.112(1); 626.611(4), (5), (7), (9), (10), and (13); 626.621(2), (6), and (12); 626.9521; 626.9541(1)(b), (1)(e), (1)(k)1., (1)(x)4., and (1)(z)3.F.S.
The violations charged in Count IX (General Allegations) are: Sections 626.041(2)(a), (2)(b), and (2)(c); 626.112(1); 626.611(4), (5), (7), (9), (10), and (13); 626.621(2), (6), and (12); 626.9521; 626.9541(1)(b), (1)(e), (1)(g)2., (1)(k)1., (1)(x)4., and (1)(z)3. F.S. It does not incorporate any acts with regard to any specific customer or any specific allegations of Counts I--VIII, but pleads cumulatively that as on-going business practices, Respondent required customers to purchase ancillary products in order to obtain financing; required the purchase of such ancillary products without informed consent; and allowed unlicensed persons to conduct insurance business.
Many of the alleged violations are cumulative or unsubstantiated by the evidence presented. It is axiomatic that even where a violation has been proven, Respondent cannot be found guilty of that violation if it was not alleged in the appropriate count wherein it was proven.
The precise content of Emerald Coast's advertising is not in evidence. Unfair, misleading, or deceptive advertising has not been proven.
The documentary evidence and testimony, once reconciled, present insufficient evidence to support a conclusion that funds have been improperly withheld, not transmitted, or misappropriated.
The evidence falls short of establishing by clear and convincing evidence that unlicensed personnel were utilized improperly.
DOI permits unlicensed insurance agency personnel to perform numerous tasks that do not involve the application of judgment, including but not limited to giving quotations, taking applications, receiving premiums for insurance and similar activities, so long as these activities are "incidental" to, that is, less than 10 percent of) their usual employment activities. See, Rules 4- 222.020, 4-222.040 and 4-222.050 F.A.C. Moreover, it is undisputed that
Respondent oversaw and assumed responsibility for all interactions between unlicensed personnel and customers, signed all necessary forms, and performed all acts with regard to the binding of insurance required by statute and rule.
There was no evidence presented to support the charges of insurance commission splitting or rate manipulation.
On the issue of "sliding," this case is distinguishable from Department of Insurance v. Williamson, 11 FALR 5547 (1989) [DOAH Case No. 88- 4553; RO entered 7/24/89; FO entered 9/5/89]. The facts herein demonstrate that there was no "sliding" of ancillary product sales under Section 626.9541(1)(z)
F.S. Assessing all the documentary evidence and weighing the credibility of all witnesses, it is clear that whether or not they wanted to buy them, all eight customers who bought ancillary products knew that they were purchasing ancillary products at some cost in addition to their insurance premiums, even if there was some confusion as to which benefits those ancillary products included or which club would provide them.
Ms. Bassett did not buy an auto club but did buy a death and dismemberment benefit. Ms. Flowers bought both an auto club and a death and dismemberment benefit.
Each of the eight customers signed one or more documents clearly setting forth that they knew they were buying an ancillary product at an additional cost. Most acknowledged that they had understood that purchase of the ancillary product was required for either purchase of insurance or financing.
People may sign a document because they understand or because they do not wish to admit that they do not understand, or they may sign for the very fact that they do not understand in the first place but think they do, but both parties have a right to rely on unambiguous writings to show informed consent. Business is transacted in writing because memories of oral transactions are always flawed and often contradictory. Absent clear, credible, convincing proof of misleading or false dealing against them, signers must be held to the truth of their written acknowledgments. Although the purchase of the ancillary products was by no means voluntary, there was no uninformed "sliding."
Respondent also was charged with discrimination under Section 626.9541(1) F.S. which prohibits an agent from:
(g) 2. Knowingly making or permitting any unfair discrimination between individuals of the same actuarially supportable class and essentially the same hazard, in the amount of premium, policy fees, or rates charged for any policy or contract of accident, disability, or health insurance, in the benefits payable thereunder, in any of the terms or conditions of such contract, or in
any other manner whatever. (Emphasis supplied) Section 626.9541(1) F.S.
The evidence shows that Respondent discriminated against all eight customers on the basis of their ability--or rather, lack of ability--to pay, but Respondent's specific practice of requiring the purchase of ancillary products is not the type of discrimination that is statutorily precluded.
Respondent's discrimination was across the board against all customers as to price versus terms and was not directed at persons within the same actuarially supportable class and hazard. Respondent is not guilty under Section 626.9541(1) (g)2. F.S.
Respondent is also charged with a refusal to insure for failure to purchase ancillary products. See, Section 626.9541(1)(x)4. F.S.
Respondent claims that he refused to finance insurance premiums unless ancillary products were purchased, but that he did not refuse to insure unless ancillary products were purchased.
If this technicality prevents Respondent from being held accountable for refusing to insure, he might appropriately fall in the more egregious category of one who has used his license to circumvent the insurance code. See, Section 626.611(4) F.S. However, a single transaction that simultaneously violates several statutes does not permit discipline to be aggregated as though several unlawful transactions took place. Instead, the discipline should be derived from the statute that most particularly describes the unlawful transaction. See, Department of Insurance and Treasurer v. Dillingham, DOAH Case No. 93-5393 (Recommended Order entered May 25, 1994; Final Order entered September 2, 1994). In this case, that statute is Section 626.9541(1)(x)4. F.S. It is therefore concluded that Respondent is guilty on eight counts of refusing to insure. Of peripheral interest, see the agency's position in Hughes v. Professional Insurance Corporation, 140 So. 2d 340 (Fla. 1st DCA 1962).
In mitigation thereof is Respondent's unrefuted testimony that he sought instruction from DOI prior to the offenses, and that the refusal to finance concept appears to be one of first impression.
Respondent's disingenuousness with regard to the misrepresentations on his receipts and the inconsistencies and discrepancies among those receipts and his insurance applications, financing agreements, and coverage summaries/cost breakdowns also render him guilty of eight counts of showing himself detrimental to the public interest under Section 626.621(6) F.S.
The fact that customers signed disclosures without reading them does not help Respondent here. The disclosure that ancillary products were being sold at a charge in addition to automobile insurance was clear and unambiguous. The disclosures of costs, monies paid, and what purpose some monies already paid were being applied to were not clear and unambiguous. Some customers' cost breakdowns misrepresented items. The receipts misrepresented and confused what was occurring. In one instance, the cost breakdown and acknowledgment did not match as to content of ancillary service or cost thereof. Most of the customers would not have been able to discern which amounts were assigned to each part of the transaction even if they had read the documents, although with diligence, most could have figured out the total amount they were paying for the ancillary product. There also were misrepresentations in the use of the wrong auto club name on the acknowledgment and club forms and other fast and loose treatments of the truth with regard to explaining to customers what benefits constituted the
38 auto club benefit options and with transmitting the auto club forms. Respondent's insurance agent's fiduciary relationship with his customers was used in the promotion of the ancillary sales, so his omissions and commissions within those club sales works to his discredit here. Respondent misused the word "premium" in order to coerce customers when attempting to collect insurance premiums and/or auto club fees.
In concluding that there were eight violations under Section 626.621(6) F.S. instead of under some of the other similar statutes also charged which carry a more stringent penalty, the undersigned has considered that no actual misappropriation of monies occurred, that most of the misrepresentations were more in the nature of failures to communicate when agreed amounts would be deducted than in the nature of deliberate falsehood, that Respondent devised forms intended to communicate correctly even when they did not, and that many acts were strictly in relation to the ancillary products, not the sale of insurance.
In considering penalty, the guidelines established by agency rule have been considered. In aggravation and mitigation, the following has been specifically considered: whether the Respondent was actively involved or as a licensed agent was merely responsible for his employees; to what extent Respondent profited by his violations; the first impression nature of this case; and Respondent's attempts to get guidance from DOI. Upon all these considerations, thirteen months' suspension of license is appropriate.
Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Insurance enter a final order suspending Respondent's licenses for thirteen months for eight violations of Section 626.9541(1)(x)4. and eight violations of Section 626.621(6) F.S.
RECOMMENDED this 4th day of April, 1995, at Tallahassee, Florida.
ELLA JANE P. DAVIS
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 4th day of April, 1995.
APPENDIX TO RECOMMENDED ORDER 93-5436
The following constitute specific rulings, pursuant to Section 120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF).
Petitioner's PFOF:
1-5 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
6-7 Rejected as not proven.
8-10 Subordinate to the facts as found.
11-15 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer counts.
Subordinate to the facts as found.
Rejected as a conclusion of law
19-29 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
30-31 Subordinate to the facts as found.
32 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count.
33-38 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count.
Rejected as a conclusion of law.
43-47 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
48 The first sentence is rejected as a conclusion of law. The second sentence is accepted,.
49-50 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
51 Accepted as covered in FOF 18.
52-53 Subordinate to the facts as found.
54-55 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
56 Rejected in part as a conclusion of law. The remainder is covered in substance.
57-59 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
60 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
61-62 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
63 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
64-71 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
72 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
73-74 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Rejected in part as a conclusion of law. Otherwise accepted.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
78-79 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 66-68.
80-83 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
86-87 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 20,24, 72-76.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
90-95 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Rejected because not proven as stated.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
98-99 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
100-102 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Rejected as a conclusion of law.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
106-111 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Rejected as a conclusion of law.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
117-118 Rejected in part and accepted in part as covered in FOF 90-91. 119-124 Accepted in substance, except that unnecessary, subordinate
and/or cumulative material has not been utilized.
Rejected as misstating the primary party.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 123 and respective customer count.
128-130 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Rejected as a conclusion of law.
133-138 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
139 Rejected as contrary to the record as a whole.
140-145 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
146-147 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
148-150 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count.
Rejected as a conclusion of law.
153-157 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
158 Rejected as a conclusion of law.
159-162 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.
Respondent's PFOF:
1-18 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded.
19-20 Rejected because misleading and non-dispositive as stated. See FOF 17-20.
21 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded.
22-25 Unnecessary.
Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded.
Immaterial
28-37 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded.
38 Accepted but not dispositive
39-42 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded.
43 Rejected as not proven.
44-103 Accepted in substance, except that unnecessary, subordinate, and/or cumulative material has not been utilized, and some further explanation has been added. Some matters have been considered on the issue of credibility but not incorporated.
104 Rejected because not proven as stated.
105-108 Covered only as necessary in FOF 23-24
109-112 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. The primary party has been indicated.
113-124 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, and as stating a conclusion of law.
125-128 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded.
129-133 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, an as stating a conclusion of law.
134-137 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded.
COPIES FURNISHED:
Michael K. McCormick, Esquire David D. Hershel, Esquire Daniel T. Gross, Esquire Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
Robert S. Cohen, Esquire Post Office Box 10095 Tallahassee, Florida 32302
Bill O'Neil, Esquire
Department of Insurance and Treasurer The Capitol, PL-11
Tallahassee, Florida 32399-0300
Bill Nelson
State Treasurer and Insurance Commissioner The Capitol, Plaza Level
Tallahassee, Florida 32399
Dan Sumner
Department of Insurance and Treasurer 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 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
=================================================================
THE TREASURER STATE OF FLORIDA DEPARTMENT OF INSURANCE
IN THE MATTER OF: DEPT. CASE NO.: 93-L-432DDH KENNETH MICHAEL WHITAKER DOAH CASE NO.: 93-5436
/
FINAL ORDER
THIS CAUSE came on before the undersigned Treasurer and Insurance Commissioner of the State of Florida for consideration and final agency action. On August 24, 1993, an Administrative Complaint was filed against the Respondent, Kenneth Michael Whitaker, charging him with multiple violations of the Florida Insurance Code. The Respondent timely filed a request for a formal proceeding pursuant to Section 120.57, Florida Statutes. Pursuant to notice, a formal hearing was held on November 18 and 21, 1994, in Tallahassee, Florida, before the Honorable Ella Jane P. Davis, a duly appointed Hearing Officer of the Division of Administrative Hearings.
After consideration of the evidence, argument and testimony presented at hearing, and subsequent written submissions by the parties, the Hearing Officer issued her Recommended Order, attached as Exhibit A, on April 4, 1995. The Hearing Officer recommended that the Insurance Commissioner enter a Final Order suspending the Respondent's insurance licenses for a period of 13 months, based upon her finding that the Respondent was guilty of eight (8) violations of Section 626.9541(1)(x)4., and eight (8) violations of Section 626.621(6), Fla. Stat. On April 14, 1995, both the Petitioner and the Respondent filed exceptions to the Recommended Order. Based upon a complete review of the record, including the original charging document, the transcript and evidence adduced at the formal hearing, the Recommended Order and all exceptions thereto, and the relevant statutes, rules and case law, I find as follows:
RULINGS ON PETITIONER'S EXCEPTIONS TO RECOMMENDED ORDER
The Petitioner first excepts to the Hearing Officer's failure to conclude that the Respondent is guilty of eight (8) counts of violating Section 627.9521, Fla. Stat. The Petitioner contends that because the Hearing Officer found that the Respondent was guilty of eight (8) counts of violating Section 626.9541(1)(x)4., Fla. Stat., then, by necessity, the Respondent is also guilty of eight (8) counts of violating Section 626.9521, Fla. Stat. The propriety of the Hearing Officer's conclusion that the Respondent is guilty of eight (8), as opposed to four (4), counts of violating Section 626.9541(1)(x)4., Fla. Stat., is discussed below in Paragraphs 3. and 4. of the Rulings on Respondent's Exceptions to Recommended Order. With respect to the Petitioner's contention that a violation of Section 626.9541(1)(x)4., Fla. Stat., is, by necessity, also a violation of Section 626.9521, Fla. Stat., the Petitioner's exception is accepted for the following reasons.
Section 626.9521, Fla. Stat., states, in pertinent part:
626.9521. Unfair methods of competition and unfair or deceptive acts or practices prohibited; penalties
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.
Any person who violates any provision of this part shall be subject to a fine in an amount not greater than $2,500 for each nonwillful violation and not greater than $20,000 for each willful violation. Fines under this subsection may not exceed an aggregate amount of $10,000 for all nonwillful violations arising out of the same action or an aggregate amount of $100,000 for all willful violations arising out of the same action.
The fines authorized by this subsection may be imposed in addition to any other applicable penalty.
From a reading of the above-quoted statutory section, it is clear that such section does not internally define what constitutes an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. Rather, such unlawful conduct is specifically defined in Section 626.9541. Consequently, the Hearing Officer's conclusion that the Respondent engaged in the unlawful activity defined in Section 626.9541(1)(x)4. necessarily means that the Respondent also violated Section 626.9521, Fla. Stat., which prohibits such activity. As discussed in Paragraphs 3. and 4. of the Rulings on Respondent's Exceptions to Recommended Order, it is concluded that, because the Respondent was charged with violating only four (4) counts of section 626.9541(1)(x)4., Fla. Stat., the Respondent is thus guilty of violating only four (4) counts of Section 626.9521, as opposed to eight (8) counts.
The Petitioner next excepts to the Hearing Officer's failure to recommend that the Insurance Commissioner enter a Final Order imposing the penalties mandated by Section 626.9521(2), Fla. Stat. For the reasons expressed in the preceding paragraph, the Petitioner's exception is accepted.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(z)3., Fla. Stat., which prohibits the sale of a specific ancillary coverage or product, in addition to the cost of the motor vehicle insurance coverage applied for, without the informed consent of the applicant. In her Recommended Order, the Hearing Officer found that each and every consumer named in the Administrative Complaint knew that they were purchasing an automobile club product in conjunction with the insurance coverages that they had applied for, and that each and every consumer had signed an acknowledgement form to that effect. Despite such finding, the Hearing Officer further found that the automobile club product sold to the respective consumers contained thirty-eight (38) separate and distinct benefit levels and that "[e]ach of the benefit levels was an option which should have been discussed with and knowingly accepted by the customer." These findings are necessarily contradictory. In determining whether the Respondent is also guilty of violating Section 626.9541(1)(z)3., Fla. Stat., one must focus on the operative language contained in such section, which is that a
customer must give his or her "informed consent" to the purchase of an ancillary coverage or product. Black's Law Dictionary, Abridged Sixth Edition (1991) defines informed consent as:
A person's agreement to allow something to happen (such as surgery) that is based on a full disclosure of facts needed to make the decision intelligently; i.e., knowledge of risks involved, alternatives, etc.
Informed consent is thus distinguishable from the mere mutuality of assent necessary to the formation of a valid contract. Generally, to be enforceable, an agreement must be sufficiently specific, and reflect assent by the parties to all essential terms. Suggs v. Defranco's, Inc. 626 So.2d 1100 (Fla. 1st DCA 1993). In this case, many of the consumers named in the Administrative Complaint testified at the formal hearing that they did not read the auto club acknowledgement forms which they had signed. Such failure, in and of itself, does not constitute sufficient grounds for the rescission of the contract to procure the motor club. As a matter of law, a party who voluntarily executes a document knowing it is intended to establish a contractual relationship between the parties but without reading it is bound by its terms in the absence of coercion, duress, fraud in the inducement or some independent ground justifying rescission. Merrill Lynch v. Benton, 467 So.2d 311 (Fla. 5th DCA 1995).
However, in the context of the sale of insurance products, the Legislature, through the enactment of Section 626.9541(1)(z)3., Fla. Stat., has mandated a further requirement that ancillary products shall not be sold without the consumer's "informed consent." Florida courts have not yet interpreted the meaning of "informed consent" as that term is used in Section 626.9541(1)(z)3., Fla. Stat. Informed consent has been defined in other contexts, however, particularly in the context of the physician-patient relationship. In this relationship, a patient must give his or her informed consent to the doctor's performance of a particular medical procedure. In such situations, although a physician is not required to disclose mere conjecture or speculation about a patient's condition, the fact that the doctor occupies a position of trust with the patient gives rise to an affirmative duty to disclose to the patient those facts which the doctor knows or, through efficient diagnosis, should know.
Bogorff by and through Bogorff v. Koch, 547 So.2d 1223 (Fla. 3rd DCA 1989), jurisdiction accepted; University of Miami v. Bogorff, 559 So.2d 581, jurisdiction accepted, Lederle Laboratories v. Bogorff, 559 So.2d 581, quashed, 583 So.2d 1000.
In this case, the Hearing Officer specifically found that the Respondent had utilized applications for automobile club memberships with the name of the wrong automobile club on them; that the automobile club acknowledgement forms also contained the name of the wrong automobile association on them; and that the use of such improper forms "constituted a misrepresentation, deceptive to the customer on several levels." The Hearing Officer further concluded that in addition to the misrepresentations made by the Respondent with regard to the use of the wrong automobile club application and acknowledgement forms, the Respondent also engaged in "fast and loose treatments of the truth with regard to explaining to customers what benefits constituted the 38 auto club benefit options and with transmitting the auto club forms". The Hearing Officer also found that the 38 different auto club benefit options were never offered in their entirety to each customers Finally, the Hearing Officer concluded that the Respondent used his insurance agent's fiduciary relationship with his customers to promote the sale of automobile clubs. Consequently, because the Respondent did not fully and fairly disclose the material facts regarding the automobile club benefits and the corresponding costs associated with such
benefits, so as to allow the consumers named in the Administrative Complaint to make an intelligent decision regarding the purchase of such product, such consumers were completely unable to make an "informed" decision regarding the purchase of the products. For these reasons, the Petitioner's exception is accepted. However, although each and every consumer named in the Administrative Complaint was sold an ancillary product without their informed consent, a violation of Section 626.9541(1)(z)3., Fla. Stat., was only charged in Counts IV, VI and VIII of the Administrative Complaint. Accordingly, the Respondent is guilty of three (3) counts of violating Section 626.9541(1)(z)3. and three (3) counts of violating Section 626.9521, Fla. Stat. See Paragraph 1., above.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Sections 626.611 (5), (9); 626.621(6); 626.9521; 626.9541(1)(b), (e), and (k) 1., Fla. Stat. As a basis for its exception, the Petitioner notes that the Hearing Officer found that the use of the wrong motor club application and acknowledgement forms constituted a misrepresentation and a deceptive act; that the Respondent's misuse of the word "premium" on the receipts provided to the consumers named in the Administrative Complaint was deceptive and misleading; that the "[r)espondent's deductions of all or part of the ancillary product fee up front resulted in false statements on other documents..."; and that the completed summary of coverages and cost break down forms completed by the Respondent were misleading and did not adequately explain what amounts were being charged for the various products, including insurance coverage, purchased by the consumer. Finally, the Petitioner notes that the Hearing Officer found that the Respondent's cancellation letter sent to David K. Register, as alleged in Count I of the Administrative Complaint, was misleading and had the effect of threatening Mr. Register with the cancellation of his automobile insurance policy for nonpayment of the ancillary product fee.
Section 626.611(5), Fla. Stat., provides for the compulsory suspension or revocation of an agent's license upon a finding that such agent willfully misrepresented any insurance policy or annuity contract or engaged in willful deception with regard to any such policy or contract, done either in person or by any form or dissemination of information or advertising. In ruling on this exception, it is noted that all deceptive or misleading acts and/or misrepresentations made by the Respondent, as found by the Hearing Officer in her Recommended Order, pertained to the automobile club application, acknowledgement and financing forms and the receipts provided to the respective consumers, and not to any insurance policy sold by the Respondent. As the Hearing Officer could reasonably find that there was not a willful misrepresentation or willful deception with regard to an insurance policy or annuity contract, the Petitioner's exception to the Hearing Officer's failure to conclude that the Respondent violated Section 626.611(5), Fla. Stat., is rejected.
Section 626.611(9), Fla. Stat., provides for the compulsory suspension or refusal of an agent's license upon a finding that such agent has engaged in fraudulent or dishonest practices in the conduct of business under the license or appointment. For the reasons expressed above, as well as the reasons expressed in this paragraph, the Petitioner's exception is accepted. The Hearing Officer made several conclusions regarding the Respondent's standard business practice that are properly characterized as dishonest. First, the Hearing Officer concluded that the Respondent's misuse of the term "premium" was a practice that led some customers to falsely believe that their deposits against both auto club or death and dismemberment policies and insurance coverage were down-payments on the insurance policies alone. Second, the
Hearing Officer concluded that the Respondent's standard business practice of combining the costs of insurance coverages with the costs of the auto club memberships and then calling such costs "total premium" on receipts issued to customers constituted a misrepresentation and was deceptive. Third, the Hearing Officer concluded that the Respondent's standard business practice of deducting all or part of the ancillary product fee up front resulted in false statements on other documents that the full down-payment for premium or financing of premium had been made, when in actuality it had not. Consequently, Petitioner's exception to the Hearing Officer's failure to conclude that the Respondent also violated Section 626.611(9), Fla. Stat., is accepted. As all eight consumers named in the Administrative Complaint were subjected to the Respondent's above- described dishonest business practices, the Respondent is guilty of eight (8) counts of violating Section 626.611(9), Fla. Stat.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.621(6), Fla. Stat. Because the Hearing Officer in her Recommended Order did find that the Respondent was guilty of eight (8) counts of violating Section 626.621(6), Fla. Stat., by showing himself to be detrimental to the public interest, the Petitioner's exception is rejected.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9521, Fla. Stat. This exception is accepted for the reasons stated in Paragraph 1., above.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(b), Fla. Stat., which prohibits the publishing, disseminating, circulating, or placing before the public an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading. Because the Hearing Officer could properly find that the precise content of the Respondent's advertising was not in evidence, and therefore that unfair, misleading, or deceptive advertising had not been adequately proven by competent, substantial evidence, the Petitioner's exception is rejected.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(e), Fla. Stat., which prohibits knowingly making, publishing, disseminating, circulating, delivering to any person, or-placing before the public any false material statement. As found by the Hearing Officer in her Recommended Order, both the summary of coverages and cost breakdown forms prepared by the Respondent were misleading, as were the auto club application and acknowledgement forms. Furthermore, the Hearing Officer found that the Respondent's deduction of all or part of the ancillary product fee up-front resulted in false statements on other documents that the full down-payment for premium or financing of premium had been made when, in actuality, it had not. Despite these specific findings of fact, the Hearing Officer, in Paragraph 146. of her Recommended Order, stated that the Respondent had not acted in a "deliberate" fashion, and had "intended" for the false statements to "communicate correctly even when they did not." Such considerations, as they are characterized by the Hearing Officer, belie the factual findings that she made which establish a comprehensive pattern of deception by the Respondent, and are unsupported by competent, substantial evidence.
The plain language of Section 626.9541(1)(e), Fla. Stat., prohibits knowingly making any false material statement. There is competent, substantial evidence to support the Hearing Officer's factual finding that the Respondent knowingly prepared auto club applications and acknowledgement forms with the name of the wrong automobile club on them. There is also competent, substantial evidence to support the Hearing Officer's factual finding that the Respondent knowingly misused the term "premium" on the summary of coverages and cost breakdown forms. For the purposes of Section 626.9541(1)(e), Fla. Stat., it is irrelevant whether the Respondent "intended" for the false statements to confuse or mislead the consumers; it matters only that he knowingly prepared and disseminated the false statements. Because the Hearing Officer specifically found that the Respondent prepared false and misleading statements, as previously described, the Petitioner's exception to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(b), Fla.
Stat., is accepted. Because the Respondent delivered a false material statement or statements to each consumer named in the Administrative Complaint, the Respondent is thus guilty of eight (8) counts of violating Section 626.9541(1)(e) and eight (8) counts of violating Section 626.9521, Fla. Stat.
See Paragraph 1., above.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(k)l., Fla. Stat., which prohibits knowingly making a false or fraudulent statement or representation on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurer, agent, broker, or individual. Because the false, deceptive and/or misleading statements made by the Respondent in this case, as found by the Hearing Officer in her Recommended Order, did not pertain to an insurance policy but rather to an application for the purchase and financing of an ancillary product, i.e., an automobile motor club, the Petitioner's exception to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(k)1., Fla. Stat., is rejected.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.611(7), Fla. Stat., which provides for the compulsory suspension or revocation of an agent's insurance licenses upon the agent's demonstrated lack of fitness or trustworthiness to engage in the business of insurance. Based upon the findings of fact made by the Hearing Officer, as set forth in her Recommended Order, the Petitioner's exception to the Hearing Officer's failure to conclude that the Respondent violated Section 626.611(7), Fla. Stat., is accepted. The Respondent's lack of fitness and trustworthiness to engage in the business of insurance in this state was demonstrated by his standard business practices of: (1) withholding a portion of a customer's down-payment, applying such amount toward the cost of an ancillary product, and then referring to the balance owed for such product as an additional down-payment; (2) threatening to cancel customers' insurance policies or coverages if they failed to remit the balance owed for such ancillary products; and (3) the other dishonest business practices cited to in Paragraph 4.B., above. The Respondent's lack of fitness and trustworthiness to engage in the business of insurance in this state is also specifically demonstrated by his failure to forward Mr. Register's car photos to the insurer, as well as his refusal to provide Ms. Hawks with a copy of her insurance policy. As all eight consumers named in the Administrative Complaint were subjected to the Respondent's aforementioned dishonest business practices, the Respondent is guilty of eight (8) counts of violating Section 626.611(7), Fla. Stat.
The Petitioner next excepts to the Hearing Officer's failure to conclude that the Respondent violated Section 626.9541(1)(g)2., Fla. Stat., which prohibits knowingly making or permitting any unfair discrimination between individuals of the same actuarially supportable class in the amount of premium, policy fees, or rates charged for any policy or contract of accident, disability, or health insurance. Because the Respondent's unlawful conduct found by the Hearing Officer, as set forth in her Recommended Order, is not in relation to any accident, disability, or health insurance, the Petitioner's exception is rejected.
The Petitioner next excepts to the Hearing Officer's finding, as a mitigating factor, that the Respondent met with the Department on two separate occasions to discuss the optional insurance coverages. The Petitioner states that the record is silent as to what guidance or other representations may have been made by the Department in these discussions. Because the record does not contain competent, substantial evidence regarding the content of any discussion between Department personnel and the Respondent, the Petitioner's exception to the Hearing Officer's aforementioned finding is accepted.
Finally, the Petitioner excepts to the Hearing Officer's recommendation that the Insurance Commissioner enter a Final Order suspending the Respondent's insurance licenses for a period of thirteen (13) months. To the extent that the Hearing Officer's recommended penalty is inconsistent with the penalty imposed herein, as set forth below, the Petitioner's exception to the Hearing Officer's recommendation is accepted.
RULINGS ON RESPONDENT'S EXCEPTIONS TO RECOMMENDED ORDER
No ruling necessary, as this paragraph is merely a correct recitation of one of the Hearing Officer's conclusions and corresponding recommendation.
No ruling necessary, as this paragraph is merely a recitation of Section 626.9541(1)(x)4., Fla. Stat.
No ruling necessary. It is acknowledged that the Respondent was charged with only four (4) counts of violating Section 626.9541(1)(x)4., Fla. Stat.
The Respondent excepts to the Hearing Officer's conclusion that he violated Section 626.9541(1)(x)4., Fla. Stat., as it applies to Counts II, IV, VI, and VII. Because the Respondent was not charged with violating Section 626.9541(1)(x)4., Fla. Stat., in Counts II, IV, VI, and VII, the Respondent's exception is accepted.
The Respondent next excepts to the Hearing Officer's apparent failure to address the purported distinction between the refusal to finance insurance premiums and the refusal to insure. In her Recommended Order, the Hearing Officer specifically found that unless a customer purchased an ancillary product from the Respondent, the Respondent refused to finance the customers' insurance premiums unless they made at least a 50 percent down payment or paid in full. The Hearing Officer concluded, as a matter of law, that such conduct constituted a refusal to insure under Section 626.9541(1)(x)4., Fla. Stat.
The Respondent contends that there is a distinction between the refusal to insure and the refusal to finance insurance premiums for an individual who cannot pay in full or make at least a 50 percent down-payment on the insurance coverages purchased. Despite the Respondent's contention that there is a
difference between these two concepts, the end result of the Respondent's refusal to finance insurance premiums, unless an individual has agreed to purchase non-insurance services or commodities (automobile clubs), is that the individual is unable to procure insurance coverage. Consequently, in the instant case, the Respondent's refusal to finance insurance premiums is equivalent to a refusal to insure, as proscribed by Section 626.9541(1)(x)4., Fla. Stat. It is axiomatic that a regulatory agency's construction of a statute that it is required to enforce is entitled to great weight and will not be overturned unless it is clearly erroneous. Gay v. Canada Dry Bottling Co., 59 So.2d 788, 790 (Fla. 1952); Department of Revenue v. First Union National Bank of Florida, 513 So.2d 114 (Fla. 1987); and Escambia County v. Trans Pac, 584 So.2d 603 (Fla. 1st DCA 1991). The Department's interpretation of Section 626.9541(1)(x)4., Fla. Stat., is reasonable and well within the range of permissible constructions. Although the Respondent refused to insure each consumer named in the Administrative Complaint unless they purchased an ancillary product, the Respondent was only charged with violating Section 626.9541(1)(x)4., Fla. Stat., in Counts II, IV, VI and VII. Accordingly, the Respondent is guilty of violating only four (4) counts of Section 626.9541(1)(x)4., rather than eight (8) counts.
See Ruling on Respondent's Exception to Recommended Order No. 5, above.
See Ruling on Respondent's Exception to Recommended Order No. 5., above.
See Ruling on Respondent's Exception to Recommended Order No. 5., above.
To the extent that the Respondent has commented on the proper construction to be afforded penal statutes such as Section 626.9581, Fla. Stat., such exception is accepted.
To the extent that the Respondent is commenting upon the requisite knowledge necessary to warrant the suspension or revocation of a person's license for violating Section 626.9541, Fla. Stat., as set forth in subsection
(1) of said section, the Respondent's exception is accepted.
The Respondent next excepts to the Hearing Officer's reliance on the penalty guidelines set forth in Rule 4-231.100, Florida Administrative Code, stating that such guidelines "improperly omit the `knowledge' determination required by Section 626.9581, Fla. Stat., in order for the Department to suspend a license for violation of Section 626.9541." The Respondent's exception is rejected for the following reasons. There is competent, substantial evidence in the record to support a finding that the Respondent knew or reasonably should have known that his refusal to finance premiums was tantamount to a refusal to insure, and therefore a violation of Section 626.9541(1)(x)4., Fla. Stat. In addition, Rule 4-231.100, F.A.C., implements Section 626.9541(1), Fla. Stat., and therefore necessarily and implicitly incorporates the knowledge requirement prescribed in the latter.
The Respondent's exception is rejected for the reasons expressed in the preceding paragraph.
No ruling necessary, as this paragraph is merely a recitation of Section 626.621(6), Fla. Stat.
The Respondent's assertion that he was found to have violated Section 626.621(6), Fla. Stat., by showing himself to be "detrimental to the public interest," is a correct recitation of a Conclusion of Law made by the Hearing Officer. The Respondent's assertion that the term "detrimental to the public interest" is ambiguous, is rejected. In Thomas v. Department of Insurance and Treasurer, 559 So.2d 419 (Fla. 2d DCA 1990), the court specifically dealt with a case in which two insurance agents were found to be transacting insurance in a manner "detrimental to the public interest," as contemplated by Section 626.621(6), Fla. Stat. The Thomas court upheld the suspension of the agents' licenses, finding that the Department's "legal conclusions are based upon a correct interpretation of the applicable statutes. .. [and) are supported by substantial competent evidence." Id. at 421. Accordingly, based upon the authority expressed in Thomas, the Respondent's exception is rejected.
The Respondent next excepts to the Hearing Officer's conclusion that he is guilty of eight (8) counts of violating Section 626.621(6), Fla. Stat., contending that such finding is not predicated upon Respondent's violation of any substantive statute. As stated, the record contains ample competent, substantial evidence to support the Hearing Officer's determination that the Respondent's actions were detrimental to the public interest. Accordingly, the Respondent's exception is rejected.
To the extent that the Respondent has commented on the applicable law regarding statutory vagueness, such exception is accepted. However, if the Respondent is asserting that Section 626.621(6), Fla. Stat., is void for vagueness, such assertion is rejected on the grounds set forth in Paragraph 14., above.
To the extent that the Respondent has commented on the applicable law regarding statutory vagueness, such exception is accepted. However, if the Respondent is asserting that Section 626.621(6), Fla. Stat., is void for vagueness, such assertion is rejected on the grounds set forth in Paragraph 14., above.
The Respondent next excepts to the Hearing Officer's conclusion that his actions were detrimental to the public interest, claiming that such conclusion was not based upon any particular action but rather upon the Hearing Officer's perception of his demeanor. The Respondent incorrectly asserts that the Hearing Officer, in finding the Respondent to be disingenuous, is referring to his demeanor. In her Recommended Order, the Hearing Officer specifically states in Paragraph 144. that the Respondent's disingenuousness resulted from the "misrepresentations on his receipts and the inconsistencies and discrepancies among those receipts and his insurance applications, financing agreements, and coverage summaries/cost breakdowns." The Hearing Officer did not refer to specific instances of misconduct in Paragraph 144., they are explained in detail in her Findings of Fact. The Hearing Officer's conclusion that the Respondent had shown himself to be "detrimental to the public interest" was based upon her determination that the Respondent violated, in separate, distinct actions, Section 626.621(6), Fla. Stat. However, had the Hearing Officer relied upon the Respondent's demeanor during his testimony, such reliance is within the province of the Hearing Officer, and her determination of the Respondent's credibility is entitled to great weight. Department of Professional Regulation
v. Waner, 405 So.2d 471, 473 (Fla. 1st DCA 1981); Wash & Dry Vending Co. v. State Department of Business Regulation, 429 So.2d 790, 792 (Fla. 3d DCA 1983). Accordingly, the Respondent's exception is rejected.
No ruling necessary, as this paragraph merely paraphrases the considerations made by the Hearing Officer in Paragraph 146. of her Recommended Order.
The Respondent next asserts that the Hearing Officer's conclusions only amounted to a determination that the Respondent had "failed to adequately communicate with eight (8) individuals." Such assertion is unsupported by competent, substantial evidence, and contradicts the explicit Findings of Fact made by the Hearing Officer. Despite the mitigating factors considered by the Hearing Officer, as set forth in Paragraph 146. of her Recommended Order, the Hearing Officer also found that the Respondent prepared false and misleading automobile club application and acknowledgement forms and acted in a disingenuous manner with regard to the misrepresentations on his receipts and the inconsistencies and discrepancies among those receipts and his insurance applications, financing agreements, and summary of coverage and cost breakdown forms. Further, in Paragraph 4.F. above, the Respondent's above mentioned actions were determined to have been made knowingly. Therefore, the Respondent's assertion is rejected. Additionally, the Respondent asserts that the Hearing Officer found him to be detrimental to the public interest solely because he was "disingenuous about the matter." It should be noted that Roget's II: The New Thesaurus (1980), defines "disingenuous" as:
Marked by treachery or deceit; insincere.
Clearly, when determining whether the Respondent has shown himself to be "detrimental to the public interest," a finding by the Hearing Officer that the Respondent acted in an insincere or deceitful manner constitutes a more than adequate basis for discipline. There is competent, substantial evidence in the record which shows that the Respondent acted in a disingenuous manner.
Consequently, the Respondent's assertion is rejected.
The Respondent next asserts that the public interest standard applied by the Hearing Officer is entirely subjective and devoid of all objective guidelines, thereby violating the Respondent's right to due process of law under both the Florida and the United States Constitutions.
As stated in Paragraph 14., above, agent discipline pursuant to the public interest standard was imposed by the Department and upheld by the Second District Court of Appeal in Thomas, supra. Additionally, agencies are afforded wide discretion in the interpretation of a statute which they administer and will not be overturned on appeal unless clearly erroneous. Natelson v.
Department of Insurance, 454 So.2d 31, 32 (Fla. 1st DCA 1984); Paisley v.
Department of Insurance, 526 So.2d 167, 169 (Fla. 1st DCA 1988). Accordingly, the Respondent's assertion is rejected.
RULING ON PETITIONER'S EXCEPTION TO RECOMMENDATION
Based upon the Rulings on Petitioners' Exceptions to Recommended Order, the Petitioner's Exception to the Hearing Officer's Recommendation is accepted. The justification for the Department's departure from the Hearing Officer's recommended penalty in this matter is set forth in the final disposition below.
RULING ON RESPONDENT'S EXCEPTION TO RECOMMENDATION
Based upon the Rulings on Respondent's Exceptions to Recommended Order, as well as on the Rulings on Petitioner's Exceptions to Recommended Order, the Respondent's Exception to the Hearing Officer's Recommendation is rejected. The
justification for this ruling is set forth in the final disposition of this matter below.
IT IS THEREFORE ORDERED:
The Findings of Fact of the Hearing Officer are adopted as the Department's Findings of Fact.
The Conclusions of Law of the Hearing Officer are adopted as the Department's Conclusions of Law with the exceptions and additions noted above. Specifically, it is concluded, as a matter of law, that the Respondent has violated the following provisions of the Florida Insurance Code:
Four (4) counts of violating Section 626.9541(1)(x)4., Fla. Stat.;
Three (3) counts of violating Section 626.9541(1)(z)3., Fla. Stat.;
Eight (8) counts of violating Section 626.611(9), Fla. Stat.;
Eight (8) counts of violating Section 626.621(6), Fla. Stat.;
Eight (8) counts of violating Section 626.9541(1)(e), Fla. Stat.;
Eight (8) counts of violating Section 626.611(7), Fla. Stat.; and
Fifteen (15) counts of violating Section 626.9521, Fla. Stat.
The Hearing Officer's recommendation that the Respondent's insurance licenses be suspended for a period of thirteen (13) months is rejected. Pursuant to the penalty guidelines set forth in Rule 4-231, F.A.C., revocation of the Respondent's insurance licenses is the appropriate penalty to be imposed in this matter. In rejecting the Hearing Officer's recommended penalty in this case, the Department is aware of its duty to comply with the provisions of
Section 120.57(1)(b)(10), Fla. Stat., which prohibits an increase or decrease in the recommended penalty "without a review of the complete record and without stating with particularity its reasons therefor in the order, by citing to the record in justifying the action."
It should first be noted that the Hearing Officer's recommended penalty of a thirteen (13) month suspension of the Respondent's insurance licenses was based upon her determination that the Respondent was guilty of violating eight
counts of Section 626.9541(1)(x)4., and eight (8) counts of violating Section 626.621(6), Fla. Stat. As noted above, the Department accepted the Respondent's exception regarding the number of counts of Section 626.9541(1)(x)4. that he could properly be found guilty of, and therefore reduced the number of counts from eight (8) to four (4).
However, as specifically set forth in the Rulings on Petitioner's Exceptions to Recommended Order above, the Department has concluded, as a matter of law, that, in addition to the violations found by the Hearing Officer (as amended), the Respondent is also guilty of violating the following provisions of the Florida Insurance Code, to wit:
Three (3) counts of violating Section 626.9541(1)(z)3., Fla. Stat.;
Eight (8) counts of violating Section 626.611(9), Fla. Stat.;
Eight (8) counts of violating Section 626.9541(1)(e), Fla. Stat.;
Eight (8) counts of violating Section 626.611(7), Fla. Stat.; and
Fifteen (15) counts of violating Section 626.9521, Fla. Stat.
The Department's reasons for concluding that the Respondent violated these additional statutory sections are set forth in the body of this Order. Given the Respondent's egregious pattern of deceptive and misleading conduct in the transaction of insurance, as well as the sheer number of statutory violations of which the Respondent has been found guilty, the Department has determined that a revocation of the Respondent's insurance agent licenses is warranted and necessary to protect the insurance-buying public.
ACCORDINGLY, all licenses and eligibility for licensure held by the Respondent, KENNETH MICHAEL WHITAKER, are hereby REVOKED, pursuant to the provisions of Sections 626.611, 626.621, 626.641(2), and 626.651(1), Fla. Stat., effective the date of this Final Order. During the period of revocation, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or permit is required under the Florida Insurance Code, or directly or indirectly own, control or be employed in any manner by an insurance agent or agency.
Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110. Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a Notice of Appeal with the General Counsel, acting as the agency clerk, at 612 Larson Building, Tallahassee, Florida 32399-0333, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of the rendition of this Order.
DONE and ORDERED this 3rd day of July, 1995.
COPIES FURNISHED TO:
KENNETH MICHAEL WHITAKER
1319-A East Tennessee Street Tallahassee, Florida 32308
ROBERT S. COHEN, ESQUIRE
Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302
ELLA JANE P. DAVIS, HEARING OFFICER
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee. Florida 32399-1550
BILL NELSON
Treasurer and Insurance Commissioner
DAVID D. HERSHEL, ESQUIRE
Department of Insurance Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
=================================================================
DISTRICT COURT OPINION
=================================================================
IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA
KENNETH MICHAEL WHITAKER NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED.
vs. CASE NO. 95-2702
DOAH CASE NO. 93-5436
DEPARTMENT OF INSURANCE AND TREASURER,
Appellee.
/ Opinion filed June 13, 1996.
An appeal from an order of the Department of Insurance.
James T. Miller of Corse, Bell & Miller, P.A., Jacksonville, for appellant.
David D. Hershel and Michael H. Davidson, Department of Insurance, Tallahassee, for appellee.
KAHN, J.
Appellant Kenneth Michael Whitaker challenges an order of the Department of Insurance which revokes his insurance licenses.
Among the many issues he raises, Whitaker contends that the Department erred 1) in finding him guilty of failure to insure under section 626.9541(1)(x)4., Florida Statutes (Supp. 1992), and 2) in finding that his conduct was detrimental to the public interest in violation of section 626.621(6), Florida Statutes (Supp. 1992). Finding merit to these points, we reverse in part and remand for further proceedings.
Whitaker held licenses as a life agent, a life and health agent, and a general lines agent. He served as corporate president, director and registered agent of Emerald Coast Insurance Agencies, Inc. (Emerald Coast). Emerald Coast is a nonstandard automobile insurance agency which insures high risk drivers who
normally have a difficult time procuring insurance. The violations which led to this disciplinary proceeding arose from the day-to-day operations of Emerald Coast.
The record shows that when an Emerald Coast customer could not pay the necessary insurance premium, Emerald Coast required a down payment and made premium financing available for the balance. In these instances, however, Whitaker required the customer to purchase a motor club membership and/or a separate death and dismemberment policy. Whitaker received a 90 percent commission from Atlantic Travel Association of North Florida, Inc. for the motor club memberships and a similar commission from American Travelers Association for death and dismemberment contracts.
Whitaker and his employees obtained customers' signatures on various documents which listed the cost of the "ancillary product," and indicated that the motor club membership was optional. The customers in question testified they had not read the documents but instead relied upon the explanations of the salesmen. Some customers were not aware they had purchased an ancillary product, while others testified they believed it was all part of the financing agreement and were not aware of an additional fee.
Appellant used motor club contract forms from Emerald Coast's previous motor club, Atlantic Travelers Association, Inc., or forms listing the motor club as Atlantic Travelers Association. None of the motor club contract forms or acknowledgments used during the time in question listed the correct name, "Atlantic Travelers Association of North Florida, Inc."
The auto club contracts offered 38 different choices of benefit levels.
These options were largely unknown to Emerald Coast's customers, however, because the salesmen selected a benefit level at their discretion and did not disclose the various levels available. Several customers testified they would not have purchased a towing benefit if the options had been explained.
Appellant took all or part of the cost of the ancillary product from the required premium down payment and gave the consumer a receipt which listed the full down payment as "Total Premium." The receipt did not reveal that part of the "premium" went to purchase an ancillary product. The practice of deducting the cost of the ancillary product from the down payment often caused Whitaker to require customers to make an additional down payment on the actual premium. In some cases, appellant would send letters and make phone calls requiring immediate payment of the additional down payment that day or threatening to cancel the "policy".
The Insurance Commissioner filed a nine count administrative complaint charging Whitaker with 140 violations of Chapter 626, Florida Statutes. The hearing officer assigned to the case found eight violations of section 626.9541(1)(x)4., and eight violations of section 626.621(6). She recommended that the Commissioner enter a final order suspending appellant's licenses for 13 months.
The Insurance Commissioner adopted the hearing officer's findings of fact and conclusions with exceptions. The final order found four violations of section 626.9541(1)(x)4. (refusal to insure), three violations of section 626.9541(1)(z)3. (lack of informed consent for sale of ancillary product), eight violations each of sections 626.621(6)(unfair methods of competition or unfair or deceptive acts or practices), 626.611(7)(lack of fitness/trustworthiness) and 626.611(9)(fraudulent or dishonest practices under
license) and fifteen violations of section 626.9521 (unfair method of competition or unfair and deceptive act or practice). The Commissioner rejected the 13 month suspension in favor of revocation of appellant's insurance licenses. The purported violations of section 626.9541(1)(x)4. will not withstand our construction of the statute. The violations of section 626.621(6) must also fall because that statute is unconstitutionally vague.
Section 626.9541(1)(x)4., Florida Statutes (Supp. 1992), provides: 626.9541 Unfair methods of competition and
unfair or deceptive acts or practices defined. --
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:
(x) Refusal to Insure. - - In addition to other provisions of this code, the refusal to insure, or continue to insure, any individual because of:
4. The insured's or applicant's failure to purchase noninsurance services or commodities, including automobile services as defined in
s. 624.124. .
Appellant contends that the hearing officer and the Commissioner abused their discretion in interpreting section 626.9541(1)(x)4. to find "Respondent's refusal to finance insurance premiums is equivalent to a refusal to insure, as proscribed by section 626.9541(1)(x)4." Appellant argues and we find, that the statute is clear on its face. The phrase "refusal to insure" is unambiguous and must be given its plain meaning. See Martin County v. Edenfield, 609 So.2d 27 (Fla. 1992)(if a statute is clear and unambiguous, then a court should not construe the language of the statute); City of Jacksonville v. Nashid Properties, Inc., 636 So.2d 875 (Fla. 1st DCA 1994)(same). In plain terms the statute prohibits certain refusals to insure, but not refusals to finance.
Because the statute is penal in nature, it must be strictly construed with any doubt resolved in favor of the licensee. Taylor v. Department of Prof.
Reg., Bd. of Medicine, 534 So.2d 782, 784 (Fla. 1st DCA 1988); Elmariah v. Department of Prof. Reg., Bd. of Medicine, 574 So.2d 164, 165 (Fla. 1st DCA 1990)("Although it is generally held that an agency has wide discretion in interpreting a statute which it administers, this discretion is somewhat more limited where the statute being interpreted authorizes sanctions or penalties against a person's professional license. Statutes providing for revocation or suspension of a license to practice are deemed penal in nature and must be strictly construed, with any ambiguity interpreted in favor of the licensee."). Had the Legislature intended to include "refusal to finance" under this section, it could easily have done so. Section 626.9541(1)(x)4., however, fails to give notice that the practice of conditioning premium financing upon purchase of an ancillary product is a prohibited act. See Yes Dear, Inc. v. Department of Revenue, 523 So.2d 1235 (Fla. 1st DCA 1988). The violations of section 626.9541(1)(x)4. must be reversed.
Appellant also argues that because section 626.621(6) is unconstitutionally vague, the alleged violations under the statute may not stand. The enactment under review provides:
626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, adjuster's, customer representative's, service representative's managing general agent's, or claims investigator's license or appointment. -The department may, in its discretion, deny an application for, suspend, revoke or refusal to renew or continue the license or appoint- ment of any applicant, agent ... and it may suspend or revoke the eligibility to hold a license ... of any such person, if it finds that as to the applicant, licensee, or appointee 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:..
(6) In the conduct of business under the license or appointment, 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 hearing officer and the Commissioner found that appellant violated section 626.621(6) by "showing himself to be `detrimental to the public interest'" we must determine whether the phrase "detrimental to the public interest" is too vague to constitute notice of what acts it purports to prohibit. Such a level of notice is the minimum requirement of due process. See Papchristou v. City of Jacksonville, 405 U.S. 156, 92 S. Ct. 839, 31 L. Ed. 2d 110 (1972)(A reviewing court must find a statute unconstitutionally vague if the statute fails to give adequate notice or the requisite definite warning of what conduct is prohibited.).
The test for vagueness is whether the statutory language is sufficiently explicit to inform those who are subject to its provisions what conduct on their part will render them liable to its penalties and conveys a sufficiently definite warning of the proscribed conduct when measured by common understanding and practice. State v. Wershow, 343 So.2d 605, 609 (Fla. 1977); Cuda v. State, 639 So.2d 22 (Fla. 1994)(terms "improper" and "illegal" as used in statute making it a crime to financially exploit aged persons or disabled adults, were unconstitutionally vague). A court cannot amend a statute by construction in order to bring the statute within the fundamental law. Wershow, 343 So.2d at 607 A statute is not sufficiently definite if a person of common intelligence must speculate about the statute's meaning and be subject to penalty if the guess is wrong. Id. at 608; See also D'Alemberte v. Anderson, 349 So. 2d 164 (Fla. 1977)(statute which placed at stake the loss of livelihood and professional reputation, though noncommercial, must meet at least minimal constitutional standards for definiteness). Here, the phrase "detrimental to the public interest" is subject to many interpretations. Moreover, the meaning
of "public interest" is left to the fancy of the enforcing agency. We hold, therefore, that the language following the last "or" in section 626.621(6), Florida Statutes (Supp. 1992), offends due process.
We affirm the Commissioner's findings as to the other statutory violations except to the extent that some of those violations are based on violations of sections 626.9541(1)(x)4. or 626.621(6). As to the appropriate penalty, the Commissioner determined that revocation of appellant's insurance agent licenses was warranted in part due to the "sheer number of statutory violations." The number of violations will be less as a result of today's partial reversal. On remand the Commissioner must reconsider the penalty and should take into account section 626. 641 (1)(a), Florida Statutes (a suspension period shall not exceed two years), and Rule 4-231.040, Florida Administrative Code ("The Department is authorized to find multiple grounds exist under sections 626.611 and 626.621 for disciplinary actions against the licensee based upon a single count in an administrative complaint based upon a single act of misconduct by a licensee.
However, only the violation specifying the highest stated penalty will be considered for that count.").
Accordingly, we AFFIRM in part, REVERSE in part, and REMAND the matter to the Commissioner for proceedings consistent with this opinion.
BARFIELD, C.J., and ALLEN, J., CONCUR.
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AGENCY AMENDED FINAL ORDER
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THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE
IN THE MATTER OF: DOI CASE NO.: 93-L-432DDH KENNETH MICHAEL WHITAKER DOAH CASE NO.: 93-5436
/
AMENDED FINAL ORDER
THIS CAUSE came on before the undersigned Insurance Commissioner of the State of Florida, as agency head of the Florida Department of Insurance (hereinafter, the "Department"), for consideration and final agency action. On August 24, 1993, the Department filed an administrative complaint against the Respondent, Kenneth Michael Whitaker, charging him with multiple violations of the Florida Insurance Code. Pursuant to written notice, a formal hearing was held on November 18 and 21, 1994, in Tallahassee, Florida, before the Honorable Ella Jane P. Davis, a duly appointed Hearing Officer of the Division of Administrative Hearings.
On April 4, 1995, the Hearing Officer issued her Recommended Order in this matter, which is attached hereto as Exhibit "A". On July 3, 1995, the Department entered its Final Order, which is attached hereto as Exhibit "E".
The Respondent timely appealed the Department's Final Order to the First
District Court of Appeal. On June 13, 1996, the Court issued a written opinion affirming the Final Order in part and reversing it in part. The Court further remanded this matter to the undersigned for proceedings consistent with its opinion. This Amended Final Order is being entered, therefore, pursuant to and in accordance with the Court's June 13, 1996, opinion.
VIOLATIONS FOUND IN THE DEPARTMENT'S INITIAL FINAL ORDER
In its initial Final Order entered July 3, 1995, the Department found the Respondent, Kenneth Michael Whitaker, guilty of violating the following provisions of the Florida Insurance Code:
Four (4) counts of violating section 626.9541(1)(x)4., Florida Statutes;
Three (3) counts of violating section 626.9541(1)(z)3., Florida Statutes;
Eight (8) counts of violating section 626.9541(1)(e), Florida Statutes;
Eight (8) counts of violating section 626.621(6), Florida Statutes;
Eight (8) counts of violating section 626.611(7), Florida Statutes;
Eight (8) counts of violating section 626.611(9), Florida Statutes; and
Fifteen (15) counts of violating section 626.9521, Florida Statutes.
The Court acknowledged these findings on page 4 of its June 13, 1996, opinion, but with one apparent oversight. Upon close comparison of the above list of violations with the violations recited by the Court on page 4 of its opinion, one can see that the Court inadvertently failed to mention the eight
violations of section 626.9541(1)(e) found by the Department in its July 3, 1995, Final Order. This was clearly an oversight by the Court, as evidenced by the fact that the Court did not discuss - let alone overturn - such violations in its June 13, 1996, opinion.
THE COURT'S JUNE 13 1996 OPINION
In its opinion filed June 13, 1996, the Court reversed the Department's finding that the Respondent had committed four (4) violations of section 626.9541(1)(x)4., Florida Statutes, and eight (8) violations of section 626.621(6), Florida Statutes. The Court further struck down any other violation which may have been based on a violation of either of these two sections. The Court affirmed the Department's findings with respect to all other statutory violations found in the Department's Final Order dated July 3, 1995.
VIOLATIONS FOUND IN LIGHT OF THE COURT'S JUNE 13, 1996 OPINION
In light of the Court's June 13, 1996 decision, the Department hereby finds the Respondent, Kenneth Michael Whitaker, guilty of violating the following provisions of the Florida insurance Code:
Three (3) counts of violating section 626.9541(1)(z)3., Florida Statutes;
Eight (8) counts of violating section 626.9541(1)(e), Florida Statutes;
Eight (8) counts of violating section 626.611(7), Florida Statutes;
Eight (8) counts of violating section 626.611(9), Florida Statutes; and
Eleven (11) counts of violating section 626.9521, Florida Statutes.
In addition to setting aside the four (4) violations of section 626.9541(1)(x)4. and the eight (8) violations of section 626.621(6), the Department has further set aside, pursuant to the Court's June 13, 1996 ruling, four (4) violations of section 626.9521. That is because four (4) of the initial fifteen (15) violations of said section were based upon the Respondent's four (4) purported violations of section 626.9541(1)(x)4., Florida Statutes. As previously discussed, these four (4) violations were reversed by the Court. The remaining eleven (11) violations of section 626.9521 are based upon the Respondent's three (3) violations of section 626.9541(1)(z)3., and his eight (8) violations of section 626 .9541 (1)(e), all of which were upheld by the Court.
DETERMINING THE APPROPRIATE PENALTY
As noted by the Court in its June 13, 1996, opinion, section 626.641(1)(a), Florida Statutes, and Rule 4-231, F.A.C., must be taken into account when calculating the appropriate penalty to be imposed in this matter. Rule chapter 4-231, F.A.C., contains the Department's penalty guidelines for violations of the Florida Insurance Code and the rules and orders of the Department. Pursuant to these guidelines, the Respondent's above-listed statutory violations carry the following corresponding penalties:
Violation of section 626.9541(1)(z)3., Florida Statutes; 6 month license suspension (See Rule 4-231.100(26), F.A.C);
Violation of section 626.9541(1)(e), Florida Statutes; 6 month license suspension ( Rule 4-231.100(5), F.A.C);
Violation of section 626.611(7), Florida Statutes;
6 month license suspension ( Rule 4-231.080(7), F.A.C);
Violation of section 626.611(9), Florida Statutes;
9 month license suspension ( Rule 4-231.080(9), F.A.C); and
Violation of section 626.9521, Florida Statutes; Subsection (2) of section 626.9521 authorizes the imposition of a fine in an amount not greater than
$2,500 for each nonwillful violation and not greater than $20,000 for each willful violation. (Note: Although a fine is authorized in this matter, in its discretion the Department declined
to impose one in its initial Final Order. Likewise, the Department hereby declines to impose a fine against the Respondent in this Amended Final Order.)
As indicated, the Respondent has been found to have committed numerous violations of the statutory sections listed in the preceding paragraph. Only the single highest stated penalty established for each count in an administrative complaint, however, shall be used in calculating the "total penalty." The single highest stated penalty established for each count is referred to as the "penalty per count." See Rule 4-231.040, F.A.C.
Looking again at the above-referenced penalties, one can readily ascertain that a violation of section 626.611(9) carries the highest penalty - a nine (9) month license suspension. No other statutory violation established in this matter carries a higher penalty. The Respondent has been found to have committed a total of eight (8) violations of section 626.611(9), or one violation in each of Counts I - VIII of the Department's administrative complaint. The Respondent's penalty per count, therefore, is a nine (9) month license suspension.
Pursuant to subsection (2) of Rule 4-231.040, each penalty per count shall be added together and the sum shall be referred to as the "total penalty." The total penalty in this matter is a seventy-two (72) month license suspension, which is determined by multiplying a 9 month penalty per count by 8 counts.
Pursuant to subsection (3) of Rule 4-231.040, the "final penalty" imposed against a licensee shall be the total penalty, as adjusted to take into consideration any aggravating or mitigating factors.
Rule 4-231.160, F.A.C., prescribes the aggravating and mitigating factors which the Department shall consider and, if warranted, apply to the total penalty in reaching the final penalty. In paragraph 147 of her Recommended Order, the Hearing Officer considered the following factors in aggravation and mitigation: (1) that the Respondent purportedly sought instruction from the Department prior to refusing to finance insurance premiums; (2) that the refusal to finance concept appears to be one of first impression; (3) the Respondent's personal involvement in the unlawful activity; and (4) the Respondent's financial gain arising from his unlawful activity. As a result of the Court's reversal of the four (4) section 626.9541(1)(x)4. violations, the mitigating factors set forth in subparagraphs (1) and (2) above are no longer relevant.
The two remaining factors are aggravating in nature. Additional aggravating factors in this matter, as delineated in Rule 4-231.160, are the willfulness of the Respondent's conduct and the existence of secondary violations established in Counts I - VIII of the administrative complaint. The existence of these aggravating factors would tend to increase the Respondent's total penalty, thereby resulting in a higher final penalty. Increasing the Respondent's total penalty would be pointless, however, for section 626.641(1), Florida Statutes, limits a licensee's period of suspension to a maximum of two (2) years. As one can see, the Respondent's seventy- two (72) month total penalty already well exceeds the two (2) year statutory limit. Consequently, the Department has determined that a revocation of the Respondent's insurance agent licenses is warranted and appropriate in this matter, and is necessary to adequately protect the insurance-buying public.
Revocation of an agent's license is authorized upon the establishment of any one or more of the grounds prescribed in section 626.611, Florida Statutes. Such grounds have been conclusively established by the Department in this matter, and have been upheld by the Court in its June 13, 1996, opinion.
IT IS THEREFORE ORDERED:
The Department's initial Final Order entered July 3, 1995, is hereby modified and superseded to the extent that it conflicts with any of the findings and conclusions set forth in this Amended Final Order. In all other respects, said initial Final Order remains as written and is incorporated herein.
ACCORDINGLY, all licenses and eligibility for licensure held by the Respondent, KENNETH MICHAEL WHITAKER, are hereby REVOKED, pursuant to the provisions of sections 626.611, 626.621, 626.641(2) and 626.651(1), Florida Statutes, effective the date of this Amended Final Order. As of the date of this Amended Final Order, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or permit is required under the Florida Insurance Code, or directly or indirectly own, control or be employed in any manner by an insurance agent or agency.
Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to section 120.68, Florida Statutes, and Rule 9.110. Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a Notice of Appeal with the General Counsel, acting `as the agency clerk, at 612 Larson building, Tallahassee, Florida 32399-0333, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of the rendition of this Order.
DONE and ORDERED this 12th day of August, 1996.
BILL NELSON
Treasurer and
Insurance Commissioner
COPIES FURNISHED:
KENNETH MICHAEL WHITAKER
1319-A East Tennessee Street Tallahassee, Florida 32308
JAMES T. MILLER, ESQUIRE
Corse, Bell & Miller, P.A.
233 East Bay Street, Suite 920 Jacksonville, Florida 32202 E
ELLA JANE P. DAVIS, HEARING OFFICER
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee. Florida 32399-1550
DAVID D. HERSHEL, ESQUIRE
Department of Insurance Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
| Issue Date | Proceedings |
|---|---|
| Aug. 13, 1996 | Amended Final Order filed. |
| Jun. 14, 1996 | First DCA Opinion (Affirmed in part, Reversed in part, and Remanded to the agency) filed. |
| Jul. 05, 1995 | Final Order filed. |
| Apr. 04, 1995 | Recommended Order sent out. CASE CLOSED. Hearing held 11/18 & 21/94. |
| Jan. 12, 1995 | Petitioner`s Proposed Recommended Order filed. |
| Jan. 12, 1995 | (Respondent) Proposed Recommended Order (for Hearing Officer Signature) filed. |
| Jan. 09, 1995 | Letter to EJD from D. Hershel (RE: request for Extension of time) filed. |
| Dec. 22, 1994 | Post-Hearing Order sent out. |
| Dec. 20, 1994 | Transcripts (Volumes I, II, III/tagged) filed. |
| Nov. 21, 1994 | (2) Subpoena Duces Tecum (from R. Cohen); Affidavit of Service filed. |
| Nov. 18, 1994 | CASE STATUS: Hearing Held. |
| Nov. 17, 1994 | Petitioner`s Request for Admissions (first set); Motion for Leave to Amend Prehearing Stipulation; Notice of Filing of Petitioner`s Request for Admissions (First Set) and Respondent`s Responses to First Request for Admissions; Respondent`s Responses To Fi |
| Nov. 16, 1994 | Order sent out. (Motion for continuance denied) |
| Nov. 15, 1994 | (Respondent) Notice of Appearance filed. |
| Nov. 08, 1994 | Prehearing Stipulation (Joint) filed. |
| Nov. 03, 1994 | (Respondent) Motion for Continuance filed. |
| Nov. 03, 1994 | (Respondent) Motion for Continuance filed. |
| Oct. 31, 1994 | Notice of Appearance filed. |
| Jul. 20, 1994 | Order of Continuance to Date Certain Hearing sent out. (hearing rescheduled for 11-18-94; 9:30am; Tallahassee) |
| Jul. 08, 1994 | (Petitioner) Motion for Continuance filed. |
| May 19, 1994 | Notice of Hearing sent out. (hearing set for 8/9/94; 9:30am; Tallahassee) |
| May 19, 1994 | Order of Prehearing Instructions sent out. |
| May 17, 1994 | (Petitioner) Status Report filed. |
| Feb. 25, 1994 | Order of Abeyance sent out. (Parties to file status report by 5/7/94) |
| Feb. 23, 1994 | Respondent`s Responses to First Request for Admissions filed. |
| Jan. 21, 1994 | Petitioner`s Notice of Service of Petitioner`s First Set of Interrogatories and Petitioner`s First Request for Production of Documents and Petitioner`s First Request for Admissions on Respondent filed. |
| Oct. 20, 1993 | Notice of Hearing sent out. (hearing set for 3/7/94; 10:00am; Tallahassee) |
| Oct. 20, 1993 | Order of Prehearing Instructions sent out. |
| Oct. 05, 1993 | (Petitioner`s) Response to Initial Order filed. |
| Sep. 24, 1993 | Initial Order issued. |
| Sep. 17, 1993 | Agency referral letter; Petition for Formal Administrative Proceedings; Exhibits filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 13, 1996 | Opinion | |
| Jul. 03, 1995 | Agency Final Order | |
| Apr. 04, 1995 | Recommended Order | "Sliding" of ancillary products not found due to unambiguity of paperwork, but refusal to finance equaled refusal to insure;misrepresentations are determined to public intent |
DEPARTMENT OF INSURANCE vs TARA JEANNE SMITH, 93-005436 (1993)
DEPARTMENT OF INSURANCE vs RICHARD ROSENBLUM, 93-005436 (1993)
DEPARTMENT OF INSURANCE AND TREASURER vs. LLOYD ELDO REGISTER, 93-005436 (1993)
DEPARTMENT OF FINANCIAL SERVICES vs JAY LAWRENCE POMERANTZ, 93-005436 (1993)
DEPARTMENT OF INSURANCE AND TREASURER vs JOANNE MARIE SHEPHERD, 93-005436 (1993)
