STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 94-0137

)

NELSON SPEER BENZING, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell held a formal hearing in this case on April 19, 1994, in Tampa, Florida.

APPEARANCES

For Petitioner: John A. Dickson

Qualified Representative Division of Legal Services

Department of Insurance and Treasurer 612 Larson Building

Tallahassee, Florida 32399-0333

For Respondent: Nelson Speer Benzing

306 Indian Rocks Road South Largo, Florida 34640-4023

STATEMENT OF THE ISSUES

Whether Respondent engaged in conduct proscribed by the Insurance Code as is particularly set forth in the Administrative Complaint filed December 7, 1993.

PRELIMINARY STATEMENT

By its Administrative Complaint filed December 7, 1993, Petitioner, the Department of Insurance, seeks to discipline Respondent's licenses for alleged violations of Chapter 626, Florida Statutes. Specifically it is alleged that Respondent made misrepresentations to Florida consumers by describing a life insurance policy as a retirement "savings plan" and that Respondent sold insurance without being properly appointed by the company. Respondent timely requested a formal hearing and on January 27, 1994, this matter was set for final hearing for April 19, 1994 and was heard as scheduled.

At the final hearing, Petitioner presented the testimony of George Cantonis, President of Mega Manufacturing, Inc., and Tina Netherton, an office manager employed by Mega Manufacturing for approximately three years.

Petitioner introduced composite Exhibit 1, which consisted of five separate documents, including a certification from the Petitioner concerning Respondent's appointments; copies of Wisconsin National Life Insurance Company's applications for Cantonis and Netherton and the actual life insurance policies issued.

Respondent testified on his own behalf and presented the testimony of Kimberly Koozer, a licensed life and health insurance agent who has managed an insurance agency since approximately 1985. Respondent introduced several exhibits including copies of excerpts from Chapter 626, Florida Statutes; an investigative file check list compiled by Petitioner's investigator, Philip J. Adamo; a letter of certification issued by Petitioner respecting Respondent's licensure status and current appointments for various lines of insurance and an excerpt from the company brochure that was presented to employees of Mega Manufacturing during a sales presentation.

The parties filed proposed recommended orders which were considered in preparation of this Recommended Order. Petitioner's proposed findings of fact are substantially adopted in this recommended order. Respondent's "proposed recommended order" is basically excerpts from a Florida life and health manual - a manual which many new agents use to become familiar with the insurance code and to sit for the state insurance exam. As such, no specific rulings are made on the excerpts or Respondent's arguments on the law in Florida respecting the insurance code.

Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received, and the entire record complied herein, I make the following relevant findings of fact:

FINDINGS OF FACT

1. During times material, Respondent, Nelson Speer Benzing, was licensed with Petitioner, Department of Insurance and Treasurer, as a life insurance and as a life and health insurance agent.

   
   

2. During times material, Respondent was an employee of U.S. Savings Trust Management (herein USSTM).

   
   

3. During times material, Respondent was never appointed with Petitioner to represent Wisconsin National Life Insurance Company (herein Wisconsin). However, Respondent did attend a workshop sponsored by Wisconsin.

   
   

4. At some time prior to March 5, 1992, Respondent met with George Cantonis, President of Mega Manufacturing, Inc. (herein Mega) in order to obtain Cantonis' permission to make a sales presentation to Mega's employees. Cantonis granted Respondent permission to make a sales presentation to Mega's employees.

   
   

5. On March 5, 1992, Respondent made a sales presentation to Mega's employees. The purpose of said presentation was to enroll the employees of Mega in a "savings plan" offered by USSTM. The presentation lasted approximately 15-

   30 minutes. Employees were told that the plan, as presented, incorporated an insurance savings plan which had a "liquid" component as well as a long term savings component.

   
   

6. At no time during this sales presentation did Respondent explain to employees of Mega that he was a licensed life insurance agent.

7. During the course of his presentation, Respondent described USSTM's product variously as an "insurance saving plan", as an "investment in insurance companies" and as a "retirement savings plan". At no time during the presentation did Respondent specifically state that he was selling life insurance.

   
   

8. At the conclusion of the presentation, Respondent enrolled all interested employees in USSTM's plan. During the enrollment procedure, Respondent told the employees to complete portions of at least three documents which included a form entitled "Employee History", a Wisconsin's life insurance application, and an employee payroll deduction authorization.

   
   

9. Cantonis enrolled through the above procedure and signed a blank Wisconsin National Life Insurance application.

   
   

10. Subsequent to the group sales presentation, Respondent made a similar presentation to Tina Netherton, Mega's office manager, who was working in the office and answering the telephone.

    
    

11. At the conclusion of the presentation to Netherton, she enrolled in the plan and also signed a blank Wisconsin National Life Insurance application pursuant to instructions from Respondent.

    
    

12. Both Netherton and Cantonis believed that the "savings plan" consisted of both a short term "liquid cash element and a long term investment". Neither were aware that they had purchased life insurance.

    
    

13. Both Netherton and Cantonis had, in their opinion, adequate life insurance at the time of Respondent's sales presentation, and would not have purchased additional life insurance if they had been told (by Respondent) that they were purchasing life insurance. Both Netherton and Cantonis executed beneficiary designations on their belief that such was needed so that disbursements, if any, could be made to their designee in the event of their death.

    
    

14. Approximately three weeks after enrollment, Netherton and Cantonis received brochures from USSTM which acknowledged their enrollment and detailed the benefits of the "savings plan". The brochure advised that Netherton and Cantonis had enrolled in an insurance "savings plan" and failed to state that they had purchased life insurance.

    
    

15. Cantonis and Netherton attempted to withdraw funds from the liquid portion of the plan and were unable to do so.

    
    

16. Four to five months after their enrollment, Cantonis and Netherton received life insurance policies from Wisconsin.

    
    

17. Pursuant to the insurance applications, Cantonis and Netherton were issued Wisconsin life insurance policy numbers L00566485 and L00566483, respectively.

    
    

18. Cantonis and Netherton maintained their Wisconsin policies in order to realize some gain from their overall loss in dealing with Respondent and USSTM. At the time that Respondent made his presentation to Mega's employees and officials, he had never before made sales presentations in order to enroll employees in plans offered by USSTM. Respondent's general manager, Vincent Radcliff, was the agent of record of Wisconsin. The insurance application and

    policies issued to Cantonis and Netherton were signed by an agent other than Respondent.

    
    

19. Respondent's supervisor, Vincent A. Radcliff, III, was disciplined by Petitioner and Respondent cooperated with the Petitioner in investigating the complaint allegations filed against his supervisor, Radcliff.

    
    

20. Respondent was first licensed by Petitioner on November 15, 1989.

    
    

21. Respondent has not been the subject of any prior disciplinary actions by Petitioner.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

23. The parties were duly noticed pursuant to Chapter 120, Florida Statutes.

    
    

24. The authority of the Petitioner is derived from Chapter 626, Florida Statutes.

    
    

25. Respondent, as a licensed life and health insurance agent, is subject to the disciplinary provisions of Chapter 626, Florida Statutes.

    
    

26. Petitioner has the burden of establishing, by clear and convincing evidence, that Respondent committed the alleged violations set forth in the administrative complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

27. Section 626.112(2), Florida Statutes, makes it unlawful for an agent, customer representative, or solicitor to be an agent, or represent or hold himself out to be an agent, customer representative or solicitor as to any kind or kinds of insurance as to which he is not then licensed and appointed.

    
    

28. Section 626.611(a), Florida Statutes, makes it unlawful for a license or permit to be willfully used to circumvent any of the requirements or prohibitions of the insurance code. Likewise, subsection (b) makes it unlawful for an agent or solicitor or customer representative to willfully misrepresent any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or any form of dissemination of the information or advertising. In the same context, subsection (e) of 626.611 makes it unlawful for an agent to engage in dishonest practices in the conduct of business under the license or permit.

    
    

29. Section 626.621, Florida Statutes, sets forth the grounds for discretionary refusal, suspension, or revocation of agents, solicitor's, adjuster's , customer representative's, service representative's, managing general agent's, or claims investigator's license or appointment:

    
    

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

    2. Violation of any lawful order or rule of the department..

       (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.

       
       

30. Section 626.9541 Florida Statutes, makes it unlawful to practice unfair methods of competition and unfair or deceptive acts or practices, and provides, in pertinent part:

    
    

    (a) Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

    1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.

    * * *

    (e) Knowingly:

    1. Filing with any supervisory or other public official,

    2. Making, publishing, disseminating, circulating,

    3. Delivering to any person,

    4. Placing before the public,

    5. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement.

    * * * 626.9541(1)(k)(1) Knowlingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.

    * * * 626.99(5)(b) An agent shall inform the

    prospective purchaser, prior to commencing a life insurance sales presentation, that he

    is acting as a life insurance agent and shall inform the prospective purchaser of the full name of the insurance company which he is representing. In sales situations in which an agent is not involved, the insurer shall identify its full name.

    626.99(5)(c) Terms such as "financial planner", "investment adviser", "financial consultant", or "financial counseling" shall not be used in such a way as to imply that

    the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales unless such activity is the case.

    
    

31. Respondent's contention that he is not the agent of record for the policies issued to Tina Netherton and George Cantonis is immaterial inasmuch as an agent is prohibited from soliciting, i.e., make a sales presentation or otherwise transact as an agent, insurance as to which he has not been licensed and appointed. Section 626.112(2), Florida Statutes. Based on Respondent's solicitation of consumers Netherton and Cantonis, he engaged in proscribed conduct within the purview of Section 626.112(2), Florida Statues.

    
    

32. Although Respondent attended a workshop sponsored by Wisconsin National, attendance at such a workshop is immaterial inasmuch as the procedure for appointing an agent does not hinge on such attendance, but is only effectuated when the company notifies Petitioner, in writing, and submits the appropriate fee as set forth in Section 624.501, Florida Statutes. Wisconsin National never notified the Department of its intent to appoint Respondent as one of its agents; therefore, Respondent was never lawfully appointed with Wisconsin National.

    
    

33. Respondent's reliance on Sections 626.752 and 626.341, Florida Statutes, is misplaced inasmuch as Section 626.752, only applies to general lines insurance agents and not to agents, as Respondent, who are life insurance and health agents.

    
    

34. Likewise, 626.341 Florida Statutes, generally deals with the premise that an agent may solicit for a company with whom he is not appointed if the agent requests said company to appoint him when he submits an application for insurance. Here, Respondent never made such a request, and never submitted any application(s) to Wisconsin National.

    
    

35. The sales presentation given by Respondent was clearly designed to deceive those who attended. Specifically, the presentation lasted only a few minutes with very little time for consumers to ask questions or discover any concerns which they may have had. Respondent continued his discussion of the plan while the consumers completed the necessary paperwork, and they were not afforded time to thoroughly read the documents while signing. In fact, most of the necessary forms were completed by Respondent and other officers of USSTM after they received the necessary information that was needed, i.e., the signature of the applicants. Likewise, the consumers could reasonably believe that the fact that they listed a beneficiary related to their belief that the beneficiary designation pertained to whom the proceeds of the savings plan would be paid to in the event of their death.

    
    

36. Respondent's misrepresentation of the "savings plan" to consumers Netherton and Cantonis is clear as was evidenced by the fact that when they attempted to exercise their option to cash in the liquid portion of the "savings plan", they were advised that they only had life insurance and both consumers testified that had they known they were purchasing life insurance, they would not have enrolled in the plan.

    
    

37. The provisions of the insurance code which mandate full disclosure by an insurance agent of his identity and his product were created to prevent the activities similar in kind that Respondent engaged in. By failing to clearly identify himself and state with specificity that he was selling insurance,

Respondent engaged in proscribed conduct within the purview of Sections 626.611, 626.9541, and 626.99, Florida Statutes.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that:

Petitioner enter a Final Order suspending Respondent's life and health insurance licenses for a period of three (3) months. It is further RECOMMENDED that Petitioner order that Respondent engage in continuing education respecting the manner and means of soliciting on behalf of insurance companies, and to the extent that he completes the required courses within an acceptable time frame, that the suspension be suspended pending the outcome of Respondent's satisfactory completion of such continuing education courses. 1/

RECOMMENDED this 1st day of July, 1994, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of July, 1994.

ENDNOTE

1/ This recommendation appears to satisfy the disciplinary guidelines and the mitigating evidence offered by Respondent respecting his unblemished licensure status, his cooperation with the Department during all stages of the investigation and the credible evidence indicating that this was a first time, isolated incident, which Respondent was not thoroughly familiar with.

COPIES FURNISHED:

John A. Dickson Qualified Representative

Department of Insurance & Treasurer 612 Larson Building

Tallahassee, Florida 32399-0333

Nelson Speer Benzing

306 Indian Rocks Road, South Largo, Florida 34640

Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Bill O'Neil General Counsel

Department of Insurance The Capitol, PL-11

Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the Final Order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

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AGENCY FINAL ORDER

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

OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE

IN THE MATTER OF: CASE NO. 93-L-965LSS

NELSON SPEER BENZING CASE NO. 94-137

/

FINAL ORDER

THIS CAUSE came on before the undersigned, the Treasurer and Insurance Commissioner of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration and final agency action. On December 7, 1993, an Adninistrative Complaint was filed by the Florida Department of Insurance (hereinafter "Department") against NELSON SPEER BENZING (hereinafter "Respondent") charging Respondent with various violations of Chapter 626, Florida Statutes. Respondent thereafter timely requested a formal administrative proceeding pursuant to Section 120.57(1), Florida Statutes, to resolve this matter. Pursuant to notice, the natter was heard before Janes E. Bradwell, Hearing Officer for the Division of Adninistrative Hearings, on April 19, 1994. After consideration of the evidence, argument and testimony presented at the hearing, as well as the subsequent written submissions of the parties, the hearing officer issued his Recommended Order on July 1, 1994 (attached hereto as Exhibit "A") The hearing officer recommended the following: That Petitioner enter a Final Order suspending Respondent's life and health insurance licenses for a period of three (3) months and that Petitioner order that

Respondent engage in continuous education respecting the manner and means of soliciting on behalf of insurance companies, and to the extent that he completes the required courses within an acceptable time frame, that the suspension be suspended pending the outcome of Respondent's satisfactory completion of such continuing education courses.

The Respondent filed exceptions to the hearing officer's Recommended Order on August 1, 1994. Pursuant to Rule 4-121.072, Florida Administrative Code, Respondent's exceptions were not timely submitted and will not be considered.

Upon careful consideration of the record in this matter and being otherwise fully advised in the premises, it is hereby

ORDERED:

1. The findings of fact of the hearing officer are adopted in full as the Department's findings of fact.

   
   

2. The conclusions of law of the hearing officer are adopted in full as the Department's conclusions of law except where modified herein.

   
   

   In paragraph twenty-eight of the hearing officer's Recommended Order, he makes citations to three subsections of section 626.611, Florida Statutes. The citation to section 626.611(a) is incorrect and should have been a citation towards 626.611(4); the citation to section 626.611(b) is incorrect and should have been a citation towards section 626.611(5); and the citation to section 626.611(e) is incorrect and should have been a citation towards section 626.611(9), Florida Statutes. These incorrect citations are immaterial to the hearing officer's findings of wrongdoing as the Hearing Officer did find that Respondent's conduct was violative of the conduct proscribed in sections 626.611(4), (5), and (9), Florida Statutes.

   
   

3. The hearing officer's recommendation is rejected to the extent that it allows the recommended three month suspension to be suspended pending the outcome of Respondent's satisfactory completion of the continuing education courses. A finding that a licensee violated any provision of section 626.611, Florida Statutes, requires the Department to either suspend or revoke the license. The hearing officer's recommendation that Respondent's licenses be suspended for a period of three months and that Respondent be required to engage in continuing education respecting the manner and means of soliciting on behalf of insurance companies is accepted except as modified herein.

ACCORDINGLY, IT IS HEREBY ORDERED that all insurance licenses held by Respondent, NELSON SPEER BENZING, under the purview of the Department of Insurance, are hereby suspended for a period of three (3) months. Said suspension shall become effective beginning ten calendar days from the date of filing of this Final Order. Pursuant to section 626.641(4), Florida Statutes, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly or indirectly own, control, or be employed in any manner by any insurance agent or agency. Pursuant to section 626.641(1), Florida Statutes, Respondent's insurance licenses shall not be reinstated except upon request for such reinstatement, and the Respondent shall not engage in the transaction of insurance until his licenses are reinstated. Pursuant to section 626.641(1), Florida Statutes, the Department shall not grant such reinstatement if it finds that the circumstance or circumstances for which his licenses were suspended still exist or are likely to recur. Further, prior to any

reinstatement of his licenses, Respondent must provide to the Department proof that he has completed and passed the examination for the Department-approved continuing education course entitled Target Ethics.

Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to section 120.68, Plorida 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 412 Larson Puilding, Tallahassee, Elorida 32399- 0300, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of rendition of this Order.

DONE AND ORDERED this 3rd day of October, 1994.

TOM GALLAGHER

Treasurer and Insurance Commissioner

COPIES FURNISHED:

James E. Bradwell Hearing Officer

Divison of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Nelson Speer Benzing

306 Indian Rocks Road, South Largo, Florida 33640

Lisa S. Santucci, Esquire Division of Legal Services

412 Larson Building

Tallahassee, Florida 32399-0300

Docket for Case No: 94-000137

Orders for Case No: 94-000137