STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE AND ) TREASURER, )
)
Petitioner, )
)
vs. ) CASE NO. 94-999
)
WAYNE HARLAND CREASY, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on November 28, 1995, in Pensacola, Florida.
APPEARANCES
For Petitioner: Willis F. Melvin, Jr., Esquire
Department of Insurance Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
For Respondent: C. Rabon Martin, Esquire
Martin and Associates
403 South Cheyenne Avenue Tulsa, Oklahoma 74103
STATEMENT OF THE ISSUE
The issue to be resolved in this proceeding concerns whether the Respondent violated various provisions of the Florida Insurance Code, as alleged in the Amended Administrative Complaint, and if so, what penalty, if any, is warranted.
PRELIMINARY STATEMENT
This cause arose when an Administrative Complaint was filed on February 2, 1994 against the Respondent, Wayne Harland Creasy. The Complaint alleged that he violated various provisions of Chapter 626, Florida Statutes. He is an agent licensed in the State of Florida, and the gravamen of the charges concerns the Respondent allegedly aiding and abetting an unauthorized insurer, Pacific Guardian Life Insurance Company, Ltd. (Pacific), to transact business in the State of Florida. After filing an answer to the Administrative Complaint and requesting a formal proceeding, pursuant to Section 120.57(1), Florida Statutes, the cause was ultimately referred to the undersigned Hearing Officer.
After two agreed-upon continuances, the Petitioner filed a Motion for Leave to File an Amended Administrative Complaint, which the Hearing Officer granted,
soon thereafter granting a continuance of the hearing then set. On June 8, 1995, an Order was entered by the Hearing Officer granting the Petitioner's motion for the Hearing Officer to "make findings of fact" based upon the Respondent's answers to the request for admissions, its answer to the Administrative Complaint, and its answer to the Petitioner's Interrogatories. It was found that the factual allegations referenced in paragraph 1 of that motion were no longer in dispute and that no testimony would be required at
hearing regarding those allegations. The matter was set for hearing on July 19, 1995. The Respondent failed to appear at this hearing, and the Petitioner's case-in-chief was adduced.
Thereafter, the Respondent filed a motion to vacate a default order, if any, and objection to assessment of fees and costs, and requested a hearing on the merits. In that motion, the Respondent's counsel set forth the reasons he had failed to appear at the hearing of July 19, 1995, candidly admitting that he had been served with notice of the hearing. Due to an error in his office resulting in his failure to see the order resetting the matter for hearing, he was unaware of the hearing of July 19, 1995. On August 15, 1995, the Petitioner filed its response to that motion, and the Hearing Officer, upon consideration of the motion and response, issued an order allowing the Respondent a hearing on the merits in which to present its case. Due to the circumstances by which the Respondent failed to appear at the first hearing of July 19, 1995, the Respondent was required to accept the Petitioner's case as already presented, with the option being afforded that the Respondent could call as witnesses the Petitioner's personnel or potential witnesses, as the case might be, in the course of presenting its case-in-chief.
The case was accordingly noticed for hearing on November 28, 1995, and the hearing was conducted on that date. The Petitioner offered four exhibits, which were admitted into evidence. The Respondent offered 11 exhibits, which were admitted into evidence, as mitigatory evidence. These were admitted pursuant to Section 120.58, Florida Statutes, as explanatory hearsay, in explanation of the evidential facts established by the Respondent's request for admissions, answers to Interrogatories, as well as by his counsel's concession at hearing that the Respondent did not contest that the conduct alleged occurred, as a matter of fact. Additionally, it is observed that with the exception of the Respondent's Exhibits 2 and 11 (newspaper articles), the documents contained in the Respondent's exhibits could be considered to be business records of the Respondent and the company for which the subject policies were written and, thus, within that exception to the hearsay rule, although they were not offered as such.
Neither party presented any witnesses at this second hearing. The Respondent's attorney, without objection, presented testimony for the Respondent via proffer. The Respondent did not attend the hearing in person due to recent coronary bypass surgery, which necessitated his absence from the hearing for medical reasons.
Subsequent to the hearing, a transcript was submitted and the parties submitted Proposed Recommended Orders. The Respondent, without leave, exceeded the time limit for submission. Consequently, the motion to strike it is granted, as more particularly delineated in the Appendix hereto.
FINDINGS OF FACT
The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of
insurance and with regulating the practice of agents and other insurance professionals already licensed by the State of Florida.
The Respondent, at all times pertinent hereto, was and is licensed by the State of Florida as a non-resident life and health insurance agent.
The Respondent procured applications for life insurance to be issued from Pacific to the 30 named individuals and entities set forth in the Amended Administrative Complaint in its 25 counts. Pacific was not authorized to transact insurance business in the State of Florida because the company was not yet licensed. However, it was in the process of becoming licensed and licensure was imminent. The company Regional Director, C. Manley Denton, and other company officials, when they recruited the Respondent to sell insurance policies in Florida, assured him that licensure was imminent, that there was no impediment to finalization of the licensure procedures in the very near future, and that the Respondent could legally obtain life insurance policy applications and sell policies in Florida if he took the applications and dated them in and from his Tulsa, Oklahoma, office. He was assured that this procedure would render his activities legal. In reliance on these representations by officials of Pacific, the Respondent undertook to and did obtain the applications for, and sell the insurance policies, referenced above and in the Amended Administrative Complaint.
The Respondent, for many years, has transacted insurance business as a general agent of life and health insurance in Oklahoma and in Florida. He is a resident of both states, spending part of each year in each state. Many of the policyholders referenced above and in the Amended Administrative Complaint were clients of the Respondent, who had already had other insurance policies issued by him through companies he represents. In the particular instances involved in this proceeding, many of these clients had been policyholders of the First Capital Life Insurance Company, which had experienced financial difficulties and gone into receivership. Because of his policyholders' concern and his own concern about the possibility of the future inability to pay claims by the company in receivership, the affected clients and the Respondent were desirous of replacing those policies with policies in a different and sounder insurance company.
This desire dovetailed neatly with the desire by the executives at Pacific to obtain a large block of insurance policy business in Florida and in other states in the mainland United States. This desire by Pacific executives was due to a recent merger of that company with the Hawaiian Life Insurance Company, a company which was owned by Meiji Mutual Life of Tokyo Japan (Meiji). The resulting merged company, Pacific, was owned by Meiji. The executives at Pacific, which had historically been headquartered in San Jose, California, desired to continue to maintain the company domicile and their own personal residences in California and avoid having to relocate to Hawaii. This was the reason they desired to secure a large block of insurance business very rapidly in order to enhance the sales record of the "stateside branch" of the company. They believed that this would insure that their relocation would not have to be accomplished.
With this interest in the forefront of their plans, the executives of Pacific began to search for the best insurance agents in the nation who have a record of successfully writing large volumes of life insurance policy business. The Respondent is such an insurance agent. He had recently achieved a nationally-recognized ranking as one of the highest volume life insurance producer agents in the country.
Because the Respondent was desirous of placing a high-dollar volume of life insurance policies for the clients referenced above, who had had policies in the financially-troubled First Capital Life Insurance Company, the Respondent agreed, at the behest of the officials of Pacific, to attempt to write a large block of life insurance business in the State of Florida.
The Respondent is a well-respected general life insurance and health insurance agent. He is widely known throughout the insurance profession and industry, throughout the United States, as an ethical, competent and successful life insurance policy producer. He has no blemish on his licensure and practice record as an agent, throughout the approximate 40 years he has engaged in the profession.
When the Respondent obtained the insurance policy applications and policies at issue in this proceeding, he engaged in one course of conduct. That is, he contacted the clients and obtained their applications and arranged for the sale of the insurance policy contracts to them, as either new policies and clients, or as replacement policies for his existing clients, as the case might be. He engaged in this essentially-identical transaction with all 30 of these policyholders, in the genuine, good-faith belief that he was legally writing insurance policy business in the State of Florida based upon the circumstances related to him by officials of Pacific, upon which he relied. He candidly acknowledges, through counsel, that, in so relying, he knew that the company was not actually licensed in the State of Florida, but that that eventuality was imminent in the very near future, and that based upon the method the company assured him of writing the policies through the Tulsa, Oklahoma, office, he would be obtaining and transacting this business in a legally acceptable way.
He also candidly acknowledges that, in fact, he understands, from his contact with the Department since that time, this was not the case and that he was writing the business for a company not legally authorized to do business in the State of Florida.
The Respondent has freely admitted these above-found facts and does not dispute that he was in violation of the portion of the charges that do not depend on intent. He has established, however, through the exhibits admitted as explanatory hearsay and the agreed-upon proffer of his counsel, that the transactions at issue, all of which were the result of one essentially-identical course of conduct, were accomplished with no intent to defraud the policyholders, the company, or the Florida Department of Insurance. There was no willful, dishonest or deceitful intent by the Respondent during the course of his engagement in these transactions. There was no such willful wrongful intent in the course of his contact and relations with the company, those policyholders, or the Department of Insurance since that time. No policyholder or company suffered any financial detriment as a result of the Respondent's conduct, nor did any insurance coverage lapse at any time. Although there were some 30 policyholders who were sold insurance by the Respondent, as the agent for a company not actually licensed in the State of Florida, that circumstance had no effect on the validity of the policy coverages involved and there were no actual "victims" of the Respondent's conduct.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties hereto. Section 120.57(1), Florida Statutes.
The Amended Administrative Complaint alleges that the Respondent violated 12 provisions of the Florida Insurance Code, to wit: Sections 626.901(1), 626.611(4), 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.611(13), 626.621(2), 626.621(3), 626.621(6), 626.9541(1)(a)1., and 626.9541(1)(e)1., Florida Statutes. Those provisions provide as follows:
626.901 - Representing or aiding unauthorized insurer prohibited:
(1) No person shall, from offices or
by personnel or facilities located in this state, or in any other state or country, directly or indirectly act as agent for, or otherwise represent or aid on behalf
of another, any insurer not then authorized to transact such insurance in this state in:
The solicitation, negotiation, procurement, or effectuation of insurance or annuity contracts, or renewals thereof;
The dissemination of information as to coverage or rates;
The forwarding of applications;
The delivery of policies or contracts;
The inspection of risks;
The fixing of rates;
The investigation or adjustment of claims or losses;
The collection or forwarding of premiums; or in any other manner represent or assist such an insurer in the transaction of insurance with respect to subjects of insurance resident, located, or to be performed in this state. If the property or risk is located in any other state, then, subject to the provisions of sub- section (4), insurance may only be written with or placed in any insurer authorized to do such business in such state or in an insurer with which a licensed insurance broker of such state may lawfully place such insurance.
* * *
626.611 - Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's or claims investi- gator's license or appointment.
If the license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.
Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any
form of dissemination of information or advertising.
Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Demonstrated lack of reasonably adequate knowledge and technical competence to engage
in the transactions authorized by the license or permit.
Fraudulent or dishonest practices in the conduct of business under the license or permit.
(13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.
* * *
626.621 - Grounds for discretionary refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's or claims investigator's license or appointment.
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.
Violation of any lawful order or rule of the department.
(6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.
* * *
626.9541 - Unfair methods of competition and unfair or deceptive acts or practices defined.
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS - The following are defined as unfair methods of competition and unfair or deceptive acts or practices:
(a) Misrepresentations and false advertising
of insurance policies - knowingly making, issuing, circulating, or causing to be made, issued or circulated any estimated illustration, circular, statement, sales presentation, omission, or comparison which:
1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.
(e) False statements and entries
1. Knowingly:
Filing with any supervisory or other public official,
Making, publishing, disseminating, circulating,
Delivering to any person,
Placing before the public,
Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement.
Clear and convincing evidence of record and, indeed, the Respondent's admission, establishes that he committed a violation of 626.901 by his course of conduct in representing and aiding an unauthorized insurance company to sell policies, deliver them and obtain the relevant premiums in the State of Florida from Florida insurance customers. There is no question that the Respondent "solicited, negotiated, procured and effected insurance contracts" and disseminated information as to coverage, rates and forwarded applications and delivered policies. It is also established that he, inferentially at least, must have collected or forwarded premiums in order for those policies to be placed in force, which is undisputed. Thus, he assisted an unauthorized insurer to transact insurance business with respect to residents of this State and insurance contracts to be performed in this State.
He did this through a mistaken, careless course of conduct, rather than willfully, without any deceptive or fraudulent intent. He relied upon Mr.
C. Manley Denton and other executives of Pacific in their representations to him that the necessary licensure steps had been taken, that licensure was imminent and that he could legally write the insurance business in the State of Florida with the applications being taken and dated in his Tulsa, Oklahoma, office. He was mistaken in that reliance and, with his years of experience perhaps should have inquired further, however, it was a good-faith reliance and, therefore, no fraudulent or deceptive intent was harbored by the Respondent in committing this course of conduct.
The above-quoted provisions of Section 626.611, Florida Statutes, "Grounds for Compulsory Refusal, . . .", have thus not been established by clear and convincing evidence. There has been no demonstration that the act committed by the Respondent was willful, fraudulent, or with deceptive intent or intent to misrepresent of any kind. In fact, if anything, the Respondent was misled by the company for which he was writing the coverage involved in this proceeding. There has been no proof that his license or permit was willfully used "to circumvent the requirements or prohibitions of the Florida Insurance Code", to "misrepresent any insurance policy or other contract" or to commit willful deception with regard to any such policy or contract.
It has not been demonstrated that he is not fit or trustworthy to engage in the business of insurance. His 40-year record of exemplary service in the insurance profession, with no other disciplinary blemishes on that record, coupled with the fact that the act committed herein was not accompanied by any willful, deceptive intent, belies such a determination.
There has been no demonstration that he lacks "reasonably adequate knowledge and technical competence" to engage in the relevant transactions nor that he committed any
" . . . dishonest practices" in the conduct of the business under his license or permits involved in this proceeding. There has been no proof of any willful failure to comply with "a proper order or rule of the Department or a provision of the Florida Insurance Code". His
single violation of Section 626.901, referenced
above, was not willful but, rather, was due to a negligent misapprehension of the legal basis for Pacific's performance of insurance business and transactions in the State of Florida, for which he was agent.
The Respondent has violated Section 626.621, which references grounds for discretionary refusal, suspension or revocation of an agent's license by derivatively violating Subsection (2) of that section concerning violation of any provision of the Florida Insurance Code, since he did violate Section 626.901 in the above-found particulars. Aside from that, no evidence of a violation of this section has been adduced.
There has been absolutely no evidence offered to show that the Respondent violated Section 626.9541, as charged, concerning unfair methods of competition and unfair or deceptive acts or practices, as further illuminated and defined in the subsections and paragraphs of that section quoted above, because there has been no showing of any unfair competitive act, misrepresentation, false advertising, false statements, making, publishing, disseminating, or circulating any false information, or any of the other prohibited elements of conduct to which Section 626.9541 relates. It simply has not been shown that the Respondent did anything intentionally wrong. Rather, it has been demonstrated, at most, that he negligently failed to apprehend that he was committing a violation of the law by writing insurance business in the State of Florida for Pacific and that he was negligent in accepting that company's representation concerning the legality of the conduct he was performing.
In summary, the Respondent has violated Section 626.901(1), Florida Statutes, only, of the 12 statutory violations charged. Even though there were
30 different policyholders to whom he sold coverage, many of whom had already been his prior customers and for whom he was simply replacing coverage, in reality this did not constitute 30 different violations, as the Department seems to maintain. The single course of conduct, with regard to the sale of each policy contract, was the same. The Respondent relied upon the insurer's representation that he could legally transact business in the State of Florida under the referenced circumstances and that its licensure in the State of Florida was imminent. Based upon that representation, which he negligently acted upon, he sold the policy contracts to those 30 clients. He did not, however, commit 30 different wrongful acts. It was the same act or course of conduct simply performed in a short span of time, for 30 different individuals or entities. Consequently, in logic and in law, it should not constitute other than one violation of the Florida Insurance Code. Therefore, there should be no "stacking" of penalty based upon the characterization of this conduct as 30 separate, wrongful acts.
It having been demonstrated that the Respondent committed a negligent violation of the Florida Insurance Code in terms of the above-referenced violation of Section 626.901(1), Florida Statutes, the Hearing Officer finds the following elements of mitigation present in this circumstance:
The Respondent's candid admission of the violations and acceptance of responsibility therefor;
His reliance upon representations from the company regarding imminent licensure in the State of Florida and the propriety of taking and dating applications at his office in
Tulsa, Oklahoma, while that application was pending;
His involvement in the insurance profession, without disciplinary blemish for some 40 years;
The absence of any complaint from any individual for whom a policy application was solicited and for whom coverage was written by the Respondent on behalf of Pacific, and the absence of any monetary loss to any individual, any company, nor any financial gain to the Respondent as a result of his conduct.
Revocation or suspension of a viable professional license is not warranted where there has been no complaint of financial loss from any individual resulting from the activity complained of and the conduct, in effect, was a "victimless act". The court held in Brod v. Jernigan, 188 So.2d 575 (Fla. 1st DCA 1966), that, in the case of a licensure discipline action of a real estate broker, where no member of the public was hurt or prejudiced by the act of the respondent, there should not be a suspension of the license. The reasoning gleaned from the Brod decision was that an agency may possess the broad discretionary power to supervise a business, such as a real estate brokerage or the insurance profession, and to deal firmly with those engaged in it in a proper disciplinary proceeding, including imposing suspension or revocation of licensure. However, the court reasoned that such potent administrative weapons should always be reasonably and sparingly used. Such power should be aimed at the dishonest and unscrupulous operator who cheats or swindles the public. Such serious penalty should not be meted out against a licensee who may commit a wrongful or negligent act, but without fraudulent, dishonest, or deceptive intent, and which results in no harm to the members of the public or companies served by that licensee. Pauline v. Borer, 274 So.2d 1 (Fla. 1973); Munch v. Department of Professional Regulation, Division of Real Estate, 592 So.2d 1136, 1144, 1145 (Fla. App. 1st Dist. 1992).
In consideration of the totality of the facts and circumstances proven in this case, as enumerated and discussed above, it has been demonstrated that a penalty in the nature of a monetary fine should be imposed. Based upon all of the circumstances of this case, including that there were 30 individuals from whom insurance applications were solicited, referenced in this Recommended Order, a monetary penalty in the sum of $3,000.00 should be imposed.
Motion for Fees and Costs
Petitioner's motion for attorney's fees for preparation for and attendance at the two hearings in this proceeding is denied as not being supported by good cause. Counsel for the Petitioner was only required to present its case once, even if two hearings were scheduled. Even though most of the operative facts were ultimately essentially admitted, there remained factual and legal disputes to be adjudicated at hearing, and the defense of the Petitioner's claim was not shown to be frivolous. No extra work was shown to be occasioned counsel for the Petitioner merely because two hearings were held, since the Petitioner only had to present its case-in-chief once, based upon the Hearing Officer's order.
There has been no proof of the costs of attendance (including travel costs) at the second hearing, or at either hearing, by Petitioner's counsel. Consequently, in consideration of all of the circumstances involved in this proceeding, it is determined that attorney's fees are not due to the Petitioner for its counsel's attendance at and preparation for the two hearings in this proceeding.
On the other hand, counsel for the Petitioner has established justification for award of four hours of attorney's fees at $125.00 per hour for preparation of the Motions to Compel answers to Petitioner's second set of Interrogatories because of the long delays (five months) which were not justified by the Respondent. The Respondent waited many months without responding to the subject Interrogatories and, indeed, was dilatory throughout the discovery process. Indeed, the Hearing Officer gave an extension of time to the Respondent to respond to the request for admissions, of which opportunity the Respondent did not avail himself. If the discovery rules had been complied with, the Motion to Compel and proceeding thereon would not have been necessary. The Respondent offered no justification for the failure to timely respond to the discovery request propounded by the Petitioner. Timely request for extension of time to respond was not made. Consequently, attorney's fees for preparing and arguing the Motions to Compel answers are justified, in the amount of $500.00.
Concerning the subject of costs for attendance at the hearing at which the Respondent or his counsel failed to appear, no proof of actual costs of that hearing has been adduced, other than the cost for the court reporter's fees in the amount of $76.73. The remaining "costs" shown in the affidavit attached to the Petitioner's motion are, in reality, statements of hours and hourly rates in support of the Petitioner's request for attorney's fees. This has not been shown to be a frivolous defense on the Respondent's part nor does the attorney's fee claim properly lie within the ambit of any other provision of Sections
120.57 and 120.68 and Chapter 57, Florida Statutes, or the Florida Rules of Civil Procedure. The Petitioner did not incur any attorney fees in excess of the normal salary paid its attorney even in the absence of this proceeding. The Respondent has voluntarily paid the court reporter cost for the first hearing. Thus, the motion to tax costs has thereby been rendered moot, there being no proof of any other true costs attached to the first partially-abortive hearing.
The remaining elements referenced in the affidavit concerning attorney's fees have not been supported by a showing of good cause. The attorney's fee of $1,000.00 for preparing the "Motion for Hearing Officer to Make Findings of Fact", for instance, while it may have been accomplished by the Petitioner's counsel, certainly should not have taken eight hours to prepare.
In any event, the preparation of the motion and the resulting favorable order rendered it unnecessary for much hearing preparation and examination of witnesses at hearing to be performed by the Petitioner's counsel. Under those circumstances, there is no justification to award attorney's fees for this effort. The same is true of the other elements of attorney's fees postulated by the Petitioner's counsel in the motion and affidavit.
With regard to the second hearing conducted herein, the costs for counsel's attendance at that hearing, at which counsel for the Petitioner presented no witnesses, has not been placed of record. No substantial preparation by the Petitioner's counsel for that hearing could have been required since the Petitioner's counsel was not again required to put on its case and little preparation in terms of anticipated cross-examination was required.
Thus the motion to assess attorney's fees, other than for preparation of the above-referenced motion to compel, has, under the circumstances, not been supported by a showing of good cause. Aside from the $500.00 to be awarded for preparation of the motion to compel, the motion for attorney's fees and costs is denied.
In summary, in consideration of the above-found facts and circumstances, discussion, and conclusions of law, and in consideration of the above-referenced mitigating factors, there being demonstrated no aggravating factors, it is determined that a penalty in the amount of $3,000.00 be imposed and that attorney's fees in the amount of $500.00 be awarded to the Petitioner. The only costs proven in this proceeding are the above-referenced $76.73 for the court reporter's appearance fee for the first hearing of July 19, 1995. That amount has already been paid by the Respondent's counsel and is moot.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Petitioner, Department of
Insurance, finding the Respondent, Wayne Harland Creasy, guilty of a violation of Section 626.901(1), Florida Statutes, in the manner found and concluded above and that a penalty of $3,000.00 be imposed, together with the award of $500.00 in attorney's fees.
DONE AND ENTERED this 1st day of April, 1996, in Tallahassee, Florida.
P. MICHAEL RUFF, 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 April, 1996.
APPENDIX TO RECOMMENDED ORDER
Petitioner's Proposed Findings of Fact 1-32. Accepted.
Rejected, as constituting a conclusion of law and not a finding of fact.
Accepted, in part, but subordinate to the Hearing Officer's findings of fact on this subject matter.
Accepted, in a technical sense, but not in the sense that any overt, intentional effort to circumvent Florida law was committed by the Respondent. Rather, it was a negligent failure to act in a legal way due to being misled by Pacific Guardian Life Insurance Company, Ltd. or its officers or employees.
Accepted, as to the factual allegations of the Administrative Complaint, but not as to their legal import, and subordinate to the Hearing Officer's findings of fact on this subject matter.
Respondent's Proposed Findings of Fact
The Respondent's proposed findings of fact are not ruled upon or considered because they were not timely filed, being approximately one month out of time with no motion for extension of time, during the originally-set time period, being filed. Consequently, the Petitioner's motion to strike the Respondent's proposed findings of fact and conclusions of law is granted.
COPIES FURNISHED:
Willis F. Melvin, Jr., Esquire Department of Insurance
and Treasurer
Division of Legal Services 612 Larson Building
Tallahassee, Florida 32399-0333
C. Rabon Martin, Esquire Martin and Associates
403 South Cheyenne Avenue Tulsa, Oklahoma 74103
Bill Nelson, State Treasurer and Insurance Commissioner
Department of Insurance and Treasurer
The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Dan Sumner, Acting General Counsel 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 to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should 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 OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE
IN THE MATTER OF CASE NO. 94-L-123-WFM WAYNE HARLAND CREASY DOAH CASE NO. 94-999
/
FINAL ORDER
THIS CAUSE came before the undersigned Treasurer of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration of final agency action. On February 2, 1994, a one count Administrative Complaint was filed charging the Respondent, WAYNE HARLAND CREASY, with violations of various provisions of Chapter 626, Florida Statutes. Respondent timely filed a request for a formal proceeding in accordance with Section 120.57(1), Florida Statutes. The Administrative Complaint was subsequently amended to include a total of twenty-five counts on Petitioner's motion granted by order of the Hearing Officer. On February 17, 1995, Petitioner filed a Motion For Hearing Officer to Make Findings of Fact. On dune 8, 1995, by Order, the Hearing Officer granted Petitioner's Motion and established certain facts upon which no witnesses or evidence would be required.
The Final Hearing was ultimately set, pursuant to Notice of Hearing, to be held at 10:00 A.M. on July 19, 1995 in Pensacola, Florida. Respondent failed to appear at the scheduled hearing and Petitioner presented its case and subsequently timely filed a Proposed Recommended Order. On August 8, 1995, Respondent served a Motion to Vacate Default Order, if any, Objection to Assessment of Fees and/or Costs, and Request for Hearing on the Merits. In that Motion Respondent's counsel admitted having received notice of the Hearing, but asserted that his secretary had not brought it to his attention and no copy had been sent directly to Respondent (It is noted for the record that, where represented by counsel, service on counsel is sufficient and no pleadings, orders, or notices are required to be served directly upon the party. See, Fla. Admin. Code R. 28-5.109. and Fla. R. Civ. P. 1.080(b)). Despite written objection by Petitioner, substantial prejudice to Petitioner, and an absence of excusable neglect, the Hearing Officer entered an Order granting Respondent's request and reopening the record in the case for a "further hearing on the merits." The second hearing was held, pursuant to notice, on November 28, 1995 at 1:30 P.M. in Pensacola, Florida.
At the second hearing, Petitioner was permitted to rely on its case in chief previously presented at the July 19, 1995 hearing. Respondent's counsel appeared, however, due to illness, Respondent himself did not appear at the final Hearing. Counsel for Respondent offered documentary evidence add "proffered" testimony on his client's behalf. The documentary and testamentary evidence was allowed over Petitioner's objections Petitioner again filed a timely Proposed Recommended Order. Respondent filed a Proposed Recommended Order outside the time limit set for the filing and as a result the Hearing Officer granted Petitioner's Motion to Strike Respondent's Proposed Recommended Order.
After consideration of the documentary and testamentary evidence and Petitioner's Proposed Recommended Order, the Hearing Officer issued his Recommendation (Attached as Exhibit A). The Hearing Officer recommended that the Final Order be entered finding WAYNE HARLAND CREASY guilty of a single violation of Section G2G901(1), Florida Statutes and assessing a $3,000.00 penalty together with the award of $500.00 in attorney's fees Petitioner filed exceptions to the Recommended Order which have been considered and are addressed below. Respondent did not file exceptions.
RULINGS ON PETITIONER'S EXCEPTIONS TO FINDINGS OF FACT
Petitioner excepts to the Hearing Officer's Findings of Fact 3 through 10, principally on the basis that the findings are not based on competent substantial, or even admissible, record evidence. Respondent did not present any witnesses at either hearing in this matter Rather, Respondent's counsel made a statement to the court which he termed a "proffer". Counsel was not sworn as a witness and his statement was not testimony The "proffer" begins on page 5 of the November 28, 1995 hearing transcript and continues through page twenty-eight (28). In conjunction with counsel's "proffer," he offered in evidence eleven
numbered exhibits. Petitioner objected to the admission of the documentary exhibits and any consideration of the "proffer" of counsel as evidence in the case. The Hearing Officer asserts in his Recommended Order that the "proffer" was agreed to by the Petitioner, however the record belies that assertion.
The inquiry before the Treasurer and Insurance Commissioner is whether there is competent substantial evidence on the record to support the Hearing Officer's recommended Findings of Fact. The underlying admissibility of the evidence in question is central to the question of its competence and substantial nature as the rules of evidence are in large part the court's method of testing competence and reliability. Discussion of the admissibility of the evidence is undertaken to shed light on the trustworthiness of the evidence and is not undertaken in an attempt to overturn the Hearing Officer's ruling on the objections to that evidence.
There is absolutely no basis upon which the Hearing Officer could make findings of fact based upon Respondent's counsel's "proffer". The "proffer" in no way constitutes evidence, let alone competent substantial evidence. Despite having sustained the Department's objection at trial, the Hearing Officer used the information presented to the Court through the "proffer" as the basis for a number of the recommended Findings of Fact. The Hearing Officer's treatment of the "proffer" as evidence effectively allowed the Respondent to make an end run on the Department by presenting evidence which the Department could not contest Counsel for the Department noted on the record that the "proffer" included assertions which he could not test by cross examination or any other method and he is correct. To the extent that the Hearing Officer's recommended Findings of Fact are based upon the "proffer" of counsel, the recommended Findings of Fact do not rely on evidence which is either competent or substantial.
The documentary evidence presented is undoubtedly unauthenticated and hearsay. The objection on the record surrounded the hearsay nature of the documents and was sustained by the Hearing Officer with the caveat that the documents could be taken into consideration as hearsay supplementing or explaining other evidence pursuant to Section 120.58(1)(a)l., Florida Statutes. In the Recommended Order, the Hearing Officer further asserted that much of the documentary evidence could come in pursuant to the business records exception to the hearsay rule. No foundation for admissibility under the business records
rule was laid for any document offered. Additionally, the language of the Recommended Order references Respondent's admissions and admissions "through counsel." Section 90.803(18), Florida Statute sets forth an exception to the hearsay rule for certain statements offered against a party. The self serving use of the exception in an attempt to admit hearsay statements of a party or his agent to support the party's position is clearly not authorized and presents significant reliability concerns.
Respondent's exhibits number 1 and number 3 were identified by Respondent's Counsel as premium statements. Each relate to a separate transaction alleged in the First Amended Administrative Complaint. To the extent that documentary evidence was allowed based on the business records exception and the provisions of Section 120.58(1)(a)1., Florida Statutes the evidence comes in and has some probative value.
Respondent's exhibits number 2 and number 11 contain photocopies of newspaper articles for which no basis for admissibility was established and which do not, as a matter of law, constitute competent or substantial evidence. Respondent's exhibit 2 contains three additional documents which purport to be a September 11, 1995 letter from Todd Hunt to Bryan Ward regarding a sports complex in Las Vegas, an advertisement for chairs, and a "production report" for Chubb Lifeamerica. The hearsay nature of these documents is such that their admissibility is questionable and their probative value is minimal. The business records exception may be pertinent to the admissibility of the production report, but is not otherwise applicable. Only the production report is of a nature that might be considered competent or substantial.
Respondent's exhibit number 4 purports to be a September 12, 1991 letter from Respondent to Fred Levin, one of the consumers with whom Respondent was alleged in the complaint to have illegally transacted. The subject of the letter is the financial condition of Mr. Levin's current Insurer. The document is partially double hearsay and the business records exception is only a partial cure. The document fails in any way to supplement or explain any admissible evidence presented and is not competent evidence of any fact at issue.
Respondent's exhibit number 5 purports to be a resume for James Manley Denton and is inadmissible hearsay. Neither the business records exception nor any other hearsay exception even arguably apply to this document and it does not serve to supplement or explain any competent direct evidence presented at the hearing. As such it cannot be competent or substantial and should not have been relied upon as the basis of any recommended finding of fact.
Respondent's exhibit's number 6 and number 7 purport to be March 15 and March 23, 1992 letters from J. Manley Denton to Wayne Creasy regarding a conversations Mr. Denton purportedly had with Lou, Wally Burrian, and David Zuccolotte of Pacific Guardian Life. The facts asserted in the documents are classic double hearsay and the defect cannot be cured by the business records exception to the hearsay rule. Further, the documents do not support or explain any competent direct record evidence and therefore are not even assigned any value under Section 120.58(1)(a)1., Florida Statutes. As such they are not appropriately considered competent and substantial evidence.
Respondent's exhibit number 8 purports to be a facsimile from Pacific Guardian Life to Vivian Krumel. There is no foundation on the record for the admission of the document and it does not serve to support or explain any competent direct evidence on the record and is itself presented without any explanation of relevance. It conceivably could constitute a business record if
such a foundation were laid but cannot be determined to have any competent or substantial value.
Respondent's exhibit number 9 purports to be a letter from Pacific Guardian Life to Frederick G. Levin and could conceivably have been presented upon a foundation that it was a business record. No such foundation was laid and the competence and substantial value of the document is minimal.
Finally, Respondent's exhibit number 10 purports to be a letter from "Wayne" to "Lou" regarding Respondent's planned trip to Florida to transact insurance. The document could possibly come in as a business record or as support or explanation of evidence presented by Petitioner regarding Respondents transaction of business in Florida on behalf of Pacific Guardian Life. Again, the document has limited competence and is in itself not substantial evidence of any matter.
Discussing the concept of competent substantial evidence, the Florida Supreme Court in DeGroot v. Sheffield, 95 So.2d 912 (Fla. 1957) stated "...the evidence relied upon to sustain the ultimate finding should be sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached." Id. at 916. See also Gould v. Division of Florida Land Sales, 477 So.2d 612 (Fla. 1st DCA 1985). It is abundantly clear that Respondent presented precious little admissible evidence in support of his case and that, even taken in the light most favorable to Respondent, the documents presented by Respondent, taken together or individually, do not constitute competent or substantial evidence of any matter at issue.
Petitioner's exceptions to the Hearing Officer's recommended Findings of Fact 3 through 10 are ACCEPTED and these recommended findings are rejected The Findings of Fact of the Department of Insurance and Treasurer are set forth below in their entirety and include in substance those recommended Findings of Fact of the Hearing Officer which are found to be supported by competent substantial record evidence. Additionally, the Hearing Officer mixed Conclusions of Law into his recommended Findings of Fact paragraphs 9 and 10 and to the extent that those paragraphs contain conclusions of law they are replaced by the Conclusions of Law set forth herein. Further, as noted in Petitioner's Exceptions to Recommended Order, the Hearing Officer failed to set forth findings of fact as per his Order of June 8, 1995. To the extent that the Order called for particular findings to be made, those findings are also set forth below as the Department's Findings of Fact.
RULINGS ON PETITIONER'S EXCEPTIONS TO CONCLUSIONS OF LAW
Petitioner excepts to the Hearing Officer's recommended Conclusions of Law set forth in paragraphs 20 through 23. Paragraph 20 of the Hearing Officer's recommended Conclusions of Law concludes that even though there were thirty distinct policy holders and twenty-five distinct insurance transactions, the allegations of the First Amended Administrative Complaint relate to a single course of conduct and should properly be deemed a single violation. Rule Chapter 4-231 of the Florida Administrative Code sets forth Penalty Guidelines to be followed by the Department of Insurance in license disciplinary actions. Specifically, Fla. Admin. Code R. 4-231.030(2) indicates that:
"Count" refers to a series of one or more numbered paragraphs of factual allegations in an administrative complaint that are grouped together under the word "Count" followed by a
Roman numeral and which are set apart from other counts in an administrative complaint, which relate to a single transaction or occurrence, and which if true would constitute a violation of one or more provisions of the Insurance Code.
The First Amended Administrative Complaint against Respondent in this matter provides groupings of facts under each of twenty-five counts. Each grouping of facts relates to an insular transaction between the Respondent and a separate consumer or group of consumers culminating in a placement with Pacific Guardian Life Insurance Company, Ltd. As such, the organization of counts in the document complies with the definition of "Count" set forth in Fla. Admin. Code
4-231.030(2). Each count set forth in the First Amended Administrative Complaint presents facts sufficient in themselves to establish insurance code violations by Respondent. The conclusion recommended by the Hearing Officer fails to distinguish between a person charged with a discrete and insular instance of transacting insurance on behalf of an unauthorized insurer and a person such as Respondent who has engaged in a pattern of activity and repeated instances of transacting insurance on behalf of an unauthorized insurer.
The Hearing Officer's recommended Conclusion of Law paragraph 21 deals with mitigating circumstances. No aggravation was addressed. It is noted that despite the recommendation by the Hearing Officer to treat the actions by Respondent as a single violation he does not recommend aggravating the penalty based on the fact that there were twenty-five separate transactions. Such an approach would at least have provided a rational method for distinguishing between a person charged with a discrete and insular instance of transacting insurance on behalf of an unauthorized insurer and a person such as Respondent who has engaged in a pattern of activity and repeated instances of transacting insurance on behalf of an unauthorized insurer. As the Department shall treat the twenty-five separate transactions as distinct violations, the multiplicity of violations shall not be considered in aggravation of the penalty to be imposed.
Of those factors considered by the Hearing Officer in his recommendation, only Respondent's admission of the facts underlying the First Amended Administrative Complaint is based upon competent substantial record evidence. The balance of factors considered are based primarily upon Respondent's counsel's "proffer" at the second hearing and in part upon documentary evidence which is neither competent nor substantial.
The Hearing Officer's recommended Conclusion of Law paragraph 22 asserts that suspension or revocation of Respondent's licenses is not warranted because the conduct complained of was a "victimless act." This recommended conclusion is an excellent example of why the Legislature and the Courts have determined that Conclusions of Law are the domain of the regulating agency which has the requisite expertise in the matters regulated rather than the domain of Hearing Officers who "are judicial generalists who are trained in the law but not necessarily in any specific profession." Criminal Justice Standards and Training Commission v. Bradley, 596 So.2d 661, 664 (Fla. 1992)(quoting Hambley v.
Department of Professional Regulation, Division of Real Estate1 568 So.2d 970, 971-971 (Fla. 2d DCA 1990)(Altenbernd, J., dissenting))
Aiding unauthorized insurers in the transaction of insurance in this state places policyholders at significant peril for reasons too numerous to completely set forth in this Order. Among the most significant reasons the practice imperils policyholders are:
Unauthorized insurers are not members of the various guarantee funds established by the Legislature to provide insured with a source of recovery in the event an insurer becomes insolvent and is unable to meet its financial obligations to consumers. In this particular instance the relevant statutory provision limiting fund coverage to policies issued by unauthorized insurers is Section 631.713(1), Florida Statutes.
The Department has no assurance that an unauthorized insurer meets the capital and surplus requirements as set forth in Section 624.408, Florida Statutes or the reserve requirements as set forth in Section 624.404, Florida Statutes for insurers in this or any other state. Assuring the financial capacity of insurers is a crucial element of the Department's role in regulating the insurance Industry for the protection of the citizens of the State of Florida. Such an entity avoids the very statutory restrictions provided to limit the potential for insolvency and as noted above the safety net of the guarantee funds is unavailable to policyholders insured by the entity.
When an unauthorized entity illegally engages in the business of insurance in this state, the Department is deprived of the opportunity to evaluate the competence and trustworthiness of management pursuant to Section 624.404(3), Florida Statutes and ocher similar provisions. The fact that the entity was transacting insurance in the State of Florida without authorization and in violation of applicable law would suggest that management's competence and trustworthiness might well be an appropriate area of Departmental inquiry.
There is no competent substantial record evidence to indicate that the unauthorized entity in question has ever been authorized in any state, was ever an applicant in the State of Florida, has any financial resources whatsoever, or is operated by competent and trustworthy management.
The competent substantial evidence on the record in this case indicates that Respondent sold life insurance products with substantial face values to a significant number of Florida consumers. Further, Respondent knew the policies were to be issued by an unauthorized insurer. There is an absence of competent substantial evidence on the record that each of these consumers has been made whole. Until such time as all of the policies are terminated via premium refund or payment of death or other benefits, the ability of the unauthorized entity to meet Its contractual obligations will remain in question. Surely, the Department is not constrained to withhold suspension or revocation of Respondent's licenses until such consumer harm occurs.
Petitioner further excepts to the Hearing Officer's Recommended Penalty of
$3,000. Not only is the penalty not promulgated in accordance with the Department's Penalty Guidelines for insurance Representatives set forth in Rule Chapter 4-231, Florida Administrative Code, but it exceeds the statutory discretion available The only monetary penalties authorized by law which are available given the statutory violations cited in the First Amended Administrative Complaint are pursuant to Sections 626.9521 and 626.681, Florida Statutes. Since the Hearing Officer has specifically recommended a finding that Respondent did not violate Section 626.9521, Florida Statutes, the monetary penalty recommended must be pursuant to the terms of Section 626.681, Florida Statutes. This statutory provision allows the imposition of fines in lieu of suspension or revocation of up to $500 for nonwillful violations and up to
$2,500 for willful violations to be Imposed. The fine may be augmented by the amount of commissions received by the violator as a result of the conduct underlying the sanction. Since the Hearing Officer recommended a finding that
Respondent had committed only one violation and had not engaged in any willful violation and did not derive any financial gain from the transactions it is unclear how he can justify a monetary penalty of $3,000.
The Petitioner's exceptions to the Hearing Officer's Conclusions of Law paragraphs 20 through 23 and Recommended Penalty are found to be meritorious and are therefor ACCEPTED. The Hearing Officer's recommended Conclusions of Law paragraphs 20 through 23 and Recommended Penalty are hereby rejected and replaced by the Department's own Conclusions of Law and Penalty as set forth below.
Upon careful consideration of the record In this matter and being otherwise advised In the premises, it is ORDERED:
The Findings of Fact of the Hearing Officer numbered 3 through 10 are hereby REJECTED and replaced in full by the Department's Findings of Fact as set forth herein below. The balance of the Findings of Fact of the Hearing Officer are ACCEPTED and adopted in substance as set forth herein below.
The Conclusions of Law of the Hearing Officer numbered 20 through 23 are hereby REJECTED and replaced in full by the Department's Conclusions of Law set forth herein below. The balance of the Conclusions of Law of the Hearing Officer are ACCEPTED and adopted in substance as set forth herein below.
The Hearing Officer's recommendation, in so far as it recommends that a Final Order be entered imposing a $3,000 fine against Respondent is REJECTED and replaced in full by the Department's penalty as set forth herein below. The Hearing Officer's recommendation, in so far as it recommends that a Final Order be entered assessing $500 in attorney's fees is ACCEPTED and adopted in substance as set forth herein below.
FINDINGS OF FACT
The Respondent, WAYNE HARLAND CREASY, is currently licensed in this state as a nonresident life insurance agent and as a nonresident life and health insurance agent.
At all times relevant to the dates and occurrences set forth in the First Amended Administrative Complaint, the Respondent was licensed in this state as a nonresident life Insurance agent and as a nonresident life and health Insurance agent.
Respondent personally committed the acts and facts alleged in the First Amended Administrative Complaint constituting the violations charged therein.
Pacific Guardian Life Insurance Company, Limited, (Pacific Guardian) of Hawaii is not authorized to transact insurance business in the State of Florida.
(COUNT I - Serological, Inc.)
On or about April 1992, Respondent met with Sam A. Penninger, Chairman of the Board of Serological, Inc. in Pensacola to discuss shareholder keyman insurance policies with Pacific Guardian.
As a result of the above-referenced solicitation by Respondent, applications were forwarded to Pacific Guardian for policies to be issued to Sam Penninger, James Sowinski, Theodore Gail, Richard Beasley, William Kenter and
Tim Hurst After receiving the applications Pacific Guardian issued policies for these individuals
(COUNT II - Frederick Levin)
On or about January 1992, Respondent went to the law firm of Levin, Middlebrooks, Mabie, Thomas, Moyes and Mitchell, P.A., in Pensacola, Florida.
At the time of Respondent's visit referred to in Findings of Fact above, Respondent sold a Key Man life Insurance policy to Frederick Levin. This policy was to be issued by Pacific Guardian.
On March 28, 1992, Pacific Guardian issued its policy number 0008026397 to Frederick Levin.
(COUNT III - Schroeder)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Gerald D. Schroeder of Pensacola, Florida who was subsequently issued policy number 8025850 by Pacific Guardian.
(COUNT IV - Stanley Levin)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Stanley B. Levin of Pensacola, Florida who was subsequently issued policy number 8025913 by Pacific Guardian.
(COUNT V - Stamps)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Britton Stamps of Gulf Breeze, Florida who was subsequently issued policy number 8025916 by Pacific Guardian
(COUNT VI - Branner)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from David A. Branner of Pensacola, Florida who was subsequently issued policy number 8025946 by Pacific Guardian.
(COUNT VII - Levy)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Maurice A. Levy of Fort Lauderdale, Florida who was subsequently issued policy number 8026083 by Pacific Guardian
(COUNT VIII - Britt)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from John Ratliff Britt of Gulf Breeze, Florida who was subsequently issued policy number 8026117 by Pacific Guardian.
(COUNT IX - Sheldon)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Arthur Joel Sheldon of Miami, Florida who was subsequently issued policy number 8026200 by Pacific Guardian.
(COUNT X - Levin Trust)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Rose and Abe Levin Trust of Pensacola, Florida who was subsequently issued policy number 8026284 by Pacific Guardian.
(COUNT XI - Charles Heaton)
The Respondent procured an application for life Insurance to be issued from Pacific Guardian from Charles W. Heaton of Cantonment, Florida who was subsequently issued policy number 8026293 by Pacific Guardian.
(COUNT XII - John Merting)
The Respondent procured an application for life Insurance to be issued from Pacific Guardian from John Webster Merting Pensacola, Florida who was subsequently issued policy number 8026325 by Pacific Guardian.
(COUNT XIII - Linda Merting)
The Respondent procured an application for life Insurance to be issued from Pacific Guardian from Linda Jean Merting of Pensacola, Florida who was subsequently issued policy number 8026326 by Pacific Guardian.
(COUNT XIV - Fulwood)
The Respondent procured an application for life Insurance to be issued from Pacific Guardian from Ronnie D. Fulwood of Tampa, Florida who was subsequently issued policy number 8026329 by Pacific Guardian.
(COUNT XV - Bell)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Eugene T. Bell of Pensacola, Florida who was subsequently issued policy number 8026426 by Pacific Guardian.
(COUNT XVI - Allen Levin)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Allen R. Levin of Pensacola, Florida who was subsequently issued policy number 8026427 by Pacific Guardian.
(COUNT XVII - Montgomery)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Robert B. Montgomery of Gulf Breeze, Florida who was subsequently issued policy number 8026448 by Pacific Guardian.
(COUNT XVIII - Curry)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Norman R. Curry of Pensacola, Florida who was subsequently issued policy number 8026519 by Pacific Guardian.
(COUNT XIX - Rabin)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Joel Merrit Rabin of Miami, Florida who was subsequently issued policy number 8026552 by Pacific Guardian.
(COUNT XX - Lupo)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Vincent Louis Lupo of West Palm Beach, Florida who was subsequently issued policy number 8026655 by Pacific Guardian.
(COUNT XXI - Wilbur Heaton)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Wilbur D. Heaton of Pensacola, Florida who was subsequently issued policy number 8026694 by Pacific Guardian
(COUNT XXII - Pullum)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from William A. Pullum of Navarre, Florida who was subsequently issued policy number 8026517 by Pacific Guardian.
(COUNT XXIII - Guerra)
The Respondent procured an application for life Insurance to be issued from Pacific Guardian from Michael A. Guerra of Pensacola, Florida who was subsequently issued policy number 8026520 by Pacific Guardian.
(COUNT XXIV - Patsy McFrederick)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from Patsy McFrederick of Clearwater, Florida who was subsequently issued policy number 8026347 by Pacific Guardian.
(COUNT XXV - James McFrederick)
The Respondent procured an application for life insurance to be issued from Pacific Guardian from James E. McFrederick of Clearwater, Florida who was subsequently issued policy number 8026348 by Pacific Guardian.
In each of the above findings of fact wherein the Respondent solicited and procured applications regarding Pacific Guardian he aided and abetted an unauthorized insurer to transact business in this state due to Pacific Guardian's failure to have a Certificate of Authority in this state.
Respondent knew that the company he was representing, Pacific Guardian was not authorized to transact business in this state because of his statement that the company "was in the [process]" of getting licensed (emphasis added)
Respondent would take and date the Pacific Guardian applications in Tulsa, Oklahoma in an effort to circumvent Florida law until such time as Pacific Guardian became licensed in Florida.
Respondent admits all allegations of the Administrative Complaint.
CONCLUSIONS OF LAW
The Department of Insurance has jurisdiction of the subject matter of and the parties to this proceeding pursuant to Sections 120.57(1)and 120.59, Florida Statutes.
The standard of evidence to discipline an insurance license is that of clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987)
The Administrative Complaint alleges that Respondent violated twelve
provisions of the Insurance Code to wit: Sections 626.901(1), 626.611(4), 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.611(13), 626.621(2)7 626.621(3), 626.621(6), 626.9541(1)(a)1., and 626.9541(1)(e)1., Florida Statutes. The provisions provide as follows:
626.901 Representing or aiding unauthorized insurer prohibited
No person shall, from offices or by personnel or facilities located in this state, or in any other state or country, directly or indirectly act as agent for, or otherwise represent or aid on behalf of another, any insurer not then authorized to transact such insurance in this state in:
The solicitation, negotiation, procurement, or effectuation of insurance or annuity contracts, or renewals thereof;
The dissemination of information as to coverage or rates;
The forwarding of applications;
The delivery of policies or contracts
The inspection of risks;
The fixing of rates;
The investigation or adjustment of claims or losses;
The collection or forwarding of premiums: or in any other manner represent or assist
such an insurer in the transaction of insurance with respect to subjects of insurance resident, located1 or to be performed in this state. If the property or risk is located in any other state, then, subject to the provisions of subsection (4), insurance may only be written with or placed in any insurer authorized to do such business in such state or in an insurer with which a licensed insurance broker of such state may lawfully place such insurance.
* * *
626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative' s, service representative' s, managing general agent's or claims investigator's license or appointment.
If the license or permit is willfully used, or to be used, to circumvent any of the
requirements or prohibitions of this code.
Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either In person or by any form of dissemination of information or advertising.
Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.
Fraudulent or dishonest practices in the conduct of business under the license or permit.
(13) Willful failure to comply with, or willful violation of any proper order or rule of the department or willful violation of any provision of this code.
* * *
626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, managing general agent's or claims investigator's license or appointment.
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.
Violation of any lawful order or rule of the department.
(6) In the conduct of business under the license or permit, engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.
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:
misrepresentations and false advertising of Insurance policies - knowingly making, issuing, circulating, or causing to be made, issued or circulated any estimated illustration, circular, statement, sales presentation, omission, or comparison which:
1. Misrepresents the benefits, advantages, conditions, or terms of any
insurance policy.
(e) False statements and entries
1. Knowingly:
Filing with any supervisory or other public official,
Making, publishing, disseminating, circulating,
Delivering to any person,
Placing before the public,
Causing, directly or indirectly, to be made, published,
disseminated, circulated, delivered to any person, or placed before the public, any false material statement.
The Respondent aided and abetted Pacific Guardian, an unauthorized insurer, to transact insurance in this state and due to these transactions he is in violation of 626.901(1), 626.611(7), 626.611(8), 626.621(2), and 626.621(6), Florida Statutes.
5 The Respondent by his own admission knew the company he was representing, Pacific Guardian, did not possess authorization to transact insurance in this state yet he aided and abetted them in transacting business In the state and therefore he is in violation of 626.901(1), 626.611(4), 626611(7) , 626.611(8), 626.611(13) 626.621(2), and 626.621(6), Florida Statutes.
By taking and dating Pacific Guardian Applications in Tulsa, Oklahoma in an effort to circumvent Florida law until such time as Pacific Guardian was licensed in Florida, Respondent violated sections 626.901(1), 626.611(4), 626.611(5), 626.611(7), 626.611(8), 626.611(9) 626.611(13), 626.621(2), 626.621(6), 626.9521, and 626.9541(1)(e)1., Florida Statutes.
The above-referenced violations are all violations of various provisions of the Insurance Code and all are applicable to the business of insurance in the course of dealing under Respondent's license in contravention of Section 626.621(2), Florida Statutes.
Based on the foregoing enumerated violations and his actions, the Respondent has demonstrated, clearly and convincingly a lack of fitness or trustworthiness to engage in the business of insurance in violation of Section 626.611(7), Florida Statutes. Particularly in light of Respondent's knowledge that Pacific Guardian was not authorized to transact business in the State of Florida.
The Department's motion for attorney's fees for preparation for and attendance at the two hearings in this proceeding is denied as not being supported by good cause. Counsel for the Department was only required to present its case once, even if two hearings were scheduled. Even though most of the operative facts were ultimately essentially admitted1 there remained factual and legal disputes to be adjudicated at hearing, and the defense of the Petitioner's claim was not shown to be frivolous. No extra work was shown to be occasioned counsel for the Petitioner merely because two hearings were held, since the Petitioner only had to present its case-in-chief once, based upon the Hearing Officer's order.
There has been no proof of the costs of attendance (including travel costs) at the second hearing, or at either hearing, by the Department's counsel.
Consequently, in consideration of all of the circumstances involved in this proceeding, it is determined that attorney's fees are not due to the Department for its counsel's attendance at and preparation for the two hearings in this proceeding.
On the other hand, counsel for the Department has established justification for award of four hours of attorney's fees at $125.00 per hour for preparation of the Motions to Compel answers to Petitioner's second set of Interrogatories because of the long delays (five months) which were not justified by the Respondent. The Respondent waited many months without responding to the subject interrogatories and, indeed, was dilatory throughout the discovery process. Indeed, the Hearing Officer gave an extension of time to the Respondent to respond to the request for admissions, of which opportunity the Respondent did not avail himself. If the discovery rules had been complied with, the motion to Compel and proceeding thereon would not have been necessary. The Respondent offered no justification for the failure to timely respond to the discovery request propounded by the Petitioner. Timely request for extension of time to respond was not made. Consequently attorney's fees for preparing and arguing the Motions to Compel answers are justified, in the amount of $500.00.
Concerning the subject of costs for attendance at the hearing at which the Respondent or his counsel failed to appear, no proof of actual costs of the hearing has been adduced, other than the cost for the court reporter's fees in the amount of $76.73. The remaining "costs" shown in the affidavit attached to the Petitioner's motion are, in reality, statements of hours and hourly rates in support of the Petitioner's request for attorney's fees. This has not been shown to be a frivolous defense on the Respondent's part nor does the attorney's fee claim properly lie within the ambit of any other provision of Section 120.57 and 120.68 and Chapter 57, Florida Statutes, or the Florida Rules of Civil Procedure. The Petitioner did not incur any attorney fees in excess of the normal salary paid its attorney even in the absence of this proceeding. The Respondent has voluntarily paid the court reporter cost for the first hearing. Thus, the motion to tax costs has thereby been rendered moot, there being no proof of any other true costs attached to the first partially-abortive hearing.
The remaining elements referenced in the affidavit concerning attorney's fees have not been supported by a showing of good cause. The attorney's fee of $1,000.00 for preparing the "Motion for Hearing Officer to Make Findings of Fact", for instance, while it may have been accomplished by the Petitioner's counsel, certainly should not have taken eight hours to prepare.
In any event, the preparation of the motion and the resulting favorable order rendered it unnecessary for much hearing preparation and examination of witnesses at hearing to be performed by the Petitioner's counsel. Under those circumstances, there is no justification to award attorney's fees for this effort The same is true of the other elements of attorney's fees postulated by the Petitioner's counsel in the motion and affidavit.
With regard to the second hearing conducted herein, the costs for counsel's attendance at the hearing, at which counsel for the Department presented no witnesses, has not been placed of record. No substantial preparation by the Department's counsel for that hearing could have been required since the Department's counsel was not again required to put on its case and little preparation in terms of anticipated cross-examination was required.
Thus the motion to assess attorney's fees, other than for preparation of the above-referenced motion to compel, has, under the circumstances, not been
supported by a showing of good cause. Aside form the $500.00 to be awarded for preparation of the motion to compel, the motion for attorney's fees and costs is denied
PENALTY CALCULATIONS
Rule Chapter 4-231, Florida Administrative Code sets forth the Penalty Guidelines for Insurance Representatives. The twenty-five instances were each found to have been established by clear and convincing record evidence and each include multiple violations of Section 626.611, Florida Statutes. Where violations of Section 626.611, Florida Statutes are established, suspension or revocation of the Respondent's license is mandatory. (Section 626.611, Florida Statutes) . The penalty per count (PPC) is equal to the highest penalty provided by rule for any violation proven in each count. (Rule 4-231.030(6), Florida Administrative Code). Twenty-five violations of 626.901, Florida Statutes were established in this matter. The section 626.611(9), Florida Statutes violations at issue here were premised upon the underlying noncompliance with Section 626.901(1), Florida Statutes. The penalty for violation of section 626.611(9), Florida Statutes is nine (9) months suspension and the penalty for violation of section 626.901, Florida Statutes is six (6) months suspension. The PPC for each count would, therefore, be a nine (9) month suspension per Rule 4-231.100(36), Florida Administrative Code. The Total Penalty (the penalty before applying aggravating and mitigating factors) is, a two hundred twenty five month (225) suspension. (Rule 4- 231.030(8), Florida Administrative Code). Suspensions in excess of twenty-four months are proscribed by Section 626.641(1), Florida Statutes and are therefore appropriately treated as revocations pursuant to Section 626641(2), Florida Statutes. Pursuant to Rule 4-231.60, Florida Administrative Code, there are insufficient mitigating factors present in the instant case to warrant a reduction in the Total Penalty sufficient to reduce the Total Penalty to a level allowing suspension rather than revocation. The appropriate penalty, therefore, for Respondent's violations is the revocation of his licenses as an insurance agent in this state.
ACCORDINGLY, Respondent, WAYNE HARLAND CREASY's, licenses and eligibility for licensure are hereby REVOKED and Respondent is assessed $500 in attorney's fees which shall be paid to the Florida Department of Insurance within thirty days of the entry of this Final Order.
No person whose licenses, appointments and eligibility for licensure have been revoked by the Department shall have the right to apply for another license or appointment under the Insurance Code within two (2) years from the date of this Order of Revocation. The Department shall not, however, grant a new license or appointment or reinstate eligibility to hold such license or appointment if it finds that the circumstance or circumstances for which the eligibility was revoked or for which the previous license or application was revoked still exist or are likely to recur.
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 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.
Respondent shall immediately surrender to the Department his photo license identification.
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 rendition of this Order.
DONE and ORDERED this 21st day of May, 1996.
COPIES FURNISHED:
P. Michael Ruff Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
C. Rabon Martin, Esquire Martin and Associates The Martindale Penthouse
403 South Cheyenne Ave. Tulsa, OK 74103 32549
Willis F. Melvin, Esquire Florida Department of Insurance 612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
Bill Nelson Treasurer and
Insurance Commissioner
| Issue Date | Proceedings |
|---|---|
| Jul. 09, 1996 | BY ORDER OF THE COURT (Motion for return of cash deposit filed 07/02/96, is granted) filed. |
| Jul. 03, 1996 | Motion for Return of Cash Deposit (filed in the 1st DCA) filed. |
| Jun. 27, 1996 | BY ORDER OF THE COURT (Joint motion for conditional stay is granted) filed. |
| Jun. 17, 1996 | DCA Case No. 1-96-2256 filed. |
| Jun. 12, 1996 | Notice of Appeal filed. (filed by: ) Harry O. Thomas. |
| May 22, 1996 | Final Order filed. |
| May 20, 1996 | Respondent's Reply to Petitioner's Exceptions filed. |
| Apr. 01, 1996 | Recommended Order sent out. CASE CLOSED. Hearing held 11/28/95. |
| Mar. 12, 1996 | (Respondent) Response to Petitioner's Motion to Strike Respondent's Suggested Findings and Conclusions filed. |
| Feb. 16, 1996 | (Petitioner) Motion to Strike Respondent`s Proposed Recommended Order filed. |
| Feb. 08, 1996 | Respondent's Proposed Recommended Order; Recommended Order (for HO signature); Cover Letter filed. |
| Jan. 03, 1996 | Petitioner's Proposed Recommended Order filed. |
| Jan. 03, 1996 | Petitioner's Proposed Recommended Order filed. |
| Dec. 18, 1995 | Letter to W. Melvin from C. Martin Re: Reimbursement check for $76.73 for court reporter fee filed. |
| Dec. 05, 1995 | (Transcript) filed. |
| Dec. 05, 1995 | (Transcript) filed. |
| Nov. 28, 1995 | CASE STATUS: Hearing Held. |
| Nov. 13, 1995 | (Petitioner) Notice to Produce at Final Hearing filed. |
| Oct. 31, 1995 | Third Notice of Hearing sent out. (hearing set for 11/28/95; 1:30 P.M.; Pensacola) |
| Oct. 26, 1995 | Order sent out. (issues and costs of attorney's fees will be addressed) |
| Oct. 19, 1995 | (Petitioner) Response to Order filed. |
| Oct. 19, 1995 | (Petitioner) Response to Order filed. |
| Oct. 13, 1995 | Order sent out. (ruling on motion) |
| Aug. 15, 1995 | Petitioner`s Response to Respondent`s Motion to Vacate Default Order,If Any, Objection to Assessment of Fees And/Or Costs, And Request for Hearing On The Merits filed. |
| Aug. 14, 1995 | (Respondent) Motion to Vacate Default Order, If Any, Objection to Assessment of Fees And/Or Costs, And Request for Hearing On Merits filed. |
| Jul. 31, 1995 | Petitioner's Motion to Tax Fees And Costs filed. |
| Jul. 19, 1995 | CASE STATUS: Hearing Held. |
| Jul. 19, 1995 | CASE STATUS: Hearing Held. |
| Jun. 09, 1995 | Order sent out. (hearing rescheduled for 7/19/95; 10:00am; Pensacola) |
| Jun. 08, 1995 | (Petitioner) Notice to Produce at Final Hearing filed. |
| Mar. 30, 1995 | Respondent's Response to Order filed. |
| Mar. 10, 1995 | (Petitioner) Response to Order filed. |
| Mar. 01, 1995 | Order sent out. (parties shall advise the undersigned within 10 days from the date hereof of mutually agreeable hearing dates in March through June, 1995) |
| Feb. 20, 1995 | Objection to Motion for Continuance (Petitioner) filed. |
| Feb. 17, 1995 | (Petitioner) Motion for Hearing Officer to Make Findings of Fact filed. |
| Feb. 17, 1995 | (Respondent) Motion for Continuance filed. |
| Feb. 06, 1995 | Order sent out. (motion granted) |
| Jan. 18, 1995 | (Petitioner) Motion for Leave to File First Amended Administrative Complaint; First Amended Administrative Complaint filed. |
| Dec. 14, 1994 | Order sent out. (motion denied) |
| Dec. 12, 1994 | Respondent's Answers To Petitioner's Second Set Of Interrogatories filed. |
| Dec. 02, 1994 | Motion to Compel Answers To Petitioner's Second Set Of Interrogatories filed. |
| Oct. 18, 1994 | Second Notice of Hearing sent out. (hearing set for 2/27/95; 9:30am; Talla) |
| Sep. 26, 1994 | Respondent`s Answers to Petitioner`s Request for Admissions w/Respondent`s Answers to Petitioner`s Interrogatories; Respondent`s Answers to Petitioner`s Interrogatories filed. |
| Sep. 15, 1994 | Order sent out. (respondent shall respond to the request for admissions within 10 days of the date hereof) |
| Aug. 03, 1994 | (Petitioner) Motion for Hearing Officer to Make Findings of Fact Due to Respondent's Failure to Respond to Petitioner's Request for Admissions filed. |
| Jul. 11, 1994 | Respondent's Response to Order filed. |
| Jul. 08, 1994 | Notice of Service of Petitioner`s Second Set of Interrogatories Respondent, Wayne Harland Creasy filed. |
| Jun. 22, 1994 | Notice of Service of Petitioner's First Set of Interrogatories to Respondent, Wayne Harland Creasy filed. |
| May 17, 1994 | Order sent out. (hearing date to be rescheduled at a later date; parties to file status report within 10 days) |
| May 11, 1994 | (Petitioner) Motion for Continuance filed. |
| Apr. 08, 1994 | Notice of Hearing sent out. (hearing set for 6/20/94; 9:30am; Talla) |
| Mar. 18, 1994 | (Petitioner) Response to Initial Order filed. |
| Mar. 03, 1994 | Initial Order issued. |
| Feb. 25, 1994 | Agency referral letter; Administrative Complaint; Election of Rights (unsigned); Response to Administrative Complaint and Request for Formal Hearing filed. |
| Issue Date | Document | Summary |
|---|---|---|
| May 21, 1996 | Agency Final Order | |
| Apr. 01, 1996 | Recommended Order | Petitioner proved he did not sell policies in Florida for non-Florida licensed Company with any deceptive, fraudulent intent. Therefore, only guilty of above statute charge. |
