STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2367

)

EDWARD ALOYSIUS GARVEY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on November 2, 1994, in Melbourne, Florida.

APPEARANCES

For Petitioner: Lisa S. Santucci, Esquire

Department of Insurance and Treasurer Division of Legal Services

612 Larson Building

Tallahassee, Florida 32399-0333

For Respondent: J. C. Murphy, Esquire

Murphy & Murphy, P.A.

1901 South Harbor City Boulevard, Suite 805 Melbourne, Florida 32901

STATEMENT OF THE ISSUES

An administrative complaint dated April 4, 1994, alleges in a single count that Respondent, Edward Aloysius Garvey, violated various provisions of Chapter 626, F.S. by failing to reveal a proposed insured's pre-existing medical condition on an application for group health insurance.

The issue in this proceeding is whether the violations occurred and if so, what license discipline is appropriate.

PRELIMINARY STATEMENT

Mr. Garvey, through counsel, responded to the complaint and the case was referred to the Division of Administrative Hearings for a formal evidentiary hearing. After continuances for good cause, the case proceeded as described above.

In support of its complaint, the Department of Insurance presented the testimony of Patricia Foutt and Sondra Henry. The Department's two exhibits, the license status report and investigation file, were received in evidence without objection.

Mr. Garvey testified in his own behalf and presented the additional testimony of James Mitravich and Joseph Daly. His exhibits, a consumer assistance request form and an enrollment form were received in evidence as Respondent's exhibits #1 and #2; the latter exhibit was received over an objection based on relevancy.

The transcript was filed and with an extension of deadline, both parties filed proposed recommended orders. These have been considered and specific rulings on the proposed findings of fact are found in the attached appendix.

FINDINGS OF FACT

1. At all times relevant to these proceedings, Respondent, Edward Aloysius Garvey, was licensed as a life insurance agent, a life and health insurance agent, health insurance agent and dental care contract salesman.

   
   

2. On or about May 2, 1993, Mr. Garvey wrote an insurance application for group health insurance coverage for Patrica Foutt, of Palm Bay, Florida. Ms. Foutt was a new employee of Florida Diagnostic Imagery. The coverage was to have been provided by Fidelity Security Life Insurance Company.

   
   

3. Because Florida Diagnostic Imagery changed group insurers several times, May 2, 1993, was one of several visits Mr. Garvey made to assist with enrollment of the employees.

   
   

4. The enrollment and completion of applications took place in a small kitchen-like break room. Employees were in and out of the room. The enrollment forms were mostly completed by Mr. Garvey. He asked the questions and filled in the blanks with responses given by the employees.

   
   

5. There is a section of the application form involving a series of medical conditions. The form requires a yes or no check mark, and an explanation for any "yes" response. One of the medical conditions in the series is disease or disorder of the heart or circulatory system; there also is a question of whether the applicant received any treatment, surgery, consultation or advice (including prescriptions) for any conditions within the last 10 years.

   
   

6. Patrica Foutt's application form reflects a "yes" answer only for the latter question. On the space provided for explanation is this language: "1988

   - Last check-up. Dr. Thomas Rose [and his address]. Excellent health-no problems". Mrs. Foutt signed the application beneath this language:

   
   

   I represent that the above statement and answers are true and complete. Also, I under- stand that no Agent, Broker or Representative has authority to bind coverage and no insurance

   will become effective unless approved in writing by the Company. I understand that no agent, broker or representative is allowed to permit

   me to answer any question inaccurately or untruthfully and I represent that such did not occur. I further understand that any

   material omission or medical information or material misrepresentation can result in rescission of coverage. I understand that any condition which was diagnosed or treated within the twelve (12) month period to the

   effective date of insurance will not be covered until the insurance has been in effect for twenty-four (24) months.

   
   

7. Ms. Foutt has and, at the time the application was completed, had mitral valve prolapse. She claims she told Mr. Garvey that she had seen a cardiologist for this condition, but that Mr. Garvey said it was not significant enough to put on the form. Mr. Garvey denies that he was told about the condition.

   
   

8. After the application was taken, the company issued a policy to Ms. Foutt. She later went to see Dr. Rose again with some chest pain and a little palpitations. After she filed a claim on her policy, the policy was rescinded.

   
   

9. Sondra Henry was also employed at Florida Diagnostic Imagery in 1991. She was in the small room filling out her own application when she overheard Mr. Garvey's and Ms. Foutt's exchanges. She "believe[s] Ms. Foutt told Mr. Garvey that she suffered from micro valve prolapse and asked if it mattered".

   According to Ms. Henry, he replied "no, because it [was] a benign condition". (transcript pp 22-23)

   
   

10. No evidence whatsoever was presented on micro valve prolapse, also referred to as "MVP". Nor was any competent evidence presented on why Ms. Foutt's claim was denied and her policy cancelled. Both Ms. Foutt and Mr. Garvey were earnest, credible witnesses. Ms. Foutt claims she told Mr. Garvey about her micro valve prolapse; he does not remember that she told him and feels that if she had, he would have either noted it or checked with the underwriter. At the hearing, Ms. Foutt insisted that she gave correct responses to all of the questions on the application, and that she is in "excellent health" as noted on the form and has "no problems". (transcript p. 14) It is impossible to find that one person or the other is untruthful; it is more likely that there was a misunderstanding by one person or another. Without evidence of the nature and seriousness of micro valve prolapse, it is impossible to weigh Ms. Foutt's claim of "no problems" or to assess how that response should have affected Mr. Garvey's completion of her application.

    
    

11. No evidence was presented of prior misdeeds by Mr. Garvey. Two business owners for whose employees he has acted as agent for eight to ten years have never had any problems with Mr. Garvey's insurance representation.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to section 120.57(1), F.S.

    
    

13. According to the administrative complaint at issue, the simple one- count charge of misrepresentation subjects Respondent to discipline for myriad violations of the Florida insurance code, including:

    
    

    1. 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 [Section 626.611(5), Florida Statutes]

    2. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes]

    3. Fraudulent or dishonest practices in the conduct of business under the license or

       permit. [Section 626.611(9), Florida Statutes]

       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. [Section 626.621(2), Florida Statutes]

       2. 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. [Section 626.621(6), Florida Statutes]

       1. Knowingly making, issuing, circulating, or causing to be made, issued, or circulated,

          any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy.

       2. 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, e..Causing, directly or indirectly, to

             be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. [Section 626.9541(1)(e)1., Florida Statutes]

       3. [Making] false or fraudulent statements or representation on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money

       or other benefit from any insurer, agent, broker or individual [Section 626.9541(1) (k)1., Florida Statutes]

       (Administrative Complaint, dated 4/4/94)

       
       

14. As stated in the administrative complaint, the department seeks to revoke or suspend Respondent's licenses or to impose such lesser penalties as may be proper. In this proceeding, therefore, the department has the burden of proving the allegations of the complaint with evidence that is "clear and convincing". Ferris v. Turlington, 510 So 2d 292 (Fla. 1987)

15. The department has failed to meet this burden here.

...[C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must

be precise and explicit and the witnesses must

be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a

firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

Slomowitz v. Walker, 429 So 2d 797, 800 (Fla 4th DCA 1983)

RECOMMENDATION

Based on the foregoing, it is hereby, RECOMMENDED:

That the Department of Insurance enter a final order dismissing the complaint against Respondent, Edward Aloysius Garvey.

DONE AND RECOMMENDED this 13th day of January, 1995, in Tallahassee, Leon County, Florida.

MARY CLARK

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 13th day of January, 1995.

APPENDIX

The following constitute my specific rulings on the findings of fact proposed by the parties:

Petitioner's Proposed Findings

1. Adopted in paragraph 1.

2. Adopted in paragraph 2.

3. Rejected as unsupported by clear and convincing evidence.

4. Adopted in substance in paragraph 9; however, Ms. Henry's testimony was equivocal as she says she "believes" she overheard the question and response.

5. Rejected as unsupported by competent evidence.

6. Rejected as argument and unnecessary; while the first sentence is accurate, it is immaterial here since Petitioner failed to prove that the misrepresentation occurred.

Respondent's Proposed Findings

Respondent's proposed findings are substantially adopted here, except for paragraphs 5 through 7. While it was not clearly established that Ms. Foutt did not properly inform Mr. Garvey, it was not his burden to prove that she did not. If she did tell him of her condition, there was likely misunderstanding.

COPIES FURNISHED:

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, FL 32399-0300

Dan Sumner, Esquire Acting General Counsel Department of Insurance The Capitol, PL 11

Tallahassee, FL 32399-0300

Lisa S. Santucci, Esquire Dept. of Insurance & Treasurer 612 Larson Building

Tallahassee, FL 32399-0333

J. C. Murphy, Esquire

1901 S. Harbor City Blvd., Ste. 805 Melbourne, FL 32901

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA

OFFICE OF THE TREASURER, INSURANCE COMMISSIONER, AND FIRE MARSHALL

IN THE MATTER OF CASE NO. 94-L-342LSS

EDWARD ALOYSOIUS GARVEY DOAH CASE NO. 94-2367

/

FINAL ORDER

THIS CAUSE came on before me for the purposes of issuing a Final Agency Order. The hearing officer assigned by the Division of Administrative Hearings in the above-styled matter submitted a Recommended Order to the Department of Insurance and Treasurer. The Recommended Order entered January 13, 1995, by hearing officer, Mary Clark, is incorporated by reference.

FINDINGS OF FACT

The Department of Insurance and Treasurer hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order as modified by rulings on exceptions.

RULINGS ON EXCEPTIONS

Counsel for petitioner filed two numbered exceptions to the Recommended Order's findings of fact. The petitioner's exception to paragraph 10 of the hearing officer's findings of fact is granted as that exception relates to the presence of competent, substantial evidence in the record submitted to show why Patricia Foutt's claim was denied and her health insurance policy was cancelled. The hearing officer found at the second sentence of finding 10: "Nor was any competent evidence presented on why Ms. Foutt's claim was denied and her policy cancelled." The petitioner submitted its composite exhibit 2, which was admitted without objection, which included a letter dated May 18, 1992, from AMS Administrators. This letter stated in pertinent part the reason for Patricia Foutt's policy being cancelled as follows:

Enclosed is a copy of the enrollment form which was completed and signed by you on May 2, 1991. If the information obtained during the investigation of this claim had been reflected on the enrollment form, coverage would not have been approved based on records received from the above. [services rendered by Dr. Thomas Rose] Therefore, in view of the omission of pertinent medical information that would have been material to our underwriting decision, we have no alternative except to terminate coverage under the policy retroactive to June 1, 1991.

The petitioner's exception to paragraph 10 of the hearing officer's findings of fact is denied as that exception relates to the assessability of Ms. Foutt's statements concerning mitro-valve prolapse. The hearing officer found at finding of fact 10.:

Without evidence of the nature and seriousness of mitro valve prolapse, it is impossible to weight Ms. Foutt's claim of "no problem" or to assess how that response should have affected Mr. Garvey's completion off her application.

The petitioner argues that based on its May 18, 1992, letter from AMS Administrators (petitioner's composite exhibit 2) the seriousness of the mitro- valve prolapse was irrelevant to the issue of why Ms. Foutt's policy was cancelled. The petitioner argues that the omission of disclosure caused the cancellation of Patricia Foutt's health insurance policy. However, petitioners composite exhibit 2 contradicts this argument. The May 18, 1992, letter from AMS Administrators states in pertinent part:

. . . The Underwriting Committee has completed their review of claims submitted for services rendered to you by Dr. Thomas Rose.

When you made application for coverage, you were required to submit evidence of insurability. Enclosed is a copy of the enrollment form which was completed and signed by you on May 2, 1991. If the information obtained during the investigation of this claim had been reflected on the enrollment form, coverage would not have been approved based on records received from the above. Therefore, in view of the omission of pertinent medical information that would have been material to our underwriting decision, we have no alternate except to terminate coverage under the policy retroactive to June 1, 1991."

The record demonstrates that it was not simply that some information was omitted from the application that caused the policy to be cancelled. The nature of the risk judged to be material to the company's underwriting decision caused cancellation.

The petitioner in its exception attacks that portion of findings of fact 10 wherein the hearing officer, while finding Patricia Foutt a credible witness, "without explanation, leaps to the conclusion that there must have been a misunderstanding between Ms. Foutt and Mr. Garvey." The petitioner asserts that "[t]here is no record evidence to indicate a misunderstanding and this finding of fact should be rejected as being speculative." The record reflects that the hearing officer found both Edward Garvey and Patricia Foutt to be credible witnesses. The record further reflects that these witnesses had diametrically opposed views of the facts relating to the taking of Patricia Foutt's medical history portion of her health insurance application. The hearing officer did not only find Patricia Foutt's testimony credible, the hearing officer also found Edward Garvey's testimony to be credible. The hearing officer then tactfully or accurately, as the case may be, found under the circumstances a

"misunderstanding." This finding is supported by competent and substantial evidence in the record. Such diplomacy from the bench is not to be found in error.

The petitioner filed an exception to the Recommended Order's finding of fact 11. as being irrelevant. Finding of fact 11. in its entirety states:

"11. No evidence was presented of prior misdeeds by Mr. Garvey. Two business owners or whose employees he has acted as agent for eight to ten years have never had any problems with Mr. Garvey's insurance representation."

This finding is supported by competent and substantial evidence in the record. It is not irrelevant as it is corroborating evidence supporting the finding that Mr. Garvey's testimony was credible. The finding of fact placed at issue by this exception is not controlling to the case, but it is not irrelevant as it relates to a noncontrolling fact, lack of any pattern of previous violations.

CONCLUSIONS OF LAW

The Department of Insurance and Treasurer hereby adopts and incorporates by reference the Conclusions of Law set forth in the Recommended Order.

EXCEPTION TO CONCLUSION OF LAW

The petitioner filed an exception to the hearing officer's conclusion of law contained at paragraph 15. of the Recommended Order. That conclusion found that the Department of Insurance and Treasurer failed to meet its burden by clear and convincing evidence. Conclusion of law 15. defined that burden as:

The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction without hesitancy, as to the truth of the allegations sought to be established. (Slomowitz vs. Walker, 429 So.2d. 9, 800 Fla. 4th DCA, 1983.)

The petitioner argues in its exception to the Recommended Order's conclusion of law at paragraph 15 ". . . that the burden of proof has been met by clear and convincing evidence of two witnesses to the same event and corroborating documentary evidence." The trier of fact weighed the evidence of the entire record and found that the burden was not met. There is clear and convincing evidence in the record to support the trier of fact's weighing of the totality of the evidence presented in this case and concluding as was done.

Inter alia, there is clear and convincing evidence in the record that it was not the practice of Edward Garvey to use small check marks. He testified that he did not make the check marks in question. Patricia Foutt was asked three times whether she made the check marks, once on direct and twice on cross examination. Each time her answer was that she did not know. The medical history of Patricia Foutt, as part of her health insurance application, which was a central factual issue of this case, reflects that questions calling for "yes" and "no" answers were completed with small check marks.

Based upon the foregoing, it is

ADJUDGED, that the complaint against the respondent, EDWARD ALOYSIUS GARVEY, is dismissed.

DONE and ORDERED this 22nd day of February, 1995, in Tallahassee, Florida.

BILL NELSON TREASURER AND

INSURANCE COMMISSIONER

COPIES FURNISHED:

J. C. MURPHY, ESQUIRE Murphy & Murphy, P.A.

1901 South Harbor City Boulevard Suite 805

Melbourne, Florida 32901

LISA S. SANTUCCI, ESQUIRE

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0222

Docket for Case No: 94-002367

Orders for Case No: 94-002367