STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND )

TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 95-5926

)

ARMANDO DEJESUS SILVA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on February 23, 1996, in Miami, Florida.

APPEARANCES

For Petitioner: Ross Stafford Burnaman, Esquire

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

For Respondent: Charles J. Grimsley, Esquire

Charles J. Grimsley and Associates, P.A. 1880 Brickell Avenue

Miami, Florida 33129 STATEMENT OF THE ISSUE

Whether Respondent, a licensed insurance agent, committed the offenses alleged in the Administrative Complaint and the penalties, if any, that should be imposed.

PRELIMINARY STATEMENT

Respondent has been a licensed insurance agent at all times pertinent to this proceeding. On October 12, 1995, Petitioner filed an administrative complaint against Respondent that contained certain factual allegations pertaining to Respondent's and Richard Camejo's (an unlicensed trainee who was supervised by Respondent) dealings with a consumer named Charles David Countin. Based on those factual allegations Petitioner charged Respondent with multiple violations of the Florida Insurance Code. Specifically, Petitioner charged that Respondent:

1. Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance. [Section 626.611(7), Florida Statutes.]

2. Engaged in fraudulent or dishonest practices in the conduct of business under the license or permit. [Section 626.611(9), Florida Statutes.]

3. Willfully failed to comply with, or willfully violated any proper order or rule of the department or willfully violated any provision of the insurance code.

   [Section 626.611(13), Florida Statutes.]

4. Violated any provision of the insurance code or any other law applicable to the business of insurance in the course of dealings under the license or permit.

   [Section 626.621(2), Florida Statutes.]

5. Engaged in unfair methods of competition or in unfair or deceptive acts or practices

   in the conduct of business under the license or permit, as prohibited under Part X of Chapter 626, Florida Statutes, or otherwise showed himself to be a source of injury or loss to the public or detrimental to the public interest. [Section 626.621(6), Florida Statutes.]

6. Willfully used his license or appoint- ments to circumvent requirements of the insurance code which prohibit unlicensed persons from transacting insurance.

   [Sections 626.611(4) and 626.112(1), Florida Statutes.]

7. Knowingly aided, assisted, procured, advised or abetted any person in violation of, or to violate, a provision of the insurance code.

Respondent timely denied the allegations of the administrative complaint, the matter was referred to the Florida Division of Administrative Hearings, and this proceeding followed.

At the formal hearing, the Petitioner presented the testimony of Charles David Countin and had eight exhibits marked, six of which were admitted into evidence. The other two Petitioner exhibits were not moved into evidence. At the request of the Petitioner, official recognition was taken of Sections 626.611, 626.621, 626.112, 626.551, 624.10, Florida Statutes, Chapter 4-231,

Florida Administrative Code, the consent order entered in the Department's Case No. 07200-93-A, and the Respondent's responses to requests for admissions.

Respondent testified on his own behalf and presented the additional testimony of Edward MacDougall and Richard Camejo. Respondent offered three exhibits, each of which was admitted into evidence.

The parties filed a prehearing stipulation which contained certain stipulated facts. Those stipulated facts have been incorporated in this Recommended Order as findings of fact to the extent they are relevant.

A transcript of the proceedings has been filed. On motion of the Respondent, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the requirement

that a recommended order be rendered within thirty days after the transcript is filed was waived. Rule 60Q-2.031, Florida Administrative Code. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent is currently licensed in Florida as a residential property and casualty joint underwriting associate, a life and health insurance agent, and a general lines property, casualty, surety, and miscellaneous lines agent.

   
   

2. At all times pertinent to this proceeding, Respondent was an agent for Federal Kemper Life Assurance Company (Kemper Life).

   
   

3. At all times pertinent to this proceeding, Respondent was employed as an insurance agent with All Dade Insurance Agency in Perrine, Florida (All Dade).

   
   

4. In April 1987, Richard Camejo (a/k/a Ricardo Camejo) was an unlicensed person and employee of All Dade. At the times pertinent to this proceeding, Mr. Camejo was a trainee and worked under Respondent's supervision. As a trainee, Mr. Camejo did some office work for the Respondent and tried to learn the insurance business. Mr. Camejo occasionally accompanied Respondent when he met with prospective customers outside the office.

   
   

5. Prior to their employment by All Dade, Respondent had his own business named "A. Silva and Associates" where Respondent was the managing agent and Mr. Camejo worked under his supervision as a trainee. Mr. Camejo's responsibilities at both businesses were vague. He did not have regular hours and Respondent, his supervisor, often did not know where he was or what he was doing.

   Respondent had a difficult time monitoring Mr. Camejo's activities as a trainee at All Dade.

   
   

6. Respondent tried to help Mr. Camejo get started in the insurance business because he regarded him as a friend.

   
   

7. Mr. Camejo was not well-versed in insurance products. He had shown little interest in the insurance business and was not very productive. His main interest during the Fall of 1986 through the Spring of 1987 was in body building. Consequently, he spent a lot of his time in health clubs.

   
   

8. Respondent knew that Mr. Camejo was not licensed to engage in the business of insurance. It is not uncommon for persons to work as trainees prior to being licensed in order to learn the insurance business.

   
   

9. In the Fall of 1986, Charles David Countin was in the process of building a new restaurant in Bayside Mall, Miami, Florida. Mr. Camejo met one of Mr. Countin's associates at a health club and discussed the fact that Mr. Camejo was in the insurance business. Mr. Camejo met Mr. Countin through his associate in the Fall of 1986 and had discussions with him about his insurance needs. Mr. Camejo expressed an interest in aiding Mr. Countin with his insurance requirements for the new restaurant business he was starting and presented him with general marketing brochures.

   
   

10. Toward the end of 1986, Mr. Camejo visited Mr. Countin on the construction site at Bayside Mall and at his home to further discuss Mr. Countin's insurance needs. Mr. Countin wanted several policies, including a

    health insurance policy and a retirement policy. Mr. Camejo did not understand that Mr. Countin wanted was a retirement policy. He thought the second policy was a life insurance policy to secure a buy-sell agreement relating to Mr.

    Countin's interest in the new restaurant.

    
    

11. Respondent was not present during the preliminary discussions between Mr. Camejo and Mr. Countin about the latter's insurance needs. Mr. Countin never discussed with Respondent his desire for a retirement policy.

    
    

12. Mr. Camejo presented Mr. Countin with a business card that indicated he was an agent of Federal Kemper employed by All Dade. This business card was printed without authority of anyone at All Dade. Respondent had no authority to order the printing of such cards.

    
    

13. Mr. Camejo made verbal representations that led Mr. Countin to believe that Mr. Camejo was a licensed insurance agent. The presentation of the business card and the verbal representations by Mr. Camejo as to his status as an insurance agent were made without the knowledge or consent of the Respondent.

    
    

14. Mr. Camejo introduced Respondent to Mr. Countin in April 1987. Respondent believed that Mr. Countin wanted a life insurance policy to secure a buy-sell agreement. Respondent had never sold a policy of insurance for a buy- sell agreement and was not certain how such agreements worked.

    
    

15. There were at least two meetings involving Respondent, Mr. Camejo, and Mr. Countin. During the first meeting, Respondent made the presentation to Mr. Countin because Respondent viewed Mr. Camejo as being timid and knew that he was not experienced. Respondent testified that ". . . after we had established what Mr. Countin needed . . ." he presented Mr. Countin with two proposals for different life insurance policies. Respondent did not submit to Mr. Countin a proposal for a retirement policy because Mr. Countin did not tell Respondent that he wanted a retirement policy and not a life insurance policy. The brochures pertaining to the life insurance policies discussed cash surrender values, which may have contributed to the misunderstanding between Mr. Countin and Respondent.

    
    

16. On April 13, 1987, Respondent, Mr. Camejo, and Mr. Countin met to finalize the insurance applications. Mr. Camejo asked Mr. Countin for the information that was necessary to complete the application and, based on that information, filled out the application for Respondent's and Mr. Countin's signatures. Mr. Countin testified that he signed the application, including the section stating that he has read all questions and that his answers are true and correct. Mr. Countin admitted that the application form contained no reference to retirement and that the questions pertained to life insurance, death benefits, and beneficiaries. In response to the question as to the purpose of the insurance, the "buy/sell" answer was circled. Respondent collected money from Mr. Countin, signed his application to Federal Kemper as agent and as a witness, and certified to Federal Kemper that the application had been prepared in conformance with the company's rules, guidelines, and instructions.

    
    

17. As part of Kemper Federal's underwriting requirements, Respondent submitted a letter to Kemper Federal documenting that the insurance policy was being submitted for the purpose of executing a buy/sell agreement.

    
    

18. Respondent gave Mr. Camejo portfolios or policy jackets within which a customer could keep his policy of insurance. These portfolios or policy jackets had the name "A. Silva and Associates" embossed upon them. Without Respondent's

    knowledge or consent, Mr. Camejo gave to Mr. Countin one of these portfolios and stapled one of his business cards to the portfolio. This business card identified Mr. Camejo as an insurance agent with Federal Kemper. The telephone number and address on the business card are the telephone number and address used by Respondent.

    
    

19. Respondent submitted Mr. Countin's application to Federal Kemper. Federal Kemper issued to Mr. Countin a life insurance policy (No. 5006813) with an effective date of May 13, 1987. This life insurance policy does not provide a retirement benefit. Respondent received a commission for this policy.

    
    

20. Mr. Countin is a college graduate and holds a Masters Degree in Administration. Mr. Countin did not read the cover policy or the policy itself. Had he read the cover page for the Federal Kemper policy or the policy itself, he should have known that the policy was a life insurance policy. Had he read the cover page, Mr. Countin would have known that he had a period of twenty days to cancel the policy and have his premiums returned if the policy was not what he wanted.

    
    

21. In 1994, Mr. Countin read an article that Federal Kemper was about to be purchased by another insurer. When he contacted Federal Kemper to determine whether his policy would be impacted by the buy-out, he learned that his policy was a life policy and not a retirement policy. He thereafter employed an attorney in an attempt to require Federal Kemper to convert his life policy to a retirement policy. Mr. Countin incurred attorney's fees of approximately $2,000 in this unsuccessful effort. Thereafter, Mr. Countin complained to Petitioner about this transaction.

    
    

22. Respondent was the Respondent in a Department of Insurance Consent Order in Case No. 07200-93-A, styled In the Matter of: Armando DeJesus Silva.

    
    

23. On or about September 28, 1994, Mr. Countin complained to the Petitioner regarding the actions of Mr. Camejo and the Respondent as to the transaction of insurance which resulted in the Federal Kemper life insurance policy.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

25. Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So.2d 112 (Fla. 1st DCA 1989). Evans Packing, supra, 550 So. 2d 112, 116, fn. 5, provides the following pertinent to the clear and convincing evidence standard:

    
    

    That standard has been described as follows: [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 evidence 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 the firm belief of (sic) 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).

    
    

26. The gravamen of Petitioner's administrative complaint is that Respondent aided and abetted Mr. Camejo in the unlicensed transaction of insurance business. Section 624.10, Florida Statutes, defines "transact" with regard to the business of insurance, to include any of the following: "solicitation or inducement; preliminary negotiations; effectuation of a contract of insurance; and transaction of matters subsequent to the effectuation of a contract of insurance and arising out of it."

    
    

27. Mr. Camejo committed acts that should be considered the transaction of insurance in his dealings with Mr. Countin. Mr. Camejo held himself out as an insurance agent, solicited business from Mr. Countin, and engaged in preliminary negotiations with him. There was insufficient evidence to establish that Respondent aided or abetted Mr. Camejo in this unauthorized transaction of insurance, or that he knew or should have known of Mr. Camejo's activities. Petitioner did not prove that Respondent was vicariously liable for Mr. Camejo's actions.

    
    

28. The Petitioner failed to establish by clear and convincing evidence that Respondent knew or should have known of Mr. Camejo's dealings with Mr. Countin prior to April 1987 when Mr. Camejo told him that Mr. Countin was interested in buying a health insurance policy and a life insurance policy.

    Once he knew that Mr. Countin was interested in purchasing insurance, Respondent met with him and discussed his insurance needs with him. Based on the information that Mr. Countin and Mr. Camejo gave him, Respondent believed that Mr. Countin wanted to purchase a life insurance policy to be used in connection with a buy/sell agreement. Petitioner failed to establish that Respondent was not entitled to rely on this lead furnished by Mr. Camejo or on the information given to Respondent during his interview with Mr. Countin. That Mr. Countin did not receive the product he wanted is an unfortunate fact that resulted from miscommunications between Mr. Countin and Mr. Camejo. However, the evidence did not establish that Respondent tried in any way to trick or defraud Mr. Countin, that he failed to explain the product he was selling, or that he was otherwise responsible for this mistake.

    
    

29. Petitioner has failed to establish by clear and convincing evidence that Respondent committed the violations alleged in the administrative complaint.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a final order that adopts the

findings of fact and conclusions of law contained herein and dismisses the charges brought against Respondent.

DONE AND ENTERED this 13th day of May 1996 in Tallahassee, Leon County, Florida.

CLAUDE B. ARRINGTON, 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 May 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5926

The following rulings are made as to the proposed findings of fact submitted by Petitioner.

1. The proposed findings of fact in paragraphs 1-9, 11-22, 27, 29-33, 35, 36, and 44-52 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraph 10 are rejected as being unnecessary to the conclusions reached since the administrative complaint does not charge Respondent with that failure.

3. The proposed findings of fact in paragraphs 23-25, 28, 34, 53, and 54 are subordinate to the findings made.

4. The proposed findings of fact in paragraph 26 are adopted in material part by the Recommended Order, but the proposed finding as to the date this meeting occurred is not substantiated by the record.

5. The proposed findings of fact in paragraphs 37-43 are rejected as being unnecessary to the conclusions reached since the proposed findings deal with transactions not alleged in the administrative complaint.

6. The proposed findings of fact in paragraphs 55-61 are rejected as being argument or as being unnecessary to the conclusions reached.

The proposed findings of fact submitted by the Respondent are adopted in material part by the Recommended Order or are subordinate to the findings made.

COPIES FURNISHED:

Ross S. Burnaman, Esquire Department of Insurance Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-0333

Charles J. Grimsley, Esquire 1880 Brickell Avenue

Miami, Florida 33129

Honorable Bill Nelson

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Dan Sumner, General Counsel Department of Insurance

The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least 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.

Docket for Case No: 95-005926

Orders for Case No: 95-005926