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Petitioner, )
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vs. ) CASE NO. 96-5055
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)
Respondent. )
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RECOMMENDED ORDER
A FORMAL HEARING was heard before the Division of Administrative Hearings by Administrative Law Judge, Daniel M. Kilbride, on February 3 and 4, 1997 in Lakeland, Florida. The following appearances were entered:
APPEARANCES
For Petitioner: Mechele R. McBride, Esquire
Department of Insurance and Treasurer
200 East Gaines Street Tallahassee, Florida 32399-0333
For Respondent: Charles J. Grimsley, Esquire
Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue
Miami, Florida 33129
STATEMENT OF THE ISSUES
Whether Respondent's insurance agent’s license should be disciplined for the alleged violations of the Florida Insurance Code as set forth in the Administrative Complaint.
PRELIMINARY STATEMENT
The Petitioner filed an Administrative Complaint on May 21, 1996, charging Respondent, a Florida insurance agent licensed by Petitioner, with violations of various provisions of Chapter 626, Florida Statutes, and sought to impose disciplinary sanctions against Respondent's licenses and eligibility for licensure. On June 6, 1996, the Respondent filed a Response, an Election of Rights and a request for a formal hearing, pursuant to Section 120.57(1), Florida Statutes. On June 7, 1996, Respondent requested a waiver of the immediate referral of the matter to the Division of Administrative Hearings. This matter was subsequently forwarded to the Division of Administrative Hearings on October 29, 1996 and this proceeding followed. This cause was set for hearing, but continued in order to permit the Petitioner to file an Amended Administrative Complaint which added five additional counts, and to permit sufficient time to complete discovery.
At the formal hearing, Petitioner presented the testimony of two (2) witnesses, and forty-six (46) documents were admitted in evidence. Respondent testified in his own behalf, and submitted eight (8) exhibits in evidence. The hearing was recorded and the transcript was filed on February 17, 1997. By stipulation, the parties agreed to file proposed findings of fact and conclusions of law thirty days after the filing of the transcript or the filing of the last deposition. Petitioner filed its proposed
recommended order on March 27, 1997. Respondent has not filed a proposed order as of the date of this order.
Based upon all of the evidence, the following findings of fact are determined:
FINDINGS OF FACT
Petitioner, Department of Insurance and Treasurer, is the state agency charged with the responsibility of licensing and monitoring the business activities of insurance agents to assure statutory compliance with the Florida Insurance Code.
The Respondent, Duane Alexander Zolnoski, is currently eligible for licensure and is licensed in this state as a general line insurance agent, and was so licensed at all times relevant to these proceedings.
The Florida Department of Insurance and Treasurer has jurisdiction of Respondent’s licenses and appointments.
At all times relevant to the dates and occurrences referred to herein, Respondent was an officer and an insurance agent of Citi Insurance Services, a Florida corporation, doing business in Lakeland, Florida.
At all times relevant to the dates and occurrences referred to herein Respondent was the president, agent of record, and owner of Citi Insurance Services.
At all times relevant to the dates and occurrences referred to herein, in the applicable regular course of business, the normal processing time for Citi Insurance Services to forward
insurance applications and insurance premium down payments to insurance companies is three (3) business days.
At all times relevant to the dates and occurrences referred to herein, in the applicable regular course of business, the normal processing time for Citi Insurance Services to forward insurance applications and insurance premium down payments to financial companies is five (5) business days.
On or about February 4, 1995, an insurance application was completed and signed by Julio Rojas and Respondent.
On or about February 4, 195, Rojas purchased an automobile insurance policy with Old Dominion Insurance Company (hereinafter referred to as “Old Dominion) from Respondent.
On or about February 4, 1995, Respondent explained to Rojas that he would mail the insurance application and insurance premium down payment to Old Dominion and that Old Dominion would send him his policy and schedule of payments within 15 to 20 days.
In accordance with the agreement between Old Dominion and Citi Insurance Services, the insurance agency and the agents of the insurance agency do not have binding authority. The agency and the agents can only submit business that will be bound by Old Dominion.
Under the Old Dominion underwriting procedures, Respondent should have either immediately requested a binder number from Old Dominion, marked the binder number on the application or faxed the application as soon as it was signed.
Old Dominion would assign a binder number, enter it in the binder log and the policy would become effective.
Respondent failed to fax Rojas’ insurance application until February 6, 1995, two days after the insurance transaction with Rojas.
Rojas’ insurance application was not bound on the day he purchased it.
Under Old Dominion underwriting procedures, and the contract between Old Dominion and Citi Insurance Services, Respondent was required to mail the original application and the insurance premium down payment within seventy-two (72) hours of receipt of the insurance premium down payment and the original insurance application. The agents are sometimes permitted to send the original insurance application ten (10) to fourteen (14) days after the effective date of the policy to Old Dominion.
Respondent did not mail the original insurance application or Rojas’ insurance premium down payment to Old Dominion within seventy-two hours of the application being signed.
Respondent did not send the original insurance application or Rojas’ insurance premium down payment to Old Dominion within 10 to 14 days after the application was completed.
Rojas’ original application was not mailed to the company at all. Therefore, Old Dominion never received the original insurance application from Respondent.
Old Dominion mailed out a notice of cancellation of the binder to Rojas on February 24, 1995 stating that his insurance with Old Dominion would be canceled March 3, 1995, because no money and no application had been received.
Old Dominion also mailed out a notice of cancellation of the binder to Citi Insurance Services.
Respondent drafted a check to Old Dominion for Rojas’ insurance premium down payment of eighty ($80.00) dollars on March 8, 1995. This was after the insurance was canceled by Old Dominion and thirty-one days after Respondent received the money from Rojas.
Old Dominion received the check Respondent sent for Rojas’ insurance premium down payment on March 13, 1995.
The billing department of Old Dominion processed the check that was sent by Respondent for Rojas as a payment because there was no other information sent to Old Dominion with this payment.
Respondent did not resolve the underwriting problem between Rojas and Old Dominion.
In February and March 1995, Rojas did not receive his insurance policy nor the schedule of payment from Old Dominion.
On or about August 7, 1995, Rojas called Old Dominion and was informed that Old Dominion had no records of any insurance policy owned by him.
On or about August 8, 1995, Rojas spoke to Respondent about the insurance policy with Old Dominion, and Respondent
sought to have Rojas to fill out another insurance application so that Respondent could write another policy.
On or about August 13, 1995, approximately six (6) months after Rojas transacted insurance with Respondent, Citi Insurance Services refunded the insurance down payment to Rojas by a check that was signed by Respondent.
As a result of Respondent’s actions, Rojas did not have insurance coverage for his automobile for a six month period of time due to the negligence of Respondent.
As a result of Respondent’s actions, Rojas’ driver’s license was placed in jeopardy of suspension or revocation.
On or about August 12, 1995, Kenny Bingle purchased a 1991 Ford Mustang from T. Thomas Chevrolet.
On or about August 12, 1995, Bingle called Respondent to inquire about an insurance policy and requested changes to existing insurance coverage. Bingle requested that his insurance coverage be upgraded to full coverage, with his insurer, American Southern Insurance Company, to cover the purchase of a used 1991 Ford Mustang which he was financing through the dealership.
Respondent’s binding authority with American Southern Insurance Company had been terminated prior to August 12, 1995, because he bounced checks to them and the insurance company had received complaints about lack of service from Citi Insurance Services. Respondent did not inform Bingle of this fact.
On or about August 15, 1995, Bingle received a telephone call from T. Thomas Chevrolet advising him that they
had not received any paperwork from Citi Insurance Services pertaining to the insurance coverage for his newly purchased automobile. On or about August 12, 1995, Respondent had failed to make Bingle’s requested changes.
On or about August 15, 1995 Bingle contacted Respondent and asked him to forward the information about his insurance coverage with American Southern Insurance Company to T. Thomas Chevrolet.
T. Thomas Chevrolet then received a facsimile transmission of Bingle’s insurance coverage for the 1991 Ford Mustang and the automobile was released into the possession of Bingle.
On or about August 25, 1995, Bingle’s 1991 Ford Mustang was stolen.
On or about August 25, 1995, Bingle contacted Respondent to inform him of the theft of his car.
On or about August 26, 1995, Respondent went to Bingle’s place of business, filled out an insurance application with Transport Insurance Company that was not dated nor signed by Respondent or Bingle. Respondent left only the front page of the application with Bingle.
Respondent mailed the insurance application to Transport Insurance Company, dated August 22, 1995, a date prior to the theft of Bingle’s car.
The postmark on the envelope that the insurance application was mailed in was dated August 26, 1995.
An inspection form also had to be sent in by the agent or the insurance policy would be canceled. The inspection form for the 1991 Ford Mustang that was filled out, signed and dated August 22, 1995, by Respondent, was sent to Transport Insurance Company by Respondent without an inspection of the 1991 Ford Mustang.
Bingle filed a claim for his stolen car with Transport Insurance Company. This claim was denied when it was determined that the application was completed after the theft of the car.
As a result of Respondent’s negligent and fraudulent actions, Bingle was without insurance at the time of the theft of his newly purchased car, and he received no money from any insurance company for the car being stolen.
On or about November 7, 1995, Rosa Ortiz went to Citi Insurance Services and paid the October 25, 1995 insurance premium payment of sixty dollars and eighty-five cents ($60.85).
Ortiz went into Citi Insurance Services because her insurance premium payment was late. Ortiz had been told that she could pay the payment at Respondent’s office and it would be forwarded to Gold Coast Finance, Inc.
On or about November 7, 1995, Ortiz received a receipt from Citi Insurance Services that was signed by Respondent for the premium payment.
The insurance premium payment of sixty dollars and eighty-five cents ($60.85) should have been forwarded to Gold
Coast Finance, Inc. within five to seven days in the applicable regular course of business.
Ortiz’s insurance policy was canceled on or about November 15, 1995, due to non-payment of insurance premium.
An insurance premium payment for Ortiz was received by Gold Coast Finance, Inc. on December 13, 1995, thirty-five days after Ortiz made her payment to Respondent.
On or about December 21, 1995, the check Respondent sent to Gold Coast Finance, Inc. was returned by the bank as an insufficient (NSF) funds check.
Gold Coast Finance, Inc. sent out a notice of cancellation of the insurance policy to the agency and the insured.
The insured, Ortiz, disregarded the notice of cancellation because Citi Insurance Services assured her that everything would be taken care of.
On or about February 21, 1996, Gold Coast Finance, Inc. forwarded to Respondent a check in the amount of one hundred twenty-five dollars and seventy-five ($125.75) that was to be returned to Ortiz.
Ortiz did not receive her refund check until January 29, 1997, approximately eleven (11) months after Citi Insurance Services, Inc. received the refund check from Gold Coast Finance, Inc.
As a result of Respondent’s failure to forward her insurance premium payment to Gold Coast Finance, Inc., Ortiz’s
insurance policy was canceled, and she was without insurance at the time her car was vandalized.
On or about August 30, 1995, Respondent sold Bobby Joe Davis, Jr. full insurance coverage on his 1986 automobile. Davis paid Respondent a down payment of one hundred forty-nine dollars ($149.00)
Davis expected to receive a payment booklet from the finance company and an insurance policy from the insurance company.
On or about November 3, 1995, Davis received a ten day notice of intent to cancel his insurance policy because he was late on his October 1995 payment.
Citi Insurance also received a ten day notice of intent to cancel Davis’ insurance policy from the finance company, Gold Coast Finance, Inc.
On or about November 9, 1995, Davis was instructed to bring the late payment to Citi Insurance and Citi Insurance would forward it to the finance company immediately.
The payment was not forwarded to the finance company until on or about November 17, 1995.
In the meantime, Davis was advised that his insurance coverage would be canceled due to nonpayment of the October insurance premium.
On or about November 17, 1995, Davis did receive a notice of reinstatement from the finance company concerning his insurance policy.
The notice of reinstatement states in part, “Dear insured . . . we are extending you the courtesy of requesting a reinstatement of your policy by your insurance company. However, the decision to do so is entirely theirs. You might not currently have insurance coverage and we strongly suggest that you contact your agent immediately for his advice and instruction.”
Pursuant to the notice of reinstatement from the finance company, Davis did contact Citi Insurance Services, the insurance agency, and was advised that he was reinstated.
On or about December 7, 1995, Davis sent in another insurance premium payment to the finance company.
On or about December 9, 1995, Davis was involved in an automobile accident. Upon notification of the accident to the insurance company, he was informed that his insurance policy had been canceled for non-payment of the October premium.
As a result of Respondent’s inaction, Davis’ insurance premium payment was not forwarded in the applicable regular course of business. This failure to timely forward the insurance premium payment caused the cancellation of Davis’ insurance policy.
As a result of Respondent’s action, David did not have insurance coverage at the time his car was damaged in an accident.
On or about February 14, 1996, Michael Anthony purchased full insurance coverage from Respondent for his 1986 Mercury Cougar, which included rental car reimbursement coverage.
On or about February 14, 1996, Michael Anthony gave Respondent an insurance premium down payment of one hundred seventeen dollars ($117.00).
Anthony was assured that his insurance coverage included rental car reimbursement coverage.
Approximately three weeks later, Anthony contacted Respondent because he had no record that he had insurance coverage.
Several weeks later, Anthony came to Citi Insurance Service at Respondent’s request, and signed his name several times on one page of an insurance application.
On or about April 10,1996, Respondent changed Michael Anthony’s insurance coverage to another insurance company, Delta Casualty Insurance Company, without his knowledge or consent.
In April 1996, Anthony’s car was in an automobile accident.
After Anthony notified Respondent of the accident, Respondent advised Anthony to go to a rental agency and rent a car.
When Anthony went to rent a car, he was informed that he had no rental car reimbursement coverage.
Anthony rented the car anyway because he needed transportation, but he could only afford to rent the car for three days.
Anthony could not afford to keep the rental car the entire time his car was being repaired, so he paid someone ten dollars ($10.00) a day to bring him back and forth to work.
Respondent contributed ten dollars ($10.00) a day to Anthony for two weeks for his transportation expenses.
Delta Insurance Company subsequently canceled Anthony’s insurance coverage.
As a result of Respondent’s actions, Anthony did not have insurance coverage on or after February 14, 1996 for his newly purchased car.
As a result of Respondent’s actions, Anthony did not have rental car reimbursement coverage at the time he needed to rent a car.
On or about February 17, 1996, Michael Landress purchased a 1987 Honda Accord and the salesman referred him to Respondent for automobile insurance.
Respondent came to the car lot where Landress purchased his car and sold Landress full insurance coverage through Federated National Insurance Company.
On or about February 17, 1996, Respondent gave Landress the front page of a Federated National Insurance application without a binder number.
Landress paid Respondent an insurance premium payment of one hundred twenty dollars ($120.00.). His monthly insurance premium was quoted as seventy-one dollars ($71.00).
When an insurance agent fills out an insurance application with Federated National Insurance Company for a consumer, the insurance agent is required to call the office immediately to get a binder number for the insurance policy. After the insurance agent gets the binder number from the office, the insurance agent is then to write the binder number on the application and send the application to Federated National Insurance Company.
If the insured finances the contract, the agent should fill out a draft and send the net amount, which is less the agent’s commission, along with a copy of the application, a copy of the premium finance contract, and whatever is needed for the application to be processed within seventy-two hours (72) hours.
On or about February 17, 1996, Federated National Insurance Company (Assurance Managing General Agents) did not receive Landress’ insurance application nor the insurance premium down payment from Respondent.
On or about February 17, 1996, Federated National Insurance Company did not give Respondent a binder number for Landress’ insurance application.
The binder number at the top of Landress’ insurance application is not a Federated National Insurance Company binder number.
On March 18, 1996, Landress made an insurance premium payment of seventy-one dollars and ten cents ($71.10) to Citi Insurance Services.
During April 1996, a hailstorm occurred and caused damage to Landress’ automobile.
Landress called Respondent to inform Respondent of the damage to his automobile, and Respondent advised him to get three estimates for the repair of the automobile and bring it to him at Citi Insurance Services.
Landress brought the estimates to Respondent.
Respondent could not locate the file and Landress was told that he was not in the binder book.
Landress was told that when his insurance file was found that he would be contacted.
Respondent did not contact Landress regarding his insurance policy.
After Landress could not get any information from Citi Insurance Services on his insurance policy, he contacted the Department of Insurance.
Respondent has no record of any insurance transaction with Landress.
As a result of Respondent’s actions, Landress did not have insurance at the time his automobile was damaged.
Under the agreement between Respondent and Victoria Insurance Company granting Respondent binding authority,
Respondent is required to submit insurance applications and insurance premium down payments within three (3) business days of receipt.
In the summer of 1996, Respondent, the agent of record and an officer of Citi Insurance Services, was sending Victoria Insurance Company insurance applications which exceeded his binding authority.
In the summer of 1996, Respondent was sending Victoria Insurance Company insufficient (NSF) checks when processing insureds’ insurance applications and premium payments.
Respondent was not timely forwarding insurance applications or insurance premium down payments to Victoria Insurance Company.
Respondent filled out an insurance application for Willie Wright on August 14, 1996, which should have been the effective date of the insurance policy. This application was kept in Citi Insurance Services files but was not forwarded to Victoria Insurance Company; the insurance application that was forwarded to Victoria Insurance Company was dated of August 29, 1996, which became the effective date of the insurance policy.
Respondent filled out an insurance application for Christina Smith on August 2, 1996, this date should have been the effective date of Smith’s insurance policy. This application was kept in Citi Insurance Services files; however, the insurance application that was forwarded to Victoria Insurance Company was
dated August 31, 1996, which became the effective date of the insurance policy.
Respondent filled out an insurance application for James Taylor on August 16, 1996, this date should have been the effective date of Taylor’s insurance policy. This application was kept in Citi Insurance Services files; however, the insurance application that was forwarded to Victoria Insurance Company was dated September 28, 1996, which became the effective date of the insurance policy.
Victoria Insurance Company terminated their contract with Respondent on October 2, 1996; however, Respondent continued to represent to consumers that he was affiliated with Victoria Insurance Company and attempted to transact business on behalf of the company.
As a result of Respondent’s actions, Victoria Insurance Company did not receive approximately thirteen thousand dollars ($13,000) in premium payments that was paid to Respondent by insureds and were never forwarded to Victoria Insurance Company.
As a result of Respondent’s actions, Victoria Insurance Company received approximately fifteen thousand dollars ($15,000) worth of insufficient funds (NSF) checks from Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding, and the parties thereto, pursuant to Sections 120.569 and 120.57(1), Florida Statutes.
This proceeding involves disciplinary action against Respondent’s license as a general lines insurance agent. Therefore the burden of proof to establish the facts upon which the Petitioner seeks to discipline Respondent’s license is on the Petitioner. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). 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); Department of Banking and Finance v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996).
The Department of Insurance has jurisdiction to discipline the license of insurance agents in this state, Section 626.611, Florida Statutes.
The following provisions of Chapter 626, Florida Statutes are relevant. The provisions provide as follows in pertinent part:
626.561 Reporting and accounting for funds.-(1) All premiums, return premiums, or other funds belonging to insurers or others received by an agent . . . in transactions under his license shall be trust funds so received by the licensee in a fiduciary capaCiti. . . .
The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.
626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, title agency’s, solicitor's, adjuster's, customer’s representative’s, service representative's, managing general agent's, or claims investigator's license or appointment.-The department shall . . . suspend, revoke . . .the license of
any . . . agent . . .if it finds that as to the . . .
licensee . . . any one or more of the following applicable grounds exist:
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(4) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.
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(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
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Fraudulent or dishonest practices in the conduct of business under the license or permit.
Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.
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(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.
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626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, adjuster's, customer representative’s, service representative's, managing general agent's, or claims investigator's license or appointment.-The department may . . . suspend, revoke . . . the license . . . of any . . . agent . . . if it finds . . .:
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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 appointment.
Violation of any lawful order or rule of the department.
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(6) In the conduct of business under the license or appointment, engaging in unfair methods of competition
or in unfair or deceptive acts or practices, as prohibited under part X of this chapter, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest.
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626.9521 UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES PROHIBITED, PENALTIES -
No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 626.951 or s. 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.
Any person who violates any provision of this part shall be subject to a fine . . ..
626.9541(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:
Misrepresentations and false advertising of insurance policies.—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.
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Misrepresentation in insurance applications.--
Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual.
626.734 Corporations, liability of agent.-Any general lines agent who is an officer, director, or stockholder of an incorporated general lines insurance agency shall remain personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any
provisions of this code committed by such licensee or by any person under his direct supervision and control while acting on behalf of the corporation. Nothing in this section shall be construed to render any person criminally liable or subject to any disciplinary proceedings for any act unless such person personally committed or knew or should have known of such act and of the facts constituting a violation of this chapter.
At all times relevant to the dates and occurrences referred to herein, pursuant to Section 626.734, Florida Statutes, Respondent as the owner and president of Citi Insurance Services, was personally liable and accountable for any wrongful acts, misconduct, or violation of any provision of the Florida Insurance Code committed by him or anyone under his direct supervision and control while acting on behalf of the corporation.
Evidence has clearly shown that Respondent was personally involved in or supervising the transactions with the several insurance companies, as alleged in the Administrative Complaint and with each of the consumers, and during all of these transactions was chief operating officer of Citi Insurance Services.
As to Count I
The major focus of this count was that Respondent failed to forward Rojas’ insurance application and failed to timely forward the insurance premium down payment to the insurance company. Although Respondent stated that he “binder faxed” the application on February 4, 1995 so that it would be bound. Old Dominion had no record that the insurance application was faxed until February 6, 1995. Faxing the application 48 hours after the
insurance transaction occurred was not in accordance with Old Dominion underwriting guidelines. Additionally, Respondent did not mail in the original insurance application. There is no record of Respondent mailing the original application to Old Dominion, and there was no evidence produced to refute the fact that Respondent did not mail the application. Furthermore, Respondent kept Rojas’ insurance premium down payment for thirty- five days after he received the insurance premium down payment.
Respondent did not forward the insurance premium down payment until March 8, 1996, which was after Rojas’ insurance policy had been canceled due to non-receipt of the original application and the insurance premium down payment. Respondent failed to forward the application and the insurance premium in the applicable regular course of business.
His explanations in regard to his omissions are not credible.
As to Count II
The major focus of this count is that Respondent misrepresented to Bingle that he had insurance coverage for his newly purchased car. Respondent failed to place insurance coverage for a consumer's newly purchased automobile resulting in the consumer being uninsured at the time the consumer’s automobile was stolen. Respondent’s misconduct in this instance was aggravated by his attempt to conceal his misconduct by falsifying an insurance application. Respondent’s statements in explanation of this conduct are not credible.
As to Count III
Respondent failed to timely submit Ortiz’s insurance premium payment before her insurance coverage was canceled. Since Respondent accepted payment of these funds that did not belong to him, Respondent had the responsibility to forward this payment to the finance company in the applicable regular course of business so that Ortiz’s insurance policy would not be canceled. Respondent’s negligent actions in not forwarding this insurance payment to the finance company in the regular course of business caused Ortiz’s insurance coverage to be cancelled and caused Ortiz to be without insurance at the time her car was vandalized.
After Ortiz’s insurance coverage was canceled, Respondent received the refund check from the finance company. However, Respondent did not return these funds in the applicable regular course of business to Ortiz. Respondent did not return these funds until approximately eleven (11) months later. For a period of approximately eleven (11) months, Respondent wrongfully withheld these funds from his clients. It is the responsibility of the insurance agent in the regular course of business to account for and pay these funds to the persons entitled to these funds. Section 626.561.(1), Florida Statutes. Respondent did not return these funds until after this administrative action was commenced.
As To Count IV
The major focus of this count is that although representations were made to Davis that his late insurance premium
payment could be brought to Citi Insurance Services and it would immediately be forwarded to the finance company, Respondent did not forward the insurance premium payment that was paid at Respondent’s insurance agency in the regular course of business. The payment was not forwarded to the finance company until after the cancellation of Davis’ insurance coverage. Respondent withheld these funds that did not belong to him. Additionally, after Davis contacted Citi Insurance Services and Respondent finally sent the insurance premium payment to the finance company and the finance company did reinstate Davis, Davis contacted Citi Insurance Services to make sure everything with his insurance coverage was alright, as Davis was advised to do by the letter he had received from the finance company, it was misrepresented to Davis that the problem with his insurance coverage was resolved. In fact, Davis’ insurance coverage had not actually been reinstated with the insurance company. Respondent had failed to contact the insurance company to make sure the insurance coverage was reinstated as was required in the regular course of business. As a result of Respondent’s actions, Davis was without insurance coverage at the time of his automobile accident.
As to Count V
In this count Respondent made the misrepresentation to Anthony that he had full insurance coverage including rental car reimbursement coverage. However, Anthony did not receive this rental car coverage. As a result of Respondent’s misrepresentations, Anthony was without rental car coverage at the time his automobile was disabled and he needed a rental car.
There was an insurance transaction and an insurance premium down payment given to Respondent on February 14, 1996. However, Respondent unlawfully withheld these funds until April 10, 1996, almost two (2) months later, when Respondent actually obtained insurance coverage for Anthony with Delta Casualty Insurance Coverage. Respondent misrepresented to Anthony that he had insurance coverage in February 1996, when actually there was no record of any insurance coverage until April 10, 1996. Additionally, these funds were not accounted for or paid to the entity entitled to these funds in the regular course of business.
Additionally, Respondent misrepresented to Anthony that he had insurance with one insurance company, New Hampshire Insurance Company, when in fact Respondent changed Anthony’s insurance coverage to another insurance company, Delta Insurance Company, without his knowledge or consent.
As to Count VI
In this count, Respondent failed to forward an insurance application, an insurance premium down payment and an insurance premium payment to the insurance company that Respondent
obtained insurance from for Landress’ car. This caused Landress to be without insurance coverage at the time his vehicle was damaged. Respondent stated via his testimony that he had no record and no recollection of any insurance transaction with Landress. However, the evidence shows that Respondent was referred to Landress by a salesman after Landress purchased his automobile. That Respondent came to the car lot and sold Landress full coverage through Federated National Insurance Company.
Landress paid Respondent an insurance down payment of one hundred twenty dollars ($120.00). Shortly thereafter, a hailstorm occurred and caused damage to Landress’ automobile, that Landress contacted Respondent about the damage of his car, and that Respondent told Landress to get three estimates. This testimony is credible.
Respondent made misrepresentations to Landress which caused Landress to believe that he had full insurance coverage, when in fact there was none. There was no record at Citi Insurance Services and no record at Federated National Insurance Company that insurance coverage for Landress actually existed. This caused Landress to be without insurance at the time his vehicle was damaged and is a violation of the statute.
Additionally, Respondent received an insurance premium down payment and an additional insurance premium payment; however, there was no record of insurance coverage. Therefore, Respondent
unlawfully withheld funds from the insurer and the insured and did not forward any of the funds to the persons entitled to these funds in the applicable regular course of business.
As To Count VII
The major focus of this count is that Respondent was sending Victoria Insurance Company insurance applications which exceeded his binding authority. In addition, Respondent was sending Victoria Insurance Company insufficient checks (NSF) when processing insureds’ insurance applications and premium payments, and Respondent was not timely forwarding insurance applications and insurance premium down payments to the Victoria Insurance Company.
As a result of these actions, Respondent unlawfully withheld monies that did not belong to him. Respondent did not account for any and pay these funds to the persons entitled to these funds in the regular course of business.
Respondent continued to transact business for this insurer after Respondent’s appointment and affiliations with the insurer had been terminated. Respondent failed to forward insurance premiums or to timely forward insurance applications to this insurer.
As To All Counts
In Natelson v. Department of Insurance, 454 So.2d 31 (Fla. 1st DCA 1984), the court stated that the business of insurance is “greatly affected by the public trust” and points out that “the holder of an agent’s license stands in a fiduciary
relationship to both the client and the insurance company.” Natelson at 31. Respondent here has abused that trust and placed his own financial gain over the needs of his clients and insurance companies by misappropriating and mishandling fiduciary funds and by negligently failing to obtain insurance coverage for his clients, which caused these clients to be without insurance coverage at their time of loss.
The Respondent knowingly, negligently and willfully misrepresented to his clients that he would obtain the proper coverage for his clients, which he failed to do on several occasions. This conduct is a violation of Sections 626.611(4) and 626.9541(1)(a)1, Florida Statutes.
Respondent's conduct in its entirety indicates a lack of trustworthiness to sell insurance and is therefore a violation of Section 626.611(7), Florida Statutes.
Respondent's conduct in its entirety is dishonest and is therefore a violation of Section 626.611(9), Florida Statutes.
The Respondent's conduct in its entirety caused injury to several clients and is a detriment to the people of this state and is therefore a violation of Section 626.621(6), Florida Statutes.
Respondent's testimony in relation to his purpose and intent when he submitted the applications that he signed himself is not credible.
The evidence establishes that the actions of the Respondent violate the statutory sections cited herein.
Rule 4-231.030(6), Florida Administrative Code, sets forth the range of penalties appropriate in this case. Rule 4- 231.160, Florida Administrative Code, sets forth aggravating and mitigation factors to be considered in determining penalties. There are no mitigating factors. Aggravating factors include the willfulness of the Respondent's conduct, the injury to the victims, motivation of the Respondent, and financial gain sought by the Respondent.
Based on the foregoing findings of fact and conclusions of law, it is
The Respondent, Duane Alexander Zolnoski, be found guilty on Counts I, II, III, IV, V, VI and VII, of the First Amended Administrative Complaint, of violations Sections 626.561(1), 626.611(4), (7), (8), (9), (10), (13), 626.621(2) and (6), and 626.954(1)(a)1 and (k), Florida Statutes.
Pursuant to Rules 4-231.080 and 4-231.160, Florida Administrative Code, Respondent's licenses be REVOKED.
In view of the multiple violations of Section 626.9521, Florida Statutes, which carry with them monetary penalties which are to be imposed “in addition to any other applicable penalty”, impose an administrative fine in the amount of $2,500 per count.
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(904) 488-9675 SUNCOM 278-9675
Fax Filing (904) 921-6847
Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 1997.
Mechele R. McBride, Esquire Department of Insurance and Treasurer
200 East Gaines Street Tallahassee, Florida 32399-0333
Charles J. Grimsley, Esquire
Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue
Miami, Florida 33129
Duane A. Zolnoski 2448 U. S. 92 East
Lakeland, Florida 33801
Bill Nelson
State Treasurer and Insurance Commissioner
Department of Insurance and Treasurer The Capitol, Plaza Level
Tallahassee, Florida 32399-0300
Daniel Y. Sumner General Counsel Department of Insurance The Capitol, PL-26
Tallahassee, Florida 32399-0300
All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Proceedings |
|---|---|
| Jun. 06, 1997 | Final Order filed. |
| Apr. 29, 1997 | Recommended Order sent out. CASE CLOSED. Hearing held February 3 and 4, 1997. |
| Apr. 11, 1997 | Order to Show Cause sent out. (parties to show cause why this case should not be closed, must file response within 7 days of the date of this order) |
| Apr. 07, 1997 | (From C. Grimsley) Motion to Withdraw as Counsel filed. |
| Mar. 27, 1997 | Petitioner`s Proposed Recommended Order filed. |
| Feb. 25, 1997 | Petitioner`s Notice of Filing Depositions; Deposition of Richard McMullen (tagged/telephone); Deposition of Scott Vara filed. |
| Feb. 17, 1997 | (2 Volumes) Transcript filed. |
| Feb. 05, 1997 | CASE STATUS: Hearing Held. |
| Feb. 05, 1997 | (From C. Grimsley) Notice of Taking Telephone Deposition filed. |
| Feb. 03, 1997 | (Respondent) First Set of Interrogatories; First Request for Production filed. |
| Feb. 03, 1997 | Respondent`s Notice of Compliance With Petitioner`s First Request for Production; Respondent`s Notice of Compliance to Petitioner`s First Set of Interrogatories filed. |
| Jan. 31, 1997 | (Petitioner) Motion to Compel Response to Petitioner`s First Request for Production of Documents filed. |
| Jan. 31, 1997 | Respondent`s Answers to Petitioner First Request for Admissions filed. |
| Jan. 30, 1997 | (From M. Nash) Notice of Appearance filed. |
| Jan. 07, 1997 | Order Granting Motion for Leave to File First Amended Administrative Complaint sent out. |
| Jan. 02, 1997 | Petitioner`s Notice of Service of Petitioner`s First Set of Interrogatories to Respondent filed. |
| Dec. 02, 1996 | (Petitioner) Motion for Leave to File First Amended Administrative Complaint; First Amended Administrative Complaint filed. |
| Nov. 18, 1996 | Notice of Hearing sent out. (hearing set for Feb. 3-4, 1997; 11:00am; Lakeland) |
| Nov. 13, 1996 | Joint Response to Initial Order filed. |
| Nov. 01, 1996 | Initial Order issued. |
| Oct. 29, 1996 | Agency referral letter; Administrative Complaint; Election of Rights;Election of Rights (Unsigned) filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 04, 1997 | Agency Final Order | |
| Apr. 29, 1997 | Recommended Order | Respondent is guilty of misrepresentation, of failure to forward funds, of misappropriation of funds, of negligent failure to obtain coverage, and of lack of trustworthiness. Recommend revocation. |
DEPARTMENT OF INSURANCE AND TREASURER vs RUTH ANNE WASHBURN, 96-005055 (1996)
DEPARTMENT OF FINANCIAL SERVICES vs MARGARET LOUISE HERGET, 96-005055 (1996)
DEPARTMENT OF FINANCIAL SERVICES vs JOHN CHRIS BERNS, 96-005055 (1996)
DEPARTMENT OF FINANCIAL SERVICES vs GLENN KENNETH FANNIN, JR., 96-005055 (1996)
