STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) Case No. 00-2410

)

INGRID MACHADO, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on September 22, 2000, in Miami, Florida, before Patricia Hart Malono, the duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mechele R. McBride, Esquire

Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: Mark A. Dienstag, Esquire

Brenner & Dienstag, P.A.

21 Southeast First Avenue Suite 800

Miami, Florida 33131-1017 STATEMENT OF THE ISSUE

Whether the Respondent committed the violations alleged in the Amended Administrative Complaint filed with the Division of

Administrative Hearings on September 15, 2000, and, if so, the penalty that should be imposed.

PRELIMINARY STATEMENT

In an Administrative Complaint dated May 18, 2000, the Department of Insurance ("Department") charged that Ingrid Machado violated 22 separate provisions of the Florida Insurance Code. The enumerated violations were based on factual allegations relating to Ms. Machado's involvement in a transaction in which health insurance was procured for a consumer named Teresita Baldor. Ms. Machado timely requested a formal hearing, and the Department transmitted the matter to the Division of Administrative Hearings for assignment of an administrative law judge. The Respondent filed a Motion to Expedite Hearing, which was granted. Pursuant to notice, the final hearing was held on September 22, 2000.

On September 5, 2000, Ms. Machado filed a Motion for Summary Final Order, in which she asserted that there were no disputed issues of material fact, and that the undisputed facts showed that she had no involvement in the transaction underlying the allegations in the Administrative Complaint, and that she was entitled to judgment in her favor as a matter of law. In the motion, Ms. Machado also requested an award of attorney's fees and costs pursuant to Section 120.595(1), Florida Statutes (1999), on the grounds that the Department participated in this

proceeding for an improper purpose. On September 12, 2000, Ms. Machado filed an Amended Motion for Summary Final Order in which she stated the same grounds in support of the motion and again included a request for an award of attorney's fees and costs.

The Department filed its response in opposition to the amended motion on September 18, 2000, in which it responded to the substance of the amended motion and to the request for attorney's fees and costs. The Amended Motion for Summary Final Order was denied at the start of the final hearing, the undersigned having concluded after considering the grounds for the motion, the attachments to the motion, the depositions referred to in the motion, and the response in opposition to the motion, that there existed disputed issues of material fact to be resolved in a formal hearing before the Division of Administrative Hearings. 1/ The request for attorney's fees and costs was treated as a motion for attorney's fees and costs, to be resolved in the Recommended Order.

On September 15, 2000, the Department filed an Expedited Motion for Leave to Amend Administrative Complaint, which was served on the Petitioner by facsimile transmittal on September 15, 2000. In the motion, the Department sought to amend the Administrative Complaint to delete certain factual

allegations, to correct a clerical omission, and to substitute

"and/or" for "and" in certain factual allegations; to add three substantive amendments to the factual allegations in the original Administrative Complaint; and to charge Ms. Machado with a violation of an additional statutory provision, while deleting the charges that she had violated certain other statutory provisions. Ms. Machado did not file a written response to the motion, but counsel for the parties argued the motion at the start of the final hearing. At the conclusion of the arguments by counsel, the undersigned found that Ms. Machado had not shown that she would be prejudiced in the presentation of her defense to the charges made by the Department should the amendments to the Administrative Complaint be allowed.

Consequently, the Expedited Motion for Leave to Amend Administrative Complaint was granted in its entirety. In the Amended Administrative Complaint, the Department charged that Ms. Machado violated Sections 626.611(7); 626.611(8);

626.621(2); 626.621(6); 626.621(12); 626.9521(1);

626.9541(1)(a)1.; 626.9541(1)(o)1. and 2.; 641.3901;

641.3903(1)(e); 641.3903(10)(a) and (b); and 624.310(3)(a),

Florida Statutes (1999).

At the hearing, the Department presented the testimony of Teresita Baldor and Carol Sheridan, an employee of the Department; Petitioner's Exhibits 1 through 5 were offered and

received into evidence. Ms. Machado presented the testimony of Carol Sheridan; she did not offer any exhibits into evidence.

The transcript of the proceeding was filed with the Division of Administrative Hearings on October 5, 2000. The Department timely filed proposed findings of fact and conclusions of law, which have been considered in preparing this Recommended Order. Ms. Machado did not timely file proposed findings of fact and conclusions of law. Her counsel did, however, file on November 8, 2000, a Motion for Extension of Time, in which he requested an "additional" ten days in which to file proposed findings of fact and conclusions of law. Pursuant to the agreement of counsel, the proposed findings of fact and conclusions of law were due to be filed within ten days of the date on which the transcript was filed with the Division of Administrative Hearings, which was October 16, 2000. The Motion for Extension of Time is, therefore, denied as untimely. See Rule 28-106.204(5), Florida Administrative Code.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:

1. The Department of Insurance is the state agency responsible for licensing insurance agents in Florida and with

   regulating their conduct. Section 624.307 and Chapter 626, Part I, Florida Statutes (1999).

2. At the times material to this proceeding, Ingrid Machado was Florida-licensed insurance agent.

3. In March 1999, Teresita Baldor was interested in purchasing health insurance. Ms. Baldor had previously owned a private school and had been insured through the school's group health insurance policy. After she sold the school and began teaching mathematics at Miami-Dade Community College and Saint Thomas University, she no longer had health insurance coverage.

4. On or about March 10, 1999, Ms. Machado met with Ms. Baldor at Ms. Baldor's home. Ms. Baldor knew Ms. Machado

   only as an insurance agent and did not know whether Ms. Machado was affiliated with an insurance agency.

5. Ms. Machado told Ms. Baldor during the March 10, 1999, visit that she would try to place Ms. Baldor in a group for health insurance purposes but that she did not know at that time the group Ms. Baldor would be placed in or the name of the insurance company that would provide the health insurance coverage. Ms. Machado told Ms. Baldor during the visit that she would let Ms. Baldor know the name of the company providing her coverage and that she would send Ms. Baldor the coverage information.

6. During her March 10, 1999, visit to Ms. Baldor's home, Ms. Machado asked Ms. Baldor for general identification information, such as her name and social security number, and for other information, such as her weight. Ms. Baldor did not sign any document during this visit and cannot recall if

   Ms. Machado completed any form during their conversation.

   
   

7. Ms. Machado asked Ms. Baldor to make out two checks, one in the amount of $175.00 and one in the amount of $100.00, but Ms. Baldor does not remember Ms. Machado's telling her the reason she needed two separate checks. Ms. Machado asked

   Ms. Baldor to leave the line for the name of the payee blank, again telling Ms. Baldor that she did not yet know which insurance company would ultimately provide health insurance coverage to Ms. Baldor. Ms. Machado told Ms. Baldor that the name of the company would be filled in on the checks at a later time.

8. Ms. Machado told Ms. Baldor that she would have health insurance coverage effective March 15, 1999. On or about

   March 20, 1999, Ms. Baldor telephoned Ms. Machado because Ms. Baldor had not received any information regarding health

   insurance coverage. Ms. Machado told Ms. Baldor that she was having complications with her pregnancy and could no longer handle Ms. Baldor's insurance matters. Ms. Machado gave

   Ms. Baldor the telephone number of the "Durey Agency," told her

   that this agency would work with her to obtain health insurance coverage, and gave her Ray Gonzalez's name.

9. Ms. Machado had no further contact with Ms. Baldor after the telephone conversation on or about March 20, 1999, during the times material to this proceeding.

10. At some point, Ms. Baldor called the telephone number Ms. Machado had given her to find out why she had not received any information regarding her health insurance coverage.

    Ms. Baldor told the person who answered the phone, a woman named Maria, that she wanted her checks back if she could not give her any information "right then." Later the same day, Maria called Ms. Baldor and told her that she had been placed in a group for health insurance purposes.

11. A Neighborhood Health Partnership Enrollment Form was submitted to the Neighborhood Health Partnership on behalf of Ms. Baldor. On the form, Ms. Baldor was identified as an employee of "International Marketing." A signature appeared on the bottom of the form purporting to be that of Ms. Baldor, and the date next to the signature was "5/10/99." Ms. Baldor never saw the Neighborhood Health Partnership Enrollment Form.

12. A few weeks after Maria told Ms. Baldor that she had been placed in a group for health insurance purposes, Ms. Baldor received a package from the Neighborhood Health Partnership that contained an identification card indicating that she was

    enrolled in the "International Marketing Group" and indicating that her insurance coverage with the Neighborhood Health Partnership was effective as of June 15, 1999.

13. During Ms. Baldor's conversations with Ms. Machado, Ms. Machado never mentioned the Neighborhood Health Partnership or International Marketing Group.

14. The checks Ms. Baldor provided to Ms. Machado were made payable to the Durey Insurance Group and were processed by the bank on or about May 17, 1999. In addition, Ms. Baldor wrote checks to the Durey Insurance Group dated July 10, 1999, and August 9, 1999, as payment for her health insurance premiums.

15. Ms. Baldor's insurance coverage with the Neighborhood Health Partnership was eventually cancelled. It was

    Ms. Baldor's understanding that it was cancelled because the Durey Insurance Group did not remit her premium to the Neighborhood Health Partnership and because the "International Marketing Group" in which she was placed by the Durey Insurance Group did not exist.

    Summary

    
    

16. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado's actions with respect to her dealings with Ms. Baldor demonstrated a lack of fitness or trustworthiness or

    demonstrated that Ms. Machado lacked reasonably adequate knowledge and technical competence to engage in the transaction of insurance. The Department presented no evidence to establish any standards of skill, ability, knowledge, or competence by which Ms. Machado's acts or omissions can be judged to determine if she committed any of the violations with which Ms. Machado is charged. It is not possible to determine from the evidence presented if Ms. Machado's actions deviated from a standard of fitness or trustworthiness which a reasonably prudent insurance agent would be expected to exhibit under the circumstances or if Ms. Machado's conduct fell below a standard establishing the degree of knowledge and technical competence which a reasonably prudent insurance agent would be expected to exhibit under the circumstances. 2/

17. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado engaged in any unfair method of competition or deceptive practices or knowingly made any misrepresentations to Ms. Baldor regarding health insurance coverage. The uncontroverted evidence establishes that Ms. Machado took some minimal information from Ms. Baldor and told her she would place her in a group for health insurance coverage. The uncontroverted evidence further establishes that Ms. Machado did not represent to Ms. Baldor that she would place Ms. Baldor in

    any specific group, that she would place Ms. Baldor with any particular insurance company, 3/ or that Ms. Baldor would be provided with any specific coverage or benefits.

18. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado knowingly collected from Ms. Baldor any sums in excess of premium because, at the time Ms. Machado collected the two checks from Ms. Baldor, Ms. Machado did not know which insurance company would write health insurance coverage for

    Ms. Baldor and, therefore, did not know what the premium would be.

19. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Ms. Machado knowingly collected from Ms. Baldor any premium for insurance that was not, in due course, provided. The uncontroverted evidence establishes that Ms. Machado initially agreed to procure health insurance coverage for Ms. Baldor; however, because of her pregnancy, Ms. Machado referred

    Ms. Baldor to the Durey Insurance Group approximately ten days after Ms. Machado's only meeting with Ms. Baldor and advised Ms. Baldor that the Durey Insurance Group would assist

    Ms. Baldor in obtaining health insurance. There is no persuasive evidence establishing that Ms. Machado knew or should

    have known that Durey Insurance Group would not, in due course, provide legitimate health insurance coverage to Ms. Baldor.

20. The evidence presented by the Department is not sufficient to establish that Ms. Machado had any involvement, directly or indirectly, in the transaction in which the Durey Insurance Group identified Ms. Baldor as an employee of "International Marketing" and obtained health insurance for Ms. Baldor with the Neighborhood Health Partnership as a member of the "International Marketing Group." 4/ Furthermore, the evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that

    Ms. Machado's actions made her a source of injury to Ms. Baldor or anyone else. As noted above, the uncontroverted evidence establishes that, soon after Ms. Machado's visit with Ms. Baldor on March 10, 1999, Ms. Machado advised Ms. Baldor that she could not act as Ms. Baldor's agent in placing her with a health insurance company, that she had sent Ms. Baldor's information and checks to the Durey Insurance Group, and that Ms. Baldor should contact the Durey Insurance Group for further assistance. Ms. Baldor's contacts subsequent to the latter part of

    March 1999 with respect to her health insurance coverage were exclusively with personnel who purported to be affiliated with the Durey Insurance Group. A representative of the Durey Insurance Group notified Ms. Baldor that her health insurance

    would be provided by the Neighborhood Health Partnership, and Ms. Baldor's premium checks were made payable to the Durey Insurance Group. Finally, the Neighborhood Health Partnership Enrollment Form identifying Ms. Baldor as an employee of International Marketing is dated approximately two months after Ms. Machado's last contact with Ms. Baldor, and the Department failed to present any evidence tending to establish that

    Ms. Machado had any involvement in the preparation of this form.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (1999).

22. To paraphrase the court in Drew v. Insurance Commissioner and Treasurer, 330 So. 2d 794, 796 (Fla. 1st DCA

    1976), the Department in this case "threw the book" at Ms. Machado. She was charged in the Department's Amended Administrative Complaint with the following violations:

    1. Section 626.611(7) and (8), Florida Statutes (1999), which provides in pertinent part:

       The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjuster, customer representative, service representative, or managing general agent, and it shall suspend or revoke the

       eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:

       
       

       * * *

       
       

       1. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

       2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

          
          

    2. Section 626.621(2), (6), and (12), Florida Statutes (1999), which provides in pertinent part:

       The department may, in its discretion, deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, solicitor, adjuster, customer representative, service representative, or managing general agent, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:

       
       

       * * *

       
       

       (2) 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.

       
       

       * * *

       
       

       (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 or herself to be a source of injury or loss to the public or detrimental to the public interest.

       
       

       * * *

       
       

       (12) Knowingly aiding, assisting, procuring, advising, or abetting any person in the violation of or to violate a provision of the insurance code or any order or rule of the department.

       
       

    3. Section 626.9521(1), Florida Statutes (1999), which provides:

       (1) 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

       
       

    4. Section 626.9541(1)(a)1. and (o)1. and 2., Florida Statutes (1999), which provides in pertinent part:

       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:

          1. 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:

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

       * * *

       
       

       (o) Illegal dealings in premiums; excess or reduced charges for insurance.--

       1. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided, or is not in due course to be provided, subject to acceptance of the risk by the insurer, by an insurance policy issued by an insurer as permitted by this code.

       2. Knowingly collecting as a premium or charge for insurance any sum in excess of or less than the premium or charge applicable to such insurance, in accordance with the applicable classifications and rates as filed with and approved by the department, and as specified in the policy; or, in cases when classifications, premiums, or rates are not required by this code to be so filed and approved, premiums and charges in excess of or less than those specified in the policy and as fixed by the insurer.

       
       

    5. Section 641.3901, Florida Statutes (1999), which provides:

       No person, entity, or health maintenance organization shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to

       s. 641.3905 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of health maintenance organizations.

       
       

    6. Section 641.3903(1)(e) and (10)(a)and (b), Florida Statutes (1999), which provides in pertinent part:

       The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

       (1) Misrepresentation and false advertising of health maintenance contracts.--Knowingly making, issuing, or

       circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:

       
       

       * * *

       
       

       (e) Misrepresents the benefits, nature, characteristics, uses, standard, quantity, quality, cost, rate, scope, source, or geographic origin or location of any goods or services available from or provided by, directly or indirectly, any health maintenance organization.

       
       

       * * *

       
       

       (10) Illegal dealings in premiums; excess or reduced charges for health maintenance coverage.--

       1. Knowingly collecting any sum as a premium or charge for health maintenance coverage which is not then provided or is not in due course to be provided, subject to acceptance of the risk by the health maintenance organization, by a health maintenance contract issued by a health maintenance organization as permitted by this part.

       2. Knowingly collecting as a premium or charge for health maintenance coverage any sum in excess of or less than the premium or charge applicable to health maintenance coverage, in accordance with the applicable classifications and rates as filed with the department, and as specified in the health maintenance contract.

       
       

    7. Section 624.310(3)(a), Florida Statutes (1999), which provides as follows:

    (3) Cease and desist orders.--

    (a) The department may issue and serve a complaint stating charges upon any licensee or upon any affiliated party, whenever the department has reasonable cause to believe

    that the person or individual named therein is engaging in or has engaged in conduct that is:

    1. An act that demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, is hazardous to the insurance buying public, or constitutes business operations that are a detriment to policyholders, stockholders, investors, creditors, or the public;

    2. A violation of any provision of the Florida Insurance Code; (footnote omitted)

    3. A violation of any rule of the department;

    4. A violation of any order of the department; or

    5. A breach of any written agreement with the department.

    
    

23. Because the Department sought in its Amended Administrative Complaint to impose penalties against Ms. Machado that include suspension or revocation of her license and/or the imposition of an administrative fine, it has the burden of proving by clear and convincing evidence that Ms. Machado committed the violations alleged in the Amended Administrative Complaint. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Co., 670

    So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292

    
    

    (Fla. 1987).

    
    

24. As the Florida Supreme Court explained in Osborne

    
    

    Stern, clear and convincing evidence is the proper standard in license revocation proceedings because they are penal in nature and implicate significant property rights. 670 So. 2d at 935;

    see also Walker v. Florida Department of Business and

    
    

    Professional Regulation, 705 So. 2d 652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting).

25. In Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA

    1989), the court explained:

    
    

    [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 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).

    
    

    More recently, Judge Sharp, in her dissenting opinion in Walker v. Florida Department of Business and Professional Regulation,

    705 So. 2d 652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting), reviewed recent pronouncements on clear and convincing evidence and stated:

    Clear and convincing evidence requires more proof than preponderance of evidence, but less than beyond a reasonable doubt. In re Inquiry Concerning a Judge re Graziano,

    696 So. 2d 744 (Fla. 1997). It is an intermediate level of proof that entails both qualitative and quantative [sic] elements. In re Adoption of Baby E.A.W., 658 So. 2d 961, 967 (Fla. 1995), cert.

    denied, 516 U.S. 1051, 116 S. Ct. 719, 133

    L. Ed. 2d 672 (1996). The sum total of

    evidence must be sufficient to convince the trier of fact without any hesitancy. Id.

    It must produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. Inquiry Concerning Davie, 645 So. 2d 398, 404 (Fla. 1994).

    
    

26. On the basis of the findings of fact herein, the Department did not meet its burden of proving by clear and convincing evidence that Ms. Machado committed any of the violations of the Florida Insurance Code with which she was charged in the Department's Amended Administrative Complaint:

    1. Because it failed to present evidence establishing the general duties owed by an insurance agent to a consumer, the generally-accepted trade practices in the industry, or the actions that would have been taken by a reasonably prudent insurance agent in Ms. Machado's circumstances, the Department did not prove by clear and convincing evidence that Ms. Machado violated Sections 626.611(7), 626.611(8), 626.621(6), 626.9521(1), or 626.3901, Florida Statutes (1999).

    2. Because the Department failed to present evidence establishing that Ms. Machado made any misrepresentations, knowing or otherwise, to Ms. Baldor or that Ms. Machado knew what premium Ms. Baldor would be required to pay for health insurance coverage, the Department did not prove by clear and convincing evidence that Ms. Machado violated

       Sections 626.9541(1)(a)1., 626.9541(1)(o)1. or 2.,

       641.3903(1)(e), or 641.3903(10)(a) or (b), Florida Statutes (1999).

    3. Because the Department failed to present evidence establishing that Ms. Machado had any involvement with the Durey Insurance Group or with the placement of Ms. Baldor in the "International Marketing Group" for purposes of obtaining health insurance coverage from the Neighborhood Health Partnership, the Department did not prove by clear and convincing evidence that Ms. Machado violated Section 626.621(12), Florida Statutes (1999).

    4. Because the Department did not prove by clear and convincing evidence that Ms. Machado committed any of the substantive violations alleged in the Amended Administrative Complaint, the Department did not prove that Ms. Machado violated Section 626.621(2), Florida Statutes (1999).

    5. Finally, Section 624.310(3)(a), Florida Statutes (1999), is not a statute that can be "violated." It simply authorizes the Department to issue an administrative complaint under specified circumstances.

    Attorney's fees and costs

    
    

27. Ms. Machado is not entitled to an award of attorney's fees and costs incurred in this proceeding. In her Amended Motion for Summary Judgment, Ms. Machado asserted that the Department had participated in this proceeding for an improper

    purpose, and she requested an award of fees and costs pursuant to Section 120.595(1), Florida Statutes (1999), which provides as follows:

    1. CHALLENGES TO AGENCY ACTION PURSUANT TO SECTION 120.57(1).--

       1. The provisions of this subsection are supplemental to, and do not abrogate, other provisions allowing the award of fees or costs in administrative proceedings.

       2. The final order in a proceeding pursuant to s. 120.57(1) shall award reasonable costs and a reasonable attorney's fee to the prevailing party only where the nonprevailing adverse party has been determined by the administrative law judge to have participated in the proceeding for an improper purpose.

       3. In proceedings pursuant to s. 120.57(1), and upon motion, the administrative law judge shall determine whether any party participated in the proceeding for an improper purpose as defined by this subsection and

          s. 120.569(2)(e). In making such determination, the administrative law judge shall consider whether the nonprevailing adverse party has participated in two or more other such proceedings involving the same prevailing party and the same project as an adverse party and in which such two or more proceedings the nonprevailing adverse party did not establish either the factual or legal merits of its position, and shall consider whether the factual or legal position asserted in the instant proceeding would have been cognizable in the previous proceedings. In such event, it shall be rebuttably presumed that the nonprevailing adverse party participated in the pending proceeding for an improper purpose.

       4. In any proceeding in which the administrative law judge determines that a party participated in the proceeding for an improper purpose, the recommended order

          shall so designate and shall determine the award of costs and attorney's fees.

       5. For the purpose of this subsection:

          1. "Improper purpose" means participation in a proceeding pursuant to s. 120.57(1) primarily to harass or to cause unnecessary delay or for frivolous purpose or to needlessly increase the cost of licensing or securing the approval of an activity.

          2. "Costs" has the same meaning as the costs allowed in civil actions in this state as provided in chapter 57.

          3. "Nonprevailing adverse party" means a party that has failed to have substantially changed the outcome of the proposed or final agency action which is the subject of a proceeding. In the event that a proceeding results in any substantial modification or condition intended to resolve the matters raised in a party's petition, it shall be determined that the party having raised the issue addressed is not a nonprevailing adverse party. The recommended order shall state whether the change is substantial for purposes of this subsection. In no event shall the term "nonprevailing party" or "prevailing party" be deemed to include any party that has intervened in a previously existing proceeding to support the position of an agency.

          
          

28. With the definition of "nonprevailing adverse party" inserted in place of the term "nonprevailing adverse party" in Section 120.595(1)(b), Florida Statutes (1999), that statute reads as follows:

    The final order in a proceeding pursuant to

    s. 120.57(1) shall award reasonable costs and a reasonable attorney's fee to the prevailing party only where ["the party that has failed to have substantially changed the outcome of the proposed . . . agency action which is the subject of a proceeding"] has been determined by the administrative law

    judge to have participated in the proceeding for an improper purpose.

    
    

29. The Department cannot be a "nonprevailing adverse party" in this case. The Department has not sought to "substantially change[] the outcome of the proposed . . . agency action which is the subject of [this] proceeding"; rather, it is the Department's proposed agency action that Ms. Machado seeks to change. Accordingly, if the Amended Administrative Complaint against Ms. Machado is dismissed, Ms. Machado will not be entitled to an award of attorney's fees and costs pursuant to Section 120.595(1)(b), Florida Statutes (1999), even though she will have substantially changed the Department's proposed agency action. Because she will not, in any event, be entitled to such an award, it is not necessary to consider whether the Department participated in this proceeding for an improper purpose.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance issue a final order dismissing the Amended Administrative Complaint against Ingrid Machado.

DONE AND ENTERED this 15th day of November, 2000, in

Tallahassee, Leon County, Florida.

PATRICIA HART MALONO

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 15th day of November, 2000.

ENDNOTES

1. Counsel were further advised that, in a case such as this, in which an administrative law judge is authorized to enter a recommended order, the appropriate motion is one to relinquish jurisdiction to the referring agency for further proceedings. See Section 120.57(1)(i), Florida Statutes (1999).

   
   

2. The only remotely relevant evidence presented by the Department on this point is in the testimony of Carol Sheridan, the Department's investigator, who testified at the hearing as follows:

   
   

   When an insurance agent completes an application for an applicant or an enrollment form for an applicant, that applicant should get a copy of the application. They should get a summary of coverage knowing what company they are being placed with and what kind of coverage that they are getting.

   
   

   Transcript at 148. There is no evidence in the record that Ms. Machado completed an application or enrollment form in the context of her dealings with Ms. Baldor or that Ms. Machado had arranged health insurance coverage for Ms. Baldor at the time she referred Ms. Baldor to the Durey Insurance Group.

3. Carol Sheridan, the Department's investigator, testified that Ms. Baldor told her during the investigation that Ms. Machado told Ms. Baldor at the March 10, 1999, visit that Ms. Machado would place her with "Humana." This is contrary to the testimony that Ms. Baldor gave during the final hearing and constitutes unsubstantiated hearsay that cannot be used as the basis of a finding of fact in this proceeding. See 120.57(1)(c), Florida Statutes (1999).

   
   

4. In addition, there was no evidence presented by the Department that established any relationship between Ms. Machado and the Durey Insurance Group except for the referral at issue herein.

COPIES FURNISHED:

Mark A. Dienstag, Esquire Brenner & Dienstag, P.A.

21 Southeast First Avenue Suite 800

Miami, Florida 33131-1017

Mechele R. McBride, Esquire Department of Insurance

200 East Gaines Street Tallahassee, Florida 32399-0333

Honorable Bill Nelson

State Treasurer and Insurance Commissioner Department of Insurance

The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel Department of Insurance

The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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.

Docket for Case No: 00-002410

Orders for Case No: 00-002410