STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE,

Petitioner,

vs.

BARRY RICHARD RANEW,

Respondent.

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) Case No. 01-3423PL

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RECOMMENDED ORDER

On December 12, 2001, a formal administrative hearing was held in this case in Melbourne, Florida, before Jeff B. Clark, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: David J. Busch, Esquire

Department of Insurance Division of Legal Services

200 East Gaines Street 645A Larson Building

Tallahassee, Florida 32399-0333

For Respondent: Jack A. Kirschenbaum, Esquire

Gray, Harris & Robinson, P.A. Post Office Box 1870 Melbourne, Florida 32902-1870

STATEMENT OF THE ISSUE

The issue for determination in this case is whether the license of Respondent, Barry Richard Ranew, as an insurance agent in Florida, should be disciplined for violation of certain

provisions of Chapter 626, Florida Statutes, as contained in allegations set forth in the Amended Administrative Complaint.

PRELIMINARY STATEMENT

On August 2, 2001, Petitioner, the Department of Insurance, filed a one-count complaint against Respondent, a licensed Florida insurance agent, alleging that he had violated certain provisions of Chapter 626, Florida Statutes. On

October 17, 2001, Petitioner filed a Motion to Amend Administrative Complaint to Conform to Evidence based upon testimony elicited at the taking of witness James Leichti's deposition on October 12, 2001. The motion to amend was considered and granted without objection at the final hearing; an Amended Administrative Complaint was filed December 17, 2001.

The Amended Administrative Complaint alleged that Respondent, in an effort to provide insurance for Park Plaza Condominium, either willfully and fraudulently signed the name of Jim Leichti to an agent of record letter dated March 18, 1999, or willfully and fraudulently sent the letter knowing that it falsely represented that Respondent had been designated agent of record by the Park Plaza Condominium Association, Inc.

Such actions are alleged to be in violation of several Florida Insurance Code provisions, as specified in Subsections 626.611(5), 626.611(7), 626.611(9), 626.611(13), 626.621(2),

626.621(6), 626.9521, 626.9541(1)(a)1., 626.9541(1)(a)6.,

626.9541(1)(b), 626.9541(1)(e)l., and 626.9541(1)(1), Florida

Statutes.

On August 20, 2001, Respondent answered the Administrative Complaint and filed an Election of Rights seeking an administrative hearing. On August 28, 2001, the case was forwarded to the Division of Administrative Hearings. On September 6, 2001, the case was set for final hearing on October 18, 2001. On October 17, 2001, Respondent sought a continuance of the final hearing which was granted without objection of Petitioner. The case was rescheduled for

December 12, 2001, in Melbourne, Florida.

At the final hearing, Petitioner presented the deposition testimony of James Leichti, Art Bartlett, and Bob Virtue.

Respondent testified and presented the testimony of witnesses Calvin Luther, Pamela Winn, Petey Davis, Steve Robertson, Patsey Kendall, Melissa Berkowitz, and Wanda Givens and the deposition testimony of Damian McFadden. Petitioner's Exhibits 1-5, including the depositions of James Leichti, Art Bartlett, and Bob Virtue and Respondent's Exhibits 1-5, including the deposition of Damian McFadden, were received into evidence.

A Transcript of the final hearing was filed on February 1, 2002; the parties timely filed Proposed Recommended Orders which were thoughtfully considered by the undersigned.

FINDINGS OF FACT

Based on the testimony, both live and in deposition, the demeanor of the witnesses, documentary evidence, and facts stipulated to in the Pre-hearing Stipulation, the following findings of fact are made:

1. Petitioner, the Department of Insurance ("Department"), is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of

   Chapter 626, Florida Statutes.

   
   

2. Respondent is, and was at all material times, licensed in Florida as a general lines, property, casualty and miscellaneous lines (2-20) insurance agent.

3. During all times material to the allegations contained in the Amended Administrative Complaint, Respondent was the owner of the Ranew Insurance Agency located in Melbourne, Florida.

4. Respondent's agency sells nothing but oceanfront, or near oceanfront, condominium master policies and insures about 700 associations.

5. Park Plaza Condominium ("Park Plaza") is a 50-unit condominium in Jupiter, Florida. The Park Plaza Condominium Association, Inc. ("Association") is the corporate entity through which Park Plaza conducts business. Concept Management was the professional property manager for Park Plaza.

6. During February 1999, the Association Board of Directors and insurance committee presented several insurance agents, including Respondent, with a seven or eight-page document outlining Park Plaza's insurance needs and sought quotes from them. James Leichti was chairman of the Association insurance committee during all times material to the matter at issue.

7. Correspondence between these insurance agents and the Association directors and insurance committee members was sometimes accomplished by the use of facsimile transmission ("fax") machines. The property manager and several condominium residents had fax machines.

8. On March 11, 1999, Louise Rotondo, an employee of Concepts Management who was the property manager at Park Plaza, contacted Respondent and requested that he meet with the Association representatives regarding insurance.

9. On March 18, 1999, Respondent met with members of the Association Board of Directors and insurance committee regarding providing insurance for Park Plaza.

10. On March 18, 1999, Respondent directed his office manager to send an "agent of record" letter to Louise Rotondo of Concept Management for the purpose of having the letter signed by James Leichti. The Ranew Agency had a standard "agent of record" letter that it used; typically, a letterhead was created

    on an agency computer for the entity authorizing the "agent of record" letter because most of the condominium associations did not have letterhead stationery. A letterhead was created for the "agent of record" letter in this case.

11. It is not uncommon in the insurance industry for an agent to draft "loss history" letters and "agent of record" letters for condominium associations. Typically, members of the boards and insurance committees of condominium associations are not familiar with the necessary "words of art" for these letters. These letters facilitate the timely receipt of quotes by the agent. "Agent of record" letters also have the effect of limiting access of other agents to quotes from the insurance broker who has received an "agent of record" letter. No evidence was received that indicated that the practice of creating "loss history" and "agent of record" letters is improper.

12. On March 20, 1999, an unidentified person at Respondent's agency faxed a note to Bob Virtue at the Laub Group of Florida, Inc. ("the Laub Group") which indicated "[E]nclosed is the BOR as promised." Attached to the fax was the March 18, 1999, "agent of record" letter which contains the signature "Jim Leichti." (While the term "agent of record" was used during the final hearing, the text of the March 18, 1999, letter refers to "Broker of Record.")

13. The Laub Group is a managing general agent and a reinsurance broker. Respondent and other agents dealt through the Laub Group in procuring insurance coverage for various condominiums, including Park Plaza. Another agency seeking Park Plaza insurance business was Acordia/Wells Fargo ("Acordia"), as represented by agent Damien McFadden.

14. The Laub Group business records contain a "Fax Transmittal" memorandum from Acordia to the Laub Group dated March 11, 1999, showing that Park Plaza was at that time insured by State Farm, with an insurance renewal date in July 1999. Acordia desired to rewrite the coverage effective May 1, 1999, and was then seeking a quote from the Laub Group for that coverage.

15. The Laub Group's business records contain a faxed note from Respondent's office to Bob Virtue, the Laub Group, dated March 20, 1999, at 12:13 p.m. (referred to in paragraph 12, supra), which says "enclosed is the BOR [broker of record letter] as promised." Attached to that is a broker of record letter dated March 18, 1999, on the Association letterhead purportedly signed by Jim Leichti, Chairman Insurance Committee. On the March 18, 1999, letter signed by Mr. Leichti is the handwritten notation in conspicuously large print, "AOR" in a circle.

16. The Laub Group business records contain a fax dated March 22, 1999, directed to Joyce Creighton, Acordia, which contains the following note: "We have received Mar 18, 1999 Agent of Record letter from another agent."

17. Subsequent to the receipt of the fax mentioned in paragraph 16, supra, Damien McFadden contacted James Leichti and others on the Association board and was advised that Mr. Leichti did not sign the "agent of record" letter.

18. On March 23, 1999, Respondent met with members of the Association board and insurance committee. An obviously upset James Leichti asked Respondent who had signed his name to the March 18, 1999, letter. Respondent acknowledged creating the letter but advised that he did not know who signed the letter. Mr. Leichti left the meeting while it was in progress. Shortly thereafter, Respondent sought out Mr. Leichti at his residence and apologized profusely for the incident. However, he did not indicate that he had signed Mr. Leichti's name to the letter.

19. At the hearing Respondent denied having signed "Jim Leitchi" to the March 18, 1999, letter, having authorized or directed anyone to sign the letter, or knowing that the signature on the letter was not Mr. Leichti's when the letter was forwarded to the Laub Group.

20. While no Florida law was presented that confirms Respondent's stated belief that an insurance broker has a

    statutory obligation to advise an existing agent of record or an agent who had received a quote that a new "agent of record" letter had been received from a second agent, which gave the "old" agent of record the opportunity to seek cancellation of the new "agent of record" letter, that appears to be the practice as confirmed by Mr. McFadden and consistent with what took place in this case. Because of this practice (which Respondent believed to be a legal obligation), it is unlikely that an experienced insurance agent, such as Respondent, would attempt to use a forged "agent of record" letter. There is a probability that an insurance broker would immediately advise the "old" agent of record that a "new" agent of record had been designated by the client, as was done in the instant case by the Laub Group. The "old" agent would then question the client regarding the designation of a "new" agent of record and the forgery would be discovered.

21. Frank Norwich, an expert witness in the field of determining whether or not a signature is authentic or a forgery, opined that the "Jim Leitchi" signature on the

    March 18, 1999, letter is a forgery and that he was unable to determine whether or not Respondent was the author of the questioned signature based on eight signature exemplars available to him from documents which appear to have come from

    public records and that additional exemplars would not make any difference.

    CONCLUSIONS OF LAW

    
    

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

23. The burden of proof, absent a statutory directive to the contrary, is on the party asserting the affirmative of the issues in the proceedings. Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); Balino v.

    Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). In this proceeding, the Department is asserting the affirmative: that Respondent violated Subsections 626.611(5), 626.611(7), 626.611(9), 626.611(13), 626.621(2),

    626.621(6), Section 626.9521, Subsections 626.9541(1)(a)1, 626.9541(1)(a)6, 626.9541(1)(b), 626.9541(1)(e)1, and

    626.9541(1)(l), Florida Statutes.

    
    

24. License revocation, suspension and discipline proceedings are penal in nature. The Department must demonstrate the truthfulness of the allegations in the Administrative Complaint by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987). Therefore, the burden of establishing by clear and

    convincing evidence the elements of Respondent's violations is on the Department.

25. As noted by the Supreme Court of Florida:

    
    

    [C]lear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

    
    

    In Re: Davey, 645 So. 2d 398, 404 (Fla. 1994), quoting

    
    

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

    
    

26. If determined to be guilty of the violations as alleged in paragraph 23, supra, Respondent may suffer a suspension or revocation of his license. Statutes that authorize the imposition of penal sanctions must be strictly construed and any ambiguity must be construed in favor of Respondent. Elmariah v. Department of Business and Professional Regulation, 574 So. 2d 164, 165 (Fla. 1st DCA 1990). The Florida lenity statute, Subsection 775.021(1), Florida Statutes, provides that: "offenses" defined by any Florida Statute must be construed most favorably to the offender if the language is susceptible to different meanings. Pasquale v. Florida

    Elections Commission, 759 So. 2d 23, 26 (Fla. 4th DCA 2000).

27. The Amended Administrative Complaint alleges violations of the following statutory provisions: Subsections 626.611(5), 626.611(7), 626.611(9), and 626.611(13), Florida Statutes, provide:

    626.611 Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, solicitor's, adjuster's, customer representative's, service representative's, or managing general agent's license or appointment.--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:

    
    

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    (5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising.

    
    

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    (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    
    

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    (9) Fraudulent or dishonest practices in the conduct of business under the licensee 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.

    
    

    Subsections 626.621(2) and 626.621(6), Florida Statutes, provide:

    626.621 Grounds for discretionary refusal, suspension, or revocation of agent's, solicitor's, adjuster's, customer representative's, service representative's, or managing general agent's license or appointment.-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:

    
    

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    (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.

    
    

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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 IX 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.

    Section 626.9521, Florida Statutes, provides: 626.9521 Unfair methods of competition

    and unfair or deceptive acts or practices

    prohibited; penalties.--

    
    

    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.

       
       

    2. Any person who violates any provision of this part shall be subject to a fine in an amount not greater than $2,500 for each nonwillful violation and not greater than

    $20,000 for each willful violation. Fines under this subsection may not exceed an aggregate amount of $10,000 for all nonwillful violations arising out of the same action or an aggregate amount of

    $100,000 for all willful violations arising out of the same action. The fines authorized by this subsection may be imposed in addition to any other applicable penalty.

    
    

    Section 626.9541 and Subsections 626.9541(1)(a)1, 626.9541(1)(a)6, 626.9541(1)(b), 626.9541(1)(e)1, and

    626.9541(1)(l), Florida Statutes, provide:

    
    

    626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.--

    
    

    1. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:

       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.

          
          

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          6. Is a misrepresentation for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy.

          
          

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       2. False information and advertising generally.--Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public:

    
    

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    (e) False statements and entries.--

    
    

    1. Knowingly:

    
    

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    (l) Twisting.--Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to

    take out a policy of insurance in another insurer.

    
    

28. This case rises or falls on the allegations in the Amended Administrative Complaint that Respondent "admitted signing Jim Leichti's name to the Agent of Record letter on what appeared to be Park Plaza stationery dated March 18, 1999, or sending that letter knowing it falsely represented that you [Respondent] had been designated agent of record by Park Plaza" and "[Y]ou, Barry Richard Ranew, willfully and fraudulently signed and/or sent the above-referenced letter containing false and misleading statements."

29. No evidence was presented that Respondent "admitted signing Jim Leichti's name" or that Respondent knew that the signature was forged when the letter was forwarded to the Laub Group as alleged. While the signature on the March 18, 1999, "agent of record" letter was clearly forged, the circumstantial evidence which arises is not demonstrative of clear and convincing evidence that Respondent signed the letter or knew at the time he sent the letter that it was forged. In fact, evidence was elicited that was inconsistent with the suggestion that Respondent forged the document or knew that it was forged.

30. Assuming, arguendo, that Mr. Leichti, in his capacity as Chairman of the Insurance Committee of the Association, had signed the March 18, 1999, letter directed to the Laub Group

advising . . ."that the Association request . . . you recognize

. . . Barry Ranew . . . as "Broker of Record" . . . ," once Mr. Leichti signed the "agent of record" letter, Respondent became the agent or broker of record, and the letter ceases to contain false and misleading statements. No evidence was

presented which suggests that, once an authorized representative of a condominium association executes an "agent of record" letter, the insurance agent so designated is not clothed with whatever authority that the designation "agent of record" entails.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Petitioner, the Department of Insurance, enter a final order finding Respondent, Barry Richard Ranew, not guilty of the allegations alleged in the Amended Administrative Complaint filed in this matter, and dismissing the Amended Administrative Complaint.

DONE AND ENTERED this 27th day of February, 2002, in Tallahassee, Leon County, Florida.

JEFF B. CLARK

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 27th day of February, 2002.

COPIES FURNISHED:

David J. Busch, Esquire Department of Insurance, Division of Legal Services

200 East Gaines Street 645A Larson Building

Tallahassee, Florida 32399-0333

Jack A. Kirschenbaum, Esquire Gray, Harris & Robinson, P.A. Post Office Box 1870 Melbourne, Florida 32902-1870

Honorable Tom Gallagher

State Treasurer/Insurance Commissioner Department of Insurance

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

Mark Casteel, 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: 01-003423PL

Orders for Case No: 01-003423PL