KEVIN McCARTY

DIRECTOR

OFFICE OF INSURANCE REGULATION

fW

FILED

,,,PR 2s 2003

0111Illb"i -

IN THE MATTER OF: MARIAN. NEAL

FINAL ORDER

THIS CAUSE came on for consideration and final agency action, On May 24, 2002, a Notice of Denial was issued by the Department of Insurance, now the Office of Insurance Regulation, against the Petitioner, Maria N. Neal, denying her application for licensure as an independent all lines adjuster because of her criminal history, Petitioner timely filed a request for a proceeding pursuant to Section 120,57(1), Florida Statutes. Pursuant to notice, the matter was heard before William R, Pfeiffer, Administrative Law Judge, Division of Administrative Hearings, on October 30, 2002.

After consideration of the record and argument presented at hearing, the Administrative Law Judge issued his Recommended Order on March 19, 2003. (Attached as Exhibit A), The Administrative Law Judge recommended that the Department enter a final order approving Petitioner':; application for licensure as a resident independent all lines insurance adjuster.

On April 3, 2003, the Department timely filed exceptions to the Recommended Order. The exceptions were to Findings of Fact, Conclusions of Law and the Recommendation, The Petitioner did not file any exceptions or responses to the Department's exceptions. Each exception will be addressed below.

RULINGS ON THE DEPARTMENT'S EXCEPTIONS

I. The Department excepts to Finding of Fact #9 of the Recommended Order and argues that this Finding of Fact has been mislabeled and is, in actuality, a Conclusion of Law. Although the Dc:partment acknowledges that an Administrative Law Judge's findings of fact

cam1ot be modified or amended if it is supported by competent substantial evidence, (See e.g.

Gross v. Department of Health, 819 So.2d 997, 1001 (Fla. 5th DCA 2002); Strickland v. Florida

A & M Univers'!Y, 799 So.2d 276, 278 (Fla. 1st DCA 2001); Bush v. Brogan, 725 So.2d 1237, 1239 (Fla. 2nd DCA I 999)), the question of whether or not Petitioner is fit and trnstworthy to hold a license i : a legal conclusion, which is based upon factual findings. See generally; South

Florida Cargo Carriers Association, Inc. v. Department of Business & Professional Regulation, 738 So.2d 391, 394 (Fla. 3rd DCA 1999)("There is ... a fundamental difference ... between evidentiary findings of fact, which involve resolving conflicts of perceptions, judging the credibility of witnesses and drawing permissible inferences therefrom and those ultimate factual findings which are usually couched in terms of statutory or rule language and which resolve the legal issues between the parties")(citation omitted). In this case, the weighing of evidence only aids the Admit1istrative Law Judge in determining a legal conclusion. As a result, Finding of Fact #9 is a legal conclusion because if Petitioner is determined to be fit and trustworthy to hold a license then the legal issues between the parties will be resolved.

Accordingly, the Department's exception is accepted and the issue of the Petitioner's fitness and trustworthiness to hold a license is discussed further below.

1. The Department excepts to Findings of Fact #10 - #15 arguing that the Petitioner pied guilty to Felony Battery and not "no-contest" as the Administrative Law Judge stated in Finding of Fact #15. The Department further argues that there should be a presumption that the

   Petitioner committed the crime to which she pied guilty and that the Petitioner should not have been given an opportunity to argue her criminal case again at the administrative hearing.

   The Depaitment is correct in arguing that the Petitioner pied guilty to the lesser included

   
   

   offense of Felony Battery, a third degree felony on August 15, 2000 (See, Department Exhibit 4). The Administrative Law Judge did not have competent substantial evidence in the record to support his findings of fact that the Petitioner pied "no-contest" to Felony Battery, and it was an error for him to :so find. There being competent substantial evidence in the record to support a finding of fact that the Petitioner pied guilty to Felony Battery, the words "no-contest" are stricken from Findings of Fact #3 and #15 and replaced with the word "guilty". Accordingly, that portion of the Department's exception is accepted.

   As to the Department's argument that the Petitioner should not have been allowed to re­ argue her crim:.nal case at the administrative hearing, the record does not indicate that the Department made an objection to Petitioner's testimony relative to the facts underlying the criminal case. By not making an objection at the hearing, the Department \\laived its right to have the Petitioner's testimony excluded. See, Boling v. Barnes, 216 So.2d 804 (Fla. 2d DC::A

   1969) and ZEP Manufacturing v. Gratzer, 545 So.2d 965 (Fla. 1st DCA 1989). Because there was competent substantial evidence in the record to support the Administrative Law Judge's Findings of Fact #10-#15 (except as to the classification of the plea as ''no-contest"), the Department would have to improperly reject the Administrative Law Judge's findings of fact to

   permit the adoption of the remainder of the Department's exception #2. See, Brogan v. Carter, 671 So.2d 82:2: (Fla.1st DCA 1996). Accordingly, the remainder of the Department's exception #2 is rejected.

2. Although the Department did not specifically except to Finding of Fact #20 of the Recommended Order, there is a portion of this finding that is not supportec, by competent substantial evidence. The last portion of the first sentence in this finding states that "...Respondent slipulates that the new rule does not apply to Petitioner." Nowhere in the record is that stipulation made by the Department. Any discussion of the new law enforcement waiting period rule was done by way of explanation of this rule's history and not to stipulate that the new

   rule was inapplicable to the Petitioner. (See, Respondent's Proposed Recommended Order and Tr. pgs. 22-25 i,nd 31-39). Accordingly, the phrase "...Respondent stipulates that the new rul.e does not apply to Petitioner.", is stricken from Finding of Fact #20 because it is not supported by competent substantial evidence in the record.

3. The Department did not specifically except to Conclusion of Law #30 of the Recommended Order, however, in order to be consistent with the discussio:1 in paragraph 3 above, Conclusion of Law #30 is stricken and replaced with the following Conclusion of Law:

   Respondent admits, however, that it operated strictly under Sec1ions 626.611 and 626.621, Florida Statutes and stipulates that the previous law enforcement waiting period rules were inapplicable to Petitioner's application. See, Rule 4-211.031, Florida Administrative Code (repealed June 21, 2001). However, based on the holding in Agency for Health Care Adminis1ration v. Mount Sinai Medical Center of Greater Miami, 690 So.2d 689 (Fla. I st DCA 1997), the Respondent could use the law enforcement waiting period rules enacted on October 17, 2002 (Se\,, Rule 4-211.042, Florida Administrative Code) to detemtine whether Petitioner was eligible for licensure.

   
   

   This Conclusion of Law is as or more reasonable than the Conclusion of Law found by the Administrative Law Judge.

4. The Department excepts to Conclusion of Law #31 and argues that the Petitioner is not fit and trustworthy to hold a license. The Department argues that it properly denied the

   Petitioner's application based upon Section 626.611(7), Florida Statutes, because of her recent criminal plea.

   The courts have held that the Department can use a criminal plea to establish that a

   
   

   person is unfit and untrustworthy to hold a license. See, Natelson v. Department of Insurance,

   
   

   454 So.2d 31, 32 (Fla. !st DCA 1984); Paisley v. Department of Insurance, 526 So.2d 167,169 (Fla. !st DCA 1988). The Natelson and _paisley courts both stated that agencies are given wide discretion in the interpretation of statutes administered by them and will not ce overturned on

   appeal unless clearly erroneous. See, Paisley, 526 So.2d at 169; Natelson, 454 So.2d at 32; Se

   
   

   al 2, Republic Media Inc. v. Department of Transportation, 714 So.2d 1203, 1205 (Fla. 5th DCA J 998)("A reviewing court must defer to any statutory interpretation by an agency which is within the range of possible and reasonable.").

   Agency discretion must ordinarily be governed by legislative standards and guidelines. However, the two recognized exceptions to this maxim are "licensing and the dete1mination of fitness of licem,e applicants and the regulation of occupations which are engaged in by privilege rather than by right and which are potentially injurious to the public welfare." See, Astral

   Liquors, Inc. v. State Dept. of Business and Professional Regulation, 432 So.2d 93, 95-96 (FlaJd DCA 1983). See also, Dept. of Business and Professional Regulation v. Jone , 474 So.2d 359, 361-362 (Fla. l st DCA 1985). Agencies must use their discretion to make a determination of fitness. This discretion is particularly broad where the applicant seeks to engage in an occupation that is a privilege rather than a right. Once an agency has used its discretion to determine fitm:ss then the courts under a standard of reasonableness review the agency's choice.

   See, Jones at 362; See also, Astral at 96.

   The Administrative Law Judge in the Conclusions of Law fails to even address the standard by which review of an agency's exercise of discretion is undertaken. In the instant case, the situation involves a question of fitness of an applicant which necessitates the exercise of discretion by an agency. This discretion is especially broad because prior to an insurance license being issued, it 1s merely a privilege and the practice of insurance is undoubtedly potentially injurious to the public welfare. The discretionary decision that the Petitioner was not fit for Iicensure should be reviewed to determine if it was not reasonable.

   The Department exercised its discretion and determined that the Petitioner's entry of a

   
   

   guilty plea to fel,Jny battery fell within the Department's construction of the term lack of fitness. The Administrative Law Judge failed to address whether the Department's detennination of lack of fitness was reasonable, and instead substituted his discretion for the Department's. The Department argues that its determination of lack of fitness is reasonable. Se, , Natelson and

   Paisley. supra.

   
   

   In addition, the Department has promulgated a rule providing guidelines and waiting periods for individuals with criminal histories, and for determining fitness and trustworthiness for licensure. Rule 4-211.040, et , Florida Administrative Code became effective October 17, 2002, which was after the Notice of Denial issued by the Department but prior to the final decision on the Petitioner's application. This rule is applicable to the present ,;ase pursuant to

   the holding in Agency for Health Care Administration v. Mount Sinai Medical Center of Greater

   
   

   Miami, 690 So.2d 689 (Fla. I st DCA 1997) (stating that where there is a change in relevant agency rules after an application is complete but before a final decision is made, the change shall apply to the application). Further, as the Administrative Law Judge correctly pointed out in

   Conclusion of Law #26, this was a de novQ review proceeding and it was an error as a matter of law for him not to consider this rule promulgated by the Department.

   Rule 4-211.040(2), Florida Administrative Code states that "This rule part applies to

   
   

   applications for bcensure as an agency, lli!juster, sales representative, or other licc:nsure under th,: Florida Insuranc<' Code". (Emphasis added).

   Rule 4-21 l.042(22)(cc), Florida Administrative Code provides that Battery is a Class "B''

   
   

   Crime. The waiting period for a "Class B Crime" is 7 years from the trigger date (i.e. the date on which the applicant pied to the felony crime). See, Rule 4-211.042(8), Florida Administrative Code. Since the Petitioner pied guilty to a Class "B" Crime on August 15, 2000, her waiting period under the applicable rule would be until August 15, 2007.

   Rule 4-211.042(10), Florida Administrative Code allows mitigating factors to be considered to shorten the usual waiting period. There is evidence to support the fact that the Petitioner made restitution as ordered by the criminal court judge, therefore the waiting period for the Petitioner should be reduced by one (I) year, under the provisions of Rule 4- 21 l.042(10)(a)2., Florida Administrative Code. Further, Rule 4-21 l.042(10)(a)6., Florida Administrative Code allows for additional mitigation consistent with the standards set forth in Section 626.207, Florida Statutes. In view of the unique facts of this case, three (3) additional years are deduded from the required waiting period. As a result of these mitigating factors, Petitioner's waiting period would be until August 15, 2003.

   For the above-stated reasons, the Department's exception is accepted and the following Conclusion of Law is substituted for Conclusion of Law #31 of the Recommended Order.

   As noted above, Section 626.611, Florida Statutes, provides for mandatory license denial when a person is found to be unfit and untrustworthy or found guilty or pleads to a felony involving moral turpitude. This record contains sufficient evidence demonstrating

   that the Petitioner is not fit and trustworthy to hold an insurance license, and therefore Section 626.611(7), Florida Statutes does apply in this case.

   
   

   This Conclusion of Law is as or more reasonable than the Conclusion of Law set forth by the Administrative Law Judge.

5. The Department excepts to Conclusions of Law #33-#35 of the Recommended Order and argu, s that the Administrative Law Judge used only certain portions of the Department's Proposed Recommended Order, misinterpreted them and made speculative conclusions.

   As to the exceptions relative to Conclusions of Law #33 and #34, the Administrative Law Judge is simply quoting from either the Department's Proposed Recommended Order or from the transcript of the hearing. There is nothing in either of these Conclusions of Law that could be considered a misinterpretation or speculation. Accordingly, the Department's exceptions to Conclusions of Law #33 and #34 are rejected.

   However. as to Conclusion of Law #35, for the same reasons set forth in paragraphs 3 and 4 above, the following Conclusion of Law is substituted for Conclusion of Law #35 of the Recommended Order.

   As stated above, Respondent's licensing review committee

   reviewed the four-corners of Petitioner's application and determined that she was unfit and untrustworthy to hold a license due to her recent criminal plea and the short length of time between the completion of her probation and application for licensure. The Respondent acted well within its discretion when it denied Petitioner a license.

   
   

   This Conclusion of Law is as or more reasonable than the Conclusion of Law set forth by the Administrative Law Judge.

6. Thi: Department excepts to the Recommendation in the Recommended Order and argues that the Pelitioner's application should be denied.

It is well established that an agency may increase or decrease a penalty recommended by

an Administrative Law Judge. Criminal Justice Standards v. Bradley, 596 So.2d 661 (Fla. 1992);

Department of Law Enforcement v. Hood, 601 So.2d 1194 (Fla. 1992); Section 120.57(1)(1), Florida Statutes. So long as there are standards for the imposition of a penalty, adherence to those standards, and adherence to the requirements of Section 120.57(1)(1) Florida Statutes, an agency is free to increase or decrease a penalty recommended by an Administrative Law Judge. In the present case, the standards for the imposition of a penalty are enumerated in Section 626.611, Florida Statutes, and Rule Chapter 4-211, Florida Administrative Code, and the denial of the license is in accordance with these standards. Further, a complete review of the record has been made, as evidenced by the above discussions and citations to the record, jus1:ifying denial of Petitioner's license.

Therefor,:, upon careful consideration of the entire record, the submissions of the parties, including the exceptions filed, and being otherwise fully advised in the premises, it is ORDERED:

1. The Findings of Fact of the Administrative Law Judge are adopted in full, except

   
   

   as modified, as the Department's Findings of Fact.

   
   

2. The Conclusions of Law of the Administrative Law Judge are adopted in full, except as modified, as the Department's Conclusions of Law.

3. The Administrative Law Judge's recommendation that the Department enter a Final Order granting Petitioner's application for licensure as an independent all lines insurance adjuster in the State of Florida is rejected for the reasons set forth above.

ACCORDINGLY, it is ORDERED that Petitioner's, MARIAN. NEAL'S, application for licensure as an independent all lines insurance adjuster in the State of Florida is hereby DENIED.

NOTICE OF RIGHTS

Any party to these proceedings adversely affected by this Order is entitled to seek review of the Order pun;uant to Section 120.68, Florida Statutes, and Rule 9.110, Fla.R.App.P. Review proceedings must be instituted by filing a petition or Notice of Appeal with the General Counsel, acting as the agency clerk, at 200 East Gaines Street, Tallahassee, FL 32399-0333, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of the rendition of this Order.

DONE and ORDERED this 23rd day of April, 2003.

Office oflnsurance Regulation

COPIES FURNISHED TO:

Maria N. Neal

5639 Breckenridge Circle

Orlando, FL 32818-1377

Honorable William R. Pfeifer Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

Ladasiah Jackson, Esquire Division of Legal Services Department of Financial Services 200 E. Gaines Street

Tallahassee, FL 32399-0333

Docket for Case No: 02-003542

Orders for Case No: 02-003542