STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL SERVICES,
Petitioner,
vs.
JENNIFER L. FALOON,
Respondent.
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) Case No. 03-3666PL
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RECOMMENDED ORDER
Notice was provided and on February 5 and 6, 2004, a formal hearing was held in this case. Authority for conducting the hearing is set forth in Sections 120.569 and 120.57(1), Florida Statutes (2003). The hearing was conducted by video- teleconferencing. The administrative law judge was located at a site in Tallahassee, Florida. The remaining participants were located at a site in Jacksonville, Florida. The hearing was conducted by Charles C. Adams, Administrative Law Judge.
APPEARANCES
For Petitioner: Greg S. Marr, Esquire
David J. Busch, Esquire Department of Financial Services 612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
For Respondent: Jed Berman, Esquire
Infantino and Berman
100 South Knowles Avenue, Suite 7 Winter Park, Florida 32789
STATEMENT OF THE ISSUE
Should discipline be imposed by Petitioner against Respondent's licenses as a general lines agent (2-20) and Florida Residential Property and Casualty Joint Underwriters Association (FRPCJUA) agent (0-17), held pursuant to Chapter 626, Florida Statutes (2001)?
PRELIMINARY STATEMENT
By an Administrative Complaint in Case No. 64692-03-AG, dated September 23, 2003, Petitioner accused Respondent, in five separate counts of violating various provisions within Chapters 624 and 626, Florida Statutes (2001), related to the sale of automobile insurance and ancillary products to customers while an employee of John Beck Insurance, Inc. (Beck Insurance).
As instructed, Respondent elected her right to dispute factual allegations in the Administrative Complaint through a formal hearing pursuant to Section 120.57(1), Florida
Statutes (2001). That election was made on September 25, 2003. Although not required, Respondent filed an answer to the Administrative Complaint stating a lack of knowledge of the identity of the customers in Counts 1 through 5, and denying the remainder of the allegations pertaining to those counts.
Respondent in her answer did admit the general allegations found in paragraphs 1 through 3 to the Administrative Complaint. Her answer was served on October 3, 2003, through counsel. In addition, on that same date, Respondent made known her opposition to the allegations in the Administrative Complaint by a filing under authority of Florida Administrative Code Chapter 28-106.
On October 8, 2003, the Division of Administrative Hearings received the case for conduct of a hearing in accordance with Section 120.57(1), Florida Statutes (2001).
The case was set to be heard December 5, 2003, by video- teleconferencing.
On November 4, 2003, an order was entered granting Petitioner's unopposed motion to correct the transaction date in Count V to the Administrative Complaint.
A joint motion was filed to reschedule the December 5, 2003, hearing date. The motion was granted, and the case was reset to be heard on January 9, 2004, via video- teleconferencing.
Respondent moved to strike Count IV to the Administrative Complaint and for the award of attorneys' fees. The motion was opposed.
Respondent moved to enforce what she claimed was a settlement between the parties. That motion was opposed.
Petitioner moved for a protective order against the giving of a deposition by an agency employee who had knowledge about the sales of ancillary products by licensed agents and clerical employees of insurance agencies. That motion was opposed.
On December 15, 2003, an order was entered denying the enforcement of the claimed settlement.
On December 16, 2003, an order was entered denying the motion to strike Count IV and any attorneys' fees and costs.
On December 22, 2003, an order was entered which addressed the motion for protection against the giving of a deposition by Petitioner's designated employee, with instructions concerning the manner in which that deposition could be conducted.
Respondent's unopposed motion to continue the January 9, 2004, hearing date was granted. The case was reset to be heard on February 5, 2004, by video-teleconferencing. The hearing was conducted on that day and held over until February 6, 2004.
On January 7, 2004, Petitioner filed a written response to the requirements set forth in the order, dealing with the giving of a deposition by Petitioner's employee, in relation to any knowledge concerning sales of ancillary products by licensed agents and clerical employees of insurance agencies. Following that filing, Respondent moved to impose sanctions against Petitioner, to include the striking of the underlying Administrative Complaint and for the award of attorneys' fees.
Petitioner filed in opposition to the motion for sanctions. On January 22, 2004, an order was entered denying Respondent's motion for sanctions and attorneys' fees.
Respondent moved for clarification of the January 22, 2004, order, when considered in the context of the December 22, 2003, order. On January 28, 2004, an order was entered denying the motion for clarification.
On January 30, 2004, Petitioner filed its notice of dismissal of Count I of the Administrative Complaint.
Respondent filed a motion calling for the administrative law judge to attend the final hearing at the same location as other participants. On February 3, 2004, an order was entered denying the motion to require the administrative law judge to attend the final hearing in Jacksonville, where other participants would be located.
Respondent moved to suppress evidence obtained by Petitioner in its investigation at Beck Insurance and evidence discovered beyond that time which led to the charges against Respondent in the present case. Petitioner filed in opposition to the motion. On February 5, 2004, an order was entered denying the motion to suppress.
At hearing, Petitioner presented the testimony of
Laura Brown, Danyetta Wilson, William Henderson, and Linda Davis as its witnesses. Petitioner's Exhibits numbered 1 through 6,
and 8 through 22, were admitted. Petitioner's Exhibit numbered 7, was denied admission. Petitioner's Exhibit numbered 16 is the deposition testimony of Marc Appling. Petitioner's Exhibit numbered 1 is composed of requests for admissions propounded from Petitioner to Respondent and
Respondent's responses to the request for admissions, to include the instances where the requests were admitted.
Respondent testified in her own behalf. Respondent presented Bill Canova and Monica Beck as her witnesses. Respondent's Exhibits numbered 1, 4, 5 through 10, 12 through
16, 18 through 25, and 27 through 28, were admitted. Respondent's Exhibit numbered 17 was identified but not admitted. Respondent's Exhibit numbered 26 was withdrawn. Respondent's Exhibits numbered 2, 3, and 11 were denied admission.
The hearing Transcript was filed on March 29, 2004. The parties timely filed Proposed Recommended Orders on or before the extended deadline for submission of those pleadings. The Proposed Recommended Orders have been considered in preparing the Recommended Order. By requesting additional time to file post-hearing submissions, the parties waived the time requirement for entry of the recommended order set forth in Florida Administrative Code Rule 28-106.216.
FINDINGS OF FACT
Facts Admitted by Answer
Pursuant to Chapter 626, Florida Statutes, you Jennifer L. Faloon, currently are licensed in this state as a general lines (2-20) agent and a FRPCJUA (0-17) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Your license identification no. is A080736.
Pursuant to Chapter 626, Florida Statutes, the Department of Financial Services has jurisdiction over your licenses and appointments.
At all times relevant to the dates and occurrences referenced herein you, Jennifer L. Faloon, were employed with Beck Insurance, in Jacksonville, Florida.
Additional Facts Established by Responses to Requests for Admissions
Respondent was licensed as a general lines (2-20), and a Florida Residential Property and Casualty Joint Underwriters Association (0-17) agent, in Florida, from June 25, 2001, until and including the present time.
From June 25, 2001, until and including February 19, 2002, Respondent was employed with Beck Insurance, in Jacksonville, Florida.
Respondent signed the insurance application on February 19, 2002, to bind coverage for Ms. Wilson (Danyetta Wilson).
Respondent signed the insurance application on January 21, 2002, to bind coverage for Mr. Appling (Marc Appling).
Respondent signed the insurance application on January 22, 2002, to bind coverage for Ms. Brown (Laura Brown).
Anna Michelle Mack transacted insurance business with Laura Brown on January 22, 2002.
Respondent signed the insurance application on June 25, 2001, to bind coverage for Mr. Henderson (William Henderson).
Respondent's Duties at Beck Insurance
Respondent began her employment with Beck Insurance, in September 1996. She began as an unlicensed person. While working with Beck Insurance she obtained her (4-42) license allowing limited customer service related to the sale of automobile insurance. She subsequently obtained her (2-20) insurance agent license related to property and casualty, which would allow the sale of automobile, homeowners, and commercial insurance.
Prior to this case Respondent has had no complaints filed against her in her capacity as insurance agent.
In addition to selling insurance at Beck Insurance, Respondent is familiar with ancillary products offered through that agency. In particular, she is familiar with the sale of contracts involving towing a disabled car operated by a party who has contracted for those services. Respondent is also conversant with rental car contracts sold at Beck Insurance. The rental car contract allows for the customer to rent a car when the customer's personal car is unavailable.
During the years 2001 and 2002, the years in question in this case, Respondent served as a supervisor at Beck Insurance in her capacity as a licensed (2-20) agent for persons employed by Beck Insurance, both unlicensed and licensed. The licensed agents that she had supervisory responsibility for were (4-42) limited or unlimited customer service licenses for automobile insurance and (4-40) full customer service agents. Respondent also was expected to deal with issues of underwriting for the insurance policies sold. As few as five and as many as ten agents were employed with Beck Insurance in the relevant time frame. This included another supervising (2-20) agent named Lon Woodward. Both Respondent and Mr. Woodward supervised the licensed (4-42) and (4-40) agents at Beck Insurance, who could not conduct business without supervision from the licensed (2-20) agent.
The office hours in the relevant time period were from 9:00 a.m. to 6:00 p.m. Monday through Friday, and 9:00 a.m. to 5:00 p.m. on Saturday.
In any given month in excess of 100 customers might be served. Not all activities in providing service were in relation to writing insurance policies.
Beck Insurance, at times relevant to the inquiry, represented numerous insurance companies involved with the sale of automobile insurance. The clientele that purchased automobile insurance from Beck Insurance was principally constituted of persons with problematic driving records, including suspensions, DUIs, lapses in coverage, as well as persons who only intended to pay the minimum amount necessary for a premium to obtain insurance that would allow that person to operate a motor vehicle in Florida.
As a non-standard agency, the majority of Beck Insurance customers are persons who would not be provided insurance by the standard insurance companies such as State Farm, AllState, and Nationwide.
Typically, when a customer initially contacted Beck Insurance by telephone they wanted the best price. In response, the Beck Insurance employee would consider the price structure among the 35 insurance companies represented by Beck Insurance to choose the most economical policy.
When telephone inquiries were made about purchasing automobile insurance through Beck Insurance no mention was made of the All World towing and rental plan.
Beck Insurance trains its employees in the manner those employees will serve the customers. Respondent was included in that training, having received training and provided training in those approaches.
Ordinarily when a customer inquired concerning the purchase of automobile insurance at Beck Insurance, he or she was asked about the type coverage he or she was interested in purchasing. Information was gathered concerning the automobile to be insured. A questionnaire was completed. Within that document is a reference to towing and rental car reimbursement coverage, as well as information about the automobile insurance itself. The questionnaire which was used at times relevant to this case sought information about the customer and the use of the automobile that was being considered for coverage with blanks being provided to the left of the questions for initialing by the customer and blanks to the right for an affirmative or negative response. By contrast to other items, item 11 within the questionnaire was declarative in nature. It had a space for the initials of the customer, but not one to declare acceptance or rejection of what was described. By its terms it stated: "Motor Club - I am aware that towing and rental
car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier)." The parenthetical reference within item 11, was by smaller type, unlike the interrogatories that were found within the questionnaire. The statement in item 11 has an internal contradiction. In its initial sentence, it talks about the optional opportunity to obtain towing and rental car reimbursement, but it is followed by a sentence which says that the customer wants to carry the coverage with no apparent opportunity within the document to decline that coverage. Moreover, at the bottom of the questionnaire, there was the opportunity for the customer to say that he or she did not want to carry and was rejecting bodily injury liability, uninsured motorist, medical payments, comprehensive and collision, and custom or special equipment coverage, by initialing the blank provided with each category of coverage, but there was no similar opportunity to reject the towing and rental car reimbursement that was described earlier in the document. The insurance coverages were referred to as optional, as was towing and rental. An example of the text within the document, aside from its execution, is found as Petitioner's Exhibit numbered 5. The execution of that document will be discussed subsequently in relation to the customer Danyetta Wilson.
According to Respondent, the typical customer for automobile insurance at Beck Insurance is told "In this price we are also giving you towing and rental reimbursement." The nature of the plan for towing and rental is described. For example, if it is Plan 3, the customer is told "you will receive free tow reimbursements for six months for $100.00 each. You will also receive -- -- if you are involved in an automobile accident with another vehicle and you have to have your vehicle in a shop for repair, you will receive $25.00 a day reimbursement for five days. These claims have to be filed through our agency. You bring us the receipt within 60 days, we file it."
The towing and rental services being sold by Beck Insurance, which are the subject in this dispute, are offered through All World All Safe Drivers (All World), part of Beck Insurance.
Once more specific discussion is entered into concerning the automobile insurance policy applied for, the Beck Insurance employee also returns to the discussion of the All World towing and rental products. Beyond the presentation of the information concerning the purchase of the insurance coverage that has been chosen, Respondent testified that during the time in question the customer would be told "this is your towing and rental reimbursement contract." The details
concerning the towing and rental in the contemplated agreement between Beck Insurance and the customer are as set forth in Respondent's Exhibit numbered 28, a form application for towing and automobile rental reimbursement through All World.
The form application which constitutes the basis for providing the coverage makes no mention concerning the charge for the various plans offered to the customer for the towing and rental. The terms set forth in the application bundle the reimbursement plan for automobile rental and towing services, as opposed to separate coverage for automobile rental reimbursement and towing reimbursement. Notwithstanding the lack of explanation within the form application for All World rental reimbursement and towing service reimbursement, concerning the costs for the various plans described, Respondent indicated in her testimony that those packages are $35, $60, and $75, in costs. The discussion of the amount charged for towing and rental is included in the price breakdown that also pertains to the costs for the automobile insurance purchased.
Approximately 50 percent of the customers solicited purchased All World towing and rental contracts in the time in question.
Customarily, the application for automobile insurance is signed by an appointed licensed (2-20) agent at Beck
Insurance who has authority to review the application to make certain that it has been correctly executed.
When the transaction is complete between a customer and the Beck Insurance employee, there is but one receipt provided to the customer. That receipt sets out the aggregate charges and then breaks out individual charges for the automobile insurance policy, All World, and the motor vehicle report (MVR) fee that some insurance companies charge.
As the receipt suggests, the amount tendered at the time that the automobile insurance is purchased and towing and rental reimbursement is purchased is a single amount that would have cost components for the automobile insurance, towing and rental, and a MVR fee.
Another form is provided to customers with Beck Insurance. An example is found as Respondent's Exhibit numbered 27. That form outlines automobile insurance coverage by providing explanations about the types of coverage and advice on making certain that the insurance company pays claims made by the customer. There is a reference within this form to a subject other than automobile insurance, namely a reference to towing and rental-car reimbursement wherein is stated: "Reimbursement for towing charge when your covered vehicle is unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an
accident. This coverage is optional. Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan."
As anticipated by law, persons who work for Beck Insurance, other than the licensed (2-20) agent, may take information supporting the application for automobile insurance sold through Beck Insurance.
Count II Danyetta Wilson
Danyetta Wilson was interested in purchasing automobile insurance in February 2002. She called Beck Insurance and spoke to Respondent concerning that purchase. After receiving a telephone quote, Ms. Wilson immediately went to Beck Insurance to transact business. The date was February 19, 2002.
Before arriving at Beck Insurance, Ms. Wilson had told Respondent what she wanted in the way of automobile insurance coverage, and Respondent indicated that everything necessary to conclude the transaction would be prepared in advance before Ms. Wilson arrived at Beck Insurance. Of course, the application for insurance had not been executed, but pertinent information had been written down by Respondent on scratch paper. Essentially Ms. Wilson told Respondent in the telephone call that she wanted a minimum down-payment and low monthly payments, without discussing the amount of the deductible.
When Ms. Wilson arrived at Beck Insurance, she saw Respondent. Both the Respondent and Tracy Laroe assisted Ms. Wilson in the transaction.
Ms. Laroe was employed by Beck Insurance. Her application to become a licensed (4-42) limited customer representative was authorized by Petitioner on December 11, 2001. Petitioner issued license no. EO10041 (4-42) to
Ms. Laroe on March 8, 2002, as recognized by Beck Insurance on March 29, 2002. As of July 1, 2002, Ms. Laroe's license was inactive based upon cancellation by Beck Insurance as the appointing entity.
On February 19, 2002, Respondent was responsible for Ms. Laroe as supervisor at Beck Insurance, in relation to
Ms. Wilson's transaction with Beck Insurance in purchasing automobile insurance through Progressive Insurance and automobile rental and towing reimbursement through All World.
Most of the activities involved with the transaction occurred between Ms. Wilson and Ms. Laroe when addressing the purchase of automobile insurance on the date in question.
During the transaction at Beck Insurance, Ms. Laroe, while assisting Ms. Wilson, did not suggest possible interest in buying the motor club also referred to as a towing and rental contract. Nor was there mention of All World as the company to provide that ancillary product. What was established in
discussion was the amount of down-payment and the monthly payments for the automobile insurance. The down-payment was made by cash. Ms. Wilson was told that the down-payment would be $332, which is the amount that she paid.
Ms. Wilson completed and was provided copies of certain documents in the transaction. Petitioner's Exhibit numbered 2 is the application for the automobile insurance questionnaire that was completed by providing answers and initials in relation to the underwriting information that was requested in the application form. Ms. Wilson signed the application on February 19, 2002. She did not read the document carefully because she was, as she describes it, "in a rush." The completed application was counter-signed by Respondent as producing agent on February 19, 2002, at 1:41 p.m.
On February 19, 2002, Ms. Wilson was provided a receipt indicating a total amount of $332. The receipt reflected that $269 was a down-payment for Progressive Insurance, an amount of $60 as related to All World rental and towing, and $3 for a MVR fee. Ms. Wilson did not examine the receipt at the time it was provided to her. The receipt was filled out by a cashier at Beck Insurance, a person other than Respondent and Ms. Laroe. No explanation was made concerning its several parts.
In addition to the questionnaire associated with the application for insurance coverage pertaining to the Progressive Insurance policy, Ms. Wilson executed the Beck Insurance questionnaire which described automobile insurance generally and the All World towing and rental. That questionnaire is Petitioner's Exhibit numbered 5. Petitioner's Exhibit
numbered 5 creates the impression that towing and rental is an integral part of the purchase of automobile insurance. It was signed by Ms. Wilson on February 19, 2002, and initialed in its numbered parts. Those parts included the reference to the motor club at number 11 where it stated, "Motor Club - I am aware that the towing and rental care reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" Again, while the towing and rental car reimbursement was stated as being optional, the quoted material was ambiguous as to its optional nature, and there was no opportunity in the latter portion of the questionnaire to specifically decline this ancillary product.
In connection with the rental and towing service through All World, Ms. Wilson signed as applicant for the product. This application which formed the basis for charging Ms. Wilson $60 for rental and towing is Petitioner's Exhibit numbered 4. It is in the manner described earlier as to its
form, in which no indication is made concerning the amount charged to purchase Plan 3.
Ms. Wilson did not read Petitioner's Exhibit numbered 4, which described the automobile rental and towing
reimbursement offered through All World. She signed her name by a red "X" on the application line. The document which described the nature of the reimbursement plan offered through All World was not specifically explained to her. Ms. Wilson was not told that there was an additional charge for the towing and rental.
She had no interest in towing and rental, having been provided similar services through her cell-phone plan.
In this process, Respondent came over to the location where Ms. Wilson was seated and pointed out certain places in the insurance application to check-off and initial.1 Respondent did not sit at the desk with Ms. Wilson when the transaction took place.
During the transaction, Ms. Laroe told Ms. Wilson that the questions she was asking would have to be directed to Respondent, in that Ms. Laroe could not help Ms. Wilson by providing the answers. Ms. Laroe mentioned that her participation was part of the customer service.
Ms. Wilson also was involved with a sheet which was informational in nature describing the various types of insurance coverage. Respondent showed Ms. Wilson that form. It
is Respondent's Exhibit numbered 1, which was signed by
Ms. Wilson on February 19, 2002. It indicates that Ms. Wilson declined uninsured motorists and medical payments coverage.
Zeros are placed next to those explanations. Within the document is a reference to towing and rental reimbursement, wherein it is stated:
Towing and Rental Car Reimbursement.
Reimbursement for towing coverage when your covered vehicles are unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an accident and is being repaired. This coverage is optional.
Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan.
The towing and rental had a dash placed by that item together with the balance of the items on the information sheet that described insurance coverage. Respondent saw Ms. Wilson place the marks by the side of the forms of coverage and the information about towing and rental reimbursement, which is not part of automobile insurance coverage as such. The overall expectation within Respondent's Exhibit numbered 1 is to generally describe available products. It does not serve as an application. The status of the document is not changed by having Ms. Wilson sign the document.
Respondent saw Ms. Wilson initial item 11, concerning the motor club found within Petitioner's Exhibit numbered 5. Ms. Wilson did not ask any questions of Respondent concerning Petitioner's Exhibit numbered 5.
Respondent was present when Ms. Wilson signed the application for towing and rental, Petitioner's Exhibit numbered 4. Respondent in relation to that document asked if there were any questions. Ms. Wilson did not indicate that she had questions.
In relation to Petitioner's Exhibit numbered 4, Respondent recalls the nature of the explanation that she gave to Ms. Wilson as: "What this is, is this is your towing and rental contract. It gives you three tows per six months,
$100.00 reimbursement on every tow, on each tow with a limit of three per six months. The rental benefit is $25.00 a day for five days if you are involved in an automobile accident and you need reimbursement. All claims have to be brought here to the office within 60 days in the form of receipts. We file the claims for you. Now, I need you to sign there." Nothing in that explanation indicates that there was an opportunity to decline to participate. The explanation did not establish the cost for the plan.
Respondent indicated hat Ms. Laroe in her participation in the transaction with Ms. Wilson was there to listen and learn.
Count III Marc Appling
On January 21, 2002, Marc Appling purchased automobile insurance from Beck Insurance. He wanted full coverage for his car. The amount quoted for the insurance as a down-payment was
$288. On January 21, 2002, $200 was paid. On January 24, 2002, the additional $88 was paid. Of the $288 paid, $222 was a down- payment for automobile insurance through Superior American Insurance Company (Superior), $60 was for All World automobile towing and rental reimbursement, $3 for a MVR fee, and $3 for some unexplained charge. The receipt provided Mr. Appling when he paid the initial $200 reflects $222 for down-payment to Superior, $60 for All World, and $3 for a MVR fee. That receipt is Exhibit numbered 9 to the Appling deposition, Petitioner's Exhibit numbered 16.
On January 21, 2002, Mr. Appling primarily dealt with Lance Moye, an employee of Beck Insurance who gave him a price quotation for the purchase of insurance through Superior.
Mr. Moye explained to Mr. Appling the details, to include the amount of payment per month beyond the down-payment.
Michelle Mack, an employee for Beck Insurance was sitting next to him. If Mr. Moye experienced problems in carrying out the transaction, he would ask Ms. Mack her opinion.
Mr. Moye has never been licensed by the Petitioner in any capacity. During 1991 and 1993, he had applied for a (2-20) general lines property and casualty license.
On the date in question, Michelle Mack, known to Petitioner for licensing purposes as Anna Michelle Mack, was licensed as a (4-42) limited customer representative agent.
Mr. Appling executed the Beck Insurance questionnaire and acknowledgement form that has been previously described, to include initialing item 11, related to the motor club which says: "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office as it is not written with your auto carrier.)" This form that was signed and initialed and answered yes or no in various places was Exhibit numbered 8 to the Appling deposition, Petitioner's Exhibit numbered 16. Mr. Moye told Mr. Appling that "you pay," addressing Mr. Appling, "X amount of dollars for rental car coverage and everything like that." However, Mr. Appling was not satisfied with the explanation. The questionnaire Exhibit numbered 8 to the Appling deposition, describing towing and rental car reimbursement as optional, did not create below that
statement the specific opportunity to decline that option as would have been the case as items such as uninsured motorist and medical payments. Mr. Appling was left with the impression that the motor club was part of the insurance policy that he purchased and that the $288 down-payment included the motor club. Because Mr. Appling was interested in full coverage, he believed that the automobile insurance itself would cover rental reimbursement. Notwithstanding that the form questionnaire, Exhibit numbered 8 to the Appling deposition referred to towing and rental car reimbursement as an optional item,
Mr. Appling did not understand that it was an optional purchase. Had he been persuaded that it was a separate item he would not have purchased the motor club.
Exhibit numbered 7 to the Appling deposition, Petitioner's Exhibit numbered 16, is the application for All World towing and rental reimbursement.
The automobile insurance application through Superior is found as Exhibit numbered 5 to the Appling deposition, Petitioner's Exhibit numbered 16. It was executed and signed by Mr. Appling on the date in question, then was marked as bound and signed by Respondent on that date.
Although Respondent signed the Appling application for automobile insurance with Superior, she had no specific recollection of the event and was not otherwise involved in the transaction.
Count IV Laura Brown
On January 21, 2002, Laura Brown purchased automobile insurance through Beck Insurance. She dealt with
Valerie Lynn Webster and Anna Michelle Mack, employees at Beck Insurance.
At various times in 2002 and 2003, Ms. Webster had applied to Petitioner to be licensed as a (2-14) life, including variable annuity agent and a limited customer representative
(4-42). No licenses were issued to Ms. Webster.
Before arriving at Beck Insurance, Ms. Brown had obtained a preliminary quotation by telephone from the agency related to the purchase of automobile insurance. Ms. Brown was interested in obtaining full coverage for her car.
The nature of the discussion once Ms. Brown arrived at the agency was about the purchase of automobile insurance, not about a towing and rental contract, motor club membership or the All World plan. A down-payment was made with installments to follow, associated with the automobile insurance. Ms. Brown thought that the entire amount of the down-payment was for the insurance premium. No explanation was made to the effect that
the motor club was separate from the automobile insurance policy. When Ms. Brown left the Beck Insurance agency, she did not realize that she had purchased anything other than automobile insurance.
Petitioner's Exhibit numbered 12 is the automobile insurance application through Superior, executed by Ms. Brown on the date in question. It was signed by Respondent, noting that the policy was bound. Respondent had no other direct involvement in the transaction.
Petitioner's Exhibit numbered 13 is a receipt dated January 22, 2002, issued to Ms. Brown by Ms. Webster and
Ms. Mack, totaling $247 that Ms. Brown paid on that date. It is broken out as $184 for Superior, $60 for All World, and $3 for a MVR fee.
Petitioner's Exhibit numbered 14 is an executed application for All World automobile reimbursement and towing service reimbursement executed by Ms. Brown for the period January 22, 2002, through June 22, 2002, under Plan 3 in the form that has been previously described.
As reflected in Petitioner's Exhibit numbered 15,
Ms. Brown executed the Beck Insurance questionnaire in the form that has previously been described that contains item 11, relating to the motor club stating, "I am aware that the towing and rental car reimbursement is optional. I want to carry this
coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" The questionnaire additionally sets forth that the towing and rental car reimbursement is optional but without the opportunity to decline that option that is specifically described for other optional coverage in the form, such as uninsured motorists and medical payments.
In an affidavit containing Ms. Brown's statement prepared on May 23, 2002, Ms. Brown stated, "I knew that I had purchased towing or rental reimbursement policy for my policy 1/22/2002/2003 because I saw the form and I asked questions about it. The lady in picture number 10 (Ms. Mack depicted on Petitioner's Exhibit numbered 17) told me I would get so many tows for free, she also told me it was from Beck Insurance." But in that affidavit Ms. Brown goes on to state, "I did not know that I paid an additional $60 for the towing policy. I thought this was just something I got with the car insurance policy." Again, nothing in Petitioner's Exhibit numbered 14, the application for All World towing and rental, reflects the cost of Plan 3. That was made known in the receipt, Petitioner's Exhibit numbered 13.
Count V William Henderson
On June 25, 2001, William Henderson purchased automobile insurance from Beck Insurance. He dealt with
Daphne Ferrell, a person Respondent claims was a licensed agent at the time. No proof has been presented to contradict Respondent's position, and it is found that Ms. Ferrell was a licensed agent when the transaction took place.
On the date in question, Mr. Henderson was interested in purchasing full coverage for his automobile. He executed an application with Atlanta Casualty Company (Atlanta Casualty) to purchase the automobile insurance. That application is Petitioner's Exhibit numbered 6. Respondent's involvement in the purchase was the signing of the application in the place indicated for the agent's statement vouching for the application's correctness.
The automobile that was covered by the purchase was inspected by Ms. Laroe as evidenced in Petitioner's Exhibit numbered 7. The inspection was not a function that required a licensed person to perform.
Mr. Henderson paid Atlanta Casualty $306 on June 25, 2001, for automobile insurance. That payment is
reflected in Petitioner's Exhibit numbered 8, a copy of the check written to Atlanta Casualty. The money that was paid was acknowledged by a receipt from Ms. Ferrell dated June 25, 2001, Petitioner's Exhibit numbered 9. That receipt reflects $306 down-payment for the automobile insurance to Atlanta Casualty and $75 for a rental contract involved with All World, for a
total of $381. Whether Mr. Henderson paid the $75 for towing and rental, aside from the $306 check written for the insurance to Atlanta Casualty, is not clear from the record.
Mr. Henderson had made application on the form related to All World for auto rental reimbursement and towing service reimbursement, which has been previously described. The specific application by Mr. Henderson is Petitioner's Exhibit numbered 10, relating to Plan 3.
Mr. Henderson executed the Beck Insurance questionnaire form that has been previously described setting forth item 11, the motor club, which states: "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" While Mr. Webster initialed item 11 on the form, as other customers had done in the circumstances addressed in the Administrative Complaint, the form he executed, as with other customers, did not create an opportunity to opt out of the motor club. While the form at item 11 spoke of the optional nature of the motor club, it was followed by a statement that made it appear that the opportunity to decline the coverage had already been determined, when it said: "I want to carry this coverage." The reference to the optional nature of the towing and rental car reimbursement in the latter portions of the form was not
followed by an opportunity to specifically decline the motor club, as allowed in reference to other forms of optional insurance coverage pertaining to such items as uninsured motorist and medical payments, for example. The executed questionnaire is Petitioner's Exhibit numbered 11.
In completing the Beck Insurance questionnaire, Petitioner's Exhibit numbered 11, his instructions were to initial where the solid arrow runs from items 1 through 14, at the top of the page, and by the Xs at the bottom of the page. The arrow and the Xs were placed by someone other than
Mr. Webster. Only a brief explanation was given to Mr. Webster concerning the questionnaire. Mr. Webster has no recollection of someone specifically reading item 11, related to the motor club.
During the transaction at issue, Mr. Webster remembers a discussion of towing and rental. He indicated that he was not interested in rental reimbursement. He did want towing.
Mr. Webster, like the other customers who have been discussed, did not carefully read the documents presented to him for his consideration in purchasing the automobile insurance and in relation to the motor club. Mr. Webster has a vague recollection of someone placing an "X" on the applicant's signature line in Petitioner's Exhibit numbered 10 and signing
that application for the All World motor club, but he thought that he was only purchasing towing not rental. The application covers both rental and towing.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding in accordance with Sections 120.569 and 120.57(1), Florida Statutes (2003).
This is a disciplinary case. Therefore, Petitioner has the burden of proving the allegations in the Administrative Complaint by clear and convincing evidence. See § 120.57(1)(j), Fla. Stat. (2003); see also Department of Banking and Finance, Division of Investor Protection v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); and Pou v. Department of Insurance and Treasurer, 707 So. 2d 941 (Fla. 3rd DCA 1998).
In pertinent part, the Administrative Complaint in its present form alleges:
Count II
On or about February 19, 2002, you, JENNIFER L. FALOON, in your capacity as an employee of Beck Insurance, transacted business with Danyetta Wilson regarding her purchase of a private automobile insurance policy. During the course of this transaction, you JENNIFER L. FALOON, either directly or through an unlicensed employee of Beck Insurance, Tracy Laroe, completed an
application with little or no input from Danyetta Wilson, chose coverage and deductible amounts with no input from Danyetta Wilson, sold Danyetta Wilson a rental/towing contract without explaining that this was separate from and an additional charge to the automobile policy, and signed the application form without having personal knowledge that it was correct or actually signed by
Danyetta Wilson.
Count III
On or about January 21, 2002, you, JENNIFER L. FALOON, in your capacity as an employee of Beck Insurance, transacted business with Marc Appling regarding his purchase of a private automobile insurance policy. During the course of this
transaction, you JENNIFER L. FALOON, either directly or through an unlicensed employee of Beck Insurance, Lance Moye, completed an application with little or no input from Marc Appling, chose coverage and deductible amounts with no input from Marc Appling, sold Marc Appling a rental/towing contract without explaining that this was separate from and an additional charge to the automobile policy, and signed the application form without having personal knowledge that it was correct or actually signed by Marc Appling.
Count IV
On or about January 21, 2002, you, JENNIFER L. FALOON, in your capacity as an employee of Beck Insurance, transacted business with Laura Brown regarding her purchase of a private automobile insurance policy. During the course of this
transaction, you JENNIFER L. FALOON, either directly or through an unlicensed employee of Beck Insurance, Valerie Webster, and Anna Michelle Mack, a licensed limited customer representative employee with Beck
Insurance, completed an application with little or no input from Laura Brown, chose coverage and deductible amounts with no input from Laura Brown, sold Laura Brown a rental/towing contract without explaining that this was separate from and an additional charge to the automobile policy, and signed the application form without having personal knowledge that it was correct or actually signed by Laura Brown.
Count V
On or about June 25, 2001, you,
JENNIFER L. FALOON, in your capacity as an employee of Beck Insurance, transacted business with William Henderson regarding his purchase of a private automobile insurance policy. During the course of this transaction, you JENNIFER L. FALOON, either directly or through an unlicensed employee of Beck Insurance, Tracy Laroe, completed an application with little or no input from William Henderson, chose coverage and deductible amounts with no input from William Henderson, sold William Henderson a rental/towing contract without explaining that this was separate from and an additional charge to the automobile policy, and signed the application form without having personal knowledge that it was correct or actually signed by
William Henderson.2
The remaining Counts II through IV charged violations of the following statutory provisions, which if proven would subject Respondent to discipline for her misconduct. In turn, those provisions are:
§ 624.11(1), Fla. Stat. (2001).
No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this code.
§ 626.611, Fla. Stat. (2001).
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:
* * *
(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.
* * *
Demonstrated lack of fitness or trust- worthiness to engage in the business of insurance.
Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.
Fraudulent or dishonest practices in the conduct of business under the license or appointment.
* * *
(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.
* * *
§ 626.621, Fla. Stat. (2001)
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:
* * *
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.
* * *
(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.
* * *
(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.
§ 626.9541, Fla. Stat. (2001):
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:
1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.
* * *
(z) Sliding.--Sliding is the act or practice of:
* * *
Representing to the applicant that a specific ancillary coverage or product is included in the motor vehicle policy applied for without an additional charge when such charge is required; or
Charging an applicant for a specific ancillary coverage or product, in addition to the cost of the motor vehicle insurance coverage applied for, without the informed consent of the applicant.
Section 624.10, Florida Statutes (2001), defines transacting insurance as:
"Transact" with respect to insurance includes any of the following, in addition to other applicable provisions of this code:
Solicitation or inducement.
Preliminary negotiations.
Effectuation of a contract of insurance.
Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.
When the factual allegations that have been described are considered into relation to the statutory prohibitions they fall into three categories: 1) that Respondent directly or through others completed the automobile insurance applications with little or no input from the customers and chose coverages and deductible amounts with no input from the customers; 2) that Respondent sold the customers rental/towing contracts without explaining that the ancillary product was separate from an additional charge unrelated to the automobile policy; and
3) that Respondent signed the applications for automobile insurance without having the personal knowledge of their correctness and that it actually had been signed by the customers.
When considering Respondent's conduct in the transactions at issue, it is with the recognition that Respondent has a fiduciary relationship, both with her customers
and the insurance companies. See Natelson v. Department of Insurance, 454 So. 2d 31 (Fla. 1st DCA 1984).
Concerning the manner in which applications for insurance were completed in relation to the customers in Counts II through IV, the application forms and related
documents and their use, as explained in the facts, do not point to completion of the application for automobile insurance with little or no input from the customer and the choice of the deductible amounts with no input from the customers. Likewise, it has not been shown that Respondent needed to have personal knowledge of the details reported in the application for insurance, as opposed to the facial review of the application for correctness in order to comply with requirements of law.
From the facts found, it is concluded that Respondent was aware that the persons signing the applications for automobile insurance were the customers identified in Counts II through IV.
From the facts found, there was a problem with the process in which Respondent participated directly with Danyetta Wilson, wherein the customer was sold the All World
towing and rental policies without adequate explanation that the product was separate and carried an additional charge unrelated to the automobile insurance policy. The oral explanation which Respondent gave in the Wilson transaction concerning the towing and rental contract, was not designed to satisfy, and did not
satisfy, the requirements of Thomas v. State of Florida, Department of Insurance and Treasurer, 559 So. 2d 419 (Fla. 2nd DCA 1990), rev. denied, 570 So. 2d 1307.
The forms prepared by Beck Insurance and utilized by Respondent in the Wilson transaction to sell towing and rental are fraudulent in their design and unfair and deceptive, and were inappropriately employed by Respondent for reasons explained in the fact finding.
Respondent was not accountable for the acts of those other persons employed by Beck Insurance when dealing with the sale of All World rental and towing, with the exception of Tracy Laroe whom she aided, assisted, and abetted to violate the insurance code in the Wilson transactions. Respondent did not have that immediate knowledge of the activities of the other employees when it came to the question of selling the ancillary products, rental and towing, with the exception of the transaction involving Wilson. The fact that Respondent was on the floor as supervisor does not make her absolutely accountable for all acts performed by the other employees, whereas the owners of Beck Insurance may have been.
Statutory definitions are provided which identify what it meant to be a general lines agent (2-20) and a limited customer representative (4-42), wherein it is stated:
§ 626.031, Fla. Stat. (2001)
"Agent" defined, in general.--As used in this part, the term "agent" or "insurance agent" means a general lines agent, title agent, life agent, or health agent as defined in this chapter or related chapters, or all such agents, as indicated by context.
§ 626.041, Fla. Stat. (2001)
"General Lines agent" defined.--
For the purposes of this code, a "general lines agent" is one so transacting any one or more of the following kinds of insurance:
(a) Property insurance.
* * *
With respect to any such insurances, no person shall, unless licensed as an agent:
Solicit insurance or procure applications therefore;
In this state receive or receipt for any money on account of or for insurer, or receive or receipt for money from any persons to be transmitted to any insurer for a policy, contract, or certificate of insurance or any renewal thereof, although such policy, certificate, or contract is not signed by him or her as agent or representative of the insurer;
Directly or indirectly represent himself or herself to be an agent of any insurer or as an agent, to collect or forward any insurance premium, or to solicit, negotiate, effect, procure, receive, deliver, or forward, directly or indirectly, any insurance contract or renewal thereof or any endorsement relating to an insurance contract, or attempt to
effect the same, of property or insurable business activities or interest, located in this state.
* * *
§ 626.072, Fla. Stat. (2001)
"[L]imited customer representative" defined.--For the purposes of this code:
* * *
(2) A "limited customer representative" is a customer representative appointed by a general lines agent or general lines agency to assist the agent or agency in transacting only the business of private passenger motor vehicle insurance from the office of the agency or agency. A limited customer representative is subject to this code in the same manner as a customer representative unless otherwise specified.
To the extent that limited customer representatives (4-42) were involved in the subject transactions, their appointment was by Beck Insurance, not by Respondent. They were employed for the purpose, as the law contemplates, of assisting Beck Insurance in transacting business of private passenger motor vehicle insurance from Beck Insurance. The appointments are evidenced by the records maintained by Petitioner.
Nothing in the description of the duties of a general lines agent (2-20) and a limited customer representative (4-42) makes the former responsible for acts of the latter in all instances. Without knowledge of violations of the insurance code committed by other Beck Insurance employees who acted as
limited customer representative (4-42), Respondent, as a general lines agent (2-20), cannot be held accountable for their acts or those of any other person who is unlicensed by Petitioner. With the exception of the transaction involving Danyetta Wilson, Count II, Respondent had no knowledge of the activities of others pertaining to the offending circumstances involved with the sale of the All World rental and towing contracts. In this case, the expectations within Florida Administrative Code Chapters 4-213, now 69B-213 or 69O-213, concerning Respondent's responsibilities as supervising agent for the limited customer service representatives, does not make her responsible for the misdeeds of the other Beck Insurance employees about which she had no knowledge. In the isolated circumstances contemplated by the Administrative Complaint, Respondent did not have actual knowledge of the transactions involving the sale of All World towing and rental to customers Appling and Brown. With the exception of the Danyetta Wilson transaction, upon these facts, given the two remaining occasions where others sold the All World towing and rental, constructive knowledge, as contrasted with actual knowledge, cannot be imputed to Respondent.
In relation to Count II involving the transaction with Danyetta Wilson, it has been proven by clear and convincing evidence that Respondent violated Subsections 626.611(5), (7), (9), and (13), Subsections 626.621(2) and (6), and Subsections
626.9541(1)(a)1, (1)(z)2. and (1)(z)3., Florida Statutes (2001). In participating with Tracy Laroe in the Wilson transaction, Respondent has also violated Subsection 626.621(12), Florida Statutes (2001). It has not been proven that Respondent violated Subsections 626.611(8) or 626.621(3), Florida Statutes (2001), in relation to the Wilson transaction. Likewise, it has not been proven that Respondent violated any of the provisions alleged in association with Counts III and IV and the abandoned Count V.
In addition to the penalties that have been related previously, Petitioner has the opportunity to impose discipline consistent with Sections 626.681, and 626.691, Florida Statutes (2001), in association with possible administrative fines and probation as a means of punishment.
In recommending the penalty for misconduct resort is made to the guidelines set forth in Florida Administrative Code Rule Chapters 4-231, now 69B-231, or 69O-231, in particular Florida Administrative Code Rules 4-231.040, 4-231.080,
4-231.090, 4-231.100, and 4-231.160, 69B-231.040, 69B-231.080,
69B-231.090, 69B-231.100, and 69B-231.160, or Rule 69O-231.040,
69O-231.080, 69O-231.090, 69O-231.100, and 69O-231.160.
Upon the consideration of the facts found and the conclusions of law reached, it is
RECOMMENDED:
That a Final Order be entered finding Respondent in violation of those provisions within Count II that have been referred to, dismissing the others within that count, dismissing Counts III through V; suspending Respondent's licenses for nine months, placing Respondent on two years' probation and requiring attendance at such continuing education courses as deemed appropriate.
DONE AND ENTERED this 3rd day of June, 2004, in Tallahassee, Leon County, Florida.
S
CHARLES C. ADAMS
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 3rd day of June, 2004.
ENDNOTES
1/ Notwithstanding Respondent's denial of participation in the Danyetta Wilson transaction when responding to requests for admission, her testimony was that she did have some involvement, and the testimony is credited.
2/ Through the Petitioner's Proposed Recommended Order, counsel has conceded the insufficiency of the proof to establish by clear and convincing evidence the allegations set forth in Count V to the Administrative Complaint. This concession is in accordance with the view held by the undersigned. Therefore, without further discussion it will be recommended that Count V be dismissed.
COPIES FURNISHED:
Jed Berman, Esquire Infantino and Berman
100 South Knowles Avenue, Suite 7 Winter Park, Florida 32789
Greg S. Marr, Esquire David J. Busch, Esquire
Department of Financial Services 612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
Honorable Tom Gallagher Chief Financial Officer
Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
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.
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 28, 2005 | Agency Final Order | |
| Jul. 07, 2004 | Agency Final Order | |
| Jun. 03, 2004 | Recommended Order | Respondent engaged in unfair practices and sliding related to auto insurance sales and aided another to do so. |
DEPARTMENT OF FINANCIAL SERVICES vs BRIAN WHITNEY MCDANIEL, 03-003666PL (2003)
DEPARTMENT OF FINANCIAL SERVICES vs ANNA MICHELLE MACK, 03-003666PL (2003)
DEPARTMENT OF INSURANCE AND TREASURER vs. VIRGINIA LOUISE WILLIAMSON, 03-003666PL (2003)
DEPARTMENT OF FINANCIAL SERVICES vs JAY LAWRENCE POMERANTZ, 03-003666PL (2003)
DEPARTMENT OF INSURANCE vs MARILYN DIANNE MASSEY, 03-003666PL (2003)
