STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL SERVICES,
Petitioner,
vs.
BRIAN WHITNEY MCDANIEL,
Respondent.
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) Case No. 03-4279PL
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RECOMMENDED ORDER
Notice was provided and on March 16, 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 location was the Alachua County Civil Courthouse, 201 East University Avenue, Gainesville, Florida.
The hearing was conducted by Charles C. Adams, Administrative Law Judge.
APPEARANCES
For Petitioner: Greg S. Marr, Esquire
Department of Financial Services 612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
For Respondent: Jed Berman, Esquire
Infantino and Berman Post Office Drawer 30
Winter Park, Florida 32790-0030
STATEMENT OF THE ISSUE
Should discipline be imposed by Petitioner against Respondent's license as a life, health, and variable annuity agent (2-15), general lines agent (2-20), and a legal expense agent (2-56), held pursuant to Chapter 626, Florida Statutes (2003)?
PRELIMINARY STATEMENT
By an Administrative Complaint in Case No. 63654-03-AG, dated October 31, 2003, Petitioner accused Respondent, in six separate counts, of violating various provisions within Chapters 624 and 626, Florida Statutes (2001), related to the sale of legal insurance while employed by Cash Register Auto Insurance of Alachua County, Inc. (Cash Register) in Gainesville, Florida.
Respondent elected his right to dispute factual allegations in the Administrative Complaint by requesting a formal hearing pursuant to Section 120.57(1), Florida Statutes (2003). That election was received by Petitioner on November 14, 2003.
On November 18, 2003, the Division of Administrative Hearings received the case for conduct of a hearing in accordance with Section 120.57(1), Florida Statutes (2003).
Following two continuances, the case was heard on March 16, 2004.
Petitioner moved to amend the Administrative Complaint by adding Count VII. The motion was unopposed. On February 25, 2004, the motion was granted.
On February 25, 2004, Respondent filed an Answer to Amended Administrative Complaint admitting paragraphs 1 through 3, and 4, 6, 8, 10, 12, 14, and 16, as they were implicated through the admissions to the first three paragraphs within the Amended Administrative Complaint.
At hearing Petitioner presented Ray Wenger, Albert B. Tomes, Raymond L. Washington, Kim Langford, Joana Samad, Beverly A. Akpo-Sani, and Respondent as its witnesses.
Petitioner's Exhibits numbered 1, 3 through 5, 8 through 16, and
18 through 19, were admitted as evidence. Petitioner's Exhibit numbered 19 is the deposition of Samina C. Ashraf. Within that deposition, in response to a motion to strike by Respondent, lines 6 through 8 on page 59 and lines 1 through 4 on
page 60 were stricken from consideration.
Respondent testified in his own behalf. Respondent's Exhibits numbered 5, 7, 8, 17, 19, 21, 23, 24, 25, 27 through 29, and 31 through 32 were admitted as evidence.
On May 12, 2004, a hearing transcript was filed.
Petitioner timely filed its proposed recommended order. Respondent moved for an extension of time to file his proposed recommended order. That motion was opposed in writing. A
telephone conference was held to consider the motion. On June 3, 2004, an order was entered granting the motion. Both proposed recommended orders have been considered in preparing the Recommended Order.
FINDINGS OF FACT
Facts Established by the Answer
Pursuant to Chapter 626, Florida Statutes, you, Brian Whitney McDaniel (Respondent), currently are licensed in this state as a life, health, and variable annuity (2-15),
general lines (2-20) and legal expense (2-56) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Respondent's license identification no.
is A171563.
Pursuant to Chapter 626, Florida Statutes, Petitioner has jurisdiction over your (Respondent's) license and appointments.
At all times relevant to the dates and occurrences referenced herein Respondent, was employed with Cash Register.
Respondent's Duties at Cash Register
Respondent was employed at the Cash Register agency in Gainesville, Florida from March 1998 through September 2002. He began his employment as a limited customer service representative (4-40). Respondent became the designated primary agent at the location in June 2000, at which time he was
licensed as a general lines agent (2-20). He continued in the capacity as a designated primary agent until his departure from the agency.
As the primary agent at Cash Register, Respondent was expected to make sure that the customer service representatives employed at the agency were properly trained and the customers were taken care of in a manner that they were expecting as consumers. Respondent also took care of paper work such as payroll, keeping the lights on, and similar activities.
In addition to his supervisory duties Respondent dealt with the public, to include selling insurance to members of the public. The principal form of insurance sold at Cash Register was automobile insurance. Cash Register also sold boat insurance, insurance for motorcycles, and ancillary products, such as towing and rental. Cash Register sold legal insurance underwritten by Southern Legal Services (Southern Legal). Other products sold were hospital indemnity and accidental death benefits policies.
The products such as hospital indemnity and legal service plans, were insurance products that could be financed for the balance of the amount due following a down-payment. The towing and rental contracts were not insurance products and not subject to financing.
Hypothetically, and the hypothetical pertains to the experiences that customers in this case would typically be exposed to when the customer came into the agency, the customer took a seat and Respondent began to collect necessary information. That information pertained to name, address, phone number, age, driving record, and vehicle information. Then the discussion would turn to the nature of the automobile insurance that the customer was interested in purchasing. That issue concerned whether the customer wanted only property damage liability, and personal injury protection (PIP), as required by the State of Florida to maintain their tag registration or desired greater coverage. Other offerings included bodily injury liability, uninsured motorists, comprehensive and collision. Comprehensive and collision was explained to the customer as being a necessary coverage where automobiles have been financed.
The information that had been gathered would be entered into a computer program which Cash Register used. That program was known as "Quick Quote." The quotation method was designed to select the better price from among a number of insurance companies.
This process that has been described concerning the quote would pertain equally when quotations were provided over the telephone.
Cash Register is affiliated with LR3 Enterprises, Inc. (LR3), its parent company. The parent company insisted that its employees who sold automobile insurance at Cash Register agencies during the time in question follow a script in selling the insurance. This involved the offer of several options to purchase. The first option was to pay the full price of the insurance. The second option was a standard down-payment, which was a greater amount down than the third option. The second option with the greater down-payment carried a smaller monthly payment in the part financed and saved money for the customer over time compared to the remaining option. The third option was a lower down-payment with a larger monthly payment that included necessarily, among other mandatory alternatives, in accordance with the management policy from LR3, the purchase of a legal service plan in relation to traffic violations to include DUIs, accidents, and child support. The legal service plan that is at issue here is legal insurance underwritten by Southern Legal. The value of this required purchase was that if any of the legal services were needed, the insurance plan that was required under option three would help defray the cost for those legal services.
Respondent emphasized that the employees within the Cash Register agency must follow the script concerning the three options, failing which the employee would be "fired on the
spot." Respondent described how this requirement was the first thing he had been told when he was hired. Having considered this explanation concerning the three options, it leaves the impression that a customer might come to believe that the legal insurance plan was an integral part of the automobile insurance that the customer sought to purchase. This impression could be created notwithstanding the documents that might be produced beyond that point, where careful review might lead one to a different conclusion as to the necessity to purchase the ancillary product. It is a significant issue in that most customers who purchased automobile insurance wanted the lowest down-payment available when transacting business with Cash Register.
In this connection, the majority of customers who were served by Cash Register were interested in obtaining "tag insurance," referring to the basic coverage necessary to comply with Florida law. Those are the customers who almost always wanted a low down-payment.
Returning to the several options that were explained by Respondent, option two carried a 35 percent down-payment with no necessity to purchase an ancillary product in addition to the automobile insurance. By contrast the third option carried an
18 percent down-payment and the Cash Register agency through its employees, to include Respondent, would require that the
customer buy a legal services plan to warrant the low down- payment. Alternatively, the 18 percent down-payment under option three would be available in the instance where a customer bought a motor club contract, towing and rental. In this setting, unlike the legal plan, the towing and rental contract could not be financed.
More specifically, Respondent explained that when customers called for a quotation on automobile insurance, he routinely, that is taken to include those instances described in this case, would say to the customer, "There's three different ways of paying for this. You can pay for it all at once, paid in full, the cash price is this, or we have two different payment options. The standard down-payment option is more out of your pocket, but it keeps your monthly low and saves you money in the long run, and it is this. We also have a low down- payment, which is the other way around, it's less money out of your pocket, but your monthly payment goes up and it includes an additional coverage for legal fees for traffic violations, DUIs, accidents. If you need an attorney it helps to pay his fee and that price is this." The same script was followed with customers who came to the office, as opposed to calling on the telephone.
Respondent described how the application involved with the purchase of auto insurance was printed and brought to the
desk where the customer was located. The application was not the only document involved in the transaction. Among the papers with the insurance application, was a confirmation of coverages, a premium finance agreement, where applicable; and a disclosure form, and a new business receipt, where applicable. All these documents were printed through a computer program.
The documents were presented to the customer so that the customer could read it. As Respondent explains, it was not necessary for the employee to read it because the employee was familiar with the information that is established by the documents.
A pen would be used to direct attention to documents, the first document pointed out, the confirmation of coverages.
An example of the discussion with the customer would be, "You are buying property damage liability with a $10,000.00 limit, personal injury protection with a $10,000.00 limit, with a $2,000.00 deductible. You are rejecting bodily injury liability. You are rejecting uninsured motorists. You are purchasing comprehensive and collision with a $500.00 deductible. You chose the low down-payment option so you are purchasing the legal protection plan which goes with the low down-payment option. Please sign both of these signatures and date it for me."
The arrangement was one in which the low down-payment option necessarily committed the customer to purchasing a legal protection plan as Respondent describes the arrangement.
The next document in the series was in relation to the automobile insurance application per se. By using a pen the Respondent would show the purchaser what they were obtaining in coverage and what they were not. Respondent would gain the signature from the customer.
Next in series, depending on the nature of the option pursued by the customer, was the legal protection plan or motor club, if it was involved in the purchase; the finance agreement; and the disclosure form and receipt, as applicable.
Copies of the documents that have been identified were provided to the customers.
Other remarks concerning the legal protection plan, which Respondent would make to the customers, would be that it helps to pay legal fees such as, if you were given a ticket that is contested or an accident where the customer is being sued, or have issues concerning child support, the plan would help to pay for legal fees. Nothing in this explanation was designed to explain to the customer that the legal insurance was not part of the automobile insurance.
Count I Beverly Akpo-Sani
On November 27, 2001, Beverly Akpo-Sani went to the Cash Register in Gainesville and purchased automobile insurance. She was waited on by Respondent.
Ms. Akpo-Sani intended only to purchase what the state required to maintain coverage for her 1988 Plymouth station wagon. She also discussed the requirement for an SR-22, which is a Florida financial responsibility form to provide proof of insurance.
Respondent followed the script that has been set forth earlier in selling automobile insurance and legal insurance plan to Ms. Akpo-Sani, with the exception that additional discussion was held concerning the SR-22 Florida financial responsibility form.
Respondent described to Ms. Akpo-Sani the three agency options for purchasing the automobile insurance. Her interest was to have a low down-payment. As a consequence, Respondent offered her option three.
Ms. Akpo-Sani applied for automobile insurance from Direct General Insurance Company (Direct General Insurance). Petitioner's Exhibit numbered 1.
Ms. Akpo-Sani also executed a document in relation to legal insurance, referred to as "Sav-Cash Traffic Protectors," for pre-paid traffic violation insurance. That insurance was
underwritten by Southern Legal. A copy of the document supporting the purchase is Petitioner's Exhibit numbered 3. Ms. Akpo-Sani and Respondent signed the document. On its face it indicates that it was paid for through a premium finance agreement with Direct General Financial Services, Inc. (Direct General Financial), and an amount of $105.00 is stated.
In pertinent part, the document related to the pre- paid traffic violation insurance stated:
Cardholder acknowledges receipt of goods and/or services in the amount of the total shown hereon and agrees to perform the obligations set forth in the cardholder's agreement with the issuer. I hereby apply for participation in Southern Legal Services Plan, Inc. SL 210 Driver's Protection Legal Plan, and acknowledge coverage is conditioned by receipt and approval by the Company. I understand that legal services will be provided under the plan for certain legal proceedings and that I am responsible for all costs associated with any matter. I agree to abide by the provisions and rules of the plan. I agree and authorize that the premiums be paid as indicated above. I understand that my attorney-client relationship will be with the attorney providing legal services under the plan and not with Southern Legal Services Plan, Inc. I represent that to the best of my knowledge all of the information contained herein is correct and that no person to be insured under this policy is now involved in any litigation, court proceedings, or other matter which could result in legal action.
Petitioner's Exhibit numbered 3, which is by way of an application, was to be mailed to Robinson Insurance Agency c/o CTA in Palm Coast, Florida.
Other than the information which has been quoted from the application document, the exact nature of the coverage provided by the pre-paid traffic violation insurance has not been explained in this record.
Although Ms. Akpo-Sani signed the document applying for the legal insurance as reflected in Petitioner's Exhibit numbered 3, she believed that she was purchasing automobile insurance and to the extent that the legal insurance was not part of the automobile insurance purchase she had no intent to buy it.
Respondent did not explain adequately the legal insurance purchase. Instead Ms. Akpo-Sani was led to believe that it was part of the procedure necessary to get her automobile insurance policy. No oral explanation was made that the cost of the legal insurance was an additional charge.
Ms. Akpo-Sani was provided additional documents that portrayed the legal insurance as a different cost item, mainly the Premium Finance Agreement with Direct General Financial. A copy of that finance agreement is Petitioner's Exhibit
numbered 5, which was signed both by Ms. Akpo-Sani and Respondent. On its first page under the schedule of policies,
it separately sets out that the auto coverage was for a premium of $688.00, with $124.10 down and the balance to be paid to Direct General Insurance on her behalf. The schedule of policies refers to the legal insurances as "LGL," totaling a
$105.00 premium, with $18.90 down and $86.10 to be paid to Southern Legal on Ms. Akpo-Sani's behalf. But the document goes on to set out the total premium financed in the aggregate, without separately stating the amount related for Direct General Insurance and the Southern Legal, with installment payments in the aggregate of $73.68, to be made in connection with both purchases at an annual percentage rate of 27.29 percent. The second page in disclosing information about her purchases referred to the PIP, property damage liability, and bodily injury pertaining to an SR-22 requirement. It goes on to describe the legal services purchase separately on the second page.
Ms. Akpo-Sani received a receipt, referred to as a New Business Receipt drawn on a form by Cash Register. That receipt is Petitioner's Exhibit numbered 4. It breaks out the cost items under a heading entitled "Vehicle(s)," wherein it sets out property damage liability, PIP, and bodily injury liability, all in the automobile insurance coverage category, as well as the driver's protection legal plan, which is not part of the automobile insurance. Nonetheless, it is depicted under the
heading "Vehicle(s)." The document explains the amount tendered as an aggregate amount paid, which would be constituted of
$124.10 for the automobile insurance and $18.90 for the legal plan, totaling $146.00 as depicted on the receipt. The document goes on to describe the "policy total" under the section in relation to the vehicle as being $796.00, which would include both the automobile insurance and the driver's protection legal plan. Other than the brief reference to the drivers protection legal plan depicted as part of the "Vehicle(s)," the balance of the receipt provides information concerning the automobile insurance side of the purchase.
Another document provided to Ms. Akpo-Sani and signed by her on the occasion, was a document titled "Confirmation of Coverages." It is Respondent's Exhibit number 5. In relation to purchases made it sets out the property damage liability, and the PIP as required coverage, bodily injury liability as optional coverage, and the election of a driver's protection legal under ancillary products identified as optional. Although the document refers to the legal insurance as an optional opportunity, by the design of the form, given the manner in which this sale was made to Ms. Akpo-Sani, the impression created by Respondent would lead one to believe that it was not an option for her to decline the drivers protection legal.
Instructions within the Confirmation of Coverages document explain the several parts. These parts are: auto insurance coverages required (1, 2), optional auto insurance coverages (3-6) and ancillary products (optional) (7-10), among them the driver's protection legal (10). The instructions state:
Please READ the ten (10) sections above to be sure the coverages or benefits circled or checked are the coverages or benefits you want. The terms 'Full Coverage', 'Minimum Coverage', and 'State Required Coverage' are not specific enough to assure that you are buying the insurance coverages or benefits you want. The above confirmations are meant to protect you, your agent, and your insurance company from misunderstandings.
If 'NO COVERAGE' or 'DECLINED' is marked in any section, you are not buying that sections coverages and benefits. COVERAGES AND BENEFITS ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE INDIVIDUAL
POLICIES OR PLANS. Please read the policy jacket or plan descriptions that re available to you for detailed definitions of the coverages and benefits. If you still have questions, ask your agent to explain in more detail. Items seven (7) through ten
The instructions identify ancillary products, to include the driver's protection legal, as separate from the auto policy but the sales pitch by Respondent related to option three did not
treat the purchase in that manner. It made the purchase of the legal plan appear mandatory. Moreover the instructions themselves make it appear that the ancillary products are linked with the auto insurance in the interest of establishing competitive auto insurance rates.
Ms. Akpo-Sani did not read the application for pre- paid traffic violation insurance which is Petitioner's Exhibit numbered 3 before signing it. Similarly Ms. Akpo-Sani did not notice the details within the Premium Finance Agreement. Petitioner's Exhibit numbered 5. Ms. Akpo-Sani did not read the Confirmation of Coverages document, Respondent's Exhibit numbered 5, before signing. Mr. Akpo-Sani was in a hurry and this explains why she did not take the time to carefully read the documents that have been described.
Count II Samina C. Ashraf
On July 20, 2001, Samina C. Ashraf purchased automobile insurance at Cash Register in Gainesville from Respondent. Respondent also sold Ms. Ashraf pre-paid traffic violation insurance underwritten by Southern Legal as part of the transaction.
Petitioner's Exhibit numbered 19 is the deposition provided by Ms. Ashraf which forms the basis of her testimony for hearing purposes. Attached to that deposition are various exhibits. Exhibit "A" is the application for insurance with
Direct General Insurance. Exhibit "B" is Confirmation of Coverages document. Exhibit "C" is a document referring to a travel protection plan, which cost $60.00 as a premium.
Exhibit "C" is related to bail bond coverage, ambulance assistance, collision loss of use, theft loss of use, emergency travel loss of use, and personal effects loss from an auto rented as a result of loss under previously stated coverages.
Exhibit "D" to the deposition is the application for pre-paid traffic violation insurance through Southern Legal. Exhibit "E" to the deposition is the Premium Finance Agreement with Direct General Financial, which sets out costs related to the basic automobile insurance, the legal insurance, and the travel protection plan, which is a type of motor club. The automobile and legal insurance was financed beyond the down-payment. The motor club premium was fully paid at the time the transaction commenced.
In format the application with Direct General Insurance, the Confirmation of Coverages document, the pre-paid traffic violation insurance underwritten by Southern Legal, and the Premium Finance Agreement are the same as has been discussed concerning Ms. Akpo-Sani.
Highlighting the Ashraf transaction, $105.00 was paid for the legal insurance, consisting of an $18.90 down-payment, with $86.10 to be financed with Direct General Financial. The
Premium Finance Agreement with Direct General Financial included the automobile insurance and legal insurance, with a total amount to be financed of $873.15 at 25.71 annual percentage rate, $97.93 due on each payment financed.
When Ms. Ashraf arrived at Cash Register she was interested in purchasing the minimum insurance necessary for her automobile. She had just purchased the auto and told Respondent that she needed to obtain insurance and return to the car lot where she had purchased the auto and show proof of insurance coverage.
Ms. Ashraf was interested in a low down-payment for auto insurance. Respondent told her that she could pay the full amount of the insurance premium. Alternatively, Respondent explained what the down-payment amount would be and the continuing payment process beyond that point in time.
In discussing towing and rental, Respondent told
Ms. Ashraf the cost for that premium. Respondent explained the towing option (motor club) to Ms. Ashraf. Respondent did not tell Ms. Ashraf of other options available, to include the legal plan, as she recalls the transaction. Ms. Ashraf did sign the various documents involved in the transaction that have been described.
The documents that have been identified were stacked one on top of the next. Respondent told Ms. Ashraf in relation
to those documents, "Just sign here, here, here, here." Respondent did not discourage Ms. Ashraf from reading the documents but she did not read them. She was in a hurry. She had told Respondent that she was only interested in the automobile insurance that was necessary in association with the purchase of the car on that day. She erroneously assumed that Respondent was giving her what was needed and nothing more.
Aside from the motor club, which Ms. Ashraf knowingly purchased, she did not realize that she had also purchased legal insurance through Southern Legal. Respondent had not separately explained that the legal insurance product was optional and that it was not part of the basic auto insurance policy or that there was an additional charge for the legal plan, notwithstanding any written explanation provided that would suggest otherwise.
In relation to the Premium Finance Agreement, Respondent explained the portion dealing with the amount financed, the finance charge, the total payments, and the total sales price, but not the individual breakout of charges set out at the top of the document.
Count III Kim Langford and Count IV Joana Samad
Kim Langford and Joana Samad bought auto insurance from the Cash Register agency in Gainesville and the legal plan through Southern Legal, as alleged in the Amended Administrative Complaint. However, Respondent did not sell the legal plan to
these customers. He was not immediately involved with either transaction and cannot be factually implicated under terms set forth in the Amended Administrative Complaint.1
Count V Albert B. Tomes
On November 2, 2001, Albert B. Tomes bought auto insurance from Respondent at Cash Register in Gainesville. The company that he purchased the automobile insurance from was Direct General Insurance. The application for auto insurance is Respondent's Exhibit numbered 24. Respondent also sold
Mr. Tomes pre-paid traffic violation insurance underwritten by Southern Legal. Petitioner's Exhibit numbered 13. The format of the application for the legal insurance is the same as with Ms. Akpo-Sani. The total cost of the legal insurance was
$105.00.
During the transaction, a Confirmation of Coverages document was executed. Respondent's Exhibit numbered 27. A Premium Finance Agreement was entered into following a down- payment in relation to the Direct General auto coverage insurance and the legal insurance through Southern Legal. Respondent's Exhibit numbered 25. The format of Confirmation of Coverages and the Premium Finance Agreement through Direct General Financial were the same as with the transaction involving Ms. Akpo-Sani.
The documents that have been described were laid out in front of Mr. Tomes and he quickly signed his name and initials where necessary. As he explains it, he was told, "Initial here, initial here, initial here, sign this, sign this, and that's what I did." Mr. Tomes was there at the agency about
20 minutes.
Mr. Tomes signed all documents that have been described in relation to the transaction.
Mr. Tomes did not read the Premium Finance Agreement which he signed that set out the charges for the auto insurance and legal insurance.
Mr. Tomes signed the Confirmation of Coverages document without reading it.
Mr. Tomes paid a down-payment for the auto insurance of $107.50, with a premium to be financed in the amount of
$358.00. He paid $31.50 as a down-payment for the legal insurance, with $73.50 to be financed. As reflected in the Premium Finance Agreement pertaining to the purchase of auto insurance, and legal insurance, the total amount financed was
$325.40 at an annual percentage rate of 33.55 percent. The installment amount for each payment was $37.75.
Mr. Tomes had called ahead before going to Cash Register. Information provided in the telephone call described a down-payment and monthly payments beyond that point.
When Mr. Tomes arrived at Cash Register and spoke to Respondent, he was told by the Respondent that the automobile insurance could be paid for in cash or a down-payment could be made in monthly payments to follow. Mr. Tomes was told by Respondent that if more were paid down, then the monthly payments would be lower in cost.
Although Mr. Tomes acknowledged signing the application for pre-paid traffic violation insurance, he does not recall seeing the document on November 2, 2001. He did not understand what he was buying as evidenced by the document. The product described in the document was not explained to him by Respondent. All that Mr. Tomes was interested in purchasing was automobile insurance sufficient to "be legal." He just wanted the basic automobile insurance coverage, and that is what he asked for. He understood this to mean PIP coverage.
Although Mr. Tomes does not recall the application for legal insurance and its terms, Respondent and Mr. Tomes generally discussed the legal plan. Mr. Tomes told Respondent he did not want the legal plan. Respondent said to Mr. Tomes "You don't have to have the legal plan just take the standard down-payment option. I know that is a little harder on your checkbook today, but it keeps your monthly payment a lot lower and saves you money in the long run." This is taken to mean the option that required a larger down-payment and smaller monthly
payments without having to purchase the additional product, the legal plan. Mr. Tomes told Respondent in reply "Well, I want the low down-payment option but I don't want the legal." Respondent said in turn that he couldn't do it that way. He stated that if Mr. Tomes took the 18 percent down-payment, he would also have to take the legal plan. Mr. Tomes was not happy with that arrangement where he was allowed a low down-payment conditioned upon the purchase of the legal plan but ultimately "did it."
Count VI Raymond L. Washington
On September 19, 2001, Raymond L. Washington purchased automobile insurance from Cash Register in Gainesville. Respondent was the employee for the agency involved in the transaction. The automobile insurance was purchased from Direct General Insurance. At the same time, Respondent sold
Mr. Washington pre-paid traffic violation insurance from Southern Legal and a motor club contract from American Bankers Motor. A Premium Finance Agreement was entered into between Mr. Washington and Direct General Financial in relation to the automobile insurance and the legal insurance. A Confirmation of Coverages document was executed on this occasion. The format of all documents that have been described was the same as for the Akpo-Sani transaction. Mr. Washington signed all the documents.
The automobile insurance application is Respondent's Exhibit numbered 28. The application for pre-paid traffic violation insurance is Petitioner's Exhibit numbered 15. The Premium Finance Agreement with Direct General Financial is Respondent's Exhibit numbered 29. The Confirmation of Coverages document is Respondent's Exhibit numbered 31.
The Premium Finance Agreement sets out a down-payment of $93.10, with a balance to be paid of $418.90 pertaining to the automobile insurance. Mr. Washington, according to the Premium Finance Agreement, paid $18.90 down for the legal insurance, with $86.10 to be paid through installment payments. The Premium Finance Agreement sets out that $567.10 in the aggregate was financed for the auto insurance and for the legal insurance, at an annual percentage rate of 28.22 percent. The monthly payment was $64.30. The motor club was a $60.00 one time premium payment.
On the date in question, Mr. Washington went to Cash Register with the intent to purchase basic insurance, what he refers to as "PIP." He told Respondent what he wanted to buy. Respondent offered towing and rental insurance. Mr. Washington was interested in that offering and purchased the towing and rental through the motor club contract. By contrast,
Mr. Washington has no recollection of the discussion between the parties of the legal insurance through Southern Legal. He was
told he needed to sign the document applying for the legal insurance and that he should have it. The legal insurance was not something he was interested in purchasing.
Mr. Washington had called for a quotation of the price of auto insurance before arriving at Cash Register. Once there, he spent approximately one and one-half hours to finish his business.
Respondent explained the several options for auto insurance, to include the cash purchase, a higher down-payment or a lower down-payment, with the purchase of an additional product. Mr. Washington wanted to make a lower down-payment.
While at the agency Mr. Washington read some of the Premium Finance Agreement but not in all its details. He did not read the top of the document referring to the schedule of policies, with the types of coverage and the listing of the auto insurance, legal insurance and motor club. He did not read the upper right portion of the document pertaining to the companies being paid through the finance agreement. He read the part setting forth the monthly amount to be paid as an installment, which was $64.30.
Mr. Washington did not read the application for legal insurance through Southern Legal before signing the document.
Concerning the Confirmation of Coverages,
Mr. Washington looked at that part of that document that told
him to read all ten sections above. But he did not read item 10 which had a check-mark placed next to the driver's protection legal plan SL-210-A.
Although Mr. Washington was at the agency for over an hour, he did not feel that he had time to read all the documents provided him. He was in a hurry to leave. Mr. Washington cannot remember the details of the discussion but he does recall that some questions that he asked Respondent concerning the transaction were not fully addressed. He has no recollection of any discussion of item 10 within the Confirmation of Coverages document associated with the driver's protection legal plan, and he did not realize that he had purchased the legal insurance.
Respondent recalls his dealings with Mr. Washington and the offering of the three options to purchase auto insurance and that Mr. Washington chose the low down-payment option.
Count VII Change of Address
On August 1, 2003, Respondent became an agent for Allstate at West Newberry Road, Highway 26, Jonesville, Florida, without notifying Petitioner of this change in his business address. According to records maintained by the Petitioner, Respondent had not provided information concerning the change of address as late as March 3, 2004. Petitioner's Exhibit numbered 18.
Respondent proceeded with the mistaken belief that once he was appointed as an agent for Allstate, that the insurer would notify Petitioner of that appointment and presumably include information on the address of his business.
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 Amended 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 Amended Administrative
Complaint alleges:
Count I
5. On or about November 27, 2001, you, BRIAN WHITNEY MCDANIEL, sold to Beverly A. Akpo-Sani, of Gainesville, Florida, a Southern Legal Services Plan without his/her informed consent.
Count II
7. On or about July 20, 2001, you
BRIAN WHITNEY MCDANIEL, sold to Samina C. Ashraf, of Alachua, Florida, a Southern Legal Services Plan without his/her informed consent.
Count III2
9. On or about May 21, 2001, you, BRIAN WHITNEY MCDANIEL, sold to
Kim Langford, of Archer, Florida, a Southern Legal Services Plan without his/her informed consent.
Count IV3
11. On or about August 8, 2001, you,
BRIAN WHITNEY MCDANIEL, sold to Joana Samad, of Gainesville, Florida, a Southern Legal Services Plan without his/her informed consent.
Count V
13. On or about November 2, 2001, you, BRIAN WHITNEY MCDANIEL, sold to Albert B. Tomes, of Gainesville, Florida, a Southern Legal Services Plan without his/her informed consent.
Count VI
15. On or about September 19, 2001, you, BRIAN WHITNEY MCDANIEL, sold to
Raymond Washington, of Alachua, Florida, a Southern Legal Services Plan without his/her informed consent.
COUNT VII
On or about August 1, 2003, you, BRIAN WHITNEY MCDANIEL, established a business address of 14029 W. Newberry Rd., Jonesville, Florida 32669.
As of the date of this Amended Administrative Complaint, you, BRIAN WHITNEY MCDANIEL, have not notified the Department of this change in business address.
The remaining Counts I, II, V, and VI charged violations of the following statutory provisions, which if proven would subject Respondent to discipline for his misconduct. Count VII charges violations of some but not all of the provisions related to the aforementioned counts. In addition, Count VII charges a violation of Chapter 626.551, Florida Statutes (2003). The pertinent provisions state:
§ 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:
* * *
If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.
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 trustworthiness 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.
§ 626.9541, Fla. Stat. (2001):
(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:
* * *
(z) Sliding.--Sliding is the act or practice of:
* * *
3. 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.
§ 626.551, Fla. Stat. (2003):
Every licensee shall notify the department or office in writing within 60 days after a change of name, residence address, principal business street address, or mailing address. Any licensed agent who has moved his or her residence from this state shall have his or her license and all appointments immediately terminated by the department or office.
Failure to notify the department or office within the required time period shall result in a fine not to exceed $250 for the first offense and, for subsequent offenses, a fine of not less than $500 or suspension or revocation of the license pursuant to s.
262.611 or s. 626.621.
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.
The remaining counts involve themselves with two questions. Did Respondent sell the Southern Legal plan to various customers without his or her informed consent? Did Respondent change his business address without informing Petitioner of that change?
When considering Respondent's conduct in the transactions at issue, it is with the recognition that Respondent has a fiduciary relationship, both with his customers and the insurance companies. See Natelson v. Department of Insurance, 454 So. 2d 31 (Fla. 1st DCA 1984).
In relation to Counts I, II, IV, V, and VI, Respondent did sell the pre-paid traffic violation insurance to the customers that was underwritten by Southern Legal. He entered into transactions of insurance. The terms of that plan are not clear when referring to the document that constitutes the application entitled at the top "Sav-Cash Traffic Protectors." The Confirmation of Coverages document at item 10 under the description of ancillary products provides no greater explanation of the nature of that plan. While a review of those documents would reveal that something referred to as "pre-paid traffic violation insurance," in the application document and "driver's protection legal," under the Confirmation of Coverages has been purchased, nothing more is known. The application establishes that $105.00 is subject to premium finance through Direct General Financial. There is the Direct General Premium Finance Agreement which in one portion delineates the legal plan as a separate cost item from the auto insurance but the overall portrayal of the amount financed under the Premium Finance Agreement aggregates the auto and legal insurance and any other
purchase financed, with one amount stated for the installment payments. The customers, excepting Mr. Tomes, were unclear about the separate nature of the legal insurance and its costs. They were not well informed by Respondent. The inclination by Respondent was to without fail follow his employer's policy insisting on the purchase of some form of ancillary product, such as the legal plan, when the option was chosen to pursue the lowest down-payment, even in the instance where the customer did not desire the legal plan. It may well have been appropriate for Respondent in the interest of his employer to refuse a low down-payment for the auto insurance that was requested but it was not appropriate to make a low down-payment contingent upon forcing the customers into a posture of having to purchase that legal insurance when that was not their choice. This is especially evident in the Tomes case where he specifically protested and was compelled by Respondent to accept the legal plan as a condition to purchasing the auto insurance with a low down-payment. The manner of his presentation with the customers associated with the legal plan did not comply with 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.
In relations to Counts I, II, V, and VI, it has been proven by clear and convincing evidence that Respondent violated
Subsection 624.611(1), Subsections 626.611(4), (5), (7), (9),
and (13), Subsections 626.621(2) and (6), and Subsection 626.9541(1)(z)3., Florida Statutes (2001). It has not been proven that Respondent violated Subsection 626.611(8) and Subsection 626.621(3), Florida Statutes (2001). Likewise, it has not been proven that Respondent violated any provisions pertaining to Counts III and IV.
In relation to Count VII, it has been proven by clear and convincing evidence that Respondent violated Subsection 624.11(1), Subsection 626.621(2), and Section 626.551, Florida Statutes (2003). It has not been proven that Respondent violated Subsections 626.611(8) and (13) and Subsection 626.621(3), Florida Statutes (2003).
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) and (2003), 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 Rules 69O-231.040,
69O-231.080, 69O-231.090, 69O-231.100, and 69O-231.160.
Upon 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 Counts I, II, and V through VII, that have been concluded as violations, dismissing the others within those counts, dismissing Counts III and IV; suspending Respondent's licenses for one year, imposing a
$100.00 administrative fine, placing Respondent on two years' probation and requiring attendance at such continuing education courses as deemed appropriate.
DONE AND ENTERED this 1st day of July, 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 1st day of July, 2004.
ENDNOTES
1/ Through the Proposed Recommended Order Petitioner concedes that Counts III and IV have not been proven. That concession coincides with the impression held by the undersigned concerning those counts.
2/ Petitioner concedes that the facts necessary to support this allegation have not been presented. Therefore, no violation has been established.
3/ See above.
COPIES FURNISHED:
Greg S. Marr, Esquire Department of Financial Services 612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0333
Jed Berman, Esquire Infantino and Berman Post Office Drawer 30
Winter Park, Florida 32790-0030
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 |
|---|---|---|
| Jul. 30, 2004 | Agency Final Order | |
| Jul. 01, 2004 | Recommended Order | Respondent sold an ancillary product that was not requested and was not adequately explained. |
