STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL SERVICES,
Petitioner,
vs.
MICHAEL DAVID GARRETT,
Respondent.
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) Case No. 04-3838PL
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RECOMMENDED ORDER
Pursuant to notice, a final hearing was conducted on
April 28, 2005, in Sarasota, Florida, before Administrative Law Judge Jeff B. Clark of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Joe Thompson, Esquire
Department of Financial Services
200 East Gaines Street, Tallahassee, Florida 32399
For Respondent: Michael David Garrett, pro se
Post Office Box 50234 Sarasota, Florida 34242
STATEMENT OF THE ISSUES
Whether the licensure and eligibility for licensure as an insurance agent in Florida held by Respondent Michael David Garrett should be disciplined based on the allegations of the Administrative Complaint filed against him and, if so, the extent of such discipline.
PRELIMINARY STATEMENT
On September 17, 2004, Petitioner, Department of Financial Services, filed an Administrative Complaint against Respondent, Michael David Garrett, wherein it was alleged that Respondent had violated the following sections of the Florida Insurance Code: 626.561(1); 626.611(7), (9), (10), and (13); 626.621(6);
626.9521; and 626.9541(1)(o)1., Florida Statutes (2001).1 On October 4, 2004, Respondent returned an Election of
Proceedings wherein he indicated that he disputed factual allegations of the Administrative Complaint and requested a hearing before the Division of Administrative Hearings.
On October 27, 2004, Petitioner forwarded the matter to the Division of Administrative Hearings. On the same day, an Initial Order was forwarded to the parties requesting mutually convenient dates for the final hearing. On November 8, 2004, the final hearing was scheduled for January 4, 2005, in Sarasota, Florida. On December 16, 2004, Respondent's request for a continuance was granted, and the case was rescheduled for hearing on February 2 and 3, 2005.
On January 24, 2005, the case was again continued, this time at Petitioner's request, and rescheduled for April 28 and 29, 2005.
The final hearing took place as rescheduled on April 28, 2005. Petitioner presented one witness, Jack Winebrenner, and
offered nine exhibits which were received into evidence and marked Petitioner's Exhibits 1 through 9. Included in these exhibits are the depositions of Gregory Sendoya taken on April 26, 2005, and David W. Butterfield taken on April 25, 2005, which were considered. The deposition of Randy Davis, taken on April 27, 2005, was also received and considered.
Respondent did not testify. Respondent filed two depositions and proffered one exhibit. Proposed recommended orders were to be filed with the Clerk of the Division of Administrative Hearings on or before June 3, 2005. Petitioner timely filed its Proposed Recommended Order.
On June 5, 2005, Respondent submitted a facsimile transmission which contained hospital records from the Cayuga (N.Y.) Medical Center indicating that on May 26, 2005, Michael Garrett had been involved in an accident wherein he suffered a head injury which did not require hospitalization. In addition, the facsimile transmission contained a Request for Order of Summary Judgment in Favor of Respondent, With Costs. Although not timely filed, the Request for Order of Summary Judgment in Favor of Respondent, With Costs will be considered as a motion for summary recommended order. As such, Respondent's motion is denied.
FINDINGS OF FACT
Petitioner is the state agency that is responsible for the regulation of insurance agent conduct and licensure.
Respondent is currently eligible for licensure as an insurance agent and is licensed in this state as a life, variable annuity and health agent, life and health agent, and health agent.
The Association for Independent Managers (AIM) is an entity that was founded in 1979 for the purpose of providing educational and other services or benefits to a membership base that is comprised primarily of small businesses. In
February 2002, Jack Winebrenner, AIM’s chief executive officer, desired to secure health insurance benefits for AIM’s members.
On or about February 7, 2002, Winebrenner delivered applications for health insurance and a cashier’s check in the amount of $23,920.77 to Respondent.
The pertinent applications were intended to secure health insurance with an entity known as Mutual Service Life Insurance Company and/or an entity known as United States Life Insurance Company. Winebrenner agreed to gather the applications on behalf of AIM and to forward them to Respondent and Respondent’s company, known as Eastwich Re, Inc.
Respondent had represented that he was a licensed insurance agent.
The identifying number of the $23,920.77 cashier’s check referred to hereinabove that was delivered to Respondent is 381524555.
Respondent’s company, Eastwich Re, Inc., had a business checking account at Flagship National Bank (Flagship) in Sarasota, Florida.
On February 12, 2002, the $23,920.77 check that Winebrenner had delivered to Respondent was deposited into Eastwich Re’s Flagship account.
Respondent was a signatory on Eastwich Re’s Flagship account.
Respondent did not secure health insurance from United States Life Insurance Company or Mutual Service Life Insurance Company or any other company for any of the AIM applicants.
Respondent did not forward any premium moneys in the year 2002 to United States Life Insurance Company or Mutual Service Life Insurance Company for the purpose of securing health insurance for any of the AIM applicants.
Respondent returned only $10,000.00 from the amount that Winebrenner gave to him in the $23,920.77 cashier’s check. Winebrenner testified that he requested several times of Respondent that the full amount ($23,920.77) of the cashier’s check be returned, once it was clear that no health insurance had been secured for any AIM applicants. AIM engaged private
counsel to seek return of the entire $23,920.77 amount, but the efforts of private counsel were not successful. No reason was offered for Respondent only returning $10,000.00.
On September 19, 1991, Respondent’s licenses and appointments as an insurance agent were surrendered as part of a Consent Order into which he entered with the Department of Insurance.
In 1996, Respondent’s application for licensure as an insurance agent was denied. Respondent’s application for licensure was denied based on information “indicating that Respondent transacted insurance in 1992, in violation of the September 19, 1991 Consent Order which resulted in the surrender of all licenses and appointments held by Respondent . . . [and] had the same force and effect as a revocation.”
Respondent was again granted a license as an insurance agent in 1997. Respondent was a licensed insurance agent in Florida at the relevant times that are material to the Administrative Complaint that is the basis for the instant
action.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes (2004).
Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See
Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Subsection 626.561(1), Florida Statutes, provides as follows:
All premiums, return premiums, or other funds belonging to insurers or others received by an agent, customer representative, solicitor, or adjuster in transactions under his or her license are trust funds received by the licensee in a fiduciary capacity. An agent shall keep the funds belonging to each insurer for which he or she is not appointed, other than a surplus lines insurer, in a separate account so as to allow the department to properly audit such funds. The licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured, or other person entitled thereto.
Section 626.611, Florida Statutes, provides, in pertinent part, as follows:
The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjuster, customer representative, service representative, or managing general agent, and it shall suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:
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(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
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Fraudulent or dishonest practices in the conduct of business under the license or appointment.
Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.
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(13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.
Section 626.621, Florida Statutes, provides, in pertinent part, as follows:
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, adjuster, customer representative, service representative, or managing general agent, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:
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(6) In the conduct of business under the license or appointment, engaging in unfair
methods of competition or in unfair or deceptive acts or practices, as prohibited under part IX of this chapter, or having otherwise shown himself or herself to be a source of injury or loss to the public or detrimental to the public interest.
Section 626.9521, Florida Statutes, states:
No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s. 626.951 or s. 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.
Any person who violates any provision of this part shall be subject to a fine in an amount not greater than $2,500 for each nonwillful violation and not greater than
$20,000 for each willful violation. Fines under this subsection may not exceed an aggregate amount of $10,000 for all nonwillful violations arising out of the same action or an aggregate amount of
$100,000 for all willful violations arising out of the same action. The fines authorized by this subsection may be imposed in addition to any other applicable penalty.
Subsection 626.9541(1)(o)1., states:
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:
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(o) Illegal dealings in premiums; excess or reduced charges for insurance.--
1. Knowingly collecting any sum as a premium or charge for insurance, which is not then provided, or is not in due course to be provided, subject to acceptance of the
risk by the insurer, by an insurance policy issued by an insurer as permitted by this code.
Petitioner proved by clear and convincing evidence that Respondent received $23,920.77 under the pretense of providing health care insurance for a group of individuals, that Respondent did not attempt to secure the insurance, and that no insurance was provided. When a refund was demanded, he returned $10,000.00, and, apparently without explanation, kept
$13,920.77. Petitioner has demonstrated clearly and convincingly that Respondent willfully violated his fiduciary responsibility, has demonstrated a lack of fitness and trustworthiness, and fraudulent and dishonest behavior, and has converted funds in the conduct of the insurance business. In so doing, Respondent willfully violated each of the above-mentioned provisions of the Florida Insurance Code.
Florida Administrative Code Chapter 69B-231 sets forth penalty guidelines pertinent to this proceeding. Florida Administrative Code Rule 69B-231.160(1)(a) through (l) sets forth aggravating and mitigating factors to be considered.
Section 626.692, Florida Statutes, reads, as follows:
If any ground exists for the suspension, revocation, or refusal of a license or appointment, the department may, in addition to any other penalty authorized under this chapter, order the licensee to pay restitution to any person who has been deprived of money by the licensee's
misappropriation, conversion, or unlawful withholding of moneys belonging to insurers, insureds, beneficiaries, or others. In no instance shall the amount of restitution required to be paid under this section exceed the amount of money misappropriated, converted, or unlawfully withheld. Nothing in this section limits or restricts a person's right to seek other remedies as provided for by law.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that Petitioner enter a final order finding Michael David Garrett guilty of violating the provisions of Section and Subsections 626.561(1); 626.611(7), (9), (10), and
(13); 626.621(6); 626.9521; and 626.9541(1)(o)1., Florida
Statutes. As penalty for these violations, it is recommended that Petitioner (1) revoke Respondent's insurance licenses and eligibility for licensure; (2) that Respondent be required to pay an administrative fine of $20,000.00; and (3) that Respondent be required to pay restitution to AIM for the benefit of the defrauded insurance applicants in the amount of
$13,920.77.
DONE AND ENTERED this 28th day of June, 2005, in Tallahassee, Leon County, Florida.
S
JEFF B. CLARK
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 2005.
ENDNOTE
1/ All references herein are to Florida Statutes (2001) unless otherwise noted.
COPIES FURNISHED:
Joe Thompson, Esquire Department of Financial Services
200 East Gaines Street Tallahassee, Florida 32399
Michael David Garrett Post Office Box 50234 Sarasota, Florida 34242
Carlos G. Muñiz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Honorable Tom Gallagher Chief Financial Officer
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 |
|---|---|---|
| Aug. 29, 2005 | Agency Final Order | |
| Jun. 28, 2005 | Recommended Order | Respondent violated the Insurance Code by accepting $23,920.77 for health insurance and not securing the insurance for the applicants. |
