STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 05-1144PL

)

PEARLIE M. BUTLER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case before Larry J. Sartin, an Administrative Law Judge of the Division of Administrative Hearings, on May 17, 2005, by video teleconferencing at sites in Miami and Tallahassee, Florida.

APPEARANCES

For Petitioner: James A. Bossart, Esquire

Division of Legal Services Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

For Respondent: No Appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Pearlie M. Butler, committed the offenses alleged in an Administrative Complaint issued by Petitioner, the Department of Financial

Services, on December 29, 2004, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On December 29, 2004, Petitioner issued an Administrative Complaint, Petitioner's Case No. 79379-04-AG, alleging that Respondent had violated certain statutory provisions governing the conduct of Florida insurance agents. On or about

February 8, 2005, Respondent executed a document titled Election of Proceedings, disputing the factual allegations of the Administrative Complaint and requesting a hearing pursuant to Section 120.57(1), Florida Statutes (2004). On the Election of Proceedings form, Respondent listed her address as "Post Office Box 924013, Homestead, Fl. 33032." A copy of the Administrative Complaint and the Election of Proceedings was filed with the Division of Administrative Hearings on March 29, 2005. The matter was designated DOAH Case No. 05-1144PL and was assigned to the undersigned.

An Initial Order requesting information concerning the availability of the parties was sent to the parties at their addresses of record on March 29, 2005. The copy of the Order mailed to Respondent was returned unopened.

A final hearing was scheduled for May 17, 2005, by Notice of Hearing by Video Teleconferencing issued April 13, 2005.

Again, the copy of the Notice, despite having been mailed to Respondent's address of record, was returned unopened.

On April 29, 2005, Petitioner filed a Motion to Relinquish Jurisdiction. Petitioner indicated in the Motion that all its efforts to contact Respondent had been to no avail. Petitioner requested that an order be entered requiring that Respondent file a response indicating she still desired a formal administrative hearing. Petitioner further requested that, if Respondent failed to respond to such an order, she be deemed to have abandoned her request for hearing.

On May 9, 2005, in response to Petitioner's Motion to Relinquish Jurisdiction, an Order to Show Cause was entered. Respondent was given until May 16, 2005, to indicate in writing whether she still desired a formal hearing. She was also informed that, if she failed to respond to the Order, it would be assumed that she did not desire a hearing. The copy of the Order mailed to Respondent was returned.

The final hearing commenced as scheduled on May 17, 2005.

The hearing was conducted by video teleconferencing. The undersigned appeared from Tallahassee, Florida. Counsel for Petitioner, all witnesses, and the court reporter appeared from Miami, Florida. At no time during the hearing did Respondent appear.

At the commencement of the hearing, Petitioner was informed that Respondent had not responded to the Order to Show Cause.

Petitioner elected to present its case rather than treat Respondent as having withdrawn her request for hearing.

Petitioner presented the testimony of one witness and had admitted eight exhibits.

At the conclusion of the formal hearing, Petitioner indicated that a transcript would be ordered and was given ten days from the filing of the transcript to file a proposed recommended order. When no transcript was filed, Petitioner was contacted to determine the status of the matter. Petitioner indicated that the court reporter had not understood that a transcript was being ordered and, therefore, had not prepared one. Petitioner, therefore, indicated that no transcript or proposed recommended order would be filed.

FINDINGS OF FACT

1. The Parties.

   
   

   1. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. (2003).

   2. Respondent, Pearlie Mae Butler, is licensed in Florida as a Life Including Variable Annuity Agent (2-14), a Life and Health Agent (2-18), and a Health Agent (2-40). Ms. Butler's license number is D068258.

   3. At the times relevant to this matter, the Department has had jurisdiction over Ms. Butler's insurance licenses and appointments.

2. Ms. Butler's Failure to Remit.

1. At the times relevant to this matter, Ms. Butler was employed as an agent of Monumental Life Insurance Company (hereinafter referred to as "Monumental").

2. Ms. Butler, on behalf of Monumental, collected payments for insurance on a monthly basis, often in cash. Pursuant to Monumental's policies and procedures, Ms. Butler was required to give customers a receipt for all premium payments, which she signed in acknowledgement of a payment, and to record the receipt of the payment in Monumental's records.

3. In September 2003 Ms. Butler voluntarily left Monumental. As a consequence, an audit was conducted of Ms. Butler's records. This audit included a comparison of actual insurance premium receipts which Ms. Butler had give to her customers with the insurance premium payments recorded by her in Monumental's records.

4. As a result of the audit, it was found that Ms. Butler had collected a total of $483.21 in premiums she had received from three different customers which she did not report or remit to Monumental. These funds constituted trust funds pursuant to Section 626.561(1), Florida Statutes (2003), and were received in a fiduciary capacity by Ms. Butler. As such they should have been accounted for and paid to Monumental.

5. Ms. Butler was informed by letter of the findings of the audit and was requested to remit the unaccounted-for funds. Ms. Butler had not, as of the date of the final hearing, responded to this request.

6. Monumental, despite not having received the premiums, gave the three customers credit for their payments.

   CONCLUSIONS OF LAW

   
   

   1. Jurisdiction.

      
      

7. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2005).

   1. The Burden and Standard of Proof.

      
      

8. The Department seeks to impose penalties against Ms.

   
   

   Butler through the Administrative Complaint that include mandatory and discretionary suspension or revocation of her licenses. Therefore, the Department has the burden of proving

   the specific allegations of fact that support its charges by clear and convincing evidence. See Department of Banking and

   Finance, Division of Securities and Investor Protection v. Osborne Stern and Co., 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. 3d DCA 1998).

9. What constitutes "clear and convincing" evidence was described by the court in Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So. 2d 112, 116, n. 5 (Fla. 1st DCA 1989), as follows:

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

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

   
   

   See also In re Graziano, 696 So. 2d 744 (Fla. 1997); In re

   
   

   Davey, 645 So. 2d 398 (Fla. 1994); and Walker v. Florida Department of Business and Professional Regulation, 705 So. 2d 652 (Fla. 5th DCA 1998)(Sharp, J., dissenting).

   1. The Department's Charges.

      
      

10. Section 626.611, Florida Statutes (2003), mandates that the Department suspend or revoke the license of any insurance agent if it finds that the agent has committed any of a number of acts specified in that Section.

11. Section 626.621, Florida Statutes (2003), gives the Department the discretion to suspend or revoke the license of any insurance agent if it finds that the agent has committed any of a number of acts specified in that Section.

12. The Administrative Complaint in this case contains one count. It is premised upon one factual allegation: that

    Ms. Butler failed to remit $483.21 worth of insurance policy premiums which she collected on behalf of Monumental policyholders. The Department met its burden of proving this allegation.

    1. Alleged Violations of Section 626.611, Florida Statutes (2003).

13. The Department has alleged that Ms. Butler violated the following acts described in Section 626.611, Florida Statutes (2003):

    (4) If the license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code.

    
    

    . . . .

    1. Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

       
       

    2. Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment;

       
       

    3. Fraudulent or dishonest practices in the conduct of business under the license or appointment.

       
       

    4. 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.

    
    

    . . . .

    
    

    (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.

    
    

14. The Department has alleged that Ms. Bulter violated Section 626.611(13), Florida Statutes (2003), by violating Section 626.561(1), Florida Statutes (2003), which imposes the following duty on insurance licensees:

    1. All premiums, return premiums, or other funds belonging to insurers or others received by an agent, customer representative, 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 or office 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.

       
       

15. The Department proved clearly and convincingly that, by failing to remit insurance premiums she had collected on behalf of Monumental, she demonstrated a "lack of fitness or trustworthiness to engage in the business of insurance" in violation of Section 626.611(7), Florida Statutes (2003).

16. The Department also proved clearly and convincingly that Ms. Butler, by failing to remit insurance premiums she had collected on behalf of Monumental, engaged in "dishonest practice in the conduct of [insurance] business" in violation of Section 626.611(9), Florida Statutes (2003).

17. The Department also proved clearly and convincingly that Ms. Butler, by failing to remit insurance premiums she had collected on behalf of Monumental, is guilty of "[m}isappropriation, 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" in violation of Section 626.611(10), Florida Statutes (2003).

18. Finally, the Department proved clearly and convincingly that Ms. Butler, by failing to remit insurance premiums she had collected on behalf of Monumental, is guilty of "willful violation of any provision of this code" in violation

    of Section 626.611(13), Florida Statutes (2003), by having violated the duty imposed upon her by Section 626.561(1), Florida Statutes (2003).

19. The Department failed to prove that Ms. Butler violated Section 626.611(4), Florida Statutes (2003).

    1. Alleged Violations of Section 626.621, Florida Statutes

       
       

       (2003).

       
       

20. The Department has alleged that Ms. Butler committed the following acts in violation of Section 626.621, Florida Statutes (2003):

    (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or appointment.

    
    

    . . . .

    
    

    (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.

    
    

    . . . .

    
    

21. The Department has alleged that Ms. Butler violated Section 626.621(2), Florida Statutes (2003), by violating Section 626.561(1), Florida Statutes (2003), which is quoted in paragraph 17, supra. The Department proved clearly and convincingly that Ms. Butler, by failing to remit insurance

    premiums she had collected on behalf of Monumental, is guilty of a "[v]iolation of any provision of this code" in violation of Section 626.621(13), Florida Statutes (2003), by having violated the duty imposed upon her by Section 626.561(1), Florida Statutes (2003).

22. Finally, the Department has proved clearly and convincingly that Ms. Butler, by failing to remit insurance premiums she had collected on behalf of Monumental, is guilty of "engaging in . . . deceptive acts or practices, as prohibited under part IX of this chapter, [and] having otherwise shown

    . . . herself to be a source of injury or loss to the public or detrimental to the public interest" in violation of Section 626.621(6), Florida Statutes (2003).

    1. Penalty.

    
    

23. Florida Administrative Code Rule Chapter 69B-231 provides guideline penalties for violations of Sections 626.611, 626.621, and 626.954(1), Florida Statutes (2003), and Department rules.

24. Florida Administrative Code Rule 69B-231.040, provides the following with regard to the calculation of the appropriate penalty where multiple violations are found:

    1. Penalty Per Count.

       
       

       1. The Department is authorized to find that multiple grounds exist under Sections 626.611 and 626.621, F.S., for disciplinary

          action against the licensee based upon a single count in an administrative complaint based upon a single act of misconduct by a licensee. However, for the purpose of this rule chapter, only the violation specifying the highest stated penalty will be considered for that count. The highest stated penalty thus established for each count is referred to as the “penalty per count”.

          
          

       2. The requirement for a single highest stated penalty for each count in an administrative complaint shall be applicable regardless of the number or nature of the violations established in a single count of an administrative complaint.

       
       

    2. Total Penalty. Each penalty per count shall be added together and the sum shall be referred to as the “total penalty”.

       
       

    3. Final Penalty. The final penalty which will be imposed against a licensee under these rules shall be the total penalty, as adjusted to take into consideration any aggravating or mitigating factors, provided however the Department shall convert the total penalty to an administrative fine and probation in the absence of a violation of Section 626.611, F.S., if warranted upon the Department’s consideration of the factors set forth in rule subsection 69B-231.160(1), F.A.C.

       
       

25. Florida Administrative Code Rule 69B-231.160 provides the following relevant aggravating and mitigation factors:

    1. For penalties other than those assessed under Rule 69B-231.150, F.A.C.:

       
       

       1. Willfulness of licensee’s conduct;

       2. Degree of actual injury to victim;

       3. Degree of potential injury to victim;

       4. Age or capacity of victim;

       5. Timely restitution;

       6. Motivation of agent;

       7. Financial gain or loss to agent;

       8. Cooperation with the Department;

       9. Vicarious or personal responsibility;

       10. Related criminal charge; disposition;

       11. Existence of secondary violations in counts;

       12. Previous disciplinary orders or prior warning by the Department; and

       13. Other relevant factors.

       
       

26. Applying the foregoing rules to this case, it is concluded that Ms. Butler's licenses should be revoked.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Pearlie Mae Butler violated the provision of Chapter 626, Florida Statutes (2003), described, supra, and revoking her licenses.

DONE AND ENTERED this 8th day of September, 2005, in Tallahassee, Leon County, Florida.

S

LARRY J. SARTIN

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 8th day of September, 2005.

COPIES FURNISHED:

James A. Bossart, Esquire Division of Legal Services Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0333

Pearlie M. Butler

Post Office Box 924013 Homestead, Florida 33032

Honorable Tom Gallagher Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 05-001144PL

Orders for Case No: 05-001144PL