vs. ) Case No. 05-1339PL
MARK D. HANNIFIN, )
Respondent. )
Pursuant to notice, a formal hearing was held in this case by video teleconference on June 28, 2005, at sites located in West Palm Beach and Tallahassee, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of Administrative Hearings.
For Respondent: Robert W. Guerrier, Esquire
The issue for determination is whether Respondent committed the offenses set forth in the Administrative Complaint and, if so, what action should be taken.
On February 10, 2005, the Department of Financial Services (Department) filed a six-count Administrative Complaint against Mark D. Hannifin (Hannifin). The Department charged Mr. Hannifin with the following: Count I--violating Sections 626.611(7), (8), (9), and (10) and 626.621(2)(by failing to comply with Section 626.561(1)) and (6), Florida Statutes; Count II--violating Sections 626.611(7), (8), (9), and (10) and 626.621(6) (by engaging in or committing the methods or acts or practices defined in Section 626.9541(1)(e)1.b., c., and e. and (k)1.), Florida Statutes; Count III--violating Sections 626.611(7), (8), (9), and (10) and 626.621(6) (by engaging in or committing the methods or acts or practices defined in Section 626.9541(1)(e)1.b., c., and e. and (k)1.), Florida Statutes; Count IV--violating Sections 626.611(7), (8), (9), and (10) and 626.621(6) (by engaging in or committing the methods or acts or practices defined in Section 626.9541(1)(e)1.b., c., and e. and (k)1.), Florida Statutes; Count V--violating Sections 624.11(1), 626.611(7) and (8), 626.621(2) and (6), and 626.901(1),
Florida Statutes. By an Election of Proceedings, Mr. Hannifin disputed the allegations of fact and requested a hearing
pursuant to Section 120.57(1), Florida Statutes.
On April 14, 2005, this matter was referred to the Division of Administrative Hearings.
The Department filed a Motion for Summary Recommended Order regarding Counts I through IV of the Administrative Complaint, to which Mr. Hannifin filed a response. By Order dated June 24, 2005, the Department's motion was denied.
At hearing, the Department presented the testimony of four witnesses and entered thirteen exhibits (Petitioner's Exhibits numbered 3-8, 11-13, 13A, 14-15, and 25) into evidence; three exhibits were rejected (Petitioner's Exhibits numbered 22-24). Mr. Hannifin presented the testimony of one of the Department's witnesses and entered no exhibits into evidence.1 The undersigned took official recognition of two documents--Petitioner's Exhibits numbered 9 and 10.
A transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than 10 days following the filing of the transcript. The Transcript, consisting of one volume, was filed on July 15, 2005. The Department timely filed its post- hearing submission.
As to Counts V and VI of the Administrative Complaint, the Department indicated in footnote numbered 1 of its post-
hearing submission that it had abandoned those counts.
Mr. Hannifin failed to timely file his post-hearing submission, but the Department did not object. Together with Mr. Hannifin's post-hearing submission, he filed two attachments--a copy of the Administrative Complaint and a copy of a letter, dated June 22, 2005, from Timothy McClure of Madd Dogs Installation, Inc. to counsel for the Department. The Administrative Complaint is a part of the record, as it was forwarded to the Division of Administrative Hearings with the referral of this matter by the Department, and, therefore, its attachment raises no concerns. However, the attachment of the letter raises concerns in that it was neither requested to be late-filed nor admitted into evidence at hearing. The Department has not raised an objection to the letter. The undersigned has not considered the document in the preparation of this Recommended Order, but it is made a part of the record. Mr. Hannifin's post-hearing submission is accepted, except as indicated.
considered in the preparation of this Recommended Order.
At all times material hereto, Mr. Hannifin was licensed by the Department as a resident Life Agent, Life and Health Agent, General Lines (Property and Casualty Insurance)
Agent, and Health Agent. Mr. Hannifin's license identification number is A110269.
At all times material hereto, Mr. Hannifin was licensed by the State of Florida as an insurance agent.
At all times material hereto, Mr. Hannifin was the president of Hannifin & Associates, Inc. He was the only insurance agent in Hannifin & Associates.
An investigator with the Department investigated several complaints against Mr. Hannifin. The investigator tape recorded Mr. Hannifin's statement on September 3, 2003, after informing Mr. Hannifin of his Miranda rights and having Mr. Hannifin execute a Miranda warning card. During the statement, the investigator presented several documents to Mr. Hannifin and asked him several questions regarding the
documents. The investigator testified at hearing and the tape recording was received into evidence. As to the identification of those documents, the undersigned finds the investigator's testimony credible. Mr. Hannifin made admissions during the taped statement2 (Statement). The undersigned finds the Statement credible.
The undersigned took official recognition of a criminal matter involving Mr. Hannifin, regarding the issues in the Administrative Complaint, in the Circuit Court of Palm
Beach County, Fifteenth Judicial Circuit: State of Florida v. Mark Dwain Hannifin, Case No. 03-0112566CFA02. In the Information filed in the court case on October 28, 2003,
Mr. Hannifin was charged with two counts of misappropriation of insurance funds (Counts 1 and 2) and four counts of uttering a forgery (Counts 3-6). Pertinent to this matter, Count 2 of the Information involved Madd Dogs Installation, Inc. (Madd Dogs Install'n); Count 3 involved Double A Industries (Double A); Count 4 involved Rockwell Development Company (Rockwell Development); and Count 6 involved Royal Professional Builders, Inc. (Royal Professional Builders).
Subsequently, Mr. Hannifin entered into a Pretrial Intervention Program, Deferred Prosecution Agreement on all counts, filed in the court case on April 12, 2005, in which, among other things, prosecution was deferred for a period of
12 months provided Mr. Hannifin abided by certain agreed conditions.
COUNT I
On or about September 20, 2001, Timothy McClure and Brett Carnahan of Madd Dogs Install'n met with Mr. Hannifin at his office.3 They sought to obtain workers' compensation insurance and commercial general liability insurance for Madd Dogs Install'n.
Messrs. McClure and Carnahan agreed to obtain the
workers' compensation insurance and commercial general liability insurance for Madd Dogs Install'n from Mr. Hannifin. The workers' compensation insurance was to be provided by Florida United Businesses Associations, Inc. (FUBA), and the commercial general liability insurance was to be provided by Burlington Insurance Company (BIC).
On that same day, Messrs. McClure and Carnahan completed the applications for the insurance. Mr. Hannifin received from Messrs. McClure and Carnahan a partial premium payment for the workers' compensation insurance in the amount of $1,205.70 in cash; a premium payment for the commercial general liability insurance in the amount of $453.00 in cash; and an application fee for membership in FUBA in the amount of
$50.00 in cash. Mr. Hannifin deposited the monies received into the business account of Hannifin & Associates.
Hannifin & Associates sent Madd Dogs Install'n four invoices for monthly premiums relating to the workers' compensation insurance. Between November 2001 and February 2002, Madd Dogs Install'n, by and through Mr. McClure by check, made four monthly payments on the premiums due for the workers' compensation insurance. The payments were deposited into the business account of Hannifin & Associates.
Mr. Hannifin failed to remit any of the payments from Madd Dogs Install'n to BIC, to FUBA or to any other
insurance company.
Mr. Hannifin never obtained the workers' compensation insurance and the commercial general liability insurance for Madd Dogs Install'n.
Mr. Hannifin admitted in his Statement that, due to cash flow problems, he diverted the monies paid by Madd Dogs Install'n to his own use.
Mr. Hannifin admitted in his Statement that he did not return the money to Mr. McClure.4
Among the conditions provided in the Deferred Prosecution Agreement was that Mr. Hannifin would pay Mr. McClure $8,763.60.
COUNT II
Mr. Hannifin issued to Madd Dogs Install'n a Certificate of Liability Insurance (Certificate). The date on the Certificate was November 28, 2001. The Certificate provided, among other things, that the insured was Madd Dogs Install'n; that the insurers were BIC for commercial general liability coverage and FUBA for workers' compensation coverage; that the policy number for the commercial general liability was B20394871; that the policy number for the workers' compensation coverage was F4673920; that the coverage period for the policy was September 20, 2001 through
September 20, 2002; that the certificate holder was Rockwell Development; and that the "Certificate is issued as a matter of information only and confers no rights upon the certificate holder. . . ." Mr. Hannifin signed the Certificate, as the authorized representative.
Madd Dogs Install'n provided a copy of the Certificate to Rockwell Development. Before permitting subcontractors to perform work on its projects, Rockwell Development requires the subcontractors to provided proof of insurance. Madd Dogs Install'n was a subcontractor of Rockwell Development.
An inference is drawn and a finding is made that, without the Certificate, Rockwell Development would not allow Madd Dogs Install'n to perform any work at its (Rockwell Development) projects.
Mr. Hannifin knew that Rockwell Development would receive a copy of the Certificate.5
Count II contains an allegation that Mr. Hannifin furnished a copy of the Certificate to Rockwell Development. The evidence failed to demonstrate that Mr. Hannifin or anyone in his office, which would satisfy showing that he furnished the Certificate, furnished the copy to Rockwell Development. However, failure to prove this allegation is inconsequential
in that the evidence demonstrates that Mr. Hannifin knew that a copy of the Certificate would be furnished to Rockwell Development whether he, or someone in his office, or Madd Dogs Install'n furnished the copy.
Madd Dogs Install'n was not insured with either BIC or FUBA.
Mr. Hannifin knew that Madd Dogs Install'n did not become, and was not, insured by either BIC or FUBA. He did nothing to cure the non-insurance coverage. Further, as a result, Mr. Hannifin knew that the policy numbers for coverage were nonexistent and, therefore, false.
The Certificate was a false material statement.
COUNT III
Mr. Hannifin issued to Madd Dogs Install'n a Certificate. The date on the Certificate was March 21, 2002. The Certificate provided, among other things, that the insured was Madd Dogs Install'n; that the insurers were BIC for commercial general liability coverage and FUBA for workers' compensation coverage; that the policy number for the commercial general liability was B958477322; that the policy number for the workers' compensation coverage was F4673920; that the coverage period for the policy was September 20, 2001 through September 20, 2002; that the certificate holder was
Double A; and that the "Certificate is issued as a matter of information only and confers no rights upon the certificate holder. . . ." Mr. Hannifin signed the Certificate, as the authorized representative.
Before permitting subcontractors to perform work on its projects, Double A requires the subcontractors to provided proof of insurance. Madd Dogs Install'n was a subcontractor of Double A.
Based on the evidence presented, an inference is drawn and a finding is made that Mr. Hannifin provided a copy of the Certificate to Double A.6
An inference is drawn and a finding is made that, without the Certificate, Double A would not allow Madd Dogs Install'n to perform any work at its (Double A) projects.
Mr. Hannifin knew that Double A would receive a copy of the Certificate.
Madd Dogs Install'n was not insured with either BIC or FUBA.
Mr. Hannifin knew that Madd Dogs Install'n did not become, and was not, insured by either BIC or FUBA. He did nothing to cure the non-insurance coverage. Further, as a result, Mr. Hannifin knew that the policy numbers for coverage were nonexistent.
The Certificate was a false material statement.
COUNT IV
Mr. Hannifin issued to R. K. Drywall7 a Certificate.
The date on the Certificate was August 26, 2002. The Certificate provided, among other things, that the insured was
R. K. Drywall; that the insurer was Florida Citrus Association (FCA), which is also FUBA, for workers' compensation coverage; that the policy number for the workers' compensation coverage was FLWC96850049; that the coverage period for the policy was August 17, 2002 through August 17, 2003; that the certificate holder was Royal Professional Builders; and that the "Certificate is issued as a matter of information only and confers no rights upon the certificate holder. "
Mr. Hannifin signed the Certificate, as the authorized representative.
Mr. Hannifin did not forward any money to FCA for the
workers' compensation coverage. R. K. Drywall was not insured by FCA.
Mr. Hannifin knew that R. K. Drywall did not become, and was not, insured by FCA. He did nothing to cure the non- insurance coverage. Further, as a result, Mr. Hannifin knew that the policy number for coverage was nonexistent.
The Certificate was a false material statement.
An inference is drawn and a finding is made that, without the Certificate, Royal Professional Builders would not allow R. K. Drywall to perform any work at its (Royal Professional Builders) projects.
Mr. Hannifin admitted in his Statement that he furnished Royal Professional Builders a copy of the Certificate.
Mr. Hannifin also admitted in his Statement that he returned to R. K. Drywall all the monies paid to him.
Count IV contains an allegation that Mr. Hannifin signed and furnished the Certificate to Royal Professional Builders on August 26, 2001, instead of August 26, 2002. In the proposed findings of fact of the Department's post-hearing submission, the Department again refers to the date as
August 26, 2001, in spite of the evidence to the contrary; and, as supported by the evidence, refers to the year of another Certificate, showing R. K. Drywall as the insured and Badger Homes, Inc., as the certificate holder, as 2002. At no time did the Department make a request to declare the year of 2001 as a scrivener's error and to amend the Administrative Complaint accordingly. Taking into consideration that the burden of proof is upon the Department by clear and convincing evidence and taking into consideration the evidence presented at hearing and the Department's post-hearing submission, the
undersigned considers the year of 2001 in the Administrative Complaint to be critical and not a harmless error. Therefore, the undersigned finds that the Department failed to show that the Certificate's date was August 26, 2001, as alleged in the Administrative Complaint.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of these proceedings and the parties thereto pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes (2005).
License revocation proceedings are penal in nature.
The burden of proof is on the Petitioner to establish by clear and convincing evidence the truthfulness of the allegations in the Administrative Complaint. Department of Banking and Finance, Division of Securities and Investor Protection v.
Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
A licensee is charged with knowing the practice act that governs his/her license. Wallen v. Florida Department of Professional Regulation, Division of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).
"Insurance is a business greatly affected by the public trust, and the holder of an agent's license stands in a fiduciary relationship to both the client and the insurance
company." Natelson v. Department of Insurance, 454 So. 2d 31, 32 (Fla. 1st DCA 1984).
Section 626.611, Florida Statutes (2001), provides in pertinent part:
The department shall . . . suspend, revoke, or refuse to renew or continue the license or appointment of any . . . agent, title agency, . . . 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 . . . licensee, or appointee any one or more of the following applicable grounds exist:
* * *
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.
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.
(Emphasis added)
Section 626.621, Florida Statutes (2001), provides in pertinent part:
The department may, in its discretion, . .
. suspend, revoke, or refuse to renew or continue the license or appointment of any
. . . agent, . . . 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 . . . 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:
* * *
(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.
(Emphasis added)
Section 626.9541, Florida Statutes (2001), provides in pertinent part:
(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:
* * *
(e) False statements and entries.--
1. Knowingly:
* * *
Making, publishing, disseminating, circulating,
Delivering to any person,
* * *
e. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public,
any false material statement.
* * *
(k) Misrepresentation in insurance applications.--
1. Knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an application or negotiation for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from an insurer, agent, broker, or individual.
The provisions of Section 626.9541, Florida Statutes (2001), are "merely definitional and do not themselves authorize any disciplinary action." Werner vs. Department of Insurance and Treasurer, 689 So. 2d 1211, 1214 (Fla. 1st DCA 1997).
Section 626.561, Florida Statutes (2001), provides in pertinent part:
(1) All premiums, return premiums, or other funds belonging to insurers or others received by an agent, customer representative . . . in transactions under his or her license are trust funds received by the licensee in a fiduciary capacity. . . . 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.
The Department demonstrated by clear and convincing evidence that Mr. Hannifin committed the following violations: Count I--violated Sections 626.611(7), (9) and (10) and 626.621(2) (by failing to comply with Section 626.561(1)), Florida Statutes (2001); and Counts II and III--violated Sections 626.611(7) and (9), and 626.621(6) (by engaging in or committing the methods or acts or practices defined in Section 626.9541(1)(e)1.b. ,c., and e.), Florida Statutes (2001).
The Department failed to demonstrate that
Mr. Hannifin committed the violations charged in Count IV of the Administrative Complaint. Matters not charged in the Administrative Complaint cannot be considered as a violation. Chrysler v. Department of Professional Regulation, 627 So. 2d
31 (Fla. 1st DCA 1993); Klein v. Department of Business and Professional Regulation, 625 So. 2d 1237 (Fla. 2d DCA 1993). As to Count IV, the Department failed to demonstrate by clear and convincing evidence that the Certificate issued by
Mr. Hannifin was dated August 26, 2001, which was material to Count IV. The evidence demonstrated that the date of the Certificate was August 26, 2002, and that the period of the insurance coverage was August 17, 2002 through August 17, 2003. The Administrative Complaint in Count IV dealt with
circumstances occurring on or about August 26, 2001, not August 26, 2002. Even though the evidence demonstrated that Mr. Hannifin committed violations as to the Certificate issued August 26, 2002, he was not charged with matters occurring on or about August 26, 2002.
As to penalty, Florida Administrative Code Rule 69B-
provides:
Penalty Per Count.
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".
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.
Total Penalty. Each penalty per count shall be added together and the sum shall be referred to as the "total penalty".
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.
Florida Administrative Code Rule 69B-231.080 provides that the penalty for a violation of Subsections 626.611(7), (9),
and (10), Florida Statutes (2001), is a six-month suspension, a nine-month suspension, and a nine-month suspension, respectively.
Florida Administrative Code Rule 69B-231.090 provides that the penalty for a violation of Subsections 626.621(2) and (6), Florida Statutes (2001), is a three-month suspension and a six-month suspension, respectively.
Florida Administrative Code Rule 69B-231.100 provides that the penalty for a violation of Section 626.9541(1)(e), Florida Statutes (2001), is a six-month suspension.
The highest stated penalty for Counts I (six-month, nine-month, nine-month, and three-month), II (six-month, nine- month, and six-month), and III (six-month, nine-month, and six-month) is a nine-month suspension, respectively. The total penalty is a 27-month suspension.
However, the period of suspension cannot exceed two years (24 months). § 626.641(1), Fla. Stat. (2001).
Aggravating factors exist. Mr. Hannifin's conduct
of receiving monies and not applying the monies for the insurance coverage was willful, and his diverting the monies for his own use was willful. Fla. Admin. Code R. 69B- 231.160(1).
Mitigating factors also exist. Mr. Hannifin fully cooperated with the Department in its investigation, and no evidence was presented as to prior disciplinary action by the Department. Id.
Taking into consideration the aggravating and mitigating factors, the aggravating factors outweigh the mitigating factors. As a result, the final penalty should be more severe than a 24-month suspension. The final penalty should be revocation.
DONE AND ENTERED this 5th day of December, 2005, in Tallahassee, Leon County, Florida.
___________________________________ ERROL H. POWELL
Filed with the Clerk of the Division of Administrative Hearings this 5th day of December, 2005.
1/ Mr. Hannifin did not appear at the hearing. His non- appearance cannot be used as a factor against him in this matter.
2/ The admissions are an exception to hearsay and are admissible. Mr. Hannifin need not, and did not, testify.
§ 90.803(18), Fla. Stat.
3/ Neither Mr. McClure nor Mr. Carnahan testified at hearing.
4/ The letter, dated June 22, 2005 and from Mr. McClure to the Department, attached to Mr. Hannifin's post-hearing submission indicates that Mr. Hannifin returned the monies paid by
Mr. McClure on behalf of Madd Dogs Install'n. As provided in
the Preliminary Statement, the letter was not considered in the preparation of this Recommended Order.
5/ Whether Mr. Hannifin or his office provided the Certificate to Rockwell Development is immaterial. Mr. Hannifin knew that Rockwell Development would receive a copy of the Certificate.
6/ Mr. Hannifin admitted in his Statement that the Certificate bore his fax identification information and that he probably faxed the Certificate to Double A.
7/ No representative of R. K. Drywall testified at hearing.
Robert W. Guerrier, Esquire
Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
Department of Financial Services The Capitol, Plaza 11 Tallahassee, Florida 32399-0300
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.
