FILE D

jJL 15 2016

Docketedby t.. ..

ALEJANDRO JAVIER FRIGULS,

Petitioner

vs.

CHIEF FINANCIAL OFFICER

JEFF ATWATER

S I'AFE OF FLORIDA

DOAH Case No. 15-7354PL DFS Case No. 189390-15-AG

DEPARTMENT OF FINANCIAL SERVICES,

Respondent.

FINAL ORDER

THIS CAUSE came on for entry of a final order. The Administrative Law Judge ("ALJ") concluded the Department, in denying petitioner' s application for a license as a resident personal lines (20-44) insurance agent, misinterpreted section 626.207(4)(b), Florida Statutes. Specifically, the ALJ opined that section 626.207(4)(b), Florida Statutes, does not apply to nolo contendere pleas where adjudication was withheld and, thus, does not support the license denial. The ALJ further concluded the Department should not exercise the discretion afforded it under section 626.821(8), Florida Statutes, to deny petitioner' s application. The Department filed exceptions to the recommended order and petitioner responded to those exceptions. The exceptions are incorporated into the analysis below.

Section 626.207, Florida Statutes, as germane here, provides:

1. An applicant who commits a felony of the first degree; a capital felony; a felony involving money laundering, fraud, or embezzlement; or a felony directly related to the financial services business is permanently barred from applying for a license under

   
   

   
   

   Filed July 27, 2016 9:32 AM Division of Administrative Hearings

   
   

   
   

   this part. This bar applies to convictions, guilty pleas, or nolo contendere pleas, regardless of adjudication, by any applicant, officer, director, majority owner, partner, manager, or other person who manages or controls any applicant.

2. For all other crimes not included in subsection (3), the department shall adopt rules establishing the process and application of disqualifying periods that include:

   1. A 15-year disqualifying period for all felonies involving moral turpitude that are not specifically included in the permanent bar contained in subsection (3).

   2. A 7-year disqualifying period for all felonies to which neither the permanent bar in subsection (3) nor the 15-year disqualifying period in paragraph (a) applies.

   3. A 7-year disqualifying period for all misdemeanors directly related to the financial services business.

(Emphasis supplied). The recommended order, particularly paragraphs 21-24, interprets section 626.207 such that the portion of subsection (3) italicized above applies only to the felonies listed therein. The net effect, according to the ALJ, is that an applicant who has been convicted of, or who entered a guilty or nolo contendere plea to, an offense described in subsection (3), is permanently barred from license eligibility, while only conviction of an offense described in subsection (4) will preclude license eligibility for the given period of time. The ALJ , in recommended order paragraph 23, opined that the Department is prohibited from reading the language in subsection (3) into subsection (4) in order to apply the disqualifying period in subsection (4)(b) to petitioner's nolo contendere plea. It is, in fact, the ALJ who is seeking to re-draft the statute. The ALJ's construction of the statute changes the word " crimes" in subsection (4) to the phrase "criminal convictions." The ALJ' s plain language analysis is flawed. Section 626.207, Florida Statutes, standing alone, is neither plain nor unambiguous.

Statutes must be read in pari materia. See Heart of Adoptions, Inc. v. J.A., 963 So, 2d

189, 199 (stating that related statutes " must be read together to achieve a consistent whole"),

quoting, Woodham v. Blue Cross and Blue Shield, Inc., 829 So. 2d 891, 898 (Fla. 2002). The ALJ's analysis contravenes this principle. Section 626.207, Florida Statutes, must be read in conjunction with sections 626.611(l)(n) and 626.621(8), Florida Statutes. Section 626.611(1)(n) expressly requires the Department to deny a license application where the applicant has pleaded guilty or nolo contendere to a felony involving moral turpitude. Section 626.621(8) expressly authorizes the Department to deny a license where the applicant has pleaded guilty or nolo contendere to any felony. Both sections include the phrase " having pleaded guilty or nolo contendere to a felony." Thus, this phrase must necessarily apply to the disqualification periods outlined in section 626.207(4)(a)(felonies involving moral turpitude), and (4)(b)(felonies not involving moral turpitude). The "permanent bar" language in section 626.207(3) is not linked to either section 626.611 ( 1)(n) or section 626.621(8), and so required the inclusion of the additional language. This interpretation of the statute is as or more reasonable as the one the ALJ proffers 1.

Although the Department rejects the ALJ ' s construction of section 626.207(4)(b), Florida Statutes, the disposition of this proceeding does not depend upon resolving that dispute. The Department' s denial notice advised petitioner only that his license application was denied. The notice cited both section 626.621(8) and 626.207(4)(b), Florida Statutes, as authority, but did not purport to disqualify petitioner for any set period. Section 626.621(8), Florida Statutes, standing alone, supports the denial of petitioner's application. Recommended order paragraph 31 acknowledges the Department's discretion, under section 626.621(8), to deny the application based solely upon petitioner' s nolo contendere plea to a felony, but the ALJ concludes the Department should not exercise that discretion.

1 The AU and the Department agree that the Department could clarify this issue, and address misdemeanors referenced in section 626.207(4)(c), Florida Statutes, through rulemaking authorized in section 626.207(4).

An applicant for an occupational license has the ultimate burden of proving fitness for licensure. Dep't of Banking and Fin. v. Osborne Stern & Co., 670 So. 2d 932, 934 (Fla. 1996). The Department, in denying an application, must only identify a specific reason for the denial, and prove that reason by the preponderance of evidence. 1d; Dep't of Children and Fam. v. Davis Family Day Care Home, 160 So. 3d 854, 857 (Fla. 2015). The Department's reduced burden flows from the agency's broad discretion to regulate occupations practiced by privilege rather than right, which are potentially injurious to the public. Id; Astral Liquors, Inc. v. Dep't of Bus. Reg., 463 So. 2d 1130, 1132 (Fla. 1985). In the instant case, the Legislature has determined, as a matter of law, that a nolo contendere plea to felony drug possession is sufficient evidence of lack of fitness to support denial of petitioner's application for a license to transact insurance. § 626.621(8), Fla. Stat. The fact of petitioner's plea is undisputed, and the ALJ so found. The Department, therefore, satisfied its burden under Osborne Stern.

Although section 626.621(8), Florida Statutes, provides the Department clear authority to

deny petitioner's application, the formal hearing below was de novo, affording petitioner the opportunity to present additional evidence to change the Department's decision to exercise that authority. See Couch Const. Co., Inc. v. Dep't of Transp., 361 So. 2d 172, 175-76 (Fla. 1st DCA 1978). Accordingly, the ALJ could consider that evidence and conclude whether or not the Department should exercise its discretion to deny the application. See Heburn v. Dep' t of Children and Families, 772 So. 2d 561, 562 (Fla. 1st DCA 2000). The Department, however, may reject that conclusion, provided it supplies a reasonable explanation for doing so. Id. at 563.

The ALJ, in recommended order paragraphs 32 and 33, references petitioner's "earnest demeanor," "sincere testimony," and his "acknowledgement of his criminal record" at the final hearing. In paragraph 33, the ALJ notes that petitioner's drug possession charge did not relate to

the financial services business; that petitioner completed his court ordered probation without incident; and that petitioner has not been in trouble since that time. Based on these considerations, the ALJ concludes in recommended order paragraph 34 that the Department should refrain from denying petitioner's application because "[s]tanding alone, petitioner's nolo contendere plea, without being convicted of or adjudicated guilty of a charge of possession of Oxycodone, is not sufficient grounds to deny petitioner's application for licensure as a personal lines insurance agent." The Department respectfully disagrees.

Petitioner's criminal plea, as noted above, is, as a matter of law, sufficient grounds for denying petitioner's license application. The Department disagrees that felony drug possession is unrelated to the business of insurance. Insurance is a business greatly affected by the public trust, and an insurance agent stands in a fiduciary relationship to both the client and insurance company. The act to which petitioner pleaded nolo contendere suggests untrustworthiness and unfitness to maintain such a critical fiduciary position. See Natelson v. Dep't of Ins., 454 So. 2d 31, 32 (Fla. 1st DCA 1984)(affirming revocation of insurance agent's license following agent's guilty plea to possession of cannabis with intent to distribute). . The Department, moreover, concludes that insufficient time has passed since petitioner was released from supervision in 2013 to demonstrate that petitioner is fit and' trustworthy for licensure. The Department does not agree that these factors are overcome by petitioner's "earnest demeanor" and "sincere testimony" at the final hearing. The fact that adjudication on the felony charge was withheld does not change the Department's analysis.

In accordance with the foregoing, having reviewed the complete record of this

proceeding, recommended order paragraph seven is rejected. Although presented as a finding of fact, it is actually a recommendation as to how the Department should exercise its discretion in

evaluating the license application. To the extent it is a finding of fact, it is not supported by competent substantial evidence. The Department pleaded and proved, and the ALJ found as fact, that petitioner pleaded nolo contendere to a felony. Section 626.621(8), Florida Statutes, provides that the plea is a legally sufficient basis to deny the application. With regard to the recommended order's conclusions of law, the first sentence of paragraph 15; paragraph 16; all but the first sentence of paragraph 22; the first sentence of paragraph 23; the first and third sentences of paragraph 24; and paragraphs 29, 32, 34, and 35 are rejected. The Recommendation is rejected. The Department's construction and application of sections 626.621(8) and 626.207(4)(b), Florida Statutes, is, for the reasons explained above, more reasonable than that of the ALJ.

The Recommended Order, as modified, is adopted.

Accordingly, Petitioner's application for a resident personal lines (20-44) insurance agent

license is DENIED.

.}h

DONE and ORDERED this 15 day of J U,, l 12016.

Copies furnished to:

Alejandro Javier Friguls, Petitioner 992 Sweetgum Valley Place

Lake Mary, FL 32746

J. Bruce Culpepper, Administrative Law Judge Division of Administrative Hearings

Robert C. Kneip Chief of Staff

James Bossart, Attorney for Petitioner James.bossart@myfloridacfo.com

Docket for Case No: 15-007354

Orders for Case No: 15-007354