The Issue The issue is whether the petitioner's applications for qualification and for examination as an insurance agent should be granted.
Findings Of Fact Wallace F. Sharrett applied on or about May 14, 1987, for qualification as a general lines agent or solicitor for insurance, and also applied for examination as a life and health insurance agent. On or about July 30, 1987, he filed another application for examination as a life and health agent. On all these applications he listed his social security number as 113- 20-3677. His social security number is actually 113-30-2677. All three applications contain the same question #6, which asks: Have you ever held an insurance license in this or any other state? On all applications Mr. Sharrett answered "no." All three applications also contain question #11: Does any insurer or general agent claim that you are indebted under any agency contract or otherwise? If so, state name of claimant, nature of claim, and your defense thereto. To all three questions, Mr. Sharrett checked the box labeled "no." On all three applications, in response to question 14(b), asking, "What insurance experience have you had?", Mr. Sharrett answered "none." Mr. Sharrett previously had sought and had been issued licenses and qualifications by the Florida Department of Insurance to represent insurance companies as follows: Security Life Insurance Company of Georgia, issued August 26, 1977. Conger Life Insurance Company, issued October 20, 1977. Security Life Insurance Company of Georgia, issued January 31, 1979. Coastal States Life Insurance Company, issued July 12, 1979. Hartford Life and Accident Insurance Company, issued June 26, 1981. Mr. Sharrett has held no Florida licenses or qualifications for licensure for any insurers since 1984. From October 3, 1977, through December 27, 1978, Mr. Sharrett had been employed by Conger Life Insurance Company of Miami, Florida. After his termination, an internal audit of Mr. Sharrett's accounts at Conger Life was performed. The internal audit dated January 31, 1979, showed that Mr. Sharrett owed the company $707.66. Thereafter, Mr. Sharrett made payments of $510.14, and Conger Life's records show that as of March 31, 1979, based on total payments, and additional shortages allocated to Mr. Sharrett's account, he owed Conger Life $388.74. After Mr. Sharrett's termination of employment with Conger Life, he applied to become a salesman with Security Life Insurance Company of Georgia. On February 7, 1979, the agency vice president for that company, J. H. Phillips, wrote to Conger Life for information about Mr. Sharrett, and said: We particularly would be interested in, did he leave your company without a deficiency. On February 12, 1979, Mr. Henry J. Spaman of Conger Life wrote to Mr. Phillips stating He was employed by [us] from 10/3/77 to 12/22/78. He left our employment with a shortage of considerable amount which we are in the process of taking legal action [sic]. We also have reported to the State Department of Insurance the shortage and have been assured that it will be investigated. Nevertheless, Mr. Sharrett thereafter was hired as a salesman by Security Life Insurance Company of Georgia. Apparently the payment which Mr. Sharrett made of $510.14 settled his account with Conger Life Insurance Company to the satisfaction of Security Life Insurance Company of Georgia. Conger Insurance Company still maintains, however, that Mr. Sharrett is indebted to it in the amount of $388.74. No legal action to collect that amount from Mr. Sharrett has ever been taken, nor is there any evidence of a demand for payment being directed to him since his payment of $510.14 to Conger Life during the first quarter of 1979. Mr. Sharrett did not list his prior licenses to sell insurance on his recent applications because he had discussed his applications with a retired insurance agent, Mr. Morrelle, who had been an agent with Independent Life Insurance Company for 27 years, Mr. Morrelle told Mr. Sharrett that it was not necessary to list jobs with insurance companies which were more than five years old. Mr. Morrelle had not looked at the applications themselves, and did not know that the question about whether the applicant ever had been licensed in Florida or any other state has no time limit. Mr. Raines, the district sales manager for Independent Life Insurance Company, the company for which Mr. Sharrett will work if licensed, stated that he did not know that Mr. Sharrett had been employed by five different insurance companies. Independent Life's own background check of Salespeople through Equifax only goes back five years. Mr. Sharrett was employed by Independent Life from May 4, 1987, to January 22, 1988, and was a good employee. After this case began, Mr. Sharrett filed an amended application with the Department, dated February 17, 1988. In that application Mr. Sharrett listed his correct social security number, but with regard to question number 6 (concerning other insurance licenses) he listed only Conger Life Insurance Company, Security Life Insurance Company, and New England Life Insurance Company. He neglected to mention his licensure with Coastal States Life Insurance Company and Hartford Life and Accident Insurance Company. The Department has no record that Mr. Sharrett was qualified to represent New England Life Insurance Company. With respect to question number 11 (concerning whether any insurer or general agent claimed that Sharrett was indebted under any agency contract) on the amended application, he again answered "no." On question 14(b), Mr. Sharrett acknowledged 2 years experience in the insurance business in the amended application. The Hearing Officer finds no material misrepresentation with respect to question number 11 (claims of indebtedness by insurance companies) on any of the applications Mr. Sharrett filed. He had no reason to believe that Conger Life Insurance Company continued to maintain that he was indebted to it. Conger Life has never taken any action to collect the $388.74 it maintains Mr. Sharrett owes it. His payment of $514.14 during the first quarter of 1979, shortly after his termination with Conger Life settled the dispute between Conger Life and Mr. Sharrett. In making this finding, the Hearing Officer is persuaded that the dispute between Mr. Sharrett and Conger Life Insurance Company was made known to Security Life Insurance Company in February 1979, and it is more likely than not that both Security Life Insurance Company of Georgia and Mr. Sharrett were satisfied that an agreement had been reached with Conger Life about Mr. Sharrett's indebtedness to Conger Life before he would have been employed by Security Life. Mr. Sharrett did, however, make material misrepresentations in his applications for licensure. While the transposition of numbers on the portion of the application asking or a social security number would not, by itself, be sufficient proof of an intentional misrepresentation, although it would impede investigation into the applicant's background, the error in the social security number in the three original applications is highly significant in conjunction with two other facts: Mr. Sharrett did not reveal in answer to question 6 that he had been licensed to sell insurance in Florida before. Even crediting Mr. Morrelle's testimony that he told Mr. Sharrett it was not necessary to list insurance licenses more than five years old, a plain reading of the form would show that question 6 has no time limit on it, whereas question 10 asks for a record of employment "for the past five years" and is time limited. Minimal attention to the questions asked on the form would have put Mr. Sharrett on notice that he was required to disclose all past insurance licenses. This would have brought to light Mr. Sharrett's dispute with his prior employer, Conger Life, which he would be required to explain. Mr. Sharrett stated that he had no insurance experience in answer to question number 14(b). All these answers were simply untrue. The error in the social security number, the failure to list past licenses Mr. Sharrett held in Florida on three applications, the failure to correctly list past licenses on the fourth (amended) application, and the failure to acknowledge any past insurance experience, leads the Hearing Officer to find purposeful misrepresentation of Mr. Sharrett's past. These misrepresentations raise questions about Mr. Sharrett's trustworthiness. Although the dispute Mr. Sharrett had with Conger Life in 1979 can be explained and would not, in itself, disqualify him from licensure, several of the items of misinformation on his licensure applications apparently were designed to impede the Department from learning of the settled dispute with Conger Life. This misrepresentation is disqualifying.
Recommendation It is recommended that the applications of Mr. Sharrett for qualification and for examination as an insurance agent be denied. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of June, 1988. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1050 (904) 488-9765 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 1988. APPENDIX The following are my rulings on the proposed findings of fact submitted by the petitioner pursuant to Section 120.59(2), Florida Statutes (1987). Covered in finding of fact 5. General covered in finding 6-9, whether the indebtedness was on the payment bond or is general indebtedness is not relevant. Covered in finding of fact 12. [Introduction] The content of the original applications are recounted in findings of fact 1-4. 4(a). Rejected as unnecessary. 4(b). Sentence 1 covered in finding of fact 1, the remainder rejected for the reason stated in findings of facts 17 and 18. 4(c). Rejected for the reason stated in finding of fact 17(a). 4(d). Accepted in finding of fact 16. Rejected as unnecessary. Covered in finding of fact 13. The following are my rulings on the proposed findings of fact submitted by the respondent pursuant to Section 120.59(2), Florida Statues (1987). Covered in finding of fact 5. Covered in finding of fact 6. Covered in finding of fact 8. 4(a). The name used on the application is not a problem. Concerning the social security, see finding of fact 1. 4(b). See finding of fact 1. 4(c). See finding of fact 1. [Appears to be misnumbering] Rejected as unnecessary. Rejected as unnecessary. Covered in finding of fact 11. Covered in finding of fact 12. Covered in findings of facts 1, 2, 3, 4, and 5. Same as previous ruling. Same as previous ruling. Covered in findings of facts 16, 17, and 18. COPIES FURNISHED: Mr. Wallace F. Sharrett 109 Southwest Third Avenue Hallendale, Florida 33009 Hon. William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 William W. Tharpe, Jr., Esquire Office of Legal Services 413-B Larson Building Tallahassee, Florida 32399-0300 Don Dowdell General Counsel State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact At all times material to this action, the Petitioner, Randall Petersen, was a duly-authorized life and health insurance agent. The Petitioner was employed by Gulf Life Insurance Company. Petitioner was one of Gulf Life's most productive agents during the time of his employment with the company. Petitioner resigned form his employment in 1989. Count I of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Helen Hinson and her husband; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy or annuity to the Hinsons; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with the Hinsons; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding the Hinsons; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the Hinsons' monies; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to Petitioner's dealings with the Hinsons. All of these alleged violations arose from one transaction involving Helen Hinson and her husband. Prior to 1986, Mr. and Mrs. Hinson had insurance coverage with Gulf Life. The Hinson's had purchased their earlier insurance coverage prior to Petitioner's employment with Gulf Life. Petitioner took over the Hinsons' account after he joined Gulf Life. The Hinsons also had an IRA with New England Life Insurance. In an effort to consolidate their insurance needs with one company, the Hinsons closed their IRA with New England Life. The Hinsons received two (2) checks from New England Life Insurance for their IRA. They wanted to do something with the money which would be beneficial to them, estate, investment and tax-wise. Their idea was to create something similar to an IRA. Mr. Petersen arranged a visit and consultation with Tom Saita, the Gulf Life Home Office Representative and the company's expert in the area of investment insurance planning. This area of insurance planning can be a very complicated area for lay persons and general agents, like Petitioner, not familiar with tax and planning strategies. A specialist like Mr. Saita is often required. Mr. Saita was to assist Mr. Petersen in going over the Hinson's insurance needs. Various insurance plans were discussed and Mr. Saita recommended a Universal Life Policy for the Hinsons. Mr. Saita made the sales presentation, along with Mr. Petersen and received a 16% sales commission. Mr. Saita testified that he was very comfortable with the Hinsons' understanding of the sales presentation. The Hinsons decided to go ahead with Mr. Saita's recommendations. An Application for Universal Life was taken and a required medical examination was obtained. The policies were issued and the premiums paid. Part of the premiums were paid with the two IRA checks from New England Life. Approximately two (2) years later, Mr. Petersen was contacted by Mrs. Hinson regarding information on their IRA. Mr. Petersen advised Mrs. Hinson that she did not have an IRA, but rather, had Universal Life Insurance. Mrs. Hinson testified that she thought they had purchased an IRA. She also knew that they had Universal Life. She thought the transaction they had completed two years earlier was a roll-over of their IRA into another IRA. Mrs. Hinson acknowledged that she either did not understand the sales presentation, or the agents (Petersen and Saita) did not understand what they wanted. The evidence established that the Hinsons' transaction and subsequent dissatisfaction was the result of miscommunication and misunderstandings between the Petitioner, Saita and the Hinsons. The transaction did not involve any misrepresentations on Petitioner's part. Neither did the Petitioner willfully try to cheat the Hinsons or mishandle their money. Both Mr. Petersen and Mr. Saita tried to resolve the problems the Hinsons were having. Eventually, Gulf Life refunded all of the cash value that was paid into the Universal Life Policy. Based on the foregoing, the Department has failed to sustain its burden of proof with regard to the allegations of Count I of the Administrative Complaint. Petitioner properly called in an expert in the area of investment insurance planning. The expert primarily handled the details of the Hinsons' insurance plan. As indicated earlier, the evidence demonstrated that the parties simply had a misunderstanding. Such a misunderstanding falls short of establishing any of the charges alleged in Count I of the Administrative Complaint. Therefore, Count I of the Administrative Complaint should be dismissed. Count II of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Halen and Mary Stroud; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to the Strouds; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with the Strouds; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding the Strouds; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the Strouds' monies; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to Petitioner's dealings with the Strouds. All of these alleged violations arose from one transaction involving Halen Stroud and Mary Stroud. Halen Stroud is the father of Mary Stroud. Both Halen and Mary Stroud are sight-impaired individuals. Halen Stroud is an elderly gentleman. Mary Stroud appeared to be easily confused. Halen and Mary Stroud had existing insurance with Gulf Life. Mr. Petersen collected premiums from them on a monthly basis. An agent from Independent Life told Mr. Stroud that "he had money available in his Gulf Life policies and that he could put that money into Independent Life policies". Although it is uncertain what terminology this Independent Life agent used, it appears he was referring to the cash value of the Gulf Life life insurance policies the Strouds already had. Sometime around 1986 or 1987 and after being prompted by his earlier conversation with the Independent Life agent, Mr. Stroud contacted Petitioner regarding consolidation of his existing insurance, as well as purchasing additional insurance. Mr. Petersen explained that the Strouds could take out loans on the existing cash value of their Gulf Life policies and then purchase additional insurance with the loan proceeds. When the new policies were issued, the old ones could then be cancelled. Both the Strouds dispute that Mr. Petersen explained that the transaction involved a "lien" against the Strouds' policies. Neither Stroud indicated in their testimony whether "loans" of the cash surrender values had been discussed. The better evidence indicates that such loans were discussed since Mr. Stroud and his daughter signed a policy and loan application. When Mr. Stroud received notice of the loans and liens from Gulf Life, he did not know if he wanted to follow through on the transaction and wanted to think about it further. Mr. Petersen and his sales manager, Edward Agerton, met with the Strouds to re-explain the transaction. Mr. Stroud told Mr. Agerton that he did not sign any loan forms or buy any additional insurance. However, the signatures on the policy and loan applications were the Strouds' signatures. Mr. Stroud wanted to think about the transaction some more because he wasn't sure he wanted the policy. His concern centered on the new policies' expense and the lien. Approximately two (2) months later, Mr. Petersen delivered the policies to Mr. Stroud so that he could examine them. Mr. Stroud called Mr. Petersen and said he had decided he did not want the new coverage. Eventually, the entire transaction was rescinded by Gulf Life and the Strouds returned to the status quo. The evidence is unclear on exactly what Mr. Petersen explained to the Strouds about the consolidation of their insurance and the increase in the amount of their insurance. In this case, it does not appear that there was any misrepresentation by Mr. Petersen, but that either the Strouds did not understand the transaction or that a portion of the transaction was not explained to them by Mr. Petersen. The evidence supports the fact that Mr. Stroud and his daughter signed both the policy applications and policy loan forms and that this transaction was the standard method by which an insured can use the cash value in old policies to purchase more insurance. It appears from the evidence that Mr. Stroud had second thoughts and changed his mind regarding the transaction. None of these actions constitute a violation of Chapter 626, Florida Statutes, or constitute clear and convincing evidence of any of the alleged violations contained in the Administrative Complaint. Therefore, Count II of the Administrative Complaint should be dismissed. Count IV of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Reba Hammontree or on behalf of Reba Hammontree; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting a replacement health insurance policy that was purchased by Reba Hammontree; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction involving Reba Hammontree; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Reba Hammontree; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding the money given him either by Reba Hammontree or on behalf of Reba Hammontree; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, in regards to Petitioner's dealings with Reba Hammontree. All of these alleged violations arose from one transaction involving Reba Hammontree and her father. In 1986, Reba Hammontree and her father, Steven Flores, maintained two policies of health insurance with Gulf Life. Mr. Flores paid the premiums for Reba Hammontree. Mr. Petersen collected these premiums from Mr. Flores on a monthly basis. At some point in time, the existing major medical coverage on Ms. Hammontree lapsed from non-payment of the premiums. This lapse was not shown to be due to any actions on Petitioner's part. Later, Mr. Petersen was advised by Mr. Flores that his daughter wanted to talk to him about purchasing health insurance coverage. Mr. Petersen left the policy with Mr. Flores so that Ms. Hammontree could examine it. He also left an application for such insurance. Mr. Petersen later picked up the application. The application had been completed and was signed with the name "Reba Hammontree". The signature turned out not to be the signature of Reba Hammontree. In fact, the appearance of the signature on the application was not even close to the appearance of Reba Hammontree's signature. However, the signature on the application was not shown to be the handwriting of the Petitioner, and it remains a mystery as to whose hand signed the name "Reba Hammontree". It did not appear from the evidence that either Mr. Petersen or Gulf Life had any way of knowing that the signature on the application was not Ms. Hammontree's signature. Based on the signed application, the policies were issued by Gulf Life. Premiums were paid for over one (1) year on the replacement policy by Ms. Hammontree's father. After that year, Ms. Hammontree's business was transferred out of Mr. Petersen's account. In submitting the application to Gulf Life, Respondent signed the application in the space titled "Witness (Agent)." Petitioner also signed a portion of the application titled "Agent's Report." The Agent's Report included the following boilerplate representation: I do warrant that I have personally seen the Proposed Insured on the date this application was signed and that I have properly asked the questions, recorded the answers, witnessed the signature, and where required by state law, delivered an outline of coverage. ... Clearly, Petitioner did not see Ms. Hammontree on the date the application was signed or witness the signing of the application. At best, the Department established that Petitioner did not follow the underwriting procedures of Gulf Life by allowing a customer to sign an application outside his presence. The evidence did not show that permitting a customer to sign an application in such a manner is indicative of a lack of knowledge, skill, or trustworthiness on the part of an agent. Likewise, given the fact that the application was left with Ms. Hammontree's father and that it was completed prior to Mr. Petersen's return to pick up the application from the policy payor, Ms. Hammontree's father, the evidence did not show that the Petitioner's failure to witness Ms. Hammontree's signature would have been material to Gulf Life in issuing the policy. Therefore it cannot be said that the Petitioner's misrepresentation in signing such boilerplate language that such events occurred was a misrepresentation of a material fact. Moreover, the fact that the referenced statement in the Agent's Report is boilerplate language, it may be inferred that the specifics of such language are quickly forgotten and Petitioner did not sign the Agent's Report intending to make the representations contained in it. Petitioner's actions only demonstrate a concern for the convenience of his customers. Given these facts and absent clear statutory authority, such violation of a private company's underwriting policies does not constitute a violation of any of the provisions of Chapter 626, Florida Statutes. Ms. Hammontree claims that Mr. Petersen took out policies on her without her authority. She denied signing the policy application. She also denied authorizing anyone else to sign her name to the application. She disavows any knowledge of the new coverage. Although Ms. Hammontree denies any knowledge of the replacement insurance coverage, the facts demonstrate otherwise. She denied holding any conversation with Mr. Petersen prior to 1987. However, she wrote a letter, dated March 3, 1989, to the Insurance Commissioner and referenced a meeting with Mr. Petersen in 1986. The referenced 1986 meeting regarded updating her insurance. In the letter, she referenced the new coverage. She also filed a claim on the new coverage and received a check from Gulf Life. Based upon the foregoing, the Department has failed to present clear and convincing evidence that Petitioner violated any provisions of Chapter 626, Florida Statutes. Therefore, Count IV of the Administrative Complaint should be dismissed. Count V of the Administrative Complaint charged Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Gary Ard; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to Mr. Ard; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Mr. Ard; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Mr. Ard; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Mr. Ard's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Mr. Ard. All of these alleged violations arose from one transaction involving Mr. Ard. Mr. Ard is a self-made businessman. He owns and operates his own paint and body shop business. The evidence showed that Mr. Ard does not read well and does not handle the details regarding his insurance coverage. Such details were left to Mr. Ard's wife, now x-wife. Mr. Ard is very talkative and does not listen very well. It can be inferred that Mr. Petersen had some difficulty in communicating with Mr. Ard. Mr. Petersen was the Gulf Life Insurance agent for Mr. Ard. Mr. Ard had existing insurance coverage with Gulf Life. Mr. Ard requested Mr. Petersen to review his existing life policy regarding an increase in coverage. Mr. Ard needed additional life insurance to use as collateral for a bank loan on his paint and body shop business and to replace a Provident Life insurance policy. A medical examination was arranged for Mr. Ard, and it was determined that he had high blood pressure. The policy was issued with a rated premium. A policy amendment was issued for $200,000.00. Mr. Petersen delivered the amendment to Mr. Ard's wife. He returned approximately four (4) days later and picked up the signed amendment. The signature on the amendment said "Gary Ard". However, the signature was not Mr. Ard's. The signature's appearance was very close to the appearance of Mr. Ard's true signature. Again, as with Ms. Hammontree, the fake signature was not shown to be Petitioner's handwriting. To say the least, Mr. Ard's testimony was very confusing and difficult to follow. He identified the $50,000.00 policy. He testified that the signature on the application looked like his, but he did not know for sure. He denied the signature on the policy amendment. He further stated that he was not familiar with the $200,000.00 additional coverage and did not authorize anyone to sign his name to the amendment. He then states that he signed the policy application, without the amendment, but goes on to say that he could not remember signing the application. Mr. Ard's confusion very likely is due to the fact that he left the details of such transactions to his wife, who is now Mr. Ard's ex-wife. Moreover, Mr. Ard's testimony, when compared to other evidence submitted to the Department in its investigation, substantially conflicts in material respects. Given Mr. Ard's nature and his very confusing and conflicting testimony, it is impossible to make any material findings regarding the allegations contained in Count V of the Administrative Complaint. Therefore, the Department has failed to establish clear and convincing evidence with regard to the allegations contained in Count V of the Administrative Complaint, which Count should be dismissed. Count VI of the Administrative Complaint charged the Petitioner with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Aubrey Johnson; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy or annuity to Mr. Johnson; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Mr. Johnson; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Mr. Johnson; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Mr. Johnson's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Mr. Johnson. All of these alleged violations arose from one transaction involving Mr. Johnson. Mr. Petersen was contacted by Mr. Johnson to review his life insurance and annuity coverage because he had $40,000.00 to invest. Mr. Petersen advised Mr. Johnson that he would arrange a meeting with Tom Saita, the Gulf Life Home Office Representative. A meeting was held with Mr. Johnson, his secretary, Mr. Petersen and Tom Saita. Mr. Saita made the sales presentation and discussed a universal life contract on Mr. Johnson. Mr. Saita testified that he was comfortable with Mr. Johnson's understanding of the sales presentation. A universal life policy was sold and issued by Gulf Life. Mr. Johnson testified that he had several meetings with Mr. Peterson and met twice with Mr. Saita, before he made his decision to invest with Gulf Life. His bookkeeper was also present during one (1) of the meetings with Mr. Saita. Mr. Johnson testified that he was told by Mr. Petersen that he could invest his money with Gulf Life and be able to withdraw the full amount at anytime, without a penalty. 1/ Mr. Petersen denied that he made this statement and testified that he told Mr. Johnson that the money could be withdrawn, within thirty (30) days, without a penalty. The thirty-day grace period for withdrawal was a true representation by Mr. Petersen. The evidence does not clearly and convincingly demonstrate that the Respondent willfully misrepresented this transaction to Mr. Johnson. Given the representations testified to by the Respondent and Mr. Johnson and the multiple meetings between the Respondent, Mr. Johnson and Mr. Saita, the more probable interpretation of the evidence is that Mr. Johnson misunderstood what Mr. Petersen said about the thirty-day grace period. Additionally, the facts and circumstances involved in Petitioner's transaction with Mr. Johnson were similar to the facts involved in Petitioner's dealings with the Hinsons. The same factual conclusions are reached in Petitioner's transaction with Mr. Johnson. Therefore, the Department has failed to sustain its burden of proof, as to the allegations contained in Count VI of the Administrative Complaint and Count VI of the Administrative Complaint should be dismissed. Count VII of the Administrative Complaint charged the Respondent with violating Section 626.561(1), Florida Statutes, by failing to properly handle money given him by Ms. Tugwell on behalf of her daughter, Janet Iturriaga; violating Section 626.611(5), Florida Statutes, by willfully misrepresenting an insurance policy to Ms. Tugwell; violating Section 626.611(7), Florida Statutes, by demonstrating a lack of fitness or trustworthiness to engage in the business of insurance; violating Section 626.611(8), Florida Statutes, by demonstrating a lack of reasonably adequate knowledge and technical competence to engage in the transaction he concluded with Ms. Tugwell; violating Section 626.611(9), Florida Statutes, by committing fraud or dealing dishonestly regarding Ms. Tugwell; violating Section 626.611(10), Florida Statutes, by misappropriating, converting or unlawfully withholding Ms. Tugwell's money; violating Section 626.611(13), Florida Statutes, by willfully violating a rule or order of the Department; violating Section 626.621(2), Florida Statutes, by violating any statutory provision related to the business of insurance; and violating Section 626.621(5), Florida Statutes, by committing an act of twisting, as defined in Section 626.9541(1)(6), Florida Statutes, with regard to Petitioner's dealings with Ms. Tugwell. All of these alleged violations arose from one transaction involving Ms. Tugwell. Ms. Tugwell manages the Hilburn Apartments and manages the financial affairs of her daughter, Janet Iturriaga. Ms. Iturriaga is slightly mentally retarded and has a heart condition. In 1987, Ms. Tugwell was shopping for health insurance for the apartment employees and her daughter. She contacted Gulf Life. Ms. Tugwell had existing health insurance coverage on her daughter with Prudential and was paying $471.00 per month in premiums. Mr. Petersen was given the lead on Ms. Tugwell's inquiry and went to see Ms. Tugwell. He explained the available health plans and left an outline of the various types of coverage with Mrs. Tugwell. Mrs. Tugwell called a few days later. Mr. Petersen again visited Mrs. Tugwell at the Hilburn Apartments and upon arrival, saw the daughter, Janet, sitting at the front desk. Mr. Petersen completed the policy applications, with information given to him by Mrs. Tugwell. Some of the information on Ms. Iturriaga's health was incorrect. Ms. Tugwell claims that she told Mr. Petersen the correct information. She states that she told Mr. Petersen that her daughter would be high risk. Mr. Petersen claims that he faithfully recorded the information given to him by Ms. Tugwell. She further states that she did not receive the original policies, despite the fact that she paid the premiums for three (3) years. Mrs. Tugwell took the application, left the room, and returned with the application signed "Janet I Tugwell". Mr. Petersen did not actually see the daughter sign the applications. The signature was not Ms. Iturriage's. However, he had no reason to believe that Ms. Iturriaga did not, in fact, sign the application for insurance. Again, Petitioner signed the Agent's Report portion of the application. The same findings are made in reference to that Agent's Report as were discussed in Ms. Hammontree's case. The policies were thereafter issued by Gulf Life and delivered to Mrs. Tugwell. As with Ms. Hammontree, the appearance of the signature on the application did not resemble Ms. Iturriaga's real signature. Likewise, the signature on the application was not shown to be in Petitioner's handwriting. Ms. Tugwell cancelled her daughter's health insurance with Prudential. She paid the premiums on the Gulf Life policies for approximately three (3) years and also filed a claim for an accidental injury to Janet. Mrs. Tugwell called about her daughter's claim. Mrs. Tugwell was advised that the home office had requested medical records from the hospital. Mrs. Tugwell stated, "Why is it taking so long? There is nothing wrong with my daughter." The claim was initially denied by Gulf Life because two (2) different names were given to the hospital. The name "Tugwell" was listed on the claim form. The claim was eventually paid by Gulf Life and the check was cashed. Ms. Tugwell testified that her daughter's name on the application, "Janet I. Tugwell", was wrong. Her daughter never called herself "Janet I. Tugwell". She always goes by the name of "Janet T. Iturriaga". Therefore, Ms. Tugwell believes that the signature on the application was not her daughter's signature. However, she did not know whether Janet had signed the application. Mrs. Tugwell testified that she had authority to take out insurance on her daughter. She also testified that her daughter did not know that she was taking out new insurance on her. Clearly, Janet did not sign the application if she did not know insurance was being taken out. Ms. Tugwell did occasionally refer to her daughter as "Janet Tugwell", as evidenced by a premium check dated September 1, 1987. The check contains the following legend: "For Janet Tugwell, Policy #8710030". The policy number was the number of the new policies Ms. Tugwell had taken out on her daughter. Clearly, within 8 months of the insurance being taken out, Ms. Tugwell knew her daughter's policy number and knew the policy was under the name of "Janet Tugwell". The only way Ms. Tugwell could have received such information is if she had possession of the new policies or had her daughter's signature placed on the insurance application. In February of 1989, Mrs. Tugwell requested duplicate policies from Gulf Life and to have the name on the policies changed to Janet T. Iturriaga. To change the name on the policies, a policy change form was required. On March 13, 1989, Janet signed the policy change form and ratified the earlier coverage. Janet testified, however, that she did not sign the policy change form. The better evidence establishes that Ms. Ituriaga did sign the policy change form and simply has forgotten that fact. It should be noted that when the duplicate policies came in, Mrs. Tugwell had an agent from another insurance company look them over. The agent allegedly told her that the Gulf Life policies were not worth anything. It was then that Mrs. Tugwell filed her complaint. Mrs. Tugwell had insurance with Gulf Life and paid premiums for approximately three (3) years. She filed claims on the coverage and accepted the benefits. It appears that the reason behind Mrs. Tugwell's complaint seems to be based on the fact that she became dissatisfied with the coverage on her daughter because she had been told that the coverage was worthless. Given the fact that the alleged misrepresentation in regards to Ms. Iturriaga's health, which was in the application, is based upon a swearing match between Mr. Petersen and Ms. Tugwell and the obvious discrepancies in Ms. Tugwell's testimony, there is simply no clear and convincing evidence to sustain a finding that Mr. Petersen made misrepresentations in the policy application or signed Janet Tugwell's name to the policy application. Finally, as with Ms. Hammontree's case, the fact that Petitioner signed the Agent's Report does not clearly and convincingly demonstrate that Petitioner knowingly made any material misrepresentations to Gulf Life, especially since Ms. Tugwell and Iturriaga ratified the coverage. Such ratification eliminates the materiality of the Agent's Report. Therefore, Count VII of the Administrative Complaint should be dismissed.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a Final Order dismissing the Administrative Complaint against the Respondent. It is further RECOMMENDED that Petitioner's application to represent Reserve Life Insurance Company and Pan-American Life Insurance Company be GRANTED. DONE and ENTERED this 9th day of July, 1991, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1991.
The Issue The issue in this case is whether the Education Practices Commission should deny Petitioner's application for a teaching certificate on the grounds that she lacks good moral character, has committed act(s) for which such a certificate could be revoked, and is guilty of gross immorality or an act of moral turpitude based on a plea of guilty to a felony and a judgment against her in a civil proceeding.
Findings Of Fact Petitioner Shirley McCallum Simmons is academically certified to be an exceptional student education (ESE) teacher and a non-native English speaking language students (ESAU) mathematics teacher. She teaches at Royal Palm Beach High School. Ms. Simmons' April 28, 2003, application for Florida Educator's Certificate Number 910106 (a permanent teaching certificate) was denied. Respondent, as Commissioner of Education and head of the Department of Education (DOE), recommends to the EPC that it deny Ms. Simmons' application for a permanent teaching certificate based on a finding that she lacks good moral character. The Amended Notice of Reasons for the denial of the application is as follows: On or about January 6 or 7, 1998, Applicant engaged in a conspiracy with others to obtain a passport through the use of false and fictitious statements. As part of this conspiracy, Applicant knowingly and unlawfully provided a false affidavit to the United States Department of State concerning her relationship to and the identity of an applicant for a passport. Applicant was indicted and charged with: Count 1, Conspiracy to Commit Passport Fraud; Count 2 (Count 5 of Indictment), Making False Statement in an Application for a Passport; and Count 3 (Count 6 of Indictment), False Statements. On or about January 28, 1998, Applicant pled guilty to Count 1. The other counts were dismissed. The court adjudicated Applicant guilty. Among other sanctions, the court placed Applicant on probation for 2 years and ordered her to pay a fine of $100.00. On or about April 1, 1997, the Applicant married Raymond Douchard, an individual she had only known briefly. Shortly thereafter, the Applicant applied for four (4) insurance policies on her husband's life totaling One Million Two Hundred Thousand Dollars ($1,200,000.00) in coverage. The policies became effective April 9, 1997, April 11, 1997, June 28, 1997 and July 1, 1997. On or about July 6, 1997, Applicant's husband was murdered as a result of a gun shot wound to his head. His body was discovered in a trunk of a vehicle parked behind a business entity in Broward County named Flanagan Lounge. Applicant immediately filed death claims with the insurance companies to collect on the policies. After a refusal of coverage, Applicant filed a federal lawsuit against one of the carriers, Shirley M. (Douchard) Simmons v. Valley Forge Life Insurance Co., Case Number 00-8514-CIV- HURLEY. Following a trial on the matter, a jury rendered its verdict on January 25, 2002 determining that the policy was properly rescinded on several basis, including that the Applicant had a murderous intent and the death of her husband was caused by the criminal acts of Applicant. Ms. Simmons has a bachelor's degree in social work from Florida State University, and a master's degree in educational leadership from Lynn University. She also received a certification in law enforcement from Palm Beach Community College, and a bachelor's degree in cosmetology from Dudley University in North Carolina. Ms. Simmons enrolled in ROTC while in college, then was commissioned as an army officer. She served in Germany until approximately 1986 or 1987. When Ms. Simmons returned to the United States and left military service, she was employed with the Palm Beach County Sheriff's Department for five to six years. To avoid working night shifts after her son was born in 1989, Ms. Simmons decided to go into business for herself. Ms. Simmons opened a salon called The Beauty Spa in 1992. At about the same time she began volunteering in public schools, received her academic certification to teach, and began work with the Palm Beach County School District. Ms. Simmons had been married and divorced twice when she met Raymond Douchard in 1995, whose name she believed was Robert Douchard. On April 1, 1997, Ms. Simmons and Mr. Douchard were married, but they never lived together. Ms. Simmons said they never lived together because he lied to her, including about his real name before they got married. He would also, according to Ms. Simmons, disappear for three or four days, telling her he was with a friend or cousin in Boca Raton. She felt there was something wrong or suspicious. Mr. Douchard was an automobile mechanic. Ms. Simmons testified that he told her that he was involved in stealing vehicles and sending them to Haiti. In March 1997, before they married, Mr. Douchard obtained three separate life insurance policies, each for $300,000, with Ms. Simmons as the beneficiary. Ms. Simmons was the owner of a fourth policy, also for $300,000.00 naming Mr. Douchard as the insured and Ms. Simmons the beneficiary. Ms. Simmons testified that the policy was intended to put her at ease because she did not trust Mr. Duchard. Although they were not married at the time, Ms. Simmons signed the Midlife application as beneficiary using the name Shirley Douchard. Her claim that it was after her marriage and that someone else back dated the application to "3/27/97" is not credible. Other policies were signed "Shirley Simmons, Fiance." Ms. Simmons said that Mr. Douchard set up appointments on March 27, 1997, with a life insurance agent who came to her salon, and prepared the applications for the policies. Ms. Simmons testified that she knew the policies had a two-year contestable period in the event of a death because she had similar policies on her former husbands. At least one insurance company was paid with a check drawn on the account of The Beauty Spa. On Sunday evening, July 6, 1997, at approximately 10:00 p.m., the body of Raymond Douchard was found in the trunk of a car parked behind a place called "Flanigan's Lounge" in Broward County. He had been shot in the head while in the trunk. The medical examiner estimated that the time of death was between 12:00 a.m. and 6:00 a.m., the morning of July 6, 1997. Homicide detective Glenn Bukata informed Ms. Simmons of Mr. Douchard's death and interviewed her at The Beauty Spa and at her home on the evening of July 8, 1997. She told him that she had last seen Mr. Douchard after she beeped him and he came to The Beauty Spa between 11:00 p.m. and 12:00 a.m. the evening of Saturday, July 5, 1997. After he was with her for approximately 45 minutes, Ms. Simmons said Mr. Douchard received another page on his beeper and left. During the homicide investigation, Ms. Simmons was interviewed at least ten more times, including the longest questioning for 12 to 14 hours that lasted from 12:15 p.m. until 2:15 a.m. Detective Bukata found Ms. Simmons various statements to be evasive and contradictory. Although her stories about who might have been responsible for Mr. Douchard's death changed, Ms. Simmons never admitted that she was guilty or involved. On December 11, 1997, Ms. Simmons was married for a fourth time to Deniche Altime, a Haitian immigrant who was in the United States illegally. Ms. Simmons took Mr. Altime to the passport office in Miami to apply for a passport, where he used her nephew's name and identification. Ms. Simmons initially testified that she only signed the United States Department of State Affidavit Identifying Witness, in support of the passport application claiming to be Mr. Altime's aunt, who had known him for 20 years. At the hearing, she conceded that, in addition to her signature, the handwriting filling out the affidavit also could be hers. Ms. Simmons said she was complicit in the passport misrepresentation because Mr. Altime became violent after they married, always carried a gun, and she was afraid of him. When Mr. Altime returned to the federal office to pick up his passport, he was arrested and subsequently deported. Ms. Simmons was arrested and charged with conspiracy to commit passport fraud. On January 29, 1998, she pled guilty to one count in violation of 18 USC § 371. She was placed on probation for two years, prohibited from possessing a firearm, and assessed a penalty of $100. At the time she entered her guilty plea, court documents indicate that Ms. Simmons was represented by counsel. Other than her self-serving testimony, which is rejected, there is no evidence that Ms. Simmons did not understand her plea of guilty to conspiracy to commit passport fraud or that she claimed, after he was deported, that her crime was based on a fear of Mr. Altime. After Ms. Simmons was released from federal custody, she was arrested by Broward County authorities and charged with first degree murder in the death of Mr. Douchard. She was in jail for about two years with no bond. Having been born in Jamaica, Ms. Simmons was considered at risk for fleeing the country. Ms. Simmons was tried for murder and, at the conclusion of the prosecution's case, the defense motion for judgment of acquittal was granted. After the murder charges were dismissed, Ms. Simmons filed suit against Valley Forge Life Insurance Company, Midland Insurance Company, Jackson National Life Insurance Company, and Primerica Life Insurance Company in 2000, to collect on the policies that named Raymond Douchard as the insured. Primerica settled before trial. On January 25, 2002, a jury verdict was entered against Ms. Simmons based on findings of "Material misrepresentations, fraud in policy application, murderous intent of beneficiary, and disenfranchisement - Florida Slayer Statute." Ms. Simmons filed for bankruptcy to discharge a judgment against her for $13,845 in the civil case and debts that she said accumulated during her two years in jail. There is evidence, however, that her testimony that she had good credit in March and April 1997, when she married Mr. Douchard was not the truth. Lieutenant Jeffrey Jackson worked with Ms. Simmons at the Sheriff's Department for approximately five-to-seven years, beginning in 1989 or 1990. He recalled that she was a good employee, who handled the different inmate population in her assigned housing unit well. Sheila Henry, a principal with the Palm Beach County School District for 27 years, was the principal at Royal Palm Beach High School for the two years (2004-2006) that Ms. Simmons worked there. Ms. Henry described Ms. Simmons as a good employee, who taught ESE classes, with no complaints from students or parents. Ms. Simmons' evaluations support a finding that she is a competent teacher. Ms. Henry was not aware of any civil or criminal proceedings against Ms. Simmons.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Education Practices Commission deny the application of Shirley Simmons for a permanent educator's certificate. DONE AND ENTERED this 6th day of October, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 6th day of October, 2009. COPIES FURNISHED: Kathleen M. Richards, Executive Director Education Practices Commission Department of Education 325 West Gaines Street, Room 224 Tallahassee, Florida 32399-0400 Deborah K. Kearney, General Counsel Department of Education Turlington Building, Suite 1244 325 West Gaines Street Tallahassee, Florida 32399-0400 Marian Lambeth, Bureau Chief Bureau of Professional Practices Services Department of Education Turlington Building, Suite 224-E 325 West Gaines Street Tallahassee, Florida 32399-0400 Charles T. Whitelock, Esquire Whitelock & Associates, P.A. 300 Southeast 13th Street Fort Lauderdale, Florida 33316 Thomas Johnson, Esquire Johnson, Haynes & Miller, P.A. 510 Vonderburg Drive, Suite 305 Brandon, Florida 33511
The Issue The issue to be resolved in this proceeding concerns whether the Respondent violated various provisions of the Florida Insurance Code, as alleged in the Amended Administrative Complaint, and if so, what penalty, if any, is warranted.
Findings Of Fact The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of insurance and with regulating the practice of agents and other insurance professionals already licensed by the State of Florida. The Respondent, at all times pertinent hereto, was and is licensed by the State of Florida as a non-resident life and health insurance agent. The Respondent procured applications for life insurance to be issued from Pacific to the 30 named individuals and entities set forth in the Amended Administrative Complaint in its 25 counts. Pacific was not authorized to transact insurance business in the State of Florida because the company was not yet licensed. However, it was in the process of becoming licensed and licensure was imminent. The company Regional Director, C. Manley Denton, and other company officials, when they recruited the Respondent to sell insurance policies in Florida, assured him that licensure was imminent, that there was no impediment to finalization of the licensure procedures in the very near future, and that the Respondent could legally obtain life insurance policy applications and sell policies in Florida if he took the applications and dated them in and from his Tulsa, Oklahoma, office. He was assured that this procedure would render his activities legal. In reliance on these representations by officials of Pacific, the Respondent undertook to and did obtain the applications for, and sell the insurance policies, referenced above and in the Amended Administrative Complaint. The Respondent, for many years, has transacted insurance business as a general agent of life and health insurance in Oklahoma and in Florida. He is a resident of both states, spending part of each year in each state. Many of the policyholders referenced above and in the Amended Administrative Complaint were clients of the Respondent, who had already had other insurance policies issued by him through companies he represents. In the particular instances involved in this proceeding, many of these clients had been policyholders of the First Capital Life Insurance Company, which had experienced financial difficulties and gone into receivership. Because of his policyholders' concern and his own concern about the possibility of the future inability to pay claims by the company in receivership, the affected clients and the Respondent were desirous of replacing those policies with policies in a different and sounder insurance company. This desire dovetailed neatly with the desire by the executives at Pacific to obtain a large block of insurance policy business in Florida and in other states in the mainland United States. This desire by Pacific executives was due to a recent merger of that company with the Hawaiian Life Insurance Company, a company which was owned by Meiji Mutual Life of Tokyo Japan (Meiji). The resulting merged company, Pacific, was owned by Meiji. The executives at Pacific, which had historically been headquartered in San Jose, California, desired to continue to maintain the company domicile and their own personal residences in California and avoid having to relocate to Hawaii. This was the reason they desired to secure a large block of insurance business very rapidly in order to enhance the sales record of the "stateside branch" of the company. They believed that this would insure that their relocation would not have to be accomplished. With this interest in the forefront of their plans, the executives of Pacific began to search for the best insurance agents in the nation who have a record of successfully writing large volumes of life insurance policy business. The Respondent is such an insurance agent. He had recently achieved a nationally-recognized ranking as one of the highest volume life insurance producer agents in the country. Because the Respondent was desirous of placing a high-dollar volume of life insurance policies for the clients referenced above, who had had policies in the financially-troubled First Capital Life Insurance Company, the Respondent agreed, at the behest of the officials of Pacific, to attempt to write a large block of life insurance business in the State of Florida. The Respondent is a well-respected general life insurance and health insurance agent. He is widely known throughout the insurance profession and industry, throughout the United States, as an ethical, competent and successful life insurance policy producer. He has no blemish on his licensure and practice record as an agent, throughout the approximate 40 years he has engaged in the profession. When the Respondent obtained the insurance policy applications and policies at issue in this proceeding, he engaged in one course of conduct. That is, he contacted the clients and obtained their applications and arranged for the sale of the insurance policy contracts to them, as either new policies and clients, or as replacement policies for his existing clients, as the case might be. He engaged in this essentially-identical transaction with all 30 of these policyholders, in the genuine, good-faith belief that he was legally writing insurance policy business in the State of Florida based upon the circumstances related to him by officials of Pacific, upon which he relied. He candidly acknowledges, through counsel, that, in so relying, he knew that the company was not actually licensed in the State of Florida, but that that eventuality was imminent in the very near future, and that based upon the method the company assured him of writing the policies through the Tulsa, Oklahoma, office, he would be obtaining and transacting this business in a legally acceptable way. He also candidly acknowledges that, in fact, he understands, from his contact with the Department since that time, this was not the case and that he was writing the business for a company not legally authorized to do business in the State of Florida. The Respondent has freely admitted these above-found facts and does not dispute that he was in violation of the portion of the charges that do not depend on intent. He has established, however, through the exhibits admitted as explanatory hearsay and the agreed-upon proffer of his counsel, that the transactions at issue, all of which were the result of one essentially-identical course of conduct, were accomplished with no intent to defraud the policyholders, the company, or the Florida Department of Insurance. There was no willful, dishonest or deceitful intent by the Respondent during the course of his engagement in these transactions. There was no such willful wrongful intent in the course of his contact and relations with the company, those policyholders, or the Department of Insurance since that time. No policyholder or company suffered any financial detriment as a result of the Respondent's conduct, nor did any insurance coverage lapse at any time. Although there were some 30 policyholders who were sold insurance by the Respondent, as the agent for a company not actually licensed in the State of Florida, that circumstance had no effect on the validity of the policy coverages involved and there were no actual "victims" of the Respondent's conduct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Petitioner, Department of Insurance, finding the Respondent, Wayne Harland Creasy, guilty of a violation of Section 626.901(1), Florida Statutes, in the manner found and concluded above and that a penalty of $3,000.00 be imposed, together with the award of $500.00 in attorney's fees. DONE AND ENTERED this 1st day of April, 1996, in Tallahassee, Florida. P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 1996. APPENDIX TO RECOMMENDED ORDER Petitioner's Proposed Findings of Fact 1-32. Accepted. Rejected, as constituting a conclusion of law and not a finding of fact. Accepted, in part, but subordinate to the Hearing Officer's findings of fact on this subject matter. Accepted, in a technical sense, but not in the sense that any overt, intentional effort to circumvent Florida law was committed by the Respondent. Rather, it was a negligent failure to act in a legal way due to being misled by Pacific Guardian Life Insurance Company, Ltd. or its officers or employees. Accepted, as to the factual allegations of the Administrative Complaint, but not as to their legal import, and subordinate to the Hearing Officer's findings of fact on this subject matter. Respondent's Proposed Findings of Fact The Respondent's proposed findings of fact are not ruled upon or considered because they were not timely filed, being approximately one month out of time with no motion for extension of time, during the originally-set time period, being filed. Consequently, the Petitioner's motion to strike the Respondent's proposed findings of fact and conclusions of law is granted. COPIES FURNISHED: Willis F. Melvin, Jr., Esquire Department of Insurance and Treasurer Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 C. Rabon Martin, Esquire Martin and Associates 403 South Cheyenne Avenue Tulsa, Oklahoma 74103 Bill Nelson, State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue for consideration in this case is whether the Respondent's license as a viatical settlement provider in Florida should be disciplined because of the matters alleged in the Administrative Complaint dated June 29, 2000.
Findings Of Fact At all times relevant to the issues herein, the Petitioner, Department of Insurance (Department), was the state agency in Florida responsible for the licensing of viatical settlement providers and the regulation of the viatical settlement industry in this state. The Respondent, Accelerated Benefits Corporation (ABC), was licensed as a viatical settlement provider in Florida. Pursuant to an investigative subpoena issued by the Department, in November and December 1999, investigators of the Department examined the records of the Respondent, as well as other viatical settlement providers operating within the state, looking into the viatical settlement industry's practices in Florida. As a part of the investigation, Janice S. Davis, an examiner/analyst with the Department, copied records of the Respondent relating to at least six individual viatical settlement transactions in which the Respondent was involved. These files relate to Counts 5 through 7 and 9 through 11 of the Administrative complaint. Ms. Davis also obtained from the Respondent the information regarding the location of several other cases, the files for which had been confiscated by the Statewide Prosecutor as a part of an ongoing investigation into the viatical settlement industry, and subsequently obtained copies of those files from the office of the Statewide Prosecutor. Those files relate to Counts 1 through 4 and 8 of the Administrative Complaint. As outlined in Count Five of the Administrative Complaint, in May 1998, D.K. applied to The United States Life Insurance Company (US Life) for a $250,000 life insurance policy. As a part of the policy application, D.K. stated that he had not consulted with any physician or other practitioner within the five years prior to the application. On July 29, 1998, Life Benefit Services (LBS), a viatical settlement broker used by ABC, obtained a "Confidential Application Form" completed by D.K. which revealed that sometime in 1982, D.K. had been diagnosed as HIV positive. LBS prepared a "Policy Summary Sheet" regarding D.K.'s application on which it noted that D.K. had been diagnosed with HIV/AIDS. LBS also had records from D.K.'s physician reflecting that D.K. had been under a doctor's care during the preceding five years. The policy was issued to D.K. on or about August 1, 1998. Notwithstanding the information it had on hand, LBS brokered the sale of the instant policy to ABC. On or about August 25, 1998, D.K. and the Respondent entered into a contract which called for the Respondent to purchase D.K.'s $250,000 life insurance policy for $25,000. At that point, the policy was still contestable. As a part of the transaction, the Respondent gave D.K. written instructions not to contact his insurance company until advised to do so by ABC. The Respondent also had D.K. sign an addendum to the purchase contract in which he agreed to not advise US Life that he had sold his policy and acknowledged his recognition that his life insurance policy was still contestable. D.K. was also asked and agreed to sign an undated change of ownership form for use by ABC at the expiration of the period of contestability. While the policy was still contestable, an employee of the Respondent, Jennifer Grinstead, paid the annual premium on the policy out of her personal checking account. This served to conceal the fact that D.K. had sold the policy to the Respondent. Ms. Grinstead was reimbursed for the premium payment by American Title Company of Orlando. American Title was the Respondent's trustee. The Respondent did not report any of the information it had regarding D.K.'s actual health history to US Life or the Department. A review of the documentation related to this transaction reflected that the Respondent purchased the policy rights from D.K. after it knew, or with the exercise of reasonable diligence should have known, that D.K. had made material misrepresentations regarding his health to US Life, and nonetheless attempted to conceal those misrepresentation from US Life. With regard to Count Six, the evidence of record indicates that on May 4, 1997, W.E. applied for a $45,000 life insurance policy from Life USA Insurance Company (Life USA). On the application form he signed and submitted, W.E. specifically stated he had not received any medical or surgical advice or treatment within the preceding five years, had not been advised by a medical doctor that he had AIDS or ARC, and was not, at the time, taking any medication. Based on the representations made by W.E., the policy was issued on November 12, 1997. Notwithstanding the representations made by W.E. to Life USA, W.E. also advised United Viatical Settlements (UVS), the settlement broker used by the Respondent, on December 17, 1997, through a corollary application form, that he had been diagnosed with HIV "a few years ago," and several different other forms utilized by the Respondent reflect that the Respondent knew W.E. had AIDS or HIV, and was under a doctor's treatment for the condition during the preceding five years. Nonetheless, UVS brokered the sale of this policy to the Respondent. In late December 1997, at which time the policy was still contestable, the Respondent entered into a contract with W.E. for the purchase of the $45,000 policy for $4,914.25. As a part of the sales procedure, the Respondent issued to W.E. instructions not to contact his insurance company until instructed to do so by the Respondent's representative, and it also had W.E. sign an addendum to the purchase agreement in which W.E. acknowledged that the policy in issue was still contestable. W.E. was also asked to agree not to inform Life USA of the sale of the policy to the Respondent and to sign an undated change of ownership form for use by the Respondent to transfer ownership when the contestability period had expired. The arrangement between the Respondent and W.E. called for Jennifer Grinstead to pay the annual premium on the policy for W.E. from her personal account and to receive reimbursement for those payments from American Title Company, the Respondent's trustee. This arrangement served to conceal from Life USA the fact that W.E. had sold the policy to the Respondent. The Respondent did not report the fact that it had knowledge of W.E.'s medical condition to the Department. The evidence of record reflects that at the time of the purchase of W.E.'s policy, the Respondent knew or should have known that W.E. had made material misrepresentations regarding his medical state to Life USA on his application for life insurance from that company, and it thereafter took actions which served to conceal those material misrepresentations from the company. In the Case of Count Seven, on April 26, 1997, A.T. applied for a life insurance policy from Lincoln Benefit Life (Lincoln) in the amount of $48,000. On the application form, A.T. specifically stated that he had not been under medical observation or treatment within the preceding five years, and that he had not been diagnosed as having AIDS or ARC, or tested positively for HIV. The policy was issued by the company on or about June 2, 1997. Notwithstanding those representations, on January 14, 1998, Medical Escrow Society, a viatical broker used by the Respondent in its dealing with Lincoln, received an application form from A.T. on which A.T. indicated he had tested positive for HIV on August 8, 1989, had been diagnosed with AIDS ON August 10, 1994, and was under the care of a physician. Medical Escrow Society nonetheless brokered the sale of the policy to the Respondent. Shortly after the contestability period on this policy expired. On June 25, 1999, the owner of the policy, Ralph Cahall, entered into a contract with the Respondent whereby the Respondent bought Cahall's interest in the proceeds for $29,238.72. At the Respondent's request, ownership of the policy was changed from Cahall to American Title Company of Orlando, the Respondent's trustee without either Lincoln or the Department being informed of the transfer. The file relating to this policy indicates that the Respondent brought about the transfer from Cahall after it knew or, in the exercise of reasonable diligence should have known, that A.T. had made material misrepresentations regarding his health on the application to Lincoln, and that the Respondent, though it did not report what it knew to the Department, also thereafter undertook a course of action which was designed to conceal that information from Lincoln. With regard to Count Nine, the evidence indicates that on or about September 30, 1996, R.M. submitted an application for a $100,000 life insurance policy to Interstate Assurance Company (Interstate). On the application, R.M. indicated he had not been diagnosed with an immune system disorder within the preceding ten years, and the policy was issued on October 9, 1996. Notwithstanding that representation, on July 18, 1997, R.M. completed an application form for Benefits America, a broker used by the Respondent with regard to this policy, in which he stated he had been tested positive for HIV on February 11, 1994. A "Policy Acquisition Worksheet" utilized by the Respondent on or about July 22, 1997, when R.M. was dealing with Benefits America regarding the viatication of his life insurance policy, reflects that the company was aware at that time that R.M. had been diagnosed with HIV in 1994. Even with that knowledge, the Respondent went through with the viatication, and on July 31, 1997, while the policy was still within the contestability period, bought the policy for $15,430. On August 4, 1997, R.M. executed an addendum to the purchase agreement at the behest of the Respondent, wherein he recognized the policy was still contestable and agreed, among other things, not to contact his insurance company or tell them he had sold the policy to a viatical settlement provider. He also was asked to sign, and signed, an undated change of ownership agreement for use by the Respondent at the end of the contestability period. Jennifer Grinstead, an employee of the Respondent, paid R.M.'s annual premium on the policy during the contestibility period out of her personal checking account. This action, when done in conjunction with R.M.'s failure to advise the insurance company of the sale, served to conceal the transfer of ownership from R.M. to the Respondent. Ms. Grinstead was reimbursed for the premium payments by the Respondent's trustee. The Respondent did not report to Interstate or to the Department that R.M. had made material misrepresentations regarding his health in procuring the issuance of the policy even though it knew or, in the exercise of due diligence, should have known that the material misrepresentations had been made. As to Count Ten, on May 12, 1997, J.R. submitted an application to Interstate for a life insurance policy on his life in the amount of $980,000. On his application, J.R. indicated he had not been diagnosed with an immune system disorder within the preceding ten years, had not been treated by a member of the medical profession in the preceding five years, and was not, at the time, on medication or undergoing treatment or therapy. The policy was issued on May 19, 1997. Notwithstanding those representations, on July 9, 1997, J.R. filled out an application form for the Respondent's broker for this transaction, Life Benefit Services, on which he indicated he had been diagnosed as HIV positive in May 1996. A "Mortality Profile" provided to the Respondent by AVS indicated that J.R. was first diagnosed as being HIV positive in August 1995, nine months or so earlier than he admitted, and that he had been undergoing treatment by a doctor and receiving medications well within the five years preceding the application. On August 20, 1997, J.R. entered into a contract with the Respondent calling for the sale of this insurance policy to ABC for a net sum of $107,800. At this point, the policy was still contestable. At that time, the Respondent instructed J.R. in writing not to contact his insurance company until told to do so by the Respondent's representative. The Respondent also had J.R. sign an addendum to the purchase agreement in which he acknowledged the policy was still contestable, that he would not inform Interstate of the sale, and that he would sign an undated change of ownership form for use by ABC when the contestability period expired. Notwithstanding that the Respondent knew of the material misrepresentations made by J.R. as to his health when he procured the policy, it did not report what it knew to the Department, and took steps to insure Interstate was not informed of what was going on. With regard to Count Eleven, on May 16, 1996, the same J.R. applied to Massachusetts General Life Insurance Company, later, Conseco Life Insurance Company (Conseco), for a $99,900 life insurance policy. On his application, J.R. stated he had never had any medical tests or any known indication of diseases, conditions, or physical disorders which were not mentioned on the form. AIDS, ARC, and HIV positive were not mentioned on the form, and if known to have been present, should have been noted. About a year and three months later, on July 9, 1997, J.R. submitted an application form to Life Benefit Services, the broker used by ABC on this policy, on which he stated he had tested positive for HIV in May of 1996. By letter dated July 28, 1997, Life Benefit Services advised ABC that J.R. was terminally ill and had been on medication and undergoing treatment by a physician within the preceding five years. In addition to this information, the Respondent had available to it the information regarding J.R.'s condition discovered as a result of the purchase of the Interstate policy. Notwithstanding this knowledge, on September 17, 1997, while the policy was still contestable, ABC purchased the Conseco policy from J.R. for the net sum of $13,986. By letter dated September 17, 1997, the Respondent advised J.R. not to contact his insurance company until instructed to do so by Ms. Holman, the Respondent's Director of Contracts, and requested he execute an addendum acknowledging those instructions and that the Conseco policy was still contestable. He was also asked to agree to sign an undated change of ownership assignment for use by ABC after the contestability period had expired. While the policy remained contestable, the annual premiums due from J.R. were paid from her personal checking account by Ms. Grinstead, an ABC employee, who was reimbursed therefor by American Title, ABC's trustee. None of the above information was reported by the Respondent to Conseco or the Department even though it knew or, with the exercise of reasonable diligence should have known that J.R. had made material misrepresentations regarding his physical health in his application for life insurance to Massachusetts General Life Insurance company, and it appears the Respondent attempted to conceal those misrepresentations from Conseco.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Insurance enter a Final Order dismissing Counts One through Four and Eight of the Administrative Complaint, but finding the Respondent guilty of Counts Five though Seven and Nine through Eleven of the Complaint, and both revoking its license and its eligibility for licensure as a viatical settlement provider in Florida. DONE AND ENTERED this 28th day of December, 2000, in Tallahassee, Leon County, Florida. ___________________________________ ARNOLD H. POLLOCK 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 2000. COPIES FURNISHED: Michael H. Davidson, Esquire Department of Insurance 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Mark K. Logan, Esquire Smith, Ballard & Logan, P.A. 403 East Park Avenue Tallahassee, Florida 32301 The Honorable Bill Nelson State Treasurer/Insurance Commissioner The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
