The Issue Whether Respondent, a licensed insurance agent, committed the offenses alleged in the Amended Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is a licensing and regulatory agency of the State of Florida charged with the responsibility and duty to enforce the provisions of the Florida Insurance Code, which consists of Chapters 624-632, 634, 635, 641, 642, 648, and 651, Florida Statutes. See Section 624.307(1), Florida Statutes. Respondent has been continuously licensed in the State of Florida as a life insurance agent (a 2-16 license) and a general license agent (a 2-20 license) since March 1974, and continuously as a RPCJUA insurance agent (a 00-17 license) since March 1993. On November 4, 1996, Respondent was charged with possession of cocaine in violation of Section 893.13(6)(a), Florida Statutes. This charge, filed in Palm Beach County Circuit Court and assigned Case Number 96-12206 CFA02, is a third degree felony. On May 14, 1997, Respondent entered a plea of nolo contendere to the charge of possession of cocaine, which was accepted. Adjudication of guilt was withheld and Respondent was placed on probation for a period of 18 months. The terms and conditions of Respondent's probation included working at a lawful occupation, intensive drug and alcohol evaluation, successful completion of any recommended treatment, payment of a fine in the amount of $250.00 and court costs in the amount of $461.00, performance of 100 hours of community service, random testing for the use of alcohol and drugs, six months' suspension of driver's license, and DUI school. Respondent successfully completed his probation on November 13, 1998. Respondent continued to work as an insurance agent during the term of his probation. Respondent voluntarily reported the incident to State Farm shortly after its occurrence. As a result, State Farm placed Respondent on probation and conducted a series of random alcohol and drug tests, which Respondent satisfactorily completed. Section 626.621(11), Florida Statutes, provides that the following constitutes grounds for the discretionary discipline of an agent's licensure: (11) Failure to inform the department in writing within 30 days after pleading guilty or nolo contendere to, or being convicted or found guilty of, any felony or a crime punishable by imprisonment of 1 year or more under the law of the United States or of any state thereof, or under the law of any other country without regard to whether a judgment of conviction has been entered by the court having jurisdiction of the case. Respondent failed to report to Petitioner within 30 days of doing so that he entered a plea of nolo contendere to a third degree felony charge of possession of cocaine in Case Number 96-12206 CFA02 on May 14, 1997. On or about March 18, 1998, Respondent applied for licensure as a Variable Annuity Insurance Agent (a 2-19 license). That application contained Question 18, which provides as follows and to which Respondent answered "yes": Have you ever been convicted, found guilty, or pleaded guilty or nolo contendere (no contest) to a felony under the laws of any municipality, county, state, territory or country, whether or not a judgment of conviction has been entered. As a result of his answer to Question 18, Petitioner started an investigation, with which Respondent fully cooperated. As a result of that investigation, Petitioner learned the details of Respondent's plea in the criminal proceeding. Respondent testified, credibly, that he did not timely report the entry of his plea in the criminal proceeding because he did not know he was required to do so. 1/ Respondent has continuously worked as an insurance agent licensed by Petitioner in the State of Florida since March 1974. Respondent has been continuously appointed by State Farm and has built up a successful insurance business. This proceeding is the first disciplinary proceeding brought against Respondent's insurance licenses. There have been no other complaints filed by anyone in this state against Respondent's insurance licenses. Respondent's insurance licenses have not been previously disciplined in the State of Florida. The testimony of Respondent's witnesses established that he enjoys a good reputation for honesty, trustworthiness, truthfulness, and integrity in his community. He has engaged in charitable works, including work with the food bank, the Guardian Ad Litem Program, and Brazilian Indians. Respondent's witnesses also established that they had been pleased with their business dealings with Respondent, and that he has the ability and trustworthiness to successfully engage in the business of insurance. Respondent testified that State Farm will terminate his appointment as an agent if his license is suspended. Respondent testified that he will lose his business and his employees will lose their employment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of violating Section 626.621(8), Florida Statutes, as alleged in Count I of the Amended Administrative Complaint, and guilty of violating Section 626.621(11), Florida Statutes, as alleged in Count II of the Amended Administrative Complaint. It is further recommended that Respondent's licensure as an insurance agent be suspended for two months for the violation of Count I and for three months for the violation of Count II, to run concurrently. DONE AND ENTERED this 30th day of June, 2000, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 30th day of June, 2000.
Findings Of Fact James Edward Snapp is licensed by the Department of Insurance as an Ordinary Life, including Disability Agent, Dental Agent and Disability Agent and was so licensed at all times in 1981 and 1982 in his dealings with Mrs. Mabel McCarthy and Mr. George Guertin. In July 1981 Respondent went to the apartment of Mabel McCarthy, a 79- year-old widow, and talked to her about insurance. His visit was unsolicited and Mrs. McCarthy initially told him she had adequate coverage with her Medicare, Medicaid and Blue Cross. Respondent discussed the issuance of a "gold" card which provided better coverage than she was presently receiving. They also discussed her $1,000 life insurance policy for which she had designated the Haven School in Miami as beneficiary. When she indicated she would also like to leave something to another school in Palm Beach County, Respondent suggested she cancel the $1,000 policy and take out two $5,000 policies and make each school beneficiary of one policy. Following Respondent's assertions to Mrs. McCarthy regarding her taking out different insurance policies, Mrs. McCarthy gave Respondent her check on 26 July 1981 in the amount of $1,100 made payable to Accident & Health Agency, the agent for whom Respondent worked. Mrs. McCarthy understood this to be the premium payment for the life insurance and hospitalization insurance policies. Respondent told Mrs. McCarthy the cash surrender value of her life insurance policy should be about $900. When she wrote Mutual of Omaha about the cash surrender value, she was advised it was nearer $700 and the company questioned her reasons for cancelling the policy. This aroused Mrs. McCarthy's suspicions and she called the Insurance Commissioner's branch office to inquire about Respondent. Up until this time she had full confidence in Respondent. In the application for health insurance for Mrs. McCarthy which Respondent subsequently submitted 12 July 1981 to American Sun Life Insurance Company, he checked the "no" square to the question "Is the insurance applied for intended to replace any insurance presently in force?" knowing he had suggested to Mrs. McCarthy this policy would replace her Blue Cross insurance policy. The total premium on these policies, one providing for medical expenses and the other providing for nursing home care, is $530. American Sun Life Insurance Company does not sell life insurance. On 28 July 1981 Respondent again visited Mrs. McCarthy, obtained her check in the amount of $380 made payable to Accident & Health Agency, and submitted an application to American Sun Life Insurance Company on behalf of Mrs. McCarthy which provides hospital and medical benefits. On this application he also checked the "no" square to the question about replacing existing insurance. The annual premium for this policy was $370. Mrs. McCarthy also gave Respondent a check in the amount of $500 payable to Accident & Health Agency for additional policies. Before this check had been cleared, Mrs. McCarthy received the first policies Respondent had sold her and realized they were no different from her prior coverage, no "gold" card was included and neither was a life insurance policy. Upon receipt of these policies on 11 August 1981 Mrs. McCarthy stopped payment on the $500 check and again called the Insurance Commissioner's office. When the Insurance Commissioner contacted American Sun Life Insurance Company with Mrs. McCarthy's complaint, they refunded $900 to Mrs. McCarthy for the policies they had issued. Those policies were for the maximum coverage Sun Life provides. The three policies issued by Orange State Life Insurance for various health care benefits were those applied for when the $500 check was written by Mrs. McCarthy and these policies were cancelled when payment was stopped on that check. The total premium for these policies was $449.99 plus a $26 policy fee. Respondent obtained the name of George Guertin as a potential client and called him for an appointment to discuss insurance. Upon arrival 18 January 1982 shortly after the phone call, Respondent looked at two policies Guertin showed him covering Medicare Supplemental payments on Guertin and his wife. These policies were issued by Tara Life Insurance Company. Respondent told Guertin that the agent who sold him these policies had charged top price and he could get these policies for him at a lower premium. The premium paid on the policy issued to George Guertin was $482 and the premium on the policy issued to Alma Guertin was $445. Respondent was not authorized to solicit policies for Tara. Guertin gave Respondent his check payable to J. Snapp in the amount of $540 to renew the two policies with Tara Life Insurance Company. Guertin also gave Respondent his life insurance policy issued on John Hancock Mutual Life Insurance Company to inquire about the cash surrender value. This policy was later returned to Guertin without change. Respondent's testimony that the $540 was for services he was to provide the Guertins in preparing Medicare claims and that the Guertins understood this at the time the check was signed, is not credible. George Guertin was born in Canada in 1903 but has lived in the United States for 65 years. Although he went to school in Canada through the eighth grade, he does not read English. George's brother Eme apparently lived with the Guertins and was disabled. Respondent offered to take Eme to the Veteran's Administration to get his disability pension increased. He was paid $250 for this service and for taking Eme to the VA on other occasions. Guertin testified that the signature on Exhibit 12 was not his signature and that on Exhibit 13 was not his wife's signature. Respondent testified that these "contracts" were signed by George Guertin and Alma Guertin in his presence. Regardless of the validity of the signatures, these "contracts" provide that compensation [of Respondent] shall be determined by mutual agreement. There was no mutuality of agreement that the $540 paid by Guertin to Respondent was for services to be rendered by Respondent in completing Medicare forms. When Guertin was advised by Tara Life Insurance Company that his policies were about to lapse for nonpayment of premiums, he realized Respondent had not renewed these policies as he was told Respondent would do, he complained to the Insurance Commissioner's office, and he sent premium payments to Tara. Respondent suffered injuries while serving in the Marine Corps in Korea. He was discharged with a 35 percent disability rating in 1955 and since that time he has been treated from time to time in VA facilities. He has had several heart attacks, five according to Respondent's testimony, and takes a wide variety of medication. In his testimony Respondent admitted that he only sold insurance and left the doing of the paperwork associated with these policies to the agency for whom he works. He does not keep records of his insurance transactions because he has a "real tough time" doing so. He leaves those chores to the agency.
Findings Of Fact The Respondent, Emory Daniel Jones, was not involved or engaged in the insurance business prior to August, 1977. (Tr. 177.) In approximately August of 1977, United Sun Life Insurance Company (USL) hired Respondent as an agent. (Tr. 176, 177.) Respondent passed the insurance test administered by the State of Florida in August, 1977, and was scheduled for a seminar given by USL. (Tr. 178.) In late August, 1977, Respondent attended a three-day seminar established by USL for all its new agents. (Tr. 178.) At this seminar, USL taught the agents about a policy known as T.O.P. This was the only policy taught to the agents even though USL had other policies available. (Tr. 128.) The T.O.P. contract is a life insurance policy. This policy has two primary benefits. (Tr. 230, 231.) The first is the death benefit provided by all life insurance policies. Under the death benefit provision, the owner of the T.O.P. pays a premium to USL. When the insured dies, USL will pay the death benefit (money) to the beneficiary listed on the policy. (Tr. 128, 251.) The second major benefit provided by the T.O.P. is the life benefit feature. (Tr. 251.) The T.O.P. is an insurance policy which provides for the payment of dividends to the owner of the policy. The T.O.P contract states that the owner will share in the divisible surplus earnings of USL as determined by the Board of Directors. (Tr. 120; contract page 5, Exhibit #3.) The dividends were to be paid after the second year. (Tr. 129, 130.) The owner would participate in the divisible surplus earnings of USL through the payment of a dividend. (Tr. 129, 188.) As long as the T.O.P. was in effect, the owner would receive these dividends. USL developed a presentation to be given by the agents to prospective customers. This presentation was taught in the training session by USL. (Tr. 183, 249, 260, 270.) The agents were to memorize the presentation and were not to vary from the wording when they were attempting to sell the T.O.P. to prospective customers. (Tr. 185, 249.) The presentation taught by USL stressed the life benefit feature of the T.O.P. contract. (Tr. 251, 271.) The death benefit was only minimally covered because of the relatively high cost for the life insurance portion of the contract. This presentation further explained several features which made the T.O.P. contract life benefit provisions attractive to future customers: The T.O.P. contract owner was to participate in the divisible surplus earnings of USL. The only other persons that would also participate in the divisible earned surplus were the shareholders. (Tr. 196.) The T.O.P. contract was to be sold only to a limited number of people. After an undisclosed number of T.O.P. contracts were sold, the T.O.P. contract was to be taken off the market. (Tr. 234, 261, 276.) USL was not going to sell or issue any other policies which would participate in the divisible earned surplus of USL. (Tr. 234, 255, 261, 276.) USL would grow (increase its divisible earned surplus) by selling policies other than the T.O.P. contract. The more policies that were sold, the greater the divisible surplus earnings that would be available to the T.O.P. contract owners for dividends. (Tr. 196, 276.) Since the T.O.P. owners were limited and no other participating policies were to be issued, the T.O.P. owners would share in any increases in the divisible surplus earnings of USL. The greater the number of policies sold, the greater the dividends. The T.O.P. owners were then solicited to help the agents sell insurance policies of USL to their friends. This help would reduce the cost of advertising and increase the sales of insurance. The lower expenses and greater volume would mean more divisible surplus earnings in USL and greater dividends available to the T.O.P. owners. (Tr. 201.) To illustrate these points, USL taught the agents to draw circles representing other insurance policy owners. Lines were then drawn from these circles to the T.O.P. owner's circle. The lines between the circles represented the premiums paid on the other policies, which would increase divisible surplus earnings that would increase the dividends of the T.O.P. owners. (Tr. 196, 232, 263, 270.) USL taught the agents to illustrate the features of the life benefit by dollar signs. As the agent would talk about the other policies increasing the dividends to the T.O.P. owners, he was to increase the size of the dollar sign. (Tr. 233.) The whole emphasis of this presentation was on the participating feature. Another feature emphasized in the USL presentation was that the T.O.P. owner would participate in the divisible surplus earnings of USL as long as he was alive. Therefore, the agents were to stress that the T.O.P. owner should be a younger person in the family. If that person lived 70 years, then USL would pay dividends for 69 of those 70 years. This feature of the policy was stressed in the memorized presentation. (Tr. 204, 205, 232, 233, 252, 264, 270.) In late August of 1977, Respondent attended the training session and memorized the presentation. (Tr. 181, 184, 185.) At the end of the training session, USL reviewed the Respondent's presentation and found nothing wrong. (Tr. 187.) In late August of 1977, Respondent went into the field to sell the T.O.P. contract to potential customers. (Tr. 187.) Count I On September 7, 1977, Respondent met with Louis Charles Morrison and made the USL presentation on the T.O.P. policy to Morrison. Respondent made the presentation in the way he had been taught. Morrison was aware that he was purchasing an insurance policy. He was led to believe through USL's sales presentation as given by Respondent that the participating feature of the T.O.P. policy made this policy a good investment. Morrison concluded it was not a good investment because the dividends were not as great as he had anticipated they would be. Respondent's representations to Morrison with regard to the T.O.P. policy were not false. Count II On September 12, 1977, Respondent met with Fred Menk and gave to him the USL presentation on the T.O.P. policy. Respondent gave the presentation as he had been taught. Menk was aware that he was purchasing insurance. (Tr. 51.) Respondent made no representation about future dividends. (Tr. 59.) The interest rate was represented to increase as USL grew, which it did. (Tr. 59.) Menk was dissatisfied and felt the policy was misrepresented because he did not get the rate of return he had anticipated. (Tr. 59.) According to Menk, Respondent's representations made with regard to interest rate increases were accurate, and Respondent made no representations regarding future dividends. Count III Respondent met with Paul Loudin in September of 1978, and gave him the USL presentation on the T.O.P. policy as Respondent had been taught. Loudin was aware he was purchasing insurance. (Tr. 21, 26, 27, 31.) His interest was in life insurance and retirement compensation. (Tr. 36.) In part, Loudin's dissatisfaction was the belief he had lost his money because he did not receive a dividend on his first year's premium. The policy reflects that no dividends are payable in the first year. (Respondent's Exhibit #7.) A copy of the policy was provided to Loudin by Respondent. (Tr. 45.) Loudin also anticipated a dividend of 12 to 18 percent on his premiums based upon Respondent's general comments. However, he did not remember the exact conversation with Respondent. (Tr. 31, 32, 38, 39.) Loudin received a letter from USL which reflects a dividend history based upon an 18-year-old insured with an annual premium of $1,000 as follows: End of 2nd year $100.35 End of 3rd year 130.66 End of 4th year 162.86 The rate of return in the fourth year would be 11.6 percent on the fourth year's premium. The representations made to Loudin by Respondent were substantially true, or the relevant information was made available to Loudin by the Respondent. Count IV On November 30, 1977, Respondent met with Gayle Mason and gave the USL presentation on the T.O.P. policy as he had been taught. Mason knew she was purchasing insurance. (Tr. 107.) Respondent represented that the number of participants in the T.O.P. policy would be limited. (Tr. 108.) The current rate of return was taken by Respondent to be 11 percent, and it was represented that the return could be more. (Tr. 109.) Dividends were to be paid from surplus earnings. (Tr. 114.) Mason called the Better Business Bureau and the State Insurance Commissioner's office, and she was aware that USL was an insurance company and she was engaged in an insurance transaction. (Tr. 115.) Respondent represented that as USL grew, the dividends would increase. (Tr. 118.) Mason received a dividend in the second year in accordance with the policy. The representations made to Mason by Respondent were true or thought by Respondent to be true.
Recommendation Having found the Respondent, Emory Daniel Jones, not guilty of violating any of the statutes or rules as alleged, it is recommended that the Administrative Complaint against Respondent be dismissed. DONE and RECOMMENDED this 17th day of January, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of January, 1981. COPIES FURNISHED: David A. Yon, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Paul H. Bowen, Esquire 600 Courtland Street, Suite 600 Post Office Box 7838 Orlando, Florida 32854 The Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32301
Findings Of Fact At all times pertinent to the allegations contained herein, Respondents Richard Elliott Templin, Jr., was qualified for licensure as a general lines agent and as a life and health insurance agent in Florida and represented the Okeechobee Insurance Agency, (OIA), located at 1874 Okeechobee Boulevard, West Palm Beach, Florida. Respondent is currently eligible for licensure as a general lines agent and as a health and life insurance agent in Florida. RAVEN MILLER In March, 1984, Raven Miller applied for and was issued automobile insurance by OIA. She contacted that agency among others and found that it quoted her the cheapest price for the coverage she wanted, coverage sufficient to protect her and the finance company from loss. During the application process, she signed several forms provided to her by the agent who briefly discussed her coverage with her but did not advise her it would include life insurance or accidental death insurance. When she initially went into the office to renew the policy, she asked for coverage on the vehicle but did not desire anything else. The employee with whom she talked indicated understanding of her desires and filled out the required paperwork for her without asking any other questions of her. When the paperwork was completed, Ms. Miller was told that the premium cost would be $347.00 for which she gave a check and received a receipt, plus $110.00 for a term life insurance policy. She was not told that that this latter coverage was separate from the automobile coverage. Ms. Miller filled out nothing during the application process. All the documents were filled out by the clerk. The application form was completely filled out except for her signature when she signed it. It reflected that uninsured motorist coverage was rejected but Ms. Miller was not asked by anyone at the agency if she desired that coverage. When she inquired about deductibles, she was advised there was a mandatory $250.00 deductible and though she is reflected to have rejected bodily injury coverage, this was not discussed with her, either. The only form that Ms. Miller filled out personally was the pink application to Fortune Insurance Company, (Fortune), on which she identified her "beneficiary." This form was not explained to her, however, nor was there any discussion with her of life insurance coverage. Ms. Miller, who works with the Post Office, has $140,000 in life insurance coverage through her job and had she known she was being offered additional life insurance coverage, would have rejected it. When Ms. Miller signed the summary of coverage form, it was completely filled out. The lady with whom she was dealing briefly went over the various items on it but did not discuss them with her or explained anything to her. The confirmation form which she signed was filled out prior to being given to her for signature. The explanation regarding it was brief and she was not advised that life insurance coverage was optional. The life insurance premium was not forwarded by OIA to the company. She did not receive a policy from either Fortune Life or ATA. At no time during her dealings with OIA did she meet or deal with Respondent and she does not know him nor would she recognize him. When she sold her car in March, 1985, Ms. Miller cancelled the policy in person at the agency at which time she was advised that her refund would come in the mail. Even after numerous contacts with the agency to inquire where the refund was, it was not given to her. At no time during her dealings with OIA was she aware of the fact that she was applying for an accidental death policy. All she asked for, all she wanted, and all she thought she was getting was auto insurance sufficient to cover her, her bank, and others with whom she might have an accident in the event of loss. Notwithstanding the fact that Ms. Miller signed an acknowledgment of explanation both at the time of the original policy and and the time of renewal, the explanation in both cases was extremely brief. She asked no questions to speak of and no information was volunteered. In short, at the time of renewal the agency merely renewed the prior coverage. They did not show her what they were comparing with. She assumes that the figures were the same as for the original policy and she assumed that whatever she got was a standard coverage and charge to every applicant. Ms. Miller was satisfied with the coverage she received and the package she purchased. Her complaint to the Department of Insurance related to the failure to receive her refund not to the sale of the insurance to her. In fact, at the time she filed her complaint, she did not even know that she had a life insurance policy. DENNIS AND ALETA NELSON Dennis Nelson, who has worked for the Post Office for approximately 10 years, on or about March 21, 1985 went to the OIA because, having spoken with Respondent over the phone, and having gotten a quote for "full coverage" on his automobiles from him, he liked the price. Mr. Nelson dealt with Respondent who took down the particulars on the cars to be covered, then went to his rate books, and quoted a price to Mr. Nelson which was satisfactory. In doing so, he laid out the explanation of coverage form and indicated what coverage the Nelsons would have. In the course of the application process, there was no discussion of the limits of liability insurance, uninsured motorist Coverage, deductibles, or life insurance. When the paperwork was completed, Mr. Nelson signed the applications for insurance given to him and a premium finance agreement. Respondent explained to Mr. Nelson the application for life insurance and gave him the impression that it was mandatory. It was made mandatory by the company that a customer buy the whole package, but it was not mandatory under the state requirements. The failure to make this distinction is misleading and deceptive. Mr. Nelson never received any policies from any of the companies from whom he was supposed to have received coverage, though he made his premium payments. By the same token, the company did not receive Nelson's premiums from the agency and, therefore, did not issue a policy. Approximately three months after the coverage went into effect, OIA notified the Nelsons that the cost of coverage on their Blazer would be raised by more than $200 for the year. Mr. Nelson made the initial inquiry call to the company writing this coverage but he was poorly treated by company representatives and got no information. Thereafter, Mrs. Nelson went to OIA's Okeechobee Boulevard office and spoke with Respondent who indicated he could not understand it either. Nonetheless, she paid a part of the increase, ($110.00), at the time in cash. The Nelsons checked with other companies and were quoted lower prices. Because OIA could not explain the raise, they went to the Petitioner's local office where they were told that the life insurance coverage they had purchased was not mandatory. As a result, they decided to cancel their coverage with OIA which Mrs. Nelson did in person. When she attempted to fill out the cancellation form, she was told by an agency employee that she could not cancel the life insurance portion only her husband could do that. Mr. Nelson thereafter attempted to reach the Respondent to discuss this situation with him but could never seem to get in touch with him. Mr. Nelson felt he got repeated run arounds from the employees at OIA and was repeatedly referred to the Lake Worth office. When they ultimately received the refund from OIA, it was dishonored and thereafter, the Nelsons were reimbursed for it in cash. ROBERT M. ANDERSON Mr. Anderson, an employee of Pratt and Whitney Aircraft Corporation in West Palm Beach, purchased automobile insurance from OIA in July, 1985. He selected that agency because they offered him the best price for the coverage which he had told them he wanted, which was "the minimum necessary to satisfy state and bank requirements." During the course of his negotiations with the agency, he dealt with an individual known to him as "Rich" but though Respondent looks familiar to him, he cannot identify Respondent as that individual. He advised the individual with whom he dealt what kind of car he had, (a Porche 911), his age, and that he wanted the best deal he could get. In response, the individual gave him a quotation for a 12 month policy which was too high for his budget. He asked for a quote on the rate for 6 months which was quoted to him as $1,816.00, for which he wrote a check. Mr. Anderson thereafter filled out an application package for coverage. The summary of coverage form was not discussed with him in detail. For example, the $2,000 deductible of PIP coverage was not discussed nor were any details or deductibles on other coverages. Accidental death coverage was not discussed with him nor did he request it. He recognizes his signature on certain documents and does not dispute having signed them. However, he does not recall any discussion about them nor does he recall signing a power of attorney form or even discussing the need to have one signed. There was no discussion with Mr. Anderson regarding life insurance coverage and in fact, he would have declined it had it been discussed because he was fully covered through his company's group policy. Mr. Anderson was not prevented from asking questions but did not do so because he did not know what questions to ask. He was given the opportunity to read the forms but did not review them in detail because he did not understand them then and does not understand them now. He did not, however, indicate that he did not understand. Because he had 9 points on his driver's record, he did not ask many questions. He was grateful to get any coverage and did not feel it was appropriate to take the time, as busy as Respondent appeared to be, to ask questions. It was his understanding that everything he got was a part of the "total package" that he requested. Mr. Anderson had no complaint about the coverage that he received. His complaint to the Petitioner was based on his failure to secure a prompt refund from the agency at the time he desired to cancel the coverage, and it was at this time, in discussing the matter with the Commissioner's office, that he first learned he had life and other undesired coverages as a part of his auto insurance package. He has, however, subsequently received the refund requested. All of the individuals referenced above received and paid for as a part of their insurance coverage, membership in an automobile motor club. On policies of this nature, the selling agency retains 90 percent of the premium and remits only 10 percent to the insurer. The motor club membership included a life insurance policy issued by Fortune Life. None of the persons involved with Respondent here knew they were buying either life insurance, accidental death insurance, or motor club membership. All had asked for "total" coverage, desiring thereby only that coverage necessary to operator a motor vehicle legally in this state. Neither life insurance, accidental death insurance, nor motor club coverage is a requirement of the state for the operation of a motor vehicle. It is not unlawful for an insurance agency to make those coverages a necessary part of a package and condition the issuance of liability, property damage, and PIP coverage upon the purchase of a total package including the other. What is improper, however, is a failure on the part of the agency to disclose that the life, accidental death, and motor club coverages are not a part of the insurance requirements of the state and the failure to disclose this is the nexus of the offense alleged.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, therefore: RECOMMENDED that the Respondent's licenses and eligibility for licensure be placed on probation for a period of two years and that he be ordered to pay an administrative fine of $2,500.00. RECOMMENDED this 27th day of July, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0093 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. For Petitioner 1-4 Accepted and incorporated herein. 5-7 Accepted and incorporated herein. 8 Accepted and incorporated herein. 9 Accepted and incorporated herein. 10-16 Accepted and incorporated herein. 17-18 Accepted and incorporated herein. 19 Accepted and incorporated herein. 20 Accepted but irrelevant. 21 Accepted and incorporated herein. 22 Accepted. 23-26 Accepted and incorporated herein. 27 Accepted and incorporated herein. 28 Accepted and incorporated herein. 29 Accepted but irrelevant. 30 Accepted and incorporated herein. 31&32 Accepted and incorporated herein. 33 Accepted and incorporated herein. 34 Rejected as unproven. Witness never identified Respondent as the individual with whom he dealt. In the remaining paragraph rulings, it is assumed only that Respondent was involved. 35&36 Accepted and incorporated herein. 37-39 Accepted and incorporated herein. 40&41 Accepted and incorporated herein. 42&43 Accepted. For Respondent Accepted and incorporated herein. Accepted not as a Finding of Fact but as a recitation of the evidence, Accepted in substance. Paragraph is long and involved. See 3 above. See 3 above. COPIES FURNISHED: William Gunter, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 William W. Tharpe, Jr., Esquire Office of Legal Services Larson Bldg. Tallahassee, Florida 32399-0300 David W. Spicer, Esquire Tammy J. Kissell, Esquire NCNB Tower, Suite 910 1555 Palm Beach Lakes Boulevard West Palm Beach, Florida 33401-2363 =================================================================
The Issue The issue presented is whether Respondent is guilty of the allegations contained in the Administrative Complaint filed against him, and, if so, what disciplinary action should be taken against him, if any.
Findings Of Fact At all times material hereto, Respondent has been licensed in Florida as a life and variable annuity contracts salesman and as a life and health insurance agent. In 1994 twin sisters Edith Ellis and Gertrude Franklin attended a luncheon at which Respondent made a presentation. The sisters were then 79 years old, and both were the owners of single-premium insurance policies issued by Merrill Lynch. They decided to cash in their existing policies and purchase new policies through Respondent. Both Ellis and Franklin executed 1035 exchange forms whereby the monies obtained from cashing in their Merrill Lynch policies were transferred to the insurance companies issuing their new policies. Both were charged a substantial penalty by Merrill Lynch. On August 11, 1994, Security Connecticut Insurance Company issued to Edith Ellis a flexible premium adjustable life insurance policy with a face value of $150,000. The cover page of the policy recites in bold print that it is a flexible premium adjustable life insurance policy, directs the insured to read the policy, and provides a 20-day period for canceling the policy with a full refund. It also contains a statement that provides: This Policy provides flexible premium, adjustable life insurance to the Maturity Date. Coverage will end prior to the Maturity Date if premiums paid and interest credited are insufficient to continue coverage to that date. Dividends are not payable. Flexible premiums are payable to the end of the period shown, if any, or until the Insured's death, whichever comes first. The cover page also recites that the first premium is $75,000 and that the monthly premium is $805.75. After deductions, Merrill Lynch only transferred $44,928.81, and Ellis never paid any additional premiums. Therefore, the policy was not funded to maturity since the company only received a partial payment. The insurance company did not set up this policy to receive periodic premium payments because it was originally anticipated that the company would receive $75,000 which would carry the expense, based upon the then interest rate. The policy was dependent upon interest rates. The company sent annual statements, however, to both Ellis and to the agency where Respondent worked. These statements clearly showed a declining accumulated value for the policy and specified how much it had declined from the previous year. When Ellis surrendered the policy on July 3, 2002, its value was $4,849. First Colony Life Insurance issued a flexible premium adjustable life insurance policy to Gertrude Franklin on October 18, 1994, with a face value of $600,000. The cover page provides for a 20-day cancellation period with a full refund of premiums paid. In bold type, the cover page further advises as follows: "Flexible Premium Adjustable Life Insurance Policy", "Adjustable Death Benefit Payable at Death", "Flexible Premiums Payable During Insured's Lifetime", and "Benefits Vary with Current Cost of Insurance Rates and Current Interest Rates." It also advises that the initial premium is $56,796. The insurance company received an initial premium payment of $203,993.75 on December 19, 1994, and an additional premium payment in February 1996, for a total of premiums paid of approximately $266,000. The total premiums received, however, were insufficient to fund the policy to maturity since that would have required in excess of $400,000 in premiums. Annual statements sent by the insurance company reflected that the policy value was declining. On August 26, 1996, the insurance company received a letter over the name of Nancy Franklin, the trustee of the trust which owned the policy, advising the company to send billing and annual statements to the address of the agency where Respondent was employed. Respondent sent that letter as a courtesy because Gertrude Franklin asked him to keep her papers for her because she had no place to keep them. Gertrude Franklin, not her daughter, signed that letter. Respondent left that agency in October 1997 and was not permitted to take any records with him. In 2002 Edith Ellis showed her policy to someone at a senior center. Based upon that person's statements she called her sister and told her that their policies were no good. They contacted Respondent who came to their homes and reviewed their policies. He advised Gertrude Franklin that her only options at that point were to pay an additional premium or to reduce the face value of the policy to $400,000 in order to keep it in effect longer. She chose the latter course. Respondent gave Franklin a letter for Nancy Franklin's signature directing the insurance company to reduce the face value of the policy. Franklin, not her daughter, signed the letter and forwarded it to the company. The company reduced the face value based upon that letter which it received on April 1, 2002. That directive allowed the policy to stay in force another two months.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing the Administrative Complaint filed against Respondent in this cause. DONE AND ENTERED this 28th day of December, 2004, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 2004. COPIES FURNISHED: James A. Bossart, Esquire Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Nancy Wright, Esquire 7274 Michigan Isle Road Lake Worth, Florida 33467 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
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
