The Issue Should discipline be imposed by Petitioner against Respondent’s insurance license held pursuant to Chapter 626, Florida Statutes? Although Respondent was unlicensed at the time of the specific insurance transactions enumerated in the Administrative Complaint, she since has become licensed. It is the existing license of Respondent that Petitioner seeks to discipline in this action.
Findings Of Fact The Parties Petitioner was created in accordance with Section 20.13, Florida Statutes. Petitioner has been conferred general power by the Legislature to regulate the insurance industry in Florida, in accordance with Section 624.307, Florida Statutes, and Chapter 626, Florida Statutes, grants Petitioner the authority to license and discipline insurance agents doing business in Florida. At times relevant to the inquiry, Respondent was not licensed by Petitioner to transact insurance. (Pet. Ex. 2) Respondent was employed by Beck-De Pratter, Inc., a Florida Corporation, doing business as William Dye Insurance, Inc./Brentwood (hereinafter referred to as the “Agency”) from 1996 until 2004. Count I: Aaron Curtis On August 16, 2000, Aaron Curtis came into the Agency to re-new the insurance on his vehicle. Respondent took down the information necessary for Curtis to re-new his insurance. The company that had insured Curtis' vehicle was no longer writing coverage in Florida, and the Agency placed Curtis' coverage without significant alternation with another carrier. John Beck signed this application as agent. Count II: Stacy Collier On October 7, 2002, Collier came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Collier to re-new the insurance. The company that had insured Collier's vehicle was no longer writing coverage in Florida, and the Agency placed Collier's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count III: Ruby Hubbard On October 11, 2002, Ruby Hubbard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Hubbard's vehicle was no longer writing coverage in Florida, and the Agency placed Hubbard's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count IV: Mary Kennedy On March 6, 2002, Mary Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count V: Charles Howard On September 10, 2001, Charles Howard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count VI: Not appointed as Customer Representative Petitioner’s official records reveal that Respondent was not appointed as customer representative by any insurance agency at the time the preceding transactions occurred. Respondent’s employer, John Beck, testified that he never appointed Respondent as a customer representative. Count VII: John Kennedy On March 2, 2001, John Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed this application as agent.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered dismissing the allegations contained in the administrative complaint against Respondent, Sharon G. Taylor. DONE AND ENTERED this 2nd day of November, 2004, in Tallahassee, Leon County, Florida. S __ STEPHEN F. DEAN 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 2nd day of November, 2004. COPIES FURNISHED: Greg S. Marr, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Jed Berman, Esquire Infantino and Berman Post Office Box 30 Winter Park, Florida 32790 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Tom Gallagher, Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Petitioner is engaged in the business of writing private passenger automobile insurance in the State of Florida. Petitioner's offices are in Miami, Florida, and it concentrates its business in South Florida. Petitioner has earned the rating of A (Excellent) from A. M. Best and Company. Respondent is a Florida governmental agency whose responsibilities include the regulation of private passenger automobile insurers in Florida. Section 627.0651, Florida Statutes, which governs private passenger automobile rate filings, is referred to as a "use and file" system because it allows such insurers to implement rate changes and to then seek approval from Respondent for the rate changes by making a rate filing within thirty days of the date of implementation. Respondent's review is required to be in accordance with generally accepted and reasonable actuarial techniques. An insurer such as Petitioner has the burden of establishing that the rate changes that it has implemented are not excessive, inadequate, or unfairly discriminatory. Respondent may require the insurer to provide it all information Respondent deems necessary to evaluate the rate changes. Under this regulatory scheme, insurers are not required to refund any premium overcharges that may have occurred during the period while the rates are being examined by Respondent. THE FILING OF MARCH 24, 1989: On March 24, 1989, Petitioner filed with Respondent a private passenger automobile rate filing which had gone into effect March 1, 1989. The rate filing requested a rate increase of 15%. Petitioner's only witness in this matter was Dale F. Ogden, a self-employed consulting actuary from San Pedro, California. Mr. Ogden was not tendered as an expert witness and he did not participate in the preparation of either of the two rate filings involved in these proceedings, nor had he audited any of the underlying data. Mr. Ogden knew of no actuary who assisted Petitioner in the preparation of either of the rate filings involved in these proceedings. Petitioner presented no testimony from anyone involved in the actual preparation of these rate filings or from anyone who had direct knowledge of the underlying data offered in support of the filings. Kenneth Ritzenthaler is the actuary employed by Respondent who reviewed Petitioner's March 24, 1989, rate filing (March 24 filing). Mr. Ritzenthaler was accepted as an expert in actuarial science and private passenger automobile rate making. On May 16, 1989, Respondent notified Petitioner by letter that it had determined, following its preliminary review, that the filing was insufficient to justify various specified components of the proposed rate changes. This letter detailed in twenty separately numbered paragraphs matters that Respondent determined were deficiencies in Petitioner's filing. Pursuant to Section 627.0651(9), Florida Statutes, Respondent requested additional information. On June 16, 1989, Petitioner responded to Respondent's letter of May 16, 1989, by providing additional information and by attempting to address the concerns raised by Respondent in its letter of May 16, 1989. Petitioner contends that its letter of June 16, 1989, fully answered all questions raised by Respondent's letter of May 16, 1989, and that its filing of March 24, 1989, as supplemented by its letter of June 16, 1989, establishes its entitlement to Respondent's approval of the rate filing. Petitioner's response of June 16, 1989, resolved some of the concerns raised by Respondent's letter of May 16, 1989, but the response did not resolve all of the concerns. On August 9, 1989, Respondent issued a Notice of Intent to Issue Final Order pursuant to the provisions of Section 627.0651(10), Florida Statutes. This Notice informed Petitioner of Respondent's determination that the rate filing may be excessive, inadequate, or unfairly discriminatory, advised Petitioner as to the specific matters in the filing which Respondent deemed to be deficient, and gave Petitioner 60 days within which to provide all information which, in Petitioner's belief, proves the reasonableness, adequacy, and fairness of the rate change. Instead of attempting to provide additional information in response to the Notice of Intent, Petitioner elected to file a request for a formal hearing to challenge Respondent's determinations as to the rate filing of March 24, 1989. The NOTICE OF INTENT TO ISSUE FINAL ORDER, dated August 9, 1989, provided, in pertinent part, as follows: The rate filing does not provide sufficient justification for the proposed increase. The filing is deficient in the following areas: Based on the date in this filing and other data available to this Department, the selected annual trend factors for Property Damage and PIP appear high. You have included a loading for Florida Insurance Guaranty Assessments in your indications. Part of this loading is from an October 1, 1987 payment. Since you have increased rates twice since this payment, its inclusion in the rate level indications is unacceptable. You have failed to show how the profit factors are calculated and that they are in compliance with Rule 4- 57.01, Florida Administrative Code (Calculations and Use of Investment Income in Motor Vehicle Insurance Rates). Further, you list profit factors of 2.0% for Liability and 5.0% for Physical Damage while stating that the total profit allowance underlying your proposed rates is -1.8%. You have failed to provide a breakdown of your "Losses and LAE" percentage of 64.3% into losses (pure losses only), Allocated LAE, and Unallocated LAE. Note: LAE is Loss Adjustment Expenses. Based on the data provided, the selected loss development factors for Bodily Injury and PIP appear high. In addition, the lack of credibility in the loss development data for Uninsured Motorists coverage and Medical Payments has not been accounted for. All of the above items are involved in the determination of the rate level indications which are used to support the proposed rate level changes, and must be properly justified in the rate filing. The filing is also deficient in the following areas: This filing is not in compliance with Rule 4-72.006, Florida Administrative Code (Rate Manual Filings and Revisions). The rates on Form D14-3A do not agree with those shown in your manual. The rates on Form D14-3C do not agree with those shown in your manual. Your cancellation procedures are not in compliance with Section 627.7282, Florida Statutes. The revisions to page 5 of your manual covering hurricane deductibles are unsupported. You attempted to adopt an Insurance Services Office revision concerning the rating of 1990 model year vehicles; however, you failed to show that you have adopted the same definitions and relativities approved for the Insurance Services Office and have failed to submit the statutorily required manual pages. You provided a breakdown of your proposed premiums into fixed and variable general and administrative expenses. Thus you are not in compliance with Rule 4-43.02, Florida Administrative Code (Administrative Expense Flattening). Your Medical Payments data is so limited that it really has no value as support for any change. Further, your proposed Medical Payments premiums appear to be approximately three times the premiums charged by the F.J.U.A. Thus, the proposed 96.8% increase in Medical payments premiums is unjustified. You have failed to provide supporting data which justifies PIP base rates higher than those charged by the F.J.U.A. You have proposed Uninsured Motorists premiums which vary by sex/age class. As support, you relied primarily on F.J.U.A. Uninsured Motorists premiums. Since F.J.U.A. Uninsured Motorists premiums do not vary by sex/age class, your proposed premiums are unsupported. As a result of the deficiencies set forth in paragraphs 3-5 above, the Department preliminarily finds that the proposed rate increase is not justified and may be excessive, inadequate or unfairly discriminatory. In making this determination, the Department, after reviewing the rate filing in accordance with generally accepted and reasonable actuarial techniques, preliminarily finds that the filing fails to meet the applicable standards set forth in Section 627.0651, Florida Statutes, in that: The rate filing does not give proper consideration to past and prospective loss experience within and outside this state. (Section 627.0651(2)(a), Florida Statutes) The rate filing does not give proper consideration to past and prospective expenses. (Section 627.0651(2)(b), Florida Statutes) The rate filing does not give proper consideration to investment income reasonably expected by the insurer, consistent with the insurer's investment practices, from investable premiums anticipated in the filing, plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves, not including income form invested surplus. (Section 627.0651(2) (d), Florida Statutes) The rate filing does not demonstrate that reasonable actuarial judgment has been utilized. (Section 627.0651(2)(e), Florida Statutes) The rate filing does not demonstrate the adequacy of loss reserves. (Section 627.0651(2)(i), Florida Statutes) The rate filing does not give proper consideration to trend factors, including trends in actual losses per insured unit for your company. (Section 627.0651(2)(k), Florida Statutes) The rate filing does not give proper consideration to relevant factors which impact on frequency or severity of claims or upon expenses. (Section 627.0651(2)(a), Florida Statutes) WHEREFORE, upon consideration of the foregoing and the factors enumerated in Section 627.0651, Florida Statutes, the Department finds on a preliminary basis that the rates or rate changes included in the aforementioned rate filing may be excessive, inadequate, or unfairly discriminatory among members of the class affected as those terms are used in said section. Therefore, it is my intent to issue an Order disapproving the rates or rate changes which you filed with the Department on March 24, 1989. You have the opportunity to prove to the Department that the rates or rate changes included in the aforementioned rate filing are not excessive, inadequate or unfairly discriminatory. Pursuant to Section 627.0651, Florida Statutes, you shall, within sixty (60) days of the date of this Notice file with the Department all information which you believe proves the reasonableness, adequacy and fairness of the rate or rate changes. Paragraph 3(a) of the Notice of Intent relates to the annual trend figures used by Petitioner in the calculation of its rates for Property Damage and PIP coverages. Trend figures are essentially rates of inflation and are factored into rate filings to make appropriate provision for future costs. On February 1, 1989, Petitioner requested and received from Respondent the trend figures Petitioner considered most current. The rates received from Respondent ranged between 6.5% - 8.5% for Property Damage coverage and between 9% - 12% for PIP coverage. Petitioner used the factor of 8.5% for Property Damage coverage and 12% for PIP coverage based on its experience in South Florida. Subsequent information caused Respondent to revise its recommended trend factors downward and resulted in the invalidation of the ranges that had been given Petitioner. Consequently, the annual trend factors used by Petitioner in calculating its rates for Property Damage and PIP coverages were excessive. Based on Respondent's revised information, Petitioner should have used a trend factor of approximately 10% for Property Damage coverage and a trend factor of approximately of 6% for PIP coverage. Excessive annual trend factors act to overstate projected losses which results in the overstating of rate level indications. Petitioner informed Respondent in its letter of June 16 that it had gotten the trend factor ranges from Respondent on February 1, 1989, and that it had selected the high end of each range based on its experience. The trend factors used in its calculations were not otherwise justified by Petitioner. Paragraph 3(b) of the Notice of Intent relates to the inclusion as an expense factor in the March 24 rate filing of an assessment paid on October 1, 1987, to the Florida Insurance Guaranty Association. The inclusion of the total dollar amount of this assessment in the March 24 filing is unreasonable since Petitioner has filed rate increases twice since this assessment and has recouped part, if not all, of that assessment. Petitioner has failed to establish its contention that its prior rate increases did not recoup this assessment. The inclusion of this assessment serves to overstate expenses which results in the overstating of rate level indications. This inclusion was not justified by Petitioner after being questioned by Respondent. As noted in Paragraph 3(c) of the Notice of Intent, Petitioner failed to show how it calculated its profit factors and it failed to establish that the factors were calculated in accordance with Rule 4-57.001, Florida Administrative Code. Paragraph 3(c) of the Notice of Intent also correctly notes that Petitioner provided profit data that contained an inconsistency. The physical damage profit factor of 5% used by Petitioner is reasonable. Petitioner failed, however, to show how it calculated its liability profit factor of 2% and it failed to demonstrate that the liability profit factor was calculated in accordance with the applicable rule. Without this showing, the reasonableness of the liability profit factor cannot be adequately evaluated. The inconsistency relating to profit figures is that an underwriting loss is projected using the profit factors Petitioner contends it requires. Although Petitioner presented considerable testimony as to the need to utilize good business judgment in the environment in which it operates and as to the overall profit factor it required, the deficiencies noted in Paragraph 3(c) of the Notice of Intent were not justified or resolved by Petitioner. Paragraph 3(d) of the Notice of Intent relates to the breakdown of the losses and loss adjustment expenses. Respondent's letter of May 16, 1989, asked Petitioner to provide the breakdown of losses (pure losses only), allocated LAE, and unallocated LAE. Petitioner's response, in its letter of June 16, 1989, did not provide the requested breakdown; it lumped this information together. Petitioner's contention that this information is more reliable when considered together is rejected. This information was necessary for Respondent to determine whether any adjustment in the rate level indications are required. Petitioner did not provide this information after being specially asked to do so by Respondent. Paragraph 3(e) of the Notice of Intent relates to the selected loss development factors Petitioner used in the calculation of Bodily Injury and PIP coverage. Petitioner's loss development factors were calculated, in part, by the averaging of certain data experienced during three separate periods. Because of unusual experience data during one of the periods included in the averaging process, the results were skewed, and, consequently, the loss development factors were not accurate. Petitioner failed to justify the selected loss development factors it used in the calculation of Bodily Injury and PIP coverage. (Paragraph 3(e) of the Notice of Intent also relates to the lack of credibility of data used in determining the loss development factors for Uninsured Motorist Coverage and Medical Payments. These matters are discussed in Paragraphs 22 and 23 of this Recommended Order.) Petitioner failed to submit a complete manual with its rate filing of March 24, 1989, as required by Rule 4-72.006, Florida Administrative Code, although this deficiency was specifically noted by Paragraph 5(a) of the Notice of Intent. The rates Petitioner showed on Form D14-3A attached to the March 24 filing are inconsistent with rates shown by its manual. Petitioner provided its reasons for these inconsistencies, but it did not correct these inconsistencies. This deficiency is noted in Paragraph 5(b) of the Notice of Intent. The rates Petitioner showed on Form D14-3C attached to the March 24 filing are inconsistent with rates shown by its manual. Petitioner provided its reasons for these inconsistencies, but it did not correct these inconsistencies. This deficiency is noted in Paragraph 5(c) of the Notice of Intent. Paragraph 5(d) of the Notice of Intent, relates to Petitioner's procedures for the calculation of refunds of premiums to be paid the policyholder after the cancellation of policies. The procedures stated in Petitioner's policy manual are not in full compliance with Section 627.7282, Florida Statutes. Petitioner represented in its letter of June 16, 1989, that it had made the necessary revisions for its procedures to be in full compliance with this statute. However, Petitioner did not introduce its revised provision into evidence and did not otherwise present proof of compliance after being specifically asked to do so by Respondent. Paragraph 5(e) of the Notice of Intent relates to changes in Petitioner's manual covering hurricane deductibles. The changes in these deductibles result in a decrease in coverage, as a result of an increase in the deductibles, with no concomitant reduction in premium. As a result, the premium schedule for hurricane coverage is excessive. Petitioner failed to justify the increases it implemented in the deductibles for its hurricane coverage. Paragraph 5(f) of the Notice of Intent relates to Petitioner's failure to establish that it had adopted the same definitions and relativities that were approved by the Insurance Services Office. Respondent raised this concern with Petitioner in its letter of May 16, 1989. Petitioner's response, contained in paragraph 8 of its letter dated June 16, 1989, is as follows: "At the time the filing was being prepared, we were unaware of the new symbols for the 1990 model year vehicles. Following the pattern of the past few years, it was decided to derive the 1990 relativities by adding 5% to the 1989 model relativity and applying the result to the existing symbol relativities." The adjustment made by Petitioner was inadequate and resulted in its charging inadequate rates to certain policyholders. Petitioner should adopt the Insurance Services Office definitions and relativities to assure that the appropriate premiums are being charged. Expense flattening is a concept that recognizes that certain expenses should be charged equally to all policyholders, regardless of the total premium being paid by the individual policyholders, because those expenses are not tied to the total premium being paid by each policyholder. Petitioner failed to establish that it had flattened at least 60% of its general and administrative expenses as it indicated that it should do in its initial filing and as recommended by Rule 4- 43.02, Florida Administrative Code. Petitioner flattened only 47% of its administrative expenses. As a result of its failure to flatten at least 60% of its administrative expenses, Petitioner undercharged certain of its low-rated policyholders and it overcharged certain of its high-rated policyholders. This deficiency was not corrected by Petitioner after being noted by Respondent in Paragraph 5(g) of the Notice of Intent. Petitioner failed to justify its increase of 96.8% in the premium rates for Medical Payments coverage. Although Petitioner may be able to justify such an increase with additional data, the data it relied upon to justify the increase was too limited to do so using sound actuarial techniques. Petitioner's position that the rate is actuarially sound is rejected as being unsupported by the record. Respondent noted this deficiency in Paragraph 5(h) of the Notice of Intent. Petitioner failed to justify its increase in the premium rates for PIP coverage. Although Petitioner may be able to justify such an increase with additional data, the data it relied upon to justify the increase did not do so using sound actuarial techniques. Petitioner's position that the rate is actuarially sound is rejected as being unsupported by the record. Respondent noted this deficiency in Paragraph 5(i) of the Notice of Intent. Petitioner failed to justify its premium schedule for Uninsured Motorists coverage which varies rates based on the policyholder's sex/age. Respondent specifically requested such justification because this coverage applies when a driver other than the policyholder is at fault and has no coverage. Usually, the policyholder's sex and age are considered irrelevant in establishing the premium for such coverage. While Petitioner may have data to support its contentions that its experience justifies such variation in premiums, no such data was presented either in the rate filing or at the hearing. This deficiency was noted in Paragraph 5(j) of the Notice of Intent. THE RATE FILING OF OCTOBER 30, 1989 On October 30, 1989, Petitioner filed a second rate filing which reflected a change in rates that had been implemented on October 1, 1989. This rate change increased premiums by 10.3%. On December 11, 1989, Respondent issued an IMMEDIATE FINAL ORDER OF DISAPPROVAL and ordered Petitioner to return to those rates effective as of March 1, 1989. This Immediate Final Order of Disapproval provided, in pertinent part, as follows: Assumptions which underly (sic) the rate changes in the October 20, 1989 filing are necessarily linked to the data in the March filing which has been preliminarily disapproved and, for that reason, the October filing overstates the need for a rate increase. Additionally, the October 30, 1989 rate filing does not provide sufficient justification for the proposed increase. The filing is deficient in the following areas: Based on the data in this filing and other data available to this Department, the selected annual trend factors for Bodily Injury, Property Damage, Personal Injury Protection (PIP), Uninsured Motorists, Medical Payments, and Comprehensive appear excessive. In the calculation of the indications, the company has applied the complement of credibility to a trend factor covering a time period of 1.797 years. This time period is excessive and unsupported by the company's rate history. The company has included a loading for Florida Insurance Guaranty Assessments in their indications. This loading appears to be based on an assessment paid in May of 1988. Since the company has increased rates since this assessment its inclusion in the rate level indications is unacceptable. The company has included profit factors of 4.4% for Liability and 10.3% for Physical Damage in its rate level indications. This Physical Damage profit factor is more than double the maximum profit allowance specified in Rule 4-57.001 and is not supported. Further, these profit factors are inconsistent with the 0.29% total profit allowance underlying their proposed rates. The company has provided exhibits with data titled "ULAE incurred per interval" and "ULAE incurred". The data included under "ULAE incurred" appears inaccurate based on the data under "ULAE" incurred per interval". Further, the company has included "Fixed ULAE" as a separate item in their rate level indications while also including "ULAE incurred" in the same indications; thus apparently double counting a portion of unallocated loss adjustment expenses. Based on the data provided the selected loss development factors for Bodily Injury, Property Damage, PIP, Uninsured Motorists, and Comprehensive coverage appear unreasonably high. In addition, the lack of credibility in the loss development data for Uninsured Motorists and Medical Payments has not been accounted for. The company has failed to include an adjustment for the automatic premium increases resulting from symbol drift in the rate level indications for Comprehensive and Collision coverages. All of the above items are involved in the determination of the rate level indications which are used to support the proposed rate level changed, and must be properly justified in the rate filing. The filing is also deficient in the following areas: The company's Medical Payments data is so statistically insignificant that it has insufficient credibility to support any change. Further, the company's proposed Medical Payments' premiums appear to be in excess of 3 times the premiums charged the F.J.U.A. Thus, the proposed 26.6% increase in Medical Payments' premiums is unjustified. The company has failed to provide supporting data which justifies PIP base rates higher than the F.J.U.A. The company has failed to provide supporting data which justifies Uninsured Motorists' rates higher than the F.J.U.A. Further, since the F.J.U.A. does not vary Uninsured Motorists' rates by sex/age class, the company's use of F.J.U.A. data to support rates which do vary by sex/age is unreasonable. The company has failed to provide support for the "distributional adjustment factors" included in their support for the proposed change in territory relativities, sex/age class relativities, and deductible factors. Further, you have not explained how you calculated the " base wtd. relativities", the "smoothened relativities" or the "standardized wtd. relativities". Thus, the proposed changes in territory relativities, sex/age class relativities, and deductible factors are unjustified. Note - the company also failed to explain what their PIP deductible codes (i.e., A through I) represent. The revisions to page 6 of the company's manual covering hurricane deductibles are not explained or supported. The company's cancellation procedures are not in compliance with Section 627.7282, Florida Statutes. As a result of unjustified assumptions from the contested March 24, 1989 filing and the deficiencies set forth in paragraphs 8-10 above, the Department finds that the proposed rate increase is not justified and is excessive and unfairly discriminatory. There is a direct link between the two filings involved in these proceedings in that the validity of the filing of October 30, 1989, assumes the validity of the rate filing of March 24, 1989. Deficiencies in Petitioner's October 30, 1989, filing existed and were accurately described in Respondent's Immediate Final Order of Disapproval. Many of the deficiencies noted in the Immediate Final Order of Disapproval were also noted in Respondent's Notice of Intent entered in response to the March 24 filing. Petitioner failed to establish that the rate changes in the October 30, 1989, filing are not excessive, inadequate, or unfairly discriminatory.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order which disapproves General Insurance Company's private passenger automobile rate filings of March 24, 1989, and October 30, 1989. DONE AND ENTERED this 26 day of March 1990, in Tallahassee, Leon County, Florid CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26 day of March 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 89-6041 The following rulings are made on the proposed findings of facts submitted on behalf of Petitioner: The proposed findings of fact contained in paragraph 1 are rejected as findings of fact, but are discussed as preliminary matters. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in part by paragraph 1 of the Recommended Order and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 4 are rejected as being unsubstantiated by the evidence. The portion of the transcript to which Petitioner refers is part of the opening argument by Petitioner's counsel, and is not evidence in this proceeding. The proposed findings of fact in paragraph 5 are rejected as findings of fact but are discussed as preliminary matters. The proposed findings of fact in paragraph 6 are adopted in material part by paragraphs 3, 4, and 25 of the Recommended Order. The proposed findings of fact in the first sentence of paragraph 7 are adopted in material part by paragraph 4 of the Recommended Order. The remaining portions of paragraph 7 are rejected as being either unsubstantiated by the evidence or as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 8 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 9 are adopted in part by paragraph 7 of the Recommended Order and are rejected in part as being either unsubstantiated by the evidence or as being contrary to the findings made. The proposed findings of fact in paragraph 10 are adopted in part by paragraphs 8 and 9 of the Recommended Order. The proposed findings contained in the last sentence of paragraph 10 are rejected as being inappropriate as findings of fact. The proposed findings of fact in paragraph 11 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 12 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 13 are adopted in part by paragraph 25 and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 14 are adopted in part by paragraph 26 of the Recommended Order and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 15 are rejected as being findings of fact but are discussed as preliminary matters. The proposed findings of fact in paragraph 16 are rejected as either being unnecessary to the conclusions reached or as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 17 are rejected as being either unnecessary to the conclusions reached or as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 18 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 19 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 20 are rejected as being unnecessary to the conclusions reached or as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 21 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 22 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 23 are rejected as being contrary to the findings made and to the conclusions reached. The proposed findings of fact in paragraph 24 are rejected as being contrary to the weight of the evidence. The proposed findings of fact in paragraph 25 are rejected as being contrary to the greater weight of the evidence. The proposed findings of fact in paragraph 26 are rejected as being subordinate in part to the findings made in paragraph 10, and are rejected in part as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 27 are rejected as being unnecessary to the conclusions reached or as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 28 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 29 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 30 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 31 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 32 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 33 are rejected as being contrary to the greater weight of the evidence. The proposed findings of fact in paragraph 34 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 35 are rejected as being contrary to the findings made and to the conclusions reached. The proposed findings of fact in paragraph 36 are adopted in part by paragraph 2 and 3 of the Recommended Order. The proposed findings of fact contained in the second and third sentences of paragraph 36 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact contained in the final sentence of paragraph 36 are rejected as being contrary to the weight of the evidence. The proposed findings of fact in paragraph 37 are adopted in part by paragraph 3 of the Recommended Order and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 38 are rejected as being inappropriate as findings of fact and as being unsupported by the record. The proposed findings of fact in paragraph 39 are rejected as being inappropriate as findings of fact or as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 40 are rejected as being contrary to the findings made or as being unsubstantiated by the record. The proposed findings of fact in paragraph 41 are rejected as being contrary to the conclusions reached. The proposed findings of fact in paragraph 42 are adopted in material part by paragraph 7 and 8 of the Recommended Order. The proposed findings of fact in paragraph 43 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 44 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 45 are rejected as being contrary to the findings made and to the conclusions reached. The following rulings are made on the proposed findings of fact submitted on behalf of Respondent: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 3 and 4 of the Recommended Order. The proposed findings of fact contained in the second sentence of paragraph 2 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 3 are adopted in part by paragraph 5 of the Recommended Order and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 5 are adopted in material part by paragraph 7 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 9 of the Recommended Order. The proposed findings of fact in paragraph 7 are rejected as being a finding of fact because they are more appropriately considered conclusions of law. The proposed findings of fact in paragraph 8 are adopted in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 9 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 10 are adopted in material part by paragraph 25 of the Recommended Order. The proposed findings of fact contained in the second sentence of paragraph 10 are rejected as being unsubstantiated by the evidence. The proposed findings of fact in paragraph 11 are adopted in part and are rejected in part as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 12 are adopted in material part by paragraph 26 of the Recommended Order. The proposed findings of fact in paragraph 13 are adopted in material part by paragraph 10 of the Recommended Order. The proposed findings of fact contained in paragraph 14 are adopted in material part by paragraph 11 of the Recommended Order. The proposed findings of fact in paragraph 15 are adopted in material part by paragraph 12 of the Recommended Order. The proposed findings of fact in paragraph 16 are adopted in material part by paragraph 13 of the Recommended Order. The proposed findings of fact in paragraph 17 are adopted in material part by paragraph 14 of the Recommended Order. The proposed findings of fact in paragraph 18 are adopted in material part by paragraph 15 of the Recommended Order. The proposed findings of fact in paragraph 19 are adopted in material part by paragraph 16 of the Recommended Order. The proposed findings of fact in paragraph 20 are adopted in material part by paragraph 17 of the Recommended Order. The proposed findings of fact in paragraph 21 are adopted in material part by paragraph 18 of the Recommended Order. The proposed findings of fact in paragraph 22 are adopted in material part by paragraph 19 of the Recommended Order. The proposed findings of fact in paragraph 23 are adopted in material part by paragraph 20 of the Recommended Order. The proposed findings of fact in paragraph 24 are adopted in material part by paragraph 21 of the Recommended Order. The proposed findings of fact in paragraph 25 are adopted in material part by paragraph 22 of the Recommended Order. The proposed findings of fact in paragraph 26 are adopted in material part by paragraph 23 of the Recommended Order. The proposed findings of fact in paragraph 27 are adopted in material part by paragraph 24 of the Recommended Order. 28.-40. The proposed findings of fact in paragraphs 28- 40 are adopted in material part by paragraphs 26 and 27 of the Recommended Order. 41.-43. The proposed findings of fact in paragraphs 41- 43 are rejected as being subordinate to the findings made. 44.-45. The proposed findings of fact in paragraphs 44 and 45 are adopted in material part by paragraph 4 of the Recommended Order. COPIES FURNISHED: Charles A. Intriago, Esquire Floyd, Pearson, Richman, Greer, Weil, Zack & Brumbaugh, P.A. Courthouse Center 26th Floor, 175 North West First Ave. Miami, Florida 33128-1817 Joseph DiBella President, General Insurance Company 1815 Purdy Avenue Miami Beach, Florida 33119-1879 Daniel Y. Sumner, Esquire Cathleen E. Lindsey, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated October 24, 2008, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency responsible for licensing, regulating, and imposing discipline on insurance agents in Florida. See §§ 626.016(1); 626.601, Fla. Stat. Ms. Sykes was licensed as a 2-14 "life including variable annuity agent" and as a 2-20 general lines agent in January 1998. At the times pertinent to this proceeding, Ms. Sykes worked at an insurance agency owned by David J. Heiny ("Heiny Agency"). Deena Buell also worked for the Heiny Agency, and Ms. Sykes, Ms. Buell, and Mr. Heiny were the only three employees who were licensed as 2-20 general lines agents. The remaining two employees of Heiny Agency during the times pertinent to this proceeding held 4-40 licenses as customer service representatives. Certificate of Liability Insurance The Heiny Agency marketed the insurance products of the Allstate Insurance Company ("Allstate") and also the products of other insurance companies at the times material to this proceeding. In 2003, Mr. Heiny decided to expand his business to include workers' compensation insurance. In July 2003, he submitted an application to the Florida Workers' Compensation Joint Underwriting Association ("FWCJUA"), the insurer of last resort in Florida for workers' compensation insurance, for authority to submit applications to it for workers' compensation insurance. Mr. Heiny was notified by the FWCJUA in a letter dated July 29, 2003, that he was authorized to submit workers' compensation insurance applications to the FWCJUA until July 29, 2004. Mr. Heiny did not have authority to bind coverage for the FWCJUA, nor did he have authority to issue certificates of liability insurance showing workers' compensation insurance coverage through the FWCJUA. Under his agreement with the FWCJUA, Mr. Heiny was required to meet with and explain the workers' compensation insurance coverage to applicants and to sign all of the application forms. Mr. Heiny was unfamiliar with workers' compensation insurance, and he intended for Ms. Buell to handle all of the workers' compensation insurance business because she had experience at another agency with workers' compensation insurance. Mr. Heiny's office submitted one application for workers' compensation insurance, which was rejected, and he decided that the FWCJUA required too much paperwork. Mr. Heiny decided that he did not want to be involved with workers' compensation insurance, and he did not apply to renew his authorization to submit workers' compensation insurance applications to the FWCJUA. As a result, his authority to submit workers' compensation insurance applications to the FWCJUA expired on July 29, 2004. Mr. Heiny informed both Ms. Sykes and Ms. Buell that he did not intend to renew his authorization with the FWCJUA. Ms. Sykes is fluent in Spanish and was the only licensed agent at the Heiny Agency who spoke Spanish at the times pertinent to this proceeding. Because of her fluency in Spanish, Ms. Sykes worked with the Heiny Agency's Spanish- speaking customers, and most of her business consisted of referrals from these customers. One of Ms. Sykes' long-standing customers was Mayola Campos, who owned Form Construction, Inc. ("Form Construction"), with her husband, Fortino Campos, and Ms. Sykes handled the commercial insurance for Form Construction. Mrs. Campos came into the Heiny Agency's office regularly to pay premiums and to discuss with Ms. Sykes's the corporation's various insurance policies and changes in coverage. As a result, Ms. Sykes and Mrs. Campos were well-acquainted, and Ms. Sykes received a number of referrals from Mrs. Campos. Form Construction was a trim and roofing company working in the construction industry. According to Ms. Sykes, Mrs. Campos came to her in or around July 2004 seeking workers' compensation insurance. Ms. Sykes was not familiar with workers' compensation insurance because she had never sold that type of insurance, and it was not a product normally sold through the Heiny Agency. Nonetheless, she completed an application and submitted it to Ms. Buell for processing. At the time, Ms. Sykes was aware that Mr. Heiny did not intend to renew his authority to submit applications for workers' compensation insurance to the FWCJUA and that the authority would expire at the end of July 2004. Ms. Sykes cannot recall hearing anything further about Form Construction's July 2004 application for workers' compensation insurance. She was going through a particularly difficult divorce proceeding and was not working full-time at the agency. In addition, Ms. Buell was working from her home so she could care for her infant and young daughter, and Ms. Sykes and Ms. Buell were not in regular communication. Without confirming that the FWCJUA had issued workers' compensation insurance to Form Construction, Ms. Sykes signed a Certificate of Liability Insurance for Form Construction and sent it to that company. The certificate, dated October 12, 2004, reflected that, in addition to general liability and automobile insurance, Form Construction had workers' compensation insurance through the FWCJUA that was effective from October 16, 2004, to October 16, 2005. The certificate holder was identified on the certificate as Gold Construction. Ms. Sykes was aware of the purpose of a Certificate of Liability Insurance since she routinely prepared and signed them for insurance companies whose products were marketed by the Heiny Agency. A Certificate of Liability Insurance is used to establish that a person or company has liability, automobile, and/or workers' compensation insurance. Although some insurance companies allow insurance agents to issue certificates of liability insurance, only the FWCJUA issues certificates of liability insurance for the workers' compensation insurance coverage it provides. The only exception to this policy is when an agent requests authority to issue a certificate of liability insurance for a specific insured for a specific purpose. The agent must request this authority in writing and specify the purpose of the certificate; the FWCJUA must give approval in writing to the agent before the agent can issue the certificate. The agent must then send a copy of the certificate to the FWCJUA for its records. In the construction industry, a certificate of liability insurance is presented to a contractor to establish that a company working on a project as a subcontractor has workers' compensation insurance. If a general contractor hires a subcontractor that does not have workers' compensation insurance, the general contractor is responsible for providing workers' compensation insurance for the employees of the uninsured subcontractor who worked on the contractor's job. See § 440.10(a), (b), and (c), Florida Statutes. Form Construction presented the Certificate of Liability Insurance signed by Ms. Sykes to Gold Construction, which was, at the times pertinent to this proceeding, a qualified contractor business. Gold Construction hired general contractors, which, in turn, hired subcontractors to work on its projects. The subcontractors were paid by Gold Construction, and it required all subcontractors to present a certificate of liability insurance showing that they had general liability and workers' compensation insurance at the time the subcontractors were hired. Sometimes, the subcontractor would provide the certificate directly to Gold Construction, and sometimes Gold Construction would call the subcontractor's insurance agency and request that the certificate be sent to it, directly. The Certificate of Liability Insurance signed by Ms. Sykes was presented to Gold Construction as evidence that Form Construction had liability and workers' compensation insurance, and, in November 2004, Gold Construction hired Form Construction to do truss work on two construction projects. Gold Construction was subsequently audited by its workers' compensation insurance carrier, and the auditor determined that that Form Construction did not, in fact, have workers' compensation insurance and that the Certificate of Liability Insurance was bogus. Gold Construction was, therefore, assessed an additional $12,000.00 in workers' compensation insurance premium to add coverage for Form Construction's employees. The only records the FWCJUA has relating to Form Construction is an application for workers' compensation insurance for Fortino and Mayola Campos, d/b/a Form Construction, which was signed by Mr. Heiny and dated August 27, 2003; a date stamp on the application shows that it was received by the FWCJUA on September 17, 2003. In a letter dated October 16, 2003, the FWCJUA notified Mr. Heiny that the application for Form Construction was being returned with no coverage having been bound, and there is nothing in the records of the FWCJUA showing that it received another application for workers' compensation insurance for Form Construction or that it provided compensation insurance for Form Construction. Automobile insurance endorsement The Heiny Agency wrote commercial automobile insurance through Allstate. Ms. Sykes joined the agency in 1995, after having worked for another agency that marketed Allstate insurance products. Ms. Sykes was recommended by one of Allstate's district managers, and her familiarity with the Allstate computer system and her fluency in Spanish were considered by Mr. Heiny to be very important contributions to his agency. Form Construction had commercial automobile insurance coverage with Allstate, which was written through the Heiny Agency. Ms. Sykes was the only agent at the Heiny Agency that worked with Mrs. Campos on insurance matters. Mrs. Campos visited the Heiny Agency's office frequently to pay premiums and to discuss the various insurance policies issued to Form Construction. Mrs. Campos always spoke with Ms. Sykes when she came into the office because none of the other agents or employees of the agency spoke Spanish. Form Construction's commercial automobile insurance policy came up for renewal in April 2005. When Mrs. Campos came in to pay the renewal premium, she and Ms. Sykes discussed raising the policy's bodily injury liability limits from $25,000.00 per person and $50,000 per occurrence. Mrs. Campos told Ms. Sykes that she needed to speak to her husband before she could raise the liability limits. Ms. Sykes did not hear anything from Mrs. Campos until June 2005, when Mrs. Campos came into the office and requested that Ms. Sykes add another vehicle to Form Construction's commercial automobile insurance policy. Ms. Sykes again advised Mrs. Campos that she should consider raising the policy's bodily injury liability coverage limits to at least $250,000. Mrs. Campos asked Ms. Sykes how much such an increase in coverage would cost, and Ms. Sykes went into the Allstate computer system and partially prepared an endorsement to the automobile insurance policy showing the increased limits so she could get a quote for Mrs. Campos on the price. Ms. Sykes did not submit the endorsement at that time, and it remained pending in the Allstate computer system. On or about July 12, 2005, Mrs. Campos visited the Heiny Agency's office and reported to Ms. Sykes that Mr. Campos had been involved in an automobile accident while driving a vehicle owned by Form Construction and that he had hit a person on a bicycle. Ms. Sykes advised her that her commercial automobile bodily injury liability coverage limits were $25,000.00 per person and $50,000.00 per occurrence. Ms. Sykes also reminded Mrs. Campos that she had advised her several times to raise the Form Construction's bodily injury liability limits. Ms. Sykes immediately submitted the claim to the Allstate claims Department, where it was assigned to Thomas Burger. On July 15, 2005, Mrs. Campos contacted Ms. Sykes and told her to raise the bodily injury liability limits in Form Construction's automobile insurance policy to $500,000.00 per person and $500,000.00 per occurrence. Ms. Sykes went into the Allstate computer system and prepared and submitted the endorsement to Allstate. The endorsement submitted by Ms. Sykes on July 15, 2005, carried an effective date of July 10, 2005, two days prior to the date on which Mrs. Campos reported the claim relating to Mr. Campos's automobile accident. A copy of the endorsement was sent to Mrs. Campos on July 16, 2005, and Mrs. Campos visited the Heiny Agency's office several days later with a check for the additional premium attributable to the increase in bodily injury liability limits. The Allstate claims department was, at the times pertinent to this proceeding, separate from the department handling commercial automobile insurance policies. The information available to Mr. Burger at the time the Form Construction claim was submitted showed bodily injury liability limits of $25,000.00 per person and $50,000.00 per occurrence on the Form Construction policy. On July 29, 2005, Allstate tendered a check to the person injured by Mr. Campos for the policy limit of $25,000.00. This check was not cashed. Mr. Burger did not learn until October 2005 that a policy endorsement raising the bodily injury liability limits had been submitted July 15, 2005, with an effective date of July 10, 2005. According to Ms. Sykes, someone from Allstate contacted her in August 2005 to question her about the endorsement, and she explained that the retroactive increase in bodily injury liability limits was a mistake and that the policy limits were $25,000.00 per person and $50,000.00 per occurrence at the time of the accident on July 12, 2005. Mr. Burger interviewed Ms. Sykes and Mr. Heiny on January 13, 2006, regarding the endorsement, and Ms. Sykes told Mr. Burger that she could not recall why she would have back-dated the endorsement. Ms. Sykes told Mr. Burger of the problems she had experienced with endorsements to automobile insurance policies being lost in the Allstate computer system. On January 26, 2006, the attorney representing the person injured by Mr. Campos wrote Allstate demanding disclosure of the policy limits of Form Construction's automobile insurance policy. In a letter dated February 3, 2006, Allstate notified Mr. Heiny and Ms. Sykes that it might seek indemnification from the Heiny Agency because it attributed the back-dated increase in bodily injury liability limits to agent error. Shortly thereafter, Mr. Heiny asked if Allstate could change the limits back to the original $25,000.00 per person and $50,000.00 per occurrence as of the date of the accident, but Allstate had already determined that the increased limits were effective July 10, 2005, because of the effective date on the endorsement and because of Mrs. Campos's payment of the premium for the additional coverage. In a letter dated February 17, 2006, Mr. Burger advised the attorney representing the injured person of the increase in the bodily injury liability limits, and, on March 2, 2006, Allstate tendered a check to the injured person's attorney in the amount of $500,000.00. Ms. Sykes attributed the back-dating of the endorsement to a glitch in the Allstate computer system by which the endorsement she submitted July 15, 2005, was automatically back-dated to July 10, 2005. Ms. Sykes had complained to Mr. Heiny on numerous occasions about problems with endorsements disappearing from the system, which required her to resubmit the endorsements. Ms. Sykes was not, however, aware of any endorsements being automatically back-dated by the system except for the July 2005 endorsement to Form Construction's commercial automobile insurance policy. Under the Allstate computer system, there are only two ways in which an endorsement's effective date can be established. The usual procedure requires the agent to complete the endorsement and submit it into the system; the system then automatically records on the endorsement the date it was submitted and the effective date of the endorsement. The other alternative is for an authorized agent to manually back-date the effective date of an endorsement and then submit it into the system. Mr. Heiny tested the Allstate computer system repeatedly, trying to determine whether the system would automatically back-date an endorsement. None of the test endorsements prepared by Mr. Heiny was automatically back-dated, and Mr. Heiny is aware of no instance in which an endorsement was automatically back-dated except for the Form Construction endorsement at issue herein. Findings of ultimate fact Certificate of Liability Insurance The evidence presented by the Department is sufficient to establish with the requisite degree of certainty that, when she signed the Certificate of Liability Insurance on October 12, 2004, showing that Form Construction had workers' compensation insurance issued by the FWCJUA with effective dates of October 16, 2004, through October 15, 2005, Ms. Sykes knew that Form Construction did not have workers' compensation insurance placed by the Heiny Agency through the FWCJUA and knew that Gold Construction would rely on the Certificate of Liability Insurance as evidence that Form Construction had workers' compensation insurance. Ms. Sykes' action demonstrates her lack of fitness and trustworthiness to engage in the business of insurance, and Ms. Sykes caused injury to Gold Construction because, as a result of its reliance on the Certificate of Liability Insurance, it was required to pay additional premium to its workers' compensation insurance carrier. Ms. Sykes's testimony regarding the circumstances in which she signed the Certificate of Liability Insurance was replete with inconsistencies and improbabilities and was wholly insufficient to support her contention that, when she signed the Certificate of Liability Insurance, she had a good faith belief that Form Construction had workers' compensation insurance issued by the FWCJUA. Mr. Heiny told Ms. Sykes that he did not intend to renew his authorization to submit workers' compensation insurance applications to the FWCJUA after it expired in July 2004, and, because she was the only agent at the Heiny Agency that dealt with Mrs. Campos, Ms. Sykes would necessarily have known if Form Construction had been issued a workers' compensation insurance policy by the FWCJUA. It is reasonable to infer, therefore, that Ms. Sykes was aware on October 12, 2004, that Form Construction was not, and had never been, covered by workers' compensation insurance issued by the FWCJUA as a result of an application submitted by Mr. Heiny. Finally, Ms. Sykes' testimony that, before signing the Certificate of Liability Insurance, she reviewed the Form Construction file and saw a check and a Federal Express receipt showing that "it all went out to the FWCJUA"2 directly conflicts with her testimony that Form Construction's records were destroyed when the Heiny Agency's office flooded in September 2004.3 Although the evidence presented by the Department is sufficient to establish that Ms. Sykes demonstrated a complete lack of knowledge about workers' compensation insurance, she was not authorized to submit applications to the FWCJUA and did not engage in any transactions involving workers' compensation insurance except for signing the Certificate of Liability Insurance for Form Construction. This act is not sufficient to establish that Ms. Sykes engaged in transactions involving workers' compensation insurance. Automobile insurance endorsement The evidence presented by the Department is sufficient to establish with the requisite degree of certainty that Ms. Sykes' deliberately back-dated an endorsement to Form Construction's commercial automobile insurance policy increasing the bodily injury liability policy limits so that the increased limits were effective two days before Mr. Campos was involved in an accident while driving a vehicle owned by Form Construction. Ms. Sykes' action constitutes willful misrepresentation of the coverage limits actually in effect on the date of the accident, and it demonstrates Ms. Sykes' unfitness and untrustworthiness to engage in the business of insurance. Ms. Sykes' explanation that the endorsement was automatically back-dated by the Allstate computer system is rejected as not credible. The evidence presented by the Department is not sufficient to establish that Ms. Sykes lacked in any respect adequate knowledge of or technical competence in commercial automobile insurance. Finally, the evidence presented by the Department is sufficient to establish by the requisite degree of certainty that, because Ms. Sykes committed misconduct relating to the signing of the Certificate of Liability Insurance, she engaged in dishonest practices while engaging in the business of insurance when she back-dated the endorsement to the Form Construction commercial automobile insurance policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order Finding Madeline Hernandez Sykes guilty of one count of having violated Sections 626.611(7) and 626.621(6), Florida Statutes; Finding Ms. Sykes guilty of one count of having violated Section 626.611(5), (7), and (9), Florida Statutes; and Suspending Ms. Sykes' license to engage in business as a general lines insurance agent for a period of 15 months. DONE AND ENTERED this 30th day of April, 2009, in Tallahassee, Leon County, Florida. PATRICIA M. HART 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 April, 2009.
The Issue Whether Respondent committed the violations alleged in Administrative Complaint? If so, what disciplinary action should be taken against her?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Background Information Respondent is now, and has been at all times material to the instant case, licensed by the Department as a life and health insurance agent and as a general lines insurance agent. Respondent is now, and has been at all times material to the instant case, an officer and director of Prestige Insurance Consultants, Inc., (Prestige) and its only licensed insurance agent. Throughout the period of time material to the instant case, she had an extremely heavy workload requiring her, generally, to work at least 12 hours a day, seven days a week. Prestige Insurance Consultants, Inc., is an incorporated insurance agency with offices in Hialeah, Florida. It has been in business approximately five years. Count I On or about September 13, 1990, Mayra Loboguerrero requested Respondent to assist her in obtaining automobile insurance coverage for her teenage son, Andres Loboguerrero. During their meeting on this date, Respondent received from Ms. Loboguerrero a check made out to Prestige in the amount of $510.00 as a down payment on the premium that would have to be paid to obtain such coverage. The check was subsequently deposited in Prestige's bank account. To obtain the coverage that Ms. Loboguerrero had requested for her son, Respondent remitted an amount representing the difference between the down payment she had received from Ms. Loboguerrero and the commission Respondent and Prestige were due. The balance of the premium was financed by M.C.L., Inc., (M.C.L.) pursuant to a premium finance agreement executed by Andres Loboguerrero. The requested coverage was obtained from two separate insurance companies, Protective Casualty Company, which provided collision and comprehensive coverage, and Security National Insurance Company, which provided bodily injury and property damage coverage. The two companies issued their policies on October 17, 1990, and November 15, 1990, respectively. After Andres had signed the premium finance agreement, Ms. Loboguerrero advised Respondent by telephone that she wanted to prepay the total amount that was due M.C.L. to avoid having to pay the full finance charge and having to make monthly payments. Respondent, in turn, assured Ms. Loboguerrero that prepayment was an available option and that all Ms. Loboguerrero needed to do to exercise this option was to mail Respondent a check in the amount of $1,140. According to Respondent, she would "take care of the rest." Following her telephone conversation with Respondent, Ms. Loboguerrero made out a check to Prestige in the amount of $1,140 and mailed it to Respondent. Respondent received the check and, on or about October 30, 1990, deposited it in Prestige's bank account. Respondent, however, did not "take care of the rest," as she had promised. She inadvertently failed to remit the $1,140 to M.C.L. On November 26, 1990, a Notice of Intent to Cancel was mailed to Prestige and the Loboguerreros. The notice provided the following advisement: Installment in the amount of $169.24 due 11/20/90 has been in default for five (5) days. If payment of the amount of $179.24 is not received by 12/16/90 we will be obliged to cancel your policy (ies) as of this date without further notice. Such payment was not made. Accordingly, the automobile insurance coverage Ms. Loboguerrero had obtained for her son was cancelled effective December 23, 1993, "for non-payment of an installment in accordance with the conditions and terms of the premium finance agreement." A Standard Cancellation Notice advising of the cancellation was sent to Prestige and the Loboguerreros. Upon receiving this notice, Ms. Loboguerrero telephoned Prestige to inquire about the matter. In response to her inquiry, she was told that a "mistake" had been made. Based upon what she had been told, Ms. Loboguerrero assumed that the "mistake" would be corrected and that the coverage would be reinstated. 1/ No such corrective action was taken, however, as Ms. Loboguerrero discovered in March of 1991, when her son was involved in an automobile accident. Following the cancellation of coverage, the unearned premium, which amounted to $627.30, was returned to M.C.L. The return of the unearned premium left the Loboguerrero account with an unpaid balance of approximately $110.00, which M.C.L. subsequently recouped from Respondent. Respondent thereafter offered to reimburse Ms. Loboguerrero $818.00, which represented the unused portion of the funds Ms. Loboguerrero had paid to obtain automobile insurance coverage for her son. Ms. Loboguerrero, however, refused to accept anything less than $1,140, which was more than she was entitled to receive. Neither party was willing to compromise on the matter. Finally, Ms. Loboguerrero filed suit against Prestige in Dade County Court. On June 3, 1992, an Amended Final Judgment was entered in the case awarding Ms. Loboguerrero $818.00, plus prejudgment interest in the amount of $139.06. That same day, Respondent handed Ms. Loboguerrero a check in the amount of $957.06 to fully satisfy the Amended Final Judgment. Count II On or about April 13, 1991, Rahman Nisbet requested Respondent to assist him in obtaining automobile insurance coverage. During their meeting on this date, Respondent received from Nisbet a check made out to Prestige in the amount of $751.00 as a down payment on the premium that would have to be paid to obtain such coverage. The check was subsequently deposited in Prestige's bank account. To obtain the coverage that Nisbet had requested, Respondent remitted an amount representing the difference between the down payment she had received from Nisbet and the commission Respondent and Prestige were due. The balance of the premium was financed by M.C.L. The requested coverage was obtained from two separate insurance companies, Oak Casualty Insurance and Anglo-American Insurance. Thereafter, Nisbet received information from M.C.L. that the amount of the total premium for such coverage was well in excess of what he thought it was and what he was willing to pay. Accordingly, Nisbet wrote Prestige a letter indicating that he wished to cancel his coverage. Prestige received the letter May 16, 1991. It thereupon transmitted Nisbet's cancellation request to the insurance companies that had issued the policies Nisbet desired to cancel. The policies were subsequently cancelled. Following the cancellation of the policies, the insurance companies returned the unearned premiums to M.C.L. The return of the unearned premiums left the Nisbet account with an unpaid balance of approximately $155.00, which M.C.L. subsequently recouped from Respondent. Respondent offered to reimburse Nisbet $218.17, which represented the unused portion of the funds Nisbet had paid to obtain automobile insurance. Nisbet initially refused the offer because he believed, erroneously, that he was owed more than $218.17. On or about July 13, 1992, he accepted and cashed a check from Prestige in the amount of $218.17, but in so doing he made clear that he considered the $218.17 as merely partial payment of the monies owed him.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding Respondent guilty of violating Section 626.561(1), Florida Statutes, as alleged in Count I of the Administrative Complaint; (2) penalizing Respondent for having committed this nonwillful statutory violation, not by suspending or revoking her license, but by requiring Respondent to pay, within 30 days of the issuance of its final order, an administrative fine in the amount $250.00 and by placing her on probation, on such terms and conditions as the Department deems appropriate, for a period of one year; and (3) dismissing the remaining allegations of misconduct advanced in the Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 11th day of May, 1993. STUART M. LERNER 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 11th day of May, 1993.
The Issue The issue for determination is whether Respondent committed the offenses set forth in the Administrative Complaint and, if so, what action should be taken.
Findings Of Fact At all times material hereto, John Morris Ale, hereinafter Mr. Ale, was licensed as a general lines agent in the State of Florida. On or about December 5, 1994, Mr. Ale telephoned Ms. Kristen Stryker informing her that he had started his own insurance business, Doctors Insurance Agency, and inquiring if she wanted to obtain her automobile insurance coverage from him. Mr. Ale was acquainted with Ms. Stryker due to his having obtained her present coverage for her. It was almost time for renewal of her present coverage. Ms. Stryker agreed to obtain her automobile coverage from Mr. Ale. Further, Mr. Ale inquired if Ms. Stryker would allow his son, James Ale, to come to her home and write the coverage. Mr. Ale indicated that his son was learning the insurance business, but assured her that he, Mr. Ale, would review all documents prepared by his son. Relying on that assurance and believing that Mr. Ale's son was a licensed agent, Ms. Stryker agreed for Mr. Ale's son to write her automobile coverage. On the evening of December 5, 1994, James Ale came to Ms. Stryker's home. He completed an automobile insurance application for coverage on her 1993 Jeep Cherokee and explained the coverage to her. Ms. Stryker presented to James Ale a check for $222, made payable to Doctors Insurance, as down payment for the insurance premium. Additionally, James Ale presented to Ms. Stryker an E.T.I. Financial Corporation premium finance agreement to sign. She signed the premium finance agreement. E.T.I. is a premium finance company. The premium finance agreement is dated December 6, 1994. It is signed by Respondent and indicates, among other things, Ms. Stryker's down payment, the total premium, and coverage effective on December 6, 1994, by two insurance companies, Fortune and New Alliance. Ms. Stryker's down payment check for $222 was endorsed and deposited by Doctors Insurance Agency. At no time material hereto was James Ale licensed by the State of Florida to transact insurance. At all times material hereto, Mr. Ale knew or should have known that his son, James Ale, was not licensed by the State of Florida to transact insurance. Subsequently, James Ale forwarded to Ms. Stryker an undated letter, together with additional applications for insurance coverage with insurance companies other than Fortune and New Alliance. In the letter, James Ale requested, among other things, that Ms. Stryker sign the applications and return them to him so that he could forward the applications to the insurance companies. Also, included with the undated letter was a copy of an automobile insurance binder, which indicated, among other things, that her vehicle coverage was with two insurance companies, Armor Insurance and Service Insurance, and that the binder period was from March 10, 1995 through March 10, 1996. The binder, according to the undated letter, could be used for proof of insurance. E.T.I. Financial Corporation authorized Doctors Insurance Agency, by and through Mr. Ale, to finance insurance premiums through E.T.I. Mr. Ale was the licensed agent for Doctors Insurance Agency. As an authorized insurance premium finance agent for E.T.I., Doctors Insurance Agency had possession of blank bank drafts from E.T.I. The process and procedure utilized in financing insurance premiums through an insurance company authorized by E.T.I. to represent it included forwarding blank bank drafts, bearing E.T.I.'s name, to the authorized insurance company. The bank draft is completed by the authorized insurance company, which includes making the drafts payable for the entire premium to the insurance company providing the coverage and is signed by the licensed agent of the authorized insurance company. The completed bank draft is forwarded, along with the premium finance agreement and any down payment, to E.T.I. which forwards the draft to the specified insurance company providing the coverage. If a draft is not signed by the licensed agent, the draft is not honored by E.T.I. and, therefore, is not issued to the insurance company providing the coverage. Consequently, no coverage is provided for a vehicle. No premium finance agreement from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker. No premium finance agreement was ever received by E.T.I. from Doctors Insurance Agency. No down payment for the insurance premium on behalf of Ms. Stryker was received by E.T.I. from Doctors Insurance Agency. No bank draft from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker and payable to Fortune or New Alliance. No bank draft from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker and payable to Armor Insurance or Service Insurance. No bank drafts were ever received by E.T.I. from Doctors Insurance Agency. Due to the failure of Doctors Insurance Agency to submit the proper documents to E.T.I., including the bank drafts, no insurance company, which was to provide automobile insurance coverage to Ms. Stryker, received a premium from E.T.I. Therefore, none of the insurance companies provided Ms. Stryker with coverage for her vehicle. Even though Ms. Stryker had a binder for insurance coverage, unbeknownst to her, she had no automobile insurance coverage in effect. On or about May 24, 1995, Ms. Stryker was involved in an automobile accident. Believing that she had automobile insurance coverage in effect, Ms. Stryker contacted Mr. Ale regarding the accident. Mr. Ale informed her that she did not have insurance coverage with his insurance company and never did. Shortly afterwards, Ms. Stryker spoke with James Ale who informed her that he would attempt to locate her documents. She was not contacted again by James Ale. Because she had no automobile insurance coverage, Ms. Stryker was personally liable for the damages resulting from her accident, which exceeded $3,000. Also, she was exposed to potential personal liability for claims of injuries or damages suffered by the driver of the other vehicle involved in the accident. Neither Doctors Insurance Agency nor Mr. Ale paid any monies to Ms. Stryker for the damages that she suffered. On or about June 7, 1995, Ms. Stryker filed a consumer's assistance request with the Department of Insurance and Treasurer, hereinafter the Department. On or about October 18, 1995, almost 5 months after her automobile accident, Doctors Insurance Company issued a refund to Ms. Stryker of her $222 down payment on the insurance premium. Ms. Stryker had paid the down payment more than 10 months earlier.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order: Finding that John Morris Ale violated Subsections 626.611(4), (7), (8), and (13), and 626.621(2) and (12), Florida Statutes (1993), in Count I and violated Subsections 626.561(1), 626.611(7), (8), and (13), and 626.621(2), Florida Statutes (1993), in Count II. Imposing a 21-month suspension of the license of John Morris Ale. DONE AND ENTERED this 29th day of September, 1997, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1997.
The Issue Whether the Respondent committed the acts alleged in the Amended Administrative Complaint filed by the Petitioner on October 6, 1997, and, if so, the penalty which should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of Insurance is the state agency responsible for regulating the business of insurance in the State of Florida. Section 624.307, Florida Statutes. This power extends to the licensing and discipline of insurance agents. Sections 626.291, .611, and .621, Florida Statutes. Howard Irvin Vogel ("Respondent") is, and was at all times material to this action, licensed as a general lines agent (2-20) and a health insurance agent (2-40); Respondent is also currently licensed as a Florida Property and Casualty Joint Underwriting Association representative (0-17). Respondent is, and was at the times material to this action, the president of Federal Auto Ins., Inc., 1/ ("Federal Insurance"), an incorporated general lines insurance agency located in Lake Worth, Florida. He is, and was at the times material to this action, the only officer of the corporation who is a licensed insurance agent. In 1993, 1994, 1995, and 1996, Respondent was a director of the corporation and its designated primary agent. Respondent is, and was at the times material to this action, also the only licensed insurance agent who has the authority to sign checks drawn on the Federal Insurance trust account. At the times material to this action, Federal Insurance employed at least two licensed insurance agents in addition to the Respondent. The Respondent regularly worked full-time in the Federal Insurance office during 1993, 1994, and 1995, and he was aware of the way in which the agents he employed sold insurance. All monies received by the agents were turned over to the agency, and the Respondent approved all refunds and signed all refund checks. The Respondent ran the day-to-day operations of the insurance agency and supervised the agents who worked there. At the times material to this action, it was the practice at Federal Insurance to impose a service charge for the preparation of certificates of insurance 2/ if a customer indicated he or she would need certificates prepared throughout the year. It was also the practice not to charge customers for the preparation of the first three certificates, but the agents employed there had the option, depending on the person and on the amount of the premium, of charging $5 for each certificate prepared in excess of the three free ones or of charging a flat fee of $100 per year. The charge was imposed to cover the costs of preparing the certificates. The agents employed by Federal Insurance were expected to explain the charge to the customer and to make it clear that the $100 was an additional charge and not part of the insurance premium. The fees received for the preparation of certificates of insurance were deposited in Federal Insurance's trust account. Some insurance agencies do not charge for the preparation of certificates of insurance on behalf of their customers. At the times material to this action, Federal Insurance sold automobile towing coverage provided by L.N.V., Inc., a Florida corporation whose directors since its incorporation in 1987 have been Howard and Alicia Vogel. L.N.V., Inc., reimburses its members for the expense of towing an insured vehicle if an accident occurs during the period the customer's automobile insurance policy is in effect. Federal Insurance had, at the times material to this action, a separate application for the towing coverage, which applicants for the coverage were required to sign. The agents employed by Federal Insurance were expected to explain the nature of the coverage and to make it clear to the customer that the charge for the towing coverage was separate from the premium charged for the underlying automobile insurance policy. The membership fees received for the towing coverage were deposited into a separate account for L.N.V., Inc. The Respondent is the only licensed insurance agent authorized to sign checks on this account. Michael Clark On December 19, 1993, Michael J. Clark went to the office of Federal Insurance to purchase a commercial general liability insurance policy and to renew his commercial automobile insurance policy. He met with Lee Vogel, who was a licensed general lines agent employed by Federal Insurance. Lee Vogel quoted Mr. Clark an annual premium of $776 for the renewal of his commercial automobile insurance policy for a vehicle used in his business, Eastern Electric. Mr. Clark applied for the policy, which was written by the Granada Insurance Company ("Granada"); $776 was the correct premium for the coverage Mr. Clark requested. Mr. Clark paid Federal Insurance a down payment of $330 and signed a Premium Finance Agreement and Disclosure Statement in order to obtain financing for the balance of the premium. When Mr. Clark signed the premium finance agreement, the portion identified as the Federal Truth-in-Lending Disclosure Statement had not been completed by Lee Vogel, so the form did not reflect the amount of the down payment. Mr. Clark and Lee Vogel used a worksheet when they were discussing the coverage and the cost of the policy. The worksheet Lee Vogel prepared during these discussions shows that he added $100 to the $776 premium for the commercial automobile insurance policy and stated a total of $876 on the worksheet. Mr. Clark signed the worksheet on which the $100 charge is shown, and he apparently did not question at that time the purpose of the additional $100 charge. Several weeks after he purchased the commercial automobile insurance policy, Mr. Clark received the documents and payment book from the premium finance company. These documents reflected that he had been credited with a down payment of only $230 rather than the $330 down payment Mr. Clark thought he had made on the policy. At the same time he purchased the commercial automobile insurance policy, Mr. Clark purchased a commercial general liability insurance policy. Lee Vogel quoted Mr. Clark a premium of $281 for a policy which would be written by the American Surety and Casualty Insurance Company ("American Surety"). Mr. Clark applied for this policy and paid Federal Insurance $381 as payment in full for the general liability policy. The worksheet prepared by Lee Vogel shows a $100 charge added to the $281 premium quoted to Mr. Clark. Although Mr. Clark claims that Lee Vogel did not explain the $100 charge to him, Mr. Clark did not question Lee Vogel about the additional $100 charge. He signed the worksheet and paid Federal Insurance $381 for the general liability coverage even though he was quoted $281 as the premium for the coverage. Lee Vogel added the $100 charge to the $776 and $281 premiums for the automobile and general liability policies as a service charge to cover the costs of preparing any certificates of insurance Mr. Clark might request during the policy year. According to Lee Vogel, customers are not charged for the preparation of certificates for commercial automobile insurance policies because certificates of insurance are not usually prepared for such policies. If they are, it is in conjunction with certificates of insurance prepared to confirm commercial general liability coverage. At the time he purchased the policy, Mr. Clark requested that four certificates of insurance be prepared, and, on December 20, 1993, Howard Vogel signed four certificates of insurance verifying that Eastern Electric had general liability coverage with American Surety. During the 1993-94 policy year, Federal Insurance prepared a total of seventeen certificates of insurance on behalf of Eastern Electric, which certified that Eastern Electric had general liability coverage with American Surety. Five of the seventeen certificates of insurance confirmed both that Eastern Electric had general liability coverage with American Surety and that Eastern Electric had automobile insurance coverage with Granada Insurance Company. No separate certificates of insurance were prepared by Federal Insurance for the commercial automobile insurance policy written by Granada Insurance Company. Mr. Clark testified that he was not informed of the $100 service charge added to the premiums for the commercial automobile insurance policy and the commercial general liability insurance policy. He was in a hurry when he purchased these policies, and, when Lee Vogel gave him two or three papers to sign, he signed the papers without really reading them. Except for his signature appearing on several of the certificates of insurance prepared by Federal Insurance for Eastern Electric, the Respondent's only direct involvement with Mr. Clark's case was a letter the Respondent wrote to the Department, dated June 20, 1994, in which he complained about the way in which the investigation of Mr. Clark's complaint was being handled. Cheryl Lee Andrews On February 23, 1994, Cheryl Andrews purchased a commercial general liability insurance policy for her husband's lawn care business, Tropic Green Lawn Care, through Federal Insurance. After having spoken with him on the telephone, Ms. Andrews met with Bryan Sanders, a licensed general lines insurance agent employed by Federal Insurance, who quoted Ms. Andrews a premium of $673 for a policy written by American Surety. The wholesale broker in this transaction, with whom Federal Insurance had a contract, was Amelia Underwriters, Inc. Ms. Andrews made a down payment of $271 on the policy, and she was given a receipt which indicated that she had paid a $271 payment on a "GL" policy with "Amelia." When she paid the down payment on the policy, Ms. Andrews also signed a Premium Finance Agreement to finance the remainder of the premium through Del Rio Discount Corp. When Ms. Andrews signed the premium finance agreement, the portion identified as the Federal Truth-in-Lending Disclosure Statement had not been completed by Mr. Sanders; the premium finance agreement contained only the number of payments, the amount of each payment, and the date the first payment was due. Soon after, Ms. Andrews spoke with the Respondent on the telephone and requested a copy of the premium finance agreement with a completed disclosure statement. The Respondent sent her a copy of the agreement by facsimile transmittal, but it was not legible. Ms. Andrews telephoned the Respondent again and requested that he send her a copy by mail. When she did not receive another copy from Federal Insurance, she contacted American Surety, which contacted Amelia Underwriters, and the underwriters provided a completed copy of the Premium Finance Agreement. The down payment identified in the agreement was $171. On the day she purchased the insurance policy, Mr. Sanders asked if she wanted any certificates of insurance. At that time, Ms. Andrews did not know what this was, and Mr. Sanders told her it was proof of insurance. She asked that he prepare one certificate of insurance for Tropic Green Lawn Care on February 23, 1994. A second certificate of insurance was prepared by Federal Insurance for Tropic Green Lawn Care on March 28, 1994. Mr. Sanders did not discuss with Ms. Andrews at any time a charge for preparation of certificates of insurance. When she questioned the Respondent during a telephone conversation about the additional $100 she had paid Federal Insurance, he told her that it was a charge for certificates of insurance and other service charges and that, if she wanted any information, she should ask in writing. She then wrote a letter to the Respondent, dated June 10, 1994, requesting a breakdown of these charges, but she did not receive a response. In a letter dated July 26, 1996, written to the Department, Mr. Sanders confirmed that Federal Insurance charged $100 Ms. Andrews for preparation of certificates of insurance. Tropic Green was reimbursed $100 by Federal Insurance by a check drawn on the Federal Insurance trust account and dated January 8, 1996. Virginia Davidson On August 17, 1994, Virginia Davidson applied for personal automobile insurance through Federal Insurance. She dealt with a woman whose name she does not remember and who has not been identified in these proceedings. The policy was to cover a 1985 Chrysler, and she told the woman that she wanted insurance only for a short time because she intended to sell the car in the near future. At the time of this transaction, Ms. Davidson was in her late sixties. Ms. Davidson was told she needed to buy a one-year policy, and she recalled being quoted a price of $386 for an automobile insurance policy written by Armor Insurance Company ("Armor"). She paid the $386 by check dated August 17, 1994, and made payable to Federal Insurance; she was given a receipt that indicated that she had paid in full the premium on the Armor automobile insurance policy for one year. In fact, the premium for this policy was initially computed as $281 on the Brokerage Auto Application form. Although Ms. Davidson signed the application form on which this quote appeared, her signature appeared only on the reverse of the application form, while the quote appeared on the front. Ms. Davidson does not recall that anyone on August 17, 1994, explained that the $386 quoted to her included a separate $100 charge for towing coverage to be provided by L.N.V., Inc. At the time she purchased the insurance policy, Ms. Davidson was a member of AAA and would not have knowingly purchased towing coverage. Ms. Davidson's signature appears on a separate application form which clearly displayed the terms "Towing Coverage" and "LNV Corp." The "membership fee" for this coverage was shown on the form as $100. Ms. Davidson was asked to sign a number of documents when she applied for the automobile insurance policy, and she does not recall signing the application form for towing coverage. In a notice from Armor dated September 16, 1994, Ms. Davidson was notified that she owed an additional premium of $116 on her automobile insurance policy. The additional premium was due as a result of Armor's investigation of Ms. Davidson's driving history. In a letter to Armor dated October 11, 1994, Ms. Davidson requested that the policy be cancelled and that she receive a refund of unearned premium. Armor sent Federal Insurance a check dated October 31, 1994, in the amount of $163.70, representing the unearned premium on Ms. Davidson's automobile insurance policy. Mr. Vogel signed a check to Ms. Davidson on the Federal Insurance trust account, dated November 11, 1994, for $163.70. Ms. Davidson did not receive this check, and a replacement check was prepared, dated December 5, 1994. Ms. Davidson does not recall receiving this check, and neither of these checks has cleared Federal Insurance's account. The Respondent refused to issue another replacement check unless Ms. Davidson waited six months for the checks to clear the bank or paid Federal Insurance the $25.00 fee charged by the bank to stop payment on the replacement check. During December 1994, the Respondent recalculated the amount of the refund owing Ms. Davidson, including for the first time the agency's unearned commission and a pro rata refund of the $100 fee for the towing coverage. The Respondent issued a check to Ms. Davidson, drawn on the Federal Insurance trust account and dated December 26, 1994, in the amount of $117.20. The check specified that it was for "cancellation in full" of Ms. Davidson's automobile insurance policy. Ms. Davidson did not cash this check because she disputed that it was the full amount of the refund owed to her. Armor subsequently issued a check to Ms. Davidson in the amount of $184.80, which included the $163.70 and an additional amount of unearned premium which Armor had neglected to include in its calculations. Ms. Davidson does not recall receiving this check. All of the checks were sent to Ms. Davidson at her correct address in West Palm Beach, Florida. The Respondent was involved in the transaction involving Ms. Davidson only after she cancelled her automobile insurance policy. The Respondent signed the refund checks issued in her name, and, after Ms. Davidson filed a complaint with the Department, he responded to the Department's inquiry regarding the refund due to her. After having reviewed the files of Mr. Clark, Ms. Andrews, and Ms. Davidson, the Respondent was satisfied with the way the agents employed by Federal Insurance transacted business with these individuals. Summary The evidence is uncontroverted that the employees of Federal Insurance are supervised on a daily basis by and are under the direct control of the Respondent. The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that Michael Clark was unaware that he was charged $100 in addition to the premiums quoted on the commercial automobile insurance policy and commercial general liability insurance policy he purchased through Federal Insurance. Although he may not have been told the purpose of the extra charge, Mr. Clark was quoted premiums of $776 and $281, respectively, for the insurance policies. The worksheet he signed clearly shows that $100 was added to each of these premiums; in fact, Mr. Clark paid $381 as payment in full for the commercial general liability insurance policy when he knew that the premium for the policy was $281. On the other hand, the evidence presented is sufficient to establish that Lee Vogel deducted a $100 service charge for certificates of insurance from Mr. Clark's down payment of $330 on the commercial automobile insurance policy even though this charge was not imposed on commercial automobile insurance policies because separate certificates of insurance are not prepared for such coverage. The evidence presented by the Department is sufficient to establish that Bryan Sanders did not inform Cheryl Andrews of the $100 service charge added to the premium for the general liability insurance policy she purchased for Tropic Green Lawn Care and to establish that Ms. Andrews could reasonably believe that the entire down payment of $271 would be applied to the insurance premium. However, the evidence is uncontroverted that, when she spoke to the Respondent by telephone, he told her that the charge was for preparation of certificates of insurance and other services. The evidence presented by the Department is sufficient to establish that, even though she signed an application form for towing coverage to be provided by L.N.V. Corp., Ms. Davidson was not told of the purpose of the application, the nature of the coverage, or the $100 fee for the coverage. In fact, the receipt for $386 that she received from Federal Insurance did not make any reference at all to the towing coverage or to L.N.V. Corp. The evidence presented by the Department is, however, not sufficient to establish that the Respondent refused to refund the monies owing to Ms. Davidson; under the circumstances presented, it was not unreasonable for Federal Insurance to refuse to issue a second replacement check. The evidence presented by the Department is sufficient to establish that the Respondent instituted the practice of charging a $100 service fee for the preparation of certificates of insurance for commercial general liability insurance purchased through Federal Insurance. The evidence presented by the Department is not sufficient to establish that Federal Insurance was prohibited by agreement or contract from imposing a service charge for the preparation of certificates of insurance. The evidence presented by the Department is not sufficient to establish that the Respondent instituted a policy at Federal Insurance requiring customers to purchase towing coverage from L.N.V., Inc., as a condition of purchasing an automobile insurance policy or that the Respondent developed a sales scheme whereby the application for and explanation of the towing coverage was hidden. The evidence is sufficient to establish only one instance in which an unidentified person employed at Federal Insurance failed to disclose the particulars of the towing coverage. The evidence presented by the Department is not sufficient to establish a pattern at Federal Insurance of agents failing to disclose the $100 service charge for preparing certificates of insurance, of agents imposing the service charge to policies for which no certificates of insurance are prepared in the normal course of business, or of failing to inform customers of the nature of and charge for ancillary coverage such as towing coverage. Finally, the evidence presented by the Department does not establish that the Respondent or the agents involved in the transactions at issue in this proceeding failed to remit any portion of the premiums owing to the insurance companies for the policies sold to Mr. Clark, Ms. Andrews, or Ms. Davidson. In the case of Mr. Clark and Ms. Andrews, the premiums quoted to them were correct and the premiums set forth on the premium finance agreements were correct; it is irrelevant in this respect that Mr. Clark and Ms. Andrews may have believed that their $330 and $271 down payments were to be applied solely to the premiums owed on the policies. Likewise, the full amount of the premium initially calculated for Ms. Davidson's automobile insurance policy was paid to the insurance company by Federal Insurance.
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 all three counts of the Amended Administrative Complaint filed against Howard Irvin Vogel. DONE AND ENTERED this 16th day of September, 1998, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 Filed with the Clerk of the Division of Administrative Hearings this 16th day of September, 1998.
