The Issue The issues are whether Respondent violated provisions of chapter 626, Florida Statutes, regulating insurance agents in Florida, as set forth in the Administrative Complaint, and if so, what sanction is appropriate.
Findings Of Fact At all times relevant to the complaint, Mr. Matthias was licensed in Florida as an insurance agent, including variable annuity and health. Mr. Matthias entered into an agreement with United in March 2011 to collect premiums on debit insurance policies. Mr. Matthias’s job was to visit customers each month to collect the premiums, initial the customer’s receipt book to show proof of payment, and remit the premiums to United. About half of these customers paid in cash. Mr. Matthias reported to Mr. Khalangi Ewers, who supervised five other agents in addition to Mr. Matthias. Every month, Mr. Ewers reviewed the accounts on which the monthly premium had not been paid. In a usual month, this would vary from between five to eight percent. However, in early 2013, Mr. Ewers calculated that United had not received payments from 30 percent of Mr. Matthias’s accounts. Mr. Ewers called Mr. Matthias and asked him why the premiums had not been received by United. When Mr. Matthias responded that the customers had not paid, Mr. Ewers decided to investigate by telephoning a few accounts that normally paid on time. He was told by each of the customers that they had paid Mr. Matthias. Mr. Ewers then conducted a standard audit of Mr. Matthias’s accounts by visiting the homes of each of his customers and reviewing their receipt books. Mr. Ewers compared the amounts Mr. Matthias had indicated that he had received (by initialing that customer’s receipt book) with the amounts actually turned in to United. Over the five-week period beginning on January 14, 2013, and ending February 15, 2013, a total deficiency of $5,304.17 was revealed by the audit. United continued to provide coverage to all of these customers. Mr. Matthias admitted to United that customers had paid him but that he had not remitted these amounts to United. At hearing, Mr. Matthias did not dispute the deficiency, but sought to show that he had made restitution. On January 7, 2013, Mr. Matthias gave Mr. Ewers a money order in the amount of $388.62. On January 24, 2013, he gave him another money order for $215.00 and, on February 11, 2013, gave him a third money order for $800.00. Mr. Ewers testified that the first two of these payments were credited to accounts before the calculation of the deficiency. All parties agree that the $800 payment should be applied to reduce the $5,304.17 deficiency. It is also undisputed that Mr. Matthias paid some additional cash to Mr. Ewers. However, there is a conflict in the testimony as to the amount and purpose of any additional payments. Mr. Ewers testified that he made a personal loan to Mr. Matthias in the amount of $1,200.00 because he was sympathetic to the personal and financial difficulties Mr. Matthias was having. No written evidence of a personal loan was introduced into evidence, however. Mr. Ewers testified that Mr. Matthias gave him a cash payment of $900.00 (less $78.20 credited to a specific United account) in partial repayment of that personal loan. On the other hand, Mr. Matthias testified that he never borrowed any money from Mr. Ewers. He testified that Mr. Ewers went with him on several occasions to cash his pay checks in order to collect amounts due to United and that Mr. Ewers accepted not only the $900.00, but also two additional cash payments of $220.00 and $240.00 on behalf of United, but that these sums were never credited to reduce his deficiency. The Department did not show by clear and convincing evidence that payments made to Mr. Ewers were made to repay a personal loan. However, even if Mr. Matthias is given credit for all payments he claimed to have made, totaling $2,675.42, along with a credit of $2,064.26 for his forfeited bond and interest, he still has not repaid the full $5,304.17 deficit he owed to United, despite its demands that he do so. In collecting payments from United’s customers and failing to timely remit these funds to United, Mr. Matthias demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. It was fraudulent and dishonest for Mr. Matthias to collect money owed to United, not send it to them, and initially claim that the customers had not paid him when United asked him about these accounts. Mr. Matthias engaged in misappropriation, conversion, and unlawful withholding of moneys belonging to United that he had received in the course of his insurance business. Mr. Matthias received premiums belonging to United under his insurance license, but failed to account for these trust funds or pay them to United as required. No information was presented to indicate that Mr. Matthias’s license has ever been subjected to any prior disciplinary orders or that he has received prior warnings from the Department.
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 Respondent in violation of sections 626.561(1), 626.611(7), 626.611(9), and 626.611(10), Florida Statutes, and suspending his license for nine months. DONE AND ENTERED this 17th day of December, 2014, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 2014.
The Issue Whether Respondent violated the following statutory provisions: Sections 626.561(1), 626.611(5), 626.611(7), 626.611(8), 626.611(9), 626.611(10), 626.611(13), 626.621(2), 626.621(4), 626.621(6), 626.9521, and 626.9541(1)(o)1., Florida Statutes, and if so what discipline should be imposed.
Findings Of Fact Respondent, Gus Jones, Jr., is currently and was at all times relevant to this proceeding a licensed insurance agent in this state doing business under the name of A. Maples Insurance Agency. In August, 1990, Jesus Escalera, who had a roofing business, came to Respondent to obtain workers' compensation insurance. Mr. Escalera's insurance was placed through the National Counsel on Compensation Insurance (NCCI) which is a pool for assigned risk insurance. Mr. Escalera's policy was with Aetna with coverage effective through October 26, 1991. On August 16, 1991, Mr. Escalera came to Respondent to renew his workers' compensation insurance. Mr. Escalera gave Respondent $409.00, which represented a down payment of one-half the premium for one year's coverage. The remainder of the premium was to be financed with Financial Industries, Inc. Aetna had withdrawn from the original risk insurance pool, therefore it was necessary to submit a new application to NCCI for placement of insurance for Mr. Escalera. Respondent sent the application to NCCI in October, 1991. Mr. Escalera's insurance was placed with United States Fidelity and Guaranty Company (USF&G) on November 13, 1991. Respondent kept a supply of blank drafts from Financial Industries, Inc. at his office. Respondent sent a Financial Industries, Inc.'s draft to NCCI for Mr. Escalera's insurance with USF&G. Financial Industries stopped payment on the draft because they had decided to discontinue financing workers' compensation insurance. Respondent attempted to finance Mr. Escalera's insurance through Premium Assignment Company (Premium). Respondent sent a premium draft to NCCI, but Premium stopped payment on the draft for Respondent's failure to send a transmittal to Premium. Mr. Escalera had called Respondent three or four times asking for his payment book so that he could make the installment payments for the insurance. Respondent advised Mr. Escalera that the payment book was in the mail. USF&G performed an audit on Mr. Escalera's payroll and determined that Mr. Escalera owed $13,724.00 for earned premiums. In January, 1992, Respondent contacted Mr. Escalera and advised him that USF&G intended to cancel the insurance effective February 16, 1992. On February 3, 1992, Mr. Escalera went to see Respondent. Respondent explained that he could not get financing for Mr. Escalera and requested Mr. Escalera to pay the balance of the premium of $817.00. Mr. Escalera paid $409.00 to Respondent and received a receipt for that amount. Respondent sent USF&G a check for $817.00. The policy was reinstated with coverage effective December 13, 1991. USF&G gave notice dated March 13, 1992 that Mr. Escalera's policy would be terminated April 13, 1992 for non-payment. By letter dated April 16, 1992, USF&G returned Respondent his check due to the second cancellation. By letters dated June 2, 1992, USF&G advised Respondent that Mr. Escalera owed a earned premium of $13,724.00. The policy was terminated effective April 13, 1993, because Mr. Escalera had failed to pay the earned premium. In April or May, 1992, Respondent placed the retuned check from USF&G in his trust account. Respondent did not advise Mr. Escalera that the premium had been returned. According to Mr. Escalera, he did not know at the time of the hearing who had the money. On February 6, 1993, Respondent called David Peters, a representative of USF&G and asked Mr. Peters what to do with the $817. Respondent let the money remain in the trust account and awaited further instruction from Mr. Peters. After Respondent received the administrative complaint, he called USF&G and spoke with Marilyn Bailey who was now handling the account on behalf of USF&G. Based on his conversation with Ms. Bailey, Respondent sent USF&G a cashier's check for $817 dated May 18, 1993.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer issue a Final Order finding Respondent guilty of a violation of Sections 626.561(1) and 626.621(2) and that Respondent be assessed an administrative fine of $500 and be placed on probation for a period of one year subject to such terms and restrictions as the Department may apply. DONE AND ENTERED this 19th day of October, 1993, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND 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 19th day of October, 1993.
The Issue Whether Respondent's insurance agent licenses should be disciplined because selling a commercial note to an unqualified elderly person on February 11, 1999, demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Sections 626.611(7), Florida Statutes.
Findings Of Fact Petitioner is the state agency responsible for regulating and licensing the sale of insurance in Florida, in accordance with the provisions of Chapter 626, Florida Statutes. Respondent, Kevin Ira Frye, is currently eligible for licensure and licensed in the this state as a health insurance agent, life insurance agent, life and health insurance agent, and life, including variable annuity agent, pursuant to licensure number A090874, and was so licensed at all times relevant to these proceedings. In the fall of 1998, Juanita Crouch of Spring Hill, Florida, expressed an interest in purchasing a long-term care insurance policy by responding to a solicitation she received in the mail from Respondent's agency. In response to her inquiry, Respondent came out to her home to discuss the insurance. Ms. Crouch at this time was a 75-year-old retired homemaker and widow. Her only income was $1,100 a month stipend from her deceased husband's social security and her interest income from two Certificates of Deposit (CDs). She did not graduate from high school. She had never worked outside of the home, being a homemaker all of her life; her husband handled all of the family finances prior to his death. She does not own any stocks, bonds or any other investments. Mrs. Crouch resides in a home purchased for her by her daughter, Linda Bruno-Lagos, and placed in her name through a recorded Articles of Agreement. Mrs. Crouch could not be considered a sophisticated investor. In addition, her health was poor, and her memory was some-what impaired. Mrs. Crouch possessed $25,000 deposited in two bank CDs that were coming due during the relevant time period. Mrs. Crouch was looking for a investment with a reasonable rate of interest so that she could deposit the funds in order to augment her small income. This $25,000 represented her only savings. Respondent, at this time, became aware that the CDs were coming due and during their next appointment, solicited Mrs. Crouch to take her $25,000 in savings and purchase a commercial promissory note to be issued by First American Capital Trust (FACT). FACT uses the proceeds from the issuance of the notes to fund the medium credit purchases of vehicle loans secured by perfected liens on new and used automobiles and light trucks. Respondent represented to Mrs. Crouch that, by purchasing the FACT note, she would be investing in a guaranteed financial instrument similar to a bank Certificate of Deposit. Mrs. Crouch would enjoy a 9.75 percent guaranteed interest rate on her investment over a nine-month period. Respondent gave Mrs. Crouch various brochures, including a document entitled "Disclosure Statement." The brochures purported to show that the investment was fully insured and guaranteed. No provision of this disclosure statement was ever explained by Respondent to Mrs. Crouch, including the disclosure warning by FACT that this investment was "inherently risky." Mrs. Crouch testified that she did not understand the information and was relying on Respondent's representations. This testimony is credible. Respondent testified that he purposely avoided explaining any provision of the disclosure statement. Respondent believed that it was Mrs. Crouch's sole responsibility to read the brochures and understand the details of the investment. In fact, Respondent testified that telling potential investors that they could lose all of their money was something he didn't discuss, as it might discourage sales. Respondent left the brochures explaining the investment with Mrs. Crouch to read and review, which she did not do. Respondent was aware, or should of been aware, that Mrs. Crouch, given her age and financial circumstances as a retiree, desired to place her funds only in safe, low risk, investments. Mrs. Crouch did not meet the suitability standards to purchase the FACT note, as set forth in the disclosure statement prepared by FACT. FACT required potential investors to have either a net worth of $1,000,000, or an annual income in excess of $200,000 a year, or in the alternative, no more that 20 percent of an individuals total assets could be invested. The application submitted by Respondent lists her net worth as between $150,000 and $250,000. Mrs. Crouch's actual net worth is significantly less than this sum. Respondent prepared the application, which Mrs. Crouch signed, and he determined the estimate of Mrs. Crouch's net worth. Respondent was either aware or should have been aware that Mrs. Crouch did not have such a net worth as was listed on her application, and, therefore, did not meet FACT's eligibility requirements. She should not have been sold the note. Mrs. Crouch elected to invest her $25,000 with FACT to purchase the note. On February 11, 1999, she gave the funds to Respondent, which was promptly remitted to FACT. On March 8, 1999, FACT issued a Certificate of Commercial Note, at the full redemption value of $26,961.35 in the name of Juanita Crouch, with a maturity date nine months from the date of the note. In December of 1999, Mrs. Crouch received a letter from FACT informing her that FACT had filed for bankruptcy protection on September 30, 1999. A receiver has been appointed who is attempting to recover assets. Mrs. Crouch never received any return on her purchase of the FACT note. She filed a claim in the U.S. Bankruptcy Court, but with the exception of two small payments from the receiver, she has never received any payments on the note. She has apparently suffered a loss of most, if not all, of her principal of $25,000. Mrs. Crouch, relying on Respondent's representations, thought she was purchasing a note that would pay a fixed yield with very low risk. What she unknowingly purchased was a commercial note that carried a warning from FACT that "extending credits to retail buyers with medium credit ratings is inherently risky." Mrs. Crouch was clearly unaware of this risk and Respondent made no attempt to make her aware. Despite the representations made to Mrs. Crouch by Respondent, at no time was her investment insured or guaranteed by the Federal Deposit Insurance Corporation, or any insurance company, nor any other entity. In fact, the Disclosure Statement states that the private insurance covers the vehicle loans only and not the notes directly. Respondent failed to disclose to Mrs. Crouch that her note and investment was not insured, even though he testified that he was aware of and understood that the note itself was not insured at the time of the sale. Respondent has been a licensed insurance agent since December 9, 1997, and was employed by Senior American Insurance and Financial Services. Respondent has not previously been disciplined by Petitioner.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED as follows: Respondent, Kevin Ira Frye, be found guilty of violating Section 626.611(7), Florida Statutes. Pursuant to Rule 4-231.080, Florida Administrative Code, Respondent's licenses and eligibility for licensure be SUSPENDED for a period of six months, followed by a two-year period of probation upon such reasonable conditions as the Department may require. DONE AND ENTERED this 6th day of February, 2003, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 2003. COPIES FURNISHED: James A. Bossart, Esquire Department of Financial Services 200 East Gaines Street, Room 612 Tallahassee, Florida 32399-0333 Sidney Werner, Esquire Piper, Ludian, Howie & Werner, P.A. 5720 Central Avenue St. Petersburg, Florida 33707 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether disciplinary action should be taken against the Respondent's insurance licenses based upon the alleged violations of the Florida Insurance Code set forth in the Administrative Complaint.
Findings Of Fact Respondent is currently licensed in the state of Florida as life agent, health agent and life & health agent. Pursuant to a contractual agreement executed by the Respondent on September 23, 1988, the Respondent was employed by Independent Life as a debit agent and remained employed with the Company from September 26, 1988, through April 5, 1989. His responsibilities with the Company included sales and servicing of accounts. The Respondent's duties included collecting premiums from customers either weekly or monthly for remittance to the Company. Respondent and the other agents were specifically instructed that collected premiums were to be remitted on a daily basis. Independent Life agents were instructed that all premiums collected from insureds were to be recorded in the insured's premium receipt book. The agent was then required to record the collection on the Company's field accounting route list. The field accounting route list reflects the date the last premium payment was collected, the date the next premium is due, and whether the contract is on a monthly or weekly payment schedule. When a agent collects premiums from an insured on a different day than the date which is to be reflected on the field accounting route list, that information is recorded by the agent on a memo collection list. Finally, in those cases where an insured paid by mail, the payment was to be reflected on a mail pay receipt. Together, the mail pay receipt, the memo collection list and the field accounting list should reflect all payments recorded in the insureds' premium receipt book. In other words, the records contained in the premium receipt book should exactly balance the records which appear on the field accounting route list as supplemented by the mail pay receipts and memo collection list. When accounts are audited by the Company, the sales manager compares the entries in the premium receipt books with the records reflected on the Company's field accounting route list, mail pay receipts and memo collection list. If there is a discrepancy, then the Company conducts an investigation to determine if there is a shortage. Once a shortage has been discovered, it is recorded on the Company's balance due accounting form. This form reflects the shortages which occurred on each individual account. In addition, another balance due accounting form is prepared documenting all shortages on the agent's account. On on about April 5, 1989, Respondent collected the sum of $4.72 from Diana Brown. This sum represented the insured's monthly premium payment. The payment was recorded in the insured's premium receipt book, but was not remitted by Respondent to Independent Life and/or reflected on the field accounting route list or on a memo collection list. Thus, the Respondent collected the sum of $4.72, which represented the insured's premium for a period of one month, and converted the same to his own use and benefit. On or about December 8, 1988, the Respondent collected a monthly premium in the amount of $36.36 from Winnie Christopher. This payment of $36.36 was recorded in the insured's premium receipt book. However, only $27.27 was remitted to the Company and recorded on the Company's memo collection list. This evidence indicates that the Respondent misappropriated and converted to his own use and benefit the sum of $9.09 (which represented one week's premium payment by the insured.) During the month of February, 1989, Respondent collected the sum of $24.30 from Donza Queen, which represented her premium payment for February and March of 1989. This payment was recorded in the insured's premium receipt book. However, the Respondent only recorded $12.15 in the Company's field accounting route list and that sum was the total remitted to the Company. Respondent has failed to properly account for the total amount collected for the account of Donza Queen and has unlawfully misappropriated and converted the same to his own use and benefit. On or about December 8, 1988, the Respondent collected the sum of $27.41 from Georgia Curry. This sum, which represented the insured's monthly premium payments, was recorded in her premium receipt book. However, the field accounting route list prepared by Respondent for the week of December 5, 1988, did not reflect that this collection was applied to the insured's account. Thus, Respondent unlawfully misappropriated and converted to his own use and benefit the sum of $27.41 which should have been applied to the account of Georgia Curry. During the month of January, 1989, Harold Timmerman mailed to Independent Life the sum of $31.71, which represented his premium payment for a period of three (3) months. Pursuant to Company procedures, the office staff recorded the above payment in the insured's premium receipt book, mailed the premium receipt book to the premium payer and issued a mail pay receipt to the Respondent to be applied to Mr. Timmerman's account. The Respondent failed to apply this money to the insured's account. As a result, the policy lapsed in January, 1989, for failure to pay the required premium. The insured was without coverage for a period of three (3) months until Independent Life discovered the discrepancy. In January, 1989, the Respondent collected the sum of $18.43 from William Chambliss, which represented the insured's weekly premium payment. This collection was recorded in the insured's premium receipt book. However, the Respondent failed to apply the above payment to the insured's account. Thus, the Respondent unlawfully misappropriated and converted to his own use and benefit, the sum of $18.43 which should have been applied to the account of William Chambliss. On April 4, 1989, the Respondent collected $23.80 from Claudia Hester. This payment was recorded in the insured's premium receipt book, but it was not remitted to the Company and/or reflected on the field accounting route list. Therefore, the Respondent misappropriated and converted to his own use and benefit, the sum of $23.80 which should have been applied to the account of Claudia Hester. From September, 1987 to February, 1990, Anita Campbell was the Staff Sales Manager for Independent Life. Her duties as the Staff Sales Manager included, in part, assisting other agents who had difficulty collecting their debits. During a routine review of the Respondent's accounts, Ms. Campbell ascertained that the Respondent's arrears were very high and that collection percentages were very low. As a result and in accordance with her responsibilities as Staff Sales Manager, Ms. Campbell accompanied Respondent in the collection of his debit beginning the week of April 4, 1989. Although Ms. Campbell's purpose in accompanying Respondent on his debit route was to help him get his records in order, she soon determined that, in numerous cases, the insured's premium receipt books had been marked as reflecting the payment of premiums even though the premiums were not recorded on the Company's field accounting route list, memo collection list, or other company documents. Ms. Campbell unsuccessfully attempted to discuss this matter with the Respondent who became angry and threatened to walk off the job. On April 5, 1989, the Respondent did not return to work and he was subsequently terminated. Ms. Campbell's responsibilities as Staff Sales Manager also included collecting affidavits from numerous insureds on Respondent's debit route to determine whether documented shortages existed. Her investigation uncovered numerous cases where Respondent collected money but failed to record the premium in the insured's premium receipt book. Some insureds who claim that they made their payments lost their coverage because there was no record of the payment so the Company was unable to give them credit. In other instances, payments were recorded in the premium payer's receipt book, but were not recorded in the Company's field accounting route list. Ms. Campbell completed a report regarding the numerous deficiencies and gave it to Mr. Roy Young, the District Sales Manger, who forwarded the information to the home office for further action. An audit of Respondent's agency was conducted and revealed a deficit in the amount of $1,312.31. It appears that there may be additional shortages which can not be documented. Independent Life recovered the sum of $878.88 by withholding the Respondent's last paychecks. However, there is still a documented shortage due and owing to the Company of approximately $433.43. In an effort to recover these funds, Mr. Thomas Hisle from Independent Life sent a demand letter to the Respondent dated June 14, 1989. That letter notified Respondent that $433.43 was due and owing to Independent Life. Respondent has failed to pay any portion of this outstanding balance owed to the Company.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a Final Order revoking Respondent's licenses as an insurance agent in the State of Florida. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 3rd day of April, 1991. J. STEPHEN MENTON 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 3rd day of April, 1991. APPENDIX TO RECOMMENDED ORDER The Petitioner has submitted a Proposed Recommended Order. The following constitutes my rulings on the proposed findings of fact submitted by the Petitioner. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. 1. Adopted in substance in Findings of Fact 1. 2. Adopted in substance in Findings of Fact 2. 3. Adopted 4 and 5. in substance in Findings of Fact 3, 4. Adopted in substance in Findings of Fact 6. 5. Adopted in substance in Findings of Fact 7. 6. Adopted in substance in Findings of Fact 8. 7. Adopted in substance in Findings of Fact 9. 8. Adopted in substance in Findings of Fact 10. 9. Adopted in substance in Findings of Fact 11. 10. Adopted in substance in Findings of Fact 12. 11. Adopted in substance in Findings of Fact 13. 12. Adopted in substance in Findings of Fact 14. Adopted in substance in Findings of Fact 15. Adopted in substance in Findings of Fact 16. Rejected as unnecessary. COPIES FURNISHED: John C. Jordan, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 34953 Charles Neil Newman 2931 S. W. Brittle Circle Port St. Lucie, Florida 34953 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact The parties have stipulated to the truth of the allegations of paragraph 1-7 of the Administrative Complaint. The Respondent is currently licensed in the State of Florida as a life and health (debit) agent, as well as a life and health agent. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Insurance, the Petitioner, has jurisdiction over the insurance licenses and appointments of the Respondent. On August 26, 1983, the Respondent entered into an agent contractual agreement with Capital Security Life Insurance Company (Capital). The agent's contract required that the Respondent account for and remit to Capital all premiums collected and received on behalf of that company. On or about October 18, 1991, Capital terminated its appointment of the Respondent, as one of its agents. This had the effect of cancelling the agent contract of the Respondent. The Respondent was terminated because Capital had detected the fact that certain premium monies collected by the Respondent from policy holders had not been remitted over to Capital on a repetitive basis. On or about October 18, 1991, Capital conducted an audit of the account of the Respondent. It was thus shown through the subject audit and work papers in evidence, as well as the testimony of Mr. Reynolds for the Petitioner, that the account of the Respondent contained a proven deficiency in the sum of $812.41 in insurance premiums collected but not remitted to Capital. Other than protest that the deficiency was a mistake and the result of computer error or that the financial information resulting in that figure had been erroneously input into Capital's computer by Capital's office personnel in charge of accounting for such matters and monies, no cogent credible explanation for the failure to remit over that sum of money referenced above has been established. The testimony of Mr. Reynolds is accepted over that of the Respondent as more credible and worthy of belief. It has thus been established that the Respondent misappropriated and converted to his own use and benefit, and unlawfully withheld, premium monies rightfully belonging to Capital while engaged in the applicable and ordinary course of his business as an agent for Capital.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore, RECOMMENDED that a Final Order be entered by the Petitioner agency finding that the Respondent, Willie Frank Dennis, is guilty of the violations set forth as and in the manner in the Conclusions of Law above and that, therefore, his licenses and eligibility for licensure be revoked pursuant to Sections 626.611 and 626.621, Florida Statutes. DONE AND ENTERED this 3rd day of November, 1993, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-1222 Petitioner's proposed findings of fact: 1-9. Accepted. COPIES FURNISHED: William C. Childers, Esquire Department of Insurance and Treasurer Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Willie Frank Dennis 1113 Kennard Street, Apartment No. 2 Jacksonville, Florida 32202 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Respondent holds a property and casualty insurance license, life and health insurance license, and life insurance license for the State of Florida. She has held her property and casualty license for about 20 years. In 1976, she was employed as an agent for the Orlando office of Commonwealth insurance agency, which she purchased in 1977 or 1978. She continues to own the Commonwealth agency, which is the agency involved in this case. Respondent has never previously been disciplined. In 1979 or 1980, Respondent was appointed to the board of directors of the Local Independent Agents Association, Central Florida chapter. She has continuously served on the board of directors of the organization ever since. She served as president of the association until September, 1991, when her term expired. During her tenure as president, the local association won the Walter H. Bennett award as the best local association in the country. Since May, 1986, Commonwealth had carried the insurance for the owner of the subject premises, which is a 12,000 square foot commercial block building located at 923 West Church Street in Orlando. In July, 1987, the insurer refused to renew the policy on the grounds of the age of the building. Ruth Blint of Commonwealth assured the owner that she would place the insurance with another insurer. Mrs. Blint is a longtime employee of the agency and is in charge of commercial accounts of this type. Mrs. Blint was a dependable, competent employee on whom Respondent reasonably relied. Mrs. Blint contacted Dana Roehrig and Associates Inc. (Dana Roehrig), which is an insurance wholesaler. Commonwealth had done considerable business with Dana Roehrig in the past. Dealing with a number of property and casualty agents, Dana Roehrig secures insurers for the business solicited by the agents. Dana Roehrig itself is not an insurance agent. In this case, Dana Roehrig served as the issuing agent and agreed to issue the policy on behalf of American Empire Surplus Lines. The annual premium would be $5027, excluding taxes and fees. This premium was for the above- described premises, as well as another building located next door. The policy was issued effective July 21, 1987. It shows that the producing agency is Commonwealth and the producer is Dana Roehrig. The policy was countersigned on August 12, 1987, by a representative of the insurer. On July 21, 1987, the insured gave Mrs. Blint a check in the amount of $1000 payable to Commonwealth. This represented a downpayment on the premium for the American Empire policy. The check was deposited in Commonwealth's checking account and evidently forwarded to Dana Roehrig. On July 31, 1987, Dana Roehrig issued its monthly statement to Commonwealth. The statement, which involves only the subject policy, reflects a balance due of $3700.86. The gross premium is $5027. The commission amount of $502.70 is shown beside the gross commission. Below the gross premium is a $25 policy fee, $151.56 in state tax, and a deduction entered July 31, 1987, for $1000, which represents the premium downpayment. When the commission is deducted from the other entries, the balance is, as indicated, $3700.86. The bottom of the statement reads: "Payment is due in our office by August 14, 1987." No further payments were made by the insured or Commonwealth in August. The August 31, 1987, statement is identical to the July statement except that the bottom reads: "Payment is due in our office by September 14, 1987." On September 2, 1987, the insured gave Commonwealth a check for $2885.16. This payment appears to have been in connection with the insured's decision to delete the coverage on the adjoining building, which is not otherwise related to this case. An endorsement to the policy reflects that, in consideration of a returned premium of $1126 and sales tax of $33.78, all coverages are deleted for the adjoining building. The September 30 statement shows the $3700.86 balance brought forward from the preceding statement and deductions for the returned premium and sales tax totalling $1159.78. After reducing the credit to adjust for the unearned commission of $112.60 (which was part of the original commission of $502.70 for which Commonwealth had already received credit), the net deduction arising from the deleted coverage was $1047.18. Thus, the remaining balance for the subject property was $2653.68. In addition to showing the net sum due of $944.59 on an unrelated policy, the September 30 statement contained the usual notation that payment was due by the 12th of the following month. However, the statement contained a new line showing the aging of the receivable and showing, incorrectly, that $3700.86 was due for more than 90 days. As noted above, the remaining balance was $2653.68, which was first invoiced 90 days previously. Because it has not been paid the remaining balance on the subject policy, Dana Roehrig issued a notice of cancellation sometime during the period of October 16-19, 1987. The notice, which was sent to the insured and Commonwealth, advised that the policy "is hereby cancelled" effective 12:01 a.m. October 29, 1987. It was the policy of Dana Roehrig to send such notices about ten days in advance with two or three days added for mailing. One purpose of the notice is to allow the insured and agency to make the payment before the deadline and avoid cancellation of the policy. However, the policy of Dana Roehrig is not to reinstate policies if payments are received after the effective date of cancellation. Upon receiving the notice of cancellation, the insured immediately contacted Mrs. Blint. She assured him not to be concerned and that all would be taken care of. She told him that the property was still insured. The insured reasonably relied upon this information. The next time that the insured became involved was when the building's ceiling collapsed in June, 1988. He called Mrs. Blint to report the loss. After an adjuster investigated the claim, the insured heard nothing for months. He tried to reach Respondent, but she did not return his calls. Only after hiring an attorney did the insured learn that the cancellation in October, 1987, had taken effect and the property was uninsured. Notwithstanding the cancellation of the policy, the October 31 statement was identical to the September 30 statement except that payment was due by November 12, rather than October 12, and the aging information had been deleted. By check dated November 12, 1987, Commonwealth remitted to Dana Roehrig $3598.27, which was the total amount due on the October 30 statement. Dana Roehrig deposited the check and it cleared. The November 30 statement reflected zero balances due on the subject policy, as well as on the unrelated policy. However, the last entry shows the name of the subject insured and a credit to Commonwealth of $2717 plus sales tax of $81.51 minus a commission readjustment of $271.70 for a net credit of $2526.81. The record does not explain why the net credit does not equal $2653.68, which was the net amount due. It would appear that Dana Roehrig retained the difference of $125.87 plus the downpayment of $1000 for a total of $1125.87. It is possible that this amount is intended to represent the earned premium. Endorsement #1 on the policy states that the minimum earned premium, in the event of cancellation, was $1257. By check dated December 23, 1987, Dana Roehrig issued Commonwealth a check in the amount of $2526.81. The December 31 statement reflected the payment and showed a zero balance due. The record is otherwise silent as to what transpired following the issuance of the notice of cancellation. Neither Mrs. Blint nor Dana Roehrig representatives from Orlando testified. The only direct evidence pertaining to the period between December 31, 1987, and the claim the following summer is a memorandum from a Dana Roehrig representative to Mrs. Blint dated March 24, 1988. The memorandum references the insured and states in its entirety: Per our conversation of today, attached please find the copy of the cancellation notice & also a copy of the cancellation endorsement on the above captioned, which was cancelled effective 10/29/87. If you should have any questions, please call. Regardless of the ambiguity created by the monthly statements, which were not well coordinated with the cancellation procedure, Mrs. Blint was aware in late March, 1988, that there was a problem with the policy. She should have advised the insured, who presumably could have procured other insurance. Regardless whether the June, 1988, claim would have been covered, the ensuing litigation would not have involved coverage questions arising out of the cancellation of the policy if Mrs. Blint had communicated the problem to the insured when she received the March memorandum. Following the discovery that the policy had in fact been cancelled, the insured demanded that Respondent return the previously paid premiums. Based on advice of counsel, Respondent refused to do so until a representative of Petitioner demanded that she return the premiums. At that time, she obtained a cashiers check payable to the insured, dated June 1, 1990, and in the amount of $2526.81. Although this equals the check that Dana Roehrig returned to Commonwealth in December, 1987, the insured actually paid Commonwealth $1000 down and $2885.16 for a total of $3885.16. This discrepancy appears not to have been noticed as neither Petitioner nor the insured has evidently made further demands upon Respondent for return of premiums paid. The insured ultimately commenced a legal action against Commonwealth, Dana Roehrig, and American Empire. At the time of the hearing, the litigation remains pending.
Recommendation Based on the foregoing, it is hereby recommended that the Department of Insurance and Treasurer enter a final order finding Respondent guilty of violating Sections 626.561(1) and, thus, 626.621(2), Florida Statutes, and, pursuant to Sections 626.681(1) and 626.691, Florida Statutes, imposing an administrative fine of $1002.70, and placing her insurance licenses on probation for a period of one year from the date of the final order. If Respondent fails to pay the entire fine within 30 days of the date of the final order, the final order should provide, pursuant to Section 626.681(3), Florida Statutes, that the probation is automatically replaced by a one-year suspension. RECOMMENDED this 5th day of February, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 1992. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 James A. Bossart Division of Legal Affairs Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Thomas F. Woods Gatlin, Woods, et al. 1709-D Mahan Drive Tallahassee, FL 32308
Findings Of Fact The Petitioner, Ecker Enterprises, is a corporation licensed to do business in Florida with home offices in Chicago, Illinois. It has, in the past, and up until the approximate time of this proceeding, properly authenticated its ability to provide its own insurance or funds to cover any worker's compensation exposure emanating from its operations within the State of Florida in a manner sufficient to comply with Chapter 440, Florida Statutes, and Chapter 35-5, Florida Administrative Code. The corporation, however, failed to file required financial statements and other financial information with the Bureau of Self-Insurance of the Department for 1980. On August 18, 1980 the Chief of the Bureau of Worker's Compensation, Self-Insurance issued a revocation of the corporation's privilege to be self- insured in the State of Florida pursuant to Rule 38-5.12(5) Florida Administrative Code. The financial statements involved were filed at a later time, although not timely, but did not comport with the subject rules on self-insurers in that they were not certified and did not contain the required information as to financial disclosure. The Department stipulated that it would forebear from revoking the privilege for forty-five days and allow the self-insurance privilege to remain in force provided the corporation filed the necessary documentation pursuant to Section 440.51(12) Florida Statutes, and the above-cited rule, within that period of time, to which the Petitioner agreed. The time stipulated by which the filings were to be made has elapsed and the Petitioner has failed to comply with the stipulation.
Recommendation Having considered the evidence in the record the candor and demeanor of the witnesses, the foregoing Findings of Fact and Conclusions of Law, and arguments of counsel, it is therefore RECOMMENDED that the revocation of privilege of self-insurance in the State of Florida previously imposed against the Petitioner herein was proper and should therefore stand unchanged. DONE and ENTERED this 6th day of January, 1981, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of January, 1981. COPIES FURNISHED: Jack C. Inman, Esquire Post Office Box 1294 Orlando, Florida 32302 Douglas P. Chance, Esquire Dept. of Labor and Employment Security 2562 Executive Center Circle, East Tallahassee, Florida 32301 Mr. Wallace E. Orr Secretary Department of Labor and Employment Security Suite 206 Berkley Building 2690 Executive Center Circle, East Tallahassee, Florida 32301
The Issue The issue in this case is whether Respondent, Pearlie M. Butler, committed the offenses alleged in an Administrative Complaint issued by Petitioner, the Department of Financial Services, on December 29, 2004, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. (2003). Respondent, Pearlie Mae Butler, is licensed in Florida as a Life Including Variable Annuity Agent (2-14), a Life and Health Agent (2-18), and a Health Agent (2-40). Ms. Butler's license number is D068258. At the times relevant to this matter, the Department has had jurisdiction over Ms. Butler's insurance licenses and appointments. Ms. Butler's Failure to Remit. At the times relevant to this matter, Ms. Butler was employed as an agent of Monumental Life Insurance Company (hereinafter referred to as "Monumental"). Ms. Butler, on behalf of Monumental, collected payments for insurance on a monthly basis, often in cash. Pursuant to Monumental's policies and procedures, Ms. Butler was required to give customers a receipt for all premium payments, which she signed in acknowledgement of a payment, and to record the receipt of the payment in Monumental's records. In September 2003 Ms. Butler voluntarily left Monumental. As a consequence, an audit was conducted of Ms. Butler's records. This audit included a comparison of actual insurance premium receipts which Ms. Butler had give to her customers with the insurance premium payments recorded by her in Monumental's records. As a result of the audit, it was found that Ms. Butler had collected a total of $483.21 in premiums she had received from three different customers which she did not report or remit to Monumental. These funds constituted trust funds pursuant to Section 626.561(1), Florida Statutes (2003), and were received in a fiduciary capacity by Ms. Butler. As such they should have been accounted for and paid to Monumental. Ms. Butler was informed by letter of the findings of the audit and was requested to remit the unaccounted-for funds. Ms. Butler had not, as of the date of the final hearing, responded to this request. Monumental, despite not having received the premiums, gave the three customers credit for their payments.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Pearlie Mae Butler violated the provision of Chapter 626, Florida Statutes (2003), described, supra, and revoking her licenses. DONE AND ENTERED this 8th day of September, 2005, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN 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 8th day of September, 2005. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services Department of Financial Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Pearlie M. Butler Post Office Box 924013 Homestead, Florida 33032 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
