The Issue Whether Petitioner should be disciplined pursuant to a nine count administrative complaint, each count containing allegations of multiple violations of the Insurance Code.
Findings Of Fact Emerald Coast Insurance Agencies, Inc. (Emerald Coast) is a nonstandard automobile insurance agency, insuring high risk drivers who normally have a difficult time procuring insurance. Emerald Coast advertises. Some customers named in the administrative complaint responded to advertisements featuring "high risk, low down payment." At all times material, Respondent was licensed as a life agent, as a life and health agent, and as a general lines agent and was the corporate president, director and registered agent of Emerald Coast. Respondent was present and actively overseeing all of the applications involved in this case, even when information was written on forms by the customer, another agent, or an unlicensed employee. Most of the complaining witnesses were able to identify Respondent as being present and/or assisting while their forms were made out. DOI did not affirmatively prove that any unlicensed employee of Emerald Coast spent more than 10 percent of his employment time interacting with customers. Prior to these proceedings, DOI has never taken action against Emerald Coast or Respondent. Respondent went to DOI on two occasions prior to the filing of this administrative complaint and discussed optional coverages in an effort to avoid situations that might lead to disciplinary action. Emerald Coast has four offices in three cities. All of the events underlying the charges herein occurred in Tallahassee. Emerald Coast has written between 15,000 and 18,000 automobile insurance policies in the three years it has been open. Approximately 70 percent of Emerald Coast's customers who purchase automobile insurance policies cancel those policies prior to the renewal date. Eighty percent of these cancelled policies are cancelled for nonpayment of premium. Among these cancellations are individuals called "tag runners." Tag runners purchase the minimum required insurance for receipt of an automobile license tag, with the intent of having the policy cancelled after they have made one or two payments and taking the chance that the Division of Highway Safety and Motor Vehicles will not catch up with them to suspend their licenses because insurance cancellations may take up to six months, even for non-payment. Once the policy information is taken from the customer, it is entered in a computer and, within three to five days, checks are written from Emerald Coast to the insurance carriers for initial premiums. If the proposed insured fails to make a payment or stops payment on a check, the agency loses money on the transaction because the agency has already forwarded the money to the insurance company. Emerald Coast provides the option of financing a premium if a customer cannot pay it in a lump sum annually. When a customer cannot pay in full for an insurance policy, Emerald Coast offers the option of purchasing an ancillary product like an auto club for a set price in addition to paying for the insurance with a low down payment. The club cost is in addition to the total insurance premium, and the low down payment for the insurance premium is conditional upon the customer's paying for the club's product. If the customer does not want the auto club product, Emerald Coast still permits him to finance his insurance premium with a 50 percent down payment. Emerald Coast's purpose of requiring a 50 percent down payment or payment in full, or the purchase of the auto club when a small down payment is made, is to offset cancellation rates and the agency's losses incurred thereby. The premium finance companies which finance insurance policies require fees. There are no premium finance companies that require Respondent to sell auto clubs in order to sell their premium finance products. The insurance carriers charge a premium for the risk they assume with the contract of insurance. There are no insurance carriers that require Respondent to sell auto clubs in order to sell their insurance. Approximately 60 percent of the people to whom Emerald Coast has sold policies also purchased auto clubs, including towing and rental features. The larger the fee paid by the customer for the club, the greater the towing, rental and other benefits that the club provides and the greater amount the seller makes. Respondent received a 90 percent commission from Atlantic Travel Association of North Florida, Inc. for the auto clubs he sold and sent to them. Respondent also sold American Travelers Association death and dismemberment benefit contracts at a similar commission. Respondent and Emerald Coast used to sell Atlantic Travelers Association, Inc. auto clubs. As of January 1, 1992, they switched to selling Atlantic Travelers Association of North Florida, Inc. clubs. The two clubs are not associated in any way. By agreement with the new club's owner, Respondent and Emerald Coast continued to use the old forms bearing the wrong company name and submitted them to the new club. The forms do not provide the address of the club, and members are expected to submit claims through Emerald Coast. Atlantic Travelers Association of North Florida, Inc. is a valid auto club and pays valid claims. Atlantic Travelers Association of North Florida, Inc.'s owner testified that his company was prepared to honor each misnamed form that Respondent sent to him with a fee, but it is probable that the form issued in the wrong name would not be legally binding. If the form was never received by the new club, Emerald Coast's customer would have an even more tenuous claim. Therefore, Respondent's auto club customers were protected only at the new club's whim as to whether or not a contract they paid for would be honored, and each form issued by Respondent or Emerald Coast with the wrong auto club name on it constituted a misrepresentation, deceptive to the customer on several levels. Respondent also continued to use the Atlantic Traveler's Association, Inc. name on all the acknowledgments he asked his customers to sign, signifying that they understood that the auto club cost was optional and in addition to their automobile insurance. The use of the wrong name on these acknowledgment forms also was a misrepresentation. Due to space considerations, and for greater clarity, Atlantic Traveler's Association, Inc. will hereafter be referred to as "the old auto club," and Atlantic Traveler's Association of North Florida, Inc. will hereafter be referred to as "the new auto club." None of the customers named in the administrative complaint lost money as a result of any auto club sold by Respondent or Emerald Coast. The auto club contracts offered 38 different choices of benefit levels. Each of the benefit levels was an option which should have been discussed with and knowingly accepted by the customer. Respondent gave the individuals selling the auto clubs no instructions on which of the options they should sell to a customer or how they should judge which option(s) a customer needed. Routinely, neither Respondent nor any of his employees ever offered all 38 options to each customer. Rather, dependent upon the car insurance coverage the customer selected, or upon the unbridled discretion of the salesperson, each salesperson sold what he felt like. Respondent and Emerald Coast use an acknowledgment form to let the customer know he is purchasing an ancillary product, that the total cost of the ancillary product is in addition to insurance premiums, and that the ancillary product is optional and not required by law. They use a document called an "affidavit" to inform the customer of other coverages and when the coverages will go into effect and to hopefully insure that the information received from the customer is accurate. These so-called "affidavits" are neither notarized nor attested-to by anyone. Respondent acknowledged that the DOI and the insurance industry consider the word, "premium," as applying to insurance premiums only, not ancillary products such as auto clubs. See, Section 627.041(2) F.S. Laymen likewise regard the word "premium" as reflecting the cost of insurance. Respondent and Emerald Coast use generic receipts which say "premium," not "insurance premium." Where insurance premium collections and ancillary product sales were conducted simultaneously, Respondent used the word "premium" on these receipts to cover the total amount tendered by each customer as a down payment on both the insurance policy premium and on the ancillary product. He then listed only the insurance premium down payment (total amount tendered by the customer minus ancillary product full fee or down payment) on the insurance premium finance agreement because only insurance premiums can be financed on those forms. Where receipts specified "total premium" he lumped in the cost of the ancillary product. Respondent thus misused the word "premium" on receipts issued to customers. Accordingly, the receipts provided to Respondent's customers were misrepresentations and deceptive. One result of the misuse of the term "premium" was that customers sometimes were led to believe that their deposits against both auto clubs or death and dismemberment policies and insurance coverage were down payments on the insurance policies alone, even where the receipts specified "premiums" and "deposit." Accordingly, Respondent's deductions of all or part of the ancillary product fee up front resulted in false statements on other documents that the full down payment for premium or financing of premium had been made when it had not. Respondent testified that his standard operating procedure was for himself or another licensed insurance agent to explain the coverages on each of the policy application forms executed at Emerald Coast; that where marks occurred on the summary of coverage pages, they were made by himself or another Emerald Coast representative during these explanations; that he explained the cost coverage breakdown for each customer he saw; and that he instructed each customer he saw to read all documents before signing. However, the juxtaposition of the "total" space block and the column where premiums and other costs are added on the "summary of coverages and cost breakdown" form makes it impossible for the customer to quickly add up the premiums for each type of insurance coverage and the cost of ancillary product in a straight line. Also, due to the confusion of Respondent's use of the word "premium" for different purposes on different documents, the figure for total "premium" frequently cannot be reconciled among the receipt, the financing document, the insurance application, and/or the summary of coverages and cost breakdown form. Even a reasonably attentive customer would be confused by the several forms. Reading the summary before signing it would not necessarily have revealed what funds were being applied to which purpose. In some instances, more specifically set out by customer and count infra., the completed summary of coverages and cost breakdown forms were misleading or unexplainable as to what amounts were being charged to the customer. Count I (David K. Register) On January 31, 1992, David K. Register went to Emerald Coast to purchase insurance. The applications made out at that time were executed by Respondent as brokering agent. Mr. Register signed all documents without reading them. Nonetheless, he understood that he was purchasing personal injury protection, property damage coverage, comprehensive and collision coverage, and what the deductibles were at the time he signed the documents. He also knew he was purchasing an auto club at the cost of $150. The total cost of the insurance coverage he was seeking was approximately $750. Respondent required Mr. Register to purchase an auto club contract as a condition of obtaining premium financing for his insurance policies. Respondent completed a premium finance agreement for financing the unpaid premiums for the policies showing that Mr. Register had tendered a $197 premium down payment. Respondent advised Mr. Register that he owed an additional $135, due February 14, 1992. Respondent issued a receipt to Mr. Register showing the total premium was $937. When he applied with Emerald Coast, Mr. Register had four offenses on his driving record, three for unlawful speed and one for violation of the alcoholic beverage open container law. His complete driving record was not disclosed on the documents prepared. If it had been disclosed, an additional premium would have been charged. The testimony is in direct conflict on whether or not Mr. Register orally disclosed his prior violations to Emerald Coast: Mr. Register maintained that he did; Respondent maintained that he did not. There is no direct evidence to show which witness was accurate on this issue. Circumstantially, there was no reason Respondent should fail to write down violations told him by Mr. Register since Respondent was prepared to write insurance in the high risk category anyway and one way or another Respondent could have insured Mr. Register for the amount Mr. Register was prepared to pay that day. Subsequently, Mr. Register made a down payment and executed an insurance application with Progressive Insurance through Swann Insurance Agency on which he also failed to disclose his entire driving record. He did so with the explicit understanding at that time that the new carrier would run a license check on him and an additional premium would be required due to his bad driving record which he had disclosed orally to Swann Insurance Agency. The "safety net" when a bad driving record is not disclosed on an application is that carriers routinely run independent driving license checks and adjust the premium upward or refuse coverage if they discover an undisclosed bad driving record. What Swann Insurance Agency and its carrier did after the carrier researched David Register's driving history is not clear on the record. When Emerald Coast and its carrier discovered his history, they demanded a higher premium. The evidence falls short of showing that Respondent deliberately left information provided by Mr. Register off his application at Emerald Coast. On February 6, 1992, Armor, the carrier with whom Emerald Coast had placed Mr. Register's PIP and property damage coverage, notified Mr. Register and Respondent that the policy binder would be cancelled if required photographs of the vehicle were not received. On February 10, Mr. Register took the vehicle to Emerald Coast for photographs. On February 13, Respondent wrote Mr. Register a letter threatening to cancel his "policy" if the $135 "premium" were not paid by February 14. Respondent testified that the letter referred to cancellation of the auto club towing "policy" and therefore he was not threatening to cancel Mr. Register's automobile insurance policy for failure to pay for an ancillary product. However, on its face, the letter was misleading. Respondent's unique "wordology" had the effect on Mr. Register of a threat to cancel his automobile insurance policy for non-payment of the ancillary product fee. On February 14, David Register and his father wrote Respondent requesting cancellation of the insurance policies and return of all money paid, since they had purchased duplicate coverage at Swann Insurance Agency. Respondent did not forward the cancellation request to Nu-Main, general agent for the carrier with whom he had placed Mr. Register's comprehensive and collision policy. Respondent did not forward the car photographs to Armor. As a result of the photographs not being received, on February 18, Armor cancelled its binder to David Register. On March 9, 1992, the finance company sent David Register and Emerald Coast its cancellation notice for nonpayment of premiums. David Register never paid the additional $135 due on February 14 for the auto club and the new auto club had no record of his old auto club form being received. Due to his February 14 cancellation, Respondent eventually refunded Mr. Register $140 of the $212 he had paid on January 31, 1992. Mr. Register's father testified that the $72 difference was accounted for by the cost of coverage from January 31 to February 14 and cancellation fees charged by the carriers. Count II (Diedre Hawks Johnson) On August 15, 1992, Diedre Hawks went to Emerald Coast to buy minimum insurance for a used car she had just purchased and financed. She executed an application for property damage, comprehensive, collision, and PIP insurance coverages. These coverages are more than the minimum required by law, but may not be more than the minimum required by the financing of Baldwin-Foster Motors, where Ms. Hawks had just purchased the car. The record is unclear on this distinction. Ms. Hawks tendered $165. Respondent actively supervised Dan Allison, a licensed insurance agent, during this transaction. Contrary to Ms. Hawks' testimony, it is found that she understood on August 15 that she had purchased an auto club. Although she did not read them at the time, Ms. Hawks executed the premium finance agreement to obtain financing for the remainder of the automobile insurance policy premium and the application for an auto club at $150. Ms. Hawks likewise signed both an acknowledgment showing she knew she was getting an auto club for $150 and an "affidavit." She also signed a summary of coverages and cost breakdown acknowledging that Emerald Coast employees had explained the coverages, that she fully understood them, and that she had received a completed copy of that document. Her explanation at formal hearing for why she did not read what she signed was that she was in a hurry because it was late in the day and the Emerald Coast employees were rushing to get out. However, she acknowledged that Respondent gave her an opportunity to read the documents which clearly set out that she was buying an auto club for $150. However, even if she had read them, the documents presented to Ms. Hawks were ambiguous as to what the amounts paid or owing were to cover. The enumerated coverages on the cost breakdown form add up to $745 (including a $150 auto club) plus a policy fee of $25 and a "grand total" of $770. The financial agreement shows a $620 premium total with $465 financed, a $155 down payment and $65.49 per month due in monthly payments. The receipt issued to Ms. Hawks by Emerald Coast on August 15 showed that she had tendered a $165 deposit, was paying for a $770 annual premium, and owed an additional $140 deposit. Upon the foregoing, Ms. Hawks' testimony was convincing that even though she initialled the receipt requiring the additional deposit, she did not know that she still owed a $140 down payment when she left Emerald Coast and that she believed that she only had to pay her premium in monthly increments of $65.49. The next day, August 16, 1992, Underwriters Guaranty Insurance Company issued Ms. Hawks an insurance policy with an annual premium of $620. The difference of $150 between the $770 and $620 figures was the total $150 cost of the auto club which she was required to buy in order to get financing with Emerald Coast. Ms. Hawks signed a contract with the old travel club. Emerald Coast sent the contract to the new travel club. Ten dollars of Ms. Hawks' initial $165 had been applied by Emerald Coast as a down payment on the auto club. No paper specifically shows this diversion of funds. On September 8, Emerald Coast wrote Ms. Hawks that she must come in and pay $140 more on her down payment for "premium" or her insurance would be cancelled. Ms. Hawks purposefully ignored the letter since communications with the carrier clarified that the money was actually to be applied to the auto club fee. Beginning September 13, Respondent telephoned her several times to come in and make the payment. Ms. Hawks still did not pay the $140. Therefore, Respondent refused to turn over to her a copy of her automobile insurance policy when it was issued. Ms. Hawks again dealt with the carrier directly and the carrier assigned her to a new agent. She never paid the auto club fee. Count III (Christine Maddux Vollenweider) On March 16, 1992, Christine Maddux asked to finance part of a $242 premium. Respondent told her that the additional cost of financing insurance with the $242 annual premium would be $317. Respondent also told her that Emerald Coast had a condition of financing which required her to buy an auto club. Ms. Maddux executed an application for a PIP and property damage automobile insurance policy with a total annual premium of $242. Respondent told her that she must pay a $143 down payment. Ms. Maddux had only $80 with her, so she tendered $80 to Respondent, who told her she must pay the remaining $68 the following week. On her first visit, the "total premium" was $317 on the receipt ($80 received and $68 deposit due). She paid the $68 the following week, as agreed. That amount was also receipted as "total premium." On March 16, Ms. Maddux executed a premium finance agreement to obtain premium financing on the balance of the premium amount and applied for an auto club. The premium financing agreement showed that she had tendered only $73 down payment on the insurance premium. The $7 balance of her $80 went for the auto club, but no document specifically shows that diversion of funds. Ms. Maddux did not read the summary of insurance coverages and cost breakdown prior to signing it. She was not told that she could not read the document, and she signed a statement acknowledging that the coverages had been explained to her, that she fully understood them, and that she had received a completed copy of the document. All of the documents except the financing agreement consistently reflect the $75 for the auto club. Ms. Maddux applied for the auto club at a cost of $75 even though she already received equal or better auto club benefits from AAA-Plus, and had told Respondent so. No one at Emerald Coast told Ms. Maddux that she was required by law to purchase it. She applied for the auto club only because of Respondent's specific agency business practice to require an auto club purchase of any customer who had to finance insurance premiums after a down payment of less than half of the entire annual premium. The auto club contract Ms. Maddux signed was with the old club showing a cost of $75. Emerald Coast sent the contract to the new club. Ms. Maddux was issued a policy by Security Insurance Company of Hartford. Count IV (Candy Bassett) On March 16, 1993, Candy Bassett wanted to purchase the minimum required non-owner's automobile insurance to get back her driver's license, which had been suspended. She incorrectly stated to Emerald Coast that she had only four points on her driving record, when in fact she had twelve points. The points had been accumulated for speeding tickets, for driving under the influence of alcohol (DUI) with serious bodily injury, and for a conviction for failure to identify upon an accident. Ms. Bassett signed Emerald Coast's summary of coverages and cost breakdown form and the policy application form, stating therein that her violations and offenses as revealed by her were accurate and acknowledging that the coverages had been explained to her and were fully understood by her. Ms. Bassett executed both a cost breakdown and summary and an acknowledgment. The cost breakdown and summary showed she was purchasing a travel club including accidental death coverage for $100. Her acknowledgment showed she was purchasing a motor club including towing and rental reimbursement for $187. Ms. Bassett executed an application for an automobile insurance policy to be issued by Underwriters. The application listed the total annual premium as $334. Ms. Bassett tendered her down payment check in the amount of $187. The receipt showed the "total premium" to be $449 and the amount received to be $187. Ms. Bassett executed a premium finance agreement to obtain financing for the remainder of the policy premium. It showed that Ms. Bassett had tendered only an $87 down payment on a total premium of $349. Underwriters issued Ms. Bassett an insurance policy for an annual term. Respondent actively supervised her transaction and executed the policy application as brokering agent. As part of this transaction and as part of a specific Emerald Coast business practice, Respondent required Ms. Bassett to execute an American Travelers Association, Inc. accidental death and dismemberment benefits contract reflecting a fee of $100, not a towing contract as reflected on some of her other paperwork. The $100 for this death and dismemberment product constituted the difference between the $87 shown on the finance agreement as the amount tendered and the $187 check Ms. Bassett actually tendered. There is no evidence as to the status of American Travelers Association Inc. or whether it received Ms. Bassett's contract. Contrary to other documents she executed, Ms. Bassett signed an acknowledgment form to the effect that she knew the club, including towing and rental reimbursement, were optional at a fee of $187 separate from her automobile insurance and that she understood that it was not insurance. Ms. Bassett testified that she thought the death and dismemberment benefits were included in her insurance, that she was not informed that she would have to pay an additional $100 for those benefits, and that she did not intend to pay any monies for such benefits. The foregoing testimony is not entirely credible in light of the rest of the evidence. Ms. Bassett also specifically testified that she was told that the travel/accident feature was "included in the -- I can't remember how much the premium was, it was four hundred and something, he said it was included in that." (Emphasis supplied.) She also signed an acknowledgment indicating the towing fee would be in addition to the insurance premium and a paper showing the amount for financing the insurance premium totalled only $349, and she was asked to name, and did name, a beneficiary on the death and dismemberment form. Further, she admitted that she understood that she was receiving travel/accident benefits through American Travelers, and that it was required for premium financing. However, she is credible and clear that all the amounts she had paid and was going to have to pay were not fairly represented to her and that Respondent made out forms showing she was being charged $187 for an auto club or towing feature which, having no car she could not very well use, as well as forms showing she was purchasing a death and dismemberment feature at $100, purely as a requirement of financing automobile insurance. Count V (Cynthia Mann) On January 24, 1992, Cynthia Mann made application for full coverage automobile insurance. Respondent actively supervised her transaction. Respondent was the brokering agent for the policy. Ms. Mann tendered a check for $180 and was advised that an additional down payment of $95 was due on the policy. She tendered the additional $95 down payment to Respondent on February 3, 1992. Charter American Casualty Insurance Company issued her standard automobile policy. Ms. Mann also executed a premium finance agreement to obtain premium financing for the policy. This agreement indicated that the total down payment for the policy was $165. Respondent required Ms. Mann to execute an old auto club contract in order to get the financing. She signed an acknowledgment that she had been offered an opportunity to purchase insurance from Emerald Coast without any auto club. The new auto club had no record of receiving Ms. Mann's Atlantic Travel Association, Inc. contract. The record is silent as to whether or not the old auto club received her contract. The annual fee specified on the old auto club contract was $110. Emerald Coast took $110 from Ms. Mann's $180 deposit and applied it to the auto club contract. Ms. Mann signed an application form, an acknowledgment form similar to those signed by the other complainants, and an "affidavit." Ms. Mann contended that Respondent had told her that she had a towing benefit as part of the automobile insurance policy purchased. The reconciled and understandable portion of her paperwork shows otherwise. She was not told she could not read the documents placed before her for reading and signature, but she did not read any of the documents prior to signing. She did not want to spend additional time reading documents because she "knew [she] had to have insurance." However, reading the documents would not have eliminated some of the contradictory and therfore false statements as to what constituted insurance premium. Count VI (Jacque Flowers) Respondent was actively involved in both of Jacque Flowers' transactions. At all times material, Paul Wettrich, an unlicensed employee of Emerald Coast, spent less than ten percent of his time actually filling out forms for customers or taking information from customers. On December 31, 1992, Jacque Flowers went to Emerald Coast to purchase automobile insurance and executed an application for various coverages for two automobiles. On December 31, 1992, Ms. Flowers tendered $160 as a down payment to Mr. Wettrich. Mr. Wettrich signed a receipt as "salesman," and assisted Ms. Flowers in filling out the required forms. The receipt showed a total premium of $849. The Respondent executed the application as brokering agent. Mr. Wettrich never signed any of the applications on behalf of Respondent or any other licensed agent. Also, on December 31, 1992, Ms. Flowers executed an Underwriters Financial premium finance agreement to obtain financing for the remainder of the policy premium. Respondent executed that agreement as agent of record. The agreement incorrectly specified that a $187 down payment already had been made. As part of the December 31, 1992 transaction, and pursuant to Emerald Coast's standard business practice, Ms. Flowers was required to contract with Atlantic Travel Association, Inc. for an auto club at a $100 fee. The $100 auto club fee was deducted from the $160 cash payment made on that date. On December 31, 1992, Ms. Flowers was in a hurry to complete her transaction because she had her three-year-old child with her. Without reading them, Ms. Flowers signed an application form, a premium finance agreement, an acknowledgment form, an Atlantic Travel Association, Inc. form, and a summary and cost breakdown form, acknowledging the truth and accuracy of the statements contained in each document, that the coverages had been fully explained to her, and that she understood them. Effective January 1, 1993 and pursuant to the policy application, Underwriters issued to Ms. Flowers a policy with a total annual premium of $749. On January 27, 1993, pursuant her agreement on December 31, 1992, Ms. Flowers tendered to Respondent an additional $127. ($160 plus $127 would equal $287 paid up to that date.) Also on January 27, 1993, Ms. Flowers deleted one car from the policy. On February 15, 1993, Ms. Flowers deleted the second car from the policy and added a third car. This resulted in an increased premium and an addendum to the policy which had been issued January 1. Ms. Flowers paid $92 more to Respondent's brother Scott, an unlicensed employee of Emerald Coast, who signed the receipt. The addendum stated that the additional policy premium was $167, and that $67 had been the cash down payment. Respondent executed the addendum as brokering agent. In accord with its standard business practice, Emerald Coast, through Scott Whitaker, required Ms. Flowers to execute an accidental death and dismemberment contract with American Travelers Association, Inc. Twenty-five dollars for this item was taken from her $92 paid that day. The receipts and other documents provided Ms. Flowers at this time were inconsistent, and Respondent was unable to explain the inconsistencies at formal hearing. Although Ms. Flowers testified that the two ancillary product packages (auto club and death and dismemberment benefits) were never explained to her and that she would never have purchased either package if she had understood that there were additional charges therefor, her paperwork shows otherwise. Also, she specifically testified that when she went to Emerald Coast the first time, on December 31, 1992, her insurance had just been cancelled by Florida Farm Bureau due to her husband's driving record, and that when she requested full coverage, she understood "full coverage" to include towing, based on her experience with Florida Farm Bureau. Therefore, it is concluded that she wanted the towing benefit however she could get it. She also admitted that each paper was explained to her before she signed on December 31, 1992. Therefore, she knew on December 31, 1992 that she was getting towing and was paying for it through an auto club, even though the totality of the paperwork is misleading as to what amounts were paid for each purpose, and even though the several options within each type of ancillary product were not explained to her and the Emerald Coast employees chose what benefit amount to sell her each time. The December 31, 1992 old auto club package was sent to the new auto club. The record is silent as to what became of the February 15, 1993 American Travelers Association, Inc. death and dismemberment form. Count VII (Sebrena McPhaul) On September 21, 1992, Sebrena McPhaul went to Emerald Coast to purchase automobile insurance and executed applications for bodily injury, property damage, and PIP coverages with Underwriters and for physical damage coverage with Nu-Main, for a total premium of $651, to be divided appropriately between the two carriers as they required. Ms. McPhaul executed a finance agreement stating that the down payment for her insurance policies was $163. Ms. McPhaul tendered a $163 down payment check with the understanding that she would tender an additional $100 in two subsequent $50 installments. Ms. McPhaul also signed an Atlantic Travel Association, Inc. form, even though she informed Emerald Coast employees that she did not need an auto club since she had AAA. The application she signed was for an auto club at a cost of $130, a portion of which was to be taken from the down payments to be made by Ms. McPhaul. Ms. McPhaul signed a summary of coverages and cost breakdown form which stated that an auto club was covered, including payment for bail bonds, towing and labor and owner protection at a cost of $130, but she did not read it before she signed it. Ms. McPhaul admitted that the coverages had been explained to her by Scott Whitaker, an unlicensed employee of Emerald Coast, prior to her signing the summary of coverages and cost breakdown form, but maintained that he had not adequately explained that the $130 for the auto club was in addition to her insurance premium instead of part of it. Ms. McPhaul signed an acknowledgment form concerning the purchase of the auto club and an "affidavit" concerning the truthfulness of her responses, but she read neither of them, either. She conceded that if she had taken the time to read the acknowledgment form instead of just signing it, she would have understood the difference. Scott Whitaker issued her a receipt showing her total premium was $781. Respondent was in charge of the office, was actively involved in her transaction, and signed the applications as brokering agent. Emerald Coast sent the old club form to the new club. Ms. McPhaul executed a premium finance agreement to obtain financing for the remainder of the premiums for her policies which were executed by Respondent as agent of record. Ms. McPhaul was issued insurance policies for her purchased coverages, on September 21 and 22, respectively. At this point, Ms. McPhaul understood that she was paying $130 for an auto club above and beyond her premiums and financing costs. Previously, she had thought that towing was part of her standard automobile insurance contract. She blamed the misunderstanding upon misrepresentations made by Scott Whitaker, but the acknowledgment she signed is clear on this portion of the disclosure. Ms. McPhaul stopped payment on a check she had used to pay the down payment on her insurance. Emerald Coast thereby incurred a loss of $90 it had forwarded to the carriers, and also lost the cost of processing her applications. The receipts and other documents provided Ms. Flowers were inconsistent. Respondent was unable to explain the inconsistencies. Count VIII (Steve Reeves) On March 20, 1993, Steve Reeves went to Emerald Coast to purchase automobile insurance for a new truck he was leasing. He did so because he had unilaterally formed the opinion that his current truck insurance would not cover a new truck he had just leased. Mr. Reeves tendered to Emerald Coast a down payment of $175 with the understanding that he would make an additional $45 premium payment to Emerald Coast. That additional premium payment was paid by Mr. Reeves at a later date. Mr. Reeves executed a premium finance agreement to obtain financing for the remainder of his policy premium. The financing agreement showed the down payment was $120, not $175. This is the only significant discrepancy among Mr. Reeves' documents except for the wrong use of the word "premium" on the receipt and the wrong auto club being named in the acknowledgment and auto club form. Respondent executed the policy application as agent of record. The application stated that the premium was $453 plus a $25 policy fee for a total of $478. The receipt to Mr. Reeves for the down payment lists the total premium as $578, as does the cost breakdown form. The $100 difference was applied to an auto club fee. Mr. Reeves also purchased an auto club from Emerald Coast. He knew he had purchased the auto club as a condition of getting his insurance from Emerald Coast. His companion suggested going elsewhere for cheaper insurance without the auto club, but Mr. Reeves declined this suggestion because it was late in the day and he wanted to get his truck insured right then and drive it home. The auto club contract reflected a fee of $100 and bore the name of the old auto club. It was sent to the new auto club. Mr. Reeves signed an acknowledgment form which also reflected a $100 auto club fee, an "affidavit," a summary and coverage cost breakdown form, and a travel association form, but did not fully read them. Executive Insurance Company issued a policy to Mr. Reeves, which he paid on monthly for five or six months. He eventually allowed the policy to lapse for non-payment because he got in a dispute with Emerald Coast about the agency's refusal to accept payments made in its office by way of a third party check.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Insurance enter a final order suspending Respondent's licenses for thirteen months for eight violations of Section 626.9541(1)(x)4. and eight violations of Section 626.621(6) F.S. RECOMMENDED this 4th day of April, 1995, at Tallahassee, Florida. ELLA JANE P. DAVIS 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 4th day of April, 1995. APPENDIX TO RECOMMENDED ORDER 93-5436 The following constitute specific rulings, pursuant to Section 120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1-5 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 6-7 Rejected as not proven. 8-10 Subordinate to the facts as found. 11-15 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer counts. Subordinate to the facts as found. Rejected as a conclusion of law 19-29 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 30-31 Subordinate to the facts as found. 32 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. 33-38 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Rejected as a conclusion of law. 43-47 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 48 The first sentence is rejected as a conclusion of law. The second sentence is accepted,. 49-50 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 51 Accepted as covered in FOF 18. 52-53 Subordinate to the facts as found. 54-55 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 56 Rejected in part as a conclusion of law. The remainder is covered in substance. 57-59 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 60 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 61-62 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 63 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 64-71 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 72 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 73-74 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected in part as a conclusion of law. Otherwise accepted. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 78-79 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 66-68. 80-83 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 86-87 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 20,24, 72-76. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 90-95 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected because not proven as stated. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 98-99 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 100-102 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 106-111 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 117-118 Rejected in part and accepted in part as covered in FOF 90-91. 119-124 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as misstating the primary party. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 123 and respective customer count. 128-130 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 133-138 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 139 Rejected as contrary to the record as a whole. 140-145 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 146-147 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 148-150 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 153-157 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 158 Rejected as a conclusion of law. 159-162 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Respondent's PFOF: 1-18 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 19-20 Rejected because misleading and non-dispositive as stated. See FOF 17-20. 21 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 22-25 Unnecessary. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. Immaterial 28-37 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 38 Accepted but not dispositive 39-42 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 43 Rejected as not proven. 44-103 Accepted in substance, except that unnecessary, subordinate, and/or cumulative material has not been utilized, and some further explanation has been added. Some matters have been considered on the issue of credibility but not incorporated. 104 Rejected because not proven as stated. 105-108 Covered only as necessary in FOF 23-24 109-112 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. The primary party has been indicated. 113-124 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, and as stating a conclusion of law. 125-128 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 129-133 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, an as stating a conclusion of law. 134-137 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. COPIES FURNISHED: Michael K. McCormick, Esquire David D. Hershel, Esquire Daniel T. Gross, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Robert S. Cohen, Esquire Post Office Box 10095 Tallahassee, Florida 32302 Bill O'Neil, Esquire Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399 Dan Sumner Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact At all times pertinent to the allegations contained in the Complaint filed by Ms. Morris, she was a resident of Pinellas County, Florida. Respondent, Patrick Marzouca, owned and operated and currently owns and operates American Exchange Car Rental with main office located in Clearwater and satellites located elsewhere in Pinellas County, Florida. In December, 1987, Marcia Morris, Petitioner herein, answered a newspaper advertisement for rental agents placed by American Exchange Car Rental, and was interviewed for the position by Susan Johnson. Shortly thereafter, she was telephoned by Mr. Marzouca, who had been in the office at the time Ms. Morris was interviewed, and who told her to come in to work the next day. Because Mr. Marzouca had been a bit too forward in his approach, reportedly stating, "I want you. I need you as bad as blood.", Ms. Morris declined employment at that time. However, in March, 1988, she did start work at American exchange because of her relationship with Kathy Higgins, also an associate at American, with whom she had worked at the airport. Ms. Morris had previously worked for several rental car agencies and at the time of her employment by American, had, she claims, never been terminated from employment with any of them for cause. As shall be seen below, she was terminated from employment with one agency for failure to disclose a prior DUI conviction which rendered her ineligible for insurance to operate an automobile. As compensation for her services to American, Ms. Morris was to receive $250.00 for a 40 hour work week as a rental agent, and was to have the use of a company car without restriction, if available. Her work hours were from 10:00 AM to 6:00 PM. Work hours were set by the agents themselves so long as the office was covered, but the overall time each office was open, and the length of shift, was determined by Mr. Marzouca and Ms. Higgins who was the overall manager. Individual agents' times were not entered on a time card, but were determined by the agent's initials used when entering or leaving the computer at the time of beginning and ending work. The $250.00 per week compensation was paid regardless of the number of hours worked, and each agent received a commission of 10% on charges for collision waiver sold. The $250.00 per week compensation was paid weekly, but the commission was paid every three months. The car furnished by the company was in her possession the entire time she worked there. Ms. Morris considered herself an employee of American, and was never told by anyone that she was an independent contractor. When she questioned the fact that neither withholding taxes nor social security contribution were taken from her pay, she was advised not to worry about it as the Respondent's lawyer would handle it at the end of the year. The female rental agents were required to wear an American Exchange polo shirt, supplied by the company, and either slacks or skirts. Mr. Marzouca preferred the females wear short skirts, but Ms. Morris would not do that. From the start, even the first day of work, Mr. Marzouca began making comments to Ms. Morris such as, "You're so beautiful, Baby, I want to marry you." He tended to use the word, "Baby" a lot and not a day went by, she claims, without his offering her his unwanted attentions. Over the time she worked there, he offered to buy her clothes so he could attend parties with her; and he offered to buy her jewelry, stating, "I can see a gold necklace around your beautiful neck", and other similar comments. Ms. Morris contends she told Mr. Marzouca on an almost daily basis to "Leave me alone." She also complained to Ms. Higgins and to her coworkers about the situation, seeking advice as to where to draw the line. Since she was single, lived alone, and liked her income, she did not file a formal complaint at first, though she did not like what was going on, and did not like Mr. Marzouca's attentions. She never saw him behave this way or any comparable way toward a male employee. Ms. Morris also worked at Respondent's New Port Richey office. Things were better there, as opposed to the main office, because she was not being "hit on" every day, since Mr. Marzouca did not come to that office on a daily basis. She volunteered to staff that office primarily to get away from him, but this office did not remain open, and when it was closed, she was returned to the Cleveland Street office to work. From time to time, Ms. Morris was requested by Mr. Marzouca to take his aged mother shopping. She claims that when she protested, she was told that she had to do it and did so at least twice during working hours in the afternoon. Mr. Marzouca, on the other hand, claims his mother and Ms. Morris had a friendly relationship until all this ill feeling started. According to him, on at least one occasion, Ms. Morris suggested that his mother spend the day with her for lunch and shopping. Ms. Morris, he claims, used to call in the evenings to talk with his mother and would often ask about her. In response, his mother would often buy small gifts for Ms. Morris. Ms. Morris, he contends, never complained to him about having to take his mother shopping and he categorically denies ever threatening her with the loss of her job if she complained about his mother to him. There is no indication he ever did threaten her, and in any case, there is little relationship between forcing his mother's company on Ms. Morris and job discrimination based on sex. On one occasion, in June, 1988, she was in a car with Mr. Marzouca and another male employee en route to the Tarpon Springs location to shuttle cars. When the other employee went into a store to get some cigarettes, Mr. Marzouca allegedly said to Ms. Morris, "Oh Baby, I'd love to lay my head between your tits." At this time, she was seated in the front seat of the car with Mr. Marzouca. Mr. Marzouca categorically denies this happened. Considering his demonstrated proclivity toward this type of conduct, however, it is found that it did. On another occasion, Mr. Marzouca came up behind her at the rental counter and turned her upside down by the heels. Apparently this was in response to her comment that she needed more oxygen to her brain when she was having difficulty with the computer. Mr. Marzouca admits to doing this, but claims it was done in a jocular fashion at a time when all the employees were laughing and joking together. Though he claims Ms. Morris laughed about it at the time, she, nonetheless, felt strongly enough about it to make it a portion of her complaint. On another occasion, Ms. Morris was offered a television set as a gift by Mr. Marzouca. She had previously mentioned she was moving from one apartment to another and had no furniture or television. This comment was made in the presence of Mr. Marzouca who offered her a van to help her move. A few weeks later he took her to his car and showed her a television set he had bought for her as a gift. She declined to accept it. On another occasion, she accepted a ride with Mr. Marzouca on his boat and claims, now, that this was a form of harassment. She did not relate, however, that, as was brought out later, her sister and her sister's children were also on the boat at the time. Ms. Morris' sister was then and still is an employee of American. Ms. Morris also had breakfast with Mr. Marzouca on at least one occasion but never went on a date with him. Mr. Marzouca relates he has a charge account with a delicatessen located near his main office at which he has left standing orders that any employee who wishes to eat there and who cannot pay for the meal may do so at his expense. Ms. Morris concedes Mr. Marzouca never touched her sexually throughout their relationship, He never threatened her job because she would not go out with him, but she was annoyed by his continual asking her for a date. She states that her current feelings toward him are ambivalent. She neither likes nor dislikes him but because he was "pushy", and she didn't like what he was doing with regard to her, she filed the complaint. Though she first denied it, she admitted to telling others that she did not like the Respondent because of the way he treated her. In July, 1988, Ms. Morris' relationship with American Exchange was terminated at their request. At that time, she was told it was because she caused too much confusion in the office, and when she demurred, Mr. Marzouca advised her it was his company and he could do what he wanted. Other matters presented at the hearing indicate the termination was based on Ms. Morris' failure to remain at the office beyond the close of the business day on one occasion, July 4, 1988 to handle a rental that was to be picked up after office closing hours. When asked to stay by Ms. Higgins, her manager, she flatly refused and left the office just a few minutes after the close. As a result, the rental was not consummated. Ms. Morris claims she waited until shortly after 5:00 PM that day and then left believing that the reservation had been cancelled at three or four that afternoon, and there was no reason to stay. Immediately after their conversation, Ms. Higgins called Mr. Marzouca and reported the situation to him. In the course of that conversation, she described Ms. Morris as a "bitch" and recommended he get rid of her. When she left the office against Ms. Higgins' request on July 4, 1988, she took a company car with her. She did not work on July 5. On July 6, the car was picked up outside her home by Mr. Marzouca and Ms. Higgins. At the time, Ms. Morris had not yet left for work, and when she called in thereafter, requesting a ride to work, Mr. Marzouca told her to stay home and that he would come to her place to talk. She refused and hung up on him. When she called back a few minutes later, Mr. Marzouca told her she was fired but later offered her a job working in the Tarpon Springs office on Sundays from 8:00 AM to 4:00 PM. She declined this offer claiming she needed a full time job. Kathy Higgins worked for American from February, 1988 to August, 1988 as manager of the Cleveland Street office. At that time, American had four branch locations and employed 6 employees in addition to the bookkeeper. At one point, she worked with both Ms. Morris and Mr. Marzouca, and during that period, she heard Mr. Marzouca use the word, "Fuck"; observed him pick Ms. Morris up and put her over his shoulder; make comments about her such as, "That girl has a cute ass. I'd like to fuck her." on an almost daily basis. Each time Mr. Marzouca would approach Ms. Morris in Ms. Higgins' presence, he was always rebuffed. To the best of Ms. Higgins' observation, Ms. Morris never encouraged Marzouca's conduct, and from time to time Ms. Higgins would ask him to leave the girl alone. Whenever she did this, he would go off into the other room. Even Ms. Higgins indicates that male employees were treated differently than females in areas other than those sexually oriented. On one occasion, Mr. Portei, a male employee, left the office without permission for a couple of hours to get his taxes done, leaving the office unattended. When Ms. Higgins told Mr. Marzouca about this, he merely called Mr. Portei to ask why he had left. Nothing else was done about it. Ms. Higgins was on vacation when Ms. Morris was terminated. She had previously discussed Ms. Morris' performance with Mr. Marzouca. At first, during their association, he appeared to like Ms. Morris, but his attitude changed and he advised Ms. Higgins he wanted Ms. Morris out because she was argumentative. As a result, Ms. Higgins talked with Ms. Morris at the New Port Richie office to try to work things out. Sometime thereafter, she advised Mr. Marzouca to stop asking Ms. Morris out, and in response, Marzouca indicated that if he continued, Ms. Morris might quit. Mr. Marzouca admits to having Ms. Morris out on his boat with him and her sister; to having invited her to his home, which she accepted; to offering her the TV which, he claims, he had purchased for his girlfriend and which he offered to Ms. Morris when she admired it; to asking Ms. Morris out on a date once or twice; to allowing Mr. Portei to take off without discipline, but contends Portei had an entirely different type of job; and to using the "F" word "once or twice." He denies, however, having asked Ms. Morris her dress size; having suggested a sexual relationship to her; having asked her to go to Jamaica with him, as she alleged; and he doubts he ever asked Ms. Morris if he could put his head between her breasts. He had several repeated "discussions" with Ms. Morris about the way she treated customers, but did not seem to be able to get through to her and he fired her because of her attitude and because of her failure to stay at work the evening when requested. Even after that, however, he offered her several days work but then could no longer use her in the organization because business, at that time, was bad. Ms. Morris contends she never received any complaints regarding the way she treated customers, but considering the evidence on balance, it is clear that her performance over an extended period with American was below acceptable standards and was the basis for her termination. Mr. Marzouca's "open" approach to Ms. Morris, much of which he admits to, was observed by Mr. Cote, then an employee of American and an admitted recovering alcoholic and drug abuser. The first time Cote saw Ms. Morris was when Mr. Marzouca brought her to the office where he was working and described her as his "new girl". From this introduction and the descriptions used by Mr. Marzouca, such as "pretty" and "nice" girl, he inferred that there was a personal relationship, as well as a professional one between them. Soon after this, Mr. Cote left Mr. Marzouca's employment but remained in the area in another job. He saw Mr. Marzouca in the office several times and heard the conversations between him and Ms. Morris. Mr. Marzouca's language included the regular use of curse words and it was obvious he did not treat Ms. Morris with respect. He made suggestive remarks to her which were, in Cote's opinion, out of place in an employer/employee relationship. At no time when he saw Mr. Marzouca and Ms. Morris together was Mr. Cote ever under the influence of alcohol or drugs. Similar activity by Mr. Marzouca was observed by Mr. Puglia, Marzouca's landlord at the New Port Richey office. Mr. Marzouca introduced Ms. Morris to him as his new employee and his "future wife." Ms. Morris laughed at that. Over a period of time he noticed that whenever Mr. Marzouca would come to the office where Ms. Morris was working, he would get into an argument with her and use abusive language which Puglia found embarrassing. Mr. Puglia declined an invitation by Mr. Marzouca to go out on his boat with him and Ms. Morris but believes Ms. Morris went. He also recalls her indicating to him that Marzouca made her take his mother shopping and she didn't like it. By the same token, Ms. Katheryn M. King, who was working for Mr. Marzouca when Ms. Morris started, frequently saw the relationship between Mr. Marzouca and Ms. Morris. From what she observed, it was clear they were "not fond" of each other but Mr. Marzouca would flirt with her as he did with all female employees. It was obvious, however, that Ms. Morris did not like it nor did she like to be there when Mr. Marzouca was present. Ms. King was also employed by American when Ms. Morris was terminated. In her opinion, the discharge was the culmination of the bad feelings between them topped off by her refusal to stay one evening for a late pickup. Notwithstanding Ms. Higgins' prior testimony that when she worked for American there were at least 6 employees in addition to the bookkeeper, Mr. Kelly, who fulfills that function for Mr. Marzouca at the Cleveland Street office, indicates that the staff varies, usually being 4 or 5 full time employees plus two part timers, including himself. He writes the payroll checks weekly. The rental people are paid a $250.00 per week draw or guarantee against commissions in addition to a 10% commission on the collision waiver charges. In his opinion, a rental agent can earn between $200.00 and $275.00 per week, depending on experience. However, the $250.00 has consistently been paid to the rental agents each week even if no rental commissions are earned. Hiring of agents and the setting of the draw is done by the manager. Ms. Higgins used to be the manager. Mr. Marzouca claims no knowledge of how Mr. Kelly runs the business books. He gives him only the most basic instructions and trusts Kelly implicitly to do what has to be done. Considering the evidence regarding compensation in its entirety, Mr. Marzouca's claim that he exercises little control over this matter is ingenuous at best and it is found that the $250.00 sum is salary paid to an employee, regardless that no withholding or social security contribution is taken out. Ms. King indicated that she paid the taxes due on her earnings even though Mr. Marzouca agreed to withhold them when she spoke with him about it on several occasions. He never did. In her opinion, she was an employee of American, not an independent contractor, because she had a set number of hours to work, worked regular hours, and had no authority to come and go as she pleased. Her opinion as to her status was, on the basis of the evidence, correct. This brings up the factual issue of the true status of the individuals who worked as rental agents. Here, the facts clearly demonstrate that each rental agent, the individuals being so considered, was paid a flat amount per week "draw" against "commissions", plus an additional 10% commission on sales of collision waiver. Mr. Kelly indicated that the draw was paid regardless of whether any "commissions" were earned and no evidence was presented by American to indicate that any "commissions" on rentals were ever calculated and applied against the draw. Consequently, it must be concluded, and it was so found, that the weekly stipend was not a draw but a salary which was supplemented by the free use of a company car. Further, the working hours were set by the company. Though schedules may have been arranged by the individual employee, the employee was to work a set number of hours on certain days designated by management, and the facility at which they worked was open over hours dictated by management. In addition, the employee was required to wear a particular type of clothing provided by the employer. Taken together, all indicia of employment clearly lead to the conclusion that the relationship was an employer/employee relationship and not that of an independent contractor, regardless of American's possible improper failure to take withholding and Social Security contribution out of the earnings, and it is so found. Since being terminated by American Exchange and Mr. Marzouca, Ms. Morris has been employed by several other car rental agencies, A Plus and USA Car Rentals, with compensation by both being a salary and company car. The job with USA was on an on-call basis but neither job was permanent, nor, she claims, was she fired from either. She was, however, terminated at A Plus because, due to a previous DUI conviction on her record, she was uninsurable, a prerequisite for working at a car rental agency. While working there, she earned $300.00 per week and had the use of a company car, valued at $50.00 per week. She worked there from August through November, 1988 and when she left there, applied for unemployment compensation which was initially denied because there was no record of her having been employed. Upon appeal, however, the decision to deny was reversed and she was awarded unemployment compensation for 6 weeks to 2 months. Ms. Morris had failed to disclose her prior DUI conviction when she went to work at A Plus. Also, when she applied for employment with American, she again failed to disclose her prior conviction because, "She would have preferred to discuss it in person." This contention is without merit, however. She has not disclosed her DUI conviction to any employer since being terminated by Respondent. At the end of 1988, Ms. Morris received a IRS Form 1099 from American but never a Form W-2. She has been working for 10 years, and in addition to the previously mentioned employment, was hired and fired by National Car Rental because, she claims, of a personality conflict with the new female manager. After that, she worked for Payless Rental Car with the old National manager, with whom she got along.
Recommendation Based on the Foregoing findings of Fact and Conclusions of law, it is, therefore: RECOMMENDED that the Community Relations Board of the City of Clearwater, acting as the Commission administering Pinellas County Ordnance 84-10, codified under Chapter 17.5 of the Pinellas County Code, enter a Final Order finding the Respondent, American Exchange Car Rental and Patrick Marzouca not guilty of actionable sexual discrimination against Marcia Morris. RECOMMENDED this 12th day of December, 1989, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 12th day of December, 1989. COPIES FURNISHED: Charles D. Lykes, Esquire 300 Turner Street Clearwater, Florida 34616 John D. Tubhill, Esquire 4695 Ulmerton Road Suite 440 Clearwater, Florida 31622 Ronald McElrath, Director Office of Community Relations City of Clearwater, Florida P.O. Box 4748 Clearwater Florida 34618-4748
Findings Of Fact Respondent, Ronald T. Pascale (Pascale), was at all times material hereto licensed by the State of Florida as a general lines agent and health agent. Pertinent to these proceedings, Pascale was licensed by Fortune Life Insurance - Company (Fortune Life) as a health insurance agent, but not as a life insurance agent. Respondent Leonard C. Chandler (Chandler), was at all times material hereto licensed by the State of Florida as a general lines agent, and as a life and health agent. Pertinent to these proceedings, Chandler was licensed by Fortune Life as a health insurance agent, but not as a life insurance agent. Pascale and Chandler did business through Briar Bay Insurance Agency, Inc. (Briar Bay). Briar Bay is an incorporated general lines insurance agency selling general lines insurance products through licensed agents and unlicensed sales people acting under the supervision and control of a licensed general lines agent. Briar Bay conducted business from two agency locations: 14229 South Dixie Highway, Miami, Florida (the Dixie Highway office); and 13061 North Kendall Drive, Miami, Florida (the Kendall office). Pascale is the president and a director of Briar Bay, and the general lines agent for its Kendall office. Chandler is the general lines agent for the Dixie Highway office. Pascale did, however, frequently visit the Kendall office to oversee and manage the writing of insurance. As the general lines agent for their respective offices, Pascale and Chandler were required to be in active full time control of their operations. The parties have stipulated that, pursuant to Section 626.734, Florida Statutes, Pascale and Chandler are personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any provisions of this code by them or any person who sold the insurance cover ages at issue in this proceeding. David Trudnak (Pascale Complaint-Count I) On January 18, 1986, David Trudnak called the Kendall office to get a quote for automobile insurance on his 1984 Gran Prix. Mr. Trudnak's automobile was financed through GMAC, and he informed the salesperson, Ernesto Martinez, that he wanted the minimum coverage necessary to satisfy that company. Mr. Trudnak was given a quote of approximately $1,230. Late that afternoon, near closing time, Mr. Trudnak went to the Kendall office and was waited on by Mr. Martinez. Mr. Trudnak again told Mr. Martinez that he wanted the minimum coverage necessary to satisfy GMAC. Mr. Martinez laid a number of papers before Mr. Trudnak and told him to "sign here, here, here, and here". Among the papers he signed were two applications to Fortune Life for accidental death policies and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. 2/ The two Fortune Life policies generated a premium of $250, and the motor club member- ship a premium of $20. Mr. Trudnak was misled to believe that the quote he was given, and the premium he paid, was for the minimum coverage he had requested. Had he been accorded the minimum coverage he requested, Mr. Trudnak's premium would have been $1,006 instead of the $1,276 he was charged. Juan M. Leon (Pascale Complaint-Count II) Late in the afternoon of January 20, 1986, Juan M. Leon went to the Kendall office and was waited on by Mr. Martinez. Mr. Leon informed Mr. Martinez that he had just purchased a new van, and that he needed automobile insurance to satisfy the financing agency. Mr. Martinez laid a number of papers before Mr. Leon to sign. Among the papers he signed were three applications to Fortune Life for accidental death policies and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. The three Fortune Life policies generated a premium of $400, and the motor club membership a premium of $20. Mr. Leon was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Leon's premium would have been $1,367 instead of the $1,787 he was charged. Carol Lynn Wilson (Pascale Complaint-Count III, Chandler Complaint-Count I) On January 22, 1986, Carol Lynn Wilson went to the Dixie Highway office, along with her father, to purchase automobile insurance. She was waited on by a man named Bill, but Pascale also participated in the transaction. Ms. Wilson advised the salesman that she wanted the least expensive full coverage policy she could get. The salesperson laid a number of papers before Ms. Wilson to sign. Among the papers she signed was an application to Fortune Life for a life insurance policy 3/ and an application to nation Motor Club, even though she never asked for or desired such additional coverages. 4/ The Fortune Life policy generated a premium of $35, and the motor club membership a premium of $20. Ms. Wilson was misled to believe that the quote she was given, and the premium she paid, was for the least expensive policy she had requested. She was never informed that the life insurance policy or motor club membership were separate from, and in addition to, the basic coverage she desired. Had she been accorded the coverage she requested, Ms. Wilson's premium would have been $593 instead of the $748 she was charged. David Peters (Pascale Complaint-Count IV, Chandler Complaint-Count II) On January 23, 1986, David Peters went to the Dixie Highway office to purchase automobile insurance. After explaining to the salesperson that he needed full coverage because his car was financed, the salesperson laid a number of papers before him to sign. Among the papers he signed was an application to Fortune Life for a life insurance policy and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. 5/ The Fortune Life policy generated a premium of $150, and the motor club membership a premium of $20. Mr. Peters was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Peter's premium would have been $1,686 instead of the $1,856 he was charged. Herbert Cone (Pascale Complaint-Count V, Chandler Complaint-Count III) On January 21, 1986, Herbert Cone went to the Dixie Highway office to purchase automobile insurance. After explaining to the salesperson that he desired liability coverage, the salesperson laid a number of papers in front of him to sign. Among the papers Mr. Cone signed was an application to Fortune Life for a life insurance policy and an application to Nation Motor Club, even though he never requested or desired such additional coverages. The Fortune Life policy generated a premium of $50, and the motor club membership a premium of $20. Mr. Cone was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Cone's premium would have been $425 instead of the $495 he was charged. Briar Bay Agency Forms In each of the foregoing transactions the Briar Bay agency representative obtained the signature of the customer on numerous forms, including the auto binder application, the Nation Motor Club application, and the Fortune Life application. Each of these applications were printed on what is commonly referred to as NCR paper, which consists of an original and two copies. The original is designed to be submitted to the issuing company, a copy retained by the agency, and a copy given to the customer. The Briar Bay representatives consistently failed to provide their customers with a copy of any of these applications, and thereby further obscured their deceptions. The Briar Bay representative also secured the signature of its customers on its own form. This form, consisting of one sheet of paper printed front and back, contained spaces for the customer's signature in up to 5 places. By signing the form, the customer was ostensibly acknowledging the rejection of certain coverages, the limitation on who would be covered in the operation of the vehicle, and an explanation of the coverages and their costs (the "Coverage and Cost Breakdown"). While the customers in each of the foregoing transactions signed the "Coverage and Cost Breakdown" portion of Briar Bay's form, as well as other sections, the proof established that such acknowledgment was routinely obtained in blank, or without the cost portion of the breakdown completed. The customers were routinely told to sign where the representative had marked an "X, and were led to believe that what they signed comported with the coverage they had requested. Under such circumstances, the customer's signature did not constitute an informed or meaningful acknowledgement. 6/ Policy Mixing The proof further established that Briar Bay representatives would routinely assemble the automobile insurance policies to include the Fortune Life policy and the Nation Auto Club "auto rental reimbursement riders. This practice further obscured the fact that such cover ages were not part of the automobile insurance its customers had sought to purchase. Commission Schedules An agent's commission on the sale of automobile insurance coverage (such as liability, PIP, comprehensive and collision) averages between 10-15 percent. The commission paid by Fortune Life on its policies was 90 percent, and the commission paid by Nation Motor Club was 80 percent. In the instant case, between January 18, 1986, and January 23, 1986, Briar Bay's representatives generated $796.50 in commissions on Fortune Life policies and $80 in commission on Nation Motor Club memberships through only five customers. 7/ Clearly, Respondents had a strong financial motive to push these products.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the licenses and eligibility for licensure as an insurance agent of Respondents, Ronald T. Pascale and Leonard C. Chandler, be REVOKED. DONE AND ORDERED this 24th day of June, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1987.
The Issue The issues for determination in this proceeding are whether Respondent committed the acts alleged in the Administrative Complaint, and, if so, what penalty, if any, should be imposed on Respondent's license.
Findings Of Fact Petitioner is the state agency responsible for regulating insurance and insurance-related activities in Florida pursuant to Chapters 626 and 627, Florida Statutes (2001). Respondent is licensed as a general lines insurance agent pursuant to license number A152865. (All references to statutes are to those promulgated in Florida Statutes (2001) unless otherwise stated.) Respondent is the primary agent for Cash Register Auto Insurance of Pinellas Park, Inc. (Cash Register). Cash Register is a Florida Corporation engaged in the business of selling insurance and is an insurance agent with its principal place of business at 6251 U.S. Highway 19, North, Pinellas Park, Florida. In August 2001, Mr. Maksim Segal (Segal) spoke by telephone with an unidentified representative of Cash Register and obtained a quote of $1,036 for the annual cost of the minimum insurance required by law for his 1981 Mercedes 300D vehicle (minimum coverage). Segal obtained similar quotes from several agencies, but Cash Register offered the lowest cost for the minimum coverage that Segal wanted. On August 15, 2001, Segal entered the office at Cash Register to purchase automobile insurance. Ms. Kelly Comstock (Comstock), a Cash Register employee, assisted Segal. Comstock gave the quote to Segal, took an application, and accepted the premium payment from Segal. Segal completed the transaction in approximately 10 to 20 minutes and left the office at approximately 1:37 p.m. Segal paid Cash Register $1,036 for the annual cost of the minimum coverage that Segal had requested. However, the insurance company subsequently billed Segal an additional $76 for unpaid premium pursuant to an invoice dated November 8, 2001. Segal contested the additional premium but paid it so that he could continue driving his car. An additional premium was due because Segal failed to disclose on his insurance application that his mother, another licensed driver in his household, had a previous accident. The accident increased the annual premium to $1,046. The insurance company did not bill Segal $10 for the difference between the new premium of $1,046 and the $1,036 that Segal paid to Cash Register. The insurance company billed Segal $76 because Cash Register paid the insurance company only $970 even though Cash Register collected $1,036 from Segal. Cash Register deducted $6 as a charge for the cost of two driving record reports for Segal and his mother and deducted $60 as a charge for membership in Colonial Touring Association, Inc. (CTA or motor club). The membership purports to provide accidental death and dismemberment benefits to Segal's mother as his designated beneficiary. After deducting the $66 from Segal's $1,036, Cash Register sent the remaining $970 to the insurance company. If Cash Register had not retained the $60 it charged for the motor club, the amount that Cash Register would have forwarded to the insurance company would have been $1,030. The additional premium billed on November 8, 2001, would have been $16 rather than $76. The primary allegation against Respondent is that he sold the motor club membership to Segal without Segal's informed consent or represented that the membership was part of the minimum coverage required by law when it was not. The act of selling an unwanted product to a customer in such a manner is statutorily defined as "sliding." Segal was 18 years old on August 15, 2001. He graduated from high school with a 3.5 grade point average and was a member of several honor societies, including the National Honor Society. In high school, Segal passed six International Baccalaureate courses. As a high school junior, Segal performed well on the SAT exams. He attained scores of 680 and 720, respectively, in the verbal and math parts of the exam. Segal is now enrolled in the University of Florida and is pursuing a degree in engineering. Segal is a native of Russia and a naturalized citizen of the United States. Segal speaks and reads his native language and is fluent in Spanish. Segal learned to speak and read English in one year and writes essays in English. At the time of the transaction on August 15, 2001, Segal was alert and was not under the influence of drugs or alcohol. On August 15, 2001, Segal signed numerous documents that disclose the specific coverage that Segal purchased and rejected. The documents include a confirmation of coverage form that discloses that Segal purchased motor club insurance in the amount of $6,000. The confirmation of coverage form discloses that ancillary products such as the motor club membership are: . . . high commission items that allow the agency to make a reasonable profit and continue to offer you the most competitive rates available on your auto insurance. These are separate plans from your auto policy and are optional. The confirmation of coverage form also contains the following declarations: I have read, confirm and consent to the coverages and benefits indicated on this form. DO NOT SIGN THIS FORM IF IT CONTAINS ANY BLANKS OR UNINITIALED MARK THROUGHS. GET A COPY FOR YOURSELF! READ THIS FORM AFTER YOU GET HOME. Segal also signed a motor club form. The form designates his mother as beneficiary of insurance in the amount of $6,000 and discloses that the insurance costs $60. Segal also signed an application for automobile insurance. The application discloses that Segal paid an annual premium of $970 for automobile coverage. The coverage consisted of property damage in the amount of $10,000 and personal injury protection in the amount of $10,000, subject to a deductible of $2,000. Neither party called Comstock as a witness or submitted her deposition testimony. No other witnesses observed the exchange between Comstock and Segal. Segal was the only witness who was present during the transaction between him and Comstock. Findings pertaining to the exchange between Segal and Comstock are based on the deposition testimony of Segal, the documents he signed, and the activities that Comstock was authorized to perform. That evidence is clear and convincing to the trier of fact. Comstock did not rush Segal through the transaction. Comstock gave Segal an opportunity to read the documents he signed on August 15, 2001, and no one stopped him from reading the documents. No document was concealed from Segal. Segal did not read the documents and did not ask questions about the documents. Comstock provided Segal with copies of all of the documents he signed. In addition, Cash Register provided Segal with a copy of a New Business Receipt that itemizes the charges that comprise the total charge of $1,036. The New Business Receipt shows premium charges of $642 for property damage, $328 for personal injury protection, $60 for accidental death and dismemberment, and $6 for fees. Both the New Business Receipt and the insurance application disclosed a premium for automobile insurance in the amount of $970. However, Segal paid $1,036 to Cash Register. Segal did not notice the disparity. Segal merely confirmed that the total amount due was consistent with the original quote and trusted Respondent to provide Segal with the insurance coverage he originally requested. Neither Comstock, Respondent, nor any other employee at Cash Register orally explained to Segal the coverage that he accepted or rejected in the documents he signed. Comstock was not licensed as a customer service representative and had no authority to explain insurance coverage to Segal. However, an unlicensed person in an insurance agency can give quotes, take an application for insurance, sell a motor club membership, and receive cash and premiums from customers. Neither Comstock, Respondent, nor any other employee at Cash Register orally explained to Segal that his membership was optional and was not required by law as part of the minimum insurance coverage that Segal originally requested. None of the licensed or unlicensed persons at Cash Register explained to Segal that the cost of the membership did not actually purchase life or automobile insurance or that the cost of the membership was not included in the premium for no additional charge. Segal did not realize that he was purchasing a motor club membership as well as the requested insurance. Respondent did not have Segal's informed consent to sell Segal the motor club membership. As Segal explains in this testimony: . . . I came into "Cash" Register to buy insurance . . . . I got something I didn't want, and . . . I owed $76. . . . Q. When you're talking about something you didn't want . . . . you're talking about the motor club? A. Yes. Q. At what point did you decide you didn't want it? A. When I found out I had it. Petitioner's Exhibit 1 at 61-62. Respondent is the primary agent for Cash Register. Section 626.592 makes Respondent responsible for supervising all individuals at Cash Register. Respondent is responsible and accountable for the acts and omissions of any employee at Cash Register, including the sliding that occurred in the transaction with Segal in violation of Section 626.9541(1)(z). In addition to the violation of Section 626.9541(1)(z), the Administrative Complaint alleges that the Segal transaction violated 14 statutory provisions. The following findings address those alleged violations. The sliding that occurred on August 15, 2001, demonstrates a lack of fitness or trustworthiness to engage in the business of insurance within the meaning of Section 626.611(7). The sliding also constitutes a dishonest practice in the conduct of business under Respondent's license within the meaning of Section 626.611(9). The sliding constitutes a source of injury or loss to the public and is detrimental to the public interest within the meaning of Section 626.621(6). The sliding is a violation of a provision of Chapter 626 within the meaning of Section 626.621(2). Finally, the sliding is an unfair or deceptive act or practice involving the business of insurance within the meaning of Section 626.9521. The evidence is less than clear and convincing that Respondent violated Section 626.621(12) by knowingly aiding, assisting, procuring, advising, or abetting any person in the violation of Section 626.9541(1)(z) or any other provision in Chapter 626. Respondent did not testify, and the evidence of his personal knowledge of the Segal transaction on August 15, 2001, is less than clear and convincing. The evidence is less than clear and convincing that Comstock violated Rule 4-222.060, Florida Administrative Code, by holding herself out as an insurance agent, customer representative, or any other licensed person, or performing any function that required Comstock to be licensed. Rather, the evidence shows that Comstock did not engage in a substantive discussion of insurance products but performed only those functions for which she is authorized in Rules 4-222.020 and 4- 222.050, Florida Administrative Code. (Unless otherwise stated, all references to rules are to rules promulgated in the Florida Administrative Code on the date of this Recommended Order.) The evidence is less than clear and convincing that others licensed as customer representatives and employed at Cash Register violated Subsections 626.112(1) and (2). Petitioner failed to make a sufficient showing that anyone exceeded the scope of activities authorized by their respective licenses. On August 15, 2001, Respondent did not violate Sections 626.611(13) and 626.621(3) by failing, willfully or otherwise, to comply with any order of the Department of Insurance (Department). The Department entered a Final Order against Respondent in a separate case on December 24, 2001. Respondent could not have violated the terms of that order on August 15, 2001. The evidence is less than clear and convincing that Respondent otherwise violated Section 626.611(13). An essential element of a violation of the statute is that the alleged violation must be "willful." Respondent did not testify concerning the requisite intent, and the remaining evidence is insufficient to support an inference of intent. The Administrative Complaint does not charge Respondent with willful deception in regard to an insurance policy within the meaning of Section 626.611(5). The evidence is less than clear and convincing that Respondent violated Subsections 626.9541(1)(a) and (b). Those provisions generally address public statements in advertising. This is a license discipline proceeding and is penal in nature. Terms within relevant statutes must be construed against the imposition of discipline and in favor of the licensee. The representation that the payment of $1,036 by Segal was for automobile insurance was a false statement within the meaning of Section 626.9541(1)(e). The false statement occurred in the form of an omission when the employees at Cash Register failed to orally explain that the motor club membership was optional and was not part of the minimum coverage requested by Segal. The evidence was less than clear and convincing that Respondent engaged in "twisting" within the meaning of Section 626.9541(1)(l). The evidence is insufficient to show that any act or omission by Respondent or his employees was intended to induce Segal to: . . . lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. Petitioner spent a significant amount of time during the hearing on the issue of whether Respondent properly bound the insurance company when Segal left Cash Register on August 15, 2001. As a threshold matter, the Administrative Complaint contains 18 paragraphs of factual allegations that must support the charges contained in 26 paragraphs. None of the factual allegations contain any references to the issue of whether Respondent properly bound the insurance company when Segal left Cash Register. Petitioner complains that Respondent violated the policies of the insurance company by not signing the completed application before Segal left Cash Register in order to bind the insurance company. Petitioner's proof then leads down a winding trail. Petitioner's proof shows that if Respondent had signed the application, the act would have been ineffective to bind an intermediary company responsible for assigning new business to the actual insurance company. The intermediary company authorizes agents to bind the company only by an electronic binding system performed over the telephone. However, the evidence shows that the intermediary company was not the actual insurance company. The actual insurance company allows agents to bind the company by signing the application. Respondent completed the required electronic binding procedure three hours after Segal left Cash Register, a period that is faster than the industry norm. The insurance company did not issue the policy for more than 60 days after Segal left Cash Register because the intermediary company was too busy to assign the new business to a specific company any sooner. When the company did issue the policy, the effective time and date that the company was bound was approximately 13 hours before Segal left Cash Register on August 15, 2001. During much of the hearing, Petitioner cited to policies and procedures published by the intermediary company. However, Petitioner acknowledged that the intermediary company is not a state agency, and its rules are not the rules at issue in this proceeding. In a similar vein, Petitioner spent much of its energy during the hearing attempting to prove that Respondent did not sign the application as soon as it was submitted. There is no relevant factual allegation in the Administrative Complaint, and Petitioner cited no statute or rule that requires Respondent to sign the application at a prescribed time. Respondent has a history of discipline against his license for a similar offense. On December 24, 2001, Petitioner entered a Final Order in DOAH Case Number 01-1863PL. Petitioner adopted the Recommended Order of ALJ Robert E. Meale. Petitioner suspended Respondent's license for three months.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent guilty of the charges pertaining to sliding and suspending Respondent's license for six months. DONE AND ENTERED this 4th day of December, 2002, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 4th day of December, 2002. COPIES FURNISHED: Jed Berman, Esquire Infantino and Berman Post Office Drawer 30 Winter Park, Florida 32790-0030 David J. Busch, Esquire Division of Legal Services Department of Insurance, 200 East Gaines Street 645A Larson Building Tallahassee, Florida 32399-0333 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue Should discipline be imposed by Petitioner against Respondent's license as a limited customer representative (4-42), held pursuant to Chapter 626, Florida Statutes?
Findings Of Fact Facts Admitted by Answer Pursuant to Chapter 626, Florida Statutes, you, Anna Michelle Mack, currently are licensed in this state as a limited customer representative (4-42), and were so licensed at all times relevant to the dates and occurrences referenced herein. Your license identification no. is A161579. Pursuant to Chapter 626, Florida Statutes, the Florida Department of Financial Services has jurisdiction over your license and appointments. At all times relevant to the dates and occurrences referenced herein you, Anna Michelle Mack, were employed with Beck Insurance, in Jacksonville, Florida. At all times relevant to the dates and occurrences referenced herein you, Anna Michelle Mack, had a duly-appointed supervising agent, Monica Beck. Count I - Nelson Yettman On July 20, 2001, Nelson Yettman purchased mobile home homeowner's insurance from Beck Insurance. In the interest of obtaining the insurance policy he completed an application upon a form related to the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA), Petitioner's Exhibit numbered 4. He signed the application. It reflects the signature of Monica Beck as agent, but Mr. Yettman dealt with the Respondent in the details involved with the transaction. On July 21, 2001, the only person that Mr. Yettman did business with at Beck Insurance from the beginning until the end of the transaction was the Respondent. Respondent made no explanation to Mr. Yettman as to her status as an insurance agent or not. At the time, Respondent was a limited customer representative (4-42), as she has remained. Monica Beck bound the mobile home homeowner's policy as the primary agent for Beck Insurance. On July 20, 2001, Mr. Yettman paid $377 for the mobile home homeowner's policy premium. In return Respondent provided Mr. Yettman a receipt noting that payment, Petitioner's Exhibit numbered 5. The receipt had Respondent's first name affixed. The receipt also referred to a $75 charge for "Nation Homeowners." That amount was not tendered on July 20, 2001. The reference to "Nation Homeowners" refers to a product from Nation Safe Drivers described as Homeowners/Renters contract customer service. Mr. Yettman signed for Plan 3, the $75 Plan within that service. This arrangement was one in which, according to the document, executed the agreement between the contracting parties as set forth in Petitioner's Exhibit numbered 6, was "NATION HOMEOWNERS/RENTERS PLAN agrees that the person named in the schedule made a part heheof [sic], in consideration of the payment of fee [sic] provided in paid schedule, is a nw/amed [sic] member of the NATION HOMEOWNERS/RENTERS PLAN, and entitled to all the services benefits and proviledges [sic] hereof, for and in connection with the ownership, or rental of a home or apartment in the name of the member, for the period set forth, within the United States of America, its territories, possessions, or Canada, . . . ." In particular, the services being offered were related to: Burglary & Vandalism Reward and Emblem: Nation Homeowners/Renters Plan; Extra Living Expense; Credit Card Protection; Major Appliance Allowance; Ambulance Service; Lock and Key Service; Notary Public Service; Touring and Travel Services; World Wide Tour Service; and Post Office Box. Mr. Yettman acknowledges signing Petitioner's Exhibit numbered 6, the Homeowners/Renters contract and that on July 23, 2001, he paid the $75 called for in the contract. To that end, on July 23, 2001, Respondent provided a receipt to Mr. Yettman with her first name affixed noting payment of the additional $75 Petitioner's Exhibit numbered 5. While Mr. Yettman realizes that he paid $75 for the Homeowners/Renters contract, no explanation was given to him by Respondent concerning the purchase. Mr. Yettman did not realize that it was an optional item unrelated to his mobile home homeowner's policy. He did not realize that there was an additional charge for the purchase until he paid the $377 for the mobile home homeowner's policy and was reminded that he owned an additional $75 which he eventually paid. Mr. Yettman asked what the additional $75 was for. Respondent told Mr. Yettman in response that he needed to pay another $75. Mr. Yettman went home and discussed the extra payment with his wife, and returned two days later to pay the extra $75. Mr. Yettman returned to make payment with the belief that the extra $75 was something in relation to the mobile home homeowner's insurance premium. Mr. Yettman had not read the details set forth in the Homeowners/Renters contract, Petitioner's Exhibit numbered 6. When Mr. Yettman returned on July 23, 2001, to pay the additional $75 he found out that the money was in relation to the Homeowners/Renters contract. With this knowledge he did not reject the contract at that time. Nonetheless, his overall impression remained that $452 paid in the aggregate was for a homeowner's insurance policy. As Respondent identified in her testimony, she is aware that her limited customer representative license (4-42) pertains to her opportunity to write and discuss automobile insurance. It is limited to that activity. It is unrelated to the ability to write insurance for property and casualty insurance, such as homeowner's insurance, an opportunity reserved to a general lines agent (2-20). Notwithstanding this limitation, Respondent believes that she was entitled to obtain experience while employed at Beck Insurance, under supervision leading to her licensure as a general lines agent (2-20). Respondent asserts that she was undergoing training toward that goal from Jennifer L. Faloon, a Beck Insurance employee who held a general lines agent (2-20) license. In this connection, to the knowledge of Respondent, only three or four homeowner's policies are written at Beck Insurance per month. Respondent asked Jennifer Faloon to help her in processing the application for mobile home homeowner's insurance completed by Mr. Yettman, in such matters as an item referred to as a cost estimator. Respondent wrote in the information on the application, as well as the receipts for payment that have been previously described. Respondent, in her testimony, acknowledged that the Homeowners/Renters contract was involved with items unrelated to the mobile home homeowner's insurance policy, which Mr. Yettman had come to Beck Insurance to purchase. Respondent describes the manner in which she would have presented the Homeowners/Renters contract to Mr. Yettman by telling him what it covers. "It covers the ambulance, it covers lock and key, notary, touring, covers major appliance allowance, credit cards, and stuff like that." Respondent indicated that the signature of the customer is obtained for the Homeowners/Renters contract "to let them know that they have this." This is a similar concept, as a product, to the towing and rental product sold to customer Laura Brown, whose transaction is also discussed in this case. Respondent's remarks about her description to Mr. Yettman are perceived as being what would be typical in dealing with a Homeowners/Renters contract with a customer, not specifically related to Mr. Yettman. Respondent does not recall any specific questions, which Mr. Yettman may have had about the Homeowners/Renters contract. When asked if Mr. Yettman signed the contract in her presence, she replied "Yes, Sir, he would have," meaning again that this would be the expected outcome. Respondent explained that the different plans described in the Homeowners/Renters contract are not presented to the customer by any method. Count II - Carolyn Grant On March 12, 2001, Carolyn Grant purchased automobile insurance from Beck Insurance, together with auto rental reimbursement and towing service reimbursement from All World All Safe Drivers (All World). These transactions are evidenced in applications, questionnaires, an inspection form and a receipt for payment, variously described in Petitioner's Exhibits numbered 8 through 11, and Respondent's Exhibit numbered 1. Respondent did not deal with Ms. Grant in the transactions. Count III - Laura Brown On January 21, 2002, Laura Brown purchased automobile insurance through Beck Insurance. She dealt with Valerie Webster and Anna Michelle Mack, employees at Beck Insurance. Ms. Brown dealt primarily with Ms. Webster during the transaction, with Ms. Mack there to assist Ms. Webster on and off. At various times in 2002 and 2003 Valerie Lynn Webster had applied to Petitioner to be licensed as a (2-14) life, including variable annuity agent and a limited customer representative (4-42). No licenses were issued to Ms. Webster. Before arriving at Beck Insurance, Ms. Brown had obtained a preliminary quotation by telephone from the agency related to the purchase of automobile insurance. Ms. Brown was interested in obtaining full coverage for her car. The nature of the discussion at the agency was about the purchase of automobile insurance, not about a towing and rental contract, motor club membership, or the All World plan. A down-payment was made with installments to follow, associated with the automobile insurance. Ms. Brown thought that the entire amount of the down-payment was for the insurance premium. No explanation was made to the effect that the motor club was separate from the automobile insurance policy. When Ms. Brown left the Beck Insurance agency, she did not realize that she had purchased anything other than automobile insurance. Petitioner's Exhibit numbered 12 (DOAH Case No. 03-3666PL) is the automobile insurance application through Superior executed by Ms. Brown on the date in question. It was signed by Ms. Faloon noting that the policy was bound. Ms. Faloon had no other direct involvement in the transaction. Petitioner's Exhibit numbered 13 (DOAH Case No. 03-3666PL) is a receipt dated January 22, 2002, issued to Ms. Brown by Ms. Webster and Ms. Mack, totaling $247 that Ms. Brown paid on that date. It is broken out as $184 for Superior, $60 for All World Motor Club, and $3 for a motor vehicle report. Petitioner's Exhibit numbered 14 (DOAH Case No. 03-3666PL), is an executed application for All World automobile rental and towing service reimbursement executed by Ms. Brown for a period January 22, 2002, through June 22, 2002, under Plan 3. This form does not reflect the cost of that plan. Ms. Brown executed the Beck Insurance questionnaire, Petitioner's Exhibit numbered 15 (DOAH Case No. 03-3666PL) that contains item 11 relating to the motor club stating, "I am aware that the towing and rental car reimbursement is optional. I want to carry this coverage. (This coverage can only be renewed by coming into the office, as it is not written with your auto carrier.)" This creates an option to purchase then immediately withdraws the option. The form additionally sets forth in another place, that the towing and rental car reimbursement is optional but without the opportunity to decline that option that is specifically described for other optional coverage in the form, such as uninsured motorists and medical payments. In an affidavit containing Ms. Brown's statement prepared on May 23, 2002, Ms. Brown stated, "I knew that I had purchased towing or rental reimbursement policy for my policy 1/22/2002/2003 because I saw the form and I asked questions about it. The lady in picture number 10 (Ms. Mack depicted in Petitioner's Exhibit numbered 17, DOAH Case No. 03-3666PL), told me I would get so many tows for free, she also told me it was from Beck Insurance." But in that affidavit Ms. Brown goes on to state, "I did not know that I paid an additional $60 for the towing policy. I thought this was just something I got with the car insurance policy." Nothing in Petitioner's Exhibit numbered 14 (DOAH Case No. 03-3666PL), the application for All World towing and rental reflects the cost of Plan 3. That was made known in the receipt, Petitioner's Exhibit numbered 13 (DOAH Case No. 03-3666PL). Ms. Brown does not recall whether Ms. Mack, in her participation in the transaction, indicated that Ms. Mack's status at the Beck Insurance agency was other than that of an insurance agent. Disciplinary History Respondent has no prior disciplinary history.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered finding Respondent in violation of those provisions within Counts I and III that have been referred to, dismissing the others within those Counts, dismissing Count II, suspending her license for one-year, placing Respondent on two years probation, and requiring attendance at such continuing education courses as deemed appropriate. DONE AND ENTERED this 3rd day of June, 2004, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS 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 3rd day of June, 2004.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Petitioner, John's Island Club, Inc. (petitioner or the club), is a not-for-profit corporation which owns and operates a private country club facility in the John's Island residential development in Indian River County, Florida. It provides a variety of recreational facilities to its members. Among the amenities are three golf courses, nineteen tennis courts, a tennis building, a beach club, a club house, a swimming pool, and dining facilities. Respondent, Department of Revenue (DOR), is a statutorily created agency charged with the administration of the state revenue laws, including Chapter 212, Florida Statutes, and rules promulgated thereunder. As a result of an amendment made in 1991 to Subsection 212.02(1), Florida Statutes, DOR is authorized by law to impose an admissions tax on "dues and fees" paid to private membership clubs providing recreational facilities. As a private membership club, petitioner is subject to this tax. Beginning on July 1, 1994, petitioner made an assessment on each member to raise capital for the purpose of repairing and replacing many of its physical facilities. During the six month period ending December 31, 1994, $10,441,897 was collected from the members and made available to the club. Rule 12A- 1.005(d)1.b., Florida Administrative Code, which was adopted by DOR in December 1991 to implement the admissions tax on dues and fees, imposes a tax on "(a)ny periodic assessment (additional paid-in capital) required to be paid by members of an equity or non-equity club for capital improvements." Under the authority of that rule, DOR required that petitioner pay the applicable sales tax on the assessment collected through December 31, 1994, or $730,932.79, and that it continue to pay the tax as other similar assessments are made in the future. Claiming that the rule exceeds DOR's grant of rulemaking authority, and it modifies, enlarges, and contravenes the law implemented, petitioner filed a petition for administrative determination of invalidity of existing rule. DOR denies all allegations and asks that the validity of its rule be upheld. The Club and the Assessment The composition of the club The club began operation in 1969 but was purchased by its members in 1986. It is an equity private membership club but issues no stock. The club has two types of memberships: golf and sports social. Currently, the cost of a golf equity membership is $85,000 while the cost of a sports social membership is $30,000. After payment of these fees, the member receives a membership certificate, which represents his or her equity ownership interest in the club. At the present time, there are 1125 golf memberships and 257 sports social memberships. Of the 1125 golf memberships, the original developer still owns 67. In addition to having to purchase a membership, members must also pay annual dues. A golf member pays $4,875 in annual dues while a sports social member pays $2,760 in annual dues. A sales tax is also collected on these dues. The dues are used to cover operating expenses such as insurance, administrative costs, staff salaries, and maintenance costs. In addition, members pay fees for additional services such as golf cart use, golf bag storage, locker room use, and golf and tennis lessons. When a member decides to resign or retire from the club, he or she may resell the membership to the club (but not a third party) and receive the greater of (a) the initial amount paid by the retiring member, or (b) 80 percent of the current membership cost (with the remaining 20 percent retained by the club in a separate capital improvement account). The assessment In 1992, the club began studying the feasibility of repairing and replacing many of its physical facilities. The total cost of the proposed work was set at $16,372,000. By majority vote taken in the spring of 1994, the members decided to raise capital for the work by imposing a capital assessment on each current member. It was agreed that the capital contribution would be $12,000 from each golf member and $11,150 from each sports social member. However, the payment of the capital contribution was not intended to, and did not result in any, decrease in the dues which members were required to pay for the use of the club's facilities. A failure to pay the assessment would result in suspension from the club. Three different options were made available to the members for the manner of payment of the capital contribution. The options included (a) a single payment, (b) payment over a three-year period, or (c) payment of interest only until such time as the member either sold the membership or left the club. After making payment in full, the member would be issued a certificate of capital contribution. It is noted that the developer was required to pay the capital contribution for his 67 golf memberships. Further, any person joining the club after the imposition of the assessment would likewise be required to pay the assessment. Beginning in July 1994, the club began collecting the capital contribution from its members. From July through December 1994, some $10,441,897 was collected. A total sales tax of $730,932.79 has been paid on those collections. Shortly thereafter, petitioner opted to file this rule challenge. The Rule and its Origin Rule 12A-1.005(5)(d)1.b. provides as follows: (d)1. Effective July 1, 1991, the following fees paid to private clubs or membership clubs as a condition precedent to, in conjunction with, or for the use of the club's recreational or physical fitness facilities are subject to tax. * * * b. Any periodic assessments (additional paid in capital) required to be paid by members of an equity or non equity club for capital improvements or other operating costs, unless the periodic assessment meets the criteria of a refundable deposit as provided in sub-subparagraph 2.e. below. * * * Under the terms of the rule, the capital contri- bution assessed by the club does not qualify as a refundable deposit. This is because any difference between the amount collected by the club upon the sale of a membership to a new member, and the amount which was paid to the retiring member, is retained by the club. Because Rule 12A-1.005, Florida Administrative Code, covers a wide array of items subject to taxation, the DOR cites Sections 212.17(6), 212.18(2), and 213.06(1), Florida Statutes, as the specific authority for adopting the rule, and Sections 212.02(1), 212.031, 212.04, 212.08(6) and (7), 240.533(4)(c), and 616.260, Florida Statutes, as the law implemented. There is no dispute between the parties, however, that in adopting sub-subparagraph 1.b., which contains the challenged language, the agency was relying principally on Subsection 212.02(1), Florida Statutes, as the law being implemented. That subsection defines the term "admissions" for sales tax purposes. Although the parties did not specifically say so, DOR relies on Section 212.17(6), Florida Statutes, as its source of authority for adopting the rule. That subsection authorizes DOR to "make, prescribe and publish reasonable rules and regulations not inconsistent with this chapter . . . for the enforcement of the provisions of this chapter and the collection of revenue hereunder." For the purpose of assisting DOR in administering the Florida Revenue Act of 1949, which imposes a sales and use tax on various transactions, Section 212.02, Florida Statutes, provides definitions of various terms used in the chapter, including the term "admissions." Prior to the 1991 legislative session, subsection 212.02(1) read in pertinent part as follows: The term "admissions" means and includes . . . all dues . . . paid to private clubs and membership clubs providing recreational or physical fitness facilities, including, but not limited to, golf, tennis, swimming, yachting, boating, athletic, exercise, and fitness facilities. During the 1991 legislative session, the definition of the term "admissions" was expanded by the addition of the following underscored language: The term "admissions" means and includes . . . all dues and fees . . . paid to private clubs and membership clubs providing recreational or physical fitness facilities, including, but not limited to, golf, tennis, swimming, yachting, boating, athletic, excercise, and fitness facilities. Thus, the legislature added the term "fees" to the term "dues" for those amounts "paid to any private clubs and membership clubs" which would be subject to the admissions tax. Prior to the above change in substantive law, rule 12A-1.005(5), as it then existed, provided that dues paid to athletic clubs which provided recreational facilities were taxable. However, subparagraph (5)(c) of the rule also provided that (c) Capital contributions or assessments to an organization by its members are not taxable as charges for admissions when they are in the nature of payments made by the member of his or her share of capital costs, not charges for admission to use the organization's recreational or physical fitness facilities or equipment, and when they are clearly shown as capital contributions on the organization's records. Contributions and assessments will be considered taxable when their payment results in a decrease in periodic dues or user fees required of the payor to use the organization's recreational or physical fitness facilities or equipment. Therefore, capital contributions were not taxable unless they resulted in decreased dues. That is to say, if a club levied an assessment on members and concurrently lowered its monthly dues, the assessment would be deemed to be taxable and in contravention of the rule. Thus, the effect of the rule was to prevent a club from renaming "dues" as "capital contributions" or "assessments" in order to avoid paying a tax on the dues. After the change in substantive law, the DOR staff began preparing numerous drafts of an amendment to its rule to comply with the new statutory language. At one stage of the drafting process, a DOR staffer recommended that, because the legislature had not provided a definition of the term "fee," the DOR should adopt a rule which provided that capital contributions be "not taxable if assessed under an equitable membership." Relying on what it says is the legislative intent, the DOR eventually proposed, and later adopted, the rule in its present form. In doing so, the DOR relied upon the terms "capitalization fees" and "capital facility fees" which are found in certain legislative history documents pertaining to the new legislation. Legislative History of the Law Implemented Although a number of bills related to the subject of a sales tax on admissions, the bill enacted into law was identified as Committee Substitute for House Bill 2523 (CS/HB 2523). The legislative history of the various bills relating to this subject has been received in evidence and considered by the undersigned. In early 1991, the House and Senate considered bills which addressed amendments to the sales tax on admissions. The first time the issue was addressed was at a meeting on February 21, 1991, of the Subcommittee on Sales Tax of the House Committee on Finance and Taxation. The discussion at the meeting indicated that the intent of the bill was to close a loophole that allowed physical fitness facilities to change their pricing structure to charge a higher initiation fee, which was not taxable, and thereby reduce their monthly dues, which were taxable, so as to reduce the revenue below that originally anticipated by this tax on admissions. This is corroborated by the bill analysis of the proposed committee bill that was offered, PCB FT 91-3A, which summarized the problem and solution as follows: Section 212.02(1), F. S. was amended during the 1990 Legislative Session to include in the definition of admissions those "dues" of "membership clubs" providing "physical fitness" facilities. Some clubs have attempted to avoid the tax (on dues) by shifting a substantial portion of the members' payments from "dues" to "initiation fees." Section 212.02(1), F. S., is amended to include "fees" as well as "dues" in the definition of admissions. All fees, including initiation fees and capitalization fees, paid to private clubs and membership clubs providing recreational or physical fitness facilities would be subject to the sales tax on admissions. It is unclear, but likely, that PCB FT 91-3A became House Bill 2417 (HB 2417). The bill analysis and economic impact statement on HB 2417, which was prepared by the House Committee on Appropriations, contained identical language to that in the bill analysis on PCB FT 91-3A. At the same time, the Senate was considering Senate Bill 1128, which later became Committee Substitute for Senate Bill 1128 (CS/SB 1128). On March 14, 1991, a staff analysis and economic impact statement on CS/SB 1128 was prepared by the Senate Committee on Finance, Taxation and Claims. It provided that: Section 212.02(1), Florida Statutes, defines "admissions" for sales and use tax purposes. Monthly fees of clubs with major facilities such as tennis courts, a swimming pool or a golf course have always been subject to the sales tax. During the 1990 Legislative Session this statute was amended to include dues on membership clubs providing physical fitness facilities, and not having these other major facilities. According to the DOR, such clubs have attempted to avoid payment of this tax by shifting a substantial portion of the members payments from dues to initiation fees which are not taxed. Accordingly, the purpose of the proposed statutory amendment was "to include initiation fees as well as dues in the definition of admissions." HB 2417 was passed by the House on April 17, 1991, and was sent to the Senate, where it was referred to the Committee on Finance, Taxation and Claims. HB 2417 died in that Committee. CS/SB 1128 was passed by the Senate on April 4, 1991, and was sent to the House, where it died in messages. A separate bill, Committee Substitute for House Bill 2523, which addressed similar issues to those addressed in HB 2417 and CS/SB 1128, was passed by the House on April 4, 1991, and was sent to the Senate where it was passed with amendments. The Bill was then returned to the House where further amendments were adopted. The Bill was again sent to the Senate with a request for the Senate to concur with the House amendments. The Senate refused to concur and the Bill was sent to a conference committee. The conference committee on finance and taxation met on April 19, 1991. The entirety of the discussion of the committee on this issue is as follows: Senator Jenne: The - - going down to number 21, admissions, initiation fees. The House includes capitalization fees. Representative Abrams: Which is this? Mr. Weiss: The Senate bill just states initiation fees are additionally included. The House bill, I believe, says that it's just all fees, which would include whether they called them initiation fees or capital facility fees or whatever. Representative Abrams: Because we are using something other than initiation - - Mr. Weiss: It's a fee that is going to be included. Representative Abrams: Yes, they were using - - they were breaking down categories of fees to avoid the tax, I think is what the deal was there. That gets us how much? Senator Jenne: Okay, well, it doesn't matter, because you can do it. Representative Abrams: Okay, good. Although the terms "capital facility fees" and "capitalization fees" were used during the discussion, contrary to DOR's assertion, it is far from clear that the intent of the amendment was to make taxable all capital contributions and assessments paid by members of private clubs providing recreational facilities. When placed in context with the prior debate before the committees and their staff analyses, it is much more likely that the intent was to close a loophole then used by physical fitness clubs who were renaming dues as fees in order to avoid taxes. The report of the conference committee was received by both houses on April 30, and CS/HB 2523 was passed by both houses the same day. The conference committee report for the bill contains only the following language describing the sales tax on admissions/initiation fees: Includes all recreational or physical fitness facility fees in the definition as admissions. The official conference committee report contains no reference to the terms "capitalization fees" or "capital facility fees." Neither does it make reference to the terms "assessment" or "paid in capital," which are the terms used by DOR in its rule. In the final bill analysis and economic impact statement prepared by the House Committee on Finance and Taxation for CS/HB 2523 on June 12, 1991, or 43 days after the bill was passed, the analysis states that subsection 212.02(1) was amended to include: "fees" as well as "dues" in the definition of admissions. All fees, including initiation fees and capitalization fees, paid to private clubs and membership clubs providing recreational or physical fitness facilities would be subject to the sales tax on admissions . . . This amendment should also limit further attempts to avoid taxation by renaming the fees collected from members. The staff analysis was obviously not available to members of the House or Senate when they voted on the bill on April 30, 1991. Although the final bill analysis used the term "capitalization fees," no where in any of the legislative history is there evidence of any legislative consideration of what was actually meant by that term. This is also true of the term "capital facility fees" which surfaced on one occasion prior to the passage of the bill. Capitalization Fees and Their Significance The sole basis for the DOR including the tax on assessments for capital improvements was the appearance in the legislative history of the terms "capitalization fees" and "capital facility fees." Neither term has any meaning to tax accountants. However, the accounting witnesses for both parties agreed that, from an accounting perspective, the phrase "capital facilities" would be understood to be assets having a life longer than one year. A capital contribution is typically a one time payment for the purchase of assets. It does not entitle the member to use the club. It is an equity transaction, not an income transaction, and it represents an intent to make an investment to improve the value of the membership assets separate and apart from the payment of annual expenses for the receipt of some service. "Dues" are a member's contribution to the operating costs of a club. They are assessed over an annual period and they are recurring. They also represent the payment that a member pays for admission to the organization. A capital contribution paid by a member of an equity membership club is not "dues." "Fees" as applied to a club are user charges. They are voluntary so that a member can decide whether or not to incur the charge based on whether the member uses the particular service to which it relates. A capital contribution is not a "fee."
The Issue Whether the Petitioner committed the violations alleged in the Amended Administrative Complaint filed October 14, 2003, 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 issuing licenses for insurance agents in the State of Florida, and for regulating and disciplining licensed insurance agents. Sections 626.016, 626.611, and 626.281, Florida Statutes (2004). At all times material to this proceeding, Mr. Pomerantz was licensed in Florida as a property and casualty general lines insurance agent, which is referred to as a "2-20 license." At all times material to this proceeding, Mr. Pomerantz did business as A Able insurance agency, an unincorporated entity located at 124 South Federal Highway, Pompano Beach, Florida. Mr. Pomerantz owned the A Able insurance agency, worked in the office in Pompano Beach, and was the agent in charge of the office. Automobile insurance was the primary product sold at the Pompano Beach office of the A Able insurance agency. No primary agent for the A Able insurance agency office in Pompano Beach was registered with the Department, but Mr. Pomerantz functioned as its de facto primary agent at that location. An insurance agency known as the Wide World of Insurance was, and perhaps still is, located in Margate, Florida. Mr. Pomerantz's brother, Randy Pomerantz, operated this agency. In the summer of 2000, the two offices merged, but the merger dissolved in the early spring of 2002. During the time that the two agencies operated as a single entity, they continued to maintain the two office locations. Applications and other paperwork generated in the Pompano office were, as a rule, sent to the Margate office for processing. Prior to May 2003, however, when he began working in a general administrative capacity at the Margate office, Mr. Pomerantz did not work in the Margate office and had no personal knowledge of the operations of the Margate office or the applications for automobile insurance handled by that office. At the times material to this proceeding, Mr. Pomerantz was the appointed agent for Ocean Harbor Insurance Company ("Ocean Harbor"), Southern Group Indemnity, Inc. ("Southern Group"), and U.S. Security Insurance Company ("U.S. Security"). As an appointed agent, Mr. Pomerantz, as well as agents working in the Pompano Beach office of the A Able insurance agency, acted on behalf of these companies, and the agents could bind coverage with the companies and accept premium payments on behalf of these companies. An insurance agent can "bind" automobile insurance coverage with an insurance company that has appointed or registered the agent as its representative by calling the insurance company and getting a binder number and time of day. A binder obligates the insurance company to provide the coverage specified until the binder is converted into an insurance policy or the binder is cancelled. Southern Group's agreement with Mr. Pomerantz required him to send the signed application for a new automobile insurance policy, for a renewal of an existing policy, or an amendment to an existing policy, together with a check or draft for the premium net commissions, postmarked within 72 hours of the time at which the coverage was bound. Although not reduced to writing, the standard policy of U.S. Security requires its appointed agents to mail the application and payment to the company immediately upon coverage being bound. Ocean Harbor's general rules applicable to its appointed agents require that a completed application and the required premium, together with other documentation, be received by the company within five working days of the date on which coverage is bound. Within 20 to 30 days after coverage is bound on an application, each of these three companies sends a notice to the agent listing the binders for which the company has not received the application, premium, and other required paperwork. The notice advises the agent that the binder is cancelled. This means that the insurance company no longer provides automobile insurance coverage under the binder. If the application, premium, and other required paperwork is subsequently forwarded to the insurance company, the company, after review by its underwriters, can accept the application and issue a policy with an effective date retroactive to the effective date stated on the application for the policy. In some circumstances, the underwriting review will result in an additional premium being charged on the policy. In this circumstance, a notice is sent to the insured advising them of the additional premium due. At the time the application for automobile insurance coverage is completed and the coverage is bound by an agent appointed or registered by the company, the customer pays the insurance agent either the full amount of the premium determined by the agent to be due or a down payment on the premium when the premium is financed by a premium finance company. Insurance companies using appointed or registered agents do not, as a rule, accept payment directly from the customer; rather, the payment received from a customer is deposited in the agency's account, and the agency, after deducting its commission, sends an agency check to the insurance company. When the premium is financed, the down payment is deposited in the agency account, and the agency, after deducting its commission, sends an agency check to the premium finance company. When a customer finances his or her insurance premium through a premium finance company, the customer signs a premium finance agreement in which he or she agrees to pay monthly installments to the premium finance company for the total owed under the agreement; the premium finance company, in turn, pays the full premium to the insurance company at the time the application is submitted to the insurance company. Premium finance companies provide agents with whom they do business company drafts, which are prepared by the insurance agent on behalf of the premium finance company. Mr. Pomerantz and the A Able insurance agency did business with the premium finance company ETI Finance Corporation ("ETI Finance"), and A Able insurance agency was supplied with ETI Finance premium finance agreements and ETI Finance drafts. In ETI Finance's premium finance agreement, the customer agrees to assign to ETI Finance a security interest in any unearned return premiums that may become due upon the cancellation of the insurance policy. The insurance company sends this unearned return premium directly to ETI Finance if the insurance policy is cancelled. ETI Finance deducts any amounts owed under the premium finance agreement; if the amount of unearned return premium exceeds the amount the customer owes ETI Finance under the premium finance agreement, ETI Finance remits the balance owed to the customer to the insurance agent; if the amount of unearned return premium is insufficient to cover the amount the customer owes ETI Finance, ETI Finance bills the insurance agent for the balance owed under the premium finance agreement. ETI Finance handles unearned return premium credits and debits on an account current basis whereby a bi-monthly statement is prepared for each of the agents with whom it does business. The statement lists customers and all debits and credits to the agent's account for each of the customers listed. When an insurance policy is cancelled, the agent statement includes the amount of unearned return premium received by ETI Finance from the insurance company, and shows whether the customer is owed money, which is shown as a credit to the agent's account, or whether the agent owes ETI Finance money, which is shown as a debit to the agent's account. All of the debits and credits are totalled on the bi-monthly statement; if a total credit is shown, an ETI Finance check is included with the statement; if a total debit is shown, the agent is required to send ETI Finance a check to cover the amount owed. ETI Finance's agent statement advises the agent to review the statement carefully because the agent might owe a customer a refund. If a customer pays the agent the full premium and the agent then pays the premium with an agency check, the insurance company sends the agent an unearned return premium. It is the agent's responsibility to refund the unearned return premium to the customer. In addition to paying a customer any unearned return premium received upon cancellation of a policy, the agent is responsible for refunding any unearned commissions the agent was paid on the policy. Either the insurance company or the agent calculates the amount of the unearned commission, and this is included in the payment to the customer. At all times material to this proceeding, Alida High, nee Watson, held a "2-20 license" allowing her to sell property and casualty insurance in Florida. She was employed by the A Able insurance agency and worked in the office located at 124 South Federal Highway, Pompano Beach, Florida. She began working for the A Able insurance agency in July 1999, and was paid a weekly salary plus commissions Mr. Pomerantz and Ms. High were authorized signatories on the A Able insurance agency's Bank of America checking account number 91895073. Ms. High and Mr. Pomerantz signed the signature card on February 18, 2000. Ms. High functioned as a licensed insurance agent in the Pompano Beach office of the A Able insurance agency, and her responsibilities included working with customers to prepare applications for automobile insurance coverage, binding coverage with the insurance companies, receiving payment for the premiums on the policies or for the down payment on a premium finance agreement if the premium was financed, preparing the application package to be sent out to the insurance company, and issuing temporary identification cards. If a customer of the A Able insurance agency paid his or her premium for a policy in full, the cash or check was deposited in the agency's account, and the insurance agency issued a check payable to the insurance company for the premium minus the agency's commission. In this circumstance, Ms. High prepared the application package and placed it on Mr. Pomerantz's desk so that he could write the agency's check and send the application package and check to the appropriate insurance company. Ms. High followed this procedure throughout her employment at the A Able insurance agency, in accordance with the directions Mr. Pomerantz gave her when she began working for the A Able insurance agency. If one of Ms. High's customers financed part of the premium with a premium financing company, Ms. High routinely issued the drafts of the premium finance company for the premium owed for an insurance policy, and she mailed the draft and the application package to the insurance company. Ms. High also occasionally prepared and signed checks on the A Able insurance agency's Bank of America checking account payable to "BCRC"2 to pay for automobile tags and titles issued by Broward County and other, minor, miscellaneous items. During the summer and early fall of 2002, Ms. High prepared checks at Mr. Pomerantz's request and signed his name. Most of these checks were to "BCRC", but several were to pay for office expenses, and one was written to U.S. Security Insurance Company to pay a customer's additional insurance premium. Ms. High wrote checks on the A Able insurance agency account only when she had Mr. Pomerantz's permission to do so. Writing checks was not among her normal responsibilities at the A Able insurance agency, and Ms. High would not write checks on the agency's account without Mr. Pomerantz's express permission because she did not know anything about the account balance. Beginning in the summer of 2002, Mr. Pomerantz's interest in the business of the A Able insurance agency waned, according to Ms. High, and his visits to the office became more and more infrequent. Initially during this period Mr. Pomerantz came in every few days and wrote checks and sent application packages out to insurance companies, but eventually applications for insurance prepared and bound by Ms. High began to accumulate on Mr. Pomerantz's desk. When Ms. High reminded Mr. Pomerantz that the applications on his desk had been bound and needed agency checks cut so they could be sent to the insurance companies, Mr. Pomerantz told her to leave them, that he would take care of it. Ms. High became more and more concerned about the backlog of applications on Mr. Pomerantz's desk, and, when he was in the office, she constantly reminded him of the need to send the applications to the insurance companies. Count I: John Thierwechter In February 2002, John Thierwechter went to the A Able insurance agency to purchase the minimum amount of automobile insurance required by law for a 1993 Nissan Sentra. The total premium quoted was $1,550.00 for personal injury protection/physical damage/comprehensive/collision coverage with Ocean Harbor and for a policy covering reimbursement of the $500.00 deductible on the Ocean Harbor policy. Mr. Thierwechter decided to finance the premium, and Ms. High completed an ETI Finance premium finance agreement, which Mr. Thierwechter signed on February 21, 2002. The first installment on the Premium Finance Agreement signed by Mr. Thierwechter was due on March 23, 2002. Mr. Thierwechter owed a down payment of $289.00 under the Premium Finance Agreement. On February 22, 2002, he paid $200.00 of the down payment in cash, and he received a receipt signed by Mr. Pomerantz. Mr. Thierwechter returned to the agency on February 25, 2002, to pay the remaining $89.00, and he received a receipt signed by Ms. High. Mr. Thierwechter had previously had a bad experience with Ocean Harbor, and, within a few weeks, he purchased automobile insurance coverage from GEICO Casualty Company. This coverage was effective March 16, 2002. In a letter dated March 15, 2002, that he hand-delivered to the A Able insurance agency, Mr. Thierwechter requested that his Ocean Harbor policy be cancelled and that he receive a refund of "the unearned premium" . . . within the next 30 days." On March 16, 2002, Ms. High completed an All Purpose Endorsement requesting that Ocean Harbor cancel Mr. Thierwechter's insurance coverage effective March 16, 2002. This request was received by Ocean Harbor on March 23, 2002. Because Mr. Thierwechter had financed the premium for his Ocean Harbor policy with ETI Finance, Ocean Harbor sent the unearned return premium to ETI Finance, pursuant to the Premium Finance Agreement signed by Mr. Thierwechter. ETI Finance received the cancellation notice and check for the unearned return premium from Ocean Harbor on April 9, 2002. The amount of the unearned return premium was included on the agent's statement for the A Able insurance agency dated May 1, 2002. That statement reflected return premium in the amount of $757.35. This amount was less than the amount Mr. Thierwechter owed ETI Finance because Mr. Thierwechter had not made any of the monthly installments required by the Premium Finance Agreement. As a result, the May 1, 2002, agent's statement recorded a $63.47 debit against the account of the A Able insurance agency. The A Able insurance agency was responsible for paying Mr. Thierwechter the amount of unearned commission, if any, that exceeded the $63.47 it owed to ETI Finance. Pursuant to Mr. Pomerantz's calculations, Mr. Thierwechter was owed $70.16 in unearned commission retained by the A Able insurance agency, and Mr. Pomerantz wrote Mr. Thierwechter a check for that amount on the A Able insurance agency account on July 1, 2002. Mr. Thierwechter picked up the check on or about July 22, 2002. Count III: Shirley Shaffer On or about June 11, 2001, Shirley Shaffer purchased a 1996 Kia Sephia from the Coral Springs Auto Mall. Before Ms. Shaffer could drive the car off of the car lot, the car dealer required her to secure automobile insurance. The dealer called a person to assist Ms. Shaffer, and a man arrived at the dealership within a short period of time. This man presented Ms. Shaffer with a card on which was printed "Wide World of Insurance"; there was no individual's name on the card, but the card showed a Margate, Florida, address. Ms. Shaffer wanted to purchase only the basic coverage, and a U.S. Security application for a "physical damage only" policy was prepared specifying comprehensive and collision coverage only. The application identified the insurance agency as the A Able insurance agency, located in Pompano Beach. According to a notation on the application, the comprehensive and collision insurance coverage was bound with U.S. Security at 3:00 p.m. on June 12, 2001.3 In addition, Ms. Shaffer signed a Summary of Coverages and Cost Breakdown form carrying the name "Wide World of Insurance" and an address in Margate, Florida. This form was also dated June 12, 2001. At some point during the application process at the Coral Springs Auto Mall, the person representing the insurance agency went outside the dealership offices, telling Ms. Shaffer that he was going to take photographs of her car to attach to the application for insurance coverage. Ms. Shaffer financed the premium for her automobile insurance policy, and she paid a deposit of $200.00, which she charged on her credit card. U.S. Security received Ms. Shaffer's application for comprehensive and collision coverage on June 18, 2001, and a Physical Damage Policy was issued to Ms. Shaffer on June 26, 2001, with a policy term of June 13, 2001, to June 13, 2002. Ms. Shaffer received a copy of this policy. The agent identified on the policy was the A Able insurance agency in Pompano Beach. A Notice of Cancellation dated July 18, 2001, was sent to Ms. Shaffer by U.S. Security. In the notice, Ms. Shaffer was advised that her insurance policy would be cancelled effective September 2, 2001, because her application was incomplete. After she received the cancellation notice, Ms. Shaffer called the Margate office of the Wide World of Insurance insurance agency because that was the office whose address was on the card she was given when she applied for the U.S. Security insurance policy. Someone at the Margate office told her that, because she lived in Pompano Beach, her account was handled by the agency's Pompano Beach office and that she should call that office. Ms. Shaffer contacted the Pompano Beach office and spoke to a man who told her that everything about her policy looked fine in the computer and that she should not worry about the letter from U.S. Security. After this conversation, she contacted the Margate office again and was told that they knew nothing about the problem with the policy at that office. Ms. Shaffer then telephoned U.S. Security and was told that her insurance agent needed to take care of the problem, which she was led to believe was minor. Finally, Ms. Shaffer received a letter dated August 7, 2001, from a person named Gary. The letter carried the name "Wide World of Insurance" and the Margate address. In the letter, Gary requested that Ms. Shaffer "PLEASE STOP BY OUR OFFICE SO WE MAY TAKE PICTURES OF THE KIA. ORIGINAL ONES DID NOT COME OUT. ALSO NEED REGISTRATION. IMPT!!!!!" Gary stated in the letter that Ms. Shaffer needed to provide the requested information by August 21, 2001, "to avoid any further delays or cancellation requests from the insurance company." When she received the August 7, 2001, letter, which she recalled was on a Friday, Ms. Shaffer called the Margate office and arranged to bring her car in for photographs at 8:00 a.m. the following Monday.4 Ms. Shaffer arrived at the Margate office slightly before 8:00 a.m., and a few minutes later the man who had taken her application at the Coral Springs Auto Mall arrived at the office and took pictures of her car. Ms. Shaffer also provided a copy of her automobile registration, as requested in the August 7, 2001, letter. Ms. Shaffer also purchased personal liability insurance coverage from the Pompano Beach office of the A Able insurance agency, and she charged the $659.00 premium on her Visa credit card. Ms. Shaffer handled the entire transaction during a telephone conversation with a person in the Pompano Beach office, but she does not know the name of the person with whom she spoke. When Ms. Shaffer went to the Margate office in response to Gary's letter of August 7, 2001, she was given a receipt dated August 6, 2001, for the $659.00 premium she had paid for "addl liability coverage"; it was stated on the receipt that the coverage would be effective from September 1, 2001, to June 12, 2001. The person who signed the receipt was not identified, and the signature is indecipherable. The transaction date shown on Ms. Shaffer's credit card statement was August 7, 2001, and the statement showed that the charge was credited to "A ABLE WIDE WORLD OF I POMPANO BEACH FL." Ms. Shaffer also received a Florida Automobile Insurance Card confirming that she had personal injury protection benefits, property damage liability, and bodily injury liability coverage with U.S. Security; the agent identified on the card was "A Able Wide World of Insurance," with a post office box address in Margate, Florida. U.S. Security cancelled Ms. Shaffer's physical damage policy effective September 2, 2001, because her application was incomplete. U.S. Security sent a check dated September 26, 2001, to ETI Finance for $323.85, which was the unearned return premium owing on Ms. Shaffer's policy. U.S. Security never received an application for the "additional liability coverage" Ms. Shaffer requested and paid for on August 7, 2001. On October 22, 2001, Ms. Shaffer was caught in a flash flood, and she drove her Kia automobile into an area of water that was so deep her automobile floated. At one point, a bus drove through the water near the Kia, and the wake caused the Kia to wash into railroad ties that were used in the yard of a nearby home for landscaping. The railroad ties tore off the front of the car. The damage to the Kia was so extensive that it was considered a total loss. Ms. Shaffer filed a claim with U.S. Security, and received a letter dated October 25, 2001, from Corporate Claim Services, Inc., acknowledging receipt of her claim on behalf of U.S. Security. Ms. Shaffer then received a letter from Corporate Claim Services, Inc., dated October 26, 2001, advising her that her insurance policy with U.S. Security was cancelled effective September 2, 2001. Because Ms. Shaffer had no automobile insurance at the time her car was damaged, she had the Kia repaired at her own expense and incurred substantial expense and inconvenience because she had to arrange for alternative transportation during the year-and-a-half it took to have her car repaired. Ms. Shaffer did not receive any unearned premium or unearned commission refund after the cancellation of her policy. Ms. Shaffer never did business in person with Mr. Pomerantz. In fact, she met him for the first time the week before the final hearing, when her deposition was taken. Count IV: Terensinha Honczarenko On or about March 30, 2001, Terensinha Honczarenko went to the Margate office of the Wide World of Insurance insurance agency to purchase automobile insurance for a newly- purchased Toyota Corolla.5 Ms. Honczarenko had done business with the insurance agency located in Margate for a number of years. A man working at the Margate office named Greg completed Ms. Honczarenko's application for automobile insurance coverage with Southern Group, which she signed.6 The A Able insurance agency in Pompano Beach was identified in the application as the agent producing the application. Coverage on Ms. Honczarenko's policy was bound on the policy on March 30, 2001, and Southern Group received the application on April 4, 2001. The underwriting review of Ms. Honczarenko's application was completed on May 29, 2001, and Southern Group issued a policy to Ms. Honczarenko on June 26, 2001, with an effective date of March 31, 2001, through March 31, 2002. The A Able insurance agency in Pompano Beach was identified on the policy as the insurance agent. Ms. Honczarenko paid a $275.00 down payment on the total policy premium of $1098.00, and financed the remainder of the premium with ETI Finance.7 The Premium Finance Agreement was dated March 30, 2001, and was processed by ETI Finance on April 18, 2001. Ms. Honczarenko made payments pursuant to the Premium Finance Agreement from April 30, 2001, until August 2001. Ms. Honczarenko regularly made these payments at the Margate office, sometimes paying in cash and sometimes paying by check. When she took her August 2001 payment to the Margate office, Greg told her that there was a problem with her insurance policy and that she should come back in two days. When she returned to the Margate office, she was told that her automobile insurance policy had been cancelled. When she asked for her money back, Greg refused. At some point in June 2001, Southern Group sent Ms. Honczarenko a notice at her correct address advising her that she owed $263.00 in additional premium on Southern Group automobile insurance policy. She was given three options: To pay the additional premium by June 28, 2001, and keep the policy in force; to request by July 18, 2001, that Southern Group cancel the policy and refund any unearned premium; or to do nothing, in which case the policy would be cancelled effective July 18, 2001, and the unearned premium refunded. Ms. Honczarenko claims she never received this notice. Southern Group also sent Ms. Honczarenko a notice dated June 21, 2001, to her correct address, advising her that the vehicle identification number on her insurance application did not correspond to the vehicle identification number in their records. Southern Group asked Ms. Honczarenko to check her registration and return the letter to Southern Group with the correct information set forth on the bottom of the letter. Ms. Honczarenko claims she never received this notice. Southern Group also sent a copy of the notice to the "Wide World of Ins Pompano Bch." In a letter dated June 29, 2001, "Gary" advised Ms. Honczarenko that she needed to supply the Margate office with a copy of the registration for her 1985 Toyota. This letter was sent to the same address as the notices sent Ms. Honczarenko by Southern Group. Ms. Honczarenko received the June 29, 2001, letter from the Margate office of the Wide World of Insurance insurance agency.8 Because Southern Group received no response from Ms. Honczarenko to its notice that she owed additional premium on her automobile insurance policy, it cancelled her policy effective July 18, 2001, and sent her a notice of cancellation dated June 29, 2001. The notice was sent to the same address as was the notice of additional premium and the notice that there was a discrepancy in her automobile identification number. Ms. Honczarenko received the notice of cancellation. On August 10, 2001, Southern Group sent a check to ETI Finance for unearned return premium on Ms. Honczarenko's automobile insurance policy in the amount of $572.90. ETI Finance received the check on August 16, 2001, and included Ms. Honczarenko's unearned return premium in the statement it sent to the A Able insurance agency in Pompano Beach on or about August 31, 2001. The statement showed that ETI Finance had received $572.90 in unearned return premium on Ms. Honczarenko's account, and it included a credit to the A Able insurance agency of $71.95. Ms. Honczarenko did not receive any refund of unearned return premium or unearned commission from A Able insurance agency. Count V: Cecil Worrall On June 10, 2002, Cecil Worrall went to the A Able insurance agency in Pompano Beach to renew his automobile insurance within Southern Group. At that time, he had done business with A Able insurance agency in Pompano Beach for eight-to-ten years. Mr. Pomerantz completed Mr. Worrall's application, which Mr. Worrall signed. Mr. Worrall gave Mr. Pomerantz a check in the amount of $570.00 as payment of the full amount of the renewal premium. Mr. Pomerantz gave the application to Ms. High and expected her to bind the coverage and process the application. According to a notation of the application, coverage was bound on June 19, 2002, at 3:46 p.m., and, as was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the application package and payment to Southern Group. Mr. Worrall's June 10, 2002, check was deposited into the account of "A Able Wide World of Insurance." Southern Group did not receive the application and agency check for the premium net commission on Mr. Worrall's renewal within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On July 12, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Mr. Worrall's binder coverage had expired because Southern Group had not received the application.9 Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance10 made an inquiry of Southern Group on October 16, 2002, regarding the status of Mr. Worrall's insurance policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Mr. Worrall, it had no record of having received Mr. Worrall's application and the premium payment or a response to its July 12, 2002, notice to the A Able insurance agency that the binder had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group application for Mr. Worrall was retrieved. On December 10, 2002, Southern Group issued an automobile insurance policy to Mr. Worrall, with an effective date retroactive to June 26, 2002, the date the policy would have been effective had the application and premium payment been transmitted to Southern Group timely. Count VI: Cynthia Mousel Cynthia Mousel was a client of the A Able insurance agency Pompano office, and primarily Ms. High handled her business. On or about September 18, 2002, Ms. High completed an application within U.S. Security for automobile insurance coverage on behalf of Ms. Mousel. Ms. Mousel signed the application, and coverage was bound on September 18, 2002. Ms. Mousel paid the full premium of $524.00. As was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the application package and payment to U.S. Security. In October 2002, the Department of Insurance sent an inquiry to U.S. Security regarding the status of Ms. Mousel's automobile insurance policy. In a letter dated October 30, 2002, U.S. Security advised the Department of Insurance that it had no record that, as of that date, it had received an application for automobile insurance coverage under Ms. Mousel's name.11 Count VII: Fred Hublitz Fred Hublitz was a long-time customer of the A Able insurance agency in Pompano Beach. On September 13, 2002, Mr. Hublitz visited the office, and Ms. High completed an Endorsement Request Form on his behalf to add coverage to his automobile insurance policy with Ocean Harbor for a 2000 Mercury Sable automobile. Mr. Hublitz signed the endorsement and wrote a check for $260.00, which was the full amount of the premium to add this coverage. The coverage was bound on September 13, 2002. As was her custom, Ms. High put the endorsement package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the endorsement and payment to Ocean Harbor. The check written by Mr. Hublitz on September 13, 2002, was deposited into the account of "A Able Wide World of Insurance." In a letter dated October 16, 2002, the Department of Insurance inquired of Ocean Harbor regarding the status of Mr. Hublitz's automobile insurance policy. Ocean Harbor responded in a letter dated November 7, 2002, that it had no record of having received the endorsement or premium payment for Mr. Hublitz's 2000 Mercury Sable. An Ocean Harbor representative went to the A Able insurance agency office in Pompano Beach on November 15, 2002, and picked up applications and endorsements for automobile insurance coverage. Among these documents was Mr. Hublitz's endorsement, and Ocean Harbor added the 2000 Mercury Sable to Mr. Hublitz's existing Ocean Harbor automobile insurance policy, effective retroactively.12 Count VIII: Lori O'Connell Lori O'Connell had obtained automobile insurance coverage from the A Able insurance agency in Pompano Beach. She had received a notice that her policy with Southern Group was to expire on August 14, 2002, and a friend, Joseph Balsamo, went to the A Able insurance agency office on July 9, 2002, and gave Ms. High a check for $364.00, which was full payment for the policy renewal. Ms. High bound the renewal on July 12, 2002. As was her custom, Ms. High put the application package on Mr. Pomerantz's desk for him to review, prepare an agency check for the premium net commission, and mail the renewal application package and payment to Southern Group. A month later, Ms. O'Connell had not received an insurance card or renewal policy, and Mr. Balsamo telephoned the A Able insurance agency Pompano Beach office and inquired about the policy. Ms. High told him that the insurance company was slow in processing the renewals and that Ms. O'Connell should receive the materials shortly. Ms. High knew, at the time, that the renewal application was sitting on Mr. Pomerantz's desk, waiting for him to write a check and mail the application and payment to Southern Group. Southern Group did not receive the renewal application and agency check for the premium net commission on Ms. O'Connell's renewal within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On August 2, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Ms. O'Connell's binder coverage had expired because Southern Group had not received the renewal application.13 Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance made an inquiry of Southern Group on October 16, 2002, regarding the status of Ms. O'Connell's renewal policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Ms. O'Connell on July 12, 2002, it had no record of having received Ms. O'Connell's renewal application and the premium payment or a response to its August 2, 2002, notice to the A Able insurance agency that the binder on Ms. O'Connell's renewal had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group renewal application for Ms. O'Connell was retrieved. On November 26, 2002, Southern Group issued an automobile insurance policy renewal to Ms. O'Connell, with an effective date retroactive to August 14, 2002, the date the renewal would have been effective had the application and premium payment been transmitted to Southern Group timely. Count IX: Carol Scott On July 10, 2002, Ms. High prepared an application for automobile insurance coverage with Southern Group on behalf of Carol Scott. The premium for the coverage specified in the application was $655.00. Ms. High bound the coverage on July 10, 2002. Southern Group did not receive Ms. Scott's application and the agency check for the premium net commission within the 72 hours required by Southern Group's agreement with Mr. Pomerantz. On August 2, 2002, a notice was sent to "Wide World of Insurance Pomp" at the A Able insurance agency address in Pompano Beach advising that Ms. Scott's binder coverage had expired because Southern Group had not received the application. Southern Group advised the A Able insurance agency to check its records to make sure that the application package was not misplaced and further advised that a claim against the binder might result in a claim against its "Errors & Omissions Insurance." The Department of Insurance made an inquiry of Southern Group on October 16, 2002, regarding the status of Ms. Scott's automobile insurance policy, and Southern Group replied in a letter dated October 28, 2002, that, although coverage had been bound for Ms. Scott on July 10, 2002, it had no record of having received Ms. Scott's application and the premium payment or a response to its August 2, 2002, notice to the A Able insurance agency that the binder on Ms. Scott's application had expired. After Southern Group received the inquiry from the Department of Insurance, it sent a representative to the A Able insurance agency Pompano Beach office, where the Southern Group application for Ms. Scott was retrieved. On November 26, 2002, Southern Group issued an automobile insurance policy renewal to Ms. Scott, with an effective date retroactive to July 11, 2002, the date the renewal would have been effective had the application and premium payment been transmitted to Southern Group timely. Count X: Janice Misconis On or about June 25, 2003, Janice Misconis visited the A Able insurance agency office in Pompano Beach to renew her Ocean Harbor automobile insurance policy. Ms. High prepared a Summary of Coverages and Premium covering a 1990 Buick Skylark. Ms. High bound the coverage on June 24, 2002, for a renewal with a policy period commencing July 8, 2002. The premium shown on the summary totalled $570.00, and Ms. High prepared a receipt affirming that Ms. Misconis had paid the $570.00 renewal premium in full on June 25, 2002. In a letter dated October 16, 2002, the Department of Insurance inquired of Ocean Harbor regarding the status of Ms. Misconis's automobile insurance policy. Ocean Harbor responded in a letter dated November 7, 2002, that it had no record of having received an application or premium payment for Ms. Misconis's policy renewal. An Ocean Harbor representative went to the A Able insurance agency office in Pompano Beach on November 15, 2002, and picked up applications and endorsements for automobile insurance coverage. Among these documents was Ms. Misconis's renewal application, and Ocean Harbor issued a policy of automobile insurance coverage, effective retroactively to the date it would have been effective had the application and premium payment been forwarded to Ocean Harbor timely.14 Count IX: Diane Carroll In October 2001, Diane Carroll, a/k/a Diane Heinen, purchased an automobile insurance policy with the Aires Insurance Company ("Aires") from the Wide World of Insurance insurance agency in Margate. After she had an accident and her car was sitting in a repair shop, she cancelled this policy. In late January 2002, Ms. Carroll went again to the Wide World of Insurance office in Margate, and a person working in that office took her application for another automobile insurance policy. The policy was placed with Aires, and the total premium was $2,637.00. The effective date of the policy was February 1, 2002, for the term of one year. Ms. Carroll made a down payment of $660.00, and financed the balance of the premium with Assured Premium Finance Corporation, a company that is serviced by ETI Finance. Ms. Carroll made all of the payments required under the Premium Finance Agreement she signed in January 2002. Ms. Carroll took each of the payments to the Wide World of Insurance insurance agency office in Margate. On January 8, 2003, Ms. Carroll had an automobile accident. She called the Wide World of Insurance insurance agency in Margate to report a claim, and she was told that she did not have an insurance policy, that Aires "went under." The person at the Margate office of the Wide World of Insurance insurance agency told Ms. Carroll that she had been sent notification by mail. Ms. Carroll requested a copy of the letter, which she claims she did not receive. The letter is dated November 27, 2002, and bears the letterhead of "Wide World of Insurance," with a Margate post office address. The letter is addressed to Ms. Carroll at her then-correct address and provides notice that Aires has been "PLACED IN LIQUIDATION ON NOVEMBER 14, 2002, BY THE STATE OF FLORIDA. ALL INSURANCE POLICIES WITH THE ABOVE- CAPTIONED INSURANCE COMPANY SHALL CEASE AS OF 12:01 AM, DECEMBER 14, 2002. PLEASE CONTACT OUR OFFICE IMMEDIATELY TO REPLACE THIS INSURANCE COVERAGE." The name "A Able Wide World of Insurance" is included on the letter. There is no indication on the letter that it was sent by certified mail.15 Summary Count I: Mr. Thierwechter The evidence presented by the Department is sufficient to establish that the refund of unearned commission on Mr. Thierwechter's cancelled Ocean Harbor automobile insurance policy was not made timely by the A Able insurance agency, but was held by the A Able insurance agency from early May 2002, when the A Able insurance agency received the agent statement from ETI Finance showing the debit to the A Able insurance agency's account, until July 1, 2002, when Mr. Pomerantz issued a check for the amount of unearned commission the A Able insurance agency owed to Mr. Thierwechter. Count III: Ms. Shaffer The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that either Mr. Pomerantz or the Pompano Beach office of the A Able insurance agency was involved in any meaningful way in any transactions relating to Ms. Shaffer's physical damage automobile insurance policy. Although, during the summer and fall of 2001, the A Able insurance agency located in Pompano Beach and the Wide World of Insurance agency located in Margate had merged and were doing business as a single entity, Mr. Pomerantz was the agent in charge of the Pompano Beach office. There was no evidence presented to establish that Mr. Pomerantz ever operated in the Margate office or supervised the agents in that office. Even though the Pompano Beach office of the A Able insurance agency is identified as the agent on Ms. Shaffer's U.S. Security policy, there was no creditable evidence presented to establish that anyone in the Pompano Beach office prepared the application for Ms. Shaffer's physical damage insurance policy or was responsible for servicing the policy. The evidence presented by the Department regarding the "additional liability coverage" purchased by Ms. Shaffer is scanty. Although Ms. Shaffer handled the transaction over the telephone with a man in the Pompano Beach office of the insurance agency and the charge on Ms. Shaffer's credit card was credited to the A Able insurance agency in Pompano Beach, there is no evidence identifying the person who prepared the receipt for the premium payment. The totality of the evidence presented by the Department is not sufficient to support an inference that Mr. Pomerantz was personally involved in the transaction or that he knew or should have known of the transaction. Count IV: Terensinha Honczarenko The evidence presented by the Department is not sufficient to establish that Mr. Pomerantz caused Ms. Honczarenko's automobile insurance policy to be cancelled, either directly or through his negligence or the negligence of any of the agents working in the A Able insurance agency Pompano Beach office. All of her dealings were with the Margate office, and there was no evidence that a copy of the notice from Southern Group advising Ms. Honczarenko that she owed additional premium on her policy was sent to the A Able insurance agency at the Pompano Beach address or that it was the practice of Southern Group to send such notices to agents as well as to its insureds.16 The evidence presented by the Department is, however, sufficient to establish that A Able insurance agency received notice from ETI Finance that it owed Ms. Honczarenko a refund of unearned return premium in the amount of $71.95 and that Ms. Honczarenko did not receive this refund. Counts V, VI, VII, VIII, IX, and X: Mr. Worrall, Ms. Mousel, Mr. Hublitz, Ms. O'Connell, Ms. Scott, and Ms. Misconis The evidence presented by the Department is sufficient to establish that Mr. Pomerantz was personally responsible for writing agency checks for premium net commission and for sending applications for automobile insurance coverage generated in the A Able insurance agency Pompano Beach office and premium checks received in that office to the various insurance companies. During the summer and early fall of 2002, Ms. High constantly reminded Mr. Pomerantz that the applications accumulating on his desk needed attention, and Mr. Pomerantz assumed the responsibility for handling the applications when he told her that he would handle them. The evidence presented by the Department is also sufficient to establish that Mr. Pomerantz failed to forward the applications and premiums for Mr. Worrall, Ms. Mousel, Mr. Hublitz, Ms. O'Connell, Ms. Scott, and Ms. Misconis and that the A Able insurance agency had the benefit of the premium payments made by these individuals from the time the coverage binders expired until such time as the policy applications and payments were received by the various insurance companies who issued policies with coverage retroactive to the date of the applications and premium payments. Count XI: Ms. Carroll The evidence presented by the Department is not sufficient to establish with the requisite degree of certainty that either Mr. Pomerantz or any employee of the Pompano Beach office of the A Able insurance agency was involved in the transactions with respect to Ms. Carroll's automobile insurance policy with Aires. All of Ms. Carroll's business dealings with regard to this policy were at the Margate office of the Wide World of Insurance insurance agency. Even though the name "A Able Wide World of Insurance" appears on the letter dated November 27, 2002, notifying Ms. Carroll that Aires was in liquidation and that she needed to replace her automobile insurance policy, there was no evidence presented to establish that anyone in the Pompano Beach office prepared the application for Ms. Carroll's policy or had any dealings with her on this or any other 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 that Jay Lawrence Pomerantz 1. Violated Sections 626.561(1), 626.611(4), (7), and (10), and 626.621(2) and (6), Florida Statutes (2002) with respect to Counts I, IV, V, VI, VII, VIII, IX, and X of the Amended Administrative Complaint filed October 14, 2003; Dismissing Counts II, III, and XI of the Amended Administrative Complaint20; and Revoking the property and casualty insurance agent's license of Jay Lawrence Pomerantz. DONE AND ENTERED this 30th day of April, 2004, in Tallahassee, Leon County, Florida. S 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2004.
Findings Of Fact Respondent, Gloria Ann Ellwood, is currently licensed and eligible for licensure in the State of Florida as a general lines agent. Ellwood purchased in January 1985 from Pasqualey "Pat" Caliguiri what they both believed to be were shares in two franchises to operate a nonstandard automobile insurance business, Cash Register Auto Insurance of Escambia County and Cash Register Auto Insurance of Okaloosa County. Ellwood paid Caliguiri $10,000 as a down payment and financed $35,000 for 500 of 1,000 shares in the Escambia County agency and approximately $25,000 for 500 of 1,000 shares in the Okaloosa County agency. Ellwood paid Caliguiri approximately one-half the amount financed before the events occurred which are the basis for this case. These two franchises Caliguiri had purchased in 1983, along with another franchise, for nonstandard auto insurance sales offices from Lloyd Register for $5,000 apiece, as evidenced by 500 shares of 1,000 shares common stock in each of the three corporations. Through this purchase, Caliguiri received a reduction in the amount of commission paid on the franchise and the ability to realize a profit from his efforts in building the business. He executed a consulting agreement with Register and had to sign an employment contract with the various corporations. Register provided accounting and similar services, and Caliguiri had to repay to Register all capital expenditures made on the agencies. Register was present at the closing of the sale between Caliguiri and Ellwood. Register was silent at the closing between Ellwood and Caliguiri regarding Ellwood's rights. He was aware of the transfer of Caliguiri's stock to Ellwood for valuable consideration. After the transfer, Ellwood executed a consulting agreement with Register and signed an employment contract with the two corporations which she had purchased. Ellwood was entitled to $500 per week salary from `the corporation. In the case of both Caliguiri and Ellwood, when receipts from the business were low, Register suggested that they take some lesser sum as a salary payment than what they were entitled to under their employment contract. Register demanded payment of all moneys due to Register, although he did extend the time for payment for Caliguiri at one point when business was particularly bad. Both Caliguiri and Ellwood thought that they owned the stores which they had purchased. Ellwood served as general manager, president and director of Cash Register Auto Insurance of Escambia County at all times material to the complaint. Cash Register of Escambia was a Florida corporation engaged in the operation of a nonstandard insurance agency at all times material to the complaint. During 1985 and 1986, Ellwood paid for rent, improvements to property, telephone service, and similar business expenses from her personal account when there insufficient funds in the operating account to cover these expenditures. The total of these loans to the corporation was $14,930.37. Ellwood was charged by Register for the annual state corporate filings with the State of Florida. The Escambia agency had two checking accounts; one for payroll and the other for bills and refunds. The latter account was called the operating account into which deposits and premiums were deposited. Checks for insurance companies, insureds, beneficiaries and all business expenses, except salary, were written on this account. Ellwood wrote or caused to be written all checks for the agency from both accounts. Starting in January 1987 and continuing to June 1988, Ellwood wrote a series of 14 checks on the operating account to fictitious payees which were designated as refund checks to insureds; however, the payees had never paid a deposit to the company. Between January 1987 and July 1988, Ellwood endorsed and cashed these checks keeping $1,897.44. Ellwood described these checks as repayment of the money which she had advanced to the business. Ellwood explained that she wrote these checks to fictitious payees to prevent questions from Register's accountant and from fear Register would want commissions from non-franchise agencies which she owned. During all times material to this complaint, Register provided accounting services as part of his consulting agreement. Register or his accountant was aware that checks had not been drawn on the operating account for payment of rent, advertising, and telephone services and he knew the agency was still in business at the same locale. Register or his accountant was aware of the checks for refunds which ran from $21.89 to $398.99, no two of which were for the same amount. These checks do not appear on their face to be refunds for special high risk automobile insurance although they are annotated as such. Register suggested and was aware that Ellwood and Caliguiri took less salary than they were entitled to take under their employment contracts. Although money received from a client or company for a client or beneficiary is held in a fiduciary capacity, the operating account is not an escrow account and agents are not required to maintain deposits in an escrow account pending transfer of the premiums to an insurer. No evidence was received that Ellwood impaired these accounts by issuing these checks to fictitious clients and cashing them. Ellwood did not question her ownership of the business until late summer 1988 when Register advised Brian Fisher, a potential buyer, that Fisher would not have the rights of ownership if he purchased Ellwood's shares of stock because she held only common stock and control of the corporation was vested in those persons holding preferred stock all of which was owned by Register and his wife.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the charges be dismissed against the Respondent DONE AND ORDERED this 7th day of March, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 7th day of March, 1990. APPENDIX A TO RECOMMENDED ORDER 89-4903 The following is a list of the proposed findings which were adopted and those which were rejected and why. Petitioner's Proposed Findings: Paragraph 1 Adopted. Paragraph 2 Adopted. Paragraph 3 Adopted, but reworded & renumbered. Paragraph 4 Adopted, but reworded & renumbered. Paragraph 5 Rejected as contrary to the facts. Paragraph 6 Rejected as contrary to the facts. Paragraph 7 Respondent admitted she used the money for another agency; however, that does not establish that taking the money was fraudulent. Paragraph 8 Rejected as contrary to the facts. Respondent's Proposed Findings: Paragraph 1 Adopted. Paragraph 2 Adopted. Paragraph 3 Adopted, but reworded & renumbered. Paragraph 4 Adopted, but reworded & renumbered. Paragraph 5 Adopted, but reworded & renumbered. Paragraph 6 Adopted, but reworded & renumbered. Paragraph 7 Adopted, but reworded & renumbered. Paragraph 8 Rejected as contrary to the facts. Paragraph 9 Adopted. COPIES FURNISHED: Mr. Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell, Esq. General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Roy Schmidt, Esq. Office of the Treasurer Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300 Fletcher Fleming, Esq. Shell, Fleming, Davis & Merige Seventh Floor, Seville Tower P.O. Box 1831 Pensacola, FL 32595
Findings Of Fact Charles Edward James in the relevant period of time considered by these proceedings was an insurance agent licensed by the State of Florida in the categories of ordinary life, general lines, and disability. In that same time period Respondent was the president, director, and registered agent for Friendly Auto Insurance of Panama City, Inc., located at 704 West Eleventh Street, Panama City, Florida. He was also the president, director, and registered agent of All Auto Insurance of Quincy, which operates from 101 East Jefferson, Quincy, Florida. At various times in the critical period, Respondent had five other employees in Panama City in the Friendly Auto Insurance Agency. Among those employees was Alton McCollum, Jr., a licensed general lines agent in the State of Florida. His tenure with the Panama City office was from approximately February or March, 1982, until April, 1983. Anita Prevost worked in the Panama City operation commencing August, 1981, and was employed at the time of hearing as the office manager. Michelle Tolden started working in the Panama City office in February, 1982, as a clerk. At the time of the hearing she was excused from her employment on maternity leave. Tina Clark worked as a clerk in the Panama City office, but resigned prior to the hearing date. Carmen Browning was an employee in the business whose length of employment is unknown. McCollum, as a licensed general lines agent, had been hired by Respondent to operate the Panama City office and allow Respondent to do business in Quincy. At the time James employed McCollum, he gave no specific instructions as to how McCollum would supervise the Panama City office. James basically told McCollum that he wanted McCollum there so that McCollum's agent's license could be utilized to allow the Panama City office to remain open. McCollum spent a couple of hours a day operating the office. His time was primarily devoted to review of applications received by office employees. When he was not available in the office, McCollum could be contacted by phone by other office personnel. When he arrived, he assumed that the employees who were not agents understood how to conduct the business in the sense of giving quotes for automobile insurance over the phone and filling out the necessary forms. In the beginning, he was not familiar with the sale of motor club benefits, having never worked with that type of offering. The motor club memberships that were being sold at the time that McCollum was serving as the agent for Friendly Auto called for commissions to Friendly in the amount of 70 to 80 percent of the premium. Eventually, McCollum determined that the motor club sales through the Panama City operation were questionable. He discovered that customers were not being told that they were getting a motor club membership in addition to their requests for basic automobile insurance. In effect, what he found was that the other employees in Respondent's Panama City office were quoting a single price to customers requesting basic automobile insurance which included the cost of the basic insurance premium and the price of membership in the motor club. As McCollum realized motor club is not part of basic automobile insurance coverage in Florida. McCollum then attempted to have other employees within the Respondent's office specify to customers the particulars of what they were receiving, i.e., that motor club memberships were separate from automobile coverage. He also instructed the other employees in selling motor club memberships to explain to the customers that they were purchasing a motor club membership and specifically indicate what the cost was of that plan. As a result, Friendly Auto sold fewer auto club memberships while under the supervision of McCollum. McCollum also discovered that the other employees in the Panama City office were inappropriately filling out the applications in the sense that the name, address, driving history, and other background information were filled out but that portion related to premium costs and the break out of those costs was not being completed at the time the customer was in the office. That information was being placed in the application at a later date. The normal procedure was for the customer to be provided with a copy of the application which did not contain the specific itemized costs related to premium payments. Once McCollum discovered the problem with the applications, he instructed the employees in the office to fill out the application forms completely to include specifying the premium costs in the application and providing the customer with a completed copy of the application to include a break out of these premium charges. Tina Clark in particular did not readily accept the suggested changes for improving the integrity of the operation. McCollum had suggested that James fire this employee. Instead, Respondent decreased the hours available for that employee to work in the office based upon his belief that she would leave voluntarily and the employee left several months later, indicating that she could not accept reduced hours of work. Anita Prevost was hired by Respondent and trained by Carmen Browning. Before McCollum's involvement with the Panama City office, Prevost, in taking applications for automobile insurance, would quote a cost which included motor club membership as well as the automobile premium costs, even if the customer simply requested insurance necessary to receive a license and tag for an automobile. At the time of filling out the automobile insurance form it would be signed, the motor club membership application form would be signed, and a rejection form related to coverages not requested in the automobile policy line would be signed. Prevost and other employees would not refer to the motor club membership by that name. Instead, at most benefits of the motor club membership would be explained, such as towing, rental reimbursement, accidental death benefits, and emergency road service. The idea of explaining the coverage and not referring to the motor club membership as such was that of the Respondent. When an individual discovered that they had purchased a motor club membership, Prevost and other employees per Respondent's instructions would provide a full refund of the membership costs to that customer. Prevost, and other employees, in dealing with PIP coverage routinely filled out a deductible in the amount of $8,000 after asking a customer if they had hospitalization and without regard for the customers' response. When confronted with a customer who was not interested in that amount of deductible, they would offer a lesser deductible or no deductible. This technique was in keeping with instructions given by Respondent. Later, in dealing with the PIP purchase, Prevost and other employees in the agency would ask if the customer had hospitalization. If they said yes, an $8,000 deductible PIP would be suggested; otherwise, it would be recommended that the customer purchase the PIP coverage that did not carry a deduction. This new policy was established by the Respondent in early 1982 but was not always adhered to as seen in subsequent facts. When Michelle Tolden took applications for persons who wanted basic automobile insurance, she explained the limits of liability in the coverage; coverage related to PIP and its limitations and the benefits related to motor club memberships to include road service, rental, towing reimbursement and any accidental death benefits. The words "motor club" were not mentioned and Tolden has not deviated from the practice from this decision not to mention motor clubs. She feels that the customer understands better what is involved without mentioning the term "motor club." This technique is contrary to the instructions given by McCollum. Tolden, prior to her maternity leave, dealt with the question of the sale of $8,000 deductible PIP in the same fashion as described in the facts related to Prevost. Respondent, in his training in Port Myers, Florida, prior to coming to Panama City, had utilized the technique of packaging minimum automobile insurance coverage necessary with a ¬or club membership when a customer sought "tag" insurance. He and his employees pursued this technique at the time he operated as the general lines agent with Friendly Auto from June 1981 to March 1982. This packaging did not tell a customer specifically that the customer was purchasing an unnecessary and unrequested motor club membership. The resulting confusion and deception related to the aforementioned packaging is seen in the following factual account related to select customers mentioned in the complaint. According to James, in selling PIP $8,000 deductible the realized return was $3.00 with a cost of service of between $20 and $25. As a consequence, he decided to package automobile coverage and the motor club membership in view of the fact that the motor club paid 70 percent or better as commission for the agency in the sale of memberships. This enabled the agency to realize a profit in the combination of the sale of minimum automobile coverage and motor club memberships. The average return for commissions on automobile insurance policies generally is 15 percent. COUNT I LINDA C. SMITH In May, 1982, Linda C. Smith went to Respondent's Panama City office to purchase the necessary automobile insurance to obtain a tag. Smith desired to have PIP and liability coverage; however, in the face of a quoted cost of $79 for the insurance, she determined that she could only afford PIP. She paid $79 for what she assumed was PIP coverage upon a quote of that amount by an employee in Respondent's office. Only $29 related to automobile insurance coverage, the balance was for motor club membership. No mention was made to Smith on the subject of the purchase of a motor club membership and Smith would not have purchased it in view of the fact that she had a friend who was in the wrecker business. That friend was Robert Griffiths. Smith did sign a slip pertaining to a motor club membership which may be found as Petitioner's Exhibit 8. She does not remember seeing the membership fee of $50 reflected on that form. Subsequently, Smith discovered that she had purchased a motor club membership. Had she realized that the $50 had been spent on motor club membership, she would have utilized that payment to purchase liability insurance in lieu of the motor club membership. After complaining to the Insurance Commissioner's office in Panama City, she was contacted by Friendly Insurance and received a $50 refund related to her purchase of a motor club membership. At the time of the transaction, Smith did not read the entire explanation on documents provided to her. Smith's determination to purchase the no fault deductible in the amount of $8,000 was on the basis of the signing of a form provided by the agency which is known as a rejection of liability coverages. The particular form in question may be found as Respondent's Exhibit 11, admitted into evidence. Smith does not recall checking the block which shows the $8,000 deductible PIP. Nonetheless, one of he items on that form related to the $8,000 deductible and it indicates the significance of the deductible, in that it reduces the amount of PIP benefits paid to the purchaser or resident relatives. The form also indicates that this kind of deductible is not recommended for those persons who do not have other coverages which would respond adequately to payments for injuries received in automobile accidents. In addition to this information, the employee who assisted the customer had asked about hospitalization for the benefit of Linda Smith. Smith did have health insurance or medical insurance at the time of purchasing the automobile insurance policy. In addition that form as signed by Smith, had a portion which stated "I understand the accidental death benefit through the life insurance company is a separate item, that pays in addition to my auto insurance policy. I understand the additional charge to this coverage is included in with my downpayment." Smith did not equate this latter item with motor club membership. COUNT II JACKIE MERCER Jackie Mercer went to the Panama City office of Respondent in order to purchase necessary insurance to obtain a driver's license. This explanation was made to the employee who assisted the customer at Friendly Auto. The amount of quotation for the premium was $581, which was paid by Mercer. An automobile insurance application form was signed by Mercer and a copy of that may be found as Petitioner's Exhibit No. 13 admitted into evidence. The coverage was for one year, commencing April 17, 1982. No mention was made to Mercer of the purchase of a motor club membership and Mercer would not have knowingly accepted that unsolicited membership. Nonetheless, as part of the package of coverage, $25 was charged for each of two vehicles that were being insured for a total of $50 for membership in a motor club. The real automobile insurance policy amounts for the two cars for the one year period was $531. At the time that the purchase was made, Mercer did not understand that he had paid a separate amount for motor club, notwithstanding signing two forms which are constituted as Petitioner's composite Exhibit No. 15 indicating application for motor club membership. Mercer has no recollection of signing the forms related to motor club. Mercer spent 10 to 15 minutes in the office in applying for the insurance coverage and did not read the various documents presented to him in applying for the insurance. As related in Respondent's Exhibit No. 6, Mercer signed that aspect of the rejection of liability coverages pertaining to the fact that accidental death benefits were a separate item from the overall automobile insurance coverage for which there was an additional charge. This related to the motor club membership benefits; however, Mercer was unaware of this. The automobile insurance application, Petitioner's Exhibit No. 13, does not break down the various charges related to premium payments for insurance for the two automobiles. On the other hand, the application which was presented to the insurance company and is found as part of Petitioner's Exhibit No. 14, dated April 16, 1982, carries a quotation for the total premium payments for both cars as being $431. Eventually, Mercer was notified of the cancellation of his coverage with Protective Casualty related to the two automobiles for reason of nonpayment of additional premium. It was at that time that he learned from the Florida Department of Insurance that the overall charge of $581 made by Respondent's Panama City operation included $50 for motor club memberships which were not desired by Mercer. COUNT III RENATA DOTSON On October 26, 1981, Renata Dotson went to the Panama City office of Respondent and purchased automobile insurance by dealing directly with the Respondent. She told James that she wished full coverage and paid the $289 quoted price with the expectation of receiving six months' coverage for automobile insurance. She did not wish to purchase motor club membership which is not part of automobile insurance. The cost of auto coverage was $214. Petitioner's Exhibit No. 17, entered into evidence is a copy of the application form which was used in requesting insurance from Colonial Insurance Company This item was not filled out by Dotson. She did sign the document on the second page. Ms. Dotson did not obtain a copy of the original of the application form upon leaving the agency. Dotson also signed an application for membership in the Nation Motor Club. A copy of that application may be found as Petitioner's Exhibit No. 20, admitted into evidence. She did not fill out the other information set forth on the form. At the time of requesting automobile insurance on October 26, 1981, through James' agency, in addition to not requesting to join a motor club, she recalls no discussion of joining a motor club. She would not have desired membership in the Nation Motor Club because her parents were involved in another motor club that to her understanding would cover her car. Dotson did not understand that she had signed an application for a motor club membership. Likewise, Dotson does not recall the discussion of an $8,000 deductible PIP which eventually was written into the policy or any other discussion related to deductibles. Dotson did not carefully read all papers presented to her at the time she was in Respondent's office on October 26, 1981. Dotson later discovered that she had paid $75 for motor club membership and upon that discovery, Friendly refunded her $75. As reflected in Respondent's Exhibit No. 4, Dotson signed that aspect of the rejection of liability coverages dealing with accidental death benefits and the fact that this was a separate item promoting an additional charge for coverage. She did not equate this as being unrelated to automobile insurance requested by her and related to purchase of a motor club membership. Her understanding was that the questions related to naming a beneficiary for the accidental death benefit was part of the purchase of the automobile insurance. COUNT IV EMMETT FOWLER Emmett Fowler was interested in obtaining less expensive automobile insurance that he presently held and based upon a television advertisement, he purchased automobile insurance from Friendly Auto in Panama City. When he bought the insurance, he was of the opinion that he had paid for a full year when in fact he had paid for six months' coverage. When inquiring about this misunderstanding, it was revealed that he had purchased motor club membership. He had not understood that he had purchased that membership prior to this subsequent inquiry and would not have desired the membership in that he had been a member of another motor club for fifteen years. He was reimbursed $50 for the motor club membership when he informed Friendly that he was not interested in that benefit. The actual automobile insurance premium was $52 and he had paid $102 which had been quoted as the price of automobile insurance. The other $50 was for motor club membership. Fowler had signed the application for the automobile policy, a copy of which is found as Petitioner's Exhibit No. 26 and for the motor club membership, a copy of which is Petitioner's Exhibit No. 28. At the time of purchasing the policy, no discussion was entered into on the question of purchase of a motor club membership. The employee who assisted Fowler in the purchase of the automobile insurance indicated that in view of the fact that Fowler had retired from the military, that the $8,000 deductible on personal injury protection would make the policy cheaper. Having heard this explanation, Fowler chose an $8,000 deductible PIP. The total time involved in the purchase of the automobile insurance was 10-15 minutes. Fowler did not read the documents presented to him in this session very carefully. At the time of purchase, accidental death benefits were discussed; however, Fowler was unaware that this matter pertained to motor club membership and not the insurance policy. Fowler also signed the rejection of liability coverages form which is Respondent's Exhibit No. 7, admitted into evidence. In particular, his signature appears on that portion of the form related to the fact that accidental benefits are a separate item and that there is an additional charge for that coverage. The motor club application which is Petitioner's Exhibit No. 28, does not reflect the fact of the $50 fee related to that membership. A copy of that application produced by the Respondent from his records which is admitted as Respondent's Exhibit No. 8, shows a charge of $50. The conclusion of fact to be drawn from this discrepancy is to the effect that the $50 was placed on the application form subsequent to the time that Fowler made application and without his knowledge. COUNT V MAXIE REEDER On June 4, 1982, Maxie Reeder made an application with Friendly Auto, Panama City, for automobile insurance and paid the $200 which had been quoted as the price of the insurance. Of that $200, $175 actually pertained to the automobile insurance premium and the remaining $25 paid for membership in a motor club. Reeder purchased the insurance based upon a need to have sufficient insurance to obtain a tag for her automobile. Reeder was unaware that she had purchased a motor club membership until she received notification of her membership from the motor club. Reeder also experienced problems with trying to gain benefits of her automobile insurance coverage in that she had difficulty gaining assistance from the Respondent following an automobile accident that she had in late June. The automobile policy was not received by Reeder until August 1982. Eventually, Reeder cancelled the automobile insurance policy. She requested that Friendly Auto provide her a refund for the motor club and received a refund in the amount of $25. Petitioner's Exhibit No. 30 is a copy of the application for automobile insurance which was signed by Reeder on June 4, 1982. It does not reflect the exact cost of the various elements of the automobile insurance policy premium. Those premium amounts are broken out on Petitioner's Exhibit No. 31, which is a copy of the application as completed by someone in the Friendly Auto Insurance Agency and submitted to the insurance company after Reeder left the agency. It reflects the various charges and the total charge of $175. Through this scheme of completing the form later, Reeder was not aware that the full amount of the automobile insurance was $175, not the $200 quoted, nor did she recognize that the remaining $25 of the money that she paid was for motor club membership. Reeder would not have knowingly joined an automobile motor club because she was not financially able. The transaction for the purchase of the automobile insurance on June 4, 1983, took approximately 45 minutes and the customer did not read the documents involved carefully. Reeder was eventually paid $140 related to the automobile insurance premium which represented the amount of premium not yet used at the point of her cancellation. As reflected in Respondent's Exhibit No. 9, admitted into evidence, Reeder signed that portion of the rejection of liability coverages referred to as the accidental death benefit separate item and the fact of additional charge for that coverage. Notwithstanding that signature on the rejection of liability coverage, Reeder and all other customers in this complaint did not understand the separate nature of the automobile insurance coverage and the motor club membership. Moreover, nothing that was done by the employees at Friendly Auto had as its purpose explaining the meaning of the aforementioned statement signed by the customer and the fact that the automobile club membership was not necessary in order to obtain the so-called tag insurance. In the Reeder transaction and the others, even in the face of a separate application for motor club membership and automobile insurance and the purported identification of the separateness of automobile insurance and motor club membership found in the rejection of liability coverage form signed by the customer, the overall technique used in responding to the customer's request for automobile insurance was one of obscuring the distinction between automobile coverage and motor club membership. Actions by Respondent and his employees in dealing with Reeder and the other named customers camouflaged the fact that motor club membership was not necessary to meet the requirements of law for the purchase of a tag. By these actions, Respondent and employees at Friendly Auto were making a misrepresentation to the public related to necessary coverage for obtaining automobile tags and the cost of automobile insurance and motor club membership. COUNT VII ROBERT GRIFFITHS Based upon advertising, Robert Griffiths went to the Friendly Auto to purchase full automobile insurance coverage. This visit was on February 12, 1982. At that time, he paid Friendly Auto in Panama City $168 for what he was led to believe was automobile insurance coverage requested. The copy of the application made on February 12, 1982, may be found as part of composite Exhibit No. 72 by the Petitioner. It does not reflect the exact charges related to the automobile insurance. This is a copy which was obtained by the Griffiths when they purchased the insurance. In actuality, the cost of the insurance was less than $168 paid. Griffiths signed an item requesting an application for membership in Nation Motor Club which is part of Petitioner's composite Exhibit No. 40 admitted into evidence. Notwithstanding the fact that he signed this application form, he did not understand that he had purchased a motor club membership and would not have desired that in that he operated a wrecker and would not need the towing service provided by the motor club membership. At the time of purchase of automobile insurance in February, 1982, Mr. Griffiths and his wife thought that the motor club membership was part of the automobile insurance without charge, in that the copy of the application which was received did not indicate a membership fee. This is seen in a xerox copy of the membership application which is part of composite Exhibit No. 40 as contrasted with the agency's yellow copy of the membership application and part of the composite Exhibit No. 40. The latter item contains a $25 membership fee. It is concluded that the fee quote was placed on the application form submitted to the Nation Motor Club at a time subsequent to the Griffiths' departure from Friendly Auto on the date in February, 1982. Moreover, Petitioner's Exhibit No. 73 is a copy of the basic service contract for the motor club which was received by the Griffiths and the fee amount is whited out further leading the Griffiths to believe that there was no charge for that coverage. There was no discussion on February 12, 1982, between the employee of Friendly and Griffiths on the question of joining a motor club. In the February application process, when Robert Criffiths signed the motor club membership application form and the application for insurance he did not read those matters carefully. Griffiths also signed the rejection of liability coverage acknowledgement form, Respondent's Exhibit No. 10, admitted into evidence, related to separateness of the accidental death benefit and the additional charge for that coverage. Griffiths, in asking for full insurance coverage did not wish to have the $8,000 deductible PIP at the time of purchasing insurance in February. The automobile insurance protection which was requested on the application was shown to be worth $153 and the actual policy amount was finally determined by the insurer to be $150 including the policy fee. This is reflected in Petitioner's Exhibit No. 39, admitted into evidence which is a copy of the application for insurance policy and the statement of policy declarations. The period of coverage was for six months commencing February 13, 1982. In August, Griffiths returned to Friendly Auto Insurance to renew the automobile insurance policy. On this second visit, Griffiths' wife was with him and she concluded the transaction and Griffiths returned to work. When the application for renewal was applied for in August, 1982, and Mr. Griffiths left, he left after revealing to the employee at Friendly that his duties included that of operation of a wrecker. On this second visit in August, 1982, no discussion was entered on the question of continuing the $8,000 deductible PIP which had been purchased at the time that the automobile insurance was obtained from Friendly in February, 1982. Had Mrs. Griffiths known, she would not have applied for an $8,000 deductible PIP at the time of renewal, acting in her husband's absence. She did not feel that she could afford to pay the $8,000 deductible if the insurance was needed. In addition, the automobile insurance policy renewal was not promptly forwarded to the insured even though application was made on August 17, 1982. As a consequence, when Mrs. Griffiths had an accident on August 20, 1982, she was not covered by the policy. The problem with lack of coverage of the accident on August 20, 1982, and the deficit in the coverage related to PIP were rectified by Friendly and the motor club fee was returned. COUNT VIII BRENDA D. HENDERSHOT/BRUMFIELD On January 15, 1982, Brenda Hendershot, now Brumfield, looked the Friendly Auto Insurance Agency up in the phone book and through the telephone process received a quote for insurance and decided to purchase automobile insurance to obtain an automobile tag. The purchase price quoted of $153 included motor club membership, unknown to the customer. Petitioner's Exhibit No. 44, admitted into evidence, is a copy of the application for automobile insurance. It does not reflect a break down of the cost related to the policy, although there are spaces provided for those entries. This document was signed by Brumfield at the time of applying for the policy at the Respondent's office in Panama City. That exhibit is a copy of what was given to Brumfield when she left Respondent's office. Anita Prevost was the employee who took care of Brumfield on the date the automobile insurance was purchased. During this purchase no discussion was made of the motor club. Brumfield did sign the Nation Motor Club application form that is depicted as Respondent's Exhibit No. 2. In addition, she signed the rejection of liability coverage provided by Friendly, to include that portion of the form related to accidental death benefits, being a separate item carrying an additional charge. As with other cases spoken to in this Recommended Order, the accidental death benefit was part of the motor club membership and not part of the automobile insurance coverage requested by Brumfield. Brumfield recalls some discussion about $8,000 related to personal injury protection but did not understand from this conversation at the time of purchase that this $8,000 amount pertained to a deductible. She did not discover this fact until a subsequent time. On that same occasion, Brumfield discovered that she had purchased a motor club membership which she did not request. The copy of the application for insurance which the Respondent's agency in Panama City submitted to the insurance company as shown through Petitioner's Exhibit No. 45, admitted into evidence, reflects the various charges set forth in the premium and demonstrates that the real cost of the automobile insurance was $128 with the other $25 being related to motor club membership. The customer did not carefully consider documents by reviewing them at the time of her purchase. COUNT IX BENNY L. COON On December 31, 1981, Benny Coon went to Friendly Auto Insurance to purchase the necessary automobile insurance to satisfy legal requirements in the State of Florida. He chose this agency because it was the nearest to his residence. A quotation was made to him of $158 and he paid $158 for what he understood to be the necessary automobile insurance coverage. This quote, unknown to Coon, contained motor club charges. A copy of the application form, for automobile insurance which contains his signature, may be found as Petitioner's Exhibit No. 49, admitted into evidence. Coon's also signed an application for Nation Motor Club as shown in Petitioner's Exhibit No. 52, admitted into evidence which is the copy kept by Friendly insurance. As reflected on that exhibit, $25 was charged for motor club membership unrelated to the automobile insurance requested by Coon. Coon had not requested to join a motor club when be went to the agency, not being interested in that plan, and there was no discussion made about joining the motor club. Eventually, Coon received a copy of the declaration statement related to the automobile policy and it reflected the true charge of $133 as opposed to the $158 which Coon paid, believing that was related to the cost of automobile insurance not automobile insurance and motor club membership. Petitioner's Exhibit No. 50 is a copy of the application submitted to the insurance company and it also shows charges in an amount of $133. The break out of the charges for the automobile insurance was not reflected on the copy of the application provided to the customer on the date he made that application. See Petitioner's Exhibit No. 49. Coon had not carefully read the documents prepared at the time of requesting insurance coverage. Again this customer completed the rejection of liability coverages form which is found as Respondent's Exhibit No. 5 admitted into evidence. He signed that aspect of the form related to accidental death, i.e. death benefit being a separate item and the additional charge related. COUNT XI DAVID B. PERMENTER David Permenter went to the Friendly Auto Insurance office in Panama City on March 15, 1982, to purchase basic automobile insurance coverage required by the State of Florida. He was quoted a price with a premium of $346 and he paid that price. This price included motor club membership without his knowledge. At the time the application was made, he signed a form related to membership in Nation Motor Club and was provided the customer's copy. This is found as Petitioner's Exhibit No. 63, admitted into evidence. It does not reflect the amount of charge for this protection. He also executed an application form related to the automobile insurance, a copy of which is found as Petitioner's Exhibit No. 60. This item does not display the break out of the cost related to the automobile insurance which ultimately was determined to be $321 with the balance of the amount he paid being $25 utilized for membership in Nation Motor Club. The declarations document related to the automobile insurance policy was received by the customer subsequent to the purchase of the insurance. That document reflects the cost of automobile insurance to be $321 and it was received as evidence, Petitioner's Exhibit No. 61. At the time the automobile insurance was purchased, no request was made to join a motor club and no inquiry was made of the customer if he desired to join a motor club. The purchaser thought that he was buying automobile insurance and did not recognize that motor club membership was envisioned in the sale. He would have joined the motor club if it was part of the policy payment and not a separate charge but did not wish to pay additional money to join the motor club. Permenter did not discover that he had joined a motor club until a date subsequent to the time of the purchase of insurance. No specific discussion was entered into about the features of coverage being purchased, the principal emphasis of the sale being related to the total price. The customer was in the insurance agency for approximately 15 minutes and he did not complete the application forms other than to sign them. This customer did not read the documents carefully at the time of the purchase. The amount of money paid for the motor club membership was refunded. This customer completed a rejection of liability coverages to include a signature on that aspect of the sheet which indicated that accidental death benefit was a separate item for which a charge would be placed. This document is found as Respondent's Exhibit No. 1, admitted into evidence.
