The Issue The issues are (1) whether respondent's licenses as a life and health (debit) agent, life, health and variable annuity contracts agent, life agent, life and health agent, general lines agent and health agent should be disciplined for the reasons stated in the amended administrative complaint, and (2) whether respondent's applications for the issuance and renewal of a resident license should be granted.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Stephen Schnur, was licensed and eligible for licensure as a life and health (debit) agent, life, health and variable annuity contracts agent, life agent, life and health agent, general lines agent - property, casualty, surety and miscellaneous lines, and health agent by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed as a property and casualty insurance agent for Clarendon National Insurance Company (CNIC) and had placed his license as a general lines agent with Devor Insurance Agency (DIA), an incorporated general lines insurance agency located at 6611 West Hillsborough Avenue, Tampa, Florida. He has been licensed by petitioner for approximately nineteen years. In August 1987 respondent was associated with Bill Ely Insurance (Ely) in Tampa, Florida. Because that firm was unable to write automobile insurance on young drivers, Schnur referred some of Ely's business to DIA, a firm owned by one Marcia Cline, who held no insurance licenses. In September 1987 Schnur received an offer from Cline of a weekly salary of $150 if he would place his property and casualty general lines agency license with DIA. After obtaining independent verification from petitioner that DIA had no pending "problems", and accepting Cline's representation, albeit false, that the firm had an errors and omissions policy, respondent accepted Cline's offer and placed his license with DIA effective that month. He continued to utilize his other licenses to sell insurance for Ely, his principal employer. It should also be noted that another unnamed general lines agent had placed her license at DIA during this same period of time. At first Schnur attempted to review all automobile insurance applications received by DIA. However, because of his duties at Ely, he was unable to devote more than a few hours per week to DIA. In view of this, he agreed to sign in blank applications and binders for Cline to use in his absence. In doing so, he relied upon Cline's honesty and integrity and assumed she would forward all applications and premiums to the insurance company and secure coverage for DIA's customers. Under this arrangement, Cline was considered to be an employee of DIA and operating under Schnur's direct supervision and control. In October 1987 five customers purchased various types of automobile insurance from Cline. 1/ Each customer gave Cline either cash or checks as payment for their policies. Although none of the customers met with or spoke with respondent, and dealt exclusively with Cline, each received a binder from Cline signed by respondent evidencing insurance with CNIC. In addition, Cline gave each customer a receipt of payment also carrying respondent's signature. As it turned out, Cline did not process the applications or forward them to CNIC. She also failed to remit any monies to the insurance company. Consequently, none of the customers received a policy from CNIC or any other insurance company. However, respondent had no reason to suspect anything since he periodically examined the office files during this period of time and found all documents in order. On January 3, 1988, respondent learned from other office personnel that there was a problem with Cline's handling of insurance applications. He immediately telephoned petitioner's Tampa district office the same day and advised that DIA applications were found unprocessed and in the waste basket. When Schnur asked if he should pull his license from DIA, he was told by petitioner's representative not to do anything. In the meantime, the other general lines agent at DIA pulled her license and left the state. On January 28, 1988 DIA sent a form letter to various customers, including the five who had purchased policies in October 1987. The letter read as follows: Dear We are writing you this letter concerning the insurance policy which you sought through our agency. Please consider this letter as official notification from our agency that you need to purchase insurance coverage from another agency or agencies as soon as possible. You have no insurance coverage on your vehicle or vehicles. Again, you must secure insurance on your vehicle or vehicles immediately, as in today!! Sincerely, Devor Insurance Agency It should be noted that none of the five customers received any refund of monies. In early February 1988 respondent pulled his license with DIA. Since then, he has worked full-time with Ely. Respondent has fully cooperated with the Department during the course of this investigation. At hearing, Schnur was can did and forthright and admitted he used extremely poor judgment in signing in blank the binders and receipts and relying on Cline's honesty. However, there was no intent on his part to violate the insurance code or otherwise harm the customers. He strongly desires to continue in the insurance profession, a field in which he has worked without a blemish for the last nineteen years. His present employer, Ely, has expressed complete trust and confidence in Schnur, allows him to handle all of the firm's money, and intends to reward him with a part ownership of that business. Other than the charges set forth in the pending amended administrative complaint, there is no basis upon which to deny the applications for renewal and issuance of a resident license.
Conclusions Paragraph 2 of Petitioner's exceptions takes exception to the Hearing Officer's Statement of the Issues, Preliminary Statement, Conclusions of Law, and Recommendation because none of these sections of the Recommended Order address the April 9, 1990 denial of the renewal of Respondent's resident license to represent C M Life Insurance Company as a life and health insurance agent. Petitioner filed a motion for consolidation regarding the April 9 denial on April 17, 1990. Although the record contains no Order ruling on-the last motion for consolidation, it appears that the parties agreed that the April 9 denial be considered together with the administrative complaint and the denial of Respondent's application to represent United States Life Insurance Company of NY as a life and health insurance agent (February 14, 1990) and the denial of Respondent's application to represent Acceleration Life Insurance Company as a life and health insurance agent (April 6, 1990). Because the three denials of Respondent's applications for licensure or renewal of licensure were based upon the allegations in the administrative complaint in this case, all three denials (February 14, April 6, and April 9, 1990) will be consolidated with the administrative complaint for disposition by this Final Order. Accordingly, Petitioner's exception numbered 2 is accepted. RULING ON PETITIONER'S EXCEPTION TO CONCLUSIONS OF LAW Paragraph 3 of Petitioner's Exceptions takes exception to the Hearing Officer's Conclusion of Law numbered 4 because that Conclusion of Law refers to Section 626.611(6), Florida Statutes, which was not alleged in the administrative complaint, and the Conclusion of Law does not refer to Section 626.611(7), Florida Statutes. Section 626.611(6), Florida Statutes addresses misrepresentations by insurance claims adjusters or agents in effecting claims settlements. Clearly, Section 626.611(6), Florida Statutes has no application to the instant case, and violation of that section was not charged in the administrative complaint. On the other hand, Section 626.611(7), Florida Statutes lists the demonstration of lack of fitness or trustworthiness to engage in the business of insurance as grounds for the-suspension or revocation of an insurance agent's license. This statute was included in the charges in each count of the administrative complaint. The hearing officer apparently considered Section 626.611(7), Florida Statutes, in his Conclusions of Law numbered 3 and 4. Accordingly, the citation to Section 626.611(6), Florida Statutes is deemed to be a typographical error and it is assumed that Section 626.611(7), Florida Statutes was the intended citation. In light of the foregoing, Petitioner's exception in Paragraph 3 is accepted. RULING ON PETITIONER'S EXCEPTION TO RECOMMENDATION Paragraph 4 of Petitioner's Exceptions takes exception to the Hearing Officer's Recommendation that Respondent's license be suspended for fifteen (15) days and that Respondent's applications for licensure be granted after the expiration of the fifteen-day suspension. After a complete evaluation of the record the hearing officer's recommended penalty of a 15-day suspension and acceptance of Respondent's applications after the 15-day suspension is hereby rejected for the following reasons: The Hearing Officer found, in Findings of Fact numbered 2, that Respondent accepted an offer to "place" his general lines insurance agent license with Marcia Cline, an unlicensed person. This finding is supported by the Respondent's testimony at hearing. (Tr. 71, 72) Respondent was compensated with a weekly salary of $150. (Tr. 72); The Hearing Officer found, in Findings of Fact numbered 3, that Respondent had signed, in blank, applications and binders for Cline to use in Respondent's absence. This finding is supported by Respondent's testimony at hearing. (Tr. 72, 79, 81); The Hearing Officer concluded, in Conclusions of Law numbered 4, that Cline wrongfully withheld premiums from the insurer, made willful misrepresentations to her customers, demonstrated a lack of trustworthiness, engaged in fraudulent and dishonest practices, and misappropriated monies belonging to others, as proscribed by sections 626.561(1), 626.611(5), 626.611(7), 626.611(9) and 626.611(10), Florida Statutes. The Hearing Officer further concluded that Respondent is responsible for Cline's wrongdoing pursuant to Section 626.734, Florida Statutes. (Concl. of Law #4); The Hearing Officer was of the opinion that Respondent was "the victim of circumstances which happened to place his license with the wrong person at the wrong time, and because of poor judgment, is now saddled with Cline's misconduct." (Concl. of Law #5). This circumstance, together with the facts that Respondent immediately notified the Department when he learned that Cline had misused his license (Finding of Fact #6) and that Respondent was candid and forthright under oath at the hearing of this matter and admitted that he used poor judgment (Finding of Fact *8), led the Hearing Officer to recommend the 15- day suspension. It should be noted that Respondent voluntarily "placed" his license with an unlicensed individual. (Tr. 71, 72). Not only was this "placing" of the license the result of poor judgment, but it is prohibited by Section 626.441, Florida Statutes. That section provides: 626.441 License or permit: transferability.--A license or permit issued under this part is valid only as to the person named and is not transferable to another person. S626.441, Fla. Stat. Accordingly, it is illegal to place an insurance agent's license on the wall of an agency in order to assist unlicensed persons in selling or servicing insurance policies in the absence of the licensed agent. However, because a violation of Section 626.441, Florida Statutes was not alleged in the Administrative Complaint, this final order does not rule on that issue. Additionally, agents are prohibited from supplying blank forms, applications and other supplies to unlicensed persons for use in soliciting, negotiating, or effecting contracts of insurance. S626.342, Fla. Stat. Respondent admitted that he signed blank applications and binders for Cline, an unlicensed individual, to use in his absence. (Fact Stipulation of March 5, 1990; Finding of Fact *3). Violation of Section 626.342, Florida Statutes was not alleged in the Administrative Complaint, and is not addressed by this Order. While Respondent was not charged with violation of Sections 626.342 and 626.441, Florida Statutes in the Administrative Complaint, his "poor judgment" in becoming involved in this illegal arrangement is an aggravating rather than a mitigating factor in this case. Accordingly, this aggravating factor should be considered together with the mitigating factors referred to by the Hearing Officer. The Hearing Officer concluded that Respondent is liable for the acts of Cline while his license and signature were used by Cline, and that therefore, Respondent is guilty of violating five subsections of Section 626.611, Florida Statutes. Section 626.611, Florida Statutes compels the Department of Insurance to deny, suspend, revoke, or refuse to renew or continue the license of any agent who commits any of the acts listed in Section 626.611, Florida Statutes. However, the mitigating factors found by the Hearing Officer in Conclusion of Law numbered 5, namely Respondent's immediate notification of the Department when he learned of possible wrongdoing and Respondent's cooperation in the investigation, make the 15-day suspension an appropriate, if lenient, penalty in this case. However, the aggravating factor of the improper situation entered into by Respondent in "placing" his license and supplying forms to Cline renders acceptance of Respondent's applications at the end of the 15-day suspension period inappropriate in this case. Petitioner's exception to the Hearing Officer's Recommendation is therefore accepted. IT IS THEREFORE ORDERED: That the Findings of Fact of the Hearing Officer are hereby adopted in toto as the Department's Findings of Fact. That the Conclusions of Law of the Hearing Officer are hereby adopted in toto with the exceptions noted above; That the recommendation of the Hearing Officer is hereby rejected for the reasons set forth in paragraph 4 above, Ruling on Petitioner's Exception to Recommendation; That Respondent is guilty of violating subsections 626.561(1), 626.611(1), 626.611(5), 626.611(7), 626.611(9), and 626.611(10), Florida Statutes; That as a result of Respondent's violations of the above referenced statutes, the licenses and eligibility for licensure of Respondent, Steven Schnur, are hereby SUSPENDED for a period of fifteen (15) days, effective upon the date of this Order. The denial letters dated February 14, 1990, April 6, 1990, and April 9, 1990 are hereby AFFIRMED. Upon expiration of the suspension period, Respondent is free to reapply for any insurance licenses, and the Department of Insurance shall not deny Respondent's applications based upon any of the facts and circumstances at issue in this action. Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120,68, Florida Statutes and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, Florida 32399- 0300, and a copy of the same with the appropriate district court of appeal within thirty (30) days of the rendition this Order. ORDERED this 21 day of June , 1990. TOM GALLAGHER Treasurer and Insurance Commissioner Honorable Donald R. Alexander Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, FL 32399-1550 Alan J. Kerben, Esquire 8814 Rocky Creek Drive Tampa, FL 33615 C. Christopher Anderson, III, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300
Recommendation Based on the foregoing findings of fact and conclusions of law, it is: RECOMMENDED that respondent be found guilty of violating subsections 626.561(1) and 626.611(5),(6),(9) and (10) that his licenses be suspended for fifteen days. The other charge should be dismissed with prejudice. It is further recommended that his applications for renewal and issuance of resident licenses be approved after the suspension is lifted. DONE AND ORDERED this 19 day of April, 1990, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administative 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 19 day of April, 1990.
The Issue The issues are whether Respondent is guilty of any violations of the Insurance Code, including Chapter 626, Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a general lines insurance agent, holding license number A129688. At all material times, Respondent has been the sole owner and director of America Security Insurance Agency, Inc., formerly known as America Auto Security Insurance Agency, Inc. (America Security). On April 1, 2000, Dionne Jacques purchased a motor vehicle from Sawgrass Ford in Fort Lauderdale. She did not own a vehicle at the time and testified that she purchased a model that was selected for her by someone at the dealership. In closing on the purchase, Ms. Jacques dealt extensively with a dealer employee named Herbert McKenzie. Ms. Jacques financed the motor vehicle purchase with Ford Credit. In the course of completing the required paperwork at the dealership, Mr. McKenzie referred Ms. Jacques to American Security for motor vehicle insurance. Mr. McKenzie mentioned that he dealt with someone named "AJ" at the insurance agency. According to Ms. Jacques, Mr. McKenzie informed Ms. Jacques that one year's insurance would cost $468 or $468.99. Mr. McKenzie did not testify, but Respondent testified that he spoke with Ms. Jacques on the telephone and explained the relevant features of the policies that were available to her. Although it is unclear who quoted the premium to Ms. Jacques, Petitioner has failed to prove by clear and convincing evidence that Mr. McKenzie did so. Ms. Jacques agreed to purchase the insurance and produced a credit card for the amount due. The testimony of Ms. Jacques suggests that she allowed Mr. McKenzie to charge her credit card for the insurance premium. However, the more definitive testimony of Respondent, which is credited, is that he took her credit card information over the telephone and arranged for the card debit. In return, according to Ms. Jacques, Mr. McKenzie gave her a document that she believed would document her coverage until she received an insurance policy in the mail in about 30 days. It is impossible to determine on this record that Mr. McKenzie attempted to bind coverage on behalf of the insurer. At no time prior to the purchase of the insurance did Respondent, Mr. McKenzie, or anyone else disclose to Ms. Jacques that she was purchasing other ancillary products besides insurance. Likewise, no one informed her that she was financing part of the annual insurance premium. For unclear reasons, Respondent did not obtain insurance coverage for Ms. Jacques until May 2000. At that time, he took the $468 that she had charged and, without her knowledge, applied only $143 of this sum toward the policy premium. Without Ms. Jacques' knowledge, Respondent, or someone at his direction, signed Ms. Jacques' name to a premium finance agreement, evidencing an unpaid premium balance of $504. At the same time, also without Ms. Jacques' knowledge, Respondent used $300 of the initial $468 that Ms. Jacques paid to purchase ancillary coverage that she had not agreed to purchase. This ancillary coverage included towing, supplemental medical coverage, replacement rental car, and emergency cash. These coverages supplemented a $647 personal injury protection policy containing no personal liability or uninsured motorist coverage. At no time has American Security designated a primary agent. By Immediate Final Order entered March 12, 1991, the Florida Department of Insurance, now known as Petitioner, ordered Respondent to cease and desist from the unlicensed sale of insurance. However, Respondent has made substantial restitution to Ms. Jacques, who suffered no significant financial injury as a result of Respondent's misdealings.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order suspending Respondent's license for one year. DONE AND ENTERED this 18th day of November, 2004, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 18th day of November, 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Gregg S. Marr Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Charles P. Randall Charles P. Randall, P.A. Bank of America Tower, Suite 500 150 East Palmetto Park Road Boca Raton, Florida 33432-4832
The Issue A notice and order to show cause, issued to Respondent on January 15, 1992, seeks to terminate Respondent's grandfathered status under Section 626.988, F.S., and seeks to suspend or revoke Respondent's certificate of authority pursuant to Section 626.891, F.S. Various violations are alleged, including expanding the scope of functions being performed on April 2, 1974; soliciting prospective insurance customers by placing enclosures and solicitations in First Union Bank customers' bank statements; adding resident life agents; and allowing an unlicensed individual to solicit applications of insurance in Florida. The issues for resolution in this proceeding are whether the alleged violations occurred and if so, what discipline or remedial action is appropriate.
Findings Of Fact Respondent, First Union Mortgage Corporation (FUMC), is a North Carolina corporation with its principal place of business at 301 South Tryon Street, Charlotte, North Carolina. FUMC is a "financial institution agency" as defined in Section 626.988(1)(c), F.S. FUMC is a wholly-owned subsidiary of First Union Corporation, a registered bank holding company with headquarters in Charlotte, North Carolina. First Union Corporation is also a financial institution as defined in Section 626.988(1)(a), F.S. First Union National Bank of Florida, N.A., is a national bank authorized to do business in Florida and is a sister corporation of FUMC. Until February 8, 1987, FUMC was known as Cameron Brown Mortgage Company. Under that name it had engaged in certain insurance activities in Florida since the late 1960's. When Cameron Brown became FUMC there was no change in ownership, affiliation or corporate structure. Before and after the name change the company was owned by First Union Corporation. THE DECLARATORY STATEMENT On April 2, 1974, Section 626.988, F.S., took effect, prohibiting insurance agents or solicitors licensed by the Department of Insurance (DOI) from engaging in insurance agency activities as employees, officers, directors, agents or associates of a financial institution agency. The same section includes a "grandfather" provision for continued operation of financial institution agencies which were in existence and engaged in insurance agency activities as of April 2, 1974. FUMC represented to DOI that it was entitled to the grandfather exemption for its pre-1974 insurance agency activities, and in February 1988, FUMC filed a petition for declaratory statement pursuant to Section 120.565, F.S. for determination of its status. After notice to FUMC and to the public, a proceeding on the petition was conducted on March 30, 1988 by a staffperson of DOI appointed as hearing officer. On August 5, 1988, a declaratory statement was issued, and on September 2, 1988, an amended declaratory statement was issued. The latter statement finds in pertinent part: First Union Insurance Group (formerly the insurance division of Cameron Brown Company) was engaged in insurance agency activities prior to April 2, 1974. First Union Mortgage Corporation through First Union Insurance Group has continuously [word apparently deleted here] licensed agents and conducted insurance agency activities in Florida since and before April 2 1974. The scope of insurance agency activities continuously conducted by First Union Mortgage Corporation has been limited to: One life and health insurance agent, (Mr. Winifred Eugene Strickland), who served as an agent for the insurance division of Cameron-Brown Company while also serving as a salaried employee of American Heritage Life Insurance Company. Although Mr. Strickland apparently had one or more additional sub- agents involved in soliciting Cameron-Brown Customers, their involvement was sporadic and does not meet the test for "continuously engaged" so as to entitle First Union Mortgage Corporation to more than one life and health insurance agent. One non-resident property and casualty agent, (Charles Johnson). Mr. Johnson has been licensed as the successor agent for Mr. Hubert Reid Jones. Mr. Jones and Mr. Johnson sold, through countersignature relationships with Florida agents, property and casualty insurance prior and subsequent to April 2, 1974. The solicitation and servicing of customers of Cameron-Brown Company (now First Union Mortgage Corporation) was the focus of its insurance agency activities. . . . (Petitioner's Exhibit A Pages 3-4) The amended declaratory Statement also provides: . . . But for application of the "grandfathering" provisions of Section 626.988(5), Florida Statutes, any insurance agent or solicitor licensed by the Department of Insurance (the Department) would be prohibited from association with First Union Mortgage Corporation in insurance agency activities. . . . (Petitioner's Exhibit A Page 5) The amended declaratory Statement concludes as follows: . . . Pursuant to Section 626.988(5), Florida Statutes, the Petitioner's subsidiary, First Union Mortgage Corporation, is entitled to continue to engage in insurance agency activities through First Union Insurance Group by utilizing one licensed non-resident property and casualty insurance (Class 9-20) and one licensed resident life and health insurance agent. This recognition of grandfather status for Petitioner's subsidiary First Union Mortgage Corporation does not extend to Petitioner's subsidiary, First Union National Banks of Florida. First Union Mortgage Corporation may solicit prospective insurance customers so long as neither the Petitioner, First Union Corporation, nor any subsidiary bank plays an active role in such insurance solicitation through endorsements, bank mailings, providing space within bank offices, or similar activities. . . . (Petitioner's Exhibit A Pages 7-8) emphasis added. CERTIFICATE OF AUTHORITY AS "THIRD PARTY ADMINISTRATOR" In addition to its activities described in the amended declaratory statement, FUMC (then, Cameron Brown) was engaged in other insurance related activities prior to 1970. Under contracts with various life and health insurers Cameron Brown provided third party administrator services including receiving and reviewing applications, issuing policies, explaining and collecting premiums and accounting for and remitting premiums to the insurance companies. The insurance companies with whom Cameron Brown contracted handled the actual solicitation and sale of the policies. The contracts in effect in 1968, 1970 and 1978 between Cameron Brown and Minnesota Mutual Life Insurance Company were typical of the arrangements with other companies, according to Charles Johnson, Jr., retired vice president in charge of insurance agency operations at Cameron Brown. (Transcript, p. 102). As provided in the contracts with Minnesota Mutual Life Insurance Company, the administrative services were in connection with the mortgage insurance program made available by the insurance company to borrowers of Cameron Brown. (Respondent's Exhibits number 1, 2, 3). This included borrowers in the State of Florida, although the services were being provided out of Cameron Brown/FUMC's principal offices in Charlotte, North Carolina. Prior to 1983, when Chapter 626 Part VII, Florida Statutes was enacted, Florida did not regulate third party administrators as such. Section 626.8805, F.S. now requires a certificate of authority to be issued by the Department of Insurance (DOI). On or about September 26, 1986, Cameron Brown applied to DOI for authorization to operate in the State of Florida as a third party administrator. The application was prepared by Peter Nagle, senior vice-president of FUMC who had just recently joined what was then Cameron Brown. On the application, and later in October, in response to DOI's request for additional information, Nagle indicated that Cameron Brown had operated as an administrator of insurance plans since December 1983 and that the company was not providing such services on plans for Florida residents. This information was an inadvertent error, primarily the result of Nagles unfamiliarity with the company's history. There is no evidence that the information was material to a determination of the company's eligibility for certification. Nor is there evidence of any scheme by the company to conceal its past practices at the time of application in 1986. In its application Cameron Brown disclosed its affiliation with First Union Corporation, and further provided that First Union National Bank of Florida conducted only credit insurance activities in First Union Corporation locations in Florida. DOI issued a certificate of authority for Cameron Brown to operate as an administrator in the State of Florida on October 14, 1986. The cover letter provides, "the certificate is perpetual and shows no expiration date contingent upon your annual filing, due March 1st". (Petitioner's exhibit B, p.17) Those annual filings have been made, and on May 18, 1987, the certificate of authority was reissued in the name of FUMC. During the declaratory statement proceeding, the company's third party administrator status was never an issue. DOI never asked about, and FUMC never mentioned, the existence of its certificate or the company's insurance administration activities. The staff of DOI involved in the declaratory statement proceeding did not know about their agency's grant of the certificate to FUMC. Their pique at FUMC"s failure to affirmatively raise the certificate issue, however, is misplaced in the absence of any evidence that the outcome of the declaratory statement would have been altered with that knowledge. At most, the staff can only say that their investigation would have been different had they realized that FUMC was providing insurance administration services. INVESTIGATION AND ALLEGED VIOLATIONS After the third party administrator certificate was issued, and after the amended declaratory statement was issued, sometime in 1989, DOI began investigating all financial institutions claiming grandfathered status under Section 626.988, F.S. This included FUMC, and during a two day visit to the Charlotte, North Carolina headquarters, DOI staff, obviously other than staff involved in the certificate process, learned for the first time that FUMC was operating as an administrator of insurance plans. Even then this did not trigger further investigation of the administrator activities, as there was no evidence that the company was out of compliance with its amended declaratory statement. Approximately a year later, in the summer of 1990, DOI's Bureau of Agent and Agency Investigations began receiving inquiries regarding Monumental General Insurance solicitations mailed to First Union Bank customers in Florida. Gail Connell, DOI Analyst II, opened her investigation. A few months later complaints were received from insurance agents who were also customers of First Union Bank regarding solicitations done by American Heritage Life. The brochure from Monumental General sent to First Union Bank customers listed a toll-free number for the plan administrator, First Union Insurance Group, a division of FUMC. The mailing included letters from the president of Monumental General and the senior vice-president of First Union National Bank of Florida, with an enrollment form for a $1,000 no-cost accidental death group policy and optional additional coverage. Benefits and premiums for the additional coverage were explained in the brochure. A pre-paid postage reply envelope was addressed to "First Union Insurance Group, Plan Administrator, Attn: Daniel J. McPherson, Licensed Resident Agent, P. O. Box 2678, Jacksonville, Florida 32203-9851". (Petitioner's Exhibit C; pp. 157-163.) Daniel McPherson is not one of FUMC's grandfathered agents nor a successor to a grandfathered agent. The American Heritage Life mailings were stuffed in bank statements of customers of First Union National Bank. These mailings included a simple check- off form for the customer to return for more information and for a personalized quotation for term life insurance. Some mailings indicated return to "C. Dennis Wiggins, Resident Licensed Agent, P. O. Box 2678, Jacksonville, Florida 32203- 9851", and others required return to "Robert T. Jones, Sr. Resident Licensed Agent, P. O. Box 2678, Jacksonville, Florida 32203-2678" (Petitioner's Exhibit C, p 141, 154). Neither of these agents are FUMC's grandfathered agents or their successors. The American Heritage mailings also included a toll-free number for information. Gail Connell called that number and was eventually connected to a person identified as Sheila Auten, an insurance specialist for FUMC in North Carolina. Ms. Connell said to Ms. Auten that she was interested in more information about the term life policy addressed in the brochure. Ms. Auten asked questions about Ms. Connell's name, address, age, occupation and general health. Ms. Auten gave some history about American Heritage Life, estimated a premium for Ms. Connell, and offered to take her application over the phone. In response to Ms. Connell's question, she indicated that the completed application would be mailed to American Heritage Life in Jacksonville. Ms. Connell did not reveal her occupation as DOI investigator. Ms. Connell said she needed to think about the decisions and asked Ms. Auten to mail her something. A few days later Ms. Connell received a brochure explaining the product, a premium rate sheet and an application form. A few weeks later, when Ms. Connell did not return the application she received this letter from Sheila Auten: Dear Ms. Connell: Recently we sent you a proposal for term life insurance from American Heritage Life Insurance Company. I regret I have been unable to reach you by telephone to discuss it and answer any questions you may have. This term insurance is one of the best values on the market today. You can be sure it will provide you with a high level of life insurance protection at a very competitive rate. Once you decide to apply for this valuable insurance coverage, I would be happy to answer your questions or help you apply. Don't delay. Call me now at 1-800-366-8703. (Petitioner Exhibit C, p. 176) Ms. Auten is not licensed in Florida as an insurance agent or customer account representative. DOI considers it necessary for third party administrators to use licensed agents if they are engaged in solicitation of insurance. Based on her investigation, including a review of the compensation paid to FUMC for its agency activities compared to its administrator activities, Ms. Connell concluded that FUMC was using its administrator status to perform functions beyond the scope of its amended declaratory statement. She also concluded that FUMC was using unlicensed agents (Sheila Auten) to solicit insurance. These conclusions form the basis for the allegations in the agency's Notice and Order to Show Cause issued to FUMC on January 15, 1992. FUMC concedes that no grandfathered agent participated in the Monumental and American Heritage solicitations which triggered Ms. Connell's investigation. The two insurance companies solicit customers through direct mailings conducted by their licensed agents, which mailings go to customer lists provided by First Union National Bank of Florida or are enclosed in bank statements sent out by that institution. The bank has endorsed some of the products offered by the insurance companies. Other than provide marketing advice to the insurance company, FUMC plays no part at all in the sending or preparation of the mail solicitations. The bank sends out its statements; the insurance company or its agent, unaffiliated with FUMC, sends the inserts to the place where the bank statements are prepared; and a machine stuffs the inserts. The returned inquiry forms go to a Florida post office box, as indicated in paragraphs 18 and 19 above, and are forwarded to FUMC for its administrative support services. Those services include the further response to inquiries (as evidenced by Ms. Connell's encounter with Sheila Auten), review and approval of applications based on the insurance company's underwriting guidelines, entry into the administrative system, issuance of the policy and explanation to the customer, drafting the premiums out of the customer's account, and general servicing of the policy. These functions are consistent with administrator agreements between FUMC and Monumental General effective October 1, 1986; and FUMC and American Heritage Life effective November 1, 1989. There is no evidence that FUMC has been subject to discipline in the past, has operated unprofessionally or has caused harm or risk of harm other than through what DOI asserts is the impermissible involvement of a financial institution in the insurance business. It is primarily its status as a financial institution that has resulted in this proceeding against FUMC.
Recommendation Based upon the foregoing, it is hereby RECOMMENDED that the amended notice and order to show cause be dismissed. DONE AND ENTERED this 22nd day of October, 1992, in Tallahassee, Leon County, Florida. MARY CLARK 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 22nd day of October, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1476 The following constitute rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings of Fact Adopted generally in paragraph 1. Adopted in paragraph 2. Adopted in paragraph 1. Adopted in paragraph 14. Adopted in paragraph 6. Adopted generally in paragraph 7, but the implied characterization of that order as establishing the only way that insurance activities might be conducted is rejected as discussed in the conclusions of law. Rejected as irrelevant. Rejected as an inappropriate characterization as a grant of exemption, as discussed in the conclusions of law. Adopted in part in paragraph 7, but the characterization of the order as a permit is rejected. See paragraph 8, above. Rejected as contrary to the evidence and law. Rejected as improperly precluding the possibility of Respondent's later presenting evidence of other activities in which it engaged as of April 2, 1974, if it is determined that third-party administrator status must also be grandfathered in order to continue. This was not an issue in the prior proceeding. Rejected as contrary to the evidence, as to deliberate concealment. Adopted in paragraph 14. Adopted in part, as to the first sentence. Otherwise, rejected as unsupported by the evidence. Rejected as argument rather than proposed finding of fact. Adopted in paragraph 12. 17-18. Adopted generally but Respondent's contention as to evidence in this proceeding is rejected, as provided in conclusions of law, paragraph 32. 19. Rejected as unnecessary. 20-27. Rejected as argument. 28-29. (not included in the filing). 30-33. Rejected as contrary to the weight of the evidence. Adopted in paragraphs 20-22, except for the characterization of the activity as "soliciting". Rejected as unsubstantiated by the evidence. This case establishes only that the department now interprets FUMC's administrator activities as solicitation, not that it is a policy supported by rule, procedure or reason. Rejected as contrary to the evidence. The level of compensation did not establish the association the department theorizes. Rejected as unsupported by the weight of the evidence. The response given by the witness on page 189 was a qualified, inconclusive response. Respondent's Proposed Findings of Fact Adopted in paragraph 1. Adopted in paragraph 2. Adopted in paragraph 7. Adopted in paragraph 8. Adopted in paragraph 3. Included in Conclusions of Law. Adopted in paragraph 11. Adopted by implication in paragraph 11. 9-10. Adopted in paragraph 8. 11-14. Adopted in substance in paragraph 9. 15. Rejected as unnecessary. 16-17. Adopted in paragraph 12. Adopted in paragraph 14. Adopted in paragraph 12. Adopted in paragraph 13. Adopted in substance in paragraph 9, but there is no competent evidence that the same kinds of services were being provided since 1970. Rejected as unnecessary. Adopted in paragraphs 4 and 14. Adopted in paragraph 7. 25-26. Adopted in substance in paragraph 6. 27-31. Rejected as unnecessary. Adopted in paragraph 13. Adopted in paragraph 15. Adopted in substance in paragraph 7. Adopted in paragraph 15. 36-37. Adopted in paragraph 7. Addressed in Conclusions of Law. Rejected as unnecessary and cumulative. Adopted in paragraph 25. 41-42. Adopted in paragraph 26. 43-44. Rejected as cumulative and unnecessary. 45. Adopted in paragraph 26. 46-49. Adopted in paragraphs 20-22. Included in Conclusions of Law. Rejected as cumulative and unnecessary. 52-53. Adopted in paragraph 27. COPIES FURNISHED: Lisa S. Santucci, Esquire Dennis Silverman, Esquire Department of Insurance Division off Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 J. Thomas Cardwell, Esquire Virginia B. Townes, Esquire Akerman, Senterfitt & Eidson, P.A. Post Office Box 231 255 South Orange Avenue Orlando, Florida 32802 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-2152 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact The Respondent, Robert Charles Anderson, currently is eligible for licensure and is licensed in this state as a life and health (debit) agent, life, health and variable annuity contracts agent, general lines property, casualty, surety and miscellaneous agent, and health insurance agent. The Respondent moved to Florida from Michigan in September, 1983. In January, 1984, the Respondent and a partner bought Guaranteed Underwriters, Incorporated, a corporate general lines insurance agency doing business as Security Insurance Agency (Security) in New Port Richey, Florida. The Respondent's background was primarily in the life and health insurance business; his partner's background was primarily in property and casualty insurance. They planned to divide responsibilities for Security's operations along the lines of their respective areas of expertise. However, the partnership dissolved, leaving to the Respondent responsibility for all of the operations of the agency. After the dissolution of the partnership, the Respondent delegated to unlicensed employees most of the day-to-day responsibilities for the property and casualty and workmen's compensation side of the agency's business. The Respondent was personally involved primarily in the day-to-day operations of the health and life insurance side of the business, as well as in selected large commercial accounts. The conduct of Security's business, as described above, went smoothly (there were no charges of any license violations) until two disruptive factors entered into the picture. One was financial in nature; the other was personal. In 1986, Security bought an existing insurance agency (Sunland Insurance Agency) in Holiday, merged it into Security, and attempted to operate it as part of Security's overall business. In 1987, Security bought another, large agency (Village Insurance Agency) and also merged it into Security and attempted to operate it as part of Security's overall business. At this point, the Respondent essentially was attempting to operate three insurance agencies, something he never attempted before. With the purchase of Sunland and Village, in addition to Security, the Respondent incurred significant debt which had to be met for his business to just break even. By approximately 1988, the Respondent owed approximately $150,000 still outstanding on the purchase of Security, $100,000 borrowed to finance the purchase of Village, $43,000 to three different relatives and $3,500 to the NCNB bank on loans made in connection with the business. Payments on these debts, together with payroll, rent and other business expense left Security with a monthly operating budget of almost $12,000. At this expense level, the business was losing money. In calendar year 1989, the business lost between approximately $12,600 and (counting unpaid bills outstanding at the end of the year) $17,900. At the end of 1988, severe personal problems added to the Respondent's financial woes. In December, 1988, the Respondent's wife had to be hospitalized in Tampa for eight weeks for treatment for symptoms of mental illness. During this time, in addition to trying to supervise the operations of Security, the Respondent was required to travel back and forth to Tampa (about an hour drive by car, each way) to visit his wife and also make arrangements for the care of his eighteen month old son (either by himself or by a baby-sitter). As if the Respondent's personal problems were not enough, when his wife was discharged from the hospital (with a diagnosis of a chemical imbalance), she informed him that she wanted a divorce. She took up a separate residence in Tampa where she lived pending the dissolution of the marriage. As a result of the his personal problems, the Respondent delegated more and more responsibility to his unlicensed employees. He would go to the office only for an hour or two a day. Sometimes he was not able to get into the office at all. Judy Nelson (Count V). Judy Nelson, who is self-employed doing business as Pedals 'N' Presents, used Security for her insurance needs since 1986. In January, 1989, she applied through Security for renewal of a special multi-peril (SMP) insurance policy with American Professional Insurance for another year beginning January 21, 1989. On January 10, 1989, she gave Security her check for $485 as partial payment for the coverage. The $485 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. Security never processed Nelson's application or secured the coverage. On or about March 10, 1989, Nelson received notice from American Professional that no application for renewal of coverage or premium had been received and that coverage was being cancelled. Nelson immediately contacted Security regarding the notification, and one of the Respondent's unlicensed employees acknowledged an error on Security's part but assured Nelson that Security would correct the situation and have Nelson's coverage reinstated. Security never got the policy reinstated, and the policy was cancelled on March 21, 1989. On or about April 8, 1989, Nelson's business was burglarized, and Nelson made a claim on her MPS policy. At this point, in handling the claim, the Respondent realized that the policy had been cancelled and that Nelson had no coverage. But, instead of telling her the facts, the Respondent paid the claim himself. Nelson thought the claim was paid under the terms of her SMP policy and still thought she had coverage. Later, Nelson had a question about a signature on her policy and telephoned the Professional American to get her question answered. Professional American told her that she had no coverage. At about the same time, Nelson was contacted by a Department investigator, who asked her not to contact the Respondent yet as he would make arrangements for a refund for her. On or about December 6, 1989, after the Department investigator cleared it, Nelson telephoned the Respondent and asked for a refund. This time, the Respondent acknowledged that Nelson had no coverage and agreed to a refund. The Respondent paid Nelson the refund at the end of December, 1989, or the beginning of January, 1990. Nelson still does business with Security. She has in force workmen's compensation insurance through Security. Fred J. Miller (Count VI). On or about February 24, 1989, Fred J. Miller came into the Security offices to get commercial automobile insurance for the vehicles he uses in his recycling business. He dealt with one of the Respondent's unlicensed employees. Several application and other papers for coverage with Progressive American Insurance Companies were prepared and were signed by Miller. Miller also made a partial payment for the coverage in cash in the amount of $296, for which the employee gave Miller a receipt. As he left the office, the Security employee assured him that he had coverage. A few days later, on or about February 28, 1989, Security contacted Miller and told him an additional $606 was needed to obtain the coverage for which he had applied. Miller returned to Security and gave the employee he was dealing with an additional $606 cash, for which he was given another receipt. It was not proven, and is not clear, whether the cash received from Miller was placed in the Security operating account. Security never submitted Miller's application for insurance. Contrary to Miller's understanding, Miller had no insurance on his vehicles. As of April 6, 1989, Miller had neither a policy (or copy of one) nor an insurance identification card. On or about April 6, 1989, Miller bought a new vehicle and had to contact Security to get an insurance policy number in order to have the vehicle registered in his name. The Security employee speaking to Miller discovered that Miller's undated application still was in the "pending matters" file and told Miller he could not get the policy number at that time. Miller said he had to have the policy number immediately. At that point, the employee brought the problem to the Respondent's attention. The Respondent had the employee tell Miller they would call right back. Security then dated Miller's application April 6, 1989, telephoned Progressive American to secure coverage effective April 6, 1989, and called Miller back with the policy number he needed. Security then processed Miller's application to secure the coverage for a year, through April 6, 1990. Miller has renewed the Progress American coverage through Security and still has his vehicles insured under the policy. Donald E. Wilkins (Count IV). Donald E. Wilkins, President of Apple Paradise Landscaping, Inc., used Security for his general liability and automobile insurance needs. He has no complaint about, and no issue is raised in this proceeding, as to Security's handling of those coverages. (The evidence is that the coverages Wilkins applied for were placed in the normal course of business.) On or about March 9, 1989, Wilkins decided he wanted a workmen's compensation insurance certificate. He went to Security's office, and one of the Respondent's unlicensed employees completed an application for the insurance and for premium financing. Wilkins gave her a $250 check "just for the certificate." The check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. On March 9, 1989, Wilkins also specifically requested that Security furnish to Hawkins Construction of Tarpon Springs, Florida, a certificate of insurance. In response to the request, Security furnished to Hawkins Construction a certificate that Apple Paradise with the "S. Atlantic Council on Workers Compensation." A policy number appears on the certificate, and the certificate states that coverage was effective March 13, 1989, to expire on March 13, 1990. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. The evidence did not prove whether Wilkins ever got any workmen's compensation insurance. The Department proved that Security never processed the premium financing application, and Wilkins testified that he never got a payment book or other request for payment from any premium financing company. But the representative of the National Council on Compensation Insurance gave no testimony on Wilkins or Apple Paradise. Wilkins himself did not appear to have any complaint against the Respondent or Security. Theoharis Tsioukanaras (Count III). Theoharis (Harry) Tsioukanaras owned and operated Harry's Painting and Enterprises, Inc. He had been doing business with the Respondent to meet his business and personal insurance needs since the Respondent first bought Security (and did business with the prior owner for a year before that). He had his business and personal automobile insurance, as well as his workmen's compensation insurance through Security. In the normal course of their business relationship, either Harry would telephone Security when he had insurance needs or Security would telephone Harry when it was time to renew insurance. Harry would then drop by the office to complete the necessary paperwork and pay the premium. When Harry did not have the necessary premium money when it was time to buy or renew insurance, the Respondent regularly loaned Harry premium money and Harry would pay the Respondent back later. Harry usually dealt with the Respondent's unlicensed employees, not with the Respondent directly. On or sometime after July 7, 1989, Harry telephoned Security for proof of insurance on a 1987 Subaru so that he could avoid having to pay for lender insurance on the vehicle at a bank where he was seeking to obtain financing. One of the Respondent's unlicensed employees gave Harry a purported insurance identification card for "Progressive American," listing a purported insurance policy number and purported policy effective dates of July 7, 1989, to January 7, 1990. The lending institution did not accept the card. In fact, no Progressive American policy had issued on the vehicle. At some point, Harry came by the Security office and told the Respondent that he (Harry) was due a $640 refund for automobile insurance renewal premium money on a policy that never issued. By the Respondent's own admission, he checked with his records and his unlicensed employees and confirmed that Harry was owed the money. On September 28, 1989, he gave Harry a check for $640. 1/ Despite the circumstances that resulted in the false Progressive American insurance identification card, in Harry's need to buy Allstate insurance on a vehicle he thought was insured through Security, and in Harry's need for a $640 refund from Security, Harry continues to do his insurance business with the Respondent and Security and also refers friends to the Respondent for insurance needs. John Stuiso (Count I). On or about June 7, 1989, John Stuiso, a self-employed building contractor, applied for both general liability and workmen's compensation insurance through Security. (Stuiso had been insured through Security for the preceding four years with no apparent problems.) Stuiso paid Security $3,250 as partial payment of the premiums on the policies and also applied for premium financing through Security. At least $3,000 was paid by check; the evidence is not clear how the other $250 was paid. The $3,000 check was deposited into Security's general operating account which Security used to pay the operating expenses of the business. It is not clear what happened to the other $250. It was understood between Stuiso and Security that Security would have the applications processed and would inform Stuiso if there was any problem with coverage. Not having heard anything to the contrary, Stuiso believed he had the general liability and workmen's compensation insurance for which he had applied. In fact, Security never processed either application for insurance or either application for premium financing. In late July or early August, 1989, Stuiso requested that Security furnish a certificate of insurance for him to provide to a customer, APCO Building Systems of Oldsmar, Florida. On August 4, 1989, Security issued to APCO a certificate that Stuiso had both general liability insurance with American Professional Insurance Company and workmen's compensation insurance with "South Atlantic Council on Work Comp." Purported policy numbers also appeared on the certificate. When Stuiso never received a payment book for his premium financing, he became concerned about his coverage and was about to approach the Department for assistance when he received a telephone call from a Department investigator who had been investigating the Respondent (unbeknownst to the Respondent.) The investigator told Stuiso that he had no coverage. Stuiso then approached the Respondent and asked for a refund. The Respondent checked his records and asked his unlicensed employees about Stuiso's claim that he had paid for and applied for insurance that never issued. He learned for the first time the facts about Stuiso and immediately wrote Stuiso two refund checks, one for $3,000 and one for $250. Due to the financial problems the Respondent was having, his $3,00 check was returned for insufficient funds. The Respondent tried to borrow the money to cover the $3,000 check from a friend who declined on advice of counsel. Stuiso then went to the police and had the Respondent charged with writing a worthless check. The Respondent was advised of this and turned himself in to the police. He was given a week to make good on the check. The Respondent was able to borrow the money from another friend and paid Stuiso in full. However, his encounter with the police brought home to him the depths to which he had sunk. He decided to commit suicide by monoxide poisoning but changed his mind before it was too late. He telephoned his wife in Tampa to report what he had just done, and she initiated steps to have him committed involuntarily for treatment for mental illness under Florida's Baker Act. He spent four days in the Community Hospital in New Port Richey, Florida, where he was diagnosed as having "adjustment reaction." He was released to the custody of his wife and spent the next week to ten days with her in Tampa. After the Respondent recovered, he decided to do whatever was necessary to save his business and pay off his debts. He laid off office staff and, to take up the slack, himself assumed the responsibilities he had been delegating to his unlicensed employees. He also decided, in light of the Harry's and Stuiso matters, to himself investigate to see if there were any other Security customers who did not have insurance coverage for which they had paid. He found Wanda Mae Riley (Custom Plumbing of Pasco, Inc.). Wanda Mae Riley (Count II). In about August, 1988, the Respondent himself called on Wanda Mae Riley of Custom Plumbing of Pasco County to advise her that the company's general liability and automobile insurance policies for its fleet of four trucks were up for annual renewal on August 24, 1988. The Respondent filled out applications for renewal of the policies and for premium financing and accepted Riley's check in the amount of $3,244 as down payment for the renewal policies. The $3,244 was deposited into Security's general operating account which Security used to pay the operating expenses of the business. The Respondent telephoned American Professional Insurance Company to bind the coverage. He or his office also issued proof of insurance identification cards for Custom Plumbing. But, for reasons he cannot explain (having no recollection), he never processed the applications and the binders expired when the applications were not processed and policies were not issued in the normal course of business. Having had a lapse of memory as to the matter and as to Security's responsibilities to Custom Plumbing, the Respondent did not know and never told Riley or Custom Plumbing that the insurance policies were not renewed and that Custom Plumbing did not have the coverage it thought it did. Later in 1988, Security also arranged for workmen's compensation insurance for Custom Plumbing. The evidence did not prove that there were problems in the way Security obtained this coverage for Custom Plumbing. In approximately April, 1989, Custom Plumbing requested that Security furnish a certificate of insurance for him to provide to the Barnett Bank of Hernando County. On April 21, 1989, Security issued to the bank a certificate that Custom Plumbing had automobile insurance with American Professional Insurance Company. The expired binder number (which perhaps was the same as the policy number of the prior year's policy) appeared on the certificate as the purported policy number. There is no evidence that the Respondent personally was involved in providing this certificate of insurance. When, in approximately late October or early November of 1989, the Respondent discovered that Security had not obtained the coverages for which Custom Plumbing had made down payments in August, 1988, he telephoned Riley to inform her 2/ and tell her that he would refund the down payments Custom Plumbing had made in August, 1988. When the refund was not made promptly, Riley went to a lawyer to have a promissory note drawn for the Respondent's signature. The promissory note reflected the $3,244 the Respondent owed to Custom Plumbing, payable $500 a month. On or about December 9, 1989, the Respondent signed the note, which was paid in full in accordance with the terms of the note. (As previously found in Finding 14, by this time the Respondent also had heard from Nelson.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Insurance and Treasurer, enter a final order: (1) finding the Respondent, Robert Charles Anderson, guilty of the charges contained in Counts I, II, III, V and VI of the Administrative Complaint, as set forth in the Conclusions of Law, above; and (2) suspending the Respondent's licenses and eligibility for licensure for six months. RECOMMENDED this 28th day of May, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 28th day of May, 1991.
The Issue Should discipline be imposed by Petitioner against Respondent's licenses as a general lines agent (2-20) and Florida Residential Property and Casualty Joint Underwriters Association (FRPCJUA) agent (0-17), held pursuant to Chapter 626, Florida Statutes (2001)?
Findings Of Fact Facts Admitted by Answer Pursuant to Chapter 626, Florida Statutes, you Jennifer L. Faloon, currently are licensed in this state as a general lines (2-20) agent and a FRPCJUA (0-17) agent, and were so licensed at all times relevant to the dates and occurrences referenced herein. Your license identification no. is A080736. Pursuant to Chapter 626, Florida Statutes, the Department of Financial Services has jurisdiction over your licenses and appointments. At all times relevant to the dates and occurrences referenced herein you, Jennifer L. Faloon, were employed with Beck Insurance, in Jacksonville, Florida. Additional Facts Established by Responses to Requests for Admissions Respondent was licensed as a general lines (2-20), and a Florida Residential Property and Casualty Joint Underwriters Association (0-17) agent, in Florida, from June 25, 2001, until and including the present time. From June 25, 2001, until and including February 19, 2002, Respondent was employed with Beck Insurance, in Jacksonville, Florida. Respondent signed the insurance application on February 19, 2002, to bind coverage for Ms. Wilson (Danyetta Wilson). Respondent signed the insurance application on January 21, 2002, to bind coverage for Mr. Appling (Marc Appling). Respondent signed the insurance application on January 22, 2002, to bind coverage for Ms. Brown (Laura Brown). Anna Michelle Mack transacted insurance business with Laura Brown on January 22, 2002. Respondent signed the insurance application on June 25, 2001, to bind coverage for Mr. Henderson (William Henderson). Respondent's Duties at Beck Insurance Respondent began her employment with Beck Insurance, in September 1996. She began as an unlicensed person. While working with Beck Insurance she obtained her (4-42) license allowing limited customer service related to the sale of automobile insurance. She subsequently obtained her (2-20) insurance agent license related to property and casualty, which would allow the sale of automobile, homeowners, and commercial insurance. Prior to this case Respondent has had no complaints filed against her in her capacity as insurance agent. In addition to selling insurance at Beck Insurance, Respondent is familiar with ancillary products offered through that agency. In particular, she is familiar with the sale of contracts involving towing a disabled car operated by a party who has contracted for those services. Respondent is also conversant with rental car contracts sold at Beck Insurance. The rental car contract allows for the customer to rent a car when the customer's personal car is unavailable. During the years 2001 and 2002, the years in question in this case, Respondent served as a supervisor at Beck Insurance in her capacity as a licensed (2-20) agent for persons employed by Beck Insurance, both unlicensed and licensed. The licensed agents that she had supervisory responsibility for were (4-42) limited or unlimited customer service licenses for automobile insurance and (4-40) full customer service agents. Respondent also was expected to deal with issues of underwriting for the insurance policies sold. As few as five and as many as ten agents were employed with Beck Insurance in the relevant time frame. This included another supervising (2-20) agent named Lon Woodward. Both Respondent and Mr. Woodward supervised the licensed (4-42) and (4-40) agents at Beck Insurance, who could not conduct business without supervision from the licensed (2-20) agent. The office hours in the relevant time period were from 9:00 a.m. to 6:00 p.m. Monday through Friday, and 9:00 a.m. to 5:00 p.m. on Saturday. In any given month in excess of 100 customers might be served. Not all activities in providing service were in relation to writing insurance policies. Beck Insurance, at times relevant to the inquiry, represented numerous insurance companies involved with the sale of automobile insurance. The clientele that purchased automobile insurance from Beck Insurance was principally constituted of persons with problematic driving records, including suspensions, DUIs, lapses in coverage, as well as persons who only intended to pay the minimum amount necessary for a premium to obtain insurance that would allow that person to operate a motor vehicle in Florida. As a non-standard agency, the majority of Beck Insurance customers are persons who would not be provided insurance by the standard insurance companies such as State Farm, AllState, and Nationwide. Typically, when a customer initially contacted Beck Insurance by telephone they wanted the best price. In response, the Beck Insurance employee would consider the price structure among the 35 insurance companies represented by Beck Insurance to choose the most economical policy. When telephone inquiries were made about purchasing automobile insurance through Beck Insurance no mention was made of the All World towing and rental plan. Beck Insurance trains its employees in the manner those employees will serve the customers. Respondent was included in that training, having received training and provided training in those approaches. Ordinarily when a customer inquired concerning the purchase of automobile insurance at Beck Insurance, he or she was asked about the type coverage he or she was interested in purchasing. Information was gathered concerning the automobile to be insured. A questionnaire was completed. Within that document is a reference to towing and rental car reimbursement coverage, as well as information about the automobile insurance itself. The questionnaire which was used at times relevant to this case sought information about the customer and the use of the automobile that was being considered for coverage with blanks being provided to the left of the questions for initialing by the customer and blanks to the right for an affirmative or negative response. By contrast to other items, item 11 within the questionnaire was declarative in nature. It had a space for the initials of the customer, but not one to declare acceptance or rejection of what was described. By its terms it stated: "Motor Club - I am aware that 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)." The parenthetical reference within item 11, was by smaller type, unlike the interrogatories that were found within the questionnaire. The statement in item 11 has an internal contradiction. In its initial sentence, it talks about the optional opportunity to obtain towing and rental car reimbursement, but it is followed by a sentence which says that the customer wants to carry the coverage with no apparent opportunity within the document to decline that coverage. Moreover, at the bottom of the questionnaire, there was the opportunity for the customer to say that he or she did not want to carry and was rejecting bodily injury liability, uninsured motorist, medical payments, comprehensive and collision, and custom or special equipment coverage, by initialing the blank provided with each category of coverage, but there was no similar opportunity to reject the towing and rental car reimbursement that was described earlier in the document. The insurance coverages were referred to as optional, as was towing and rental. An example of the text within the document, aside from its execution, is found as Petitioner's Exhibit numbered 5. The execution of that document will be discussed subsequently in relation to the customer Danyetta Wilson. According to Respondent, the typical customer for automobile insurance at Beck Insurance is told "In this price we are also giving you towing and rental reimbursement." The nature of the plan for towing and rental is described. For example, if it is Plan 3, the customer is told "you will receive free tow reimbursements for six months for $100.00 each. You will also receive -- -- if you are involved in an automobile accident with another vehicle and you have to have your vehicle in a shop for repair, you will receive $25.00 a day reimbursement for five days. These claims have to be filed through our agency. You bring us the receipt within 60 days, we file it." The towing and rental services being sold by Beck Insurance, which are the subject in this dispute, are offered through All World All Safe Drivers (All World), part of Beck Insurance. Once more specific discussion is entered into concerning the automobile insurance policy applied for, the Beck Insurance employee also returns to the discussion of the All World towing and rental products. Beyond the presentation of the information concerning the purchase of the insurance coverage that has been chosen, Respondent testified that during the time in question the customer would be told "this is your towing and rental reimbursement contract." The details concerning the towing and rental in the contemplated agreement between Beck Insurance and the customer are as set forth in Respondent's Exhibit numbered 28, a form application for towing and automobile rental reimbursement through All World. The form application which constitutes the basis for providing the coverage makes no mention concerning the charge for the various plans offered to the customer for the towing and rental. The terms set forth in the application bundle the reimbursement plan for automobile rental and towing services, as opposed to separate coverage for automobile rental reimbursement and towing reimbursement. Notwithstanding the lack of explanation within the form application for All World rental reimbursement and towing service reimbursement, concerning the costs for the various plans described, Respondent indicated in her testimony that those packages are $35, $60, and $75, in costs. The discussion of the amount charged for towing and rental is included in the price breakdown that also pertains to the costs for the automobile insurance purchased. Approximately 50 percent of the customers solicited purchased All World towing and rental contracts in the time in question. Customarily, the application for automobile insurance is signed by an appointed licensed (2-20) agent at Beck Insurance who has authority to review the application to make certain that it has been correctly executed. When the transaction is complete between a customer and the Beck Insurance employee, there is but one receipt provided to the customer. That receipt sets out the aggregate charges and then breaks out individual charges for the automobile insurance policy, All World, and the motor vehicle report (MVR) fee that some insurance companies charge. As the receipt suggests, the amount tendered at the time that the automobile insurance is purchased and towing and rental reimbursement is purchased is a single amount that would have cost components for the automobile insurance, towing and rental, and a MVR fee. Another form is provided to customers with Beck Insurance. An example is found as Respondent's Exhibit numbered 27. That form outlines automobile insurance coverage by providing explanations about the types of coverage and advice on making certain that the insurance company pays claims made by the customer. There is a reference within this form to a subject other than automobile insurance, namely a reference to towing and rental-car reimbursement wherein is stated: "Reimbursement for towing charge when your covered vehicle is unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an accident. This coverage is optional. Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan." As anticipated by law, persons who work for Beck Insurance, other than the licensed (2-20) agent, may take information supporting the application for automobile insurance sold through Beck Insurance. Count II Danyetta Wilson Danyetta Wilson was interested in purchasing automobile insurance in February 2002. She called Beck Insurance and spoke to Respondent concerning that purchase. After receiving a telephone quote, Ms. Wilson immediately went to Beck Insurance to transact business. The date was February 19, 2002. Before arriving at Beck Insurance, Ms. Wilson had told Respondent what she wanted in the way of automobile insurance coverage, and Respondent indicated that everything necessary to conclude the transaction would be prepared in advance before Ms. Wilson arrived at Beck Insurance. Of course, the application for insurance had not been executed, but pertinent information had been written down by Respondent on scratch paper. Essentially Ms. Wilson told Respondent in the telephone call that she wanted a minimum down-payment and low monthly payments, without discussing the amount of the deductible. When Ms. Wilson arrived at Beck Insurance, she saw Respondent. Both the Respondent and Tracy Laroe assisted Ms. Wilson in the transaction. Ms. Laroe was employed by Beck Insurance. Her application to become a licensed (4-42) limited customer representative was authorized by Petitioner on December 11, 2001. Petitioner issued license no. EO10041 (4-42) to Ms. Laroe on March 8, 2002, as recognized by Beck Insurance on March 29, 2002. As of July 1, 2002, Ms. Laroe's license was inactive based upon cancellation by Beck Insurance as the appointing entity. On February 19, 2002, Respondent was responsible for Ms. Laroe as supervisor at Beck Insurance, in relation to Ms. Wilson's transaction with Beck Insurance in purchasing automobile insurance through Progressive Insurance and automobile rental and towing reimbursement through All World. Most of the activities involved with the transaction occurred between Ms. Wilson and Ms. Laroe when addressing the purchase of automobile insurance on the date in question. During the transaction at Beck Insurance, Ms. Laroe, while assisting Ms. Wilson, did not suggest possible interest in buying the motor club also referred to as a towing and rental contract. Nor was there mention of All World as the company to provide that ancillary product. What was established in discussion was the amount of down-payment and the monthly payments for the automobile insurance. The down-payment was made by cash. Ms. Wilson was told that the down-payment would be $332, which is the amount that she paid. Ms. Wilson completed and was provided copies of certain documents in the transaction. Petitioner's Exhibit numbered 2 is the application for the automobile insurance questionnaire that was completed by providing answers and initials in relation to the underwriting information that was requested in the application form. Ms. Wilson signed the application on February 19, 2002. She did not read the document carefully because she was, as she describes it, "in a rush." The completed application was counter-signed by Respondent as producing agent on February 19, 2002, at 1:41 p.m. On February 19, 2002, Ms. Wilson was provided a receipt indicating a total amount of $332. The receipt reflected that $269 was a down-payment for Progressive Insurance, an amount of $60 as related to All World rental and towing, and $3 for a MVR fee. Ms. Wilson did not examine the receipt at the time it was provided to her. The receipt was filled out by a cashier at Beck Insurance, a person other than Respondent and Ms. Laroe. No explanation was made concerning its several parts. In addition to the questionnaire associated with the application for insurance coverage pertaining to the Progressive Insurance policy, Ms. Wilson executed the Beck Insurance questionnaire which described automobile insurance generally and the All World towing and rental. That questionnaire is Petitioner's Exhibit numbered 5. Petitioner's Exhibit numbered 5 creates the impression that towing and rental is an integral part of the purchase of automobile insurance. It was signed by Ms. Wilson on February 19, 2002, and initialed in its numbered parts. Those parts included the reference to the motor club at number 11 where it stated, "Motor Club - I am aware that the towing and rental care 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.)" Again, while the towing and rental car reimbursement was stated as being optional, the quoted material was ambiguous as to its optional nature, and there was no opportunity in the latter portion of the questionnaire to specifically decline this ancillary product. In connection with the rental and towing service through All World, Ms. Wilson signed as applicant for the product. This application which formed the basis for charging Ms. Wilson $60 for rental and towing is Petitioner's Exhibit numbered 4. It is in the manner described earlier as to its form, in which no indication is made concerning the amount charged to purchase Plan 3. Ms. Wilson did not read Petitioner's Exhibit numbered 4, which described the automobile rental and towing reimbursement offered through All World. She signed her name by a red "X" on the application line. The document which described the nature of the reimbursement plan offered through All World was not specifically explained to her. Ms. Wilson was not told that there was an additional charge for the towing and rental. She had no interest in towing and rental, having been provided similar services through her cell-phone plan. In this process, Respondent came over to the location where Ms. Wilson was seated and pointed out certain places in the insurance application to check-off and initial.1 Respondent did not sit at the desk with Ms. Wilson when the transaction took place. During the transaction, Ms. Laroe told Ms. Wilson that the questions she was asking would have to be directed to Respondent, in that Ms. Laroe could not help Ms. Wilson by providing the answers. Ms. Laroe mentioned that her participation was part of the customer service. Ms. Wilson also was involved with a sheet which was informational in nature describing the various types of insurance coverage. Respondent showed Ms. Wilson that form. It is Respondent's Exhibit numbered 1, which was signed by Ms. Wilson on February 19, 2002. It indicates that Ms. Wilson declined uninsured motorists and medical payments coverage. Zeros are placed next to those explanations. Within the document is a reference to towing and rental reimbursement, wherein it is stated: Towing and Rental Car Reimbursement. Reimbursement for towing coverage when your covered vehicles are unable to safely proceed under its own power. Reimbursement for rental car when your covered vehicle has been involved in an accident and is being repaired. This coverage is optional. Consult individual plans for different payment amounts and certain restrictions that may be applied to each optional plan. The towing and rental had a dash placed by that item together with the balance of the items on the information sheet that described insurance coverage. Respondent saw Ms. Wilson place the marks by the side of the forms of coverage and the information about towing and rental reimbursement, which is not part of automobile insurance coverage as such. The overall expectation within Respondent's Exhibit numbered 1 is to generally describe available products. It does not serve as an application. The status of the document is not changed by having Ms. Wilson sign the document. Respondent saw Ms. Wilson initial item 11, concerning the motor club found within Petitioner's Exhibit numbered 5. Ms. Wilson did not ask any questions of Respondent concerning Petitioner's Exhibit numbered 5. Respondent was present when Ms. Wilson signed the application for towing and rental, Petitioner's Exhibit numbered 4. Respondent in relation to that document asked if there were any questions. Ms. Wilson did not indicate that she had questions. In relation to Petitioner's Exhibit numbered 4, Respondent recalls the nature of the explanation that she gave to Ms. Wilson as: "What this is, is this is your towing and rental contract. It gives you three tows per six months, $100.00 reimbursement on every tow, on each tow with a limit of three per six months. The rental benefit is $25.00 a day for five days if you are involved in an automobile accident and you need reimbursement. All claims have to be brought here to the office within 60 days in the form of receipts. We file the claims for you. Now, I need you to sign there." Nothing in that explanation indicates that there was an opportunity to decline to participate. The explanation did not establish the cost for the plan. Respondent indicated hat Ms. Laroe in her participation in the transaction with Ms. Wilson was there to listen and learn. Count III Marc Appling On January 21, 2002, Marc Appling purchased automobile insurance from Beck Insurance. He wanted full coverage for his car. The amount quoted for the insurance as a down-payment was $288. On January 21, 2002, $200 was paid. On January 24, 2002, the additional $88 was paid. Of the $288 paid, $222 was a down- payment for automobile insurance through Superior American Insurance Company (Superior), $60 was for All World automobile towing and rental reimbursement, $3 for a MVR fee, and $3 for some unexplained charge. The receipt provided Mr. Appling when he paid the initial $200 reflects $222 for down-payment to Superior, $60 for All World, and $3 for a MVR fee. That receipt is Exhibit numbered 9 to the Appling deposition, Petitioner's Exhibit numbered 16. On January 21, 2002, Mr. Appling primarily dealt with Lance Moye, an employee of Beck Insurance who gave him a price quotation for the purchase of insurance through Superior. Mr. Moye explained to Mr. Appling the details, to include the amount of payment per month beyond the down-payment. Michelle Mack, an employee for Beck Insurance was sitting next to him. If Mr. Moye experienced problems in carrying out the transaction, he would ask Ms. Mack her opinion. Mr. Moye has never been licensed by the Petitioner in any capacity. During 1991 and 1993, he had applied for a (2-20) general lines property and casualty license. On the date in question, Michelle Mack, known to Petitioner for licensing purposes as Anna Michelle Mack, was licensed as a (4-42) limited customer representative agent. Mr. Appling executed the Beck Insurance questionnaire and acknowledgement form that has been previously described, to include initialing item 11, related to the motor club which says: "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 form that was signed and initialed and answered yes or no in various places was Exhibit numbered 8 to the Appling deposition, Petitioner's Exhibit numbered 16. Mr. Moye told Mr. Appling that "you pay," addressing Mr. Appling, "X amount of dollars for rental car coverage and everything like that." However, Mr. Appling was not satisfied with the explanation. The questionnaire Exhibit numbered 8 to the Appling deposition, describing towing and rental car reimbursement as optional, did not create below that statement the specific opportunity to decline that option as would have been the case as items such as uninsured motorist and medical payments. Mr. Appling was left with the impression that the motor club was part of the insurance policy that he purchased and that the $288 down-payment included the motor club. Because Mr. Appling was interested in full coverage, he believed that the automobile insurance itself would cover rental reimbursement. Notwithstanding that the form questionnaire, Exhibit numbered 8 to the Appling deposition referred to towing and rental car reimbursement as an optional item, Mr. Appling did not understand that it was an optional purchase. Had he been persuaded that it was a separate item he would not have purchased the motor club. Exhibit numbered 7 to the Appling deposition, Petitioner's Exhibit numbered 16, is the application for All World towing and rental reimbursement. The automobile insurance application through Superior is found as Exhibit numbered 5 to the Appling deposition, Petitioner's Exhibit numbered 16. It was executed and signed by Mr. Appling on the date in question, then was marked as bound and signed by Respondent on that date. Although Respondent signed the Appling application for automobile insurance with Superior, she had no specific recollection of the event and was not otherwise involved in the transaction. Count IV Laura Brown On January 21, 2002, Laura Brown purchased automobile insurance through Beck Insurance. She dealt with Valerie Lynn Webster and Anna Michelle Mack, employees at Beck Insurance. At various times in 2002 and 2003, Ms. 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 once Ms. Brown arrived 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 is the automobile insurance application through Superior, executed by Ms. Brown on the date in question. It was signed by Respondent, noting that the policy was bound. Respondent had no other direct involvement in the transaction. Petitioner's Exhibit numbered 13 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, and $3 for a MVR fee. Petitioner's Exhibit numbered 14 is an executed application for All World automobile reimbursement and towing service reimbursement executed by Ms. Brown for the period January 22, 2002, through June 22, 2002, under Plan 3 in the form that has been previously described. As reflected in Petitioner's Exhibit numbered 15, Ms. Brown executed the Beck Insurance questionnaire in the form that has previously been described 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.)" The questionnaire additionally sets forth 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 on Petitioner's Exhibit numbered 17) 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." Again, nothing in Petitioner's Exhibit numbered 14, 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. Count V William Henderson On June 25, 2001, William Henderson purchased automobile insurance from Beck Insurance. He dealt with Daphne Ferrell, a person Respondent claims was a licensed agent at the time. No proof has been presented to contradict Respondent's position, and it is found that Ms. Ferrell was a licensed agent when the transaction took place. On the date in question, Mr. Henderson was interested in purchasing full coverage for his automobile. He executed an application with Atlanta Casualty Company (Atlanta Casualty) to purchase the automobile insurance. That application is Petitioner's Exhibit numbered 6. Respondent's involvement in the purchase was the signing of the application in the place indicated for the agent's statement vouching for the application's correctness. The automobile that was covered by the purchase was inspected by Ms. Laroe as evidenced in Petitioner's Exhibit numbered 7. The inspection was not a function that required a licensed person to perform. Mr. Henderson paid Atlanta Casualty $306 on June 25, 2001, for automobile insurance. That payment is reflected in Petitioner's Exhibit numbered 8, a copy of the check written to Atlanta Casualty. The money that was paid was acknowledged by a receipt from Ms. Ferrell dated June 25, 2001, Petitioner's Exhibit numbered 9. That receipt reflects $306 down-payment for the automobile insurance to Atlanta Casualty and $75 for a rental contract involved with All World, for a total of $381. Whether Mr. Henderson paid the $75 for towing and rental, aside from the $306 check written for the insurance to Atlanta Casualty, is not clear from the record. Mr. Henderson had made application on the form related to All World for auto rental reimbursement and towing service reimbursement, which has been previously described. The specific application by Mr. Henderson is Petitioner's Exhibit numbered 10, relating to Plan 3. Mr. Henderson executed the Beck Insurance questionnaire form that has been previously described setting forth item 11, the motor club, which states: "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.)" While Mr. Webster initialed item 11 on the form, as other customers had done in the circumstances addressed in the Administrative Complaint, the form he executed, as with other customers, did not create an opportunity to opt out of the motor club. While the form at item 11 spoke of the optional nature of the motor club, it was followed by a statement that made it appear that the opportunity to decline the coverage had already been determined, when it said: "I want to carry this coverage." The reference to the optional nature of the towing and rental car reimbursement in the latter portions of the form was not followed by an opportunity to specifically decline the motor club, as allowed in reference to other forms of optional insurance coverage pertaining to such items as uninsured motorist and medical payments, for example. The executed questionnaire is Petitioner's Exhibit numbered 11. In completing the Beck Insurance questionnaire, Petitioner's Exhibit numbered 11, his instructions were to initial where the solid arrow runs from items 1 through 14, at the top of the page, and by the Xs at the bottom of the page. The arrow and the Xs were placed by someone other than Mr. Webster. Only a brief explanation was given to Mr. Webster concerning the questionnaire. Mr. Webster has no recollection of someone specifically reading item 11, related to the motor club. During the transaction at issue, Mr. Webster remembers a discussion of towing and rental. He indicated that he was not interested in rental reimbursement. He did want towing. Mr. Webster, like the other customers who have been discussed, did not carefully read the documents presented to him for his consideration in purchasing the automobile insurance and in relation to the motor club. Mr. Webster has a vague recollection of someone placing an "X" on the applicant's signature line in Petitioner's Exhibit numbered 10 and signing that application for the All World motor club, but he thought that he was only purchasing towing not rental. The application covers both rental and towing.
Recommendation Upon the 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 Count II that have been referred to, dismissing the others within that count, dismissing Counts III through V; suspending Respondent's licenses for nine months, 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 At all times pertinent to this hearing, Petitioner held a license issued by the Florida Department of Insurance as a general lines insurance agent. On or about April 3, 1979, Steven B. Atkinson entered the Okeechobee Insurance Agency in West Palm Beach, Florida, from whom he had purchased his auto insurance for approximately three years. His intention at this time was to purchase only that insurance necessary to procure the license tags for his automobile, a seven-year-old Vega. He told the person he dealt with at that time at the insurance agency that this was all he wanted. He did not ask for auto club membership, did not need it, and did not want it. He asked only for what he needed to get his tags. However, he was told by a representative of the agency that he needed not only "PIP" insurance, but also auto club membership and accidental death and dismemberment insurance. Of the $144 premium, $31 was for the required "PIP" coverage, $75 was for auto club membership (not required), and $38 was for accidental death and dismemberment (AD&D) (not required). Representatives of the agency told him that he needed all three to get the tags and, though he knew what he was getting and knew he was purchasing all three, he agreed because he was told by the agency representatives that he needed to have all three in order to get his tags. 3 Diane Phillipy McDonald contacted the Okeechobee Insurance Agency in April, 1979, because she had heard on the radio that their prices were inexpensive. All she wanted was personal injury protection (PIP), which was what she thought the law required to get tags on her automobile. When she first called the agency and asked how much the coverage she wanted would be, she was told she could pay a percentage down and finance the rest. When she entered the agency, she was waited on by a man whose name she cannot remember. However, she did not ask for auto club coverage or accidental death and dismemberment coverage, nor did those subjects ever come up in the conversation. She asked only for PIP, and she paid a $50 deposit on her coverage. In return for her deposit, she was given a slip of paper that reflected that she had purchased PIP coverage. She was not told she was charged for auto club membership or accidental death and dismemberment. The forms that she signed, including those which reflect a premium for all three coverages in the total amount of $137, bear her signature, and though she admits signing the papers, she denies having read them or having them explained to her before she signed them. In fact, she cannot recall whether they were even filled out when she signed them. In regard to the papers, the premium finance agreement signed by the witness on April 3, 1979, reflects in the breakdown of coverage total premium of $137. However, immediately below, the total cash premium is listed as $158, $21 more than the total of the individual premiums for the three coverages, and the financing charge is based on that amount1 less the down payment. Marvin W. Niemi purchased his auto insurance from the Okeechobee Insurance Agency in March, 1979, after he heard their advertisement on the radio and went in to get the insurance required by the State in order to get his license tags. When he entered the agency, he asked personnel there for the minimum insurance required to qualify for tags because he was strapped for money at the time and could not afford anything else. He definitely did not want auto club membership. In fact, discussion of that did not even arise, nor did he want the accidental death policy. When he left the agency, he thought he was only getting what he had asked for; to wit, the PIP minimum coverage. All the forms that he signed were blank when he signed them. This application process took place very quickly during his lunch hour from work. He admits giving his son's (David Robert) name as the beneficiary on his insurance, but did not realize at the time that he was purchasing coverage other than the minimum coverage required. His rationale for giving his son's name as beneficiary was that agency personnel asked and the witness felt if there was any money involved, it should go to his son. In fact, Mr. Niemi was sold not only the PIP, but membership in an auto club and PIP coverage with an $8,000 deductible. Again, the total premium was $137, when the actual premium for the coverage he asked for was only $24. Frank Johnson purchased his insurance from Okeechobee Insurance Agency in April, 1979, because he had heard and seen their advertisement on radio and television and it appeared to be reasonable. He wanted only PIP coverage as required by law sufficient to get his license tags. When he entered the agency, he spoke with a man whose name he does not know, who after consulting the books came up with the premium for the coverage to be purchased. During this meeting, the question of motor club or AD&D coverage was not mentioned. His signature does not appear on the statement of understanding, which outlines the coverage and the premium therefor. In this case, because Mr. Johnson had had some prior traffic tickets, his total premium came to $243. His coverage, however, included bodily injury liability, property damage liability, PIP, and auto club. After paying a $50 down payment, he made two additional payments which totaled approximately $50, but thereafter failed to make any additional payments. On August 1, 1980, Marguerite and Steven von Poppel entered the Federal Insurance Agency in Lake Worth, Florida, to purchase their automobile insurance coverage. They purchased policies which included bodily injury and property damage liability, PIP coverage, and comprehensive and collision coverage. The PIP coverage had a deductible of $8,000, and the comprehensive and collision coverage both had $200 deductibles. Mrs. von Poppel indicates that it was not their intention to have such large deductibles on their coverage. In any event, on that day, they gave a check for down payment in the amount of $320 and advised the employee of the agency that upon billing for the balance due of the $915 total premium, they would send the check. Neither Mrs. von Poppel nor Mr. von Poppel desired to finance the balance due of $595, and Mrs. von Poppel did not affix her signature to an application for premium financing with Devco Premium Finance Company dated the same day which bears the signature of Kevin D. Cox as agent. This premium finance agreement lists a cash premium of $966, as opposed to $915. The receipt given to the von Poppels initially reflects a down payment of $320, which is consistent with the receipt, and an amount financed of $646, as opposed to $595, which would have been the balance due under the cash payment intended and desired by the von Poppels. Somewhat later, Mrs. von Poppel received a premium payment booklet from Devco in the mail. When she received it, she immediately went to the Federal Insurance Agency, told them she did not desire to finance the payments, and that day1 September 3, 1980, gave them a check in the amount of $595, which was the balance due on their insurance coverage. This check was subsequently deposited to the account of Federal Insurance Agency and was cashed. This did not end the von Poppel saga, however, as subsequently the von Poppels were billed for an additional amount of $116.18, which reflects the interest on the amount ostensibly financed. When the von Poppels received this statement, they contacted the Federal Insurance Agency and were told that there was some mistake and that the matter would be taken care of. They therefore did not make any further payments, except a total payment of $20, which they were told was still owing. This $20 payment was made on May 29, 1981, after their insurance had been cancelled for nonpayment of the balance due on the finance agreement. The policy was, however, subsequently reinstated, back-dated to the date of cancellation, after the von Poppels complained. Their complaints, however, did nothing to forestall a series of dunning letters from a collection agency to which Devco had referred the von Poppels' account. It is obvious, therefore, that Federal Insurance Agency did not notify Devco of the fact that the amount due and payable had been paid, and did not clear the von Poppels with Devco or with the collection agency thereafter. As a result, the von Poppels filed a complaint with the Insurance Commissioner's office. That terminated their difficulty on this policy. On September 15, 1980, Federal Insurance Agency submitted a check in the amount $595, the amount paid to them by the von Poppels in full settlement of their account, to Devco. There appears to have been no additional letter of explanation, and though Devco credited this amount to the von Poppel account, it did not know to cancel the finance charges since the von Poppels' decline to finance their premium. Of the total amount of the von Poppel premium, the majority, $636, was attributable to the basic insurance in the amount of $10,000-$20,000 liability written by American Risk Assurance Company of Miami, Florida. The supplemental liability carrying a premium of $180 and covering $40,000-$80,000 liability was written by Hull and Company, Inc., out of Fort Lauderdale for Empire Fire and Marine Insurance Company. The third portion of the coverage carrying a charged premium in the amount of $150 covered the AD&D covered by Reliance Standard Life Insurance Company (RSLIC) of Philadelphia, Pennsylvania. This coverage, in the principal sum of $10,000 in the case of Mr. von Poppel and $5,000 in the case of Mrs. von Poppel, was included without the knowledge or the cosnet of the von Poppels. The policies, numbered 10753 R and 10754 R, were never delivered to the von Poppels as, according to an officer of RSLIC, they should have been, but are in the files of the Federal Insurance Agency. Further, the von Poppels were overcharged for the coverage. Respondent, however, did not remit any of the premium to Reliance Standard Life Insurance Company Instead, on August 1, 1980, the same day the von Poppels were in to purchase their insurance, he issued a sight draft drawn on Devco Premium Finance Company to Reliance Standard Life in the amount of $150. Reliance Standard Life was not the same company as Reliance Standard Life Insurance Company, was not controlled by Reliance Standard Life Insurance Company, and in fact had no relation to Reliance Standard Life Insurance Company. Reliance Standard Life was a corporation duly organized and existing under the laws of the State of Florida in which Kevin D. Cox was president and Howard I. Vogel was vice president-secretary. Of the $150 premium, 90 percent was retained by Respondent or his company as commission and 10 percent was transmitted to Nation Motor Club along with a 10 percent commission on policies written for other individuals. Nation Motor Club would then transmit the bona fide premium of 24 cents per $1,000 coverage to RSLIC. More than a year later, on October 16, 1981, Federal Insurance Agency reimbursed the von Poppels with a check for $42.50, representing the unearned portion of the unordered AD&D coverage. Clifford A. Ragsdale went to the Federal Insurance Agency in Lake Worth on April 19, 1982, to purchase his auto insurance because after calling several agencies by phone and advising them of the coverage he wanted, this was the least expensive. To do this, he would read off the coverage from his old policy and get a quote for the identical coverage. After getting this agency's quote, he went to the office where, after talking with two different ladies to whom he described the coverage he desired, he got to the person with whom he had talked on the phone and read his current coverage, and who already had some of the paperwork prepared. During all his discussions with the agency's employees on the phone and in person, he did not speak of, request, or desire auto club membership. He has been a member of AAA since 1977, and his membership there covers all the contingencies he is concerned with. Additional auto club membership in another club would be redundant. He gave the agency representative a check for $247 as a down payment and agreed to finance the balance due through Premium Service Company. Though he was given a receipt for the $247 deposit, the premium finance agreement he signed that day at the Federal Insurance Agency reflected a cash down payment of only $147, thus falsely inflating the balance due to be paid by the client. The $100 difference was refunded to Mr. Ragsdale by Federal Insurance Agency on October 25, 1982, some six months later after he complained to the Insurance Commissioner's office and was told that the $100 difference was for membership in a motor club that he did not desire or agree to. As late as December 29, 1982, over eight months later, the agency had still not remitted the $147 to Premium Service Company, who then added this deposit already paid by the client back to the account balance. Mr. Ragsdale did not read all the documents he signed at the agency, and he never received the policy he ordered. He was told he was signing an application for insurance and signed several instruments in blank at the request of the personnel at Federal Insurance Agency. He was told they would later fill in what wad needed. Respondent was the general lines agent of record for the Okeechobee Insurance Agency, located at 1874 Okeechobee Boulevard, West Palm Beach, Florida, during March and April, 1979, and at the Federal Insurance Agency, 3551 South Military Trail, Lake Worth, Florida, during the period which included August, 1980, and April, 1982. In each agency, he had instructed his' personnel how to serve and handle customers who came to the agency requesting the lowest minimum required insurance in which the agency specialized and which the agency, through its advertising program, purported to offer. As testified to by Linda Holly, an employee of Federal Insurance Agency, and as admitted by Respondent, when a prospective customer entered the agency requesting the minimum required coverage, the agent was to ask if the customer knew what the minimum was. The agent would then explain what was required and quote a premium which included not only the minimum required insurance, but also some additional service which, depending on the time, could be AD&D, towing, motor club, or the like, none of which was required by the State of Florida. Respondent instructed his employees to do this on the rationale that the premiums and commissions on the minimum required insurance were so low that the agency could not make sufficient profit on the sale of it, alone, to stay in business.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent's license as a general lines agent in the State of Florida be revoked. RECOMMENDED this 3rd day of August, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1983 COPIES FURNISHED: Daniel Y. Sumner, Esquire William W. Tharpe, Jr., Esquire Department of Insurance Legal Division 413-B Larson Building Tallahassee, Florida 32301 Mr. Kevin Denis Cox 1483 S.W. 25th Way Deerfield Beach, Florida 33441 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. Respondent, John Roger Pascale, currently holds an insurance license issued by the Florida Department of Insurance (Petitioner), and is eligible for the issuance of further licenses. It is admitted that Respondent was a licensed general lines agent during times material to the Complaint allegations herein. Respondent, however, has voluntarily elected not to renew his license since September, 1980. By its five count Administrative Complaint dated June 13, 1980, Petitioner advised Respondent that it intended to revoke, refuse to issue or renew, or to impose lesser penalties as may be proper under the provisions of Sections 626.611 and 626.621, Florida Statutes. The main thrust of Count I is that Respondent committed the following violations: Received premiums or other funds belonging to insurers or others in transactions under his license which were trust funds received by him in a fiduciary capacity, which funds he failed to account for or pay to the insurer, insured or other persons entitled thereto in violation of Chapter 626.561(1), Florida Statutes. Lacked one or more of the qualifications for the license or permit as specified in the Insurance code in violation of Chapter 626.611(1), Florida Statutes. Willfully, under his license, circumvented the prohibitions of the insurance code. Chapter 626.611(4), Florida Statutes. Was willfully deceptive with regard to an insurance policy in violation of Section 626.611(5), Florida Statutes. Demonstrated a lack of fitness or trustworthiness to engage in the business of insurance contrary to the requirements contained in Chapter 626.611(7), Florida Statutes. Demonstrated a lack of reasonable and adequate knowledge and technical competence to engage in the transactions authorized by the license or permit. Chapter 626.611(8), Florida Statutes. Engaged in fraudulent or dishonest practices in violation of Chapter 626.611(9), Florida Statutes. Misappropriated, converted, or unlawfully withheld monies belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business under his license. Chapter 626.611(10), Florida Statutes. Willfully violated an order, rule or regulation of the insurance department, or willfully violated a provision or provisions of the insurance code. Chapter 626.611(13), Florida Statutes. Withheld information from which the issuance of a license or permit could have been refused had it then existed and been known to the department contrary to the requirements of Chapter 626.621(1), Florida Statutes. Violated a provision of the insurance code contrary to Chapter 626.621(2), Florida Statutes. Violated a lawful order, rule, or regulation of the department in violation of Chapter 626.621(3), Florida Statutes. Has shown himself to be a source of injury or loss to the public or detrimental to the public interest in violation of Chapter 626.621(6), Florida Statutes. In support of the above allegations, Petitioner produced as its primary witness, Delores V. Cardet, who first purchased insurance from Respondent in November of 1977. The agent employed by Respondent with whom Ms. Cardet transacted business was Rigo Avila (Avila). (See Petitioner's Exhibit 1) Ms. Cardet's insurance application was transmitted to Lumberman's Insurance Company to effect the appropriate coverage. Her complaint against Respondent is that the wrong address was placed on her insurance application and that she was overcharged for insurance based on the premiums quoted by agent Avila. Respecting the allegation that agent Avila placed the wrong address on her insurance application, evidence indicates that when this matter was called to Respondent's attention, the matter was taken care of and Ms. Cardet subsequently received billing notices at the correct address. (Petitioner's Exhibit 3). During the time in which Ms. Cardet purchased insurance through Respondent's agency, she was employed as a manager for Beneficial Finance Company of Florida. As part of her employment duties, Ms. Cardet is involved in collections and has received management training from her employer. During the period in question Ms. Cardet had one address change. This change was properly brought to Respondent's attention and the change was effected without incident. Respondent quoted Ms. Cardet a total premium during 1978 of $699.00 whereas the insurer, Lumberman's Insurance Company, charged Ms. Cardet an annual premium of $677.00. The $22.00 overcharge represented the difference between the premium quoted by agent Avila and the actual premium charged. The excess was referred to the premium finance company (Sonny Financial Services) where it was handled as a credit toward the balance owed by Ms. Cardet. During 1979, Ms. Cardet was quoted a total annual premium of $797.00 for renewal of her insurance policy. Her policy reflects a premium of $662.00 plus two (2) motor club memberships for her two (2) vehicles at the rate of $50.00 each. The remaining difference of $35.00 was refunded from Kemper Insurance Company and forwarded to Sonny Financial Services as a credit toward the remaining balance of Ms. Cardet's premiums. 2/ Linda Manning, the underwriting service manager for Lumberman's Mutual Casualty Company, a subsidiary of the Kemper Insurance Group, acknowledged that in the insurance business, mistakes regarding insurance print-outs occur on a frequent basis. Ms. Manning services several hundred premium changes daily and testified that there are numerous reasons for an agency to give a prospective insured an improper quote. Among the reasons listed by Ms. Manning is the fact that drivers' records are not always available for a prospective insured and rate adjustments occur for various reasons. COUNT TWO The gravamen of Count Two is that Respondent's employees used an incorrect address when insurance was placed by Respondent's agency for Mr. Jeffrey Brown which resulted in the insured not getting a premium notice from the insurance company. It is also alleged that Respondent willfully listed an incorrect address for Mr. Brown in a lower rate territory which gave the insured the advantage of a lower premium. In support of the above allegations in Count Two, Petitioner introduced the testimony of Respondent's former spouse, Robin LaPlante. Ms. LaPlante's husband, Jeffrey Brown, purchased insurance through Respondent's agency on February 26, 1978. It is alleged that Respondent falsely indicated on the Brown application for automobile liability coverage with Lumberman's Mutual Casualty Company that Mr. Brown's address was in Lauderhill, Florida, whereas he actually resided in Miami, Florida. Ms. LaPlante's complaint with Respondent is that they sold a van, which was one of the two vehicles covered under the policy, and it took approximately nine (9) months before the van was deleted and a refund check was issued for termination of that coverage. Ms. LaPlante had no direct dealings with Respondent and/or his agents during the time in question. Respondent's dealings were with Ms. LaPlante's former husband, Jeffrey Brown, who did not appear to testify in these proceedings. COUNT THREE As amended by Order dated December 31, 1980, Count Three alleges that Respondent employed the services of someone other than his employees or himself to complete a portion of an insurance application; that the insured was sold membership in a motor club without his knowledge and consent and that the Respondent unlawfully endorsed a check payable to the insured from the insurance carrier to reinstate the insured's policy which had been cancelled by the insurance carrier. In support of Count Three, Petitioner presented the testimony of Stanley Friehofer. Friehofer went to Houston Motors in Dade County, Florida, for the purpose of purchasing a Subaru Brat. To do so, it was necessary for Friehofer to provide evidence of insurance on the vehicle in order to obtain financing through the dealership. Sam Houston, the salesman involved, arranged the financing on behalf of the automobile dealership. Friehofer had obtained an insurance quote from his stepmother who was also in the insurance business. After discussing the possibility of the stepmother's agency issuing a policy, Mr. Houston called Respondent, John Pascale, who was at the dealership on other matters, Respondent quoted a rate less than that quoted by Friehofer's stepmother. Friehofer paid Houston Motors $440.00 and was given an insurance binder by Sam Houston. (Petitioner's Exhibit 20). Friehofer was accompanied by his brother at Houston Motors. Also present at the time was Sam Houston. Friehofer testified that Sam Houston completed the entire insurance application and issued him the insurance binder 3/ Friehofer never received a policy for his insurance although he received a bill from Kemper Insurance Company of Orlando, Florida. (Petitioner's Exhibit 22). Friehofer noted three errors on his insurance application. Those errors were (1) his marital status (Friehofer is single), (2) the use of the vehicle was incorrectly noted, and (3) the premium quoted was the wrong amount. Friehofer also complained that he was incorrectly enrolled for membership in a motor club contrary to his consent. When Friehofer purchased the vehicle from Houston Motors, he was in the process of transferring from the Virgin Islands. Friehofer therefore used his brother's address on his insurance application. According to Friehofer, his first acquaintance with Respondent was during the taking of a deposition in this matter. Linda Manning confirmed the fact that Lumberman's Mutual charged Richard Friehofer a premium of $410.00 for insurance coverage to his vehicle. Friehofer received a cancellation notice dated April 30, 1979, from Kemper Insurance Company (Kemper) and was instructed by a Mr. Bell of Kemper to obtain "dual coverage" until Kemper could investigate the matter and refund the premiums expended by him to maintain dual coverage when the situation was resolved. Friehofer received an agency check from Respondent dated June 28, 1979. (Petitioner's Exhibit 23). Friehofer initiated the call to Kemper to advise that he intended to cancel his insurance which was effected by Respondent's agency. After Friehofer advised Kemper that he planned to cancel his coverage, he notified Respondent approximately four (4) days later. Respondent received a refund from Kemper and was unable to contact Friehofer. Respondent therefore endorsed the check and returned it to Kemper to reinstate the coverage. Respondent later learned of Friehofer's intention to, in fact, cancel the coverage and Respondent stopped payment on the check to Kemper. (See Respondent's Exhibit 1). Thereafter, Respondent refunded the premium paid from Kemper to Friehofer on June 28, 1979. (Respondent's Exhibit 13). COUNT FIVE 4/ Count Five charges Respondent with the sale of membership in a motor club to an insured and accuses the Respondent of misappropriating $38.00 of the insured's money. In support of this allegation, Petitioner introduced the deposition of Betty Monette. The thrust of this allegation is that Ms. Monette was quoted a renewal premium for her Personal Injury Protection (PIP) insurance coverage of $142.00. Thereafter, Respondent's employees determined that they could provide the same coverage through another carrier for $104.00. As a consequence, Respondent refunded the difference of $38.00 to Ms. Monette, however, the refund was accompanied by a transmittal which erroneously stated that the refund resulted from a cancellation of a motor club membership. Ms. Monette acknowledged having received the $38.00 refund, and the difference i.e. $104.00, coincides with the premium charged by Banker's Insurance for the PIP coverage. RESPONDENT'S DEFENSE Sam Houston is an official affiliated with Houston Motors. Houston contacted Respondent, who happened to be at the dealership attending to an unrelated business matter at the time the Friehofers were at the dealership to purchase a Subaru vehicle. Houston has not participated or otherwise benefited from insurance commissions derived by Respondent. Houston Motors has a policy of not being affiliated with insurance salesmen or other brokers based on legal requirements imposed upon the automobile dealerships. Houston was in charge of handling financing and insurance arrangements for purchasers of vehicles at the dealership when Stanley Friehofer purchased his vehicle from Houston Motors. Houston recalled copying basic pertinent data from a financing application onto an insurance application due to the rush that Respondent found himself in after he had quoted Friehofer a premium for coverage. Houston is not licensed to sell automobile or property insurance and is unfamiliar with the procedure of quoting premiums. When shown a copy of the insurance application executed on behalf of Friehofer, Houston recalled completing the name, address, company, telephone number, state, car information and lienholder on the insurance application. Houston was certain that he did not complete any item listed on page 2 of Petitioner's Exhibit 21 which was received in evidence herein. Houston is only licensed to sell credit life, accident and health insurance in connection with financing agreements. Houston finally recalled giving Friehofer a receipt for the $440.00 tendered for insurance premiums. Houston remembered that the Friehofer transaction was unique and to the best of his recollection, had not been previously handled by him in that fashion. Respondent, John R. Pascale, is, as stated herein, a licensed casualty, property agent who holds what is designated as a "220" license. Respondent received a bachelors degree in Business Administration from Pace University and has been involved in the insurance business since he was approximately nineteen (19) years old. Respondent started his first insurance agency in Florida during 1971, and the agency grew to five (5) offices employing approximately sixteen (16) to twenty (20) employees, presently. In response to the specific charges, Respondent had no personal dealing with Ms. Cardet on her purchase of insurance from the Pascale agency. The agent involved was Rigo Avila who was dismissed from Respondents employ on August 6, 1980. Respondent's agency files reflect that Ms. Cardet had several address changes during the three-year period in which she was insured with the assistance of Respondent's agency. Respondent countered the allegations that he incorrectly listed the wrong address for Ms. Cardet by assigning her to an area which charges lower premiums by asserting that there was no economic advantage to do this since the agency collects a commission on the amount of premiums charged. Thus, a lower premium nets the agency a lower commission. Therefore, during 1977, when Ms. Cardet was quoted a premium of $699.00, Kemper Insurance determined that the premium was approximately $677.00. A refund check was sent to Respondent which was forwarded to Segral Premium Finance Company for credit to Ms. Cardet's premium finance balance. Likewise, during 1978, Ms. Cardet was quoted a premium of $797.00 with a down payment of $300.00, with the balance financed over three (3) installments through a premium finance agency. Respondent was paid directly by the agency and the overcharge (alleged) represented a $100.00 motor club membership and a $35.00 refund which was remitted by the carrier. The refund was transferred to the premium finance agency for credit to Ms. Cardet's premium balance account. Sonny Financial Service received the $35.00 check in question. (See Respondent's Exhibits 2 and 3) Respondent acknowledged that it is an agency responsibility to correct an error once the agent learns of the error or through diligence, it is otherwise brought to the agent's attention. To correct errors, Respondent's agency usually amends the policy by means of a "declaration." Finally, Respondent acknowledged that the bookkeeping errors relative to the Cardet account had been the subject of a civil claim which was amicably settled in Ms. Cardet's behalf. (See Respondent's Exhibit 5 and 6) The insurance rates of residents in Lauderhill are generally less than the rates charged residents in Dade County. The producing agency has no control over a carrier's billing procedures. Respecting the allegations surrounding the Jeffrey Brown/Robin LaPlante matter, evidence reveals that Respondent sent policy changes per Jeffrey Brown's request to the carrier during April and September of 1978. (See Respondent's Exhibits 5 and 6) As to the allegations surrounding the Betty Monette incident, evidence revealed that Respondent was able to obtain the identical coverage through another carrier for Ms. Monette at a lower rate and thus was refunded $38.00 of a quoted $142.00 premium. The transmittal letter which accompanied the refund check, however, incorrectly stated that the $38.00 refund represented a credit for cancellation of a motor club membership. (Respondent's Exhibit 10) When all of these charges surfaced, Respondent attempted to get an understanding from his employee, Mr. Avila, who abandoned his employment with Respondent. However, Respondent did all that he could to effectively resolve the difficulties and terminated Avila's employment relationship by sending him a mailgram on August 6, 1980. (See Respondent's Exhibits 11 and 12) As to the allegations surrounding the Friehofer incident, Respondent was at Houston Motors in an effort to canvass and otherwise "drum up' additional business through the dealership. Respondent met Mr. Friehofer, quoted the insurance premium, explained the various coverages available, asked if there were questions and solicited Mr. Houston to complete the necessary basic data. Respondent acknowledged that it was not a good business practice for him to leave the insurance forms with Mr. Houston to complete, however, he considered the situation rare and unusual. He also felt that it was both an accommodation for Messrs. Houston and Friehofer. Respondent admitted that he benefited from the transaction by receiving the commission from the Friehofer insurance contract. Respondent completed the second sheet of the insurance application with the exception of the signature. (See Petitioner's Exhibit 21) Respondent did not leave any blank forms at the Houston agency or any other business enterprise. Respondent has not shared commissions received with any unlicensed or unemployed person who is not authorized to complete insurance forms. Respondent received the refund check from the Friehofer insurance application on June 20, 1979. He reviewed his file, and noted that there was no file notation regarding any intent by Mr. Friehofer to cancel his insurance coverage. He made an effort to contact Mr. Friehofer and learned that he was living with his brother-in-law in Miramar, Florida, and commuted on weekends to the Virgin Islands. He, therefore, redeposited the refund check to Kemper thinking that the policy had been erroneously cancelled. (See Petitioner's Exhibit 25 and Respondent's Exhibit 13)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, hereby, RECOMMENDED: That the Respondent be issued a letter of written reprimand cautioning him against the practice of allowing unlicensed or unauthorized persons to assist in completing forms which may be used to effect insurance coverage. In all other respects, it is RECOMMENDED that the complaint allegations filed herein be DISMISSED. RECOMMENDED this 25th day of March, 1981, in Tallahassee, Florida. JAMES E. BRADWELL 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 25th day of March, 1981.
