The Issue The issue posed for decision herein is whether or not the Respondent's license and eligibility for licensure as an Ordinary Life, Disability and a General Lines agent should be revoked, suspended, or otherwise disciplined for reasons set forth hereinafter by the Administrative Complaint filed by the Petitioner on September 24, 1982. EXHIBITS The following exhibits were made part of the record: An Insurance Binder dated October 7, 1980, issued to Colon Aveiga by Center Insurance Agency, Inc., and signed by Jon Scott Robbins evidencing payment of $554 for an auto insurance policy issued by Dixie Insurance Company (Petitioner's Exhibit 53). An application for a Fireman's Fund auto insurance policy, dated October 10, 1980, signed by Colon Aveiga and Jon Scott Robbins evidencing payment of $514 (Petitioner's Exhibit 44). An Insurance Binder dated April 20, 1981, issued to Colon Aveiga and signed by Jon Scott Robbins evidencing payment of $767 credit for premiums paid and $299 for premiums due (Petitioner's Exhibit 56). A copy of a cancelled personal check (numbered 128) written by Colon Aveiga, dated April 20, 1981, made payable to Metro Insurance Agency in the amount of $299 for payment of premiums due (Petitioner's Exhibit 57). A Notice of Cancellation of a Fireman's Fund auto insurance policy dated March 25, 1981, and issued to Colon Aveiga for nonpayment of premiums due (Petitioner's Exhibit 52). An Amended Fireman's Fund Auto Insurance Policy dated February 6, 1981, issued to Colon Aveiga and showing a premium adjustment of $271 due (Petitioner's Exhibit 49). A Fireman's Fund Interoffice Memo dated March 23, 1981, written by Albert Sons, FJUA Underwriting Manager for Fireman's Fund Insurance Companies, discussing Colon Aveiga's insurance policy application (Petitioner's Exhibit 42). A Fireman's Fund FJUA Underwriters Request for Information from Metro Insurance Agency regarding Colon Aveiga, dated December 1, 1980 (Petitioner's Exhibit 46) A Fireman's Fund Underwriting memo dated January 14, 1981, requesting information about Colon Aveiga from Metro Insurance Agency and containing a new address for Colon Aveiga (Petitioner's Exhibit 47). A Florida Department of Highway Safety and Motor Vehicles' transcript of Gaston Aveiga's certified driving record, dated September 16, 1981 (Petitioner's Exhibit 43). An Insurance Binder dated October 2, 1980, issued to Marc Gavidia by Metro Insurance Agency and signed by Jon Scott Robbins, evidencing a payment of $140 for an auto insurance policy issued by Fireman's Fund (Petitioner's Exhibit 97). An Insurance Premium Finance Agreement dated October 23, 1980, issued to Marc Gavidia by the Metro Insurance Agency and signed by Jon Scott Robbins (Petitioner's Exhibit 98). A Florida Department of Highway Safety and Motor Vehicles' transcript of Marc Gavidia's certified driving record, dated September 16, 1981 (Petitioner's Exhibit 99). An application for a Fireman's Fund auto insurance policy, dated October 9, 1980, signed by Marc Gavidia and Jon Scott Robbins (Petitioner's Exhibit 101). A Policy Change Request for a Fireman's Fund auto insurance policy, dated February 10, 1981, issued by Metro Insurance Agency, signed by Jon Scott Robbins, concerning Marc Gavidia's policy and listing his address as 5361 S.E. 11th Street, Tallahassee, Florida (Petitioner's Exhibit 111). A Notice of Cancellation of Marc Gavidia's auto insurance policy, dated February 27, 1981, issued by Fireman's Fund and citing material misrepresentation as the grounds for the cancellation (Petitioner's Exhibit 112). A copy of a cancelled personal check (No. 1726) written by Juana Perez, dated March 12, 1981, made payable to Metro Insurance Agency in the amount of $299 for payment of premiums due (Petitioner's Exhibit 62). An Insurance Binder dated March 12, 1981, issued to Rogelio Perez by Metro Insurance Agency and signed by Jon Scott Robbins, evidencing auto insurance coverage by Utah Home Insurance Company (Petitioner's Exhibit 63). An Insurance Premium Finance Agreement dated March 12, 1981, issued to Rogelio Perez by Metro Insurance Agency, and signed by Jon Scott Robbins (Petitioner's Exhibit 78). An application for a Fireman's Fund auto insurance policy, dated March 12, 1981, signed by Rogelio Perez and Jon Scott Robbins (Petitioner's Exhibit 65). A Declarations Form for auto insurance coverage by Rogelio Perez by Fireman's Fund showing a premium due of $978 (Petitioner's Exhibit 75). A Declarations Form for auto insurance coverage by Rogelio Perez by Fireman's Fund showing a premium due of $881 (Petitioner's Exhibit 66). A receipt from Luby's Chevrolet of Miami, Florida, showing $1,084 received from Luis G. Capon (Petitioner's Exhibit 80). An Insurance Binder dated January 26, 1981, issued to Luis Capon by Metro Insurance Agency, signed by Jon Scott Robbins and evidencing auto insurance coverage provided by Utah Home Insurance Company (Petitioner's Exhibit 81). An application for a Fireman's Fund auto insurance policy dated January 28, 1981, signed by Jon Scott Robbins (Petitioner's Exhibit 84). A Policy Change Request for a Fireman's Fund auto insurance policy stating that Luis Capon's address had been changed to 2560 S.W. 34th Street, Gainesville, Florida, and signed by Jon Scott Robbins (Petitioner's Exhibit 86). A Florida Department of Highway Safety and Motor Vehicles' transcript of Luis Capon's certified driving record, dated September 12, 1981 (Petitioner's Exhibit 79). A cancelled policy advisal dated July 8, 1981, regarding Luis Capon's Fireman's Fund auto insurance policy (Petitioner's Exhibit 90). A letter from Albert M. Sons, dated September 22, 1981, in his capacity as FJUA Manager stating that an inspection by Fireman's Fund established that Luis Capon had not moved to Gainesville, Florida, and that in fact he lived in Miami and was therefore in a higher rating zone (Petitioner's Exhibit 89). An Interoffice Memo from the file of Fireman's Fund dated March 23, 1981, in reference to Luis Capon questioning certain inconsistencies in that individual's application for insurance (Petitioner's Exhibit 83). An application for a Fireman's Fund auto insurance policy, dated September 10, 1980, issued to Javier Alvarez, showing a signature of "Javier Alvarez" and signed by Jon Scott Robbins (Petitioner's Exhibits 3 and 4). A Declarations Form for auto insurance coverage of Javier Alvarez by Fireman's Fund showing a premium due of $737 (Petitioner's Exhibit 5). A Return to Sender letter from Fireman's Fund to Javier Alvarez bearing the address of 4902 S.W. 84th Street, Plantation, Florida (Petitioner's Exhibit 6). A Fireman's Fund FJUA Underwriters request for Javier Alvarez' correct address, issued to Metro Insurance Agency, dated November 14, 1980 (Petitioner's Exhibit 7). An Insurance Premium Finance Agreement allegedly signed by Javier Alvarez, issued by Metro Insurance Agency, and signed by Jon Scott Robbins (Petitioner's Exhibit 19). A letter from the National Insurance Finance Company to Javier Alvarez, 251 Crandon Boulevard, Miami, Florida, informing Alvarez of dates and terms of due payments (Petitioner's Exhibit 20). Deposition of A. M. Beverly, taken February 22, 1983 (Petitioner's Exhibit 1). FJUA Rating Manual (Petitioner's Exhibit 2). Fireman's Fund FJUA Rating Examination (Petitioner's Exhibit 3). The following witnesses testified on behalf of the Petitioner: Gaston Aveiga, Albert M. Sons, Peter Gavidia, Marc Gavidia, Juana Perez, Luis Capon, and Javier Alvarez. The Respondent testified on his own behalf. Based upon my observation of the witnesses and their demeanor while testifying, post-hearing memoranda, documentary evidence received, pre-hearing stipulations and the entire record compiled herein, I hereby make the following relevant:
Findings Of Fact The Respondent, Jon Scott Robbins, was, during times material herein, licensed as an Ordinary Life, Disability and General Lines agent. By its Administrative Complaint filed herein dated September 24, 1982, Petitioner, Department of Insurance, charged that the Respondent engaged in the following acts and/or conduct (in summary fashion) which amounts to conduct violative of Chapter 626, Florida Statutes, to wit: Respondent failed to account for or pay to the insurer, insured, or other persons entitled to premiums or other funds received belonging to insurers or others in transactions under his license in a fiduciary capacity, in violation of Section 626.561(1), Florida Statutes. Respondent diverted or appropriated such funds or portions thereof for his own use, in violation of Section 626.561(2), Florida Statutes. Respondent collected a sum as premium or charge for insurance in excess of or less than the premium or charge applicable to such insurance, in violation of Section 626.9541(15)(b), Florida Statutes. Respondent misappropriated, converted, or unlawfully withheld monies belonging to insurers, insureds, beneficiaries, or others received in the conduct of business under his license, in violation of Section 626.611(10), Florida Statutes. Respondent knowingly filed with a supervisor or other public official, or made, published, disseminated, circulated, delivered to any person, or placed before the public, or caused directly or indirectly to be filed with a supervisor, or other public official, or made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement, in violation of Section 626.9541(d), Florida Statutes. Respondent knowingly made a false material statement, in violation of Section 626.9541(5)(a)2, Florida Statutes. Respondent knowingly made a false entry of material fact in a book, report, or statement of any person, or knowingly omitted to make a true entry of a material fact pertaining to the business of such person in a book, report, or statement of such person, in violation of Section 626.9541(5)(b), Florida Statutes. Respondent made false or fraudulent statements or representation on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from an insurer, agent, broker or individual, in violation of Section 626.9541(11)(a), Florida Statutes. Respondent knowingly made a false or fraudulent statement or representation in or with reference to an application or negotiation for insurance, in violation of Section 626.9541(11)(b), Florida Statutes. Respondent willfully violated a provision or provisions of the Insurance Code, in violation of Section 626.611(13), Florida Statutes. Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes. Respondent engaged in fraudulent or dishonest practices, in violation of Section 626.611(9), Florida Statutes. Respondent engaged in unfair methods of competition or in unfair or deceptive acts as prohibited under Part VII of Chapter 626, Florida Statutes, in violation of Section 626.621(6), Florida Statutes. Respondent violated a provision of the Insurance Code, in violation of Section 626.611(10), Florida Statutes. Respondent has shown himself to be a source of injury or loss to the public, or detrimental to the public interest, in violation of Section 626.621(6), Florida Statutes. During times material herein, Respondent served as a General Lines agent and represented Fireman's Fund Insurance (Fireman's Fund). The complaint allegations, in summary fashion, may be grouped in two classifications; (1) that Respondent knowingly filed false statements of material facts concerning insureds in an attempt to attract more insureds by offering lower rates and (2) Respondent received premiums from insureds in excess of the actual premiums he submitted to Fireman's Fund and thereby unlawfully appropriated the excess monies to his own use. Albert Sons is the underwriting manager for the Florida Joint Underwriters Association (FJUA) in his capacity for Fireman's Fund and is a direct contact for Fireman's Fund with the Respondent. All FJUA premium rates are identical given the same variables such as age, type of vehicle, use and territory. Any variation of these factors changes the rate in a uniform manner and that change is uniform throughout the industry. As an example, Miami is a substantially higher rated territory than Gainesville (TR 31-32). An insured who cancels his insurance coverage is charged the amount of premium based on the amount of time that the coverage remained in effect plus a service charge exacted by the company for processing the application. Pursuant to negotiations for the purchase of auto insurance, Gaston Aveiga, speaking on behalf of his father Colon Aveiga, informed Respondent of his Florida driver's license number and date of birth. The same information was provided to the Respondent on behalf of Colon Aveiga. Gaston advised the Respondent that he would be the principal driver of the car to be insured. Colon Aveiga purchased an auto insurance policy from the Respondent on October 7, 1980 and was quoted a premium of $544. Colon received an insurance binder from Respondent reflecting his correct address: 1215 NE 110th Street, Miami, Florida (Petitioner's Exhibit No. 53). Approximately three days later, an application was made to Fireman's Fund on October 10, 1980, reflecting that Colon Aveiga's address is 1534 SW 34th Street, Gainesville, Florida. The Aveigas have never lived in Gainesville nor have they indicated any intention of moving to Gainesville (TR 15). The insurance application further provides that Colon Aveiga is the only driver of the car and that he had an international drivers license whereas the Aveigas only have Florida driver's licenses; they specifically informed the Respondent of the same and that Gaston would be the principal driver of the insured car. The application submitted to Fireman's Fund on behalf of the Aveigas reflects a total premium of $514 which is, of course, $30 less than the premium quoted and collected from Colon Aveiga. On October 2, 1980, Marc Gavidia, and his father, Peter, purchased an auto insurance policy from the Respondent, doing business as Metro Insurance Agency. 2/ Respondent provided the Gavidias an insurance binder containing their correct address: 10441 SW 50th Street, Miami, Florida and evidencing a payment of $140 towards the balance due (Petitioner's Exhibit No. 97). The insurance was purchased to insure Marc Gavidia's Dodge van of which he was the principal driver. Marc Gavidia purchased the auto insurance from Respondent because of the cheaper rate (TR pp. 41-45). On October 4, 1980, an auto insurance application was tendered to Fireman's Fund on behalf of Marc Gavidia reflecting that he was self-employed (Petitioner's Exhibit No. 101). Marc Gavidia did not list himself as self- employed on the application (TR 49). Marc Gavidia gave Respondent his Florida driver's license which reflected a birth date of February 7, 1960 whereas the application submitted by Respondent on behalf of Marc Gavidia reflects a birth date of February 14, 1950 with a different driver's license number (Petitioner's Exhibit No. 101). On February 14, 1981 Respondent sent a policy change request for Florida auto insurance stating that the insured, Marc Gavidia, transferred schools to Tallahassee and now lives at 5361 SE 11th Street, Tallahassee, Florida (petitioner's Exhibit No. 111). Marc Gavidia has never lived in Tallahassee nor has he communicated to the Respondent any intent of moving to Tallahassee. (TR pp. 49-50). Juana Perez and her husband, Rogelio Perez purchased auto insurance from the Respondent based on the low rate quoted by Respondent. Ms. Perez wrote a check in the amount of $275 payable to Metro Insurance and received an insurance binder (TR pp. 53-54). Ms. Perez gave David Einhorn (a salesman of a local automobile dealership who was representing Respondent) Mr. Perez's Florida driver's license and Mr. Einhorn made a copy of the license (TR p. 56). An application for insurance was submitted to Fireman's Fund on behalf of the Perezes and reflects a total premium of $893. The application states further that the applicant has an international drivers license whereas Mr. Perez has never had an international drivers license (TR p. 59). The application reflects further that Mr. Perez was unemployed whereas he was employed at the time of his application for insurance (TR pp. 59, 63 and 65). An insurance premium finance agreement dated December 30, 1981, entered into by Mr. Perez shows $978 as a total amount of premiums minus the $275 downpayment leaving $704.20 as the amount to be financed (Petitioner's Exhibit No. 78). This represents approximately eighty-five ($85.00) dollars more than the premium sent to Fireman's Fund. On January 28, 1981, Luis Capon, purchased auto insurance from the Respondent and an application was submitted to Fireman's Fund reflecting a total premium of $789. At that time, Luis Capon paid $1,084 in cash to the Metro Insurance Company (TR p. 68). The application submitted by Respondent reflected further that Luis Capon had an international drivers license No. 1581934 and was born on January 15, 1944. At the time Luis Capon made application with the Respondent for auto insurance, he provided his Florida Drivers license which reflected his correct address: 419 NW 15th Avenue, Miami, Florida and his birth date, November 28, 1956 (TR p. 71). A policy change request for Fireman's Fund issued to Luis Capon states that Capon changed his address to 2560 SW 34th Street, Gainesville, Florida. The policy change request form was signed by Respondent. Luis Capon has never lived in Gainesville nor has he evidenced to Respondent any intent of living in Gainesville. Further, Luis Capon has never received any refund from Respondent and in fact had to pay additional premiums (TR p. 73). The additional premium seems to have stemmed from additional violations as reflected by a DMV Driving Report. Javier Alvarez purchased an auto insurance policy from Respondent and was advised that the total cash premium for the policy was $830. Javier Alvarez paid $250 and financed the remaining $580 (Petitioner's Exhibit No. 19). An application submitted on behalf of Mr. Alvarez reflects a total premium of $730 which was submitted with the application. Mr. Alvarez has not received a refund of the difference in the amount quoted i.e. $830 and the amount $730 actually paid to Fireman's Fund by Respondent. When negotiating for the purchase of the auto insurance policy from the Respondent, Javier Alvarez gave the Respondent his Florida driver's license which contained his license number, birth date and address. The application submitted on behalf of Mr. Alvarez shows a Plantation, Florida address and reflects that Javier Alvarez has a Massachusetts driver's license and a birth date of August 16, 1940 whereas his correct birth date is February 22, 1961 and his address is 251 Crandon Boulevard, Apartment 342, Key Biscayne, Florida (TR p. 106). Mr. Alvarez has never had any address other than the Key Biscayne, Florida address and has never possessed a Massachusetts driver's license. On April 2, 1981, Respondent sent an endorsement request to Fireman's Fund advising that Javier Alvarez had transferred schools and was living in Gainesville, Florida (Petitioner's Exhibit No. 2). Javier Alvarez has never attended any school in Gainesville, Florida nor has he indicated to Respondent any intent to do so (TR p. 110). THE RESPONDENT'S POSITION The Respondent testified on his own behalf and has been licensed since 1978. Respondent was first employed as a managing agent and as an underwriter for several years with another agency. During that employment, Respondent did not have the guidance and/or the assistance of a tutor. Respondent acknowledged that there were indeed numerous errors in addresses but he attributes same to the fact that he was a new agent without proper checks and balances in his office at the time, and that he, more than anyone else, was the victim of such mistakes. Respondent points to the fact that he earns commissions based on the amount of premiums and that the lower premiums quoted result in lower commissions to him. Finally, Respondent points to the fact that other agencies such as the chief complaining party in this case, Fireman's Fund, had a greater error ratio than the Respondent in the conduct of its insurance agency and that these errors were the result of sloppy clerical work and language barriers more than any intentional act on Respondent's part. 3/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Respondent's insurance license as referred to herein be suspended for a period of two (2) years. It is further RECOMMENDED that eighteen (18) months of the subject suspension be suspended during which time the Respondent's license shall be placed on probation. RECOMMENDED this 2nd day of September, 1983 in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1983
Findings Of Fact The Respondent, Teresa Jean Watson, at all times material to this proceeding was licensed as an ordinary life agent, a disability insurance agent and a general lines insurance agent. She was the only general lines agent licensed to sell insurance at the T. J. Watson Insurance Agency, Inc. and all insurance sold by that firm at times pertinent hereto was sold and issued under authority of her license. During times material to this proceeding, Teresa Jean Watson sold insurance coverage under authority of her general lines license either as direct agent for various insurance companies for whom she was general agent or, on behalf of MacNeill and Son, Inc. (MacNeill), her managing agency, which represented various insurance companies for whom the Respondent wrote coverage. Between February 1st and February 15, 1982, a homeowner's insurance policy was sold to Tony and Martha Williams by the Respondent's agency under the authority of the Respondent's general lines insurance agent's license. That homeowner's policy required a premium of $211.00. The policyholder, Tony Williams, wrote two checks to the T. J. Watson Agency dated January 22, 1982 and February 12, 1982. Those two checks totalled $174.00. The checks were cashed by the Respondent's agency on January 26, 1982 and on February 6, 1982. The Independent Fire Insurance Company issued the policy to Tony and Martha Williams and on August 4, 1982 a representative of the Independent Fire Insurance Company wrote the Respondent to advise her that she owed that company a balance of $179.35, as of May 1982. Petitioner asserts that the $179.35 represents the amount of Tony Williams' premium owed to the insurer, less the Respondent's commission, which if added together would equal the $211.00 premium on the Williams' policy. Although it was established that $179.35 was owed by the Respondent to the Independent Fire Insurance Company, and never paid, it was not established that it represented the premium due specifically for the Williams' policy as was charged in count 1 of the Administrative Complaint. For instance, the checks paid by the Williamses to the Watson Agency total $174.00 and therefore there is a discrepancy between the total of those checks and the $179.35 amount Independent Fire Insurance company was owed by the Respondent. This fact coupled with the fact that the dates on the checks from the Williamses (January and February) substantially predate the May 1982 billing date to Respondent from Independent Fire, renders it unproven that the checks written to the Watson Agency which Respondent negotiated and retained the benefit of, related to the amount of unremitted premium owed by Respondent to the Independent Fire Insurance Company. In short, it was established that $174.00 was paid the Respondent and her agency by the Williamses. But, it was not established that the premium paid by the Williamses became misappropriated fiduciary funds converted by the Respondent to her own use and benefit. It was merely established that as of May 1982 the Respondent owed the Independent Fire Insurance Company $179.35 as a past-due account It was not established that the Williamses ever suffered a lapse of insurance coverage or were otherwise harmed by the Respondent's failure to pay Independent Fire the $179.35. Indeed, the $179.35 figure was not proven to be more than a mere debt owed by Respondent to Independent Fire Insurance Company. The figure was not shown to have been related to any particular policy. The Respondent and her insurance agency in the regular course of business wrote insurance coverage for companies represented by MacNeill and Son, Inc., the Respondent's managing agency. The regular business practice between the Respondent and MacNeill was for the Respondent to write coverage on behalf of insurers represented by MacNeill and to remit on a regular open account" basis insurance premiums due MacNeill on behalf of its insurance company principals on a monthly basis. The Respondent became delinquent in submitting premiums to MacNeill and Son in November 1981. After unsuccessful efforts to collect the delinquent premium funds from the Respondent, MacNeill and Son, Inc. suspended T. J. Watson Insurance Agency and the Respondent from writing further coverage for companies they represented in January 1982. The Respondent purportedly sold her agency to one Thomas Zinnbauer in December 1981, but had already fallen into a pattern of failing to remit insurance premiums over to MacNeill before that time. In any event, the purported sale to Thomas Zinnbauer was a subterfuge to avoid collection of delinquent premiums inasmuch as the Respondent held herself out, in correspondence with MacNeill, (See Petitioner's Exhibit 4) to be the president of the agency at least as late as April 1982 and, at that time and thereafter, the agency continued to sell insurance under the aegis of the Respondent's license. After the Respondent made up the delinquency in premium remissions to the MacNeill Agency that agency restored her underwriting authority in January 1982. Shortly thereafter however, the Respondent and the T. J. Watson Agency again became delinquent in remitting insurance premiums to the MacNeill Agency and followed a quite consistent pattern of failing to forward these fiduciary funds to MacNeill for some months. Ultimately the Respondent and her agency failed to forward more than $6500.00 in premium payment funds to MacNeill and Son, Inc. as was required in the regular course of business. MacNeill and Son, Inc. made repeated futile attempts to secure the misappropriated premium payments from the Respondent and her agency. MacNeill made several accountings of the amount of the acknowledged debt to the Respondent. The Respondent communicated with MacNeill concerning the delinquent premium payments and acknowledged the fact of the debt, but sought to reach an amicable arrangement for a repayment schedule. Re- payment was never made, however, and ultimately the Petitioner agency was informed of the deficiencies and prosecution resulted. The Respondent knew that the premiums had been collected by herself and her agency and had not been forwarded to those entitled to them. She knew of and actively participated in the improper withholding of the premium payments. This withholding and diversion of premium payments from the agency and companies entitled to them was a continuing pattern of conduct and Respondent failed to take action to halt the misappropriation of the premium payments. Further, it is established by the testimony of Matthew Brewer, who investigated the delinquent premium accounts for MacNeill, that Ms. Watson failed to advise MacNeill of the purported sale of her agency until November of 1982, almost a year after it is supposed to have occurred and then only in response to Brewer's investigation. When confronted by Mr. Brewer concerning the ownership of her agency Ms. Watson refused to tell him to whom she had sold the agency. When Mr. Brewer learned that Thomas Zinnbauer had apparently bought the agency from the Respondent Mr. Brewer conferred with him and he refused to release the agency records unless Ms. Watson gave her permission. This fact, together with the fact that Ms. Watson held herself out as president of the agency some four months after she had purportedly sold the agency to Zinnbauer, establishes that Respondent, by representing to Brewer and other personnel of MacNeill and Sons, Inc. that she had sold her agency, was attempting to evade liability for failure to forward the fiduciary premium funds obtained under the authority of her agent's license. As a result of the failure to forward the above- mentioned premium payments some of the insureds who had paid those premiums suffered lapses in coverage and cancellations of policies because MacNeill and Company and the insurers they represented believed that no premiums had ever been paid. Ultimately, MacNeill and Company learned that the premiums had been paid by the policyholders, but not remitted by the Respondent and her agency and undertook steps to reinstate coverage, but those policyholders in some instances had substantial periods of time when their coverage was lapsed due to the Respondent's failure to remit the premium funds to the managing agency and the insurance companies involved. MacNeill and Company ultimately reimbursed the appropriate insurers and insureds at its own expense, incurring substantial financial detriment as a result of the Respondent's failure to have premium payments obtained under her licensed authority properly forwarded. Had the insureds who had their policies cancelled suffered losses for which claims could have been filed during the period of the lapses of coverage, they could have encountered substantial financial difficulty.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is therefore recommended that the General Lines Insurance Agent's license of Respondent Teresa Jean Watson be revoked. DONE and ORDERED this 27th day of December, 1985, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 27th day of December, 1985. APPENDIX RULING OF PETITIONER'S PROPOSED FINDINGS OF FACT: Accepted. Accepted, although the amount represented by the two subject checks totalled $174.00 instead of $175.00. Accepted. Rejected as not comporting with the competent, substantial credible evidence adduced. Rejected inasmuch as it was not established that the amount of $179.35 owed the Independent Fire Insurance Company represented the premium on the Williamses' insurance policy. Accepted. Accepted. Accepted. Accepted, although the last sentence in that Proposed Finding constitutes, in reality, mere argument of counsel. Accepted. Rejected as not comporting with the competent, substantial credible testimony and evidence actually before the Hearing Officer. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. RULINGS ON RESPONDENT'S PROPOSED FINDINGS OF FACT: Respondent submitted a post-hearing document entitled "Proposed Findings of Fact." There are few actual Proposed Facts in that one-and-a-half page pleading which is interlaced throughout with argument of counsel. However, to the extent the six paragraphs of that document contain Proposed Findings of Fact they are ruled on as follows: This Proposed Finding is rejected, but for reasons delineated in the above Conclusions of Law, Count 1 has been recommended to be dismissed anyway. This Finding is accepted but is immaterial and irrelevant to, and not necessary to, the Findings of Fact reached herein and the Conclusions of Law based thereon. Paragraph Number 3 does not really constitute a Proposed Finding of Fact or even multiple Proposed Findings of Fact in the same paragraph. In reality, it constitutes argument of Respondent's counsel concerning admissibility of certain documents into evidence which have already been ruled to be admissible by the Hearing Officer during the course of the hearing. To the extent that the last two sentences in the third paragraph of the Respondent's Proposed Findings of Fact are proposed findings of fact, they are accepted, but are immaterial, irrelevant and unnecessary to the findings of fact made herein and the conclusions predicated thereon and recommendation made herein. Rejected as not being in accordance with the competent, substantial credible testimony and evidence adduced. Rejected as constituting mere argument of counsel and not being in accordance with the competent, substantial, credible evidence adduced. Rejected as not in accordance with the competent, substantial, credible evidence presented as to Count 2. In reality, counsel obviously intended to refer to the two checks referenced in Count 1 of the complaint which has been recommended to be dismissed anyway. COPIES FURNISHED: Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Mark A. Steinberg, Esquire Post Office Box 2366 Ft. Myers, Florida 33902 Bill Gunter Insurance Commissioner and Treasurer The Capitol Tallahassee, Florida 32301
Findings Of Fact Introduction At all times relevant hereto, respondent, Charles Lee Anderson, was licensed as a general lines insurance agent by petitioner, Department of Insurance and Treasurer. Respondent presently resides at 2291 Northwest 12th Court, Pompano Beach, Florida. He has been licensed by petitioner since 1968, and, prior to this proceeding, had no blemishes on his record. When the events herein occurred, Anderson was the president and director of Payless and Save Insurance Underwriters Corporation (Payless), an insurance agency located and doing business at 2401 Northwest 21st Avenue, Fort Lauderdale, Florida. Anderson was also the general lines agent of record for the corporation. Count I In early January, 1984 Anderson was working from midnight until 8:00 a.m. as a security guard. Because of this, he hired one Mamie Baugh as an independent contractor to operate his insurance agency. Anderson authorized Baugh to sell policies and sign his name on insurance applications and other documents. Anderson would drop by his office two or three times a week to "check on (Baugh)" and "look at the paperwork." On or about January 3, 1984 Blanche Jones went to Payless to purchase an automobile insurance policy. She chose Payless because it was located just around the corner from her home in Fort Lauderdale, and was more convenient than her former insurance agent in Hallandale. Because Anderson was not present, Jones met with Baugh and discussed her insurance needs. Baugh filled out an application on behalf of Jones for automobile insurance with Industrial Fire and Casualty Insurance Company (Industrial) in Hollywood, Florida. Anderson was a licensed agent with Industrial, and authorized to act as a brokering agent for that company. Baugh signed Anderson's name on the application as brokering agent. Jones then gave Baugh a check for $456 as payment for the policy and was given a receipt. In February Jones had not received her policy or any evidence that she was insured. Her husband decided to visit the Payless office and obtain an insurance identification card in the event they had an accident. He met with Anderson who promised to give him a card. The following day, Anderson went to Jones' house and dropped off a business card. 1/ While there, Jones told Anderson she had paid for a policy but had never received anything. Anderson promised to "check into the particulars." After not hearing from Anderson for two months, Jones' husband went to Payless' office and found it closed. Jones thereafter went to her old insurance agent in Hallandale, and then to Public Insurance Agency (Public) in Hollywood. Public was the managing general agent for Industrial, the insurance company with whom Jones thought she had a policy. Public had no record of having received Jones' application or the $456 premium paid to Anderson. It also had no record of Anderson having telephoned Public on its "application telephone", a procedure that Anderson should have followed in order to have a binder issued on the policy. Consequently, Public never issued a policy insuring Jones. In late 1985 Jones was reading a copy of the Hollywood Sun Tattler, a local newspaper, and noticed an article about Anderson, who was then running for chief of police in Dania. She contacted the reporter who wrote the story who in turn contacted Anderson. Respondent telephoned Jones the next day and promised to return her money. A week later (January 10, 1986) Jones received a $456 money order from Anderson. A representative of Public established that Anderson was given a copy of an underwriting guide which contained explicit instructions on how to bind coverage and fill out applications. Among other things, the guide required that Anderson, and not his surrogate, sign all applications. Therefore, he was not authorized to allow Baugh to sign in his stead. Count II On or about December 20, 1983 Joseph V. Baxter visited Payless for the purpose of purchasing insurance coverage on various rental properties he owned. Baxter met with Anderson who prepared six "Homeowners Application for Quotation Only" with International Bankers Insurance Company (IBIC). Baxter gave Anderson a check for $818 as payment for the coverage. Anderson later endorsed the check. On January 11, 1984 Baxter returned to Payless and made application for a seventh insurance policy on another rental property. He gave Anderson a $318 check which Anderson subsequently endorsed. At that time Baxter was given a certificate of insurance indicating coverage with Great Southwest Fire Insurance Company (GSFIC). Several months later Baxter received a telephone call from a representative of the lending institution which held the mortgages on his property. Baxter then instructed Anderson to contact the institution and certify that Baxter had coverage on his properties. Anderson telephoned the institution in Baxter's presence and told the representative that Baxter was insured. Sometime later Baxter was again contacted by the mortgagee concerning his insurance coverage. Baxter attempted to visit Anderson but found Payless had closed its offices and gone out of business. Baxter then filed a complaint with petitioner. He never received insurance policies from IBIC or GSFIC. On January 10, 1986 Anderson repaid Baxter $1,136, the amount received by Anderson some two years earlier. A representative of IBIC established that Anderson never remitted the premiums or mailed the six quotation forms to the home office. It was further established that although GSFIC quoted a rate for Anderson on Baxter's seventh piece of property, it never received the follow-up application or premium. Respondent's Case Respondent blamed the Jones mishap on Baugh, who he claimed may have misplaced the application and taken the money. According to Anderson, she now lives in California and was unable to attend the hearing. However, he had no explanation for failing to follow up on Baxter's applications. Anderson said he closed his business in February, 1984 after a series of break- ins at his office, and left a note on the door giving a telephone number where he could be reached. However, he made no effort to personally contact those persons who held policies. Anderson further stated that he was unaware of the Jones and Baxter complaints until contacted by the newspaper reporter and petitioner, and then promptly repaid all monies due.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of the violations set forth in the Conclusions of Law portion of this order, and that his license and eligibility for licensure be REVOKED. DONE and ORDERED this 10th day of September, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 1986.
Findings Of Fact At all times pertinent hereto, the Respondent has been a licensed General Lines-Property, Casualty, Surety and Miscellaneous Insurance Agent in the State of Florida. The Respondent is the owner and registered agent of United No-Fault Agency, Inc. d/b/a Allied Insurance Agency, Inc. (Allied) , at 832 Irma Avenue; 4950 Silver Star Road; and 2410 Curry Ford Road, all Orlando, Florida addresses. Linda Get was employed with Allied Insurance Agency, Inc. from August, 1978 to July, 1981. She has one year of college education, but is not trained in the insurance field and was not a licensed insurance agent at times pertinent hereto. Ms. Getz helped market insurance at the 832 Irma Avenue office, at which there was no licensed agent employed from April, 1981 to July, 1981. Ms. Getz met with customers, assisted them in completing insurance applications and collected premiums from them, including helping to write and complete insurance applications for customers. The record does not reflect that she signed the Respondent's name on any insurance applications. Ms. Getz was paid a salary for these duties. She was not paid a commission for all policies she wrote for the office, and did not split any commissions with the Respondent. When the agency was profitable, however, she did receive a bonus in addition to her regular salary, representing a percentage of the profits of the agency for that particular month. These bonuses were not related to any commission percentage arrangement attributable to the sale of each individual policy however. Linda Getz was instructed by the Respondent to sell PIP and AD&D coverage together, that is, to quote the premium as one premium to prospective customers. Towing coverage, motor club coverage and AD&D coverage however, was not offered as mandatory to the customers and the customer could elect not to take it if he was informed of the difference in the policies. Ms. Getz did not explain coverages to customers unless she was specifically asked, however, and quoted the premium for both PIP which the subject customers requested and the AD&D coverage, which the Respondent told her to market in a package with the PIP, as one premium. After customers bought the policies or applied and paid their premium, the applications were sent to the insurer companies involved, the policies were prepared and then returned with all related documents to Respondent's agency, whereupon they would be mailed with related documents to the insured-customers. See, Section 624.425(3), Florida Statutes (1983). The Respondent, in training and instructing his subordinates, including Linda Getz and the other agents at each of the three offices, instructed them to add the cost of AD&D coverage or motor club membership coverage in all price quotations given for automobile insurance if the policy requested by the prospective customer was a minimum PIP "tag insurance" type coverage. His instructions to his employees and agents also included telling customers that the price of PIP coverage included the price of AD&D coverage as a package, and that they would not sell PIP coverage alone. In order to purchase an automobile license plate or tag in Florida, a driver must, at a minimum, show evidence of having personal injury protection (PIP) coverage. This type of insurance coverage is commonly termed "tag insurance." The Respondent's agency sold this type of insurance and others, including AD&D, auto club policies and liability. On or about December 30, 1981, Mr. William B. Salman went to the Allied Insurance Agency in response to a billboard he had observed that indicated that PIP coverage could be obtained for $47 premium. He considered that to be a good price and went to the Allied Agency to get such PIP coverage, for obtaining "car tags." He arrived at the Curry Ford Road agency of the Respondent and requested "car tag" insurance in response to the advertisement. He requested no other forms of insurance. He was given two applications to complete which he just signed, supplying no information. It was presumably completed by a member of the Respondent's staff. He then paid by check for the coverage and left the agency believing that he had gotten the minimum coverage he had requested. One of the papers he signed was an application (Exhibit 4) which at the top has printed the words: AFRICAN TRAVELERS ASSOCIATION Travel/Accident Benefits Including ACCIDENTAL DEATH & DISMEMBERMENT COVERAGE Application Mr. Salman understands the meaning of the term death and dismemberment, but did not have any such death and dismembership coverage explained to him while at the agency and during the course of his purchase of insurance. He does not recall being hurried or pressured to sign any papers. He only, however, intended to buy the minimum amount of insurance necessary to obtain his automobile tag' and left the agency believing that that was all he had gotten, because no explanation otherwise was given him. He thought nothing amiss by the required payment of $47 because he still considered that to be a good price for the PIP coverage alone. Although he clearly signed an AD&D coverage application and designated a beneficiary therefor, he did not read and understand the policy at the time, and did not have it explained to him, therefore he was unaware, until informed during Petitioner's investigation, that he had bought an AD&D policy in addition to the PIP coverage he had originally requested. At no time was it explained that he was buying a separate policy in addition to the requested PIP coverage. The policies were ultimately delivered to Mr. Salman by mail from the Respondent. On or about November 19, 1981, Marsh H. Polson, was sold automobile insurance coverage by Jeffrey Mark Turner, or someone acting under his supervision or control at the Curry Ford Road agency. Mr. Polson had called the agency by telephone to obtain an insurance quote and was quoted a price of $45. He merely wanted PIP coverage and considered $45 to be a favorable rate, so he went to the agency for the purpose of obtaining it. He was given application forms to execute and signed them, but paid little attention to the specifics of the papers he was signing. He was not pressured or rushed by the Respondent or any of his agents or employees, but merely did not take the time to read the applications and other documents. He only asked for PIP coverage because he wanted the minimum amount necessary to obtain car tags. In fact, however, he had been sold two separate policies, an AD&D policy, as well as the PIP coverage which would have cost approximately $20 by itself. The purchase of the AD&D policy involved signing a separate form entitled: AMERICAN TRAVELERS ASSOCIATION Travel/Accident Benefits Including ACCIDENTAL DEATH & DISMEMBERMENT COVERAGE Application The remaining $25 of the $45 premium amount represented the cost of the AD&D policy. He was asked to name a beneficiary and dice so, but paid little attention to the specifics of the forms he signed. At no time was Polson informed by the person he dealt with at the agency that he was purchasing something other than "tag insurance." He left the premises under the impression he had only purchased tag insurance or PIP coverage. No one ever explained the details of his coverages and he was not aware, until he learned through the department's investigation, that he had bought an AD&D policy as well as a PIP policy, which he had not intended to do when he went to the Respondent's place of business. His policies were ultimately delivered by mail by the Respondent's agency. On or about November 10, 1981, Mr. James C. Fine, wishing to buy minimum auto tag/PIP insurance, went to the Curry Ford Road agency for purposes of inquiring about such coverage. He dealt with Jeffrey Mark Turner or someone else operating under the supervision and control of Respondent at that agency, being on the premises a total of 15 to 20 minutes. He was quoted a price for "driver license insurance," agreed to purchase it, and paid the premium amount, ("less than $50"), signing certain applications. Indeed, he bought both a PIP and an AD&D policy. He was aware he was getting death benefits however, because he provided his brother's name as beneficiary. It was not explained to him, however, that the AD&D coverage was optional and that the minimum legal requirement for PIP insurance did not include a requirement that he obtain death coverage. Mr. Fine (and each of the customers involved in this proceeding) purchased an AD&D policy which involved signing a separate form under the caption of the language quoted above. At no time was Mr. Fine told by any of the Respondent's personnel or the Respondent, that he was specifically purchasing something other than mere "tag insurance. He left the premises under the impression that he had only purchased the minimum legally required tag insurance, and was not informed that the death benefits he had purchased (AD&D coverage) were not legally required. Ultimately, the policies were mailed to Mr. Fine, although he did not actually receive them because his address had changed, and so they were returned to the Allied Agency, uniformed. Mr. Fine has a four-year college education and understood that he had some sort of death benefit because he was required to name a beneficiary, but he still did not understand that the AD&D coverage was not legally required of him, nor that it was not a requisite part of the minimal "tag insurance" he intended to buy when he arrived at the agency, and thought he had bought when he left. On or about November 27, 1981, Mabel L. Dobbins wished to purchase automobile insurance coverage for her son's car and her own. She went to the Allied Agency and dealt with either Jeffrey Mark Turner or persons unknown who were employed by the Respondent under his direction and control, and, upon inquiring about minimum PIP insurance, was quoted a premium of $47. She inquired about liability insurance for one of the cars and was quoted the fee of $60 as a downpayment with a total premium for liability of $151, and a total payment of $180, representing, in part, a finance fee. As to the PIP coverage, she only wanted the minimum car tag insurance, but Jeffrey ark Turner or others under the supervision and control of Respondent, charged Ms. Dobbins for an AD&D policy written by American Travelers Association, which was included in the price of her PIP coverage without her knowledge or consent. Ms. Dobbins is employed as a cook and has a 10th grade education. She was not familiar with the specifics or terms of the coverage she was buying, just merely signed a place marked "x" and believed she was getting, as she intended, the minimum PIP "tag insurance." The fact that she was buying a separate policy for AD&D at a greater price than mere PIP coverage was not explained to her. Both separate policies or coverages were "packaged" under one premium charge without her knowledge as was the case with the other customers involved in this proceeding. The import of her signing two different policy applications was not explained to her. She was charged $47 premium for her PIP coverage and was not informed that $25 of that premium represented the AD&D policy she had not requested. On or about March 18, 1982, Roger Walton visited the Respondent's agency at 4950 Silverstar Road in Orlando, Florida. That agency was managed by Roger George Peltier, a licensed agent who was resident agent at that office at the time. Mr. Walton spoke with Mr. Peltier and requested "tag insurance." He was sold an AD&D policy as well as a PIP policy. He was quoted one premium by the Respondent's agent which included AD&D coverage and was not informed that the AD&D coverage was optional. He was given the impression by the Respondent's agent that the price he paid was for PIP coverage in a minimum amount and that there were no cheaper or less encompassing options available in order for him to have the legally required PIP coverage. He was given to understand that the death benefit portion was automatically mandatorily included. Indeed, if Mr. Walton had known that the AD&D coverage was optional, he would not have bought it, inasmuch as he already had similar coverage. In any event, he signed applications for both types of coverage, without realizing he only had the option to buy just the PIP coverage, paid the agent and left the office. His policies were ultimately mailed to him. Although the agent explained the coverage to some extent to him, the agent never explained that the packaged PIP and AD&D coverage could have been purchased separately with the PIP coverage costing less than the above-mentioned $47 rate for both. Mr. Walton would not have normally purchased AD&D coverage at additional cost, but did so in the belief that it was part of what he was legally required to purchase. On or about March 3, 1982, Jacquelyn Tillman went to Respondent's agency on Silver Star Road seeking to purchase "tag insurance." She was quoted a price by Roger Peltier or someone under the Respondent's supervision and control, of $47 for the requested PIP coverage. Indeed, the $47 included the PIP policy as well as an AD&D policy written by American Travelers Association. Ms. Tillman paid the required premium and signed applications for both type policies in the course of her meeting with the Respondent's representative. She was not informed that the $47 she paid included anything more than PIP coverage, when indeed it included an AD&D policy. Had she known that the AD&D policy was included in that premium rate which she paid, she would not have purchased it. Thus, the coverage she actually purchased was not fully explained to her and the purpose of the fees charged was not explained. Although the AD&D policy was indeed optional, she was not informed that she had the option to select it or refuse it, in the process or purchasing the minimum legally required PIP coverage. On or about April 15, 1982, Mr. Frank A. Walliman went to the Irma Avenue office of the Respondent's agency for the purpose of buying minimum liability coverage for his car. He only wanted and believed he only bought, liability insurance, as well as PIP coverage which he knew to be legally required at the time. Indeed, he was sold an AD&D policy as well. The fact that the PIP and liability coverage he bought also included for the total price, an AD&D policy, was not disclosed to him. He neither requested nor desired to pay additional money for an AD&D policy, and would not knowingly have purchased it at additional cost. In March, 1981, Mr. George Justus visited the Allied Agency at Irma Avenue for the purpose of buying minimal PIP or "tag insurance. On that date, from an unknown agent of Respondent, Mr. Justus bought insurance for a premium of $57. The extent, types, terms and details of his coverage were not explained to him, although he did sign applications for an AD&D policy, as had the other customers discussed above, as well as a PIP policy, for which he paid the total of $57. He neither requested nor desired an AD&D policy at extra cost. The fact that the AD&D policy from American Travelers Association was at extra cost over and above the PIP coverage he originally desired was not explained to him, nor was the fact that it was legally optional coverage explained to him. On or about March 13, 1982, Mr. Johnny Moore visited the Irma Avenue office of the Respondent's agency. Mr. Moore wanted to buy minimum "car insurance." He paid approximately $50 for PIP coverage as well as an AD&D policy. He signed applications for both policies, although his original desire when he went to the agency was to buy minimal car insurance. Mr. Moore testified however, that he did want as much coverage as he could afford and he bought the two policies with the awareness that he was also getting an AD&D policy. Thus, in some fashion, the fact that he was getting an AD&D policy as well as a PIP policy was disclosed to him in this instance. On or about April 14, 1982, Mr. David R. Lowe visited the Respondent's agency at Irma Avenue for the purpose of buying minimum PIP coverage for purposes of buying his automobile tag. Just as in the case of the other customers, Mr. Lowe was also sold an AD&D policy which he did not request nor intend to purchase when he went to the agency. The fact that he had purchased, on a separate application, an AD&D policy was never explained to him. Indeed, although Mr. Lowe recalls filling out the forms, his testimony reveals that his wife actually filled out the application forms for him because he is largely illiterate. In any event, he-did not understand that he had purchased an AD&D policy, nor did he understand that such a policy was optional and not legally required of him in order to purchase the minimum legally required PIP insurance. Sometime in late 1981, Cynthia Zellers visited the Irma Avenue office of the Respondent's agency and conversed with Mr. Jim Morris, the Respondent's resident licensed agent. She informed him that she wanted the minimum legal coverage for her automobile and paid the premium quoted. Indeed, she purchased unbeknownst to her, an AD&D policy, as well as the minimum PIP coverage, although she clearly informed Mr. Morris she wanted nothing more than the minimum legal coverage. She had her discussion with Mr. Morris in the afternoon at his office at the Respondent's agency, and was in no particular hurry to process her application. Still no one at the agency informed her that the AD&D policy she was purchasing was optional and not legally required, and had she known that she would not have purchased the AD&D coverage at additional cost. Mr. Robert Scheer also went to the Irma Avenue office of the Respondent seeking minimum PIP coverage. He specifically informed the employee or agent (name unknown) that he wanted only minim; PIP coverage, and that he wanted the cheapest insurance possible for two cars, so that he could get his automobile license plates. Indeed, Mr. Scheer signed applications for both AD&D coverage as well as PIP coverage. The fact that he had purchased AD&D coverage was never disclosed to him, nor was the fact that it was optional coverage (under the law) ever explained to him. Mr. Scheer would not have purchased the AD&D coverage for an extra premium amount had he known it was an optional coverage, not legally required to be included with the PIP coverage. On approximately May 8, 1982, Mr. Lawrence S. Ternest went to the Allied Agency on Irma Avenue and told an unindentified man employed there, that he merely wanted to purchase PIP coverage, the minimum necessary for purchase of his automobile tags. He was quoted a premium of $47 by Respondent's agent or employee. No mention was made to him that that amount included the premium for an AD&D policy. He signed the pertinent applications in evidence, and thought that he had merely purchased PIP coverage as he had desired to do, and the fact that he purchased AD&D benefits included in that $47 premium was not explained to him, nor was the fact that such was not legally required. Had he known he had purchased AD&D coverage and that it was not legally required in order to obtain his automobile tag, he would not have bought it at extra cost above the premium attributable to PIP coverage. Witnesses Peltier and Morris, who were agents of the Respondent operating two of the three offices at times pertinent hereto, as well as Linda Getz, established that the Respondent gave his agents in charge of all offices specific instructions that no one was to market PIP coverage without packaging it with AD&D coverage. This directive was carried out by the agents and employees working under Respondent's supervision and control by charging one premium when a person requested PIP auto tag coverage and including in that premium an additional AD&D insurance policy and thereby charging enough premium to cover the costs and profit margins attributable to both types of policy. These witnesses also established that they did not habitually explain coverages to customers such as those discussed above, but rather answered questions if the customer asked regarding any coverage details. "Sliding" is the practice of tricking insureds into buying coverages other than those they wish to purchase. In a typical sliding scenario, an agent who engages in the practice, generally gives the insured a single document containing more than one policy, so that the insured believes he is only applying for and purchasing one policy. In the case at bar, the customers were provided separate application documents for each of the two pertinent policies. The types of policies were identified in large bold-faced print, i.e. the AD&D policy was identified at the top of its application form as an AD&D policy. The customer's signatures were required on each policy application, and a beneficiary had to be named, which designation each customer was aware of. Receipts were provided to the customers for both policies and most of the insureds read the agreements prior to signing them. As established by an accepted expert witness, Andrew M. Beverly, the Respondent's policy of packaging PIP coverage with AD&D coverage does not, in itself, amount to sliding or dishonest and fraudulent practice. Many insurance agents and agencies do this in order to economically justify their sale of the minimal type of PIP coverage requested by the type of customers involved in the case at bar. Insurance agents ad agencies cannot economically and profitably sell PIP coverage alone, as Mr. Beverly clearly established, rather, it must be packaged with some other type of coverage in order for the sale to the customer to generate sufficient revenue for the agency to cover the cost of writing the coverage, and "opening" the file on that customer, plus some modicum of profit margin. Mr. Beverly established that such an agent as the Respondent may ethically package policies and sell multiple policies for packaged rates as here, and may ethically refuse to sell single, minimal PIP coverage, when the premium revenue received will not justify the cost of writing the coverage. Mr. Beverly extensively reviewed the Respondent's files regarding the subject customers and others and concluded that the files were reasonably well- kept and were representative of a reasonably well-run insurance agency of this nature. The files reflected that the customers were indeed sold packaged AD&D and PIP coverage, but signed separate policy applications. Mr. Beverly stressed however, that when a customer comes in requesting only one type of coverage, such as PIP, and the agent or other person servicing sells him some other coverage or coverage in addition to that requested, then the complete details regarding that coverage, including disclosure of any additional price, and all other ramifications to the customer regarding the addition of coverage, and charging therefor, in addition to that originally requested, must be fully explained and disclosed.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, and the evidence of record, it is, therefore RECOMMENDED that Respondent be found guilty of violating Subsection 626.611(9), 626.621(2), 626.621(6), 624.11, and 627.736 (1), Florida Statutes, as to Counts 3, 4, 5, 12, 15, 17, 18, 19, 21, 22, 23 and 24 of the Administrative Complaint, and that his insurance license be suspended for 60 days. All other charges should be dismissed. DONE and ENTERED this 17th day of August, 1984, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 17th day of August, 1984.
Findings Of Fact THE INSURANCE AGENCY At all times material to the instant case, Lloyd Eldo Register was a licensed insurance agent in the State of Florida, licensed as an Ordinary Life, including Disability, General Lines and Disability Agent. The Respondent, Lloyd Eldo Register (hereinafter Register) at all times material herein, was the president, owner, and registered agent for Friendly Auto Insurance, Incorporated (hereinafter referred to as Friendly Auto). In his capacity as president and registered agent, the Respondent, Register, was responsible for and exercised supervision and control over the employees and sales agents employed by Friendly Auto. At all times material herein, Respondent, Shirley Jean Hopkins was a licensed insurance agent and was employed by Friendly Auto to sell various types of auto insurance and coverages. Specifically, Shirley Hopkins was licensed as an Ordinary Life, including Disability Agent, General Lines Agent, and an Independent Adjuster. As an employee of Friendly Auto, she worked under the supervision and control of the Respondent, Lloyd Register. At the time of the various transactions which are the subject of this administrative proceeding, Florida law required personal injury protection (hereinafter PIP) insurance coverage for each owner of a motor vehicle in Florida. (See Section 627.733 and 627.736, Florida Statutes (1981)). Because it was necessary to show proof of such PIP coverage in order to purchase a license tag for an automobile, this type of insurance was and is commonly referred to as "tag insurance." Friendly Auto offered and sold PIP or tag insurance as well as other types of insurance, including motor club policies, which included as its primary benefit an accidental death benefit. The accidental death benefit (hereinafter referred to as ADB) which was sold by Friendly Auto, was one of the benefits under a motor club policy very similar to that sold by AAA (American Automobile Association). The motor club policies also included such benefits as theft reward, hit and run services, rental car discounts, credit card services, vacation travel arrangements, trip routing, and lost baggage service. The amount of premium paid and type of plan applied for determined the benefits to be received. During the period of the transactions in this action, the Respondent, Lloyd Register, had established a policy of not selling PIP alone. Customers were required to buy PIP coupled with a motor club policy. The reason for this policy was that the commission on minimum PIP coverage was too low to justify the cost of selling it alone. The commission on the motor club policies was as high as 80 percent of the premium charged. The sales agents were instructed by Mr. Register to not sell a customer PIP unless they also purchased the ADB policy. This policy was followed by the sales agents during 1981 and the first eight months of 1982. Customers, upon entering the Friendly Auto office, would indicate the kind of insurance they wanted and they were then given a quote by a sales agent for the coverage requested plus ADB. The cost of the ADD or ADB policy was added to the cost of the coverage requested without informing the purchaser and a single quote was given to the customer. If a customer inquired about the ADB coverage, they were told it was part of the coverage and that the requested coverage could not be purchased without the accidental death benefit. The customers were not informed by the salesperson nor the forms used in the transaction that they were being charged a separate and distinct premium for the ADB or that they could reject the ADB coverage. The basic PIP coverage also included a death benefit Although the Respondent, Lloyd Register, testified that in order to make a profit, it was necessary to sell the ADB with the minimum PIP coverage, the ADB was sold inn the same manner to persons purchasing PIP, as well as liability and collision coverage. The premium for the ADB ranged from $15 to $25. The decision as to which premium to charge was made by the employee of Friendly Auto and was not discussed with the customer. The sales agents had been instructed by the Respondent, Lloyd Register, to base premium charged for ADB on the customer's driving record. However, the premium charged only affected what motor club benefits would be received. No reason was given as to what effect a person's driving record had upon the premium or benefits or risk involved. After the customer was given the quote and agreed to purchase, the sales agent then filled out and gave to the customer several documents to be signed and initialed. The places to be initialed were marked by the sales agent with a red square, rubber stamped onto the appropriate points of the forms by the sales agent, and a check mark or "X" was placed next to where they were to sign. One of the documents was an application for the motor club or ADB. Respondents contend that by signing the application and the acknowledgement at the bottom of the liability coverages rejection form, the customers were made aware that they were purchasing a separate coverage for ADB. However, when inquiry was made by customers about the ADB, they were told it was part of the coverage and had to be purchased. They were not told a separate premium was involved or that it was a separate policy. The majority of the complaining witnesses in this case were not even aware they had purchased the motor club or ADB. Most of the complaining witnesses admitted they did not read the documents they were asked to sign. The sales agents did not pressure them to sign or hurry them in any way that prevented them from reading the documents. Most of the complaining witnesses had limited education, very little knowledge of insurance and basically relied upon the sales agent to give them the coverage they requested. No complaining witness requested ADB or motor club coverage. Anne Zugelder, office manager for Friendly Auto, and Shirley Hopkins testified generally regarding the procedures used, but neither person testified about the facts of the specific transactions in this case. Shortly after January 18, 1982, Mr. John A. Hoback, an investigator for the Department of Insurance, went to the offices of Friendly Auto where he reviewed approximately 35 to 40 files relating to customers who had purchased insurance from Friendly Auto. He discovered that many of these files contained the original policy for ADB coverage; the identification card on PIP coverage; and the original policy for PIP coverage. Some of these policies had been in the files for four, five, and six months. Specifically, Mr. Hoback examined the file of James Richard Johns and found the original copy of the auto policy issued by Fortune and the ADD policy issued by American Travelers Association. The auto policy had been issued on June 4, 1981. Mr. Hoback examined the file of Charles Meadows and found that the Fortune PIP policy had been issued on June 2, 1981, and the original was still in the file. The original ADD policy issued by American Travelers was also in the file. In the file of Phillip Johnson, Mr. Hoback found the original copy of the Fortune auto policy issued to Mr. Johnson on June 1, 1981, and also found the original ADD policy in the file. The file relating to Ruben Simpson was also examined and the original copies of the Fortune auto policy and the ADD policy were still in the file. These original policies were supposed to have been sent to the insureds by the agency upon receipt from the insurance company. The deposition of Mr. James T. Harrison, Jr., was admitted and considered. However, because Mr. Harrison's opinion was based upon incomplete facts in terms of the actual sales procedures used, his opinion relating to Respondents' meeting the standard of care in the industry was given no weight. FORMS In each of the purchases involved in this action, Friendly Auto's agents used several preprinted forms as part of each sale. These forms include primarily: (1) a quote sheet, (2) rejection of liability coverages form, (3) prenumbered receipts, and (4) motor club or ADB application. QUOTE SHEET The quote sheet is a small yellow form with spaces for entering information about the insured and the cars to be insured. The quote sheet in the Section titled "Type of Coverage" reflects "PIP, LIAB, COMP, COLL". These terms refer to personal injury protection, liability, comprehensive, and collision. Nowhere on the form does ADB or motor club coverage appear. There is a space at the bottom of the form for computations. LIABILITY COVERAGES REJECTION FORM The Rejection of Liability Coverages form is divided into four main parts. The top part of the form informed the customer that they had the right to purchase liability coverage and that they can also reject liability coverage. If the customer desired to reject liability coverage, there was a signature block where the customer signed rejecting such coverage. The second portion of the form dealt with PIP and had optional blocks to be checked in order to reflect the deductible desired. The deductible ranged from $250 to $8,000. There were also optional blocks to select the type of PIP coverage and at the bottom of this section was again a signature block. The third section dealt with uninsured motorist coverage and had a block where the customer entered the limits of coverage desired if they were purchasing uninsured motorist coverage. There was a block to be checked if the customer was rejecting uninsured motorist coverage. At the bottom of this section, was again a signature block. The last section referred to an accidental death benefit and contained the following language: I UNDERSTAND THE ACCIDENTAL DEATH BENEFIT THROUGH MY NATION MEMBERSHIP IS A SEPARATE ITEM, THAT PAYS IN ADDITION TO MY AUTO INSURANCE POLICY. I UNDERSTAND THE ADDITIONAL CHARGE FOR THIS COVERAGE IS INCLUDED IN WITH MY DOWN PAYMENT. The above language was followed only by a signature block. There were no blocks to be checked or initialed rejecting or accepting the accidental death benefit. (this statement is referred to hereafter as the acknowledgement.) The Rejection of Liability Coverages form was used in all sales of automobile insurance at Friendly Auto. The reference in the acknowledgement above to "MY NATION MEMBERSHIP" refers to a company which provided an ADB policy prior to the time Friendly Auto began using American Travelers Association. Once Friendly Auto decided to stop using the Nation Company, the Respondent, Register, elected not to reprint the form. He also considered, but did not feel it necessary, to have the sales agents mark through Nation and pencil in American Travelers Association. Mr. Register felt that the American Travelers Association policy could be interpreted to be a "Nation membership" because it covered the insured anywhere in the nation. However, Mr. Register could not specifically recall having instructed his sales agents to give this explanation to the customers. Prior to July or August of 1982, Mr. Register had not instructed his employees to explain that the accidental death benefit referred to in the form was optional. Beginning in July or August, 1982, Mr. Register instructed his sales agents to begin telling customers the ADB was optional. This change occurred about the same time the law relating to the $8,000 deductible PIP changed and was due in part to "heat" which Friendly Auto had been getting from the Department of Insurance. RECEIPT The receipt form contained basic information blocks for date, amount, received from, and signature block for the sales agent of Friendly Auto. There was a line preceded by "In re:" which was used to reflect the coverages for which the premium was being paid. A copy of the receipt was kept in the Friendly Auto file on each customer. AMERICAN TRAVELERS ASSOCIATION APPLICATION The last of the four forms was a motor club application for "Travel/Accident Benefits including Accidental Death and Dismemberment Coverage." The form contained spaces for the name and address of the applicant and name and address of their beneficiary. Just above the signature block of the applicant, were spaces for the effective date, the expiration date, the plan, amount of ADD coverage, and the fee. (See Respondent's Exhibit 24.) An almost identical form was used when the ADB policy was written with Southern Management Company. THE SALES Each count of the First Amended Administrative Complaint against Respondent, Lloyd Register, relates to a sale to a particular customer. Several of these same transactions were also the subject of the Administrative Complaint against the Respondent, Shirley Hopkins. The following facts are found as to both the counts of the First Amended Administrative Complaint against Lloyd Register and the Administrative Complaint against Respondent Shirley Hopkins: (the count number refers to the First Amended Administrative Complaint in Case No. 82-2048). COUNT I SALE TO BRENDA CONNER On October 9, 1981, Brenda Conner went to Friendly Auto to purchase PIP insurance. She informed the Respondent, Shirley Hopkins, that she wanted to purchase PIP only. No other coverages were explained to her, but there was some discussion about who she wanted as her beneficiary. She signed the documents she was requested to sign but did not read them. She thought she had paid for PIP only. Her receipt from Friendly Auto was for $37.00 and listed only PIP as the only coverage purchased. The receipt was signed by the Respondent, Shirley Hopkins. She never received a policy from American Travelers Association. She was charged $15.00 as part of the $37.00 premium for the American Travelers Association ADB policy. She received her policy for the PIP coverage. COUNT II SALE TO BRUCE T. EDWARDS On September 15, 1981, Bruce T. Edwards purchased insurance from Friendly Auto. Mr. Edwards was sold the insurance by Respondent, Shirley Hopkins. The receipt received by Mr. Edwards reflected a total premium of $43.00 and listed only "PIP" as the coverage purchased. Mr. Edwards was unaware that as part of the $43.00 premium, he purchased accidental death and dismemberment coverage (ADB) from American Travelers Association. The premium for the ADB was $20.00. Mr. Edwards signed but did not fill out the yellow ADB application form. Shirley Hopkins explained the PIP coverage but made no mention that he was purchasing a separate ADB insurance policy. He did not read the documents he signed, but merely initialed and signed the blocks Ms. Hopkins marked. He did not request ADB coverage and thought he was getting PIP only. He had no intention of buying any insurance other than PIP. Prior to Mr. Edwards going to Friendly Auto, his wife had called and obtained a quote of $43.00 for tag insurance. She specifically told the person on the phone that her husband wanted the cheapest coverage necessary to get a tag. COUNT III SALE TO PATRICIA EDWARDS On or about August 28, 1981, Patricia Edwards purchased insurance from Friendly Auto through its sales agent Shirley Hopkins. Patricia Edwards first called Friendly Auto and requested a quote for PIP coverage only. She also gave the person all the necessary information over the phone for the needed documentation. The person who actually went to Friendly Auto and purchased the insurance and signed the documents was Bruce Edwards, Patricia Edwards' husband. Patricia Edwards requested only minimum coverage needed to get her tag. She was given a quote of $37.00. The receipt given by Friendly Auto was signed by the Respondent, Shirley Hopkins, and reflected a $37.00 payment for PIP coverage only. The total payment of $37.00 included a $15.00 payment for an Accidental Death and Dismemberment (ADB) and travel benefits with Southern Management Company. Mr. Edwards signed the Accidental Death and Dismemberment application as well as the accident death benefits acknowledgement at the bottom of the Rejection of Liability Coverages form. The acknowledgement referred to "Accidental Death Benefit Through My Nation Membership" and not to an "Accidental Death and Dismemberment" coverage with Southern Management Company. (See Respondent's Exhibit 5.) Neither Bruce Edwards nor Patricia Edwards requested Accidental Death and Dismemberment coverage and neither was aware that such coverage had been purchased. COUNT IV SALE TO ELIZABETH JONES On September 1, 1981, Elizabeth Jones purchased insurance from Friendly Auto. She first called and asked for a quote for PIP and liability insurance for a `71 Oldsmobile Delta 88. She was given a quote of $42.00 for PIP and liability. Ms. Jones then went to the office of Friendly Auto where she first talked with two different men and then Respondent, Shirley Hopkins. Shirley Hopkins informed her the premium would be $63.00 rather than $42.00. Ms. Jones had obtained quotes from several agencies for the PIP and liability in an attempt to obtain the needed coverage for no more than the 560.00 which she had available for insurance. Ms. Jones has a fifth grade education and had never purchased insurance before. She specifically told the sales people at Friendly Auto that she did not understand insurance. Because the cost was $63.00 rather than $42.00, Ms. Jones had to return home to obtain additional money. When she returned, Ms. Hopkins had the forms prepared and had marked with an the places where she needed to sign. The receipt from Friendly Auto reflects that Ms. Jones purchased "Liab. PIP. ADB" for a premium of $63.00. Ms. Jones signed the accidental death and dismemberment coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverage form. Prior to returning home, Ms. Jones was told by one of the sales agents that she needed the accidental death benefit that could be willed to her daughter. Ms. Jones asked if that was included in the liability and PIP and did not recall whether the person replied or not. She was not aware nor did she understand that she was purchasing a separate travel and accidental death benefit policy and paying a separate premium. She did not read the documents before she signed them and relied upon Ms. Hopkins and the other two agents to give her the coverage she had requested. Ms. Jones did not receive her ADB policy. COUNT V SALE TO BARBARA BARBATO On September 21, 1981, Barbara Barbato purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto agency. Before going to the agency, Ms. Barbato called and obtained a quote for "full coverage" on her new Camero. She spoke with a gentleman named Mike. When she arrived at the agency, she informed Ms. Hopkins that she wanted full coverage on her Camero. Ms. Hopkins did not explain the various coverages to her. Ms. Barbato paid for the insurance and signed the documents without reading them. The Friendly Auto receipt received by Ms. Barbato was signed by Shirley Hopkins and reflected a payment of $138.00 for "Liab. and Coll. and Comp.". Ms. Barbato signed the ADD coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. She named her mother as beneficiary of the accidental death benefit and understood that benefit to be part of the auto insurance she was purchasing. She was not aware the accidental death benefit was separate and extra. She did not receive a policy for the ADB coverage with American Travelers Association. COUNT VI Count VI was voluntarily dismissed by Petitioner and no evidence was presented as to Count VI. COUNT VII Mary Beth Jones did not appear and testify and no other testimony was presented as to Count VII. COUNT VIII SALE TO JOANN BROOKS On September 1, 1981, Joann Brooks purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto Agency. Ms. Brooks is a farm laborer who completed the eleventh grade. Upon arriving at Friendly Auto, Ms. Brooks informed Ms. Hopkins that she wanted full coverage on her automobile. Ms. Brooks understood full coverage to include collision, liability, and PIP and she had no intention of purchasing any type of coverage other than these. Although Ms. Brooks received some explanation of the accidental death and dismemberment coverage, she signed the accidental death application form and named herself as beneficiary. Ms. Brooks thought the death benefit was part of the full coverage she requested. This was the first time she had purchased insurance and did not understand insurance matters. Ms. Brooks signed and initialed the documents she was given by Ms. Hopkins. She did not read them. The receipt Ms. Brooks received from Friendly Auto was signed by Shirley Hopkins and reflected that she paid $86.00 for "Liab. & Comp. & Coll.". COUNT IX SALE TO RUBEN SIMPSON On May 7, 1981, Ruben Simpson purchased auto insurance from Friendly Auto. Mr. Simpson is from Jamaica and does not read because of his very limited education. When he arrived at Friendly Auto, Mr. Simpson informed the sales agent that he wanted to buy PIP insurance in order to get his tag. Mr. Simpson could not recall the full details of the discussion but remembered giving them his mother's name as the person who would receive money if he were killed in an accident. Mr. Simpson signed his name where he was shown to sign. When he left the agency, Mr. Simpson believed he had purchased only the PIP insurance required to get his tag. Mr. Simpson signed the Southern Management Company Accidental Death and Dismemberment application and received a copy of it when he left the agency. (See Respondent's Exhibit No. 13.) The receipt given to Mr. Simpson at Friendly Auto reflects he paid $44.50 for "PIP ADB". The premium for the ADB was $22.50. At no time did Mr. Simpson request or agree to purchase anything other than tag insurance. Mr. Simpson signed the acknowledgement of the ADB at the bottom of the Rejection of Liability Coverages form, but was unaware that he was paying a separate premium for a policy which was neither PIP nor required to obtain his tag. COUNT X Prior to taking evidence in the formal hearing, Petitioner voluntarily dismissed Count X of the First Amended Administrative Complaint. No evidence was presented in support of Count X. COUNT XI On September 3, 1981, Mr. Ellison J. Eady, Jr., purchased insurance from Friendly Auto. Mr. Eady informed the sales agent at Friendly Auto that he wanted the necessary minimum insurance to get a tag for a new car he had purchased. The agent asked Mr. Eady some brief questions about his driving record and then gave him a quote for the price of the insurance he requested. The agent did not suggest any coverages in addition to what Mr. Eady had requested, but included the cost of an ADB policy in the quote he gave Mr. Eady. Mr. Eady agreed to the price quoted, and the agent then brought out several forms for Mr. Eady to fill out and sign. All Mr. Eady wanted was insurance for his tag and to his knowledge, that was all he purchased. At the time he purchased his insurance, Mr. Eady signed and received a copy of the American Travelers Association application form. (See Petitioner's Exhibit 2.) He did not ask any questions about the form. Mr. Eady thought that the American Travelers Association coverage was part of the insurance he was purchasing. However, the agent did not specifically tell him it was part of the insurance he was purchasing. At the time he purchased his insurance, Mr. Eady already had a motor club policy with Montgomery Ward which provided similar services to the American Travelers coverage. Mr. Eady did not read the various forms he signed. The agent gave him a brief explanation of what each form was. Mr. Eady just relied upon what the agent told him. Mr. Eady had no knowledge of Florida insurance. When he left Friendly Auto, he thought the only thing he had purchased was the minimum required by the state. One of the documents he signed was the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. (See Respondent's Exhibit 14.) Mr. Eady already had separate life insurance coverage. The agent did not explain the accidental death benefit to him. Mr. Eady did not request any coverage other than the state minimum to get his tag. The receipt given Mr. Eady reflected an $82.00 payment for "PIP. . . ADB. . . C&C". (See Respondent's Exhibit 14.) Fifteen dollars of the premium paid by Mr. Eady was for the American Travelers Association motor club policy. COUNT XII SALE TO MARY GOOD On March 17, 1981, Mr. Edward T. Good and his wife Mary Good purchased insurance at Friendly Auto. Mr. Good informed the sales agent at Friendly Auto that he wanted the cheapest insurance required by the state to get his license tag. The agent explained to him the other auto coverages he could obtain, but Mr. Good insisted that he only wanted minimum tag insurance. He was then given a lump sum quote by the agent. One of the forms Mr. Good signed was an ADB application for Southern Management Company. The agent explained that this would pay he or his wife money if they were killed in an auto accident. The agent did not explain that there was an extra charge for this benefit or that it was optional. Mr. and Mrs. Good understood the ADB coverage to be part of the PIP coverage they had requested. The receipt they were given at Friendly Auto reflected a payment of $37.00 but did not list the coverages purchased. (See Respondents' Exhibit 1.) When Mr. and Mrs. Good left Friendly Auto, they thought they had purchased only tag insurance. However, $15.00 of the $37.00 premium paid was for the ADB policy with Southern Management Company. COUNT XIII SALE TO ALICE LEAR DICKSON On or about September 3, 1981, Alice Lear Dickson (formerly Alice J. Lear) purchased auto insurance from a sales agent of Friendly Auto. Ms. Dickson called Friendly Auto to obtain quotes for full coverage for a newer automobile and minimum coverage for an older one. After obtaining these quotes, Ms. Dickson went to the office of Friendly Auto where she informed the sales agent on duty that she wanted full coverage insurance on two autos. She informed the sales agent she wanted fire, theft, windstorm, collision, liability, and uninsured motorist coverage. The sales agent also suggested a coverage for such things as towing charges. Ms. Dickson informed the agent she did not want that coverage because she already was a member of an auto club. In signing the various documents to purchase the insurance, Ms. Dickson was asked to sign a document designating a beneficiary of a life insurance benefit. She did not want this life insurance coverage, but was told by the sales agent that it was required and went along with her automobile policy and had to be purchased. In reliance upon this representation, Ms. Dickson accepted the coverage. Ms. Dickson paid a total premium of $144.03 for collision, liability, PIP, and accidental death benefit. Her receipt from Friendly Auto reflected the $144.03 was for "C&C, LIAB., PIP, ADB." (See Respondents' Exhibit 11.) The accidental death benefit purchased by Ms. Dickson was one of the travel and accident benefits provided in the American Travelers Association policy which cost Ms. Dickson $15 of the $144.03 premium she had paid. At the bottom of a Rejection of Liability Coverage form used by Friendly Auto, Ms. Dickson signed the acknowledgement relating to the ADB, but she was not aware that she could reject this coverage or that it was part of a separate motor club policy. Ms. Dickson did not desire to purchase a motor club policy and would not have purchased the motor club policy had she been aware that it was not required as an included coverage with the PIP coverage. COUNT XIV Prior to the taking of evidence at the formal hearing, the Petitioner voluntarily dismissed Count XIV of the First Amended Administrative Complaint and presented no testimony in support of that Count. COUNT XV SALE TO CHARLES MEADOWS On June 2, 1982, Charles Meadows purchased auto insurance from Friendly Auto. Mr. Meadows went to Friendly Auto to purchase PIP insurance, and upon arriving at Friendly Auto's office, he informed the sales agent he wanted only PIP insurance. When he left the Friendly Auto office, Mr. Meadows thought he had only purchased PIP. At the time he purchased his insurance, Mr. Meadows signed an American Travelers Association application. (See Respondents' Exhibit 2.) The only explanation he was given by the sales agent regarding this coverage was that if he were killed, someone would receive some money and he needed to designate who that would be. The amount of the fee charged for the American Travelers Association policy was not reflected in the appropriate block on the application form. He was not given any explanation regarding the price of this coverage. In purchasing the insurance, Mr. Meadows initialed and signed several forms. He did not read them before signing. Mr. Meadows does not read and write very well and has a problem understanding insurance policies. He completed the seventh grade in school. One of the forms signed by Mr. Meadows was the acknowledgement relating to the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The quote sheet used to give Mr. Meadows his quote of $48.00 makes no reference to any coverage other than PIP. PIP is circled on the form. The receipt Mr. Meadows received from Friendly Auto reflects a $48.00 premium for "PIP. . .ADB". The cost of the PIP coverage was $23.00 and the cost of the American Travelers Association policy was $25.00. Mr. Meadows never received a policy or certificate informing him of the coverages under the American Travelers Association policy. Mr. Meadows never intended to purchase any coverage other than PIP to obtain his tag. He never requested any coverage other than PIP. COUNT XVI SALE TO PHILLIP JOHNSON On July 1, 1982, Mr. Phillip Johnson purchased auto insurance from a sales agent at Friendly Auto. Mr. Johnson went to Friendly Auto to purchase tag insurance. He informed the sales agent that he wanted just the PIP or tag insurance. The agent then prepared the necessary forms and Mr. Johnson initialed and signed the documents where he was instructed by the agent to sign and initial. No explanation of the coverages was given by the agent. Mr. Johnson was asked to name a beneficiary and was given a pink copy of an American Travelers Association application which he had signed. That form reflects a $20.00 fee was charged for the American Travelers Association policy. The receipt which Mr. Meadows received at Friendly Auto reflects a $42.00 premium paid for "8,000 PIP". (See Respondents' Exhibit 3.) Mr. Johnson also signed the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. Mr. Johnson felt when he left Friendly Auto that he had purchased only PIP insurance. Mr. Johnson completed the ninth grade in school and has difficulty reading and writing. COUNT XVII SALE TO JAMES RICHARD JOHNS On June 4, 1982, Mr. James Richard Johns purchased insurance from the Respondent, Shirley Hopkins at Friendly Auto. Mr. Johns told Shirley Hopkins he would like to purchase PIP insurance in order to get his tag for his car. Ms. Hopkins then gave him a quote for PIP and also a quote for liability coverage and she then gave him several forms to initial and sign. She gave no explanation regarding the forms and he did not read them before signing. Although Mr. Johns thought he was only purchasing PIP insurance, he was, in fact, sold PIP with an $8,000 deductible plus an American Travelers Association policy. The cost of the PIP coverage was $24.00 and the cost of the American Travelers Association policy was $25.00. Mr. Johns signed the American Travelers Association application and was given a copy of it. He also designated a beneficiary. At the time of purchase, Mr. Johns understood that the death benefit was part of the PIP insurance he was purchasing. No explanation was given by Ms. Hopkins regarding the American Travelers Association policy or coverage. Mr. Johns also signed the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The receipt he received from Friendly Auto was for $50.23 paid for "PIP. . . ADB. . . 123(illegible)". When Mr. Johns left the Friendly Auto Agency, he felt he had purchased only PIP insurance. He did not receive an American Travelers Association policy and did not receive his Fortune Insurance policy for his PIP insurance until December of 1982 or January, 1983.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent, Lloyd Register, guilty of the violations as set forth above and that his insurance licenses be suspended for a period of one (1) year. That the Department of Insurance enter a Final Order finding Respondent, Shirley Hopkins, guilty of the violations as set forth above and that her license be suspended for a period of 90 days and that she be required to pay a civil penalty of $500. DONE and ENTERED this 1st day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
Findings Of Fact At all times material hereto Respondent was licensed as an Ordinary Life and General Lines Agent (Exhibit 1) and was the agent for Dixie Insurance Company at the Bartow office. As such, he had the authority to write policies binding the insurer. At all times relevant hereto, Respondent was president and principal stockholder of Friendly Insurance Companies of Bartow, Winter Haven, Lake Wales and Haines City. The corporate records (Exhibit 3 for Polk County) show this to be the same as Friendly Auto Insurance of Lake Wales, Inc. Respondent was the agent for Dixie Insurance Company only at the Bartow office. Dixie Insurance Company qualifies agents, not offices, to sell their policies. Respondent had no authority to act as agent for Dixie Insurance at any of these offices other than the Bartow office as the insurance company has but one agent per office. To support the allegations in count 34 of the Administrative Complaint, Edward Bland testified, and Exhibits 21 through 23 were admitted. Bland applied for automobile insurance at Friendly Auto Insurance at the Winter Haven office, which he paid for by check in the amount of $728 (Exhibit 23) as full payment for the one year premium. Subsequent thereto, a Premium Finance Agreement was prepared on which Bland's signature was forged showing $546 of the premium to be financed. This finance agreement was signed by T. R. Shaw as agent. Upon learning that the finance agreement had been issued on his coverage, Bland contacted the Winter Haven office manager, and after a few weeks of "run around" contacted the Department of Insurance and "got his money back." Bland never saw Shaw or Respondent. Rafael Gomez, M.D. purchased automobile insurance on his three cars from Friendly Auto Insurance of Winter Haven in December 1985 for which he paid $3452.71 for the annual premium. Subsequently thereto, he received a call from the Barnett Bank, which had financed one of the cars, to tell him that the bank needed evidence of insurance on the financed auto. Dr. Gomez contacted Ruth Kent, the office manager at the Winter Haven office, who assured him she would supply the bank with the necessary documentation. When the bank contacted Dr. Gomez later to again demand proof of insurance, Gomez went to the Winter Haven office and demanded to see his file. He made copies of certain documents which he took to the bank. Dr. Gomez subsequently learned that a finance agreement had been entered into on his behalf, but without his knowledge or consent, and that the address shown on the agreement under his name was that of Ruth Kent. Although when accosted by Dr. Gomez with this information, Ms. Kent denied such an intentional act, this would have allowed her to hold the finance coupons and get all information supplied by the finance company to the borrower without Dr. Gomez learning that the policy for which he had paid in full was subsequently financed. After learning of the subterfuge, Dr. Gomez contacted the Department of Insurance. Ruth Judd was office manager at the Friendly Insurance Agency of Haines City for a period of time ending in 1987 when she was terminated by Respondent. Ms. Judd contends she was only the office manager, and Respondent was the boss of the office and hired all employees. During the time she worked in the office, Ms. Judd testified several different people served as the licensed agent for the office, but they spent little time in the office with Donald Leroy Flentke, towards the end of his tenure, coming in only for his weekly paychecks. No evidence was presented from which a determination could be made that for a specific period of time any of the four offices were not being supervised by a licensed agent. Ms. Judd testified she was aware of one policy for which the insured had paid the premium in full being submitted for a premium finance agreement with forged documents. She also was aware that monthly financing payments were made by the Haines City office on some three or four other premium finance agreements. Ms. Judd testified on March 2, 1988, that she was presently unemployed. Respondent called one witness that testified and produced documentary evidence (Exhibits 24 through 26) that on March 2, 1988, this witness purchased insurance from Ms. Judd at New Horizons and was required to buy an accidental death policy in order to obtain PIP coverage. Exhibit 7 shows that an automobile insurance policy was issued to Jackie Bryan, the policy was sold through Friendly Insurance of Winter Haven, Inc., that the premium was financed, the borrower owed an additional $142.66 on the finance agreement, and the policy expired 2-26-86. Respondent acknowledged that his signature appears on the premium finance application. Some 5000 policies are sold by Respondent's agencies per year, and Respondent has no independent recollection of that finance agreement. Dixie Insurance Company issued a policy to Johnny Davis which was also financed through Envoy, but this application was signed by Shaw. Although Dixie Insurance Company had their own premium finance organization and, if the premium is financed, preferred to do the financing, Respondent testified that occasionally, if a client did not want to finance their premium through Dixie, the agency would go through another premium finance company such as Envoy. Exhibits 9, 10, 11 and 12 show premium finance agreements were contracted for on behalf of Raymond Scott, Mark Turner, Kathy Smith and Cathy Phillips, but no auto insurance policies were issued by Dixie Insurance Company to these individuals. Only one of these finance agreements (Exhibit 12) purports to be prepared at the Bartow office, and two of the drafts (Exhibits 9 and 12) purport to be signed by Respondent. Respondent testified he neither signed those drafts nor authorized someone else to sign for him. The forgery on both Exhibits 9 and 12 appear to have been perpetrated by the same person. Cathy Phillips, a friend of Ruth Kent, testified without contradiction that the signature purporting to be hers on Exhibit 12 was forged, that she never entered into a premium finance agreement with Envoy Finance Corporation, and that she had never seen Exhibit 14 until presented to her by the Petitioner's attorney. Ms. Phillips did receive a past-due notice on one occasion and called Ruth Kent who told her not to worry about it, that everything was taken care of. Subsequently, Ms. Phillips' husband wrote a letter to Envoy Finance Corporation denying any knowledge of any insurance policy written by Friendly Insurance of Bartow. Considerable testimony was submitted regarding the activities of Chuck Evans who was, at one time, employed by Respondent at the Winter Haven agency as a non-licensed employee with authority to write checks on the Trust Account. While the statements made by Evans to Department of Insurance officials contributed to the initiation of the investigation of Respondent's agencies, none of this testimony was relevant to the charges here at issue.
The Issue The issue for determination is whether Respondent used its best efforts to obtain and maintain adequate property insurance and whether adequate property insurance includes windstorm coverage.
Findings Of Fact The Carillon Association is a Florida not-for-profit corporation organized in 1966. Carillon Condominium consists of eight units. The units are owned by seven unit owners and controlled by the Carillon Association.3 Carillon Condominium is located in Miami Beach, Florida. During its existence of more than 40 years, Carillon Condominium has survived Florida's tropical storms, depressions, hurricanes, and other forms of wind and rain. At the time of the hearing, the Carillon Association was governed by a three-member board, consisting of a president, secretary, (who is also the legal counsel), and treasurer. Section XXVI of the Carillon Condominium's Declaration of Restrictions, Reservations, Covenants, Conditions and Easements (Declaration), titled "Casualty Insurance," provides in pertinent part: Purchase of Insurance: The association shall obtain fire and extended coverage insurance and vandalism and malicious mischief insurance insuring all of the insurable improvements within the condominium, together with such other insurance as the association deems necessary in and for the interest of the association, all unit owners, and their mortgagees, as their interests may appear, in a company, Triple A - best rating or better, in an amount which shall be equal to the maximum insurable replacement value as determined annually; and the premiums for such coverage and other expenses in connection with said insurance shall be assessed against the unit owners as part of the common expenses. * * * (4) Loss Less than "Very Substantial": Where a loss or damage occurs to more than one unit, or to the common elements, or to any unit or units, and the common elements, but said loss is less than "very substantial" (as hereinafter defined), it shall be obligatory upon the association and the unit owners to repair, restore and rebuild the damage caused by said loss. Where such loss or damage is less than "very substantial": * * * In the event the insurance proceeds are sufficient to pay for the cost of restoration and repair, or in the event the insurance proceeds are insufficient but additional funds are raised by special assessment within forty-five days after the casualty, so that sufficient funds are on hand to fully pay for such restoration and repair, then no mortgagee shall have the right to require the application of insurance proceeds to the payment of its loan; provided, however, that this provision may be waived by the Board of Directors in favor of any institutional first mortgages upon request thereof at any time. To the extent that any insurance proceeds are required to be paid over to such mortgagee, the unit owner shall be obliged to replenish the funds so paid over, and said unit owner and his unit shall be subject to special assessment for such sum. Notwithstanding the foregoing provision, any institutional mortgagee shall have the right to require payment to it, and apply against the mortgage, any insurance funds to the extent of its interest therein. The Carillon Condominium's By-Laws provides in pertinent part: Article II Directors * * * Section 5. Powers: The property and business of the corporation shall be managed by the Board of Directors, which may exercise all corporate powers not specifically prohibited by statute, the Certificate of Incorporation, or the Declaration to which these By-Laws are attached. The powers of the Board of Directors shall specifically include, but not be limited to, the following: To make and collect assessments and establish the time within which payment of same are due; To use and expend the assessments collected to maintain, care for and preserve the units and condominium property, except those portions thereof which are required to be maintained, cared for and preserved by the unit owners; * * * E. To insure and keep insured said condominium property in the manner set forth in the Declaration, against loss from fire and/or other casualty, and the unit owners against public liability, and to purchase such other insurance as the Board of Directors may deem advisable . . . . * * * Section 7. Meetings: * * * Special meetings shall be held whenever called by the direction of the President or a majority of the Board. The Secretary shall give notice of each special meeting either personally, by mail or telegram, at least three (3) days before the date of such meeting, but the directors may waive notice of the calling of the meeting; A majority of the Board shall be necessary and sufficient at all meetings to constitute a quorum for the transaction of business, and the act of the majority present at any meeting at which there is a quorum shall be the act of the Board. . . . * * * Article VII Finances * * * Section 3. Determination of Assessments A. The Board of Directors of the corporation shall fix and determine from time to time the sum or sums necessary and adequate for the common expense of the condominium property. Common expenses shall include expenses for the operation, maintenance, repair or replacement of the common elements . . . all insurance premiums and expenses relating thereto, including fire insurance, and any other expenses designated as common expense from time to time by the Board of Directors of the corporation. . . Funds for payment of common expenses shall be assessed against the unit owners in the proportions or percentages of sharing common expenses provided in the Declaration . . . Special assessments, should such be required by the Board of Directors, shall be levied and paid in the same manner as heretofore provided for regular assessments. . . . At all times material hereto, John Hillman was president of the Carillon Association. He has served as president for the past ten years. Additionally, he owns two units and has owned one of his two units for approximately 20 years. At all times material hereto, Lily Carico was treasurer of the Carillon Association. At all times material hereto, except from March 2010 forward, Peter Neofotistos was vice president of the Carillon Association. In March 2010, he resigned as vice president. At the end of each year for the past 20 years, the treasurer prepared a financial statement, i.e., an Annual Report, setting forth the annual budget based upon credits and debits, which was provided to each unit owner. The next year's budget was determined based upon the previous year's, resulting in essentially last year's budget becoming the next year's budget, and was financed by each of the owner's respective quarterly maintenance payments. For the past ten years, no annual budget meetings were noticed and held. Any extraordinary expenses for the past 20 years resulted in a special assessment to each unit owner, based upon each unit owner's ownership interest in the Carillon Condominium. For the past 20 years, the Carillon Association never charged or collected reserves for repair or replacement of items. Furthermore, for that same period of time, none of the unit owners requested a meeting to establish a reserve account. No evidence was presented as to whether, during the 20-year period or prior thereto, a majority of the unit owners voted to have no reserves. At all times material hereto, the Carillon Association purchased and maintained general premises liability coverage and all-risk coverage, including, but not limited to, fire, theft vandalism, vehicle, collapse, lightning, terrorism, and equipment breakdown coverage on the Carillon Condominium. The insurance premium for the all-risk policy in 2009 was $2,390.00 and in 2010 was $2,331.37. Sometime in 2006, Mr. Neofotistos suggested to Mr. Hillman the obtaining of insurance, covering wind and flood damage, by the Carillon Association in light of the recent hurricane activity. Mr. Hillman agreed in principle and that such insurance coverage might be something to explore. In 2006, unit owner Peter Neofotistos elected to use his one unit as collateral to secure a bank loan. He advised Mr. Hillman that his lender required a wind and flood insurance policy for the Carillon Condominium and that he (Mr. Neofotistos) acquired a master wind and flood insurance policy covering the Carillon Condominium at a cost of $3,740.00. Subsequently, Mr. Neofotistos made a demand for reimbursement of the $3,740.00. Mr. Hillman refused to reimburse Mr. Neofotistos mainly because the directors of the Carillon Association had not authorized and approved for Mr. Neofotistos to obtain the coverage for the Carillon Association. In 2009, unit owner Mario Sesma elected to use his one unit as collateral to secure a bank loan. The Carillon Association agrees that Mr. Sesma advised Mr. Hillman (a) that his lender was requiring a windstorm insurance policy for the loan; (b) that he (Mr. Sesma) was unable to pay for the windstorm insurance coverage; and (c) that the coverage would be considerably less if the Carillon Association had a master windstorm policy. Mr. Sesma advised Mr. Hillman further that the lender obtained a lender-placed flood insurance policy at a cost of $3,090.00 to Mr. Sesma. In April 2009, the roof at the Carillon Condominium required replacing due to leaks and age (ten years old). The unit owners were given notice of a special assessment in the amount of $15,285.70 for replacement of the roof. In 2009, Ms. Carico contacted the Carillon Association's long-time and current insurance agent for a quote on windstorm and hail insurance for the Carillon Association. She contacted the insurance agent upon learning of Mr. Sesma's request for the Carillon Association to obtain windstorm insurance. In September 2009, the insurance agent advised Carillon Association that one of the eligibility requirements for the insurance was an appraisal of the Carillon Condominium. Mr. Hillman requested the unit owners, who had forced-coverage by the lending institutions, to provide a copy of their appraisal in an effort to save money on the appraisal. The unit owners did not respond to his request. Additionally, in September 2009, the insurance agent provided a quote for the insurance coverage--the total estimated cost of the insurance was $4,012.00. However, he advised the Carillon Association that the estimate would fluctuate up or down depending upon the appraisal. The Carillon Association did not obtain an appraisal on the Carillon Condominium's common property. The Carillon Association's legal counsel, Jill Hillman, who was the daughter of Mr. Hillman and also a unit owner, advised the Carillon Association that windstorm insurance was not mandated by law. Ms. Carico conducted an informal poll of unit owners as to whether they wished the Carillon Association to purchase windstorm insurance for the Carillon Condominium. She did not want to purchase the insurance and was aware that Mr. Hillman and Ms. Hillman did not. Also, Ms. Carico asked two other unit owners, who indicated that they, too, did not want to purchase the insurance. As a result, five of the seven unit owners (also equating to six of the eight units), a majority, did not want to purchase windstorm insurance for the Carillon Condominium. After consultation with Ms. Hillman, acting as the Carillon Association's legal counsel, and the insurance agent, Mr. Hillman and Ms. Carico decided not to purchase the windstorm insurance quoted by the insurance agent. At all times material hereto, the Carillon Association did not have sufficient funds to purchase windstorm insurance. Moreover, the majority of the unit owners were unwilling to pay an assessment to purchase the windstorm insurance. The issue as to whether to purchase the windstorm policy quoted by the insurance agent or a windstorm policy from any other source was never brought to a formal board meeting as an agenda item at a duly called board of directors meeting or to a unit owner meeting. In or around June 2010, the water heater at Carillon Condominium required replacing on an emergency basis. The replacement cost was $5,200.00, which was funded with a special assessment upon all of the unit owners. Due to the immediacy of the situation, no board meeting and no unit owner's meeting was held; the replacement decision was made by the Carillon Association's president and treasurer. On or about July 29, 2010, Mr. Hillman sent a notice and the 2009 Annual Report to unit owners. The notice indicated, among other things, that three unit owners were in arrears, with two of the unit owners being Messrs. Neofotistos and Sesma. Mr. Neofotistos' arrearage was in the amount of $3,219.74, and Mr. Sesma's arrearage was in the amount of $2,586.40. Three board members of the Carillon Association own, cumulatively, four of the eight units. Only their units are free and clear of any mortgage.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares and Mobile Homes enter a final order: Finding that Carillon Condominiums, Inc., did not violate section 718.111(11)(d), Florida Statutes (2009); and Rescinding the Notice to Show Cause. DONE AND ENTERED this 1st day of August, 2011, in Tallahassee, Leon County, Florida. S ERROL H. POWELL 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 1st day of August, 2011.
