Findings Of Fact At all times pertinent to the allegations contained herein, the Petitioner, Department of Insurance, (Department), was the state agency responsible for the licensing and registration of insurance agents in Florida and for the regulation of the insurance industry in this state. At the same time, Respondent was licensed in Florida as a general lines agent, a life and health (debit) agent, a life and health agent, and as a dental health care services contract salesman. He was president, director and registered agent of, and was the only licensed insurance agent working at, Devor of Brandon, a general lines insurance agency located in Brandon, Florida. At the times in issue, Respondent employed Jay Schetina, not a licensed insurance agent in Florida, to work as a salesman at the Brandon office. Mr. Schetina worked directly under the supervision and control of the Respondent and was in charge of the Brandon office when Respondent, who worked four days a week at the other office he owned in Cape Coral, Florida was not there. On January 11, 1989, Nellie Wynperle Henry went to the Respondent's Brandon agency to buy automobile insurance. She dealt with Mr. Schetina who sold her a policy to be issued by Underwriters Guarantee Insurance Company for an annual premium of $1,288.00, and to be effective January 17, 1989. She gave Mr. Schetina a $429.00 down payment and ultimately was issued policy no. 12207947. The policy reflected Respondent as agent for the company. Though she was not told what it was and does not recall signing it, an application for an auto service contract, to be issued by Century Auto Service, was also prepared and bears what purports to be her signature. That application was prepared and submitted without her knowledge or permission. The fee for the policy was $40.00, of which the agency got to keep 90%. Since she was already a member of AAA and had their service coverage, Ms. Wynperle did not need the service club policy sold to her at Respondent's agency and, in fact, had told Mr. Schetina so. Though she was charged for the service policy, she never received a copy of it and did not know she had it. At the time she applied for the auto insurance, Ms. Wynperle also applied to finance the unpaid balance due over and above the down payment through Underwriter's Financial of Florida, Inc., a premium finance company. The premium finance agreement includes the amount of the unwanted service policy, and is also incorrect in that it reflects that the down payment tendered by Ms. Wynperle was only $389.00. Dorothy Lunsford purchased auto insurance from the Respondent's agency on January 18, 1989. The premium for her policy, also with Underwriters Guarantee, was $707.00 and she made a down payment, by check, of $217.00. She financed the balance but the application for financing showed a down payment of only $177.00. On the same day, an application form for an auto service policy was also submitted in Ms. Lunsford's name. The cost of this policy was $40.00. On January 31, 1989 Joanne Coleman applied for automobile insurance at Respondent's agency. She was to be insured by two companies' policies, one issued by United Guarantee and one by Hamilton Insurance Company. The total combined premium was $670.00. Both policies were issued and Respondent's agency was listed as agent on both. She paid for the policies with a check for $687.00. No explanation was given for the difference. At the same time she applied for the auto insurance, though she had had no discussion with the clerk with whom she dealt at the agency about it, an application for an auto service policy was also filled out in her name, carrying a premium of $20.00. She did not receive a service policy. She neither authorized or consented to the submittal of the service club application in her name. Ms. Coleman's memory of the events, however, was not clear, but it is clear that she did not want the service policy she was charged for. On February 9, 1989, Kathy Gall applied for auto insurance with the Respondent's agency. The annual premium was$733.00 and at the time, she gave the agent a check for the down payment in the amount of $240.00. She applied to finance the balance but when prepared at the agency, the application form reflected a down payment of only $220.00. This was in error. However, at that same visit, an application for an auto service policy was also filled out in Ms. Gall's name. The policy bore a premium of $20.00. At no time did Ms. Gall authorize that service policy nor, in fact, was it ever discussed with her and she did not know she was purchasing it. Finally, on February 6, 1989, Lucinda Romano applied with the Respondent's agency for an automobile insurance policy with Allegheny Mutual Casualty Company. At that time, she gave Devor a check for $61.80. Though at the time she went into the agency she did not intend to purchase an auto service contract because she was having financial problems and wanted only the most basic lawful coverage, and did not sign the application for it, she was charged for an auto service policy at a cost of $20.00. She thought she was purchasing only PIP coverage which cost $60.00. Ms. Romano subsequently requested a refund of the amount she paid for the auto service policy and the payment was refunded by check on May 19, 1989 from Jay Schetina. Sometime after the Devor agency was taken over by Sam Capitano/Action Insurance Agency, and the latter's employees were servicing the company's files, Ms. Brown-Parker, an employee of Action found the auto service policies, including those issued in the name of Ms. Romano, Ms. Gall, Ms. Coleman, and Ms. Wynperle,and Ms. Lunsford, which had not been transmitted to the policyholders. Both copies of the policy were in the file. Respondent is also the subject of a Consent Order issued on February 26, 1990, subsequent to the date of the matters in issue herein. The Settlement Stipulation For Consent Order, on which the Order is based, refers to the matters in issue here which relate to Respondent's allowing his non-licensed employees to use his license to practice insurance, and allowed the agency to operate, at least at times, without an active, full time agent in charge. At paragraph 10(c), the Stipulation provides, in part: ... If the Department has good cause to believe that, after the issuance of the Consent Order in this cause, unlicensed individuals are transacting insurance at any agency at which Respondent operates as a general lines agent ..., or that any agency at which Respondent operates ... is not at all times after issuance of the Consent Order in this cause under the active, full-time charge of a general lines agency, the Department shall initiate proceedings to suspend or revoke the licenses and eligibility for licensure and registrations of the Respondent based upon the original grounds as alleged in the Administrative Complaint referred to herein. The original charges referred to, supra, relate to Respondent's alleged authorization of unlicensed employees to transact insurance, and his alleged authorization of the agency to, at times, operate without an active, full-time agent in charge. It did not refer to the incidents alleged herein, to wit: theimproper charges for undesired auto club membership and the preparation of false premium finance applications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued dismissing the allegations that Respondent, John W. Ganter, violated Section 626.611, Florida Statutes, but finding him guilty of violations of Section 626.621, 626.9521 and 626.9541(1)(k)1, Florida Statutes, as to Ms. Wynperle, Ms. Gall, Ms. Coleman, Ms. Romano, and Ms. Lunsford, and imposing a suspension of his licenses and eligibility for licensure for a period of one year. However, under the provisions of Section 626.691, it is further recommended that in lieu of the suspension, the Respondent be placed on probation for a period of two years under such terms and conditions as specified by the Department. DONE and ENTERED in Tallahassee, Florida this 10th day of October, 1991. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1991. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. - 5. Accepted and incorporated herein. 6. & 7. Accepted and incorporated herein. Accepted and incorporated herein. - 12. Accepted and incorporated herein. 13. - 16. Accepted and incorporated herein. 17. - 19. Accepted and incorporated herein. 20. - 22. Accepted and incorporated herein. 23. & 24. Accepted. 25. Not a Finding of Fact. FOR THE RESPONDENT: 1. & 2. Accepted and incorporated herein. Accepted expect for the representation that Petitioner presented no evidence as to Count II. The Stipulation of the parties clearly makes detailed reference to the allegations regarding Ms. Lunsford. Accepted as to Counts VI, VII & VIII. Rejected as to Count II. Accepted and incorporated herein. - 8. Accepted and incorporated herein. Rejected. - 14. Accepted and incorporated herein. Rejected. - 20. Accepted and incorporated herein. Rejected. & 23. Accepted and incorporated herein. Accepted. Accepted. Accepted. Rejected. - 34. Accepted as to the actual dealings of the Respondent. COPIES FURNISHED: David D. Hershel, Esquire Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Orrin R. Beilly, Esquire The Citizens Building, Suite 705 105 S. Narcissus Avenue West Palm Beach, Florida 33401 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether Petitioner should be disciplined pursuant to a nine count administrative complaint, each count containing allegations of multiple violations of the Insurance Code.
Findings Of Fact Emerald Coast Insurance Agencies, Inc. (Emerald Coast) is a nonstandard automobile insurance agency, insuring high risk drivers who normally have a difficult time procuring insurance. Emerald Coast advertises. Some customers named in the administrative complaint responded to advertisements featuring "high risk, low down payment." At all times material, Respondent was licensed as a life agent, as a life and health agent, and as a general lines agent and was the corporate president, director and registered agent of Emerald Coast. Respondent was present and actively overseeing all of the applications involved in this case, even when information was written on forms by the customer, another agent, or an unlicensed employee. Most of the complaining witnesses were able to identify Respondent as being present and/or assisting while their forms were made out. DOI did not affirmatively prove that any unlicensed employee of Emerald Coast spent more than 10 percent of his employment time interacting with customers. Prior to these proceedings, DOI has never taken action against Emerald Coast or Respondent. Respondent went to DOI on two occasions prior to the filing of this administrative complaint and discussed optional coverages in an effort to avoid situations that might lead to disciplinary action. Emerald Coast has four offices in three cities. All of the events underlying the charges herein occurred in Tallahassee. Emerald Coast has written between 15,000 and 18,000 automobile insurance policies in the three years it has been open. Approximately 70 percent of Emerald Coast's customers who purchase automobile insurance policies cancel those policies prior to the renewal date. Eighty percent of these cancelled policies are cancelled for nonpayment of premium. Among these cancellations are individuals called "tag runners." Tag runners purchase the minimum required insurance for receipt of an automobile license tag, with the intent of having the policy cancelled after they have made one or two payments and taking the chance that the Division of Highway Safety and Motor Vehicles will not catch up with them to suspend their licenses because insurance cancellations may take up to six months, even for non-payment. Once the policy information is taken from the customer, it is entered in a computer and, within three to five days, checks are written from Emerald Coast to the insurance carriers for initial premiums. If the proposed insured fails to make a payment or stops payment on a check, the agency loses money on the transaction because the agency has already forwarded the money to the insurance company. Emerald Coast provides the option of financing a premium if a customer cannot pay it in a lump sum annually. When a customer cannot pay in full for an insurance policy, Emerald Coast offers the option of purchasing an ancillary product like an auto club for a set price in addition to paying for the insurance with a low down payment. The club cost is in addition to the total insurance premium, and the low down payment for the insurance premium is conditional upon the customer's paying for the club's product. If the customer does not want the auto club product, Emerald Coast still permits him to finance his insurance premium with a 50 percent down payment. Emerald Coast's purpose of requiring a 50 percent down payment or payment in full, or the purchase of the auto club when a small down payment is made, is to offset cancellation rates and the agency's losses incurred thereby. The premium finance companies which finance insurance policies require fees. There are no premium finance companies that require Respondent to sell auto clubs in order to sell their premium finance products. The insurance carriers charge a premium for the risk they assume with the contract of insurance. There are no insurance carriers that require Respondent to sell auto clubs in order to sell their insurance. Approximately 60 percent of the people to whom Emerald Coast has sold policies also purchased auto clubs, including towing and rental features. The larger the fee paid by the customer for the club, the greater the towing, rental and other benefits that the club provides and the greater amount the seller makes. Respondent received a 90 percent commission from Atlantic Travel Association of North Florida, Inc. for the auto clubs he sold and sent to them. Respondent also sold American Travelers Association death and dismemberment benefit contracts at a similar commission. Respondent and Emerald Coast used to sell Atlantic Travelers Association, Inc. auto clubs. As of January 1, 1992, they switched to selling Atlantic Travelers Association of North Florida, Inc. clubs. The two clubs are not associated in any way. By agreement with the new club's owner, Respondent and Emerald Coast continued to use the old forms bearing the wrong company name and submitted them to the new club. The forms do not provide the address of the club, and members are expected to submit claims through Emerald Coast. Atlantic Travelers Association of North Florida, Inc. is a valid auto club and pays valid claims. Atlantic Travelers Association of North Florida, Inc.'s owner testified that his company was prepared to honor each misnamed form that Respondent sent to him with a fee, but it is probable that the form issued in the wrong name would not be legally binding. If the form was never received by the new club, Emerald Coast's customer would have an even more tenuous claim. Therefore, Respondent's auto club customers were protected only at the new club's whim as to whether or not a contract they paid for would be honored, and each form issued by Respondent or Emerald Coast with the wrong auto club name on it constituted a misrepresentation, deceptive to the customer on several levels. Respondent also continued to use the Atlantic Traveler's Association, Inc. name on all the acknowledgments he asked his customers to sign, signifying that they understood that the auto club cost was optional and in addition to their automobile insurance. The use of the wrong name on these acknowledgment forms also was a misrepresentation. Due to space considerations, and for greater clarity, Atlantic Traveler's Association, Inc. will hereafter be referred to as "the old auto club," and Atlantic Traveler's Association of North Florida, Inc. will hereafter be referred to as "the new auto club." None of the customers named in the administrative complaint lost money as a result of any auto club sold by Respondent or Emerald Coast. The auto club contracts offered 38 different choices of benefit levels. Each of the benefit levels was an option which should have been discussed with and knowingly accepted by the customer. Respondent gave the individuals selling the auto clubs no instructions on which of the options they should sell to a customer or how they should judge which option(s) a customer needed. Routinely, neither Respondent nor any of his employees ever offered all 38 options to each customer. Rather, dependent upon the car insurance coverage the customer selected, or upon the unbridled discretion of the salesperson, each salesperson sold what he felt like. Respondent and Emerald Coast use an acknowledgment form to let the customer know he is purchasing an ancillary product, that the total cost of the ancillary product is in addition to insurance premiums, and that the ancillary product is optional and not required by law. They use a document called an "affidavit" to inform the customer of other coverages and when the coverages will go into effect and to hopefully insure that the information received from the customer is accurate. These so-called "affidavits" are neither notarized nor attested-to by anyone. Respondent acknowledged that the DOI and the insurance industry consider the word, "premium," as applying to insurance premiums only, not ancillary products such as auto clubs. See, Section 627.041(2) F.S. Laymen likewise regard the word "premium" as reflecting the cost of insurance. Respondent and Emerald Coast use generic receipts which say "premium," not "insurance premium." Where insurance premium collections and ancillary product sales were conducted simultaneously, Respondent used the word "premium" on these receipts to cover the total amount tendered by each customer as a down payment on both the insurance policy premium and on the ancillary product. He then listed only the insurance premium down payment (total amount tendered by the customer minus ancillary product full fee or down payment) on the insurance premium finance agreement because only insurance premiums can be financed on those forms. Where receipts specified "total premium" he lumped in the cost of the ancillary product. Respondent thus misused the word "premium" on receipts issued to customers. Accordingly, the receipts provided to Respondent's customers were misrepresentations and deceptive. One result of the misuse of the term "premium" was that customers sometimes were led to believe that their deposits against both auto clubs or death and dismemberment policies and insurance coverage were down payments on the insurance policies alone, even where the receipts specified "premiums" and "deposit." Accordingly, Respondent's deductions of all or part of the ancillary product fee up front resulted in false statements on other documents that the full down payment for premium or financing of premium had been made when it had not. Respondent testified that his standard operating procedure was for himself or another licensed insurance agent to explain the coverages on each of the policy application forms executed at Emerald Coast; that where marks occurred on the summary of coverage pages, they were made by himself or another Emerald Coast representative during these explanations; that he explained the cost coverage breakdown for each customer he saw; and that he instructed each customer he saw to read all documents before signing. However, the juxtaposition of the "total" space block and the column where premiums and other costs are added on the "summary of coverages and cost breakdown" form makes it impossible for the customer to quickly add up the premiums for each type of insurance coverage and the cost of ancillary product in a straight line. Also, due to the confusion of Respondent's use of the word "premium" for different purposes on different documents, the figure for total "premium" frequently cannot be reconciled among the receipt, the financing document, the insurance application, and/or the summary of coverages and cost breakdown form. Even a reasonably attentive customer would be confused by the several forms. Reading the summary before signing it would not necessarily have revealed what funds were being applied to which purpose. In some instances, more specifically set out by customer and count infra., the completed summary of coverages and cost breakdown forms were misleading or unexplainable as to what amounts were being charged to the customer. Count I (David K. Register) On January 31, 1992, David K. Register went to Emerald Coast to purchase insurance. The applications made out at that time were executed by Respondent as brokering agent. Mr. Register signed all documents without reading them. Nonetheless, he understood that he was purchasing personal injury protection, property damage coverage, comprehensive and collision coverage, and what the deductibles were at the time he signed the documents. He also knew he was purchasing an auto club at the cost of $150. The total cost of the insurance coverage he was seeking was approximately $750. Respondent required Mr. Register to purchase an auto club contract as a condition of obtaining premium financing for his insurance policies. Respondent completed a premium finance agreement for financing the unpaid premiums for the policies showing that Mr. Register had tendered a $197 premium down payment. Respondent advised Mr. Register that he owed an additional $135, due February 14, 1992. Respondent issued a receipt to Mr. Register showing the total premium was $937. When he applied with Emerald Coast, Mr. Register had four offenses on his driving record, three for unlawful speed and one for violation of the alcoholic beverage open container law. His complete driving record was not disclosed on the documents prepared. If it had been disclosed, an additional premium would have been charged. The testimony is in direct conflict on whether or not Mr. Register orally disclosed his prior violations to Emerald Coast: Mr. Register maintained that he did; Respondent maintained that he did not. There is no direct evidence to show which witness was accurate on this issue. Circumstantially, there was no reason Respondent should fail to write down violations told him by Mr. Register since Respondent was prepared to write insurance in the high risk category anyway and one way or another Respondent could have insured Mr. Register for the amount Mr. Register was prepared to pay that day. Subsequently, Mr. Register made a down payment and executed an insurance application with Progressive Insurance through Swann Insurance Agency on which he also failed to disclose his entire driving record. He did so with the explicit understanding at that time that the new carrier would run a license check on him and an additional premium would be required due to his bad driving record which he had disclosed orally to Swann Insurance Agency. The "safety net" when a bad driving record is not disclosed on an application is that carriers routinely run independent driving license checks and adjust the premium upward or refuse coverage if they discover an undisclosed bad driving record. What Swann Insurance Agency and its carrier did after the carrier researched David Register's driving history is not clear on the record. When Emerald Coast and its carrier discovered his history, they demanded a higher premium. The evidence falls short of showing that Respondent deliberately left information provided by Mr. Register off his application at Emerald Coast. On February 6, 1992, Armor, the carrier with whom Emerald Coast had placed Mr. Register's PIP and property damage coverage, notified Mr. Register and Respondent that the policy binder would be cancelled if required photographs of the vehicle were not received. On February 10, Mr. Register took the vehicle to Emerald Coast for photographs. On February 13, Respondent wrote Mr. Register a letter threatening to cancel his "policy" if the $135 "premium" were not paid by February 14. Respondent testified that the letter referred to cancellation of the auto club towing "policy" and therefore he was not threatening to cancel Mr. Register's automobile insurance policy for failure to pay for an ancillary product. However, on its face, the letter was misleading. Respondent's unique "wordology" had the effect on Mr. Register of a threat to cancel his automobile insurance policy for non-payment of the ancillary product fee. On February 14, David Register and his father wrote Respondent requesting cancellation of the insurance policies and return of all money paid, since they had purchased duplicate coverage at Swann Insurance Agency. Respondent did not forward the cancellation request to Nu-Main, general agent for the carrier with whom he had placed Mr. Register's comprehensive and collision policy. Respondent did not forward the car photographs to Armor. As a result of the photographs not being received, on February 18, Armor cancelled its binder to David Register. On March 9, 1992, the finance company sent David Register and Emerald Coast its cancellation notice for nonpayment of premiums. David Register never paid the additional $135 due on February 14 for the auto club and the new auto club had no record of his old auto club form being received. Due to his February 14 cancellation, Respondent eventually refunded Mr. Register $140 of the $212 he had paid on January 31, 1992. Mr. Register's father testified that the $72 difference was accounted for by the cost of coverage from January 31 to February 14 and cancellation fees charged by the carriers. Count II (Diedre Hawks Johnson) On August 15, 1992, Diedre Hawks went to Emerald Coast to buy minimum insurance for a used car she had just purchased and financed. She executed an application for property damage, comprehensive, collision, and PIP insurance coverages. These coverages are more than the minimum required by law, but may not be more than the minimum required by the financing of Baldwin-Foster Motors, where Ms. Hawks had just purchased the car. The record is unclear on this distinction. Ms. Hawks tendered $165. Respondent actively supervised Dan Allison, a licensed insurance agent, during this transaction. Contrary to Ms. Hawks' testimony, it is found that she understood on August 15 that she had purchased an auto club. Although she did not read them at the time, Ms. Hawks executed the premium finance agreement to obtain financing for the remainder of the automobile insurance policy premium and the application for an auto club at $150. Ms. Hawks likewise signed both an acknowledgment showing she knew she was getting an auto club for $150 and an "affidavit." She also signed a summary of coverages and cost breakdown acknowledging that Emerald Coast employees had explained the coverages, that she fully understood them, and that she had received a completed copy of that document. Her explanation at formal hearing for why she did not read what she signed was that she was in a hurry because it was late in the day and the Emerald Coast employees were rushing to get out. However, she acknowledged that Respondent gave her an opportunity to read the documents which clearly set out that she was buying an auto club for $150. However, even if she had read them, the documents presented to Ms. Hawks were ambiguous as to what the amounts paid or owing were to cover. The enumerated coverages on the cost breakdown form add up to $745 (including a $150 auto club) plus a policy fee of $25 and a "grand total" of $770. The financial agreement shows a $620 premium total with $465 financed, a $155 down payment and $65.49 per month due in monthly payments. The receipt issued to Ms. Hawks by Emerald Coast on August 15 showed that she had tendered a $165 deposit, was paying for a $770 annual premium, and owed an additional $140 deposit. Upon the foregoing, Ms. Hawks' testimony was convincing that even though she initialled the receipt requiring the additional deposit, she did not know that she still owed a $140 down payment when she left Emerald Coast and that she believed that she only had to pay her premium in monthly increments of $65.49. The next day, August 16, 1992, Underwriters Guaranty Insurance Company issued Ms. Hawks an insurance policy with an annual premium of $620. The difference of $150 between the $770 and $620 figures was the total $150 cost of the auto club which she was required to buy in order to get financing with Emerald Coast. Ms. Hawks signed a contract with the old travel club. Emerald Coast sent the contract to the new travel club. Ten dollars of Ms. Hawks' initial $165 had been applied by Emerald Coast as a down payment on the auto club. No paper specifically shows this diversion of funds. On September 8, Emerald Coast wrote Ms. Hawks that she must come in and pay $140 more on her down payment for "premium" or her insurance would be cancelled. Ms. Hawks purposefully ignored the letter since communications with the carrier clarified that the money was actually to be applied to the auto club fee. Beginning September 13, Respondent telephoned her several times to come in and make the payment. Ms. Hawks still did not pay the $140. Therefore, Respondent refused to turn over to her a copy of her automobile insurance policy when it was issued. Ms. Hawks again dealt with the carrier directly and the carrier assigned her to a new agent. She never paid the auto club fee. Count III (Christine Maddux Vollenweider) On March 16, 1992, Christine Maddux asked to finance part of a $242 premium. Respondent told her that the additional cost of financing insurance with the $242 annual premium would be $317. Respondent also told her that Emerald Coast had a condition of financing which required her to buy an auto club. Ms. Maddux executed an application for a PIP and property damage automobile insurance policy with a total annual premium of $242. Respondent told her that she must pay a $143 down payment. Ms. Maddux had only $80 with her, so she tendered $80 to Respondent, who told her she must pay the remaining $68 the following week. On her first visit, the "total premium" was $317 on the receipt ($80 received and $68 deposit due). She paid the $68 the following week, as agreed. That amount was also receipted as "total premium." On March 16, Ms. Maddux executed a premium finance agreement to obtain premium financing on the balance of the premium amount and applied for an auto club. The premium financing agreement showed that she had tendered only $73 down payment on the insurance premium. The $7 balance of her $80 went for the auto club, but no document specifically shows that diversion of funds. Ms. Maddux did not read the summary of insurance coverages and cost breakdown prior to signing it. She was not told that she could not read the document, and she signed a statement acknowledging that the coverages had been explained to her, that she fully understood them, and that she had received a completed copy of the document. All of the documents except the financing agreement consistently reflect the $75 for the auto club. Ms. Maddux applied for the auto club at a cost of $75 even though she already received equal or better auto club benefits from AAA-Plus, and had told Respondent so. No one at Emerald Coast told Ms. Maddux that she was required by law to purchase it. She applied for the auto club only because of Respondent's specific agency business practice to require an auto club purchase of any customer who had to finance insurance premiums after a down payment of less than half of the entire annual premium. The auto club contract Ms. Maddux signed was with the old club showing a cost of $75. Emerald Coast sent the contract to the new club. Ms. Maddux was issued a policy by Security Insurance Company of Hartford. Count IV (Candy Bassett) On March 16, 1993, Candy Bassett wanted to purchase the minimum required non-owner's automobile insurance to get back her driver's license, which had been suspended. She incorrectly stated to Emerald Coast that she had only four points on her driving record, when in fact she had twelve points. The points had been accumulated for speeding tickets, for driving under the influence of alcohol (DUI) with serious bodily injury, and for a conviction for failure to identify upon an accident. Ms. Bassett signed Emerald Coast's summary of coverages and cost breakdown form and the policy application form, stating therein that her violations and offenses as revealed by her were accurate and acknowledging that the coverages had been explained to her and were fully understood by her. Ms. Bassett executed both a cost breakdown and summary and an acknowledgment. The cost breakdown and summary showed she was purchasing a travel club including accidental death coverage for $100. Her acknowledgment showed she was purchasing a motor club including towing and rental reimbursement for $187. Ms. Bassett executed an application for an automobile insurance policy to be issued by Underwriters. The application listed the total annual premium as $334. Ms. Bassett tendered her down payment check in the amount of $187. The receipt showed the "total premium" to be $449 and the amount received to be $187. Ms. Bassett executed a premium finance agreement to obtain financing for the remainder of the policy premium. It showed that Ms. Bassett had tendered only an $87 down payment on a total premium of $349. Underwriters issued Ms. Bassett an insurance policy for an annual term. Respondent actively supervised her transaction and executed the policy application as brokering agent. As part of this transaction and as part of a specific Emerald Coast business practice, Respondent required Ms. Bassett to execute an American Travelers Association, Inc. accidental death and dismemberment benefits contract reflecting a fee of $100, not a towing contract as reflected on some of her other paperwork. The $100 for this death and dismemberment product constituted the difference between the $87 shown on the finance agreement as the amount tendered and the $187 check Ms. Bassett actually tendered. There is no evidence as to the status of American Travelers Association Inc. or whether it received Ms. Bassett's contract. Contrary to other documents she executed, Ms. Bassett signed an acknowledgment form to the effect that she knew the club, including towing and rental reimbursement, were optional at a fee of $187 separate from her automobile insurance and that she understood that it was not insurance. Ms. Bassett testified that she thought the death and dismemberment benefits were included in her insurance, that she was not informed that she would have to pay an additional $100 for those benefits, and that she did not intend to pay any monies for such benefits. The foregoing testimony is not entirely credible in light of the rest of the evidence. Ms. Bassett also specifically testified that she was told that the travel/accident feature was "included in the -- I can't remember how much the premium was, it was four hundred and something, he said it was included in that." (Emphasis supplied.) She also signed an acknowledgment indicating the towing fee would be in addition to the insurance premium and a paper showing the amount for financing the insurance premium totalled only $349, and she was asked to name, and did name, a beneficiary on the death and dismemberment form. Further, she admitted that she understood that she was receiving travel/accident benefits through American Travelers, and that it was required for premium financing. However, she is credible and clear that all the amounts she had paid and was going to have to pay were not fairly represented to her and that Respondent made out forms showing she was being charged $187 for an auto club or towing feature which, having no car she could not very well use, as well as forms showing she was purchasing a death and dismemberment feature at $100, purely as a requirement of financing automobile insurance. Count V (Cynthia Mann) On January 24, 1992, Cynthia Mann made application for full coverage automobile insurance. Respondent actively supervised her transaction. Respondent was the brokering agent for the policy. Ms. Mann tendered a check for $180 and was advised that an additional down payment of $95 was due on the policy. She tendered the additional $95 down payment to Respondent on February 3, 1992. Charter American Casualty Insurance Company issued her standard automobile policy. Ms. Mann also executed a premium finance agreement to obtain premium financing for the policy. This agreement indicated that the total down payment for the policy was $165. Respondent required Ms. Mann to execute an old auto club contract in order to get the financing. She signed an acknowledgment that she had been offered an opportunity to purchase insurance from Emerald Coast without any auto club. The new auto club had no record of receiving Ms. Mann's Atlantic Travel Association, Inc. contract. The record is silent as to whether or not the old auto club received her contract. The annual fee specified on the old auto club contract was $110. Emerald Coast took $110 from Ms. Mann's $180 deposit and applied it to the auto club contract. Ms. Mann signed an application form, an acknowledgment form similar to those signed by the other complainants, and an "affidavit." Ms. Mann contended that Respondent had told her that she had a towing benefit as part of the automobile insurance policy purchased. The reconciled and understandable portion of her paperwork shows otherwise. She was not told she could not read the documents placed before her for reading and signature, but she did not read any of the documents prior to signing. She did not want to spend additional time reading documents because she "knew [she] had to have insurance." However, reading the documents would not have eliminated some of the contradictory and therfore false statements as to what constituted insurance premium. Count VI (Jacque Flowers) Respondent was actively involved in both of Jacque Flowers' transactions. At all times material, Paul Wettrich, an unlicensed employee of Emerald Coast, spent less than ten percent of his time actually filling out forms for customers or taking information from customers. On December 31, 1992, Jacque Flowers went to Emerald Coast to purchase automobile insurance and executed an application for various coverages for two automobiles. On December 31, 1992, Ms. Flowers tendered $160 as a down payment to Mr. Wettrich. Mr. Wettrich signed a receipt as "salesman," and assisted Ms. Flowers in filling out the required forms. The receipt showed a total premium of $849. The Respondent executed the application as brokering agent. Mr. Wettrich never signed any of the applications on behalf of Respondent or any other licensed agent. Also, on December 31, 1992, Ms. Flowers executed an Underwriters Financial premium finance agreement to obtain financing for the remainder of the policy premium. Respondent executed that agreement as agent of record. The agreement incorrectly specified that a $187 down payment already had been made. As part of the December 31, 1992 transaction, and pursuant to Emerald Coast's standard business practice, Ms. Flowers was required to contract with Atlantic Travel Association, Inc. for an auto club at a $100 fee. The $100 auto club fee was deducted from the $160 cash payment made on that date. On December 31, 1992, Ms. Flowers was in a hurry to complete her transaction because she had her three-year-old child with her. Without reading them, Ms. Flowers signed an application form, a premium finance agreement, an acknowledgment form, an Atlantic Travel Association, Inc. form, and a summary and cost breakdown form, acknowledging the truth and accuracy of the statements contained in each document, that the coverages had been fully explained to her, and that she understood them. Effective January 1, 1993 and pursuant to the policy application, Underwriters issued to Ms. Flowers a policy with a total annual premium of $749. On January 27, 1993, pursuant her agreement on December 31, 1992, Ms. Flowers tendered to Respondent an additional $127. ($160 plus $127 would equal $287 paid up to that date.) Also on January 27, 1993, Ms. Flowers deleted one car from the policy. On February 15, 1993, Ms. Flowers deleted the second car from the policy and added a third car. This resulted in an increased premium and an addendum to the policy which had been issued January 1. Ms. Flowers paid $92 more to Respondent's brother Scott, an unlicensed employee of Emerald Coast, who signed the receipt. The addendum stated that the additional policy premium was $167, and that $67 had been the cash down payment. Respondent executed the addendum as brokering agent. In accord with its standard business practice, Emerald Coast, through Scott Whitaker, required Ms. Flowers to execute an accidental death and dismemberment contract with American Travelers Association, Inc. Twenty-five dollars for this item was taken from her $92 paid that day. The receipts and other documents provided Ms. Flowers at this time were inconsistent, and Respondent was unable to explain the inconsistencies at formal hearing. Although Ms. Flowers testified that the two ancillary product packages (auto club and death and dismemberment benefits) were never explained to her and that she would never have purchased either package if she had understood that there were additional charges therefor, her paperwork shows otherwise. Also, she specifically testified that when she went to Emerald Coast the first time, on December 31, 1992, her insurance had just been cancelled by Florida Farm Bureau due to her husband's driving record, and that when she requested full coverage, she understood "full coverage" to include towing, based on her experience with Florida Farm Bureau. Therefore, it is concluded that she wanted the towing benefit however she could get it. She also admitted that each paper was explained to her before she signed on December 31, 1992. Therefore, she knew on December 31, 1992 that she was getting towing and was paying for it through an auto club, even though the totality of the paperwork is misleading as to what amounts were paid for each purpose, and even though the several options within each type of ancillary product were not explained to her and the Emerald Coast employees chose what benefit amount to sell her each time. The December 31, 1992 old auto club package was sent to the new auto club. The record is silent as to what became of the February 15, 1993 American Travelers Association, Inc. death and dismemberment form. Count VII (Sebrena McPhaul) On September 21, 1992, Sebrena McPhaul went to Emerald Coast to purchase automobile insurance and executed applications for bodily injury, property damage, and PIP coverages with Underwriters and for physical damage coverage with Nu-Main, for a total premium of $651, to be divided appropriately between the two carriers as they required. Ms. McPhaul executed a finance agreement stating that the down payment for her insurance policies was $163. Ms. McPhaul tendered a $163 down payment check with the understanding that she would tender an additional $100 in two subsequent $50 installments. Ms. McPhaul also signed an Atlantic Travel Association, Inc. form, even though she informed Emerald Coast employees that she did not need an auto club since she had AAA. The application she signed was for an auto club at a cost of $130, a portion of which was to be taken from the down payments to be made by Ms. McPhaul. Ms. McPhaul signed a summary of coverages and cost breakdown form which stated that an auto club was covered, including payment for bail bonds, towing and labor and owner protection at a cost of $130, but she did not read it before she signed it. Ms. McPhaul admitted that the coverages had been explained to her by Scott Whitaker, an unlicensed employee of Emerald Coast, prior to her signing the summary of coverages and cost breakdown form, but maintained that he had not adequately explained that the $130 for the auto club was in addition to her insurance premium instead of part of it. Ms. McPhaul signed an acknowledgment form concerning the purchase of the auto club and an "affidavit" concerning the truthfulness of her responses, but she read neither of them, either. She conceded that if she had taken the time to read the acknowledgment form instead of just signing it, she would have understood the difference. Scott Whitaker issued her a receipt showing her total premium was $781. Respondent was in charge of the office, was actively involved in her transaction, and signed the applications as brokering agent. Emerald Coast sent the old club form to the new club. Ms. McPhaul executed a premium finance agreement to obtain financing for the remainder of the premiums for her policies which were executed by Respondent as agent of record. Ms. McPhaul was issued insurance policies for her purchased coverages, on September 21 and 22, respectively. At this point, Ms. McPhaul understood that she was paying $130 for an auto club above and beyond her premiums and financing costs. Previously, she had thought that towing was part of her standard automobile insurance contract. She blamed the misunderstanding upon misrepresentations made by Scott Whitaker, but the acknowledgment she signed is clear on this portion of the disclosure. Ms. McPhaul stopped payment on a check she had used to pay the down payment on her insurance. Emerald Coast thereby incurred a loss of $90 it had forwarded to the carriers, and also lost the cost of processing her applications. The receipts and other documents provided Ms. Flowers were inconsistent. Respondent was unable to explain the inconsistencies. Count VIII (Steve Reeves) On March 20, 1993, Steve Reeves went to Emerald Coast to purchase automobile insurance for a new truck he was leasing. He did so because he had unilaterally formed the opinion that his current truck insurance would not cover a new truck he had just leased. Mr. Reeves tendered to Emerald Coast a down payment of $175 with the understanding that he would make an additional $45 premium payment to Emerald Coast. That additional premium payment was paid by Mr. Reeves at a later date. Mr. Reeves executed a premium finance agreement to obtain financing for the remainder of his policy premium. The financing agreement showed the down payment was $120, not $175. This is the only significant discrepancy among Mr. Reeves' documents except for the wrong use of the word "premium" on the receipt and the wrong auto club being named in the acknowledgment and auto club form. Respondent executed the policy application as agent of record. The application stated that the premium was $453 plus a $25 policy fee for a total of $478. The receipt to Mr. Reeves for the down payment lists the total premium as $578, as does the cost breakdown form. The $100 difference was applied to an auto club fee. Mr. Reeves also purchased an auto club from Emerald Coast. He knew he had purchased the auto club as a condition of getting his insurance from Emerald Coast. His companion suggested going elsewhere for cheaper insurance without the auto club, but Mr. Reeves declined this suggestion because it was late in the day and he wanted to get his truck insured right then and drive it home. The auto club contract reflected a fee of $100 and bore the name of the old auto club. It was sent to the new auto club. Mr. Reeves signed an acknowledgment form which also reflected a $100 auto club fee, an "affidavit," a summary and coverage cost breakdown form, and a travel association form, but did not fully read them. Executive Insurance Company issued a policy to Mr. Reeves, which he paid on monthly for five or six months. He eventually allowed the policy to lapse for non-payment because he got in a dispute with Emerald Coast about the agency's refusal to accept payments made in its office by way of a third party check.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Insurance enter a final order suspending Respondent's licenses for thirteen months for eight violations of Section 626.9541(1)(x)4. and eight violations of Section 626.621(6) F.S. RECOMMENDED this 4th day of April, 1995, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1995. APPENDIX TO RECOMMENDED ORDER 93-5436 The following constitute specific rulings, pursuant to Section 120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1-5 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 6-7 Rejected as not proven. 8-10 Subordinate to the facts as found. 11-15 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer counts. Subordinate to the facts as found. Rejected as a conclusion of law 19-29 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 30-31 Subordinate to the facts as found. 32 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. 33-38 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Rejected as a conclusion of law. 43-47 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 48 The first sentence is rejected as a conclusion of law. The second sentence is accepted,. 49-50 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 51 Accepted as covered in FOF 18. 52-53 Subordinate to the facts as found. 54-55 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 56 Rejected in part as a conclusion of law. The remainder is covered in substance. 57-59 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 60 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 61-62 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 63 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 64-71 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 72 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 73-74 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected in part as a conclusion of law. Otherwise accepted. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 78-79 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 66-68. 80-83 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 86-87 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 20,24, 72-76. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 90-95 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected because not proven as stated. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 98-99 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 100-102 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 106-111 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 117-118 Rejected in part and accepted in part as covered in FOF 90-91. 119-124 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as misstating the primary party. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 123 and respective customer count. 128-130 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 133-138 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 139 Rejected as contrary to the record as a whole. 140-145 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 146-147 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 148-150 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 153-157 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 158 Rejected as a conclusion of law. 159-162 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Respondent's PFOF: 1-18 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 19-20 Rejected because misleading and non-dispositive as stated. See FOF 17-20. 21 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 22-25 Unnecessary. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. Immaterial 28-37 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 38 Accepted but not dispositive 39-42 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 43 Rejected as not proven. 44-103 Accepted in substance, except that unnecessary, subordinate, and/or cumulative material has not been utilized, and some further explanation has been added. Some matters have been considered on the issue of credibility but not incorporated. 104 Rejected because not proven as stated. 105-108 Covered only as necessary in FOF 23-24 109-112 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. The primary party has been indicated. 113-124 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, and as stating a conclusion of law. 125-128 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 129-133 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, an as stating a conclusion of law. 134-137 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. COPIES FURNISHED: Michael K. McCormick, Esquire David D. Hershel, Esquire Daniel T. Gross, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Robert S. Cohen, Esquire Post Office Box 10095 Tallahassee, Florida 32302 Bill O'Neil, Esquire Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399 Dan Sumner Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue is whether Respondent is guilty of an unfair or deceptive trade practice by selling ancillary insurance products to customers without adequate disclosure, in violation of Sections 626.9541(1)(z) and 626.621(6), Florida Statutes.
Findings Of Fact At all material times, Respondent has been a licensed general lines agent, holding license number A192887. She has been licensed for 15 years and has not been disciplined. From January 2000 to July 2007, Respondent was employed by Econo Insurance Agency in Deerfield Beach. She was employed to sell insurance and otherwise serve customers. Econo Insurance Agency paid Respondent a salary, but she earned commissions from the sales of ancillary products. This case involves the sale of two products ancillary to personal injury protection (PIP) coverage: an accidental medical supplement (also known as an accidental medical protection plan) to pay the $1000 deductible under the PIP policy commonly sold by the agency and a motor club membership plan to pay for towing and a rental car. On July 27, 2004, Denise Parker visited Econo Insurance Agency to renew her PIP coverage. She had obtained her insurance from Econo Insurance Agency for 17 years. Ms. Parker initially testified that she did not meet with Respondent, but instead met with another woman, Crystal Fowler. Ms. Parker testified unequivocally that she dealt with Respondent on other occasions, but did not on July 27 and that Ms. Parker did not purchase insurance from Respondent "that year." At the hearing, Ms. Parker looked at Respondent and stated that she was not the woman with whom she had dealt on the day in question. After a short break, Ms. Parker testified that Respondent, not Ms. Fowler, sold her the product in question, an accidental medical supplement. The confusion may be attributable to the fact that Ms. Parker made two visits to the agency. The first was on July 27 to arrange for the renewal of her PIP coverage, and the second was on August 2, 2004, to pay for and obtain her policy. However, the testimony of Ms. Parker precludes assigning responsibility to Respondent, rather than Ms. Fowler, for any acts or omissions that may have taken place during the July 27 and August 2 office visits. Although documentation, described below, bears Respondent's signature, this fact does not preclude a division of responsibilities between Respondent and Ms. Fowler, who may nonetheless have presented the coverage options to Ms. Parker. On July 27, Ms. Parker signed a number of documents at the agency. One of the documents is an application to purchase an accidental medical protection plan for up to $1000 in benefits for a premium of $110. According to the application, this coverage is administered by National Insurance Underwriters, Inc., in Deerfield Beach and, according to the policy, the coverage is underwritten by "certain Underwriters at Lloyd's, London (not incorporated)." (The telephone number for claims is the same as the telephone number shown in the motor club membership plan, described below, administered by "National Safe Drivers" or "Nation Safe Drivers," so Petitioner and Respondent have tended to refer to National Safe Drivers as the obligor, or its agent, under both ancillary products.) The application clearly discloses the optional nature of the accidental medical supplement coverage. Immediately above Ms. Parker's signature is a statement: "The purchase of this plan is optional and is not required with your auto insurance policy." Beside Ms. Parker's signature and bearing the same date is the signature of Respondent, attesting that three other carriers denied this coverage. The premium finance agreement and disclosure statement, which is a single form signed by Ms. Parker on July 27, 2004, shows a premium for PIP coverage and a $110 premium to Nations Safe Drivers for accidental medical supplement coverage. The renewal premium notice discloses, immediately above Ms. Parker's signature, which is dated July 27, that she has elected the $1000 deductible on her PIP coverage. On August 21, 2004, Luery Moreno visited the Econo Insurance Agency to purchase automobile insurance. She met with Respondent and agreed to purchase the insurance from her. On this day, Ms. Moreno purchased an accidental medical supplement, even though she testified that Respondent never mentioned the accidental medical supplement that she purchased, or that this coverage was not required under Florida law. Initially, Ms. Moreno stated that this was her first visit to the Econo Insurance Agency, but, on cross-examination, she admitted that her recollection of the events of August 21 was not "clear." Upon the presentation of coverage that she had purchased in June 2003 from Econo Insurance Agency, Ms. Moreno recalled that she had purchased automobile insurance from the same agency in June 2003, that she had purchased the accidental medical supplement at that time, and that she might have asked Respondent for the same coverages when she visited the office in August 2004. In fact, Ms. Moreno had submitted a claim under the motor club membership plan that she had purchased in June 2003. As in June 2003, Ms. Moreno completed an application on August 21, 2004, for accidental medical supplement coverage. The applications both state, above her signature: "The purchase of this plan is optional and is not required with your auto insurance policy." The premium finance agreement and disclosure statement show the separate premiums for the PIP and accidental medical supplement coverages and is signed by Ms. Moreno. Because Ms. Moreno secured coverage with the Florida Automobile Joint Underwriting Association (JUA), she obtained a summary of coverages and premium, which clearly reveals that she was purchasing PIP (as well as property damage), medical payments, and towing and car rental reimbursement, although the summary of coverages and premium form fails to itemize premiums for each product, instead showing a gross premium for all coverages. Although Ms. Moreno disputed her signature on one or more of the documents, the evidence failed to establish that she did not sign all of the relevant documents. On July 30, 2004, Megan McCartin visited Econo Insurance Agency to obtain PIP coverage. She met with Respondent and agreed to purchase insurance from her. Ms. McCartin selected Econo because her family had purchased insurance from this agency in the past. Initially, Ms. McCartin testified that this was the first time that she had obtained insurance, so she brought her mother with her to help with the transaction. When presented with documents showing that she had purchased insurance from Econo Insurance Agency in July 2003, Ms. McCartin recalled that the July 2004 visit was for the renewal of the coverage that she had purchased the prior year. Most of Ms. McCartin's testimony on direct concerned the transaction in which her mother helped her, which was probably the July 2003 transaction. The documentation from the July 2003 transaction discloses that Ms. McCartin had purchased the accidental medical supplement coverage and towing and car rental reimbursement for the prior year. On July 30, 2004, Ms. McCartin renewed these coverages for the year in question. Both years, Ms. McCartin signed the applications for the accidental medical supplement with the same disclosure noted above. The premium finance agreement and disclosure statement shows the separate premiums for the PIP and accidental medical supplement coverages and the signature of Ms. McCartin. Because Ms. McCartin was purchasing insurance from the JUA, she also received a summary of coverages of premium, which clearly discloses the existence of medical payments and towing and car rental, in addition to PIP. On October 26, 2004, Ashley McCartin, Megan's sister, visited the Econo Insurance Agency to renew her automobile insurance. She met with Respondent and agreed to purchase insurance from her. Ms. Ashley McCartin testified that she had purchased automobile insurance previously from the agency and wanted only the minimum coverage required by law. Ms. Ashley McCartin recalls speaking with Respondent for nearly an hour and listening to Respondent's description of the towing package, but testified that Respondent said nothing about an accidental medical supplement or accidental medical protection plan. Ms. Ashley McCartin testified that Respondent told her that, with this insurance, she obtained towing coverage, which Ms. McCartin thought would be useful because her car was unreliable. At all times, though, Ms. McCartin intended to purchase only what the law required due to her strained financial circumstances. The documentation discloses that Ms. Ashley McCartin purchased a motor club membership plan in 2003 and 2004 and that she signed an application for an accidental medical supplement with the same disclaimer as contained in the applications described above. She also signed a JUA summary of coverages and premium, which shows, as separate items, PIP, medical payments, and towing and car rental. Likewise, Ms. McCartin signed a premium finance agreement and disclosure statement, which shows separate premiums for the PIP and accidental medical supplement coverages. The PIP coverage cost her $1450, and the accidental medical supplement cost her $110. On November 19, 2004, Alta Thayer visited Econo Insurance Agency to purchase automobile insurance. She met with Respondent and agreed to purchase insurance from her. Now 74 years old, Ms. Thayer admitted that she did not recall purchasing insurance in 2004, but seemed to recall generally a transaction with Respondent, subject to the limitations noted below. Ms. Thayer drove to the agency in a 2002 Hyundai, which was insured through the Marlin Insurance Agency, but she wanted to insure another car, a Lincoln Continental. While testifying, Ms. Thayer displayed irritation with many aspects of her transaction with Respondent. Ms. Thayer testified that other insurance agents all took photographs of the insured vehicle and checked the odometer, but Respondent did not try--it is unclear whether, when Respondent declined to photograph the car, Ms. Thayer had already informed her that the vehicle to be insured was not parked outside the office. At first, Ms. Thayer testified that Respondent had been "nasty" from the start, but then changed her testimony to say that Respondent became irritable when, the next day, Ms. Thayer returned in connection with some tag work. Ms. Thayer testified that the insurer canceled her insurance on the day after she had obtained it, on the ground that she had another car, presumably the Hyundai, insured with another company. While Ms. Thayer sat and waited to be taken care of, she complained that the receptionist and Respondent chatted. When Ms. Thayer complained, she claimed that Respondent told her to file a complaint, "you old bag." Ms. Thayer testified that she and Respondent never discussed a motor club membership plan, nor did she need one. Perhaps again confusing the two cars, Ms. Thayer "explained" that the Hyundai was only two years old and had come with a five-year roadside assistance program. When reminded that she was insuring the Lincoln, Ms. Thayer testified that it had never given her problems. On November 19, 2004, Ms. Thayer signed an automobile service contract for a motor club membership plan for a "1990" Lincoln Continental. The contract calls for the payment of a $50 fee in return for towing and emergency road service and car rental reimbursement. Unlike the application for the accidental medical supplement, the application for the motor club membership plan includes no disclaimer that this plan is optional and not required with the PIP coverage. On the same date, Ms. Thayer also signed a summary of coverages and premium, which shows separate PIP and towing and car rental coverages. Four of these five transactions fail to present cases of liability without regard to the testimony of Respondent. Ms. Moreno's recollection of her transaction is impossible to separate from her recollection of the prior year's transaction. Ms. Moreno's admission that she may have asked merely for the same coverage from the prior year undermines the remainder of her testimony. Ms. Parker's recollection of her transaction is flawed by her misidentification of Respondent and the resulting possibility that Ms. Fowler, not Respondent, is guilty of the acts and omissions of which Ms. Parker complains. Ms. Megan McCartin's recollection of her transaction is impossible to separate from her recollection of the prior year's transaction. As is the case with Ms. Moreno's transaction, Ms. Megan McCartin's transaction renewed the same accidental medical supplement coverage that she had obtained the prior year with the same documentation, so it is more difficult, on this ground as well, to find Respondent guilty of any concealment or misrepresentation as to the accidental medical supplement. Ms. Thayer displayed serious credibility problems--of confusion, not prevarication. Ms. Thayer's testimony was confused at several points, as in her "explanation" that her new Hyundai did not require towing coverage when she was insuring a 14-year-old Lincoln. Repeatedly, Ms. Thayer referred to her Lincoln as a 1980 model, then a 1990 model, then a 1980 model, even after inquiry by the Administrative Law Judge intended to draw her attention to the issue and resolve it. Ms. Thayer was visibly angry at Respondent at the hearing and was decidedly adversarial as a witness. Perhaps her anger stemmed from the immediate cancelation and the agency's mishandling of her transaction, as her application revealed, on its face, that she owned another vehicle for which she was not seeking insurance. But Ms. Thayer seemed to be looking for things with which to fault Respondent, such as her failure to get up out of her chair and walk outside to photograph and inspect the car that Ms. Thayer had driven to the agency, even though this was not the car to be insured. Still working four days each week in the fitting room at Marshall's department store, Ms. Thayer proved an energetic, though not always responsive, witness, whose eagerness to bolster her own credibility extended to the assertion, late in her testimony, that she had a top secret clearance from the Korean War. After observing Respondent's demeanor during testimony and at hearing and comparing it to the demeanor of Ms. Thayer, it is highly unlikely that Respondent called Ms. Thayer an "old bag"--a fact that raises grave problems with the reliability of the rest of Ms. Thayer's testimony. The transaction with Ms. Ashley McCartin presents the only case of sliding undisclosed coverages carrying extra premiums by Respondent. Seeming to bear no grudge against Respondent, Ms. Ashley McCartin testified frankly that she told Respondent that she wanted the minimum coverage, and Respondent said nothing about an accidental medical supplement or accidental medical protection plan. However, Ms. McCartin clearly signed forms asking for this coverage and acknowledging the fact that it was not included in her PIP premium. Respondent testified that she sold 100-150 policies per month and was responsible for the tag and title work associated with these sales. A typical customer never asked just for PIP, but asked instead for minimum coverage. Respondent would take 10-15 minutes per transaction to explain bodily injury and underinsured motorist coverages and the consequences of not purchasing these items, which also offered Respondent commission income. Respondent offered accidental medical supplement and the motor club membership plan to most of her customers. Respondent testified that she told her customers that these ancillary products were "included" with their coverages. She recalled that one of the McCartins was "delighted" upon hearing that such coverage was "included," clearly suggesting that Respondent's "explanation" implied that the ancillary coverage was at no additional expense, or at least that the customer so inferred. There is some discrepancy between the versions of Ms. Ashley McCartin and Respondent. Ms. McCartin testified that Respondent never mentioned the accidental medical supplement, and Respondent testified that she always assured the customer that the ancillary coverage was "included" in the primary coverage. However, Ms. McCartin's testimony reveals little knowledge of insurance products and is consistent with her "understanding" that the medical coverage of $1000 was just part of PIP. Such a misunderstanding would be facilitated by Respondent's misleading assurance--repeated more than once at the hearing--that the accidental medical supplement is "included" with the PIP. Respondent's testimony that she assured her customers that ancillary products were "included" with the PIP coverage does not override the deficiencies noted above as to the other four customers. Ms. Parker essentially cannot say who said what to her, so, even if Respondent were misleading her customers at the time as to the relationship between ancillary products and PIP, nothing establishes that she did so with Ms. Parker. Ms. Moreno may well have told Respondent to give her the same coverage as she had the prior year, during which she had filed a claim under the motor club membership plan, so Respondent would never have had the need to "explain" to Ms. Moreno the relationship of the ancillary products to the PIP product. Ms. Thayer is the only customer who did not purchase both ancillary products, which suggests either discernment on her part or restraint on the part of Respondent--but, either way, Ms. Thayer may have obtained what she wanted. She is also the only customer for whom the alleged ancillary product is the motor club membership plan, which might reasonably have represented an attractive purchase to Ms. Thayer given the age of her Lincoln. Ms. Megan McCartin presents the closest case among the four remaining customers, but her inability to differentiate between the 2003 and 2004 transactions precludes a finding of sliding by the requisite standard of proof.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order finding Respondent guilty of one count of violating Sectios 626.9541(1)(z)2. and 3., Florida Statutes, and, thus, Section 626.621(6), Florida Statutes, and imposing a thirty-day suspension. DONE AND ENTERED this 30th day of April, 2008, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2008. COPIES FURNISHED: Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 William Gautier Kitchen, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Jed Berman, Esquire Infantino and Berman Post Drawer 30 Winter Park, Florida 32790
Findings Of Fact Petitioner, an association of automobile insurers, has standing to prosecute the instant challenge on behalf of its members. Insurance is classified into the following "kinds" of insurance: life, health, property, casualty, surety, marine, and title. Section 624.6011, Florida Statutes. The kinds of insurance at issue here are health, property, and casualty insurance. In the broadest sense, health insurance protects named beneficiaries against bodily injury, disablement, or death resulting from an accident or sickness. Section 624.603, Florida Statutes. Traditional property insurance protects the real or personal property of named insureds against loss or damage to that property. Section 624.604, Florida Statutes. Casualty insurance historically gives liability protection to the named insured or beneficiary for loss or damage to the person or property of others. However, by statutory definition, a casualty insurance policy may also provide benefits to the named insured or beneficiary for certain losses or damage to person and property irrespective of liability. Section 624.605, Florida Statutes. The various kinds of insurance are not mutually exclusive. Section 624.601, Florida Statutes. Some insurance policies provide benefits which may be classified as more than one kind of insurance. Casualty insurance is statutorily divided into "types" of insurance including, but not limited to, vehicle insurance. Section 624.605(1)(a), Florida Statutes. For purposes of this challenge to the proposed rule, vehicle insurance includes two "lines of business" for private passenger automobiles: automobile liability and automobile physical damage. The automobile liability line of business includes, but is not limited to, no-fault personal injury protection (PIP) coverage and property damage liability coverage. The property damage liability component of automobile insurance is a classic example of casualty insurance which provides coverage for insureds in the event they become liable for damage to property of others arising out of the use of a motor vehicle. Section 627.7275, Florida Statutes. Pursuant to Section 627.736, Florida Statutes, PIP coverage provides benefits to: the named insured, relatives residing in the same household, persons operating the insured's motor vehicle, passengers in such motor vehicle, and other persons struck by such motor vehicle and suffering bodily injury while not an occupant of a self- propelled vehicle, . . . for loss sustained by any such person as a result of bodily injury, sickness, disease, or death arising out of the ownership, maintenance, or use of a motor vehicle . . . . PIP is not a traditional component of vehicle insurance. It was created by the Florida legislature as part of the Florida Motor Vehicle No-Fault Law (Sections 627.730 through 627.7405, Florida Statutes) in the early 1970's. PIP provides medical, surgical, funeral, and disability benefits, irrespective of fault, so that covered persons could reap those benefits, without resort to litigation. PIP is a hybrid form of insurance which provides benefits directly to the named insured and liability coverage for injury to other persons, i.e., passengers and by-standers. As an integral part of the no-fault law, PIP is not traditional health insurance. It cannot be issued without automobile property damage liability coverage. Section 627.7275(1), Florida Statutes. PIP is casualty/vehicle insurance which currently is creating increased losses in the insurance industry. The automobile physical damage line of business includes comprehensive and collision coverage for property damage to the insured's vehicle. Automobile comprehensive insurance coverage ordinarily protects the insured vehicle from risks and perils such as broken glass, theft, or a rock hitting the car. Automobile collision insurance coverage generally protects the insured vehicle from its collision with another vehicle or object. An automobile insurance contract is a liability insurance contract because of its property damage liability component. All coverages under an automobile policy are incidental to and issued as a part of the property damage liability component. Only those insurance carriers licensed to write automobile insurance may provide these coverages. Accordingly, the proposed rule correctly requires premiums for all automobile insurance coverages to be reported as casualty insurance on the automobile liability and automobile physical damage lines of business. Approximately 1,100 property and casualty insurers must regularly report their financial condition to Respondent. Some of these insurers are authorized to do business only in the state of Florida. Others hold certificates of authority to do business in multiple states or nationally. Every insurer authorized to do business in the state of Florida, whether domestic or foreign, currently reports its financial condition on annual and quarterly statements approved by the National Association of Insurance Commissioners (NAIC). These reports allow Respondent to review the financial solvency of insurers. The NAIC quarterly statement (Page 18) lists lines of business and requires the insurer to report information relating to loss experience (Part 1) and direct premiums written (Part 2) for each line of business including, but not limited to, auto liability and auto physical damage. This schedule does not list any other line of business pertaining specifically to automobile insurance, whether commercial or private. The NAIC annual statement (Page 8) lists lines of business and requires the insurer to report information relating to recapitulation of all premiums (Part 2A) and premiums written (Part 2B) for each line of business including, but not limited to, auto liability and auto physical damage. This schedule does not list any other line of business pertaining specifically to automobile insurance, whether commercial or private. All insurers doing business in the state of Florida must file an additional state schedule (Page 14) with their annual report relating to premiums and losses for business transacted in Florida. This schedule lists lines of business including, but not limited to, private passenger auto no-fault (PIP), other private passenger auto liability, and private passenger auto physical damage. This form does not list any other line of business pertaining specifically to private passenger automobile insurance. Section 624.6012, Florida Statutes, requires Respondent to classify "kinds" of insurance into "lines of insurance" consistent with the reporting requirements of the NAIC. The proposed rule lists auto liability and auto physical damage as the only lines of business pertaining to automobile insurance consistent with NAIC's quarterly statement (Page 18) and annual statement (Page 8). As to automobile insurance, NAIC's quarterly statement (Page 15) and annual statement (Page 8) are the only reporting schedules that are appropriate for use in determining the adjusted ratios of gross and/or net written premiums to surplus pursuant to Section 624.4095(4), Florida Statutes. The schedule for reporting premiums written in the state of Florida alone (Page 14 of the NAIC annual statement) is not appropriate because the adjusted ratios apply to a company's gross and net premiums regardless of the state in which they were written. To require insurers to include information on the Florida only schedule for premiums written in every state would require a report not authorized by Florida law or NAIC. Additionally, the quarterly statement (Page 18) and the annual statement (Page 8) are appropriate because adjusted ratios may be calculated on an annualized basis, at any time during the year. The Florida only schedule (Page 14) is filed only once a year. The proposed rule lists homeowners multi peril as a line of business under the property kind of insurance. It does not contain a separate listing for mobile home homeowners insurance. Under the current version of the proposed rule, mobile home property insurance which is written on an automobile physical damage policy form (mobile home physical damage coverage), is reported on the automobile physical damage line of business as casualty insurance. Homeowners multiple peril is also listed as a line of business on the NAIC's quarterly statement (Page 18) and annual statement (Page 8). The state schedule (Page 14 ) lists separate lines of business for homeowners multiple peril and mobile homeowners multi peril. Property insurers usually provide homeowners insurance for damage to a dwelling or a mobile home on a property insurance policy form. Consequently, they are subject to assessment for windstorm insurance risk apportionment pursuant to Section 627.351(2), Florida Statutes. Mobile home physical damage coverage is substantially similar to traditional homeowners insurance. The former is a limited type of homeowners insurance which protects the mobile home estate from fire and other damage to structure and contents. Carriers selling mobile home physical damage coverage are not subject to assessment for windstorm insurance risk apportionment. Section 320.01(1), Florida Statutes, does not include a mobile home within the definition of a motor vehicle. Section 320.01(2), Florida Statutes, provides a separate definition for a mobile home for purposes of licensing and taxation. Section 627.732(1), Florida Statutes, specifically excludes a mobile home as a motor vehicle for purposes of the Florida Motor Vehicle No-Fault Law. The only record evidence presented at the final hearing relative to mobile home insurance indicates that it is not casualty insurance, regardless of the policy form on which it is written, and should not be reported as such. Respondent's own expert opined that mobile home physical damage coverage is property insurance rather than casualty insurance. In response to confusion in the insurance industry, Respondent published the proposed rule to clarify how the premium adjustment factors of Section 624.4095, Florida Statutes, applied to various "lines of business." The proposed rule lists specific lines of business for each kind of insurance. Some of the lines listed under casualty insurance have a long tail meaning that a claim may not materialize for a long time, i.e., medical malpractice. Other lines of casualty insurance have a short tail with a high loss ratio like automobile liability and automobile physical damage. Restriction of premiums written for risks with long tails or high loss ratios helps to limit the volume of losses which is directly related to an insurer's solvency. Record evidence indicates that claims on automobile insurance policies do not have long tails. However, insureds often make multiple claims on their automobile coverages within the same policy period resulting in high loss ratios. There is no record evidence that claims on mobile home physical damage coverage take any longer to materialize than claims on mobile home property insurance written on the traditional homeowners policy form. Moreover, there is no record evidence relative to loss ratios for mobile home insurance premiums. The only evidence presented pertaining to the risk of mobile home insurance indicates that all such coverages should be reported as property insurance and subject to assessment for wind storm risk apportionment. Under Section 624.4095, Florida Statutes, a company can write less casualty insurance relative to its surplus as to policyholders than health or property insurance because casualty insurance has a higher adjustment factor. Respondent did not ignore or contravene Section 624.601, Florida Statutes, or any of the statutes implemented, when it drafted the proposed rule as it relates to private passenger auto no-fault (PIP), private passenger automobile property damage liability, and private passenger automobile physical damage including comprehensive and collision coverage. However, for purposes of this proposed rule, Respondent never considered classifying mobile home physical damage coverage as property insurance rather than as casualty insurance. A plain reading of Section 624.605(1)(a), Florida Statutes, includes all coverages for private passenger automobile insurance but not coverage for mobile home physical damage. Competent substantial evidence indicates that Respondent acted arbitrarily and capriciously when it designed the proposed rule to include premiums written for mobile home estates in the automobile physical damage line of business under casualty insurance solely because it is written on an automobile physical damage policy form.
The Issue The issue presented is whether Respondent, a licensed insurance agent, is guilty of violating the statutes regulating the conduct of an insurance agent, and if so, what disciplinary action should be taken against him, if any.
Findings Of Fact At all times material hereto, Respondent has been eligible for licensure and licensed as a life and health insurance agent and as a dental health care contract salesman. For many years, Respondent had also been licensed to solicit general lines -- property, casualty, surety, and miscellaneous lines -- insurance in this state. Respondent was unaware that this license expired on March 24, 1987. At all times material hereto, Respondent was, however, eligible for licensure as a general lines agent. At all times material hereto, Respondent was one of the officers of Johnson's Model City Insurance Agency #1, Inc., a Florida corporation. That corporation was involuntarily dissolved on November 4, 1988. On December 30, 1986, Respondent telephoned Petitioner to discuss the propriety of an insurance agent charging a consulting fee. Following that telephonic conversation, an attorney for Petitioner directed correspondence to Respondent confirming that telephone conversation, advising that a consulting fee could legally be charged under certain circumstances. Those circumstances included the use of a separate consulting contract between the agent and the insured so that the insured would fully understand that he or she was entering into a separate contract and paying a separate consideration in advance of the performance of consulting services. Additionally, the services rendered must be other than those normally provided by an insurance agent. Further, if a separate consulting contract were effectuated, an agent could set up a separate consulting corporation to enter into such contracts. Hartford Insurance Company sells automobile insurance in the State of Florida by use of a toll-free telephone number. People who know the telephone number can call Hartford directly, obtain a quote for automobile insurance, and purchase a policy directly from Hartford. Hartford has no insurance agents in the State of Florida and pays no commissions to insurance agents in Florida for the obtaining of automobile insurance customers. A person can obtain a quote in writing from the Hartford in advance of purchasing a policy. Sometimes, the quotation card and the policy are issued and mailed simultaneously by Hartford to its new insureds. On September 20, 1987, Patricia Moss telephoned J. M. C. Insurance Consultants pursuant to an ad in the telephone yellow pages. She inquired about obtaining automobile insurance to replace her current policy which would expire on September 22, 1987. She spoke with an employee named Betty who advised her that she could obtain replacement insurance at a cost of $927. Since the cost quoted to her was substantially lower than the prices she had been quoted by the other agencies she had consulted, Moss went to the offices of J. M. C. on September 21, 1987. Betty presented Moss with a number of documents to sign. She signed a Power of Attorney appointing Johnson's Model City Insurance, Inc., doing business as JMC Insurance Consultants as her attorney-in-fact to obtain insurance for her, specifically ratifying and confirming actions taken on her behalf by J. L. Johnson- consultant. She also executed an Agreement with Consultant specifying the services that JMC Insurance Consultants would perform on her behalf. She signed a further statement which provided that: "I understand that JMC Insurance is acting as Consultants for my insurance placement and is entitled to any and all consultation fees." She also signed a document written in boldfaced type which states: IMPORTANT NOTICE THIS LETTER IS TO INFORM YOU THAT JMC INSURANCE CONSULTANTS ARE NOT AGENTS NOR DO WE REPRESENT HARTFORD INSURANCE COMPANY IN ANY WAY WHATSOEVER. WE REPRESENT "YOU" THE CLIENT AND WE ACT IN YOUR BEHALF WITH THE RIGHT THAT YOU GIVE US THROUGH A POWER OF ATTORNEY. WE ENDEAVOR TO PLACE YOUR AUTO INSURANCE FOR YOU ON YOUR BEHALF. WE ARE YOUR CONSULTANT. IF YOU HAVE A PROBLEM PLEASE CALL US WE ARE HERE TO HELP AND ACT IN YOUR BEHALF. CALL US FIRST. LET US HANDLE IT. CLIENT. I HAVE READ AND I UNDERSTAND. Moss gave JMC Consultants a check in the amount of $262.50 for which she was given a receipt which carried the specific notation that the money she had paid was for an insurance consultant's fee. She was also given a small card entitled Insurance Identification Card on which Betty filled in information showing that she would be insured by Hartford effective on the following day and specifically describing the coverage provided, the automobile insured, and the name and address of Moss. Within a week she received directly from the Hartford an insurance policy for the benefits which she sought. The policy itself reflected that the premium for the policy was $632 and that she would be receiving a bill from Hartford for that amount. She telephoned Betty, demanding a refund of her $262.50, which demand was refused. Betty explained to her that the amount was for the consultant's fee for obtaining the low- cost coverage for Moss. Hartford's direct marketing program does allow people to purchase insurance on someone else's behalf utilizing a Power of Attorney. Although Hartford's records do not reflect a Power of Attorney from Moss to J. M. C. Consultants or Respondent, Hartford's records regarding their policyholder Moss are not accurate. For example, they erroneously reflect that they quoted a rate to Moss on September 15, a week before they received any contact on her behalf. Although Moss testified that Betty told her the $262.50 was the down payment on her insurance premium, her testimony is not credible in view of the numerous documents that she signed stating that she fully understood that Respondent was not an agent for Hartford, that Respondent would be acting on her behalf pursuant to the Power of Attorney and Consultant's Agreement which she had signed, and the other documents reflecting that the $262.50 was a consultant's fee which she was paying to Respondent to act on her behalf. Her testimony that she did not understand is refuted by the documents she signed saying that she did. There is no allegation that Moss, a retired registered nurse, was unable to read. Rather, it is concluded that Moss voluntarily chose to pay the Hartford premium plus Respondent's consulting fee since the total price for the two charges was still substantially less than she could have obtained insurance for from other sources. Allstate Insurance Company is an insurer which sells insurance policies through their agents in the State of Florida. It also has a division which participates in Florida's Joint Underwriting Association (hereinafter "FJUA"), a program through which high-risk drivers who cannot obtain insurance in the regular voluntary insurance market can obtain automobile insurance. Prior to the time that his general lines agent license expired, Respondent participated in that program and was assigned to write insurance for Allstate for policyholders participating in the program. The Producers Contract entered into between Respondent and the FJUA, which assigned him to Allstate Insurance Company, provided that it would automatically terminate if an agent's general lines license expired. On July 22, 1988, James Tillie came to the office of J. M. C. to procure automobile insurance for the van that he used in his business. After meeting with Respondent, Tillie gave Respondent a check in the amount of $204 as a down payment on an automobile insurance policy. The check was endorsed and deposited into the business bank account of J. M. C. Respondent gave James Tillie an automobile insurance binder which reflected that his insurance policy was to be issued through Allstate Insurance Company. Under the terms of Respondent's contract with the FJUA, Respondent was required to submit James Tillie's application and premium to Allstate within 24 hours. The FJUA application acts as a binder. Once the application is completed and the premium is paid to the agent, the insured has automatic coverage for 30 days during which time the carrier, Allstate in this case, can act on the application. There is no evidence as to when Respondent forwarded James Tillie's application to Allstate; however, Allstate has no record of ever receiving the application. Respondent did tell James Tillie that within a couple of months he would receive from Allstate his policy and instructions for payment of the balance of his premium. After a month or two had elapsed, James Tillie became concerned since he had not yet received his insurance policy. He contacted Respondent who assured him that he did have insurance coverage. Shortly thereafter, James Tillie received in the mail from Respondent a card entitled Insurance Identification Card. On that card information had been filled in showing a policy number, the effective date, the insurance company as Allstate Insurance Company, a description of the insured vehicle, and the name and address of James Tillie. This is not an official Allstate identification card, and no one purported it to be such. An official Allstate Insurance card is issued by Allstate as part of the policy issued by it. On September 23, 1988, Sina Tillie, James' mother, visited J. M. C. for the purpose of purchasing automobile insurance for her new automobile. Sina Tillie is an elderly person who had never before owned an automobile or possessed a driver's license. She wished to purchase insurance on a brand- new automobile. Sina Tillie gave Respondent $1,828 in cash as full payment of the policy's annual premium. Respondent gave her an insurance binder which reflected that her insurance was placed with Allstate. Allstate has no record of receiving Sina Tillie's application and premium from Respondent. Subsequently, Sina Tillie became concerned when she had not yet received her insurance policy. She asked her daughter to contact Respondent. Respondent advised her daughter not to worry. He then mailed to Sina Tillie an Insurance Identification Card similar to the one which he had provided to James Tillie reflecting James' coverage. He also telephoned Sina Tillie to assure her that if anything happened, all she would need to do would be to show the card saying that she was covered and to contact him. Since neither he nor his mother had received a policy from Allstate, James Tillie called Allstate. He did not know that there were, in effect, two Allstates. The Allstate office which he contacted was a regular Allstate office which markets insurance to customers who call or come in, and not an office affiliated with the FJUA program. The person with whom he spoke told him that neither he nor his mother were insured by Allstate and that the policy numbers reflected on the Insurance Identification Cards given by Respondent to James and his mother were not Allstate policy numbers, but rather were binder numbers. James Tillie then contacted Respondent who consistently maintained that both James and Sina were insured. Respondent contacted Allstate regarding James' and Sina's policies. James Tillie came to the office of J. M. C. and met with Respondent. He advised Respondent that he and his mother had obtained insurance elsewhere and requested refunds of the premiums that he and his mother had paid. Respondent told Tillie that he could not refund the premiums since both James and his mother were insured in exchange for those premiums. Respondent eventually told James Tillie that he would refund the premiums if the Tillies would sign releases. James Tillie maintained that he would sign releases only after he had received the refund of the premiums. The meeting ended in stalemate. James Tillie contacted Petitioner, and Petitioner contacted Respondent. Respondent maintained that he would refund the premiums in exchange for a release. Petitioner forwarded a copy of Respondent's letter to James Tillie. Respondent eventually made arrangements with James and his mother to refund the premiums in monthly payments since he did not have the money to refund the premiums in full. By the time of the final hearing in this cause, Respondent had only refunded the total amount of $600 to the Tillies. At the time that Respondent's general lines agent license with Integrity Insurance Company was cancelled on March 24, 1987, he believed that he was being re-licensed by Fortune Insurance Company. However, he never received a license for or from Fortune and never checked to ascertain why.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of statutory violations as set forth in this Recommended Order and suspending Respondent's licensure and eligibility for licensure for a period of 60 days from the date of the Final Order entered in this cause. DONE and ENTERED this 13th day of June, 1990, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of June, 1990. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-3, 7-9, 14-19, 21-26, and 28-32 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 4-6, 10, 11, 13, 20, and 27 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed finding of fact number 12 has been rejected as being unnecessary for determination of the issues in this cause. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance and Treasurer Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Johnny L. Johnson 17120 Northwest 27th Avenue Opa Locka, Florida 33056 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint issued against her and, if so, what penalty should be imposed.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Licensure Respondent has held a Florida 2-20 general lines (property and casualty) insurance agent license since July 24, 1998, and a Florida 2-15 life (including variable annuity and health) insurance agent license since August 17, 2005. Facts Common to Counts I through V and VIII At all times material to Counts I through V and VIII of the Administrative Complaint, Respondent was employed by O. J. Insurance (O. J.), a Miami insurance agency she had previously owned for approximately 15 years before having sold it in January 2003. Respondent went to work for O. J.'s new owners in or around June 2003. She remained an employee of the agency for approximately two years. During this two-year period, Respondent was the only licensed insurance agent at the agency. The agency's two other employees (one of whom was Respondent's sister, Sonia Pupo) held Florida 4-40 customer representative licenses. Respondent and the agency's two customer representatives were all salaried employees. None of them received a commission. The agency itself, however, received commissions from the insurance companies whose policies it sold. Respondent's performance as an employee of the agency was evaluated on an annual basis. Among the factors considered in the evaluation process was Respondent's productivity (that is, the number of insurance policies she sold). After her first year as an employee of the agency, Respondent received a salary increase based upon the annual evaluation she had received. Facts Relating to Count I On or about December 30, 2003, Blanca Duron went to O. J., where she purchased automobile insurance from United Automobile Insurance Company (United) through Respondent. Respondent filled out the insurance application for Ms. Duron. On the application, Respondent put down that Ms. Duron's address was 5205 Southwest 140th Place, Miami, Florida, knowing that this was not Ms. Duron's correct address. Ms. Duron actually resided on Southwest 7th Street in Miami. At no time did she ever tell Respondent that she lived at 5205 Southwest 140th Place, Miami, Florida. 5205 Southwest 140th Place, Miami, Florida, was in a "territory" having lower insurance rates than the "territory" in which Ms. Duron actually lived. Respondent's purpose in falsifying Ms. Duron's address on the application was to enable Ms. Duron to pay a lower premium than United would have charged had her correct address been entered on the application. Facts Relating to Count II On or about December 6, 2004, Brisaida Castillo went to O. J., where she purchased automobile insurance from United through Respondent. Respondent filled out the insurance application for Ms. Castillo. Respondent put down on the application that Ms. Castillo's address was 5205 Southwest 140th Place, Miami, Florida, knowing that this was not Ms. Castillo's correct address. Ms. Castillo actually resided on Northwest 22nd Court in Miami. At no time did she ever tell Respondent that she lived at 5205 Southwest 140th Place, Miami, Florida. 5205 Southwest 140th Place, Miami, Florida, was in a "territory" having lower insurance rates than the "territory" in which Ms. Castillo actually lived. Respondent's purpose in falsifying Ms. Castillo's address on the application was to enable Ms. Castillo to pay a lower premium than United would have charged had her correct address been entered on the application. Facts Relating to Count III On or about December 10, 2004, Ricardo Fernandez went to O. J., where he purchased automobile insurance from United through Respondent. Respondent filled out the insurance application for Mr. Fernandez. Respondent put down on the application that Mr. Fernandez's address was 5205 Southwest 140th Place, Miami, Florida, knowing that this was not Mr. Fernandez's correct address. Mr. Fernandez actually resided on Essex Avenue in Hialeah, Florida. At no time did he ever tell Respondent that he lived at 5205 Southwest 140th Place, Miami, Florida. 5205 Southwest 140th Place, Miami, Florida, was in a "territory" having lower insurance rates than the "territory" in which Mr. Fernandez actually lived. Respondent's purpose in falsifying Mr. Fernandez's address on the application was to enable Mr. Fernandez to pay a lower premium than United would have charged had his correct address been entered on the application. Facts Relating to Count IV On or about February 1, 2005, Pedro Cruz, Sr., went to O. J., where he purchased automobile insurance from United. It is unclear from the record whether it was Respondent or her sister, Ms. Pupo, who filled out Mr. Cruz, Sr.'s insurance application.4 The application indicated that Mr. Cruz, Sr.'s address was 5205 Southwest 140th Place, Miami, Florida. This was not his correct address. He actually resided on Northwest 18th Street in Miami. At no time did he ever tell Respondent that he lived at 5205 Southwest 140th Place, Miami, Florida. 5205 Southwest 140th Place, Miami, Florida, was in a "territory" having lower insurance rates than the "territory" in which Mr. Cruz, Sr., actually lived. Consequently, Mr. Cruz, Sr., paid a lower premium than United would have charged had his correct address been entered on the application. Facts Relating to Count V On or about December 6, 2004, Pedro Cruz, Jr., went to O. J., where he purchased automobile insurance from United through Respondent. Respondent filled out the insurance application for Mr. Cruz, Jr. Respondent put down on the application that Mr. Cruz, Jr.'s address was 5521 Southwest 163rd Court, Miami, Florida.5 Mr. Cruz, Jr., actually resided on Northwest 18th Street in Miami. At no time did he ever tell Respondent that he lived at 5521 Southwest 163rd Court, Miami, Florida.6 Facts Relating to Count VIII On or about February 3, 2005, Eulogio Martinez went to O. J., where he purchased automobile insurance from United through Respondent. Respondent filled out the insurance application for Mr. Martinez. Respondent put down on the application that Mr. Martinez's address was 5205 Southwest 142nd Place, Miami, Florida. Mr. Martinez actually resided on Northwest 5th Street in Miami. At no time did he ever tell Respondent that he lived at 5205 Southwest 142nd Place, Miami, Florida.7 Facts Relating to Count XI Since September 2005, O.D.C. Insurance Services, Inc. (O.D.C.) has operated an insurance agency (selling Allstate insurance products) at 13860 Southwest 56th Street in Miami, Florida, for which it has not obtained a license. During this period of time, Respondent has been owner, sole officer (president), and registered agent of O.D.C. and responsible for the day-to-day operations of O.D.C.'s Allstate insurance agency. At all times material to Count XI of the Administrative Complaint, Respondent was unaware of the requirement that insurance agencies, such as O.D.C.'s, be licensed.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department issue a Final Order finding Respondent guilty of the violations alleged in Counts I through III of the Administrative Complaint, revoking her licenses for having committed these violations, and dismissing the remaining counts of the Administrative Complaint. DONE AND ENTERED this 24th day of July, 2008, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 24th day of July, 2008.
