The Issue Whether Petitioner is entitled to additional compensation under the Agreement with Respondent?
Findings Of Fact On August 1, 1986, Respondent issued ,Invitation to Bid Number 87-2, which was titled, "Invitation to Bid for Providing Financial Services Related to the Payment of State Employees' Group Health Self Insurance Claims: (Invitation to Bid). Under the terms of the Invitation to Bid, the winning bidder would agree to provide banking services for two interest bearing accounts. One account (Prescription Drug Account), was to be used to transfer funds from the Respondent to Paid Prescriptions, Inc., the administrator of the prescription drug component of the State Employee's Group Health Self Insurance Plan (Plan). The other account (Health Claims Account) was to be used to pay drafts issued by Blue Cross and Blue Shield of Florida, Inc., to participants and providers for payment of all health claims, except prescription drugs. Blue Cross and Blue Shield of Florida, Inc., was the administrator of the Plan, except for Prescription drugs. For both accounts, the Invitation to Bid required that all fees and charges of the winning bidder must be offset by "the required minimum daily balance." The required minimum daily balance was an amount of money which Respondent would have to maintain deposited in the account with Petitioner. Interest earned by the winning bidder on the required minimum daily balance amount would compensate the winning bidder for providing the services required by Respondent. In addition, funds deposited in the accounts in excess of the required minimum daily balance would earn interest credited to the account each month. Responses to the Invitation to Bid were to be evaluated based on the amount of required minimum daily balances and the amount of interest Respondent would earn on funds on deposit in excess of the required minimum daily balance. Appendix 1 to the Invitation to Bid, was titled "Prescription Drug Account Activity" and contained the following information: Estimated number of deposits per month 2 Estimated number of wire transfers per month 2 Average amount per transfer from February 1986 through May 1986 $480,000 Appendix 2 to the Invitation to Bid was Titled "Heath Claims Account Activity" and contained the following information: The following data was collected from the Period May 1, 1985 through April 30, 1986. Average number of drafts paid per month $40,568 Average daily amount of drafts paid $395,398 Average number of deposits per month 8 Average number of stop Payments per month 19 In preparing its response to the Invitation to Bid, Petitioner based its calculations on the number of transactions set forth in the Appendix. Petitioner determined that, to cover its costs plus a 20 percent profit margin, it would need to receive 13.7 cents per draft handled on the Health Claims Account. By using the 13.7 cents per draft, the average number of drafts per month listed in Appendix 2, and by assuming that it could earn 6.3 percent interest on the required minimum daily balance, Petitioner determined that it needed to ask for a required minimum daily balance of $1,059,000, if the funds were to be maintained in a Demand Deposit Account. Before petitioner submitted its response, Mr. Dale Thompson, an employee of Petitioner's, contacted Mr. Andrew Lewis, Respondent's contact for the invitation to bid, to ask a few questions, and make sure Petitioner understood what it was doing. During this conversation, Mr. Thompson asked Mr. Lewis if he had any reason to expect that the average number of drafts listed in Appendix 2 would increase. Mr. Lewis responded that the number reflected what it had been over the last period and that he had no expectation that it would increase. Petitioner submitted a response which asked for a required minimum daily balance of $0.00 for the Prescription Drug Account, contingent upon having the Health Claims Account of $961,216, if funds were to be maintained in a zero interest Certificate of Deposit, $1,059,522, if funds were to be maintained in a Demand Deposit Account. Also, the amounts on deposit in excess of the required minimum daily balance would earn interest based on the current month's auction average of the ninety-day U. S. Treasury Bill Discount Rate, but not less than 4 Percent. Based on Respondent's analysis of the bids submitted by five firms, Petitioner was selected as having submitted the best bid. Thereupon, Petitioner and Respondent entered into and Agreement whereby Petitioner agreed to provide the services set forth in the Invitation to Bid and pay the interest set forth in Finding of Fact 13, supra, in exchange for Respondent's maintaining a required minimum daily balance of $1,059,522 in a Demand Deposit account with Petitioner. Nowhere in the Agreement is there mention of the average number of drafts listed on Appendix 2. Page 6 of the Agreement contains the following language: SECTION VI - ADDITIONAL DOCUMENTS Invitation to Bid Number 87-2, mailed August 1, 1986 and Capital City's Response to Invitation to Bid Number 87-2 are incorporated herein by reference, except where there is a conflict between this Agreement and the Invitation to Bid shall take precedence over Capital City's Response to the Invitation to Bid. Petitioner began performing services under the Agreement on November 8, 1986, and continued to do so until December 31, 1987, when the agreement expired. Immediately after beginning to perform services, the number of drafts being processed in the Health Claims Account exceeded the number Petitioner had anticipated. This continued for the entire period of the Agreement, during which Petitioner processed the following number of drafts: Nov. 8 - Nov. 30, 1986 38,291 December 55,313 January, 1987 59,887 February 73,309 March 74,468 April 68,654 May 67,911 June 81,065 July 86,838 August 74,337 September 82,846 October 85,624 November 74,474 December 76,374 Monthly Average 72,217 On April 21, 1987, Petitioner, requested that Respondent pay additional compensation to Petitioner based on 13.7 cents per draft for the number of drafts which were being processed in excess of the number reflected on Appendix 2 of the Invitation to Bid. By letter dated May 25, 1987, Respondent denied Petitioner's request, stating that the "unpredictable fluctuations in the volume of drafts was a business risk agreement." Petitioner's Exhibit 4.. After further oral communications between the parties, Petitioner requested an administrative hearing regarding its request for additional compensation. The number of drafts paid from Respondent's, account during May, 1985 through April 1986, which formed the basis for the average number of drafts listed on Appendix 2 were: May 1985 32,783 June 28,045 July 32,697 August 32,822 September 34,923 October 41,430 November 41,491 December 39,136 January 1986 53,103 February 51,390 March 50,775 April 48,176 Total $486,811 Additionally, the number of drafts paid in May, June and July, 1986 were 44,020; 45,123; and 53,095; respectively. At the time Mr. Lewis was working on the Invitation to Bid and had the conversation with Mr. Thompson described in Finding of Fact 12, supra, he was not aware that the number of drafts paid per month had been increasing over the prior three months. In preparing the Invitation to Bid, Mr. Lewis had asked someone in his office to give him an average for the past 12 months and the number he received is the number reflected in Appendix 2.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED, that Respondent issue a final order denying Petitioner's request for additional compensation. Done and ENTERED this 17th day of May, 1988, in Tallahassee, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1988. APPENDIX The parties submitted proposed findings of fact which are addressed below. Paragraph numbers in the Recommended Order are referred to as "RO ." Petitioner's Proposed Findings of Fact Proposed Finding Ruling and Paragraph Number in of Fact Number Recommended Order Accepted. RO1, 2. Accepted, generally. RO3, 4 Accepted, generally. RO5 Accepted. RO9 Irrelevant Accepted. RO12 Accepted. RO11, 13 First sentence, accepted. RO14, 15. Second sentence, generally accepted, except to the extent it indicates that the number of items was limited by the Agreement. RO16, 17 and last paragraph of Conclusions of Law. Generally supported by the evidence, but irrelevant. The fact that Respondent had this information in its records does not mean that it had a duty to inform bidders when, at the time, it did not know its significance. Accepted. RO19 Accepted, except for parenthetical on incorporation by reference. RO19 Supported by competent evidence but not necessary for the decision reached 13-15. Rejected as argument Respondent's Proposed Finding's of Fact Proposed Finding Ruling and Paragraph Number in of Fact Number Recommended Order 1-3. Irrelevant 4,5. Accepted RO3, 4, 5, 13, 15 6. Accepted 7. Accepted generally. RO12 8. Accepted generally. RO12 9. Accepted 10. Accepted. RO5 11-13. Accepted. RO20 14. Supported by the evidence, but unnecessary to the decision. COPIES FURNISHED: James D. Beasley, Esquire Ausley, McMullen, McGehee, Carothers & Proctor 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Augustus D. Aikens, Jr., Esquire General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Adis Vila, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue The issue is the amount of the Petitioner’s personal injury settlement proceeds that should be paid to the Agency for Health Care Administration (AHCA) to satisfy its Medicaid lien under section 409.910, Florida Statutes (2016).1/
Findings Of Fact The Petitioner’s right hand and wrist were cut by glass in the bathroom of her apartment in March 2012. Her injuries included damage to the tendons and nerves. She was hospitalized and received medical care and treatment, which Medicaid paid in the amount of $4,348.45. The Petitioner also personally owes $123 for physical therapy she received. The Petitioner sued the owner of the apartment, who vigorously contested liability and raised several affirmative defenses alleging that the Petitioner’s negligence or recklessness was wholly or partially responsible for her injuries and that she assumed the risk. The Petitioner’s damages were substantial because she lost the effective use of her right hand. She applied and was approved for Social Security supplemental security income benefits, subject to periodic reviews of her disability status. She presented evidence in the form of her and her attorney’s testimony and a report prepared by a vocational evaluation expert that she will suffer lost wages in the amount of approximately a million dollars, calculated by assuming she would have worked full-time earning $12-15 an hour until age 70, but for her accident, and assuming she cannot be gainfully employed in any capacity as a result of her injury. While that amount of lost wages might be overstated, the Petitioner presented evidence in the form of her attorney’s testimony and a supporting affidavit of another attorney with experience in personal injury case valuations that the monetary value of her damages was no less than approximately $550,000.2/ AHCA’s cross-examination did not reduce the persuasiveness of the Petitioner’s evidence, and AHCA presented no contrary evidence. In March 2017, the Petitioner settled her lawsuit for a mere $55,000 because of her concern that a jury would find for the defendant or reduce the recoverable damages due to comparative negligence. The Petitioner knew at the time of her settlement that AHCA was claiming a $4,348.45 Medicaid lien on the settlement proceeds. The Petitioner offered AHCA $434.85 in full satisfaction of the Medicaid lien claim. AHCA declined and asserts its entitlement to the full amount of the lien claim. The Petitioner’s settlement agreement included an allocation of $434.85 to AHCA’s Medicaid lien, $123 to the other past medical expenses, and the rest to other components of damages (which did not include any future medical expenses). AHCA was not a party to the settlement and did not agree to that allocation. The Petitioner’s attorney testified that the Petitioner’s proposed allocation is fair and reasonable and introduced the concurring affidavit of another attorney. AHCA did not present any evidence but argued that the Petitioner did not prove that AHCA’s Medicaid lien should be reduced and that, as a matter of law, AHCA was entitled to the claimed lien.
The Issue Whether Respondents directly or indirectly represented or aided an unauthorized insurer, an insurance or annuity product; whether Respondents knew or reasonably should have known that the annuity contracts with the unauthorized insurer violated Section 626.901, Florida Statutes; whether Respondents knowingly placed before the public a statement, assertion, or representation with respect to the business of insurance that was untrue, deceptive, or misleading; whether Respondents knowingly caused to be made, published, disseminated, circulated, delivered, or placed before the public any false material statement; whether Respondents demonstrated a lack of fitness and trustworthiness to engage in the business of insurance; whether Respondents engaged in unfair or deceptive practices or otherwise showed themselves to be a source of injury or loss to the public; and whether Respondents otherwise acted in violation of the Florida Insurance Code provisions as specifically detailed in Petitioner’s Amended Administrative Complaint, and, if so, what penalty, if any, should be imposed on Richard P. Eberhardt’s insurance agent license and/or Nancy Eberhardt’s license.
Findings Of Fact General facts applicable to both Respondents Respondent, Richard Eberhardt (RE), is currently licensed in the State of Florida as a Life Including Variable Annuity & Health Life, Life & Health, and Health insurance agent. RE was initially licensed by Petitioner as a non- resident insurance agent on May 6, 2004. Previously, RE was a licensed insurance agent in Nebraska, Indiana, and Arizona. Respondent, Nancy Eberhardt (NE), is currently licensed in the State of Florida as a Life Including Variable Annuity, Life Including Variable Annuity & Health, Life, Life & Health, and Health insurance agent. NE was initially licensed by Petitioner as a non-resident insurance agent on January 2, 2003, and then as a resident agent on October 5, 2004. Previously, NE was a licensed insurance agent in Arizona. Petitioner has historically mailed, and subsequently made available on line, the Intercom, an insurance agent newsletter. The heading to the newsletter, reads in part: “Publication for Agents and Adjusters from the State of Florida Department of Financial Services.” These newsletters contained warnings regarding unauthorized sales of insurance products, and explanations as how an agent could verify whether or not an insurer was authorized to do business in Florida. Petitioner’s records evidence that the newsletters were distributed to insurance agents from the July – October 1996 through December 2006 editions. Respondents became licensed Florida agents in January 2003, and it is a reasonable assumption that they received or had computer access to those publications. Both Respondents are listed in Petitioner’s records as being the owners of LLQ Consulting, LLC. Respondent NE is listed as being the insurance agent-in-charge of LLQ Consulting, LLC. Pursuant to records on file with the Florida Secretary of State, LLQ Consulting, LLC, is an Arizona-limited liability company that is authorized to do business in Florida. Respondent RE was originally listed as manager; however, since April 22, 2005, Respondent NE has been listed as the manager. At all times pertinent to the dates and occurrences referred to herein, Respondents were licensed in Florida as insurance agents. Petitioner has jurisdiction over Respondents’ insurance agent licenses and appointments, pursuant to statute. National Foundation of America (NFOA) The NFOA is a registered Tennessee corporation that was formed on January 27, 2006, and headquartered in Franklin, Tennessee. Respondents assert that the difference between a charitable gift annuity and a charitable installment bargain sale is that a charitable gift annuity is under Internal Revenue Code (IRC) Section 501(m) and the payout to the investor is based on a mortality table of the donor’s expected life. Therefore, it is a tax free exchange of an asset by a donor at less than the asset’s fair market value to a charitable organization in exchange for an annuity issued by the charitable organization. On the other hand, Respondents argue that an installment bargain sale is under Section 453 of the IRC and 26 C.R.F. Sections 1.1011-2 of the IRC regulations. It is an exchange of an asset owned by the donor at less than fair market value to a charitable organization in exchange for an annuity. The IRS allows the donor to deduct the difference between the fair market value of the asset and the amount that the charitable organization pays for the asset. The payout of the annuity is for a specific term and not tied to a mortality table. Therefore, NCF did not consider the Charitable Installment Purchase to be an insurance transaction or the sale of an insurance product under state insurance laws. Nevertheless, an NFOA Corporate Resolution, dated April 16, 2006, provides for the corporate authority to “liquidate stocks, bonds, and annuities . . . in connection with charitable contributions or transactions. . . .” This same resolution also provides for the corporate ability to “enter into and execute planned giving or charitable contribution transactions with donors, including executing any and all documentation related to the acceptance or acquisition of a donation, . . . given in exchange for a charitable gift annuity. “ On September 18, 2006, the State of Washington Office of Insurance Commissioner issued an Order to Cease and Desist in the matter of National Foundation of America, Richard K. Olive, and Susan L. Olive, Order No. D06-245. The Order, among other things, was based on NFOA’s having not been granted a Certificate of Authority (COA) as an insurer in Washington and having not been granted tax exempt status under Section 501(c)(3) of the IRC. On April 13, 2007, the OIR issued an Immediate Final Order (IFO) in the matter of National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, and Robert G. DeWald, Case No. 89911-07, finding that the activities of NFOA, et al., constituted an immediate danger to the public health, safety or welfare of Florida consumers. OIR further found that, in concert, NFOA, et al., were “soliciting, misleading, coercing and enticing elderly Florida consumers to transfer and convey legitimate income tax deferred annuities for the benefit of themselves and their heirs to NFOA in exchange for charitable term certain annuities”; and that NFOA, et al., had violated provisions of the FIC, including Sections 624.401 and 626.901, Florida Statutes. NFOA has never held a license or COA to transact insurance or annuity contracts in Florida, nor has NFOA ever been registered pursuant to Section 627.481, Florida Statutes, for purposes of donor annuity agreements. NFOA was never a registered corporation with the Florida Department of State, Division of Corporations. New Life Corporation of America (“NLCA”) d/b/a National Community Foundation (“NCF”) has been registered with OIR as a Section 627.481, Florida Statutes, donor annuity organization, since October 1997. NCLA subsequently changed its name to New Life International (“NLI”), which continued to use the d/b/a/ NCF. NLI is presently registered as a donor annuity organization with OIR. NFOA appealed OIR’s IFO to the First District Court of Appeal of Florida (1st DCA). The 1st DCA dismissed NFOA’s appeal on July 24, 2007. Therefore, NFOA operated as an unauthorized insurer in Florida. On May 17, 2007, the Internal Revenue Service (IRS) sent a letter to the Texas Department of Insurance stating that NFOA was not classified as an organization exempt from federal income tax as an organization described in Section 501(c)(3) of the IRC. On May 23, 2007, the Tennessee Department of Commerce and Insurance (DCI) filed a Verified Petition for Appointment of Receiver for Purposes of Liquidation of National Foundation of America; Immediate and Permanent Injunctive Relief; Request for Expedited Hearing, in the matter of Newman v. National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna MyIntyre, Kenny M. Marks, and Hunter Daniel, Chancery Court of the State of Tennessee (“Chancery Court”), 20th Judicial District, Davidson County, Case No.: 07-1163-IV. The Verified Petition states at paragraph 30: NFOA’s contracts reflect an express written term that it is recognized by the IRS as a charitable non-profit organization under Section 501(c)(3) of the Internal Revenue Code (Prosser, attachment 4), and NFOA represents in multiple statements and materials that the contract will entitle the customers to potential generous tax deductions related to that status. The IRS states that it has granted NFOA no such designation. The deceptive underpinning related to NFOA’s supposed tax favored treatment of its contracts permeates it entire business model and sales pitch. This misrepresentation has materially and irreparably harmed and has the potential to harm financially all its customers and the intended beneficiaries of the contracts. These harms are as varied in nature and degree as the circumstances of all those individuals’ tax conditions, the assets turned in to NFOA, and the extent to which they have entrusted their money and keyed their tax status and consequences to reliance on such an organization. On August 2, 2007, the Commissioner for the Tennessee DCI, having determined that NFOA was insolvent with a financial deficiency of at least $4,300,000.00, filed a Verified Petition to Convert Rehabilitation by Entry of a Final Order of Liquidation, Finding of Insolvency, and Injunction, in the matter of Newman v. National Foundation of America, et al. On September 11, 2007, pursuant to a Final Order of Liquidation and Injunction entered in the matter of Newman v. National Foundation of America, et al., the Chancery Court placed NFOA into receivership after finding that the continued rehabilitation of NFOA would be hazardous, financially and otherwise, and would present increased risk of loss to the company’s creditors, policy holders, and the general public. On February 6, 2008, the IRS sent a letter to the court appointed Tennessee DCI Receiver (“Receiver”) for NFOA stating that NFOA does not qualify for exemption from federal income tax as an organization described in Section 501(c)(3) of the IRC. The IRS, in determining that NFOA did not qualify for tax exempt status, stated that the sale of NFOA annuity plans has a “distinctive commercial hue” and concluded that NFOA was primarily involved in the sale of annuity plans that “constitute a trade or business without a charitable program commensurate in scope with the business of selling these plans.” The IRS letter also provides that consumers may not take deductions on their income tax returns for contributions to NFOA. Insurance Agent’s Duties An insurance agent has a fiduciary duty to his or her clients to ensure that an insurer is authorized or otherwise approved by OIR as an insurer in Florida prior to the insurance agent selling the insurer’s product to his client. There are several methods by which an insurance agent could verify whether or not an insurer was authorized or otherwise approved (hereinafter “authorized”) as an insurer in Florida by OIR. It is insufficient for an insurance agent to depend on the assurances of the insurer itself or his or her insurance business peers as to whether an insurer needs to be authorized in Florida. Respondents asserted that, prior to selling NFOA annuities in 2006, they had performed due diligence in order to determine whether or not NFOA was authorized in Florida. Respondents testified that at the time they performed their due diligence, they viewed a State of Florida website that seemingly indicated that OIR does not regulate donor annuities. Respondents’ testimony lacks credibility as to the timing of Respondents’ claimed due diligence. The websites that seemingly indicate that OIR does not regulate donor annuities did not come into existence until September 12, 2008, for OIR and January 16, 2009, for Petitioner, which would have been several years after any due diligence that Respondents claim that they performed. As further noted below, the sale of the NFOA annuities to Mr. Bisch and Ms. Clark occurred in 2006, well in advance of the September 2008 and January 2009 creation of any websites that might seemingly indicate a lack of OIR regulation of donor annuity organizations. While the OIR 2008 and DFS 2009 websites may be somewhat confusing, at all times relevant to these matters, donor annuity organizations have been and continue to be regulated by OIR pursuant to Section 627.481, Florida Statutes, and Florida Administrative Code Rules 69O-202.001 and 69O-202.015. Due to the importance of income tax considerations in a consumer’s decision making process as to whether or not to purchase an insurance product, insurance agents have a fiduciary duty to their clients to verify the validity of any representations that an insurer’s product has an IRC Section 501(c)(3) tax exempt status, prior to the insurance agent’s selling the product to his or her clients. There are several methods by which insurance agents could verify whether or not an insurer has an IRS 501(c)(3) tax exempt status. Respondents admitted, in their testimony, that they had depended on the assurances of others and assumed that NFOA did not need to be authorized as an insurer in Florida. Respondents also admitted in their testimony that, but for the different names, the NFOA paperwork was the same as that of NCF. Respondent’s testimony is contradictory and lacks credibility in that NCF was qualified and registered with OIR as a donor annuity organization and NFOA was not. Nevertheless, Respondents claim NFOA was not and did not need to be regulated by OIR. Respondents testified that they had verified with the IRS that NFOA had applied for Section 501(c)(3) tax exempt status. However, Respondents were aware that the tax exempt status had not been granted to NFOA at any time relevant to this proceeding. Respondents knew income tax considerations were materially important to their clients. However, none of the NFOA materials nor any Florida consumer contracts signed or provided by Respondents to their clients contain any disclaimer language informing consumers that the Section 501(c)(3) tax exempt status had been applied for but had yet to be granted by the IRS. Respondents received commissions totaling $22,062.80 for selling NFOA annuities to Florida consumers. Respondents have failed to return any of these commissions to the Receiver for NFOA in the state of Tennessee. Count I: Consumer – Jacob Bisch On February 20, 2006, Respondents solicited and induced Jacob Bisch of Cape Coral, Florida, then aged 75, to transfer or otherwise surrender ownership of his existing annuity contract with Allianz Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into was signed by Respondent RE. Bisch credibly testified as to both Respondents’ involvement in the sale of the NFOA annuity. NE wrote a letter asking that the commission for this sale be issued in her name. The commission check was ultimately paid to LLQ Consulting, LLC, a company owned by both Respondents and which NE was registered as the insurance agent- in-charge. Respondents knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondents, by use of the NFOA donor annuity agreement, knowingly misrepresented to Bisch that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondents knew or should have known that NFOA did not hold tax exempt status with the IRS. Bisch’s testimony was credible that tax considerations were the prime consideration in the purchase of the NFOA annuity from Respondents. Based upon Respondents’ transaction of insurance, Bisch presently anticipates losing approximately $26,320.04. This amount includes a surrender penalty of $16,823.04 incurred for transferring his original Allianz annuity to NFOA, and after receiving partial refunds from the NFOA Receiver. Based upon Respondents’ transaction of insurance with Bisch, Respondents were paid a commission of $4,062.80 by NFOA. Count II: Consumer – Fay Ann Clark Culminating on May 8, 2006, Respondents solicitated and induced Fay Ann Clark of Ft. Myers, Florida, then aged 70, to write a check for $200,000.00 in return for an NFOA annuity. The NFOA agreement that Clark entered into, and which was signed by Respondent RE, was entered into less than three weeks after Clark requested rescission of two NCF annuities that Respondents had previously sold Clark. Proceeds from the rescission of the NCF annuities enabled Clark to purchase the NFOA annuity. Prior to the rescission of the NCF annuities, on or about October 21, 2005, Clark had surrendered two Allianz Life Insurance Company annuities. Proceeds from the surrender of the Allianz annuities were used to purchase the NCF annuities. Respondent NE signed the NCF annuities agreement and was the advisor. Respondent NE, by use of a check drawn on Respondents’ joint checking account, refunded Respondents’ commission for the NCF sales to Clark. Sales documentation and correspondence clearly and convincingly evidence both Respondents’ involvement in Clark’s Allianz to NCF and NCF to NFOA transactions. Respondents knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondents, by use of the NFOA donor annuity agreement, knowingly misrepresented to Clark that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondents knew NFOA was not tax exempt. Based upon Respondents’ transaction of insurance, Clark paid $200,000.00 for an NFOA annuity, paid $7,971.00 in penalties to the IRS (U.S. Treasury), and presently anticipates losing approximately $42,000.00. Clark has received a partial refund from the NFOA Receiver. Based upon Respondents’ transaction of insurance with Clark, Respondents were paid a commission of $18,000.00 by NFOA. Petitioner has proven by clear and convincing evidence that Respondents directly or indirectly represented or aided an unauthorized insurer to do business in Florida. Petitioner has proven by clear and convincing evidence that Respondents knew or reasonably should have known that the annuity contracts they contracted with clients were with an unauthorized insurer. Petitioner has proven by clear and convincing evidence that Respondents knowingly placed before the public a statement, assertion, or representation with respect to the business or insurance that was untrue, deceptive or misleading. Petitioner has proven by clear and convincing evidence that Respondents knowingly caused to be made, published, disseminated, circulated, delivered, or placed before the public a false material statement. Petitioner has proven by clear and convincing evidence that Respondents demonstrated a lack of fitness and trustworthiness to engage in the business of insurance. Petitioner has proven by clear and convincing evidence that Respondents engaged in unfair and deceptive practices or showed themselves to be a source of injury to the public. Neither Respondent has had prior disciplinary charges filed against them in Florida.
Recommendation Based upon the foregoing Finds of Facts and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services: Finding that Respondents violated Subsections 626.901(1), 626.901(2), 626.9541(1)(b)4., 626.9541(1)(e)1.e., 626.611(7), 626.621(2), and 626.621(6), Florida Statutes, as charged in Counts I and II of Petitioner’s Amended Administrative Complaints; Revoking Respondent Richard Eberhardt’s, licenses and appointments issued or granted under or pursuant to the Florida Insurance Code; Revoking Respondent Nancy Eberhardt’s, licenses and appointments issued or granted under or pursuant to the Florida Insurance Code; 4. Providing that if either of the Respondents, subsequent to revocation, makes an application to Petitioner for any licensure, a new license will not be granted if the applicant Respondent fails to prove that he or she has otherwise satisfied the financial losses of his or her NFOA clients or if the applicant Respondent otherwise fails to establish that he or she is eligible for licensure. DONE AND ENTERED this 27th day of April, 2010, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2010.
Conclusions THIS CAUSE came on for consideration and final agency action. On April 10, 2001, an Administrative Complaint was issued by the Department of Insurance alleging that Respondent Matilda M. Vath failed to timely remit cash collateral and misappropriated, converted or wrongfully withheld fiduciary funds. Respondent timely filed a request for a proceeding pursuant to section 120.57(1), Florida Statutes. For purposes of the Section 120.57, Florida Statutes, hearing this matter was consolidated with the related case in the matter of John L. Vath in case no. 40065-01-AG. Pursuant to notice, the consolidated matter was heard before William F. Quattlebaum, Administrative Law Judge, Division of Administrative Hearings, on November 30, 2001. After consideration of the record and argument presented at the hearing, the Administrative Law Judge issued his consolidated Recommended Order on February 22, 2002. (Attached as Exhibit A). The Administrative Law Judge recommended that a Final Order be entered suspending for three (3) months the licenses and eligibility for licensure of Matilda M. Vath as a limited surety agent, and requiring the refunding of $318.00 to Augustavo Porro. On March 8, 2001, the Respondent timely filed exceptions to the Recommended Order. The Respondent's exceptions are addressed below. RULINGS ON REPONDENT'S EXCEPTIONS Respondent's factual exceptions, which were filed in consolidation with the matter of John L. Vath in case no. 40065-01-AG, were made in an eight paragraph Exceptions to Findings of Fact. Respondent's exceptions do not specifically identify a single specific paragraph or finding of fact in the Recommended Order. For the purpose of this ruling on Respondent's exceptions each paragraph of Respondents’ Exceptions to Findings of Fact is treated as a separate exception. 1. Respondent's first exception is that the record does not support a finding that any willful act was done in violation of the laws of the State of Florida. This exception is not made to any specific finding of fact in the Recommended Order. Respondent's exception is made without support of the record.. It is legally insufficient to merely state that the findings of fact are not supported by the record or were not supported by competent substantial evidence. Hoover v. Agency for Health Care Administration, 676 So.2d 1380 (Fla. 3 DCA 1996). For the purpose of ruling on Respondent's exception it is presumed that the Respondent's exception relates to paragraph 28 of the Recommended Order, which finds as follows: 28. In this case, either the Respondents acted in an untrustworthy and dishonest manner in willful violation of the statutes and rules relevant to this incident or the facts establish a lack of reasonable adequate knowledge and technical competence on their part. There is competent substantial evidence in the record to support this finding of fact. Although the two forfeited bonds totaled only $2,000, the Petitioners took from Mr. Porro money far in excess of that amount. The Petitioners took from Mr. Porro $500 for the two $250 bonds even though those bonds had not been forfeited. The Petitioners’ also took from Mr. Porro an additional $304 for costs and expenses that had not been incurred and which the Petitioners have subsequently not been able to substantiate. Moreover, Petitioners’ defense that the violations were attributable to errors by the Petitioners’ office staff not timely remitting the money owed to Mr. Porro, would, if believed, not excuse the Respondent's from the conclusion that they willfully acted in an untrustworthy and dishonest manner or that the facts establish a lack of reasonable adequate knowledge and technical competence on their part. As evidence of their willful disregard for the responsibilities imposed upon them by the insurance code to faithfully handle monies entrusted to them, the Respondent's admitted that neither corporate officer of the agency exercised direct supervisory control over the office staff they had charged with the responsibility of remitting the money due to their customers, including Mr. Porro. (See Hearing Transcript, page 85, line 25, through page 86, line 17; and page 102, lines 10 through 24). The agency’s authority to reject or modify findings of fact is limited by the provisions in section 120.57(1)(I), Florida Statutes, which provides that “the agency may not reject or modify the findings of fact unless the agency first determines from a review of the entire record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law.” Because there is competent substantial evidence in the record to support the ALJ's finding of fact, the Department would have to improperly reject the Administrative Law Judge’s findings of fact to permit the adoption of Respondent's exception. Adoption of Respondent's exception would also require that the Department reweigh the evidence. The Department cannot reweigh the evidence. The weight given to the evidence is the province of the Administrative Law Judge and cannot be disturbed by the agency unless the finding is not supported by competent substantial evidence. Brogan v. Carter, (Fla. 1st DCA 1996). Accordingly, Respondent's exception is rejected. 2. Respondent's second exception is that “the record does not support a finding that the customers owed $318.00.” Paragraph 2, Respondent’s Exceptions to Findings of Fact. The Recommended order does not make a finding that any customers owed $318.00. For the purpose of this ruling on Respondent's second exception, it is presumed that the Respondent's exception relates to the Administrative Law Judge’s conclusion that the Respondents Mildred M. Vath and John L Vath owe Mr. Porro $318.00. There is competent substantial evidence in the record to support this finding of fact. Respondents John and Matilda Vath initially took $2,804 from Mr. Porro. (Hearing Transcript, page 22, lines 2 through 11). Respondents made a partial return of the money to Mr. Porro in two payments in the amount of $1,994 and $492. (Hearing Transcript, page 24, line 13 through page 27, line 12). Consistent with the Administrative Law Judge’s finding of fact that money retained by the Respondents for improperly documented expenses are due to Mr. Porro, which finding cannot be reweighed here, the outstanding amount owed by the Respondent's to Mr. Porro is $318. To grant the Respondent's exception, the Department would have to improperly reject findings of fact that are based on competent substantial evidence and reweigh the evidence. Accordingly, Respondent’s second exception is rejected. 3. Respondent's third exception is that the only evidence recording the expenses was the testimony of the Respondents. This exception is not made to any specific finding of fact in the Recommended Order. For the purpose of ruling on this exception it is presumed that Respondent's exception pertains to the finding of fact in paragraph 33 of the Recommended Order that the “improperly documented” expenses are due to Mr. Porro. This exception is an attempt to reargue the facts of the case and requires that the Department improperly reweigh the evidence and reject findings of fact made by the Administrative Law Judge. To reach his conclusion in paragraph 33, the Administrative Law Judge necessarily rejected the testimony of the Respondents on this issue. Because the Respondent's arguments would require that the Department improperly reweigh the evidence, this exception is rejected. 4. Respondent's fourth exception is that there is no evidence showing which of the Respondents was in direct control of the office staff. Respondents then proceed to argue it was the office staff that was responsible for the violations. There is no finding of fact in the Recommended Order that one of the Respondents was in direct control of the office staff. Moreover, as discussed above in the ruling on Respondent's first exception, the lack of control by the Respondents over their office staff, if believed, would not exculpate the Respondents but would aggravate the violations found herein. Accordingly, Respondent's fourth exception is rejected. 5. Respondent's fifth exception is that there is no evidence of willfulness for any of the alleged violations. This is a repeat of the Respondent's first exception. Having already rejected that exception, Respondent's fifth exception is also rejected. 6. Respondent's sixth exception contends that there is insufficient evidence to show a willful deprivation of money. This is another repeat of the Respondent's first and fifth exceptions. Having already rejected those exceptions, Respondent's fifth exception is also rejected. 7. Respondent's seventh exception is that the record does not support a finding that the indemnitor paid the entire bail bond. Respondent's then proceed to argue that the indemnitor failed to pay $89.00 of the premium. Respondent's exception is not directed to any particular finding of fact in the recommended order. It is also not clear to which specific finding of fact this exception could be attributed. There is no specific finding of fact made in the Recommended Order that the indemnitor “paid the entire premium.” Nor do the Respondents argue or explain the relevance of this factual argument to any factual finding in the Recommended Order. Accordingly, Respondent’s seventh exception is rejected. 8. Respondent's eighth exception reads as follows: “The evidence fails to show a substantial woeful [sic] violation of the Insurance Code, or the laws of the State of Florida, or the Law Administrative Code [sic].” For the purpose of ruling on this exception it is presumed that it was Respondent's intent to refer to the finding of willful violations of the Insurance Code in paragraph 28 of the Recommended Order. This is a restatement of the Respondent's first, fifth, and sixth, exceptions. Having already rejected those exceptions, Respondent's eighth exception is also rejected for improperly requiring that the Department reweigh the evidence. Upon careful consideration of the record, the submissions of the parties, and being otherwise fully advised in the premises, it is ORDERED: 1. The Findings of Fact of the Administrative Law Judge are adopted in full as the Department's Findings of Fact. 2. The Conclusions of Law of the Administrative Law Judge adopted in full as the Department's Conclusions of Law. 3. That the Administrative Law Judge 's recommendation that a Final Order be entered suspending for three (3) months the licenses and eligibility for licensure of Matilda M. Vath as an insurance agent, and requiring the refunding of $318.00 to Augustavo Porro, is approved and accepted as being the appropriate disposition. ACCORDINGLY, Matilda M. Vath’s limited surety agent license is suspended for a period of three (3) months. The suspension shall be effective from the date of entry of this Final Order. Matilda M. Vath is hereby also ordered to remit $318.00 to Augustavo Porro, which sum constitutes the outstanding amount of cash collateral that Matilda M. Vath and John L. Vath, who is the respondent in the related case no. 40065-01-AG, owe to Mr. Porro. Pursuant to Section 648.50, Florida Statutes, the suspension of Respondent's licenses and eligibility for licensure is applicable to all licenses and eligibility held by Respondent under the Florida Insurance Code. Pursuant to Sections 648.49(3) and 648.50(3), Florida Statutes, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly or indirectly own, control or be employed in any manner by a bail bond agent or agency during the period of suspension. Pursuant to Section 648.49(1), Florida Statutes, Respondent's licensure shall not be reinstated except upon request for such reinstatement, and the Respondent shall not engage in the transaction of insurance until his licensure is reinstated. The Department shall not grant reinstatement if it finds that the circumstance or circumstances for which Respondent's licenses were suspended still exist or are likely to recur.
