The Issue The issue for determination is what amount of attorney's fees and costs should be awarded to Petitioner for costs incurred in prosecuting the rule challenge case, Security Mutual Life Insurance Company of Lincoln, Nebraska vs. Department of Insurance and the Treasurer, DOAH Case No. 97-1132RU.
Findings Of Fact On March 11, 1997, Security Mutual Life Insurance Company, filed a Petition challenging three statements of Respondent, the Department of Insurance and the Treasurer, as unpromulgated rules. See Security Mutual Life Insurance of Lincoln, Nebraska vs. Department of Insurance and Treasurer, DOAH Case No. 97-1132RU. According to the Petition, the first statement concerned the Department's requiring that annuity contracts contain a table of guaranteed values. The second statement alleged to be an unpromulgated rule was that the Department disapproved contract forms labeled as "single premium annuity" contracts which permit additional contributions after the initial premium is made. The third statement challenged by Security Mutual as an unpromulgated rule involved a requirement of the Department that annuity contracts include a demonstration of compliance with Actuarial Guideline 33 to avoid form/rate denial. Throughout the proceeding below and in the Final Order issued pursuant thereto, the second and third challenged agency statements were referred to as the "Single Premium Statement" and the "Guideline 33 Statement." At the commencement of the final hearing in the proceeding below, pursuant to a stipulation, Security Mutual withdrew its challenge to the Department's alleged statement requiring that annuity contracts contain a table of guaranteed values. On May 19, 1997, the Final Order in the proceeding below, dismissed Security Mutual's petition as to the "Single Premium Statement," but determined that the "Guideline 33 Statement" should have been adopted by the rulemaking process. See Security Mutual Life Insurance of Lincoln, Nebraska vs. Department of Insurance and Treasurer, DOAH Case No. 97-1132RU. In the proceeding below, Security Mutual was represented by Sharon A. DiMuro, Esquire, of Ganger, Santry, Mitchell, and Heath, P.A. (law firm). The hourly rate of Ms. DiMuro and one other lawyer who worked on the rule challenge case was $175.00. The hourly rate of two other lawyers in the firm who worked on the case was $150.00. Ms. DiMuro expended a total of 180 hours in prosecuting the underlying rule challenge case; 172.2 of these hours were expended on issues on which Security Mutual prevailed. The remaining 7.8 hours were spent on matters related to the "Single Premium Statement" on which Security Mutual did not prevail. Thus, these 7.8 hours are deducted from Ms. DiMuro's total number of hours. The three other attorneys in the law firm expended a total of 12.7 hours on the underlying proceeding, all of which were attributable to work related to the "Guideline 33 Statement," the issue on which Security Mutual prevailed. The attorney, other than Ms. DiMuro, who earned $175.00 an hour worked on the rule challenge case 4.1 hours. The two attorneys, whose hourly rate was $150.00, worked a combined 8.6 hours on the case. With respect to its successful claim in the underlying case, the law firm expended a total of 184.9 hours. Of the total hours expended, 176.3 were billed at $175.00 an hour, and 8.6 were billed at $150.00 an hour. The $150.00 and $175.00 are reasonable hourly rates for the attorneys. Likewise, the time expended in prosecuting the underlying proceeding, 184.9, is reasonable. Based on the foregoing, Security Mutual incurred attorney's fees of $32,142.50 in maintaining and prosecuting the claim on which it succeeded. Security Mutual also incurred reasonable costs of $1,270.29 in connection with the underlying rule challenge proceeding. Moreover, in the instant proceeding, Security Mutual incurred taxable costs in the amount of $1,051.50 for the preparation and hearing time of its expert witness, Kenneth Oretel, of the law firm of Oretel, Hoffman, Fernandez and Cole, P.A. These costs were reasonable and necessary.
Findings Of Fact Edward Berk, Respondent, was at all times here relevant licensed as an ordinary life, including disability, insurance agent to represent Founders Life Assurance Company, Standard Security Life Insurance Company of New York, American Variable Annuity Life Assurance Company, Wisconsin Life Insurance Company, Columbian Mutual Life Insurance Company, and Lone Star Life Insurance Company. He is licensed as a disability insurance (2-40) agent to represent American Family Life Assurance Company of Columbus and an ordinary life (2-16) agent to represent Estate Life Insurance Company of America. (Exhibit 1). On April 12, 1979 Respondent pleaded guilty in the U. S. District Court for the Southern District of New York of violation of 18 USC 1341 and 1342 to wit: unlawfully, willfully and knowingly devising and intending to devise a scheme and artifice to defraud and to obtain money from The Travelers Insurance Company by means of false and fraudulent pretenses, representations , and promises. He was found guilty and sentenced to two years imprisonment on each of five counts, the sentences to run concurrently. The execution of the sentence was suspended and Respondent was placed on probation for a period of two years (Exhibits 2)
Findings Of Fact At all times relevant hereto, Respondent, Thomas S. Piller, was licensed by Petitioner, Department of Insurance, as an ordinary life, including disability insurance agent. His offices are located at 103 South Circle, Sebring, Florida. In June, 1980, Piller met one Elleta Y. Thomas, then 74 years old, who resided in Sebring, Florida, with her husband, William Filler sold Mr. and Mrs. Thomas two policies with American Sun Life Insurance Company effective June 10, 1980. The policies provided supplements for medicare. In January, 1981, William Thomas suffered a heart attack and was hospitalized. He died on March 3, 1981. During the period when Mr. Thomas was hospitalized, and continuing after his death, Elleta Thomas telephoned or visited Respondent's office a number of times to obtain assistance in filing insurance claims for her husband's medical bills and death. On or about May 11, 1981, Respondent received a telephone call from Elleta Thomas asking that he assist her in filling out various insurance forms. Piller went to her residence where he stayed for approximately three hours. During that time, he assisted her in filling out claim forms with three insurance companies. While there, Piller sold Thomas Policy Nos. MC 783 Florida and NS 775 with United General Life Insurance Company which provided Thomas additional medical coverage. The total annual premium was $512 which Thomas paid by check. On the application, question one asks whether the insurance is intended to replace any plan of insurance with another company. Respondent marked "no" in the blank. The policy also stated in paragraph two that "preexisting conditions are covered after this policy currently being applied for has been in effect for 6 months." Elleta Thomas signed a certification form acknowledging that she had read and understood the policy, and was being furnished a copy of that form. Although Thomas could not remember signing the form, she did admit that the signature on the form was her own. There were no representations by Piller that the new policy replaced an existing policy, or that American Sun Life Insurance Company had been consolidated into United General Life Insurance Company, or otherwise changed its name. Neither was there a representation that the American Sun policies had been cancelled. In fact, Thomas admitted that Piller had not told her to turn the American policies in, or to "disregard" them. On June 3, 1981, Thomas was injured in an accident at her home and sometime thereafter examined her General policy to see if a claim could be filed. Because the accident was apparently caused by a "preexisting condition", she did not file a claim. Even though Thomas had two current and effective policies with American Sun which provided accident coverage, she was under the impression that they had been replaced by the General policy purchased in May, 1981. With the assistance of her daughter, Thomas then filed a complaint with the Department of Insurance alleging misrepresentation on the part of Piller. Thomas later received a refund of her $512 premium and the General policy was cancelled. Her American Sun policies were never cancelled and are apparently still in force.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all charges against Respondent, Thomas Stephen Piller, be DISMISSED. DONE and ENTERED this 16th day of March, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Department of Administration Oakland Office Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1982. COPIES FURNISHED: Julie St. John, Esquire Room 428-A, Larson Building Tallahassee, Florida 32301 David B. Higginbottom, Esquire Post Office Box 697 Frostproof, Florida 33843
Findings Of Fact Respondent John Richard Klee is licensed by Petitioner as a disability insurance agent in the State of Florida. At all times material to these facts he has been so licensed. Mr. Klee was employed by the Interstate Insurance Agency for approximately 9 years. During that time Interstate wrote insurance for the Guaranty Trust Life Insurance Company and for the Founders Life Insurance Company. While an independent agent working through the Interstate Agency, Mr. Klee, on April 10, 1981 sold a hospital indemnity insurance policy through the Guaranty Trust Company to Marie D. Grantley. Subsequently, Mr. Klee left the Interstate Agency and began employment with the Diversified Health Insurance Company which writes policies for the American Guaranty Life Insurance Company. After he had begun his new employment, Mrs. Grantley called him in October, 1981 to, get assistance in determining what her benefits were under the Guaranty Trust Company policies. 1/ On October 13, 1981 Mr. Klee went to Mrs. Grantley's home to explain her coverage as it applied to her current medical bills. At that meeting Mr. Klee solicited and received her application for a medicare supplemental policy unwritten by American Guaranty Life Insurance Company. The new policy covered certain expenses such as out-patient medical bills which were not covered by the existing Guaranty Trust policies. During their discussion about the new policy, Mr. Klee explained to Mrs. Grantley that the new policy was to provide her supplemental coverage in addition to that which she already had under the Guaranty Trust policies. He did not tell her that the new policy was a direct replacement of the Guaranty Trust policies. Additionally, he did not tell her that she should cease paying the premium on her Guaranty Trust policies. These findings are the pivotal factual issues in the case. Mrs. Grantley's testimony which was received through a deposition 2/ is to the contrary. Mr. Klee's testimony that he thoroughly explained the coverage of the new policy and how it did not replace the existing Guaranty Trust Life policies is accepted as more credible than Mrs. Grantley's contrary testimony. This determination is based on the demeanor of Mr. Klee at the final hearing and on the apparent weakness of Mrs. Grantley's memory of the transaction as shown in her deposition. When Mr. Klee met with Mrs. Grantley, he gave her all the information she needed to reasonably understand the nature of the new policy she was applying for as it related to her existing policies. He did not represent to her that the American Guaranty Company was in any way related to the Guaranty Trust Company. When Mr. Klee took Mrs. Grantley's application for the American Guaranty Life Insurance policy, he gave her a receipt for three months' premium of $206.65. The receipt indicated that Mr. Klee is with the Diversified Health Agency and that the policy was to be issued by American Guaranty Life Insurance Company. Mrs. Grantley signed the American Guaranty Life Insurance Company application which indicated that the new coverage being applied for did not replace existing accident and sickness policies then in force. At the time Mrs. Grantley signed the application, Mr. Klee reasonably believed that she understood what she was doing. The check which Mrs. Grantley drew to pay for the first three months' premium on the new policy was made out to Diversified Health Services. Subsequent to her application for the American Guaranty Life policy, Mrs. Grantley called Mr. Gerald Schectman who had been Mr. Klee's supervisor at the Interstate Insurance Agency. She told Mr. Schectman that she was confused about her insurance coverage. Several days later, Mr. Schectman went to visit her at her home. She told him that she wanted to retain her original coverage purchased through the Interstate Agency and did not want the new American Guaranty Policy. As she recalled her transaction with Mr. Klee, she believed that he had told her that Guaranty Trust Life Insurance Company was being taken over by the American Guaranty Company or that they were otherwise the same company. When Mr. Schectman heard her version of Mrs. Grantley's transaction with Mr. Klee, he took her to the Insurance Commissioner's Office to file a complaint against the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance enter a Final Order dismissing the Amended Administrative Complaint filed against John Richard Klee. DONE and RECOMMENDED this 1st day of June, 1983, in Tallahassee, Florida. MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1983.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Ralph Todd Schlosser, was licensed and eligible for licensure as a life and health insurance agent, health insurance agent and general lines agent - property, casualty, surety and miscellaneous lines by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed as a life and health insurance agent for American Sun Life Insurance Company (ASLIC) and Pioneer Life Insurance Company of Illinois (PLICI). On March 2, 1987, respondent met with one Mildred H. Camp, then a resident of Clearwater, Florida, for the purpose of selling her an ASLIC long term care health insurance policy. After discussing the matter with respondent, Camp agreed to purchase a policy. She completed an application and gave respondent a check in the amount of $511.88. The check was deposited into respondent's business account at First Florida Bank in Clearwater the same day. Camp did not testify at hearing. Therefore, the only first hand version of what was discussed by Schlosser and Camp and the nature of any further communications between the two was offered by respondent. That version was not contradicted, and it is accepted as being credible. Within a week after executing the application, Camp contacted respondent by telephone concerning the policy. Pursuant to that telephone conversation, respondent did not process the application or remit the check to the company, but attempted instead to arrange another meeting with Camp to answer further questions about the policy. Although he telephoned Camp "every single Monday", respondent was unable to arrange an appointment with her until April 30, 1987. On April 30 Camp and respondent met for the purpose of him explaining in greater detail the benefits and coverage under the policy. Because two months had gone by since the application was first executed, it was necessary for respondent to update Camp's health information. Accordingly, Camp executed a new application the same date and Schlosser forwarded the check and application to ASLIC shortly thereafter. On May 5, 1987 ASLIC received the April 30 application and premium check, less respondent's commission. The application was eventually denied by ASLIC on the ground of "excessive insurance" and a refund check was forwarded by ASLIC to Camp on June 11, 1987. There is no record of any complaint made by Camp against Schlosser in ASLIC's files nor did ASLIC contact respondent regarding this matter. When Schlosser began representing ASLIC, he executed a general agent contract which contained the terms and conditions pertaining to his appointment as a general agent for the company. As is pertinent here, the contract provided that Schlosser had a responsibility "to promptly remit such funds" received by him to the company. According to a former second vice-president of ASLIC, Joyce Lynch, who worked for ASLIC when the Camp transaction occurred, the company expected in the regular course of business to have checks and applications remitted by agents to the home office within fifteen days after the application was written, and that the above provision in the general agent contract was interpreted in this manner. Lynch added that she knew of no reason why an agent would hold an application and check for sixty days before submitting it to the company, particularly since once an application is completed and signed, it is the "property" of the company and not the agent. She concluded that if a customer desired more information about a policy after an application had been signed, which is not unusual, the agent still had a responsibility to promptly forward the application and check to the company within fifteen days. At that point, the company, and not the agent, would cancel a policy and refund the premium if so requested by a customer. Therefore, Schlosser breached the general agent contract by failing to promptly remit such funds. On July 28, 1987 Schlosser visited one Maxine Brucker, an elderly resident of Sarasota, for the purpose of selling her a PLICI health insurance policy. He had telephoned Brucker the same date to set up an appointment with her. After discussing the matter with respondent, Brucker agreed to purchase a policy, executed an application and gave respondent a check for $680.00. The check was deposited into respondent's bank account the following day. After Schlosser departed, Brucker noted that Scholosser did not leave a business card and she immediately became "worried" about her money and the possibility of not getting the insurance she had paid for. She telephoned the Department the same day to check on his "reputation" and to verify that Schlosser was an insurance agent. On August 4, 1987 she wrote a letter to the PLICI home office in Rockford, Illinois to ascertain if her check and application had been received but she did not receive a reply. She wrote a second letter to PLICI on August 14, 1987 but again received no reply to her inquiry. After telephoning the home office a few days later, Brucker contacted the Department a second time in late August and requested that it assist her in obtaining a refund of her money. At no time, however, did Brucker attempt to contact respondent. In early September, Brucker received by mail a money order from respondent which represented a full refund of moneys previously paid. Brucker acknowledged that she was happy with her policy when it was initially purchased. She also acknowledged that she had never contacted respondent personally to request a refund of her money. It was only after she received no reply from the home office that she made a request for a refund. According to the agency agreement executed by Schlosser when he became a general agent for PLICI, respondent had the responsibility to "immediately remit to (PLICI) all premiums (collected)". Testimony by Ronald F. Bonner, a vice- president of PLICI, established that in the regular course of business an agent was required to forward the check and application to PLICI no more than twenty-five days after receiving them from the customer. Any application held more than twenty-five days was considered "stale", was presumably invalid and had to be returned to the customer. Even so, Bonner did not contradict respondent's assertion noted in finding of fact 11 that his failure to remit the application and check was based on instructions from the home office, and under those circumstances, was not improper. Respondent readily admitted he did not remit the Brucker application and check because of instructions from the home office received after Brucker had telephoned the home office. After unsucessfully attempting to speak with Brucker by telephone daily for about two weeks, Schlosser voluntarily sent Brucker a money order via mail in early September. A review of respondent's business bank account for the months of March and August 1987 revealed that after the checks from Camp and Brucker had been deposited, the balances in the account thereafter dropped below $511.88 and $680 during those respective months. This raises an inference that those moneys were used for other undisclosed purposes during that time. According to respondent, he submitted applications and premiums checks to the home office approximately two or three times per month. It was also his practice to wait ten days or so after receiving a check from a customer to allow it sufficient time to clear. Schlosser denied having converted insurance moneys to his own personal use. There was no evidence that Schlosser lacked reasonably adequate knowledge and technical competence to engage in insurance transactions authorized by his licenses, a matter requiring conventional factual proof. Similarly, there was no evidence to establish that Schlosser intended to willfully violate the law or that his conduct demonstrated a lack of fitness or trustworthiness to engage in the insurance business.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the administrative complaint filed against respondent be dismissed with prejudice. DONE AND ORDERED this 18th day of January, 1990, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 18th day of January, 1990.
