Appeal For This Case Unless expressly waived by a party such as in a stipulation or in other similar forms of settlement, any party substantially affected by this final order may seek judicial review by filing an original Notice of Appeal with the Agency Clerk of the Department of Management Services, and a copy, accompanied by filing fees prescribed by law, with the Clerk of the appropriate District Court of Appeal. The Notice of Appeal! must be filed within thirty (30) days of rendition of this order, in accordance with Rule 9.110, Fla. R. App. P., and section 120.68, Florida Statutes. Certificate of Clerk: Filed in the office of the Clerk of the the Department of Management Services on this JS7 day of ebwary _, 2010. mer Clerk
The Issue The issue for consideration in this hearing was whether Respondent's license as a life and health debit agent and a general lines, (fire), agent should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Department of Insurance, was the state agency responsible for the licensing of commercial insurance sales agents and the regulation of the insurance industry and profession in Florida. Respondent, Doyle Carlton Newell, was licensed in Florida as a life and health (debit) agent and a general lines agent limited to industrial fire. On April 26, 1991, Respondent entered into an agency contract with United Insurance Company of America, (United), which authorized him to sell authorized insurance policies for the company in Florida within his assigned territory. The terms of the agency contract obligated Respondent to remit to the company, on a weekly basis, all premium money collected by him on the company's behalf. For reasons not stated, United terminated Respondent from employment on May 11, 1992 by use of company form 38A, and Respondent's agency contract was cancelled immediately. The termination was followed by an audit of Respondent's account because for some time, company management had had some concern as to the condition of those accounts. Respondent had admitted to improperly taking money belonging to the company, and the audit was conducted during the period immediately following his termination in May, 1992 through August, 1992. Either prior to or as a part of the audit, Respondent submitted a list of all discrepancies he could recall. The audit revealed an actual deficiency of $3,731.67. After application of the bond submitted by and on behalf of Respondent, the ultimate shortage was $3,257.67. Respondent had, the day he left employment with the company, indicated he would reimburse it for any shortage when he overcame some personal matters and gambling problems. After the exact amount was determined, he was again asked, both orally and, several times through certified mail, to satisfy the obligation but as of the date of hearing, he had made no payments. All policies written by Respondent were honored by the company regardless of the fact he had not remitted the premiums paid therefor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered finding Respondent guilty of all misconduct and violations alleged except that relating to a lack of knowledge or technical competency, and revoking his license as an insurance agent in Florida. RECOMMENDED this 23rd day of June, 1994, in Tallahassee, Florida. 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 23rd day of June, 1994. COPIES FURNISHED: William C. Childers, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0222 Doyle Carlton Newell 8414 Waterford Avenue, T3 Tampa, Florida 33604 Doyle Carlton Newell 2106 Two Lakes Road, Apartment 2T Tampa, Florida 33604 Doyle Carlton Newell 13637 Twin Lakes Lane Tampa, Florida 33624 Doyle Carlton Newell American General Life and Accident Insurance Co. 802 West Waters Avenue Tampa, Florida 33604 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue for disposition in this proceeding is whether Petitioner, Florida Insurance Management Group, Inc. (FIMG), is entitled to authorization from Respondent (Agency) to act as a service company in the State of Florida. Ancillary issues are whether the Agency is estopped from asserting new grounds for denial in an Amended Notice of Intent to Deny and whether the Agency participated in the proceeding for an improper purpose pursuant to Section 120.595(1), Florida Statutes (Supp. 1996), so as to entitle FIMG to an award of attorney’s fees and costs.
Findings Of Fact Petitioner, FIMG, is a Florida corporation, incorporated in the State of Florida on March 29, 1994. FIMG is a wholly owned subsidiary of Interstate Insurance Services Group, Inc. (IISG), a Delaware corporation registered to do business in Florida. Allen Brooks, president of FIMG, is the principal owner of IISG. Bruce Gilbert, Terry Borgland, Mike Francine, and Lou Gutierrez are also owners. FIMG is licensed by the Florida Department of Insurance as a managing general agency. Under that license it is authorized to represent licensed insurance companies by handling various administrative aspects of their insurance programs. In this capacity, FIMG represents Claredon National Insurance Company and offers to the general public policies of workers’ compensation insurance under the Claredon name and under one of Claredon’s subsidiaries, Farmer’s Specialty Insurance Company. On May 13, 1996, FIMG submitted to the Agency its application for authorization to act as a workers’ compensation service company. A service company regulated by the Agency performs essentially the same functions for a self-insured employer that it performs for an insurance company as a managing general agency. The functions are regulated by separate state agencies. Allen Brooks resides in Lake Wales, Florida, and is president of other companies that are subsidiaries of IISG that are corporations operating as third party administrators or providing other insurance-related services in states other than Florida. Brooks filed the application for FIMG to operate as a service company after he was approached by Citrus World, a large juice-processor in Lake Wales, regarding submitting a proposal to work as a service company for that employer’s self-insured workers’ compensation company. FIMG’s application to the Agency reveals on its face the connection between FIMG and its parent, IISG. It also reveals that the directors and officers of IISG have also been officers of Associated Risk Management Services, Inc. (ARMS), an Oklahoma corporation which was registered to do business in Florida on February 12, 1990. The physical location of the three corporations, FIMG, IISG, and ARMS is 250 East Park Avenue, Lake Wales, Florida. Prior to August 22, 1994, ARMS was a service company, authorized by the Agency to serve as a third party administrator (service company) for the Florida Transportation Insurance Self- Insurance Trust Fund. In 1993, ARMS applied for its annual re- certification. The Agency denied that application and in 1994 initiated proceedings to revoke the service company authorization. When ARMS petitioned for administrative formal hearings, the Agency referred the two cases to the Division of Administrative Hearings (DOAH) where they were consolidated as DOAH Cases 93-5537 and 94-2565. These cases never proceeded to hearing. Instead, in a letter dated July 8, 1994, ARMS notified the Agency of its intent to “immediately and unconditionally surrender its authorization to act as a service company in Florida.” After DOAH relinquished jurisdiction, the Agency entered its Final Order dismissing the ARMS’ proceeding as moot. Neither DOAH nor the Agency issued an order finding any violations by ARMS, and the Agency never revoked ARMS service company authorization, as the authorization was voluntarily surrendered. When the Agency received the FIMG service company application, it did not request any additional information from FIMG in order to process the application. The Agency’s standard procedure in reviewing service company applications is to accept at face value the information provided by the applicant and the information received through background investigation reports submitted as required by the Agency. The Agency does not conduct its own investigation. On May 16 1996, the Agency received background investigation reports from Equifax, the company selected by FIMG from a list of approved companies provided by the Agency. The Equifax reports on Allen Brooks, Terry Borgland, Bruce Gilbert, and Deana Smith, officers of FIMG, reflect that each was previously employed by ARMS, and that “...[ARMS] underwent new structuring with a change in management, and the name was changed to Interstate Insurance Group, Inc. [sic], subject’s present employer as shown above.” (Petitioner’s Exhibit 2) The Agency stopped processing FIMG’s application, and on June 26, 1996, issued its Notice of Intent to Deny FIMG’s application. The notice alleged that FIMG failed to meet the criteria of Rule 38F-5.040(3)(a), Florida Administrative Code, for the following reasons: That the persons in ownership, control, and management of Florida Insurance Management Group, Inc. are the same as they were for the Association Risk Management Service Company (ARMS). The recertification of this prior company was up for revocation due to the violation of Rule 38F-5.040(3)(a) and (c), F.A.C. On July 8, 1994, ARMS notified the Division that it intended to immediately and unconditionally relinquish its authorization to act as a service company in the State of Florida and to no [sic] seek further recertification as a service company in the State of Florida, because it was not economically viable. This application is for a subsidiary of the reorganized ARMS now known as Interstate Insurance Services Group, Inc. (Joint Exhibit 2) On July 16, 1996, pursuant to a procedure established by the Agency, FIMG submitted its request for reconsideration of the intent to deny. The request included corporate documents for IISG and FIMG. It also included a letter from Allen Brooks stating that ownership and control of ARMS was not the same as FIMG, even though many of the management personnel formerly associated with ARMS were now employees of the applicant. The letter stated that ARMS is owned 100 percent by Colette C. Rumfelt and is not related to FIMG, nor was FIMG a “reorganized ARMS.” Ms. Rumfelt has no ownership interests in FIMG or IISG. The letter also clarified that, while ARMS operated as a third party administrator for group self insurance funds, FIMG’s operations would be limited to servicing individual self-insurers in Florida. The Agency still did not conduct any investigation into FIMG’s application or request for reconsideration. Instead, on September 11, 1996, the Agency denied FIMG’s request for reconsideration for the same reasons given in the notice of intent to deny, stating that “. . .the same group of people will be in control of the new service company, and for this reason we cannot approve this application.” (Joint Exhibit 4) On October 28, 1996, after the reconsideration was denied and after FIMG petitioned for a formal administrative hearing, Deana Smith wrote to Equifax and asked to have corrected the erroneous statements about FIMG or its parent company being a “reorganized” ARMS. In response, Equifax issued its “Corrected Report,” stating this under sections addressing ARMS’ former employment of Allen Brooks, Terry Borgland, Bruce Gilbert, and Deana Smith: Association Risk Management Service company is a service company to employee benefits trusts and is doing business in Florida and North Carolina. This company also holds interest in telecommunication companies. Subject [each of the four individuals] continues as an officer with the company but his active employment was for the dates shown. The company has four employees. (Petitioner’s Exhibit 4) Equifax made its changes based on the information it received from Deana Smith, but it would not have issued the revised report if it had not concluded that its original report was incorrect. Equifax’s practice in obtaining information for its reports is to interview the subjects of the reports. If the subject requests a copy of the report, someone from Equifax will read it over the telephone before sending a copy. The Equifax field representative thinks she read the original report to Deana Smith before sending her a copy. In the course of its investigation of the four officers, Equifax found no adverse information concerning their business or personal activities. On April 23, 1997, the Agency issued an Amended Notice of Intent to Deny FIMG’s service company application, adding as reason for denial the allegation that FIMG materially misrepresented that it had employees when in fact it did not, thus it did not meet the requirements of Rule 38F- 5.040(3)(b),(c), and (d), Florida Administrative Code. This amended notice is based on FIMG’s response to the Agency’s interrogatories stating that “FIMG has no employees; it relies on and uses the employees of its parent corporation, Interstate Insurance Services Group, Inc. (IISG).” FIMG has employees in the areas of claims adjusting and loss control, as represented in its application to the Agency. The non-officer personnel whose résume’s are included in the application have positions with FIMG and are performing services for FIMG pursuant to its managing general agent’s license. They are on the payroll of IISG, the parent corporation, a common business practice. In addition to the non-officer personnel, the officers of FIMG, whom the Agency concedes are employees of FIMG, are amply qualified to satisfy the requirements of the rule with regard to underwriting, claims management, and safety and loss control. Since FIMG is not yet approved as a service company it appropriately has no service contract with a self-insurer. FIMG has employees available through its parent corporation sufficient to meet the needs of a self insurer when such contract or contracts are secured. As confirmed in the Equifax report, IISG has an estimated one hundred employees. The Agency’s denial of FIMG’s application is based solely on the grounds alleged in its amended notice. As it stipulated, it did not retry in this proceeding any of the allegations or alleged violations at issue in the prior administrative proceeding related to ARMS. There is no evidence in this proceeding as to what those alleged violations were, other than Allen Brooks’ understanding that they had something to do with the fact that ARMS’ owner, Ms. Rumfelt, was related to the chairman of the Florida Transportation and Industry Self- Insurer’s Fund’s sponsoring association. In this proceeding, FIMG presented affirmative competent evidence that it is not a restructured or reorganized ARMS and that in spite of the co-location of the corporate offices in Florida and much the same officers, they do not share the same ownership and control. In its contention that ARMS agreed to never again seek certification as a services company, the Agency relies on two documents: a July 8, 1994, letter from ARMS counsel to Assistant Attorney General, Paul Martin; and the Agency’s Final Order in DOAH Cases 93-5537 and 94-2565. The July 8, 1994, letter states, in full: Dear Paul: The unjustified action of the state in pursuing revocation of the authorizations of the Florida Transportation and Industry Self- Insurers Fund and ARMS has made it economically unfeasible for the Fund to be successful or for ARMS to continue to act as service company. Accordingly, at the last meeting of the Fund’s Trustees, ARMS notified the Trustees that ARMS intended to immediately withdraw as the service company for the Fund, but would continue to work with the Fund to assure an orderly transition or closure of the Fund, in accordance with the provisions of Rule 38F-5.041(2). Because continued operation as a service company in Florida is no longer justifiable from a business standpoint, ARMS intends to unconditionally surrender its authorization to act as a service company in Florida immediately upon concluding or being relieved of its obligations to the Fund, or at such earlier time as the state may sanction. ARMS does not intend or desire to be “recertified” as a service company in Florida. The surrender of ARMS’ authorization to act as a service company will give the state all of the relief it is seeking in the pending administrative actions, and so those actions will be rendered moot. Thus, we should stipulate to a dismissal of the pending actions in order to finally resolve these cases and move on to other matters. I stand ready to draft the necessary papers upon receipt of word from you as to the form of stipulation. Sincerely, Paul R. Ezatoff (Petitioner’s Exhibit 18) The Final Order entered August 22, 1996, provides, in pertinent part: On July 8, 1994, ARMS notified the DIVISION that it intended to immediately and unconditionally relinquish its authorization to act as a service company in the State of Florida and to not seek further recertification as a service company in the State of Florida, because it was not economically viable. On July 25, 1994, the DIVISION and ARMS entered into a Joint Motion to Cancel hearing and Relinquish Jurisdiction on the basis that the administrative actions which are the subject matter of DOAH Case Nos. 93- 5537 and 94-2565 is moot. On August 4, 1994, Hearing Officer Robert Meale entered an order relinquishing jurisdiction to the DIVISION and closing the DOAH case files for these cases.
Recommendation It is hereby RECOMMENDED: that the Department of Labor and Employment Security enter its Final Order approving Florida Insurance Management Group, Inc., as a service company and denying attorney’s fees and costs. DONE AND ENTERED this 31st day of July, 1997, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1997.
Findings Of Fact At all times material hereto, Respondent, Pedro Luis Hereu, was licensed and eligible for licensure as a life and health and general lines insurance agent by Petitioner, Department of Insurance. Respondent also served as President and registered agent of P.H. Insurance, Inc. P.H. Insurance, Inc. was an incorporated life, health, and general lines insurance agency engaged in the business of selling life, health and general lines insurance products through Respondent and other agency personnel acting under the supervision and control of Respondent. Respondent was licensed to represent Union Bankers Insurance Company as a health insurance agent. Sometime prior to October 17, 1989, Respondent applied to become a resident agent for U.S. Security Insurance Company. On or around February 21, 1986, Respondent assisted Mr. Pablo Beade in the preparation of an application for health insurance for Mr. Beade and his family through Union Bankers Insurance Company. Mr. Beade is not fluent in English, and the application is written in English. Respondent, however, speaks Spanish which is Mr. Beade's native language, and with Mr. Beade's permission read the application in Spanish to Mr. Beade and completed the form in English in Mr. Beade's presence. The form consists primarily of "yes" and "no" questions. Mr. Beade answered "no" to all but one question regarding medical treatment in the previous five years. Mr. Beade told Respondent that during that time he had visited a Dr. Gualberto Navarro for a regular checkup only. Respondent noted the information on the form. In his testimony, Mr. Beade, however, stated that he informed Respondent that he had been treated for ulcers in addition to his regular checkup with Dr. Navarro. Respondent disagrees. Considering that Respondent was aware that the Union Bankers would verify Mr. Beade's health history prior to issuing the policy, that Respondent supplied the company with Dr. Navarro's telephone number and address and Respondent's demeanor at the hearing, Respondent's testimony is found to be credible. During his visit with Mr. Beade, Respondent explained to Mr. Beade that the application did not assure that his coverage would be approved by the company. Then, after completing the application, reviewing it with Mr. Beade, and witnessing the execution of it by the Beade's, Respondent collected $3,093.99 in premium dollars from Mr. Beade. Although it is Respondent's custom to collect funds in the form of a check payable to the insurer, Mr. Beade preferred to pay him in cash. Respondent accepted the cash and issued a receipt to Mr. Beade for it. Respondent returned to the P.H. Insurance and gave the cash and the application to his secretary for deposit and processing. According to Respondent, his secretary deposited the cash in the agency trust account and forwarded the application and a deposit to Union Bankers. Respondent's agent's contract with Union Bankers and the regular course of business, which Respondent admitted, obligate him to submit all money collected on behalf of Union Bankers to it immediately upon receipt. Union Banker's attempted to obtain more information from Dr. Navarro concerning Mr. Beade's health, and Respondent attempted to contact Dr. Navarro on behalf of Union Bankers. However, Union Bankers did not receive a response from Dr. Navarro and issued its policy, excluding Mr. Beade. Since coverage of Mr. Beade was excluded from the policy, the premium owed by Mr. Beade required adjustment. Respondent, however, had left Miami during the Summer of 1986 and did not return until October, 1986. It was not until then that he became aware of the company's refusal to insure Mr. Beade. On several occasions Respondent tried to telephone Mr. Beade to discuss the premium adjustment and return of a portion of the premium. His attempts were unsuccessful. On January 30, 1987, he wrote Mr. Beade, but the letter was returned. He physically went to the last known address which Respondent had for Mr. Beade, but no one was home. Respondent has not personally been contacted by Mr. Beade since Respondent's return to Miami. Mr. Beade did, however, file suit against Union Bankers and Respondent; however, the relevant evidence did not indicate the allegations or the judgment, if any, in the litigation. Meanwhile the funds remained in the non-interest bearing trust account. In May, 1989, Petitioner filed the instant complaint against Respondent, and on September 14, 1989, Respondent issued a check in the amount of $1,982.56 to Mr. Beade from the trust account. On October 17, 1989, Petitioner issued its letter demonstrating its intent to deny Respondent's application to become a registered agent for U.S. Security Insurance Company. The instant claim represents the first and only complaint filed with Petitioner against 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 which dismisses the administrative complaint against Respondent, Pedro Luis Hereu, and approves the subject application. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 22 day of March 1990. JANE C. HAYMAN 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 22 day of March 1990. APPENDIX TO THE RECOMMENDED, ORDER IN CASE NO. 89-4931 The following rulings are made on the proposed findings of fact submitted by Petitioner: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 5 are adopted as subordinate to paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 7 are adopted in material part in paragraphs 3. The proposed findings of fact in paragraph 8 are adopted in material part in paragraphs 3. The proposed findings of fact in paragraph 9 are adopted in material part by paragraphs 5 of the Recommended Order. The proposed findings of fact in paragraph 10 are adopted in material part by paragraph 9 of the Recommended Order. The proposed findings of fact in paragraph 11 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 13 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 14 are rejected as a conclusion of law. The proposed findings of fact in paragraph 15 are adopted in material part by paragraphs 8-10 of the Recommended Order. The following rulings are made on the proposed findings of fact submitted by Respondent: The proposed findings of fact in paragraph 1 are adopted in material part in paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part in paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part in paragraphs 3-5 of the Recommended Order. The proposed findings of fact in paragraph 4 are adopted in material part in paragraph 4 the Recommended Order. The proposed findings of fact in paragraph 5 are adopted in material part in paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part in paragraph 6. The proposed findings of fact in paragraph 7 are adopted in material part in paragraph 7 of the Recommended Order. The proposed findings of fact in paragraph 8 are adopted in material part in paragraph 7. The proposed findings of fact in paragraph 9 are rejected as irrelevant. The proposed findings of fact in paragraph 10 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 11 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 10 of the Recommended Order. COPIES FURNISHED: Christopher Anderson, Esquire Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Thomas F. Woods, Esquire Alex D. Barker, Esquire GATLIN, WOODS, CARLSON & COWDERY 1709-D Mahan Drive Tallahassee, Florida 32308 Don Dowdell General Counsel The Capitol Plaza Level Tallahassee, Florida 32399-0300 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Background Information Respondent is now, and has been at all times material to the instant case, licensed by the Department as a life insurance agent, health insurance agent, life and health insurance agent and dental health service contract agent. At no time has he ever been disciplined by the Department. On or about February 6, 1991, Gauthier Insurance Services, Inc., was organized under the laws of Florida. The corporation was administratively dissolved on October 9, 1992. At all times material to the instant case, Gauthier Services, Inc., was the alter ego and under the direct supervision and control of Respondent. Count I On or about August 5, 1990, Respondent entered into a General Agent's Agreement with United Insurance Company of America (hereinafter referred to as "United"). Paragraph 6. of the Agreement addressed the subject of "compensation and accounting." It provided as follows: General Agent shall bear all expenses incurred in the performance of this Agreement and, subject to the terms of this Agreement, will be paid as full compensation for all services connected herewith, new and renewal commissions and service fees as set forth in the Compensation Schedule attached hereto, and made a part hereof, or any supplement thereto which is in effect on the effective date of each policy issued pursuant to an application solicited by General Agent or one of General Agent's Representatives, provided that premiums on such policies are received by Company in cash, and subject to Company's right of offset. Company will pay Representatives the compensation due them under agreements made with them. Compensation paid the General Agent will be the total compensation due, reduced by compensation paid directly to Representatives. Compensation for policy conversions, plan changes, reinstatements and replacements will be paid in accordance with company rules and regulations in effect at the time of the occurrence of any such event. Company may unilaterally change all or any part of the Schedule of Compensation and will provide General Agent with notice of such change thirty (30) days prior to the effective date thereof. If Company for any reason whatsoever refunds any premium or any part thereof, on any policy or contract, General Agent shall promptly reimburse Company all commissions paid or advanced on such policy or contract, or at the option of the Company all such commissions may be deducted from other compensation payable under this Agreement. Paragraph 7. of the Agreement addressed the subject of "guaranty of representatives' indebtedness." It provided as follows: General Agent hereby guarantees the prompt repayment of any indebtedness of General Agent's Representatives to Company, of any kind whatsoever arising under Representative's agreement with Company, provided that Company shall first have made written demand for repayment upon Representative at Representative's last known address. This guaranty shall survive the termination of the Representative's Agreement. Paragraph 11. of the Agreement addressed the subject of "termination." Subparagraph b. thereof provided as follows: Upon termination of this Agreement for any reason, all General Agent's obligations to Company shall become immediately due and payable and General Agent shall promptly return to Company all Company property. On or about August 5, 1990, Respondent and United also executed an Advanced Commission Addendum. Paragraph 1. of the Addendum addressed the subject of "advances." It provided as follows: Pursuant to the General Agent's authorization of the Company to advance commission payments to Agent, the Company agrees to advance commissions, pursuant to the amounts and schedules and subject to the terms set forth herein, to Agent on account of those commissions which would otherwise be paid to Agent on new individual life business produced providing for premiums to be paid by the policyholder. All applications eligible for advances must be payroll deduction products and subject to the guidelines set forth by the Company. Under paragraph 2. of the Addendum, United agreed to make advanced "[c]ommission payments based upon 50 percent of the annualized first year commission otherwise to be paid." Paragraph 3. of the Addendum addressed the subject of "offset." It provided as follows: Advances made by the Company of first-year commissions shall be charged to the Agent as a debit and shall be immediately due and payable to the Company upon the occurrence of either of the following: there is forecasted an insufficiency of Agent's projected earned first-year and renewal commissions to eliminate the debit balance; or six (6) months following the termination of this Addendum there is a remaining debit balance. The entire amount of indebtedness due will bear interest at the annual rate of three percent (3 percent) above prime rate of interest announced from time to time by First National Bank of Chicago calculated from the date of the termination until paid. Upon termination of this Addendum, to the extent necessary to eliminate Agent indebtedness to the Company, including but not limited to any forecasted indebtedness, the Company may offset same against any and all compensation, whether or not vested, payable to Agent under any agreement or contract with the Company. Pursuant to paragraph 5. of the Addendum, Respondent acknowledged "that all amounts paid in advance to [him] under this Addendum in excess of actual earned commission based on the amount of premium actually paid by policyholders [would] constitute a personal obligation" of his to United. Under paragraph 6. of the Addendum, Respondent guaranteed "full and prompt payment of any indebtedness to the Company related to commissions . . . advanced to [him]" and he further agreed to "indemnify the Company against any and all cost, reasonable attorney fees, and other expenses that may be incurred by the Company in collecting or attempting to collect any advance commission not earned by [him]." In accordance with the provisions of the Addendum, Respondent received advanced commission payments from United for business that he and his representatives produced during the period of his association with the company. On or about September 4, 1990, Respondent and United entered into a Computer Purchase Agreement, which provided as follows: General Life Division [of United] will provide the use of a computer for a period of 12 months, beginning September 1, 1990. If at the end of 12 months the Agency's production credits equal $87,000 or greater, the Agency may keep the computer and owe nothing to General Life Division. If the Agency's production credits are less than $87,000 at the end of the 12 month period, the Agency will have the opportunity at that time to purchase the computer on a pro-rated basis or return it to General Life Division. Pro-rated Basis is as follows: General Life Division will deduct $225 from the full purchase price of $2,695 for every $7,250 production credits the Agency earns in the 12 month period, starting Sep. 1, 1990, i.e., if my total production credits equal $43,500 on Sep 1, 1991 the Agency agrees to pay $1,350 to General Life Division or return the computer. At the end of the 12 month period (Sep. 1, 1991) if the Agency's total production credits are less than $87,00 the Agency will either return the computer to General Life Division or pay $2,695 to General Life Division, less the amount deducted for production credits as explained in 3. above. In the event the undersigned's General Agent's Agreement with General Life Division is terminated, whether voluntary or involuntary, including death, disability or retirement, prior to having purchased the computer either with monies paid to General Life Division or earned production credits, the balance due, as determined by General Life Division, shall become immediately due and payable. The terms of provision 8. entitled "Indebtedness, Liens and Setoff" of the undersigned's General Agent's Agreement will apply to any unpaid balance. By letter dated November 21, 1991, United notified Respondent that his General Agent's Agreement with the company would be terminated, effective 30 days from the date of the letter, because he had "not written sufficient business." At the time of his termination, Respondent owed United more than $2,500.00 for "amounts paid in advance to [him] under th[e Advanced Commission] Addendum in excess of actual earned commission based on the amount of premium actually paid by policyholders." More than a year later, an attorney retained by United sent Respondent the following letter demanding payment from him: United Insurance Company of America ("United") terminated its Agency Agreement with you on February 16, 1992. At that time, your debit balance showed an amount owing to United in excess of $2500.00. Your current year-to-date earnings (through November 30, 1992), have been $133.35, reducing your current debit balance to $2,571.93. Your debit balance represents unearned commission advances to you. Additionally, you signed a Computer Purchase Agreement on September 4, 1990 (copy enclosed for your convenience). Pursuant to that agreement, you still owe United $2,355 for the computer provided to you. Your total debt to United is therefore $4,926.93. United hereby demands payment of the $4,926.93 on or before January 15, 1993. If that payment is made in a timely fashion, United will waive its contractual right to interest on that amount. If you fail to pay the $2,571.93 by January 15, 1993 and you fail to otherwise work out a payment arrangement acceptable to United, my client will then assert its legal rights in order to collect the aforementioned debt. As you are aware, the General Agency Agreement allows United to recover its cost of collection from you, as well as the interest on the outstanding debit balance. Please send a draft in the amount of $2,571.93 made payable to United Insurance Company of America to the undersigned so that it is received on or before January 15, 1993 or telephone the undersigned to attempt a satisfactory workout of this debt. Respondent, in fact, had returned the computer that was the subject of the September 4, 1990 Computer Purchase Agreement referenced in the letter and therefore, contrary to the claim made in the letter, did not owe United $2,355 for the computer under that agreement. Although he did not dispute that he owed United 2,571.93 for unearned advanced commissions, he did not repay the debt because he felt that, having just started a new sports recruiting business, he was not financially able to make such repayment. United subsequently filed suit in Palm Beach County Court against Respondent to obtain the monies it claimed he owed the company for unearned advanced commissions and for the computer that was the subject of the Computer Purchase Agreement he had entered into with the company. On or about September 3, 1993, a default judgment was entered in favor of United. United was awarded $4,899.96 in principal, plus $212.30 in court costs and $173.88 in prejudgment interest. 2/ Following the entry of the judgment, Respondent and United attempted to negotiate a payment schedule. United initially indicated a willingness to accept payments of $290.00 a month from Respondent, which was all Respondent believed he was able to afford to pay. Respondent made one such $290.00 payment. United, however, later advised Respondent that it would accept no less than $400.00 a month from him. Since being so advised, Respondent has not made any further payments to United. Count II Monies Owed USG Annuity and Life Company On or about February 6, 1989, Respondent entered into an Agent's Licensing Contract with United Services General Life Company, which subsequently changed its name to USG Annuity and Life Company (hereinafter referred to as "USG"). Subparagraph 8.d. of the Contract provided as follows: Upon any termination of this Contract, you shall immediately pay in cash any sums due hereunder and shall immediately deliver to us all of the previously furnished materials, supplies, advertising and any other printed matter which mentions the Company by name, our rate books, and all other such supplies connected with our business, excepting only those items which the Company shall specifically notify you in writing you are then permitted to maintain for servicing purposes. Paragraph 10, of the Contract addressed the subject of "commissions." It provided as follows: First year and renewal commissions shall be fully vested to you as they accrue. We shall pay you the commissions computed on the commissionable premiums paid to, received and accepted by us on applications procedured by you in accordance with this Contract at the rate and under the conditions as set forth in the Commission schedule referred to on the signature page, as amended from time to time by the Company. Any commission designated in any schedule shall not be deemed a "service fee" for any period of time. No commissions will be payable on premiums paid in advance until after the due dates of the respective premiums so paid in advance and then only if the policy is in force and effect on such due date. We reserve the right to revise the commission rates or conditions on any one or all of the policies or schedules at any time we deem such revision advisable, but such revision shall apply only to applications for insurance thereafter received by us. If any insurance procured hereunder is subsequently converted to, or replaced by, some other form of policy, the commissions payable, if any, under new insurance shall be paid to you only if such conversions or replacement is effected by or through you. Commissions shall be payable no less than monthly. If the premium on any policy secured hereunder is not paid within ninety (90) days from the premium due date and such policy is subsequently reinstated, you shall be entitled to further commissions thereon only if said policy is reinstated by or through you. You shall not be entitled to commissions on premiums waived or paid by us under the disability waiver of premium provisions or waiver of premium upon death or disability of the applicant (payer benefit) provisions of any policy. Should the Company, in its sole discretion, deem it appropriate at any time to cancel a policy and refund any premium on which you were paid any compensation, then such compensation shall be charged back to you. Commissions on benefit riders, term riders, replacement policies and conversions shall be payable in accordance with Company practices at the time the coverage is issued, converted or replaced, as the case may be. You are responsible for the obligations to us of all agents or brokers appointed by you and shall be debited on the books of the Company with the amount of such obligation when the same is due and unpaid from said agents or brokers to us, and on demand, shall promptly pay us the amount for such debt. At the outset of his relationship with USG, Respondent was licensed as a USG agent though Carnes Insurance Agency, which operated as a "recruiting agency" for USG. In or around October, 1991, he was "transferred," without his consent, to another of USG's "recruiting agencies," Investors Marketing Services, Inc. (hereinafter referred to as "IMS"), at IMS's request. The owners of IMS were Jan and Theodore Charles. In or around December of 1991, Respondent, acting in his capacity as a licensed USG agent, sold an annuity policy to the Gorman family. He received a commission from USG in the amount of $11,385.21 for the sale. By letter dated January 21, 1992, USG notified Respondent that his Agent's Licensing Contract with the company would be terminated, effective February 5, 1992. No reason for the termination was given in the letter. At around the time of Respondent's termination, the Gorman annuity policy was cancelled pursuant to the Gormans' request. As a result, the $11,385.21 that Respondent had received as a commission for the sale of the policy was "charged back" to him in accordance with subparagraph 10.h. of his Agent's Licensing Contract with USG, as well as paragraph E. of the Addendum to the Annuity Commission Schedule- DMD, which was incorporated by reference in subparagraph 10.b. of the Contract. (Paragraph E. of the Addendum to the Annuity Commission Schedule provided that "[f]ull surrender of any policy will result in commission paid or credited during the prior twelve (12) months being charged back on a pro rata basis.") On February 20, 1992, USG sent Respondent a letter advising him of this $11,385.21 debt and demanding that he make arrangements to repay it. Respondent never made such arrangements. The debt was ultimately repaid in full by IMS in four installments, the last of which was made in or around May of 1992. Monies Owed LifeUSA Insurance Company On or about August 9, 1990, Respondent entered into an Agent Agreement with LifeUSA Insurance Company (hereinafter referred to as "LifeUSA"). Subparagraphs 2.e. and f. of the Agreement addressed the subjects of "commissions" and "vesting of commissions." They provided as follows: Commissions. We will pay you, as full compensation for all services rendered and expenses incurred by you, first year and renewal commissions at the rates provided and subject to the terms and conditions contained in the attached SCHEDULE OF COMMISSIONS. These Commissions will accrue on premiums paid in cash to us for policies issued from applications procured by you while this AGREEMENT is in effect. Vesting of Commissions. All first year and renewal commissions are vested unless you are terminated for cause. Commissions will continue to be paid until total commissions earned annually amount to less than $500, at which time the Company has the option of paying, in a lump sum, the present value of future commissions. In subparagraph 2.j. of the Agreement LifeUSA agreed to provide Respondent "[o]n a prompt and timely basis . . . with statements of [his] earnings, commission loans, charges and reductions or repayments of indebtedness." Subparagraph 4.l. of the Agreement addressed the subjects of "final accounting, payment obligations and recovery rights." It provided as follows: Within a reasonable time after termination of this AGREEMENT for cause or without cause, each party will receive a full and accurate accounting from the other party. Upon termination of this AGREEMENT for cause or without cause, the entire amount of all monies due from you and any and all of your agents, will be immediately due and payable on demand, and you are responsible for assuring that the debt is repaid in full. You have the right to recover from your agents amounts owed to you by your agents under the terms of this AGREEMENT, together with interest, all costs of collection, and attorney's fees. To enter into his Agent Agreement with LifeUSA Respondent needed to obtain the sponsorship of one of the company's "field marketing organizations." IMS was the "field marketing organization" that sponsored Respondent's appointment as a LifeUSA agent. Like USG's "recruiting agencies," LifeUSA's "field marketing organizations" were responsible for the unpaid debts and obligations of the agents they sponsored. These debts included those resulting from the return to policyholders of premiums on which commissions had been paid. Respondent incurred such debts as a LifeUSA agent, as the commission statements he received from the company in accordance with subparagraph 2.j. of his Agent Agreement reflected. The commission statement covering the period from March 11, 1991, to March 17, 1991, that Respondent was sent reflected that, as of the latter date, Respondent had a debit balance of $3,056.065. On or about March 27, 1991, LifeUSA wrote Respondent a letter encouraging him to "writ[e] new business to liquidate [this] debit balance." The commission statement covering the period from April 15, 1991, to April 21, 1991, that Respondent was sent reflected that, as of the latter date, Respondent had reduced his debit balance to $3,011.93. On or about May 1, 1991, LifeUSA sent Respondent the following letter: We previously advised you of your $3,011.93 debit balance with LifeUSA, and to date, no response has been received. Therefore, we have developed a repayment schedule of $100.00 per month for you to liquidate your debt. Your first payment is due on May 15, 1991. Please write your agent number 100-001797 on your check or money order and return it in the enclosed postage paid envelope. If the first, or subsequent, payments are not received by the above date, we will be forced to turn this matter over to our attorney. If you have further questions, please feel free to contact us at 1-800-950-7045 or 1-800-950-9323. We are looking forward to working with you to resolve this matter. Thank you, in advance, for your cooperation. Respondent did not take any action to reduce his debit balance. Accordingly, as it said it would, LifeUSA turned the matter over to its attorney, who sent a letter to Respondent, dated June 6, 1991, demanding that Respondent pay LifeUSA $3,011.93 to settle his account. The letter elicited no response from Respondent. The $3,011.93 that Respondent owed LifeUSA was ultimately paid by IMS in seven installments, the last being made on October 27, 1991. In 1992, LifeUSA terminated its Agent Agreement with Respondent. It took such action because of Respondent's lack of production and his failure to have repaid the monies it owed the company. Respondent's Agreement with Theodore Charles During his association with LifeUSA, Respondent had accumulated approximately $70,000.00 worth of LifeUSA stock. Respondent transferred his LifeUSA stock to Theodore Charles, who, as mentioned previously, was one of the owners of IMS. Charles was also a stockbroker. It was Respondent's understanding that he would receive back from Charles cash in an amount equal to the market value of the stock less the total amount that IMS had paid USG and LifeUSA to settle Respondent's accounts with these companies. There was no written agreement between Respondent and Charles concerning the matter. As of the date of the final hearing in this case, Respondent had received only approximately $3,600.00 from Charles. IMS' Lawsuit Against Respondent On or about July 12, 1993, IMS filed suit against Respondent in Palm Beach County Circuit Court seeking to recoup from Respondent, among other things, the monies it had paid USG and LifeUSA to settle Respondent's accounts with these companies. Although he believed that he had already reimbursed IMS through the transfer of his LifeUSA stock to Charles, Respondent nonetheless, due to financial considerations, did not defend against the lawsuit. On or about October 4, 1994, a judgment was entered against him in the case. The judgment ORDERED AND ADJUDGED that the Plaintiff, [IMS], recover from the Defendant, Gary Gauthier, the sum of $14,595.14 based upon the evidence presented, including the depositions of Bernadette Berger, Kathy Doherty and Theodore Charles, to the effect that GARY GAUTHIER entered into contracts with insurance companies which required him to repay charged back commissions, that GARY GAUTHIER failed to repay charged back commissions and that the Plaintiff, [IMS], has been required to repay the debts of GARY GAUTHIER in the aforementioned amount; together with costs in the sum of $604.30, prejudgment interest pursuant to Florida Statute Section 687.01 in the amount of $4,065.37, and attorneys fees in the amount of $8,820.00, with the total judgment being $29,084.81, which shall bear interest at the rate of 12 percent per annum and for which let execution issue. 3/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding Respondent guilty of the violations of Sections 626.611(7) and 626.621(6), Florida Statutes, alleged in Counts I and II of the Amended Administrative Complaint; (2) suspending his license for a period of six months for having committed these violations; and (3) dismissing the remaining allegations of wrongdoing advanced in the Amended Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of July, 1995. STUART M. LERNER 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 5th day of July, 1995.
The Issue The issues in this case are whether the Florida Real Property and Casualty Joint Underwriting Association (FRPCJUA) failed to comply with applicable requirements and standards of Part I of Chapter 627, Florida Statutes, when it utilized a request for proposals (RFP) in autumn 1995 to arrive at its decision in early 1996 to contract with Intervenors, Audubon Insurance Company (Audubon), AIB Holdings, Inc. (AIB), and American International Insurance Company (AIIC), but not with the Petitioner, Bankers Insurance Company (Bankers), for insurance policy servicing work through the year 1999. Specifically, Bankers asserts: (1) that FRPCJUA improperly gave policy servicing work to AIB, which is not a licensed insurance company; that FRPCJUA violated Chapter 287, Florida Statutes, regarding competitive bidding requirements for state agencies; that, regardless whether Chapter 287 is applicable, whether FRPCJUA acted arbitrarily and in bad faith instead of using procedures equivalent to the procedures found in Chapter 287, Florida Statutes; and (4) that FRPCJUA violated the Government in the Sunshine Law, Chapter 286, Florida Statutes. The Respondent, the Department of Insurance (the Department), and the Intervenors oppose Bankers' assertions. After initially seeking maintenance of the status quo or a contract on the same terms as the others, Bankers now seeks money damages from FRPCJUA, including attorney fees and costs.
Findings Of Fact In response to Hurricane Andrew, which struck in September 1992, insurers either stopped or significantly curtailed writing residential property and casualty insurance in Florida, or in parts of Florida. In response to this crisis, the Florida Legislature enacted Section 627.351, Florida Statutes, which created the Intervenor, the Florida Real Property and Casualty Joint Underwriting Association (FRPCJUA). FRPCJUA is an unincorporated association of insurers licensed to write residential property and casualty insurance in Florida. In addition to the licenses held by its members, FRPCJUA itself also is required by law to be licensed by the Respondent, the Department of Insurance (Department), as an insurer in Florida. FRPCJUA is governed by a Board of Governors chosen in accordance with the statute; some members are appointed by the Insurance Commissioner. The Petitioner, Bankers Insurance Company (Bankers), was represented on the initial FRPCJUA Board of Governors. The FRPCJUA Board hires an executive director and other staff to conduct the day-to-day operations of FRPCJUA. The evidence indicates that Florida Representative John Cosgrove and his staff were the primary drafters of the FRPCJUA legislation and that the House Insurance Committee he chaired was its primary sponsor. Rep. Cosgrove believed that the legislation did not intend to authorize FRPCJUA to contract with non-insurers for policy and claims servicing. Rep. Cosgrove's primary reasons for wanting to limit policy and claims servicing to insurers were to ensure the financial backing of those doing the work and to maintain regulatory control over them. However, policy and claims servicing providers bear no policy risk, and the Department maintains regulatory control over FRPCJUA both under the Section 627.351 and under the statutes regulating licensed insurers. Insurance Commissioner, Tom Gallagher, and his staff also were involved in the enactment of the FRPCJUA legislation. Commissioner Gallagher believed that the legislation authorized FRPCJUA to contract with non-insurers for policy and claims servicing. He believed that the legislation was not designed to enable insurers, who had "created" the insurance crisis by refusing to write or curtailing the writing of, insurance, to keep the lucrative policy and claims servicing to themselves. Section 627.351 requires FRPCJUA to operate pursuant to a plan of operations approved by the Department. FRPCJUA's first plan of operations and its articles of association were approved by the Department in 1993. The First Amended Articles of Association were approved by the Department on December 29, 1993. Before approving them, the Department reviewed both of these documents and required FRPCJUA to make corrections or revisions. Both of these documents provided for the use of insurers (called service carriers) and non-insurers (called servicing providers) to provide policy and claims services for FRPCJUA. In addition, they provided that FRPCJUA itself could provide those services. Bankers' President, David Meehan, was on the FRPCJUA Board when it produced the first two versions of FRPCJUA's plan of operations. Bankers never objected to the provisions for the use of non-insurers to provide policy and claims services. In accordance with the plans of operation, FRPCJUA formed the Shared Market Insurance Services, Inc. (SMISI) to provide policy and claims services for FRPCJUA. SMISI in turn contracted with other entities, including Intervenor, Policy Management Services Corporation (PMSC), which did policy servicing using a computer system it developed called the Point System. In addition to the SMISI contract, FRPCJUA also had policy and claims servicing contracts with five servicing carriers: Bankers; Diamond State Insurance Company; Fortune Insurance Company; Intervenors, Audubon Insurance Company (Audubon); and American International Insurance Company (AIIC). In late 1994, Bankers objected to the growth of SMISI. When Bankers' President tried to persuade Commissioner Gallagher to abolish or down-size SMISI, he was informed that Gallagher himself supported SMISI. In response, Meehan said he was going to resign in protest. Gallagher told Meehan that he intended to ask all representatives of FRPCJUA's members to resign and asked Meehan to wait until all resigned for the sake of appearance. Meehan agreed. Approximately coinciding with Meehan's conversation with Commissioner Gallagher, the Department initiated a market conduct examination of Bankers. For various reasons, Bankers believed and alleged in this proceeding that Bankers was targeted for the market conduct examination and other punitive measures in reprisal for opposing SMISI and for arguing the issue with Commissioner Gallagher. Bankers' allegations were not proven by the evidence in this case, but Bankers' beliefs colored its perception of the Department's dealings with it from then on. They also caused Bankers to suspect that the Department also was trying to influence FRPCJUA to take punitive action against Bankers. But it was not proven that the Department's relations with Bankers had any effect on FRPCJUA's dealings with Bankers. In late 1994, Florida elected Bill Nelson to succeed Tom Gallagher as Insurance Commissioner in January 1995. Commissioner Nelson appointed William Wilson as new chair of the FRPCJUA Board and recommended that Wilson consider James W. (Jay) Newman, Jr., for appointment as new Executive Director of FRPCJUA. Wilson interviewed and hired Newman, who had impressive credentials (including service as Insurance Commissioner for the State of Virginia) and extensive and directly relevant experience. The Department approved FRPCJUA's Second Amended Plan of Operation on July 21, 1995. As with the earlier versions of the plan of operations, the Department reviewed the document and required FRPCJUA to make corrections or revisions before approving it. As with the earlier versions of the plan of operations, the Second Amended Plan of Operation provided for the use of insurers (called service carriers) and non-insurers (called servicing providers) to provide policy and claims services for FRPCJUA. It also provided that FRPCJUA itself could provide those services. Although Bankers no longer was represented on the FRPCJUA Board, it knew of these provisions and voiced no objection to them. By September 1995, FRPCJUA had decided to reduce its business (so-called "depopulation") and thought that it soon would not need so many contracts for policy and claims servicing. It also thought it could save money by reducing the number of servicing contracts. Meanwhile, the contracts of the five servicing carriers were due to expire in February 1996, and the deadline for notice of non-renewal was approaching. (Bankers' contract would have expired in approximately June 1995, but it was extended.) Although all of the contractors were performing satisfactorily, Executive Director Newman thought FRPCJUA should give notice to the five servicing carriers that their contracts would not be renewed and should initiate a request for proposals (RFP) for new contracts. His desire was to reduce the number of contracts from five to either two or three. (The SMISI contracts and subcontracts were not due to expire, and no consideration was given to terminating those contracts at the time.) At the FRPCJUA Board meeting on September 19, 1995, which was noticed and conducted as an open meeting, Newman presented this idea, and the FRPCJUA Board agreed with him. It directed Newman to give notice of non-renewal to the five servicing carriers and to proceed with the RFP process. On October 18, 1995, FRPCJUA published notice in the Florida Administrative Weekly that it would be accepting proposals from insurance companies interested in servicing FRPCJUA policies and that the deadline for proposals would be December 4, 1995. The notice referred those interested to FRPCJUA staff from whom the RFP would be available at a later date. No specifics of the RFP were included in the notice. Prior to the Board's next meeting on October 25, 1995, Newman prepared Proposed Servicing Carrier Selection Criteria. At the Board's meeting on October 25, 1995, which was noticed and conducted as an open meeting, the Board decided to add a provision that FRPCJUA should reserve the right to reject all proposals and instead negotiate contracts apart from the RFP and that the criteria should allow all existing servicing carriers to be eligible for selection. The Board directed Newman to proceed with the RFP so that the Board would be in a position to make its selection decision at its December 1995 meeting. (It does not appear from the evidence that there was a November 1995 meeting of the Board.) Immediately after the meeting on October 25, 1995, Newman began the task of drafting an RFP with the help of FRPCJUA General Counsel Michael Colodny and FRPCJUA staff attorney Fred Karlinsky. At some point in the drafting process, Colodny noticed that, by its terms, the draft RFP only solicited proposals from servicing carriers (insurers) and could be construed to prohibit servicing providers (non-insurers) from responding. To include servicing providers, other modifications to the RFP also would have to made. Newman, Colodny, and Karlinsky re-drafted the RFP to accommodate proposals by servicing providers and issued the re-drafted RFP on November 7, 1995. Bankers did not object to the eligibility of non- insurers to respond to the re-drafted RFP. Instead, it proceeded to prepare its response. On November 17, 1995, FRPCJUA published an amended notice in the Florida Administrative Weekly that it would be accepting proposals from both insurance companies and non- insurers interested in servicing FRPCJUA policies and that the deadline for proposals would be December 6, 1995. The RFP provided for a pre-bid conference to answer any questions on the services to be rendered under the RFP; it also provided an opportunity for written inquiries after the pre-bid conference. The pre-bid conference was held on November 28, 1995. Bankers attended and asked questions about the applicability of Chapter 287, Florida Statutes, and Newman answered that it did not apply. Bankers also asked questions on how to present compensation proposals and how different proposals would be scored. Newman explained that the intent was to encourage creative responses. Questions also were asked at the pre-bid conference about the requirements for a non-insurer to act as a servicing provider. Newman explained the terms of the RFP and confirmed that proposals from non-insurers were welcomed. Bankers did not object then or at any time prior to submission of its proposal. The RFP provided that proposals would be evaluated by FRPCJUA's executive director and staff. Newman asked FRPCJUA Chief Operating Officer, Robert Sklenar, Colodny, and Karlinsky to assist him in evaluating the proposals. Sklenar had extensive (35 years) experience in the insurance industry, mostly as vice-president of personal lines for Travelers Insurance Company. His experience included the design and preparation of competitive scoring processes for vendor selection by Travelers. Newman asked him to prepare the documents to be used for scoring RFP responses (the score sheets). Proposals were received on December 6, 1995. Proposals were received from Bankers, AIIC, Audubon, PMSC, Fortune, Hartford Fire Insurance Company, Mobile America Insurance Group, Inc., National Con-Serv, Inc. (NCSI), American Southern Insurance Company, and Intervenor, AIB Holdings, Inc. (AIB), which had a subcontract for policy and claims servicing with Diamond State. The RFP provided that submission of a response signified acceptance of the terms and conditions of the RFP. Newman, Sklenar, Colodny, and Karlinsky met in Tallahassee to evaluate the responses on December 6, 1995. First, the four jointly evaluated the proposals to determine whether they met seven mandatory criteria. They determined that all ten proposals met the mandatory criteria. Then each evaluator independently scored the ten proposals on each of seven technical criteria, using a numerical point scale of 1 to 5 for each criterion. Then they compared their scores, discussed any differences, and attempted to reach consensus scores for each technical criterion. Then they added the consensus scores given on all technical criteria for each of the ten proposals. At this point in the process, the evaluation team observed that 15 points seemed to be a natural break point and reasoned that American Southern Fortune, Mobile America, and NCSI should be eliminated from further consideration because they got less than 15 points on the technical criteria. Of the proposals still under consideration, Hartford scored 23 on the technical criteria, PMSC scored 22, Audubon scored 21, AIIC scored 20, Bankers scored 18, and AIB scored 17. The evaluators then discussed the top two scorers, Hartford and PMSC. The team did not think FRPCJUA should enter into a contract under the RFP with either Hartford or PMSC. By this time, the evaluation team was aware that the SMISI contract would terminate as of December 27, 1995, for "breaches and defaults of the agreements and obligations owing to the FRPCJUA by SMISI," in accordance with correspondence from FRPCJUA Board Chairman Wilson, dated November 14, 1995; however, it was anticipated that PMSC would continue to handle the SMISI business--fully half of FRPCJUA's total book of business--under a direct contract with FRPCJUA. Due to capacity concerns, the team did not think additional business should be directed to PMSC until those concerns were allayed. Meanwhile, Hartford's proposal disclosed that it would not be in a position to handle a large number of policies for some time, and it proposed either delaying initiation of services or subcontracting with PMSC in the interim. The evaluation team did not think either alternative was acceptable. Evaluation of the mandatory and technical criteria took approximately six hours and was not completed until 1 or 2 a.m. on December 7, 1995. The evaluators decided not to review or evaluate the compensation proposals; however, the other three evaluators persuaded Newman to at least look at the compensation proposals and generally advise the group as to the general nature and parameters of the compensation proposals without identifying the proposers. Colodny was unable to meet again on December 7, 1995. Newman, Sklenar, and Karlinsky met briefly to review the proposals, but it was decided that Newman would conduct a more thorough review and report his findings and recommendations to the others by telephone. Although Newman knew the team would not recommend either Hartford or PMSC, he evaluated their compensation proposals for information and comparison. Hartford offered a flat 18.42% fee. PMSC offered two alternatives. One was a very favorable flat fee of 14.9%; the other proposed flat dollar amounts. Bankers proposed an 18% fee for six-month policies, and an 18.45% fee if FRPCJUA returned to annual policies. The other compensation proposals were tiered by volume (either net written policies or policies in force). AIB structured its compensation proposal as follows: 18% fee for $25 million net written policies (NWP); 17.75% for $25-$30 million NWP; 17.50% for $30- $35 million NWP; 17.25% for $30-$40 million NWP; and 17.00% for more than $40 million NWP. Audubon proposed a 17.9% fee for up to 50,000 policies in force (PIF), 17.5% for up to 100,000 PIF, and 16.9% for over 100,000 PIF. AIIC structured its proposal: 20.0% for up to 50,000 PIF; 19.5% for up to 100,000 PIF; 19.0% for up to 150,000 PIF; 18.5% for up to 200,000 PIF; 18.0% for up to 250,000 PIF; and 17.5% for over 250,000 PIF. In order to evaluate the tiered proposals, Newman had to exercise professional judgment as to future volume in light of FRPCJUA's "depopulation" efforts and intention to replace five contracts with just two or three. Newman did not score the Hartford and PMSC compensation proposals since he knew the team would not be recommending that FRPCJUA should enter into contracts with either under the RFP. In Newman's judgment, based on a 15 point scale, the Audubon and AIB compensation proposals deserved scores of 14, Bankers' proposal deserved a score of 10, and AIIC deserved a score of 9. Adding these scores to the technical scores, Audubon's proposal would be scored the best, with 35 points, AIB would score 31 points, AIIC would score 29 points, and Bankers would score 28 points. As agreed, Newman telephoned the other evaluators to discuss the compensation proposals and Newman's scoring of them. All agreed with Newman's assessments. They decided to recommend that FRPCJUA contract with Audubon and attempt to negotiate with the others to accept Audubon's compensation proposal. Sklenar wanted to recommend that FRPCJUA contract with Audubon and one other; Newman thought it would be more prudent to contract with three. It was agreed to recommend that FRPCJUA first attempt to negotiate with AIB and AIIC to accept Audubon's compensation proposal and to negotiate with Bankers (and, if necessary, those previously eliminated from consideration) only if either AIB or AIIC refused to accept Audubon's compensation proposal. The recommendation of the evaluation team was put in writing on December 11 and was presented to the FRPCJUA Board at its meeting on December 14, 1995, which was noticed and conducted as an open meeting. The evidence was that the Board had a full and open discussion of the recommendation. Ultimately, the Board voted unanimously to accept the evaluation team's recommendation, and it instructed Newman and his staff to proceed with contract negotiations. Section 24 of the Second Amended Plan of Operation provided a means for resolving disputes with respect to any decision of the FRPCJUA Board. Section 24 provided: Except as to any dispute, cause of action, claim or controversy arising under, or out of, any contract or Agreement pertaining to bonding or borrowing by the Association, any person or entity aggrieved with respect to any action or decision of the Board of the Association, or any Committee thereof, (other than matters regarding Assessments which appeals are governed by Sections 15, 16 and 17 hereof) may make written request of the Board for specific relief. All written requests for relief or redress shall be deemed Appeals and shall be delivered to the Executive Director. The Executive Director shall schedule any Appeal for hearing at the next regularly scheduled Board meeting occurring, not less than ten (10) days nor more than forty (40) days from the Executive Director's receipt of the Appeal. Any person or entity whose Appeal for relief is denied by the Board may appeal to the Insurance Commissioner in the manner provided by § 627.371, Florida Statutes. A transcript of any Appeal items shall be made at the time of hearing. In accordance with Section 24 of the Second Amended Plan of Operation, Bankers and Fortune appealed from the FRPCJUA Board's action taken at its meeting on December 14, 1995. Before the next scheduled meeting of the FRPCJUA Board on February 7, 1996, Newman was able to successfully negotiate contracts with Audubon, AIIC, and AIB. However, the contracts were not finalized and executed by the time of the meeting. Bankers also indicated its willingness to accept the terms being offered to the other three if FRPCJUA would agree to contract with Bankers as well. At the Board's meeting on February 7, 1996, which was noticed and conducted as an open meeting, the Board fully and openly discussed several subjects relevant to the RFP contracts, including capacity concerns and whether to contract with Bankers, Fortune and Hartford. Ultimately, a motion was made to reject the RFP process and negotiate contracts with the five existing servicing carriers--i.e., Audubon, AIIC, Bankers, Fortune, and Diamond State--with new contract provisions and a blended compensation rate. The Board voted to approve the motion with only member Diaz voting "no." Bankers and Fortune indicated that the Board's action was acceptable to them, and Chairman Wilson announced that the Board's action mooted the appeals of Bankers and Fortune. Audubon, AIIC, and AIB did not indicate whether the Board's action was acceptable to them. Before the next regular meeting of the Board, all three appealed from the Board's action under Section 24 of the Second Amended Plan of Operation. The next regular meeting of the FRPCJUA Board was held on February 29, 1996, which was noticed and open to the public. The Board considered a motion by member Ricciardelli to rescind its action on February 7, 1996. After a full and open discussion, the Board voted to approve the motion; members McGriff and Burgess voted "no." As part of its attempt to prove improper influence by the Department and arbitrary and capricious action by the FRPCJUA Board, Bankers introduced as evidence that Insurance Commissioner Nelson contacted Board member McGriff once by telephone prior to the meeting on February 29, 1996, to ask him to support the FRPCJUA staff's recommendation made on December 14, 1995. But there also was evidence that Bankers' representatives contacted McGriff several times to ask him to vote to uphold the Board's action on February 6, 1996, and it is self-evident that Commissioner Nelson's telephone contact did not influence McGriff at all. In accordance with Section 24 of the Second Amended Plan of Operation, on February 29, 1996, Bankers filed an appeal of the Board's actions of that date, and Bankers presented its appeal to the Board at a meeting on April 7, 1996, which was noticed and open to the public. After hearing and discussion, the Board denied the appeal. On April 24, 1996, Bankers appealed the Board's decision to the Department of Insurance. It is found from the evidence presented that the FRPCJUA's actions in connection with the RFP were neither arbitrary nor capricious. The Board and its staff set about to reduce the number of servicing contracts it had (other than the SMISI contract) from five to either two or three in order to save money. FRPCJUA thoughtfully adopted a reasonable RFP process for achieving its objective and implemented the RFP in a thoughtful and reasonable manner. The result achieved the objective. FRPCJUA replaced the five existing servicing contracts with three new contracts and has saved FRPCJUA millions of dollars a year in servicing fees. Bankers presented the testimony of an expert in business valuation, RFP processes, and gaming theory in an attempt to prove that the RFP process and the scoring of the proposals was so flawed as to be arbitrary and capricious. But Bankers' evidence itself was flawed. First, Bankers' expert questioned RFP specifications that Bankers accepted. Second, the expert questioned the points given by the evaluators on the scoring scale they used without ever reviewing or considering any proposals other than those submitted by Bankers, Audubon, AIIC, and AIB. Third, while the expert conceded that it was important to understand the thought processes of the evaluators in assessing the validity of their judgments, he had absolutely no evidence and no knowledge about the judgments of Colodny or Karlinsky. Fourth, while the expert criticized the scoring system as not being sophisticated enough to indicate "fractional differences" between proposals, and criticized the team's failure to use a "tie-breaking" mechanism, he conceded that the consensus scoring used by the team was a valid and acceptable way to assess relatively small differences between proposals and to break scoring ties. Fifth, much of the expert's criticism amounted to disagreements as to how to evaluate aspects of the proposals; meanwhile, as the expert admitted, in most cases the evaluation required the exercise of professional judgment, and the evaluation team had more and better expertise. The expert's testimony did not prove that the RFP process and the scoring of the proposals was arbitrary or capricious.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance enter a final order denying Bankers' appeal and claim for money damages and attorney fees. DONE AND ENTERED this 10th day of November, 1998, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON 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 Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 1998. COPIES FURNISHED: Douglas A. Mang, Esquire Wendy Russell Wiener, Esquire Mang Law Firm, P.A. Post Office Box 11127 Tallahassee, Florida 32302-3127 Michael H. Davidson, Esquire Division of Legal Services 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Seann M. Frazier, Esquire Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302 Perry Ian Cone, General Counsel AIB Insurance Group, Inc. 2500 Northwest 79th Avenue Miami, Florida 33122 Michael Colodny, Esquire Stuart B. Yanofsky, Esquire Colodny, Fass & Talenfeld, P. A. 2000 West Commercial Boulevard Suite 232 Fort Lauderdale, Florida 33309 Fred E. Karlinsky Associate General Counsel Florida Residential Property and Casualty Joint Underwriting Association 101 North Monroe Street Suite 1000 Tallahassee, Florida 32301 Zollie M. Maynard, Esquire William C. Owen, Esquire Panza, Maurer, Maynard & Neel, P.A. 215 South Monroe Street, Suite 320 Tallahassee, Florida 32301 Mitchell B. Haigler, Esquire Paul R. Ezatoff, Esquire Katz, Kutter, Haigler, Alderman, Bryant & Yon, P.A. Post Office Box 1877 Tallahassee, Florida 32302 J. Stephen Menton, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551
The Issue The issue for consideration is whether Respondent's licenses as an insurance agent and his eligibility for licensure in various areas of insurance sales should be disciplined because of the matters set forth in the Administrative Complaint.
Findings Of Fact At all times pertinent to the allegations contained herein, the Department of Insurance and Treasurer was the state agency responsible for the regulation of and licensing of insurance professionals in Florida. The Respondent, Richard Lee Fast, was licensed and eligible for licensure in Florida as a life insurance agent, life and health insurance agent, home warranty association contracting sales representative, and solicitor-property, casualty, surety, and miscellaneous lines agent. In June, 1978, Fast & Co., an insurance sales firm, was organized under the laws of Florida. Corporate records and records maintained by the Florida Secretary of State's office reveal that at no time pertinent to the matters involved herein was Respondent listed as an officer, director or shareholder of the corporation. Notwithstanding, the evidence clearly indicates that Respondent was in charge of and dictated the daily operations of the firm. Richard Fast, Jr., the Respondent's son, was identified on the records as President of the firm yet had no managerial role whatever regarding the firm's activities. Both Respondent's wife and daughter were listed as corporate officers but the evidence also indicates that the majority of the company's accounts and business was generated and handled by the Respondent. At no time did Respondent dispute his control over the daily operations of Fast & Co. Therefore, though there may have been no direct evidence of who solicited or sold the policies to American and Sunniland banks, it is clear that Respondent was the guiding force for and architect of the company's business activities and knew at all times what major policies were in force and by whom they were written. Sydell Rubin was hired by Respondent as corporate secretary for Fast & Co. and indicated that during the lifetime of the corporation few if any formalities of corporate activity were observed. No shareholder, director, or officer meetings were held; no corporate minutes were kept; and only the Respondent could authorize the issue of checks drawn on the corporate bank account. Ms. Rubin, as corporate secretary, could sign corporate checks, but only with the Respondent's knowledge and consent, and he maintained complete control over the remittance of premium monies to insurers. In November, 1979, Fast & Co. entered into an agreement with Fidelity whereby Fast & Co. would serve as agent for Fidelity. This agreement was executed on behalf of Fast & Co. by Ms. Rubin and contained, in the various provisions thereof, the terms by which Respondent's company was to remit premiums earned to the insurance company. Specifically, at paragraph six, the agent, Fast & Co., was to provide Fidelity, before the 20th of each month, an account of all business written, renewed or cancel led during the preceding month and, thereafter, was to remit to the company, within 45 days after the end of the month for which the account was written, the net premium due. In the event the agent did not submit the account in a timely fashion, Fidelity was to submit its accounting to the agent for the preceding month, again, the net premium due was to be paid by 45 days after the end of the month for which the account was rendered. Paragraph eleven of the agreement provided that any monies collected on behalf of the company by the agent should be held in a fiduciary capacity and kept separate and apart from the agent's own funds and, consistent with paragraph fifteen of the agreement, the agreement could not be assigned without the consent of both parties. In October, 1985, a corporate resolution of Fast & Co. was executed by the Respondent which authorized certain individuals to have check signatory authority for the Fast & Co. business bank account with American National Bank. On this resolution, Respondent was identified as President of the corporation and signed the resolution as such. In fact, he was not President, but had he not appeared on the resolution as an officer, he would not have been allowed unlimited control over the corporation's accounts at American. In October, 1988, Fast & Co. received a check in the amount of $17,351.00 from American for the purchase of an insurance policy to be issued by Fidelity. In October, November, and December, 1988, Fast & Co. also received three checks from Sunniland Bank of Ft. Lauderdale, in the total amount of $19,478.75, also for the purchase of insurance policies from Fidelity. All these checks were endorsed and deposited into Fast & Co. `s business bank account. It was not shown who actually endorsed the checks or made the deposits. So much Of the payment as was not commission, however, was premium earned by Fidelity and under the terms of the agency agreement, should have been held for it in a fiduciary account kept separate and apart from Fast & Co. funds. It was not a Fast & Co. asset. The policy for American was issued by Fidelity effective October 1, 1988, and the Sunniland Bank policies were issued by Fidelity with an effective date of December 8, 1988. American's invoice was sent by Fidelity to Fast & Co. on November 9, 1988 and the invoice for the Sunniland Bank policies was forwarded by Fidelity on December 21, 1988. The net premium due on all policies, together, after deduction of commission due Fast & Co., was $30,012.40. The invoice forms were not, however, the account forms referred to by the agency agreement. The first account form on which the relevant policies appear was dated February 29, 1989. That statement referred to the policies effective in October, 1988 (American) and December, 1988, (Sunniland). Petitioner and Fidelity urge that the earlier notice as to each policy starts the 45 day period running. Respondent, of course, claims it is the later "statement of account." Since the "account statement" was sent by Fidelity, listing all outstanding balances due, consistent with the terms of the agency agreement which call for the submittal of an account by Fidelity in the event Fast & Co. does not do it, it is more reasonable to conclude that it is the latter. In late December, 1988, certain assets of Fast & Co. were sold by the Respondent to Loomis Management Company, (Loomis). The sale was consummated after an extended negotiation between Fast and Loomis during which time representatives of Loomis were given free access to Respondent's books and records. Included as an asset which was assigned to Loomis was the Fast & Co.'s agency agreement with Fidelity and according to the terms of the sales agreement, Loomis assumed "the duties and obligation of Fast & Co." Notwithstanding the provision of the agency agreement for notification of and obtaining consent to a transfer, no notice of the transfer was submitted to Fidelity by either Fast & Co. or Loomis, nor was Fidelity's consent to the transfer obtained prior to closing of the sale. The $30,012.40 premium held by Fast & Co. for Fidelity as a result of the sale of the American and Sunniland policies was not transferred to Loomis. It was not remitted to Fidelity, either, notwithstanding the provision of the agency agreement, which required Fast & Co. to remit earned premiums due the company in a timely fashion. The money in question was maintained by Fast & Co. and was not transferred to Loomis, and notwithstanding the fact that Fidelity contacted Respondent on several occasions throughout 1989 demanding remittance of the premium due, the money was not remitted. Finally, on December 30, 1989, after extended discussion with Fidelity regarding the delay in payment, Mr. Fast issued a check to Fidelity's agent in the amount of $30,012.40, drawn on the Fast & Co. corporate bank account, in full payment of the premium on the American and Sunniland policies. This check was dishonored by the bank upon presentation. To the date of hearing, the earned premium has not been remitted to Fidelity and as of the hearing date, those monies are unaccounted for. Respondent claims they are no longer in his custody and he disclaims any responsibility for their payment. He claims that because the agency agreement called for payment only at 45 days after the last day of the month for which the account was rendered, and since the accounting calling for payment was not sent by Fidelity until well after the policy effective date and the issuance of the preliminary invoices, the funds were not payable to Fidelity as of the date of the transfer of the corporate assets to Loomis and, therefore, the terms of the sale agreement between Fast and Loomis, calling for Fast to pay-only those obligations due and payable at the time of transfer, did not include that obligation. Respondent also shrugs off the issue of why, since the funds had been collected from the insured, they were not considered held in a fiduciary capacity to be transferred to Loomis by indicating Loomis representatives had ample opportunity to examine the books and the issue was not raised. His arguments are specious and without merit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued in this case revoking all Respondent's licenses and eligibility for licensure. RECOMMENDED in Tallahassee, Florida this 21st day of November, 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 21st day of November, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-4320 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; Accepted and incorporated herein. & 3. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. - 8. Accepted and incorporated herein. 9. & 10. Accepted and incorporated herein. 11. - 14. Accepted and incorporated herein. 15. Rejected as not a proper Finding of Fact. FOR THE RESPONDENT; Accepted and incorporated herein. - 4. Accepted and incorporated herein Accepted and incorporated herein. Accepted in the sense that he worked at Fast & Co. & 8. Rejected as implying Ms. Rubin was acting for American. Ms. Rubin completed the form for American, but it is clear she did so as an employee of Fast & Co. at the request of American. 9. & 10. Accepted and incorporated herein. 11. & 12. Accepted and incorporated herein. Accepted, but see (7. & 8.). - 17. Accepted and incorporated herein. Accepted. Rejected as contra to the weight of the evidence. 20.- 22. Accepted. Accepted. Accepted. & 26. Rejected. 27. & 28. Rejected as not pertinent to the issues of fact herein. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Charles L. Curtis, Esquire 1177 Southeast Third Avenue Fort Lauderdale, Florida 33316 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill Deputy General Counsel Department of Legal Affairs The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue The issue in this case is whether Petitioner is eligible for licensure as a resident general lines agent.
Findings Of Fact On August 14, 1998, Robert Manns, a representative for Butler County, Missouri, filed a consumer complaint with the Missouri Department of Insurance, which alleged that Petitioner financed a premium for an insurance policy when the premium had, in fact, been paid by the county. On June 9, 1999, Petitioner was assessed a fine of $10,000.00 by the Missouri Department of Insurance based on Petitioner's having practiced forgery and deception in an insurance transaction. Specifically, it was found that Petitioner signed the names of the city finance director and county commission clerk to premium finance documents and letters representing that the city and county had financed a premium when, in fact, the city and county had paid the insurance premium for the city and county accounts in full on an annual basis. At the time Petitioner forged the premium finance agreement, he was licensed as an insurance agent in the State of Missouri. The Missouri Department of Insurance did not revoke Petitioner's license as an insurance agent in the State of Missouri. On February 14, 2000, the Indiana Department of Insurance denied Petitioner’s application for licensure based upon the Missouri administrative action. On September 19, 2003, Petitioner applied for licensure as a resident general lines agent in the State of Florida. Based on its review of Petitioner's application and the administrative documents from the Missouri Department of Insurance described in paragraphs 2 above, the Department denied Petitioner’s application. In regard to the incident described in paragraph 2 above, Petitioner denied that he forged the insurance contract, but he admitted that he forged the premium finance agreement associated with the subject insurance contract. However, Petitioner testified that "no one lost money" as a result of his forging the premium finance agreement. Petitioner testified that he was not proud of the incident, that he was very sorry for doing it, and that his actions could not be justified. The Department considers the forgery of documents and deception related to insurance documents and transactions by an insurance agent to be serious matters. This is particularly true in light of the fiduciary role of an insurance agent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that final order be entered denying Petitioner’s application for licensure as a resident general lines insurance agent in the State of Florida. DONE AND ENTERED this 23rd day of November, 2004, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 23rd day of November, 2004. COPIES FURNISHED: Johnny R. Howe 4367 Winding Oaks Circle Mulberry, Florida 33860 Michael T. Ruff, Esquire Ladasiah Jackson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
