The Issue The issues to be resolved in this consolidated proceeding concern whether the Petitioner, Abraham Maida's applications to represent certain life insurance companies should be denied based upon his alleged unlawful failure to forward premium funds from insureds to the insurers during the applicable regular course of business. Also at issue are the charges in the Administrative Complaint in the related penal proceeding which concerns the same factual conduct involving the Respondent's alleged failure to forward premiums to the insurers involved in the policy contracts at issue.
Findings Of Fact The Petitioner, Abraham George Maida, is licensed in Florida as a life insurance agent, a life and health insurance agent and a dental health care contract salesman. The Department is an agency of the State of Florida charged with licensing life, health and other types of insurance agents, with regulating their licensure and practice and with enforcing the licensure and practice standards embodied in the statutes cited hereinbelow. Abraham Maida engaged in the business of selling insurance coverage to various employees of the City of Jacksonville. The premium payments for this coverage were collected by payroll deduction from the employees, and lump sum premium checks were remitted over to the Petitioner/Respondent, Mr. Maida, by the appropriate personnel of the City of Jacksonville. Mr. Maida, in turn, was required by his contractual arrangements with the underwriting insurance companies involved and by the Florida Insurance Code, Chapter 626, Florida Statutes, with timely remitting those premium funds over to the insurers who underwrote the risk for the employees in question. Mr. Maida failed to timely remit the premium funds which he collected from the City of Jacksonville to the relevant insurers for the months of February, March and April of 1990, in the case of policy contracts written on behalf of Loyal American Life Insurance Company. Additionally, Mr. Maida failed to timely remit the premium funds received from the City of Jacksonville, after it received them by payroll deduction from its employees, for the months of March, April and May of 1990, with regard to the premium funds due in contracts involving the ITT Life Insurance Company, in accordance with his contract with that company. Mr. Maida failed to timely remit the insurance premiums of James E. Daniels to the ITT Life Insurance Company, as well. The Petitioner/Respondent's contracts with these insurance companies required him to remit premium funds which he received from insureds, within thirty (30) days of receipt, to the insurance company underwriting the risk involved. This the Petitioner/Respondent failed to do for the companies involved in the above Findings of Fact and for those months of 1990 delineated above. In the case of most of the delinquent premium funds due these companies, Mr. Maida authorized them to debit his commission and/or renewal accounts with those companies, which were monies due and owing to him from the companies, in order to make up the premiums which he had not remitted over to the companies involved at that point. That procedure did not defray all of the delinquent premium amounts, however. in the case of ITT Life Insurance Company and the monies owed that company by Mr. Maida, it was established that $10,554.21 of delinquent premium amounts were owing to that company and not timely paid by Mr. Maida. Although he paid the portion of that figure representing the March premium funds due the company for March of 1990, he did not directly pay the premium funds due for April and May of 1990 but, rather, suffered the company to charge those delinquencies, for those months, to his agent's commission account. This procedure still left $4,877.54 unpaid, as of the time of hearing. It was established by witness, Steven Heinicke of that company, that Mr. Maida is their most consistently delinquent agent, in terms of timely remission of premium funds due the company for insurance business which Mr. Maida has written. It has also been established however, that Mr. Maida made a practice of always paying premium funds due the companies for which he wrote insurance in the precise amounts owing, regardless of whether the billing statements to him from those companies had inadvertently understated the amounts which they were due. It was also established that his failure to timely remit the insurance premium funds in question was not due to any intent to defraud those companies of the funds involved or to permanently convert the funds to his own use. Rather, it was established that Mr. Maida's difficulty in timely payment of the premium funds was due to misappropriation of the funds because of financial problems which he was suffering at tee times in question, due at least in part to federal income tax difficulties he was experiencing. There has been no shoring in this record that Mr. Maida is not a competent insurance agent in terms of his abilities and qualifications to fairly and effectively obtain and contract for insurance business with insureds on behalf of the insurance companies he represents. There was no showing that he lacks reasonably adequate knowledge and technical competence to engage in the transactions authorized by the licenses or permits which he presently holds or which he seeks in the licensure application involved in this proceeding.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is, therefore RECOMMENDED: That the Petitioner be found guilty of the violations found to have been proven in the above Conclusions of Law portion of this Recommended Order and that his licenses and eligibility for licensure with the insurers for which license application was made be suspended for a period of three (3) months. DONE and ENTERED this 5th day of June, 1991, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk the Division of Administrative Hearings this 6th day of June, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-6670 Respondent/Department's Proposed Findings of Fact: 1-7. Accepted. COPIES FURNISHED: Tom Gallagher, State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, Esq. General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Norman J. Abood, Esq. Willis F. Melvin, Jr., Esq. 1015 Blackstone Building Alan J. Leifer, Esq. Jacksonville, FL 32202 Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300
The Issue The issue in this case is whether Respondent, Charles Steven Lieberman, committed the offenses alleged in an Administrative Complaint issued by Petitioner, the Department of Financial Services, on January 26, 2004, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. (2004).1 Respondent, Charles Steven Lieberman, is currently, and was at all times pertinent to this matter, licensed in Florida as a resident Life & Variable Annuity (2-14); Life, Health & Variable Annuity (2-15); Life (2-16); Life & Health (2-18); and Health (2-40) Agent. (Stipulated Facts). The Department has jurisdiction over Mr. Lieberman's licenses and appointments pursuant to Chapter 626, Florida Statutes. (Stipulated Facts) Mr. Lieberman's license identification number is A155409. (Stipulated Facts). Mr. Lieberman graduated from Columbia University. From 1974 through 1992, Mr. Lieberman worked as a trader initially on the floor of the Chicago Board of Options Exchange, and later, the Chicago Mercantile Exchange. Mr. Lieberman has held his insurance licenses for ten years. This is the first administrative complaint issued against him. Mr. Lieberman's Business. Mr. Lieberman, at all times pertinent, served as president of Charles Lieberman, Inc. (Stipulated Facts). Mr. Lieberman, at all times pertinent, was the designated primary agent, as defined in Section 626.592, Florida Statutes, of Charles Lieberman, Inc. (Stipulated Facts). Charles Lieberman, Inc., at all times pertinent, owned and did business as "National Medical Services" and "The Insurance Center." (Stipulated Facts). Mr. Lieberman's "Medical Benefits Plan"/"Medical Savings Plan." Mr. Lieberman offers customers who are seeking medical insurance a plan which he calls a "Medical Benefits Plan" or "Medical Savings Plan" (hereinafter referred to as the "Lieberman Medical Benefits Plan"). The Lieberman Medical Benefits Plan consists of the following components (hereinafter referred collectively as the "Plan Products"): A hospital and surgery expense payment policy (hereinafter referred to as the "Hospital Insurance Plan"); A Catastrophe Major Medical Insurance Plan (hereinafter referred to as the "Major Medical Insurance Plan"); and A discount card titled "The Chamber Card" (hereinafter referred to as the "Chamber Card"), with a "Limited Product Warranty." None of the Plan Products included insurance coverage for physician office visits, a fact which Mr. Lieberman was fully aware of. The Hospital Insurance Plan. The Hospital Insurance Plan provides coverage for hospital and surgical expenses. It does not provide coverage for physician office visits. The Hospital Insurance Plan is a medical insurance plan offered by United American Insurance Company (hereinafter referred to as "United American"). Mr. Lieberman is an agent for United American. Petitioner's Exhibit 64 is a copy of the hospital and surgery expense policy that constitutes the Hospital Insurance Plan sold by Mr. Lieberman. (Stipulated Facts). Petitioner's Exhibit 65 is a copy of the Schedule of Benefits for the Hospital Insurance Plan. (Stipulated Facts). The Major Medical Insurance Plan. The Major Medical Insurance Plan provides coverage for major medical expenses in excess of $25,000.00. It does not provide coverage for physician office visits. The Major Medical Insurance Plan is also a medical insurance plan. It is offered by United States Life Insurance Company (hereinafter referred to as "U.S. Life"). In order to purchase a Major Medical Insurance Plan, customers are required to join one of many organizations which purchase Major Medical Insurance Plans through Seabury & Smith2, an organization which administers the sale of health insurance for U.S. Life. Customers, once they join such an organization, are then required to purchase the Major Medical Insurance Plan through the organization they joined. Mr. Lieberman is not an agent for U.S. Life or affiliated with Seabury & Smith. He does not, therefore, sell Major Medical Insurance Plans. Nor does he receive any compensation if any of his customers purchase a Major Medical Insurance Plan. Mr. Lieberman does, however, recommend the purchase of a Major Medical Insurance Plan as part of the Lieberman Medical Benefits Plan. In order to facilitate the purchase, Mr. Lieberman has his customers join the "American Contract Bridge League."3 His customers then purchase a Major Medical Insurance Plan directly based upon their League membership. Petitioner's Exhibit 63 is a copy of the Major Medical Insurance Plan which by Mr. Lieberman recommended that his customers purchase. (Stipulated Facts). The Chamber Card. In an effort to provide some relief for cost of physician office visits, which was not covered by the Hospital Insurance Plan or the Major Medical Insurance Plan, Mr. Lieberman sold his customers the Chamber Card. The Chamber Card, which is not insurance (Stipulated Facts), is a card which entitles the holder thereof to a discount4 for various medical services, including physician office visits. In an effort to enhance the discounts from the Chamber Card available to Mr. Lieberman's customers, Mr. Lieberman also provided what he termed a "Limited Product Warranty" which he offered through Charles Lieberman, Inc., d/b/a National Medical Services. This Limited Product Warranty is also not insurance. Pursuant to Mr. Lieberman's Limited Product Warranty, Mr. Lieberman purportedly agreed to provide reimbursement of the cost of any physician office visit in excess of $15.00, an amount which he referred to as a "copay," which was not paid for by the Chamber Card. The additional discounts were dependant, however, on Mr. Lieberman's ability to negotiate a reduction in the fees incurred by his customers directly from the physician.5 In describing the Chamber Card and the Limited Product Warranty sold by Mr. Lieberman, he used the acronyms "PPO" and "PHCS," and terms like "copay" and "claims" normally associated with the insurance industry. Customer W.E. (Count I of the Administrative Complaint). Prior to September 12, 2002, W.E. spoke with Mr. Lieberman by telephone. She explained to him that she was interested in purchasing health insurance, and before she could explain what she meant in any detail, he informed her that he could provide any health insurance she wanted as long as she did not have high blood pressure, which she did not. On September 12, 2002, W.E. met with Mr. Lieberman (Stipulated Facts) at his home to discuss purchasing health-care insurance. She explained to Mr. Lieberman that she wanted a health insurance plan similar to what she had had before she recently moved to Florida and that she wanted a plan with minimum co-payments. She also indicated that she wanted a basic insurance plan until she was able to find employment where her health insurance would be provided for her. W.E. did not specifically tell Mr. Lieberman that she wanted insurance that covered physician office visits.6 Rather, she reasonably assumed that by telling Mr. Lieberman that she wanted to purchase "health insurance" that, as an insurance agent, he would understand that she wanted coverage for physician office visits. Mr. Lieberman, rather than providing the insurance coverage which he knew or should have known W.E. was seeking, coverage which included physician office visits, suggested that she purchase the Lieberman Medical Benefits Plan. While Mr. Lieberman attempted to give some limited explanation of his plan to W.E., based upon the manner in which he explained his plan at hearing, it is understandable that W.E. did not understand what she was purchasing, or, more specifically, that the plan, while including some health care coverage, did not include coverage for physician office visits. On September 12, 2002, Mr. Lieberman sold or arranged for the sale of the Plan Products, as more fully described in Findings of Fact 9 through 25, to W.E.: W.E. signed an application for membership in the American Contract Bridge League (Stipulated Facts); W.E. wrote a check for her membership in the American Contract Bridge League (Stipulated Facts); W.E. signed an application and wrote checks for the Chamber Card and a United American Hospital Insurance Plan (Stipulated Facts); and W.E. signed an application for a Major Medical Insurance Plan from U.S. Life and wrote a check to Seabury & Smith. (Stipulated Facts). Mr. Lieberman knew or should have known that he was selling W.E. a product which she was not interested in purchasing and that he was not providing her with a significant part of the insurance coverage she was interested in purchasing, coverage of physician office visits. While Mr. Lieberman gave some limited explanation of what the Chamber Card was, he did not fully explain to W.E. that it was not an insurance program, plan, or policy; that it would not pay for physician office visits; or that it only provided some unspecified discount on the cost of physician office visits. W.E. did not understand what she was purchasing. She even believed incorrectly that she had not been provided any insurance at all by Mr. Lieberman. While this incorrect assumption was based in part upon comments she perceived were made by a Department investigator, her comments show that she was unknowledgeable about insurance and, therefore, placed her full reliance on upon Mr. Lieberman. Even though W.E. issued separate checks made payable to "A.C.B.L." (the American Contract Bridge League), Seabury & Smith (for the Major Medical Insurance Plan), United American (for the Hospital Insurance Plan), and National Medical Services (for the Chamber Card); signed an Acknowledgement & Disclaimer and an Acknowledgement & Disclosures (both of which are quoted, infra, in Finding of Fact 35); and signed a document titled "Medical Benefits Plan” which contained an acknowledgement (quoted, infra. In Finding of Fact 36), W.E., unlike Mr. Lieberman, did not understand that she was purchasing a product which she had not requested and did not want. The Acknowledgement & Disclaimer and Acknowledgement & Disclosures signed by W.E. provided the following: ACKNOWLEDGEMENT AND DISCLAIMER I understand that the US Life Catastrophic Insurance Policy is being purchased through the mail from Seabury & Smith (Group Insurance Plans), who are the brokers for that plan. Although I am purchasing other insurance from Charles Lieberman, I realize that Mr. Lieberman is in no way representing Seabury & Smith or US Life and that he is only making me aware that this plan is available. I acknowledge that it is my sole responsibility to review this plan and its features to determine suitability once the policy is received. Insured Date ACKNOWLEDGEMENT AND DISCLOSURES I hereby acknowledge that I am purchasing insurance that covers approximately 75% of the first $10,000 in the hospital then covers 100% hospitalization above $25,000. Although my PHCS PPO Access/Medical Savings Card (which is not insurance) will, in most cases, reduce this potential liability; through negotiated savings, it is not guaranteed to eliminate it in it [sic] entirety. INSURED DATE The foregoing Acknowledgement & Disclaimer and the Acknowledgement & Disclosures are misleading at best, and deceiving at worst. While the Acknowledgement & Disclosures includes the language "which is not insurance," that language is included after the terms "PHCS PPO Access/Medical Savings Card," terms which are not clearly identified or explained and are, along with other terminology used in the Disclosures (i.e., "PPO" and "copay") reasonably associated with health-care insurance. More importantly, the Acknowledgement & Disclaimer and the Acknowledgement & Disclosures do not explain that physician office visits are not being provided through health care insurance. Finally, W.E. was not given an opportunity by Mr. Lieberman to read the Acknowledgement & Disclaimer, the Acknowledgement & Disclosures, or any other documents shown to her by Mr. Lieberman. He simply placed most of the documents which she had to sign in front of her with only the part she was required to sign visible and told her to sign them, which she did. The following acknowledgment was also contained in a document titled "Medical Benefits Plan" which W.E. signed: By signing below, I agree that all information provided above is complete, accurate, and truthful. I recognize that because of the high cost of health insurance, National Medical Savings, plan administrator, has attempted to put together a "medical savings/benefit plan" which allows clients to purchase reasonably priced hospitalization insurance from well known a- rated insurance companies and combine it with a product which is not insurance to better suit the clients' needs. I understand that anything associated with the PPO repricing or copay rebates is part of the "medical savings plan" and is in no way to be considered as insurance, but rather as an affordable alternative to satisfy the need to reduce medical costs. Like the Acknowledgments quoted in Finding of Fact 35, this acknowledgement, which appears after a paragraph titled "Pre- Authorized Payment Plan" on the form, is misleading. It is not clear that it is referring to the Chamber Card, it contains terms normally associated with insurance coverage in spite of the disclaimer, and Mr. Lieberman gave W.E. no reasonable opportunity to read the disclaimer before having her sign it. After enrolling W.E. in the Lieberman Medical Benefits Plan, Mr. Lieberman mailed all the documents which W.E. had signed on September 12, 2002, to her. This was her first realistic opportunity to read the documents. After receiving the documents concerning the Lieberman Medical Benefits Plan, W.E. cancelled all of the Plan Products. Although there was some language in the Acknowledgement and Disclosures and the form titled "Medical Benefits Plan" signed by W.E. indicating that some part of the Lieberman Medical Benefits Plan was not insurance, due to the ambiguity of the language of the Acknowledgement and the disclaimer, the lack of opportunity that W.E. had to read the documents, the other language normally associated with insurance used in the documents, and the lack of coherent explanation provided by Mr. Lieberman, it is found that, as to W.E., Mr. Lieberman: Did not inform her that the Chamber Card was not an insurance program, plan, or policy; "Portrayed" the Chamber Card as an insurance program, plan, or policy; and Sold her products, none of which provided insurance coverage for the cost of physician office visits. Customer A.H. (Count II of the Administrative Complaint). Prior to April 11, 2003, Mr. Lieberman contacted and spoke to A.H. by telephone. A.H. told Mr. Lieberman that she was interested in purchasing health insurance, including insurance covering physician office visits, with co-pay, and hospitalization expenses, with a deductible. On April 11, 2003, A.H. met with Mr. Lieberman (Stipulated Facts) at his home to discuss purchasing health-care insurance. She again explained to Mr. Lieberman that she was interested in a policy that covered physician office visits, with a co-pay, and hospitalization expenses, with a deductible. Mr. Lieberman, rather than providing insurance coverage which he knew or should have known A.H. was seeking, coverage which included physician office visits, suggested that she purchase the Lieberman Medical Benefits Plan. While Mr. Lieberman attempted to give some limited explanation of his plan to A.H., based upon the manner in which he explained his plan at hearing, it is understandable that A.H. did not understand what she was purchasing, or, more specifically, that the plan, while including some health care coverage, did not include coverage for physician office visits. On April 11, 2003, Mr. Lieberman sold or arranged for the sale of the same Plan Products to A.H. that he had sold to W.E., described in Finding of Fact 30, supra. (Stipulated Facts). Mr. Lieberman knew or should have known that he was selling A.H. a product which she was not interested in purchasing and that he was not providing her with a significant part of the insurance coverage she was interested in purchasing, coverage of physician office visits. While Mr. Lieberman gave some limited explanation of what the Chamber Card was, he did not fully explain to A.H. that it was not an insurance program, plan, or policy; that it would not pay for physician office visits; or that it only provided some unspecified discount on the cost of physician office visits. Like W.E., A.H. signed the Acknowledgment and Disclaimer and the Acknowledgement and Disclosures quoted, supra, in Finding of Fact 35, and the disclaimer quoted, supra, in Finding of Fact 36. The Acknowledgements and the disclaimer were deficient for the same reasons described in Findings of Fact 35 and 36. Like W.E., even though A.H. issued separate checks made payable to "A.C.B.L." (the American Contract Bridge League), Seabury & Smith (for the Major Medical Insurance Plan), United American (for the Hospital Insurance Plan), and National Medical Services (for the Chamber Card); signed the Acknowledgement & Disclaimer and an Acknowledgement & Disclosures; and signed the disclaimer contained in a form titled "Medical Benefits Plan," A.H., unlike Mr. Lieberman, did not understand that she was purchasing a product which she had not requested and did not want. Having explained to Mr. Lieberman that she wanted a policy that covered physician office visits and not having been told that was not what she was purchasing, she simply relied upon Mr. Lieberman. After enrolling A.H. in the Lieberman Medical Benefits Plan, Mr. Lieberman mailed all the documents which A.H. had signed on April 11, 2003, to her. Some time after receiving the documents concerning the Lieberman Medical Benefits Plan, A.H. cancelled all of the Plan Products. Although there was some language in the Acknowledgement and Disclosures and the form titled "Medical Benefits Plan" signed by A.H. indicating that some part of the Lieberman Medical Benefits Plan was not insurance, due to the ambiguity of the language of the Acknowledgement and the Disclaimer, the other language normally associated with insurance used in the documents, and the lack of coherent explanation provided by Mr. Lieberman, it is found that, as to A.H., Mr. Lieberman: Did not inform her that the Chamber Card was not an insurance program, plan, or policy; "Portrayed" the Chamber Card as an insurance program, plan, or policy; and Sold her products, none of which provided insurance coverage for the cost of physician office visits. Customer R.G. (Count III of the Administrative Complaint). R.G. did not testify at the final hearing. The factual allegations of Count III of the Administrative Complaint were not proved. Customer J.E. (Count IV of the Administrative Complaint). Prior to January 17, 2003, J.E. spoke with Mr. Lieberman by telephone. J.E. explained to Mr. Lieberman that he was interested in purchasing health insurance to replace the Blue Cross/Blue Shield health-care insurance he currently had. On January 17, 2003, J.E. met with Mr. Lieberman (Stipulated Facts) at his home to discuss purchasing health-care insurance. He explained to Mr. Lieberman that he was interested in a policy to replace his current policy with Blue Cross/Blue Shield. J.E. specifically requested a policy that covered physician office visits. Mr. Lieberman, rather than providing insurance coverage which he knew or should have known J.E. was seeking, coverage which included physician office visits, suggested that he purchase the Lieberman Medical Benefits Plan. While Mr. Lieberman attempted to give some limited explanation of his plan to J.E., based upon the manner in which he explained his plan at hearing, it is understandable that J.E. did not understand what he was purchasing, or, more specifically, that the plan, while including some health care coverage, did not include coverage for physician office visits. On January 17, 2003, Mr. Lieberman sold or arranged for the sale to J.E. of the same Plan Products he sold to W.E. described in Finding of Fact 30, supra. (Stipulated Facts). Mr. Lieberman knew or should have known that he was selling J.E. a product which he was not interested in purchasing and that he was not providing him with a significant part of the insurance coverage he was interested in purchasing, coverage for physician office visits. While Mr. Lieberman gave some limited explanation of what the Chamber Card was, he did not fully explain to J.E. that it was not an insurance program, plan, or policy; that it would not pay for physician office visits; or that it only provided some unspecified discount on the costs of physician office visits. Like W.E. and A.H., J.E. also signed the Acknowledgment and Disclaimer and the Acknowledgement and Disclosures quoted, supra, in Finding of Fact 35, and the disclaimer quoted, supra, in Finding of Fact 36. The Acknowledgements and the disclaimer were deficient for the same reasons described in Findings of Fact 35 and 36. Like W.E. and A.H., even though J.E.. issued separate checks made payable to "A.C.B.L." (the American Contract Bridge League), Seabury & Smith (for the Major Medical Insurance Plan), United American (for the Hospital Insurance Plan), and National Medical Services (for the Chamber Card); signed the Acknowledgement & Disclaimer and an Acknowledgement & Disclosures; and signed the disclaimer contained in a form titled "Medical Benefits Plan," J.E., unlike Mr. Lieberman, did not understand that he was purchasing a product which he had not requested and did not want. Having explained to Mr. Lieberman that he wanted a policy that covered physician office visits and not having been told that was not what he was purchasing, he simply relied upon Mr. Lieberman. After enrolling J.E. in the Lieberman Medical Benefits Plan, Mr. Lieberman mailed all the documents which J.E. had signed on January 17, 2003, to him. Some time after receiving the documents concerning the Lieberman Medical Benefits Plan, J.E. cancelled all of the Plan Products. Although there was some language in the Acknowledgement and Disclosures and the form titled "Medical Benefits Plan" signed by J.E. indicating that some part of the Lieberman Medical Benefits Plan was not insurance, due to the ambiguity of the language of the Acknowledgement and the disclaimer, the lack of opportunity to read the documents before he signed them, the other language normally associated with insurance used in the documents, and the lack of coherent explanation provided by Mr. Lieberman, it is found that, as to J.E., Mr. Lieberman: Did not inform him that the Chamber Card was not an insurance program, plan, or policy; "Portrayed" the Chamber Card as an insurance program, plan, or policy; and Sold him products, none of which provided insurance coverage for the cost of physician office visits. The Administrative Complaint. On January 26, 2004, the Department issued a four- count Administrative Complaint against Mr. Lieberman. (Stipulated Facts).7 The Administrative Complaint contains four counts, one each for Mr. Lieberman's association with W.E. (Count I), A.H. (Count II), R.G. (Count III), and J.E. (Count IV). The Administrative Complaint alleges that Mr. Lieberman's conduct with all four individuals violated Section 626.611(6), (7), and (8), Florida Statutes, and Section 626.621(2), Florida Statutes. The Administrative Complaint also alleges that, as to A.H., Mr. Lieberman violated Section 626.621(6), Florida Statutes. In support of the alleged statutory violations, the Department alleged, in part, that with regard to all four individuals: Mr. Lieberman "did not inform [his customers] that The Chamber Card was not an insurance program, plan or policy"; Mr. Liberman "portrayed The Chamber Card as an insurance program, plan or policy"; and That "[n]one of the products you, CHARLES STEVEN LIEBERMAN, sold to [W.E., A.H., R.G., and J.E.] provide insurance coverage for the cost of doctors' visits."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Charles Steven Lieberman violated Sections 626.611(7) and (8), Florida Statutes, as alleged in Counts I, II, and IV of the Administrative Code; dismissing Count III of the Administrative Code; and suspending his licenses for a period of 12 months from the date of the final order. DONE AND ENTERED this 31st day of August, 2004, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 31st day of August, 2004.
The Issue The issues are whether Respondents offered and sold securities in Florida, in violation of the registration requirements of Section 517.07(1), Florida Statutes; offered and sold securities in Florida while Respondents were unregistered, in violation of Section 517.12(1), Florida Statutes; or committed fraud in the offer, sale, or purchase of securities in Florida, in violation of Section 517.301(1)(a), Florida Statutes. If so, an additional issue is the penalty to be imposed.
Findings Of Fact At all material times, Respondent James A. Torchia (Respondent) held a valid life and health insurance license. Respondent was the president and owner of Respondent Empire Insurance, Inc. (Empire Insurance), a now-dissolved Florida corporation. Empire Insurance was in the insurance business, and Respondent was its sole registered insurance agent. At no material time has Respondent or Empire Insurance held any license or registration to engage in the sale or offer for sale of securities in Florida. At no material time were the investments described below sold and offered for sale by Respondent or Empire Insurance registered as securities in Florida. These cases involve viaticated life insurance policies. A life insurance policy is viaticated when the policy owner, also known as the viator, enters into a viatical settlement agreement. Under the agreement, the viator sells the policy and death benefits to the purchaser for an amount less than the death benefit--the closer the viator is perceived to be to death, the greater the discount from the face amount of the death benefit. The viatical industry emerged to provide dying insureds, prior to death, a means by which to sell their life insurance policies to obtain cash to enjoy during their remaining lives. As this industry matured, brokers and dealers, respectively, arranged for the sale of, and bought and resold, life insurance policies of dying insureds. Prior to the death of the viator, these viaticated life insurance policies, or interests in such policies, may be sold and resold several times. In these cases, viators sold their life insurance policies to Financial Federated Title & Trust, Inc. (FinFed). Having raised money from investors, American Benefit Services (ABS) then paid FinFed, which assigned viaticated policies, or interests in the policies, to various trusts. The trusts held the legal title to the policies, and the trust beneficiaries, who are the investors from whom ABS had obtained the funds to pay FinFed, held equitable title to the policies. Sometimes in these cases, a broker or dealer, such as William Page and Associates, intervened between the viator and FinFed. At some point, though, ABS obtained money from investors to acquire policies, but did not pay the money to FinFed to purchase viaticated life insurance policies. The FinFed and ABS investment program eventually became a Ponzi scheme, in which investor payouts were derived largely, if not exclusively, from the investments of other investors. ABS typically acquired funds through the promotional efforts of insurance agents, such as Respondent and Empire Insurance. Using literature provided by ABS, these agents often sold these investments to insurance clients. As was typical, Respondent and Empire Insurance advertised the types of claims described below by publishing large display ads that ran in Florida newspapers. Among the ABS literature is a Participation Disclosure (Disclosure), which describes the investment. The Disclosure addresses the investor as a "Participant" and the investment as a "Participation." The Disclosure contains a Participation Agreement (Agreement), which provides that the parties agree to the Disclosure and states whether the investor has chosen the Growth Plan or Income Plan, which are described below; a Disbursement Letter of Instruction, which is described below; and a Letter of Instruction to Trust, which is described below. The agent obtains the investor's signature to all three of these documents when the investor delivers his check, payable to the escrow agent, to purchase the investment. The Disclosure states that the investments offer a “High Return”: “Guaranteed Return on Participation 42% at Maturity.” The Disclosure adds that the investments are “Low Risk”: “Secured by a Guaranteed Insurance Industry Receivable”; “Secured by $300,000 State Insurance Guarantee Fund”; “Short Term Participation (Maturity Expectation 36 Months)”; “Principal Liquid After One Year With No Surrender Charge”; “State Regulated Participation”; “All Transactions By Independent Trust & Escrow Agents”; and “If policy fails to mature at 36 months, participant may elect full return of principal plus 15% simple interest.” The Disclosure describes two alternative investments: the Growth Plan and Income Plan. For the Growth Plan, the Disclosure states: “At maturity, Participant receives principal plus 42%, creating maximum growth of funds.” For the Income Plan, the Disclosure states: “If income is desired, participation can be structured with monthly income plans.” Different rates of return for the Growth and Income plans are set forth below. For investors choosing the Income Plan, ABS applied only 70 percent of the investment to the purchase of viaticated life insurance policies. ABS reserved the remaining 30 percent as the source of money to "repay" the investor the income that he was due to receive under the Income Plan, which, as noted below, paid a total yield of 29.6 percent over three years. The Disclosure states that ABS places all investor funds in attorneys’ trust accounts, pursuant to arrangements with two “bonded and insured” “financial escrow agents.” At another point in the document, the Disclosure states that the investor funds are deposited “directly” with a “financial escrow agent,” pursuant to the participant’s Disbursement Letter of Instruction. The Disbursement Letter of Instruction identifies a Florida attorney as the “financial escrow agent,” who receives the investor’s funds and disburses them, “to the order of [FinFed) or to the source of the [viaticated insurance] benefits and/or its designees.” This disbursement takes place only after the attorney receives “[a] copy of the irrevocable, absolute assignment, executed in favor of Participant and recorded with the trust account as indicated on the assignment of [viaticated insurance] benefits, and setting out the ownership percentage of said [viaticated insurance] benefits”; a “medical overview” of the insured indicative of not more than 36 months’ life expectancy; confirmation that the policy is in full force and effect and has been in force beyond the period during which the insurer may contest coverage; and a copy of the shipping airbill confirming that the assignment was sent to the investor. The Disclosure states that the investor will direct a trust company to establish a trust, or a fractional interest in a trust, in the name of the investor. When the life insurance policy matures on the death of the viator, the insurer pays the death benefits to the trust company, which pays these proceeds to the investor, in accordance with his interest in the trust. Accordingly, the Letter of Instruction to Trust directs FinFed, as the trust company, to establish a trust, or a fractional interest in a trust, in the name of the investor. The Letter of Instruction to Trust provides that the viaticated insurance benefits obtained with the investor's investment shall be assigned to this trust, and, at maturity, FinFed shall pay the investor a specified sum upon the death of the viator and the trustee's receipt of the death benefit from the insurer. The Disclosure provides that, at anytime from 12 to 36 months after the execution of the Disclosure, the investor has the option to request ABS to return his investment, without interest. At 36 months, if the viator has not yet died, the investor has the right to receive the return of his investment, plus 15 percent (five percent annually). The Disclosure states that ABS will pay all costs and fees to maintain the policy and that all policies are based on a life expectancy for the viator of no more than 36 months. Also, the Disclosure assures that ABS will invest only in policies that are issued by insurers that are rated "A" or better by A.M. Best "at the time that the Participant's deposit is confirmed." The Disclosure mentions that the trust company will name the investor as an irrevocable assignee of the policy benefits. The irrevocable assignment of policy benefits mentioned in the Disclosure and the Disbursement Letter of Instruction is an anomaly because it does not conform to the documentary scheme described above. After the investor pays the escrow agent and executes the documents described above, FinFed executes the “Irrevocable Absolute Assignment of Viaticated Insurance Benefits.” This assignment is from the trustee, as grantor, to the investor, as grantee, and applies to a specified percentage of a specific life insurance policy, whose death benefit is disclosed on the assignment. The assignment includes the "right to receive any viaticated insurance benefit payable under the Trusts [sic] guaranteed receivables of assigned viaticated insurance benefits from the noted insurance company; [and the] right to assign any and all rights received under this Trust irrevocable absolute assignment." On its face, the assignment assigns the trust corpus-- i.e., the insurance policy or an interest in an insurance policy--to the trust beneficiary. Doing so would dissolve the trust and defeat the purpose of the other documents, which provide for the trust to hold the policy and, upon the death of the viator, to pay the policy proceeds in accordance with the interests of the trust beneficiaries. The assignment bears an ornate border and the corporate seal of FinFed. Probably, FinFed intended the assignment to impress the investors with the "reality" of their investment, as the decorated intangible of an "irrevocable" interest in an actual insurance policy may seem more impressive than the unadorned intangible of a beneficial interest in a trust that holds an insurance policy. Or possibly, the FinFed/ABS principals and professionals elected not to invest much time or effort in the details of the transactional documentation of a Ponzi scheme. What was true then is truer now. Obviously, in those cases in which no policy existed, the investor paid his money before any policy had been selected for him. However, this appears to have been the process contemplated by the ABS literature, even in those cases in which a policy did exist. The Disbursement Letter of Instruction and correspondence from Respondent, Empire Insurance, or Empire Financial Consultant to ABS reveal that FinFed did not assign a policy, or part of a policy, to an investor until after the investor paid for his investment and signed the closing documents. In some cases, Respondent or Empire Insurance requested ABS to obtain for an investor a policy whose insured had special characteristics or a investment plan with a maturity shorter than 36 months. FinFed and ABS undertook other tasks after the investor paid for his investment and signed the closing documents. In addition to matching a viator with an investor, based on the investor's expressed investment objectives, FinFed paid the premiums on the viaticated policies until the viator died and checked on the health of the viator. Also, if the viator did not die within three years and the investor elected to obtain a return of his investment, plus 15 percent, ABS, as a broker, resold the investor's investment to generate the 15 percent return that had been guaranteed to the investor. Similarly, ABS would sell the investment of investors who wanted their money back prior to three years. The escrow agent also assumed an important duty--in retrospect, the most important duty--after the investor paid for his investment and signed the closing documents; the escrow agent was to verify the existence of the viaticated policy. Respondent and Empire Insurance sold beneficial interests in trusts holding viaticated life insurance policies in 50 separate transactions. These investors invested a total of $1.5 million, nearly all of which has been lost. Respondent and Empire Insurance earned commissions of about $120,000 on these sales. Petitioner proved that Respondent and Empire Insurance made the following sales. Net worths appear for those investors for whom Respondent recorded net worths; for most, he just wrote "sufficient" on the form. Unless otherwise indicated, the yield was 42 percent for the Growth Plan. In all cases, investors paid money for their investments. In all cases, FinFed and ABS assigned parts of policies to the trusts, even of investors investing relatively large amounts. On March 21, 1998, Phillip A. Allan, a Florida resident, paid $69,247.53 for the Growth Plan. On March 26, 1998, Monica Bracone, a Florida resident with a reported net worth of $900,000, paid $8000 for the Growth Plan. On April 2, 1998, Alan G. and Judy LeFort, Florida residents with a reported net worth of $200,000, paid $10,000 for the Growth Plan. In a second transaction, on June 8, 1998, the LeForts paid $5000 for the Growth Plan. In the second transaction, the yield is 35 percent, but the Participation Agreement notes a 36-month life expectancy of the viator. The different yields based on life expectancies are set forth below, but, as noted above, the standard yield was 42 percent, and, as noted below, this was based on a 36-month life expectancy, so Respondent miscalculated the investment return or misdocumented the investment on the LeForts' second transaction. On April 29, 1998, Doron and Barbara Sterling, Florida residents with a reported net worth of $250,000, paid $15,000 for the Growth Plan. In a second transaction, on August 14, 1998, the Sterlings paid $100,000 for the Growth Plan. The yield for the second transaction is 35 percent, and the Participation Agreement notes that the Sterlings were seeking a viator with a life expectancy of only 30 months. When transmitting the closing documents for the second Sterling transaction, Respondent, writing ABS on Empire Insurance letterhead, stated in part: This guy has already invested with us (15,000) [sic]. He gave me this application but wants a 30 month term. Since he has invested, he did some research and has asked that he be put on a low T-cell count and the viator to be an IV drug user. I know it is another favor but this guy is a close friend and has the potential to put at least another 500,000 [sic]. If you can not [sic] do it, then I understand. You have done a lot for me and I always try to bring in good quality business. If this inventory is not available, the client has requested that we return the funds . . . In a third transaction, on February 24, 1999, the Sterlings paid $71,973 for the Growth Plan. The yield is only 28 percent, but the Participation Agreement reflects the typical 36-month life expectancy for the viator. Although the investors would not have received this document, Respondent completed an ABS form entitled, "New Business Transmittal," and checked the box, "Life Expectancy 2 years or less (28%). The other boxes are: "Life Expectancy 2 1/2 years or less (35%)" and "Life Expectancy 3 years or less (42%)." On May 4, 1998, Hector Alvero and Idelma Guillen, Florida residents with a reported net worth of $100,000, paid $6000 for the Growth Plan. In a second transaction, on October 29, 1998, Ms. Guillen paid $5000 for the Growth Plan. In a third transaction, on November 30, 1998, Ms. Guillen paid $5000 for the Growth Plan. For this investment, Ms. Guillen requested an "IV drug user," according to Respondent in a letter dated December 1, 1998, on Empire Financial Consultants letterhead. This is the first use of the letterhead of Empire Financial Consultants, not Empire Insurance, and all letters after that date are on the letterhead of Empire Financial Consultants. In a fourth transaction, on January 29, 1999, Ms. Guillen paid $15,000 for the Growth Plan. On April 23, 1998, Bonnie P. Jensen, a Florida resident with a reported net worth of $120,000, paid $65,884.14 for the Growth Plan. Her yield was 35 percent, but the Participation Agreement reflects a 36-month life expectancy. On May 20, 1998, Michael J. Mosack, a Florida resident with a reported net worth of $500,000, paid $70,600 for the Income Plan. He was to receive monthly distributions of $580.10 for three years. The total yield, including monthly distributions, is $20,883.48, which is about 29.6 percent, and the Participation Agreement reflects a 36-month life expectancy. On May 27, 1998, Lewis and Fernande G. Iachance, Florida residents with a reported net worth of $100,000, paid $30,000 for the Growth Plan. On June 3, 1998, Sidney Yospe, a Florida resident with a reported net worth of $1,500,000, paid $30,000 for the Growth Plan. The yield is 35 percent, and the Participation Agreement reflects a 30-month life expectancy. On June 12, 1998, Bernard Aptheker, with a reported net worth of $100,000, paid $10,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. On June 10, 1998, Irene M. and Herman Kutschenreuter, Florida residents with a reported net worth of $200,000, paid $30,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. On June 9, 1998, Daniel and Mary Spinosa, Florida residents with a reported net worth of $300,000, paid $10,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. On June 5, 1998, Pauline J. and Anthony Torchia, Florida residents with a reported net worth of $300,000 and the parents of Respondent, paid $10,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. On June 29, 1998, Christopher D. Bailey, a Florida resident with a reported net worth of $500,000, paid $25,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. In a second transaction on the same day, Mr. Bailey paid $25,000 for the Growth Plan. Petitioner submitted documents concerning a purported purchase by Lauren W. Kramer on July 21, 1998, but they were marked "VOID" and do not appear to be valid. On July 22, 1998, Laura M. and Kenneth D. Braun, Florida residents with a reported net worth of $150,000, paid $25,000 for the Growth Plan, as Respondent completed the Participation Agreement. However, the agreement calls for them to receive $205.42 monthly for 36 months and receive a total yield, including monthly payments, of 29.6 percent, so it appears that the Brauns bought the Income Plan. In a second transaction, also on July 22, 1998, the Brauns paid $25,000 for the Growth Plan. On January 20, 1999, Roy R. Worrall, a Florida resident, paid $100,000 for the Income Plan. The Participation Agreement provides that he will receive monthly payments of $821.66 and a total yield of 29.6 percent. On July 16, 1998, Earl and Rosemary Gilmore, Florida residents with a reported net worth of $250,000, paid $5000 for the Growth Plan. In a second transaction, on February 12, 1999, the Gilmores paid $20,000 for the Growth Plan. The yield is 28 percent, but the Participation Agreement reflects a 36-month life expectancy. The New Business Transmittal to ABS notes a life expectancy of two years or less. On July 14, 1998, David M. Bobrow, a Florida resident with a reported net worth of $700,000 on one form and $70,000 on another form, paid $15,000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. In a second transaction, on the same day, Mr. Bobrow paid $15,000 for the Growth Plan. On July 27, 1998, Cecilia and Harold Lopatin, Florida residents with a reported net worth of $300,000, paid $10,000 for the Growth Plan. On July 30, 1998, Ada R. Davis, a Florida resident, paid $30,000 for the Income Plan. Her total yield, including monthly payments of $246.50 for three years, is 29.6 percent. In a second transaction, on the same day, Ms. Davis paid $30,000 for the Income Plan on the same terms as the first purchase. On July 27, 1998, Joseph F. and Adelaide A. O'Keefe, Florida residents with a net worth of $300,000, paid $12,000 for the Growth Plan. On August 5, 1998, Thurley E. Margeson, a Florida resident, paid $50,000 for the Growth Plan. On August 19, 1998, Stephanie Segaria, a Florida resident, paid $20,000 for the Growth Plan. On August 26, 1998, Roy and Glenda Raines, Florida residents, paid $5000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy. The New Business Transmittal to ABS notes a life expectancy of 30 months or less. In a second transaction, on the same day, the Raineses paid $5000 for the Growth Plan. The yield is 35 percent, but the Participation Agreement reflects a 36-month life expectancy, although, again, the New Business Transmittal notes the life expectancy of 30 months or less. On November 24, 1998, Dan W. Lipford, a Florida resident, paid $50,000 for the Growth Plan in two transactions. In a third transaction, on January 13, 1999, Mr. Lipford paid $30,000 for the Growth Plan. On December 1, 1998, Mary E. Friebes, a Florida resident, paid $30,000 for the Growth Plan. On December 4, 1998, Allan Hidalgo, a Florida resident, paid $25,000 for the Growth Plan. On December 17, 1998, Paul E. and Rose E. Frechette, Florida residents, paid $25,000 for the Income Plan. The yield, including monthly payments of $205.41 for three years, is 29.6 percent. On December 26, 1998, Theodore and Tillie F. Friedman, Florida residents, paid $25,000 for the Growth Plan. On January 19, 1999, Robert S. and Karen M. Devos, Florida residents, paid $10,000 for the Growth Plan. On January 20, 1999, Arthur Hecker, a Florida resident, paid $50,000 for the Income Plan. The yield, including a monthly payment of $410.83 for 36 months, is 29.6 percent. On February 11, 1999, Michael Galotola, a Florida resident, paid $25,000 for the Growth Plan. In a second transaction, on the same day, Michael and Anna Galotola paid $12,500 for the Growth Plan. On November 3, 1998, Lee Chamberlain, a Florida resident, paid $50,000 for the Growth Plan. On December 23, 1998, Herbert L. Pasqual, a Florida resident, paid $200,000 for the Income Plan. The yield, including a monthly payment of $1643.33 for three years, is 29.6 percent. On December 1, 1998, Charles R. and Maryann Schuyler, Florida residents, paid $10,000 for the Growth Plan. Respondent and Empire Insurance were never aware of the fraud being perpetrated by FinFed and ABS at anytime during the 38 transactions mentioned above. Respondent attempted to verify with third parties the existence of the viaticated insurance policies. When ABS presented its program to 30-40 potential agents, including Respondent, ABS presented these persons an opinion letter from ABS's attorney, stating that the investment was not a security, under Florida law. Respondent also contacted Petitioner's predecessor agency and asked if these transactions involving viaticated life insurance policies constituted the sale of securities. An agency employee informed Respondent that these transactions did not constitute the sale of securities.
Recommendation RECOMMENDED that Petitioner enter a final order: Finding James A. Torchia and Empire Insurance, Inc., not guilty of violating Section 517.301(1), Florida Statutes; Finding James A. Torchia guilty of 38 violations of Section 517.07(1), Florida Statutes, and 38 violations of Section 517.12(1), Florida Statutes; Finding Empire Insurance, Inc., guilty of 38 violations of Section 517.07(1), Florida Statutes, and 38 violations of Section 517.12(1), Florida Statutes, except for transactions closed on or after December 1, 1998; Directing James A. Torchia and Empire Insurance, Inc., to cease and desist from further violations of Chapter 517, Florida Statutes; and Imposing an administrative fine in the amount of $120,000 against James A. Torchia. DONE AND ENTERED this 19th day of May, 2003, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of May, 2003. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Fred H. Wilsen Senior Attorney Office of Financial Institutions and Securities Regulation South Tower, Suite S-225 400 West Robinson Street Orlando, Florida 32801-1799 Barry S. Mittelberg Mittelberg & Nicosia, P.A. 8100 North University Drive, Suite 102 Fort Lauderdale, Florida 33321
The Issue Whether the Petitioner should be required to provide authorization and coverage for surgery and radiation treatment for J.C.M., a person covered under the Certificate of HMO Coverage ("HMO Certificate") between the Petitioner and the Broward County School Board.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: At all times material to this dispute, J.A.M. was insured under a group health maintenance organization contract between Foundation Health and the Broward County School Board for the benefit of its employees and their eligible dependents. At all times material to this dispute, J.C.M., J.A.M.'s son, was a dependent eligible for coverage under the contract. J.C.M. is currently a 22-year-old college student. When J.C.M. was approximately 13 years old, he suffered a cut on his arm, and a keloid developed that was surgically removed. A keloid is a raised, irregular, and enlarging scar created by an excessive build-up of collagen. When the body suffers a wound such as a cut, a burn, or a surgical incision, the body heals the wound by building up tissue over the wound to close it. A keloid forms when the body does not stop the development of tissue, so that the tissue continues to accumulate and eventually forms large, unsightly scars or growths. Some people are prone to develop keloids, although keloids do not always develop in these individuals as a result of every cut or abrasion. It appears that J.C.M. is a person prone to develop keloids. When he was 16 years old, J.C.M. elected to pierce his ears so that he could wear earrings, a practice that was, according to J.C.M., "in style." Ear piercing is not a medical procedure, although a physician can perform the procedure. After his ears were pierced, J.C.M. wore earrings continually for a period of time. At some point, J.C.M. noticed that the back of both of his earlobes itched. As time passed, it became apparent that keloids were forming on the back of each earlobe at the point at which his ears were pierced. When J.C.M. first noticed them, the keloids were the size of pimples, and they formed around the hole made by the incision piercing his earlobes. The keloids have grown slowly, and they are now quite large. They cause J.C.M. considerable discomfort: They turn a dark purplish color when exposed to the sun, they itch, and they become tender if J.C.M. rubs them or sleeps on his side. The keloids on the posterior of his earlobes developed as a result of the incisions created when his earlobes were pierced. Zoila Alen, M.D., J.C.M.'s primary physician, referred him to Nestor F. De La Cruz-Munoz, M.D., a surgeon, for evaluation of the keloids for surgical removal. Dr. De La Cruz, in turn, referred J.C.M. to Jaime Zusman, M.D., for a preoperative evaluation of the need for radiation treatment to prevent new keloids from developing as a result of the surgical incisions to remove the existing keloids. The physicians concluded that J.C.M. required surgery and radiation treatment. On March 3, 2000, Dr. Alen submitted a Primary Care Physician Referral Authorization and Consultation Form to Foundation Health requesting authorization to refer J.C.M. to Abelardo Arango, M.D., for surgery to remove the keloids on his earlobes and for radiation therapy. In a letter dated March 15, 2000, Foundation Health notified J.A.M. that it was unable to authorize the requested referral. The basis for Foundation Health's decision was that the keloids were complications of a non-covered benefit and that the treatment to remove the keloids was, therefore, not covered. J.A.M. requested a re-evaluation of the request in a letter dated March 21, 2000. In a letter dated March 23, 2000, Foundation Health notified J.A.M. that it would adhere to its original decision and deny the requested authorization. Foundation Health reiterated as the basis for its decision the determination that the keloids were "complication[s] of a non-covered benefit (ear piercing)" and that the requested services were not covered by the HMO Certificate. Foundation Health enclosed with this letter a copy of page 26 of the Member Handbook explaining J.A.M.'s coverage under the HMO Certificate, which provides in pertinent part: Miscellaneous. The following services and supplies are excluded from coverage: * * * Complications of non-covered services including the diagnosis and treatment of any condition which arises as a complication of a non-covered service (e.g. services or supplies to treat a complication of cosmetic surgery, etc.) The HMO Certificate provides in pertinent part: SECTION IX EXCLUSIONS AND LIMITATIONS A. Exclusions. The following services and/or supplies are specifically excluded from Coverage and are not Covered Services under this Agreement: * * * 8. cosmetic, surgical or non-surgical procedures which are undertaken primarily to improve or otherwise modify the Member's external appearance except reconstructive surgery necessary to correct or repair a functional disorder as a result of a disease, injury or congenital defect or initial implanted prosthesis and reconstructive surgery incident to a mastectomy for cancer of the breast. Also excluded are surgical excision or reformation of any sagging skin of any part of the body, including, but not limited to the eyelids, face, neck, abdomen, arms, legs or buttocks; any services performed in connection with the enlargement, reduction, implantation or change in appearance of a portion of the body, including, but not limited to, the face, lips, jaw, chin, nose, ears, breast, or genitals; hair transplantation; chemical face peels or abrasion of the skin,; electrolysis depilation; removal of tattooing; or any other surgical or non-surgical procedures which are primarily for cosmetic purposes or to create body symmetry. Additionally, all medical complications as a result of cosmetic, surgical or non-surgical procedures are excluded; * * * 39. Complications or conditions resulting from a non-Covered Service.
The Issue Whether Respondent engaged in conduct proscribed by the Insurance Code as is particularly set forth in the Administrative Complaint filed December 7, 1993.
Findings Of Fact During times material, Respondent, Nelson Speer Benzing, was licensed with Petitioner, Department of Insurance and Treasurer, as a life insurance and as a life and health insurance agent. During times material, Respondent was an employee of U.S. Savings Trust Management (herein USSTM). During times material, Respondent was never appointed with Petitioner to represent Wisconsin National Life Insurance Company (herein Wisconsin). However, Respondent did attend a workshop sponsored by Wisconsin. At some time prior to March 5, 1992, Respondent met with George Cantonis, President of Mega Manufacturing, Inc. (herein Mega) in order to obtain Cantonis' permission to make a sales presentation to Mega's employees. Cantonis granted Respondent permission to make a sales presentation to Mega's employees. On March 5, 1992, Respondent made a sales presentation to Mega's employees. The purpose of said presentation was to enroll the employees of Mega in a "savings plan" offered by USSTM. The presentation lasted approximately 15- 30 minutes. Employees were told that the plan, as presented, incorporated an insurance savings plan which had a "liquid" component as well as a long term savings component. At no time during this sales presentation did Respondent explain to employees of Mega that he was a licensed life insurance agent. During the course of his presentation, Respondent described USSTM's product variously as an "insurance saving plan", as an "investment in insurance companies" and as a "retirement savings plan". At no time during the presentation did Respondent specifically state that he was selling life insurance. At the conclusion of the presentation, Respondent enrolled all interested employees in USSTM's plan. During the enrollment procedure, Respondent told the employees to complete portions of at least three documents which included a form entitled "Employee History", a Wisconsin's life insurance application, and an employee payroll deduction authorization. Cantonis enrolled through the above procedure and signed a blank Wisconsin National Life Insurance application. Subsequent to the group sales presentation, Respondent made a similar presentation to Tina Netherton, Mega's office manager, who was working in the office and answering the telephone. At the conclusion of the presentation to Netherton, she enrolled in the plan and also signed a blank Wisconsin National Life Insurance application pursuant to instructions from Respondent. Both Netherton and Cantonis believed that the "savings plan" consisted of both a short term "liquid cash element and a long term investment". Neither were aware that they had purchased life insurance. Both Netherton and Cantonis had, in their opinion, adequate life insurance at the time of Respondent's sales presentation, and would not have purchased additional life insurance if they had been told (by Respondent) that they were purchasing life insurance. Both Netherton and Cantonis executed beneficiary designations on their belief that such was needed so that disbursements, if any, could be made to their designee in the event of their death. Approximately three weeks after enrollment, Netherton and Cantonis received brochures from USSTM which acknowledged their enrollment and detailed the benefits of the "savings plan". The brochure advised that Netherton and Cantonis had enrolled in an insurance "savings plan" and failed to state that they had purchased life insurance. Cantonis and Netherton attempted to withdraw funds from the liquid portion of the plan and were unable to do so. Four to five months after their enrollment, Cantonis and Netherton received life insurance policies from Wisconsin. Pursuant to the insurance applications, Cantonis and Netherton were issued Wisconsin life insurance policy numbers L00566485 and L00566483, respectively. Cantonis and Netherton maintained their Wisconsin policies in order to realize some gain from their overall loss in dealing with Respondent and USSTM. At the time that Respondent made his presentation to Mega's employees and officials, he had never before made sales presentations in order to enroll employees in plans offered by USSTM. Respondent's general manager, Vincent Radcliff, was the agent of record of Wisconsin. The insurance application and policies issued to Cantonis and Netherton were signed by an agent other than Respondent. Respondent's supervisor, Vincent A. Radcliff, III, was disciplined by Petitioner and Respondent cooperated with the Petitioner in investigating the complaint allegations filed against his supervisor, Radcliff. Respondent was first licensed by Petitioner on November 15, 1989. Respondent has not been the subject of any prior disciplinary actions by Petitioner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner enter a Final Order suspending Respondent's life and health insurance licenses for a period of three (3) months. It is further RECOMMENDED that Petitioner order that Respondent engage in continuing education respecting the manner and means of soliciting on behalf of insurance companies, and to the extent that he completes the required courses within an acceptable time frame, that the suspension be suspended pending the outcome of Respondent's satisfactory completion of such continuing education courses. 1/ RECOMMENDED this 1st day of July, 1994, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 1st day of July, 1994.
Findings Of Fact James Edward Snapp is licensed by the Department of Insurance as an Ordinary Life, including Disability Agent, Dental Agent and Disability Agent and was so licensed at all times in 1981 and 1982 in his dealings with Mrs. Mabel McCarthy and Mr. George Guertin. In July 1981 Respondent went to the apartment of Mabel McCarthy, a 79- year-old widow, and talked to her about insurance. His visit was unsolicited and Mrs. McCarthy initially told him she had adequate coverage with her Medicare, Medicaid and Blue Cross. Respondent discussed the issuance of a "gold" card which provided better coverage than she was presently receiving. They also discussed her $1,000 life insurance policy for which she had designated the Haven School in Miami as beneficiary. When she indicated she would also like to leave something to another school in Palm Beach County, Respondent suggested she cancel the $1,000 policy and take out two $5,000 policies and make each school beneficiary of one policy. Following Respondent's assertions to Mrs. McCarthy regarding her taking out different insurance policies, Mrs. McCarthy gave Respondent her check on 26 July 1981 in the amount of $1,100 made payable to Accident & Health Agency, the agent for whom Respondent worked. Mrs. McCarthy understood this to be the premium payment for the life insurance and hospitalization insurance policies. Respondent told Mrs. McCarthy the cash surrender value of her life insurance policy should be about $900. When she wrote Mutual of Omaha about the cash surrender value, she was advised it was nearer $700 and the company questioned her reasons for cancelling the policy. This aroused Mrs. McCarthy's suspicions and she called the Insurance Commissioner's branch office to inquire about Respondent. Up until this time she had full confidence in Respondent. In the application for health insurance for Mrs. McCarthy which Respondent subsequently submitted 12 July 1981 to American Sun Life Insurance Company, he checked the "no" square to the question "Is the insurance applied for intended to replace any insurance presently in force?" knowing he had suggested to Mrs. McCarthy this policy would replace her Blue Cross insurance policy. The total premium on these policies, one providing for medical expenses and the other providing for nursing home care, is $530. American Sun Life Insurance Company does not sell life insurance. On 28 July 1981 Respondent again visited Mrs. McCarthy, obtained her check in the amount of $380 made payable to Accident & Health Agency, and submitted an application to American Sun Life Insurance Company on behalf of Mrs. McCarthy which provides hospital and medical benefits. On this application he also checked the "no" square to the question about replacing existing insurance. The annual premium for this policy was $370. Mrs. McCarthy also gave Respondent a check in the amount of $500 payable to Accident & Health Agency for additional policies. Before this check had been cleared, Mrs. McCarthy received the first policies Respondent had sold her and realized they were no different from her prior coverage, no "gold" card was included and neither was a life insurance policy. Upon receipt of these policies on 11 August 1981 Mrs. McCarthy stopped payment on the $500 check and again called the Insurance Commissioner's office. When the Insurance Commissioner contacted American Sun Life Insurance Company with Mrs. McCarthy's complaint, they refunded $900 to Mrs. McCarthy for the policies they had issued. Those policies were for the maximum coverage Sun Life provides. The three policies issued by Orange State Life Insurance for various health care benefits were those applied for when the $500 check was written by Mrs. McCarthy and these policies were cancelled when payment was stopped on that check. The total premium for these policies was $449.99 plus a $26 policy fee. Respondent obtained the name of George Guertin as a potential client and called him for an appointment to discuss insurance. Upon arrival 18 January 1982 shortly after the phone call, Respondent looked at two policies Guertin showed him covering Medicare Supplemental payments on Guertin and his wife. These policies were issued by Tara Life Insurance Company. Respondent told Guertin that the agent who sold him these policies had charged top price and he could get these policies for him at a lower premium. The premium paid on the policy issued to George Guertin was $482 and the premium on the policy issued to Alma Guertin was $445. Respondent was not authorized to solicit policies for Tara. Guertin gave Respondent his check payable to J. Snapp in the amount of $540 to renew the two policies with Tara Life Insurance Company. Guertin also gave Respondent his life insurance policy issued on John Hancock Mutual Life Insurance Company to inquire about the cash surrender value. This policy was later returned to Guertin without change. Respondent's testimony that the $540 was for services he was to provide the Guertins in preparing Medicare claims and that the Guertins understood this at the time the check was signed, is not credible. George Guertin was born in Canada in 1903 but has lived in the United States for 65 years. Although he went to school in Canada through the eighth grade, he does not read English. George's brother Eme apparently lived with the Guertins and was disabled. Respondent offered to take Eme to the Veteran's Administration to get his disability pension increased. He was paid $250 for this service and for taking Eme to the VA on other occasions. Guertin testified that the signature on Exhibit 12 was not his signature and that on Exhibit 13 was not his wife's signature. Respondent testified that these "contracts" were signed by George Guertin and Alma Guertin in his presence. Regardless of the validity of the signatures, these "contracts" provide that compensation [of Respondent] shall be determined by mutual agreement. There was no mutuality of agreement that the $540 paid by Guertin to Respondent was for services to be rendered by Respondent in completing Medicare forms. When Guertin was advised by Tara Life Insurance Company that his policies were about to lapse for nonpayment of premiums, he realized Respondent had not renewed these policies as he was told Respondent would do, he complained to the Insurance Commissioner's office, and he sent premium payments to Tara. Respondent suffered injuries while serving in the Marine Corps in Korea. He was discharged with a 35 percent disability rating in 1955 and since that time he has been treated from time to time in VA facilities. He has had several heart attacks, five according to Respondent's testimony, and takes a wide variety of medication. In his testimony Respondent admitted that he only sold insurance and left the doing of the paperwork associated with these policies to the agency for whom he works. He does not keep records of his insurance transactions because he has a "real tough time" doing so. He leaves those chores to the agency.
Findings Of Fact At all times relevant hereto, Respondent, Thomas S. Piller, was licensed by Petitioner, Department of Insurance, as an ordinary life, including disability insurance agent. His offices are located at 103 South Circle, Sebring, Florida. In June, 1980, Piller met one Elleta Y. Thomas, then 74 years old, who resided in Sebring, Florida, with her husband, William Filler sold Mr. and Mrs. Thomas two policies with American Sun Life Insurance Company effective June 10, 1980. The policies provided supplements for medicare. In January, 1981, William Thomas suffered a heart attack and was hospitalized. He died on March 3, 1981. During the period when Mr. Thomas was hospitalized, and continuing after his death, Elleta Thomas telephoned or visited Respondent's office a number of times to obtain assistance in filing insurance claims for her husband's medical bills and death. On or about May 11, 1981, Respondent received a telephone call from Elleta Thomas asking that he assist her in filling out various insurance forms. Piller went to her residence where he stayed for approximately three hours. During that time, he assisted her in filling out claim forms with three insurance companies. While there, Piller sold Thomas Policy Nos. MC 783 Florida and NS 775 with United General Life Insurance Company which provided Thomas additional medical coverage. The total annual premium was $512 which Thomas paid by check. On the application, question one asks whether the insurance is intended to replace any plan of insurance with another company. Respondent marked "no" in the blank. The policy also stated in paragraph two that "preexisting conditions are covered after this policy currently being applied for has been in effect for 6 months." Elleta Thomas signed a certification form acknowledging that she had read and understood the policy, and was being furnished a copy of that form. Although Thomas could not remember signing the form, she did admit that the signature on the form was her own. There were no representations by Piller that the new policy replaced an existing policy, or that American Sun Life Insurance Company had been consolidated into United General Life Insurance Company, or otherwise changed its name. Neither was there a representation that the American Sun policies had been cancelled. In fact, Thomas admitted that Piller had not told her to turn the American policies in, or to "disregard" them. On June 3, 1981, Thomas was injured in an accident at her home and sometime thereafter examined her General policy to see if a claim could be filed. Because the accident was apparently caused by a "preexisting condition", she did not file a claim. Even though Thomas had two current and effective policies with American Sun which provided accident coverage, she was under the impression that they had been replaced by the General policy purchased in May, 1981. With the assistance of her daughter, Thomas then filed a complaint with the Department of Insurance alleging misrepresentation on the part of Piller. Thomas later received a refund of her $512 premium and the General policy was cancelled. Her American Sun policies were never cancelled and are apparently still in force.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all charges against Respondent, Thomas Stephen Piller, be DISMISSED. DONE and ENTERED this 16th day of March, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Department of Administration Oakland Office Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1982. COPIES FURNISHED: Julie St. John, Esquire Room 428-A, Larson Building Tallahassee, Florida 32301 David B. Higginbottom, Esquire Post Office Box 697 Frostproof, Florida 33843
Findings Of Fact Respondent John Richard Klee is licensed by Petitioner as a disability insurance agent in the State of Florida. At all times material to these facts he has been so licensed. Mr. Klee was employed by the Interstate Insurance Agency for approximately 9 years. During that time Interstate wrote insurance for the Guaranty Trust Life Insurance Company and for the Founders Life Insurance Company. While an independent agent working through the Interstate Agency, Mr. Klee, on April 10, 1981 sold a hospital indemnity insurance policy through the Guaranty Trust Company to Marie D. Grantley. Subsequently, Mr. Klee left the Interstate Agency and began employment with the Diversified Health Insurance Company which writes policies for the American Guaranty Life Insurance Company. After he had begun his new employment, Mrs. Grantley called him in October, 1981 to, get assistance in determining what her benefits were under the Guaranty Trust Company policies. 1/ On October 13, 1981 Mr. Klee went to Mrs. Grantley's home to explain her coverage as it applied to her current medical bills. At that meeting Mr. Klee solicited and received her application for a medicare supplemental policy unwritten by American Guaranty Life Insurance Company. The new policy covered certain expenses such as out-patient medical bills which were not covered by the existing Guaranty Trust policies. During their discussion about the new policy, Mr. Klee explained to Mrs. Grantley that the new policy was to provide her supplemental coverage in addition to that which she already had under the Guaranty Trust policies. He did not tell her that the new policy was a direct replacement of the Guaranty Trust policies. Additionally, he did not tell her that she should cease paying the premium on her Guaranty Trust policies. These findings are the pivotal factual issues in the case. Mrs. Grantley's testimony which was received through a deposition 2/ is to the contrary. Mr. Klee's testimony that he thoroughly explained the coverage of the new policy and how it did not replace the existing Guaranty Trust Life policies is accepted as more credible than Mrs. Grantley's contrary testimony. This determination is based on the demeanor of Mr. Klee at the final hearing and on the apparent weakness of Mrs. Grantley's memory of the transaction as shown in her deposition. When Mr. Klee met with Mrs. Grantley, he gave her all the information she needed to reasonably understand the nature of the new policy she was applying for as it related to her existing policies. He did not represent to her that the American Guaranty Company was in any way related to the Guaranty Trust Company. When Mr. Klee took Mrs. Grantley's application for the American Guaranty Life Insurance policy, he gave her a receipt for three months' premium of $206.65. The receipt indicated that Mr. Klee is with the Diversified Health Agency and that the policy was to be issued by American Guaranty Life Insurance Company. Mrs. Grantley signed the American Guaranty Life Insurance Company application which indicated that the new coverage being applied for did not replace existing accident and sickness policies then in force. At the time Mrs. Grantley signed the application, Mr. Klee reasonably believed that she understood what she was doing. The check which Mrs. Grantley drew to pay for the first three months' premium on the new policy was made out to Diversified Health Services. Subsequent to her application for the American Guaranty Life policy, Mrs. Grantley called Mr. Gerald Schectman who had been Mr. Klee's supervisor at the Interstate Insurance Agency. She told Mr. Schectman that she was confused about her insurance coverage. Several days later, Mr. Schectman went to visit her at her home. She told him that she wanted to retain her original coverage purchased through the Interstate Agency and did not want the new American Guaranty Policy. As she recalled her transaction with Mr. Klee, she believed that he had told her that Guaranty Trust Life Insurance Company was being taken over by the American Guaranty Company or that they were otherwise the same company. When Mr. Schectman heard her version of Mrs. Grantley's transaction with Mr. Klee, he took her to the Insurance Commissioner's Office to file a complaint against the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance enter a Final Order dismissing the Amended Administrative Complaint filed against John Richard Klee. DONE and RECOMMENDED this 1st day of June, 1983, in Tallahassee, Florida. MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1983.
Findings Of Fact The Petitioner, at all times pertinent hereto was an employee of the Department of Health and Rehabilitative Services. The Respondent is an agency of the State of Florida charged with administering the group self-insurance health insurance program and other insurance programs such as life insurance and is the agency charged with accepting or rejecting applications for coverage under those programs, such as the application at issue. On January 11, 1980 the Petitioner commenced employment with the State of Florida, Department of Health and Rehabilitative Services as a District Intake Counselor in District eleven of the Department. Shortly after commencing employment the Petitioner attended an orientation meeting during which all insurance benefits and other benefits available for state employees were explained. Ernestine Thurston, the HRS employee who conducted the orientation session on January 11, 1980 informed all employees present at that orientation meeting, including the Petitioner, of the available benefits and the means by which they were to avail themselves by proper application, of those benefits, including the fact that the Petitioner had thirty days to enroll in the State Group Health Insurance Program without the necessity of obtaining medical approval for insurability. A second orientation meeting was held during which insurance benefits were explained for a second time to the employees whose names were depicted on the recruitment log, which names include the Petitioner 's. The Petitioner was present at both orientation sessions. At the first orientation session on January 11, 1980 the Petitioner received an HRS Employee Handbook which included the following language concerning insurance benefits: "Employees may enroll within 30 days of date of employment without evidence of insurability. "Application at a later date requires proof of insurability. Consult your supervisor, personnel manager, or district/central personnel office for additional information." The Petitioner admitted that she signed a receipt on January 11, 1980 acknowledging receipt of a complete copy of that Employee Handbook and which receipt included the following language: "I understand that it is my responsibility to review the pamphlet in detail and request any clarification needed from my supervisor or personnel office." Petitioner conceded that she did not read the pamphlet or handbook, but instead put it in her desk drawer at her office. On January 14, 1980, knowing of the need to apply for insurance benefits within 30 or 31 days of her employment during the open enrollment period, the Petitioner applied for various insurance -overages and submitted the pertinent enrollment forms through her District 11 personnel office. She applied for and received State Supplemental Health Insurance coverage through the Gulf Life Insurance Company (then called the "20/20" plan). This supplemental health insurance coverage was designed to complement the overall state group health insurance program or plan. The Petitioner at that time was covered under the overall state group health insurance plan (The Plan) through her husband's family coverage since he was an employee covered under that plan at the time. The Petitioner also timely applied for and received coverage under the state life insurance program as well. The Petitioner did not submit a new enrollee form requesting to participate in the State of Florida Employee's Group Health Self Insurance Plan within 31 calendar days of January 11, 1980. The Hearing Officer has considered the Petitioner's testimony as well as that of Ms. Thurston and the other evidence surrounding the circumstances of her initial employment, the explanation of insurance coverage benefits, including the time limit for the open enrollment without medical approval which the Petitioner did not avail herself of insofar as the group health self-insurance plan is concerned. The Petitioner did not apply for the overall group health self-insurance plan because she was already covered under that plan through her husband's coverage and not because, as Petitioner maintains, that it was never explained that she had 30, or actually 31, calendar days from January 11, 1980 to apply for that plan. Indeed it was explained to her as Ms. Thurston established and Respondent admits receiving the handbook further explaining the time limit to apply for that coverage without medical approval. She signed a receipt acknowledging her responsibility to read that pamphlet or manual and ask for clarification, if needed, concerning coverage benefits and she admitted that she did not read it. Thus it is found that at the time of her initial employment all pertinent insurance benefits and entitlements were explained to the Petitioner both verbally and in writing and she failed to avail herself of the automatic coverage provision referenced above in a timely way, for the reason stated above. In any event, on July 28, 1980 the Petitioner elected to submit a new enrollee form which was submitted with a medical statement form requesting participation in the State Plan. After correspondence with the State Plan administrator requesting additional medical information, on October 22, 1980 the Department of Administration, by letter, advised the Petitioner that she had not been approved by the plan administrator and she was denied coverage for medical reasons. Accordingly, on October 24, 1980 the Petitioner enrolled in the South Florida Group Health, Inc. Plan which is a health maintenance organization plan (HMO) and she was allowed enrollment in that plan without regard to her current medical condition. The Petitioner remained enrolled in the HMO and requested and was granted leave of absence without pay from her employment position commencing May 29, 1981. Her employing agency advised her that it was her individual responsibility to forward premium payments for the HMO health insurance premiums as well as the state life insurance coverage herself. In other words, she was to pay by cash or her own personal check for this coverage during the time she was not being paid by the state, that is, the premiums for that coverage were not being payroll deducted because she was temporarily off the payroll. Her employment with the State did not lapse during this period commencing May 29, 1981, rather she remained employed, but was on leave without- pay status. The Petitioner knew of her responsibility to pay the premiums for the HMO coverage and the state life insurance coverage itself during the period she was on leave of absence without pay as evidenced by the check she and her husband submitted in June 1981 to pay the premiums on her state life insurance coverage. The Petitioner and her husband moved from Miami to Fort Myers during early June 1981 and the Petitioner remained on leave of absence without pay. When her husband changed employment and moved to the Fort Myers area in June 1981 the Petitioner was a covered dependent under the health insurance coverage available to her husband through his new employment. I n August 1981 the South Florida Group Health, Inc., the HMO in the Miami are of which Petitioner was a member, terminated the Petitioner's health insurance coverage effective August 1, 1981 due to the Petitioner's failure to pay the premiums for that coverage. Shortly thereafter the Petitioner interviewed with personnel officials of HRS in District 8 in Fort Myers and obtained an employment position as a district intake counselor for District 8. She became an active payroll employee of HRS in District 8 by transfer in August 1981. Before the effective date of her transfer the Petitioner was interviewed by Judy Graham, an HRS employee assigned to process her transfer from her former active employment in District 11 in Miami. The Petitioner failed to advise Judy Graham at the time of the interview of her HMO coverage, merely inquiring of Ms. Graham concerning the details of continuation of her state life insurance coverage and concerning her credit union membership. Thereafter, more than 31 calendar days after the effective date of her transfer, (August 24, 1981), indeed, in excess of two years later, the Petitioner completed a new enrollee form again and applied for the state employee's group self- insurance plan benefits. The Department of Administration denied the Petitioner participation upon the determination that she was not medically approvable for insurability by the Plan's claims administrator, Blue Cross and Blue Shield of Florida, Inc. In any event, the Petitioner's continuous employment with the state and with HRS had never lapsed since she was initially hired January 11, 1980. She was merely on inactive/leave-without-pay status as a state employee from May 29, 1981 until August 24, 1981, as that relates to any right to a second 31-day open enrollment period.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties it is, therefore, RECOMMENDED that a final order be entered by the Department of Administration denying the Petitioner's requested enrollment in the State Group Health Insurance Plan without medical approval. DONE AND ORDERED this 31st day of December, 1985, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1985. APPENDIX The following specific rulings are made on the Proposed Findings of Facts submitted by the parties: Petitioner's Proposed Findings of Fact Accepted. Accepted, but subordinate and not material to disposition of the issues at bar. Accepted, but subordinate and not material to disposition of the issues at bar. Accepted, but subordinate and not material to disposition of the material issues at bar. Rejected as not being in accordance with the competent, substantial, credible testimony and evidence adduced. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected as not being in accordance with the competent, substantial, credible testimony and evidence adduced. Accepted, but this Proposed Finding of Fact in itself is not dispositive of the material issues of fact and law resolved herein. Accepted. Rejected as not in accordance with the competent, substantial, credible evidence and testimony adduced. Accepted. Accepted. Respondent's Proposed Findings of Facts The Respondent failed to number its Proposed Findings of. Fact, therefore its Proposed-Findings of Fact will be specifically ruled upon in the order the various paragraphs containing its Proposed Findings of Fact were presented. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. COPIES FURNISHED: Gilda Lambert Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Curtright C. Truitt, Esq. Post Office Box 2706 Ft. Myers, Florida 33902 Richard L. Kopel, Esq. Department of Administration 435 Carlton Building Tallahassee, Florida 32301
