The Issue Whether the proposed amendment to Florida Administrative Code Rule 69O-149.041 constitutes an invalid exercise of delegated legislative authority.
Findings Of Fact Golden Rule is a foreign insurer authorized to conduct insurance business in Florida and holds a certificate of authority authorizing it to transact the following lines of insurance in Florida: life, group life and annuities, and accident and health.1/ Pursuant to its certificate of authority, Golden Rule issues group health insurance policies in other states under which residents of Florida are provided coverage for hospital, surgical, or major medical expenses, or a combination of these, on an expense-incurred basis. Golden Rule’s group health insurance certificates have been issued pursuant to several master group contracts entered into between Golden Rule and group plan sponsors. The only conversion benefit for Florida certificate holders terminating their group health insurance policies under each of these master group contracts, which could have represented the agreed-upon consideration of the contracting parties, was the then-existing 1995 SHBP. Part VII of Chapter 627, Florida Statutes, governs group health insurance policies issued in Florida. Section 627.6675, Florida Statutes,2/ governs conversion insurance policies issued to terminating members of insured group health plans in Florida and provides, in pertinent part, as follows: Subject to all of the provisions of this section, a group policy delivered or issued for delivery in this state by an insurer or nonprofit health care services plan that provides, on an expense-incurred basis, hospital, surgical, or major medical expense insurance, or any combination of these coverages, shall provide that an employee or member whose insurance under the group policy has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy, and under any group policy providing similar benefits that the terminated group policy replaced, for at least 3 months immediately prior to termination, shall be entitled to have issued to him or her by the insurer a policy or certificate of health insurance, referred to in this section as a "converted policy." * * * REQUIRED OPTION FOR MAJOR MEDICAL COVERAGE.--Subject to the provisions and conditions of this part, the employee or member shall be entitled to obtain a converted policy providing major medical coverage under a plan meeting the following requirements: A maximum benefit equal to the lesser of the policy limit of the group policy from which the individual converted or $500,000 per covered person for all covered medical expenses incurred during the covered person's lifetime. Payment of benefits at the rate of 80 percent of covered medical expenses which are in excess of the deductible, until 20 percent of such expenses in a benefit period reaches $2,000, after which benefits will be paid at the rate of 90 percent during the remainder of the contract year unless the insured is in the insurer's case management program, in which case benefits shall be paid at the rate of 100 percent during the remainder of the contract year. For the purposes of this paragraph, "case management program" means the specific supervision and management of the medical care provided or prescribed for a specific individual, which may include the use of health care providers designated by the insurer. Payment of benefits for outpatient treatment of mental illness, if provided in the converted policy, may be at a lesser rate but not less than 50 percent. A deductible for each calendar year that must be $500, $1,000, or $2,000, at the option of the policyholder. The term "covered medical expenses," as used in this subsection, shall be consistent with those customarily offered by the insurer under group or individual health insurance policies but is not required to be identical to the covered medical expenses provided in the group policy from which the individual converted. ALTERNATIVE PLANS.--The insurer shall, in addition to the option required by subsection (10), offer the standard health benefit plan, as established pursuant to s. 627.6699(12). The insurer may, at its option, also offer alternative plans for group health conversion in addition to the plans required by this section. (Emphasis added) The underscored portion of Section 627.6675(11) above was enacted by Chapter 97-179, Laws of Florida, and became effective on May 30, 1997. In 1997, when the Legislature amended Section 627.6675(11) as indicated in paragraph 4 above, Section 627.6699(12) read, in pertinent part, as follows: By May 15, 1993, the commissioner shall appoint a health benefit plan committee composed of four representatives of carriers which shall include at least two representatives of HMOs, at least one of which is a staff model HMO, two representatives of agents, four representatives of small employers, and one employee of a small employer. The carrier members shall be selected from a list of individuals recommended by the board. The commissioner may require the board to submit additional recommendations of individuals for appointment. As alliances are established under s. 408.702, each alliance shall also appoint an additional member to the committee. The committee shall develop changes to the form and level of coverages for the standard health benefit plan and the basic health benefit plan, and shall submit the forms and levels of coverages to the department by September 30, 1993. The department must approve such forms and levels of coverages by November 30, 1993, and may return the submissions to the committee for modification on a schedule that allows the department to grant final approval by November 30, 1993. * * * 5. After approval of the revised health benefit plans, if the department determines that modifications to a plan might be appropriate, the commissioner shall appoint a new health benefit plan committee in the manner provided in subparagraph 1. to submit recommended modifications to the department for approval. § 672.6699(12), Fla. Stat. (Supp. 1996), Compare § 627.6699(12), Fla. Stat. (1999) (containing the same language). In 1997, when the Legislature amended Section 627.6675(11), as indicated in paragraph 4 above, the 1995 S&BHBPs had been adopted by reference and incorporated in Florida Administrative Code Rule 4-149.041 (the predecessor to Florida Administrative Code Rule 69O-149.041).3/ Given the adoption of the specific S&BHBPs by rule in 1995, given the language of Section 627.6699(12), Florida Statutes, in 1997 (which referred to the approval and adoption of a specific set of benefits on a specified time schedule), and given the meaning in the law and in common usage of the word "established,”4/ it is reasonable to conclude, and it is concluded, that the statutory language in Section 627.6675(11) as passed in 1997--“the standard health benefit plan, as established pursuant to s. 627.6699(12)”--referred to the 1995 SHBP, which was then in existence and had been specifically adopted by rule at the time of enactment of Chapter 97-179, Laws of Florida. On October 8, 2004, in Volume 30, No. 41 of the Florida Administrative Weekly, OIR noticed a proposed amendment to Florida Administrative Code Rule 690-149.041, which would substitute the 2003 S&BHBPs, developed by a benefits committee convened in 2002, in place of the 1995 S&BHBPs, and would incorporate, by reference, Order 69745-03-CO into the proposed rule. The proposed amendment states, in the portion relevant to this challenge, as follows: (d) New and renewal policies for the Basic and Standard policies issued on or after August 1, 2003, May 1, 1995, must include the Basic and Standard Health Benefit Plans approved by Order 69745-03-CO signed by the Director on July 25, 2003, (OIR B2 95) pursuant to Section 627.6699(12), F.S., which is incorporated herein by reference . . . . As specific authority for the proposed amendment to the Rule, OIR cited Section 626.9611, Florida Statutes (2004), which authorizes the Department of Financial Services or the Financial Services Commission (“FSC”) to adopt rules necessary or proper to identify specific methods of competition or acts or practices which are prohibited by the Unfair Insurance Trade Practices Act; Section 627.6699(13)(i), Florida Statutes (2004), which provides that the FSC may establish regulations setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers in this state; and Section 627.6699(16), Florida Statutes, which addresses the applicability of other state laws to Florida small employer groups. As the laws being implemented by the proposed amendment to the Rule, OIR cited to Sections 626.9541(1)(b), (g)2., (x)3., and 627.6699(3)(g), (v), (5)(a), (7), (12)(c), (13)(b), Florida Statutes. The proposed amendment to the Rule, however, clearly also “implements, interprets, or prescribes law or policy,”5/ as to Section 627.6675(11), Florida Statutes, and would appear to require insurers offering Conversion Policies under Section 627.6675 to offer the 2003 SHBP, rather than the 1995 SHBP, as the Conversion Policy option referred to in Section 627.6675(11), Florida Statutes. Section 120.54(3)(a), Florida Statutes, requires OIR to make reference in its notice of proposed rulemaking to the sections or subsections of the Florida Statutes being implemented. OIR did not do so with respect to Section 627.6675 or Subsection (11) thereof. The FSC has not approved the proposed amendment to the rule. As Litow and others testified, a mandatory conversion policy, sometimes referred to as a guaranteed issue policy, must be issued to an individual (whether previously insured in a small group market, or another group market) upon his request, without consideration of his risk characteristics (without underwriting). In contrast, an underwritten policy is an insurance policy issued after the health status of the individual applying for coverage is evaluated, and the insurance company makes a decision whether to accept or reject the risk. In the Small Employer Group market, governed by Section 627.6699, Florida Statutes, it is the employer who makes the decision about whether or not to purchase the health insurance policy at the quoted premium rate. By contrast, in the Converted Policy market, it is the covered individual who makes the decision about whether or not to purchase the health insurance policy at the quoted premium rate. The concept of anti-selection in health insurance is that only those persons who would tend to benefit most from purchasing an insurance product would have incentive to do so, and others would not. The credible and convincing testimony of Litow, corroborated by the testimony of OIR’s own expert, James Swenson, shows that the benefits under the 2003 SHBP are more expansive than the benefits offered under the 1995 SHBP. For example, the lifetime benefits under the 2003 SHBP is five million dollars, as compared to one million dollars under the 1995 SHBP. Where the 1995 SHBP had a benefit limitation of $200,000 for organ transplants, the 2003 SHBP has no limitation and also covers several organ transplants, including liver, pancreas, and kidney, not covered under the 1995 SHBP. Additionally, the 2003 SHBP includes a new benefit for alcohol and substance abuse not available under the 1995 SHBP. As established by expert actuarial testimony at the final hearing, the actuarial impact on the Conversion Policy market (See Section 627.6675) of utilizing the 2003 SHBP instead of the 1995 SHBP would be to increase the expected average claims losses experienced by insurers participating in the Conversion Policy market. While asserting the position that the 2003 SHBP would apply to Converted Policies for all insurers required to issue such policies under Section 627.6675(11), Florida Statutes, OIR has never reviewed or analyzed the actuarial impact of the 2003 SHBP mandated by the Department for use in the Converted Policy market. The 2003 SHBP increases and/or adds benefits in the area of organ transplants, lifetime coverage limits, emergency room and hospital, and alcohol and drug abuse treatment. The actuarial impact of replacing the 1995 SHBP with the 2003 SHBP in the Converted Policy market governed under Section 627.6675 is substantial. However, the minutes of the 2002 Small Employer Benefits Plan Committee meetings between June 6, 2002, and September 27, 2002, in evidence in this proceeding, offers no reference to analysis of this type. Also in evidence as Golden Rule Exhibit 7, the Florida Small Employer Benefit Plan Committee Report of 2002, does not refer to any data review or analysis of the impact of changes in the Converted Policy market. Nor is reference to data review or analysis of the impact of the Standard Health Benefit Plan changes in the Converted Policy market contained in the order approving the small employer standard and basic health benefit plans, signed by Insurance Commissioner McCarty on July 25, 2003. Frank Dino, OIR’s chief actuary and that agency’s designated representative at this hearing, was an advisor to the Florida Small Employer Benefit Plan Committee. He testified that he did not know whether actuary members of the 2002 Committee ever analyzed differences between the 1995 and 2003 SHBPs using any sub-standard market data. He admitted, in his opinion as an actuary, that the use of substandard market data, as opposed to standard (underwritten) market data, would make a difference in the analysis. By previous deposition taken in these proceedings, Dino testified that he was unable to formulate any actuarial opinion on whether Conversion Policies have a higher level of anti-selection than small employer carrier policies. He also testified that he did not know whether an increase of lifetime benefits from $1 million to $5 million would have a greater actuarial effect in the Converted Policy market than the Small Employer market. Similarly, Dino was without an opinion regarding the difference in effect between the Small Employer market and the Converted Policy market regarding other changes from the 1995 SHBP to the 2003 SHBP. As previously noted, compared to the 1995 SHBP, the 2003 SHBP eliminates the emergency room deductible, doubles outpatient rehabilitation benefits, adds alcohol and substance abuse benefits, adds benefits for preventative care, and removes caps on organ transplant benefits. Dino testified that it was unlikely that anyone at OIR would have a higher level of information about any of these topics than he. Richard Robleto, the Deputy Insurance Commissioner, asserted that he attended every meeting of the 2002 Florida Small Employer Benefit Plan Committee. He was unable to recall any discussion by the 2002 Committee about whether changes from the 1995 SHBP to 2003 SHBP would have a different impact on Conversion Policies than on Small Employer policies. Glen Volk, a consulting actuary, was a member of the 2002 Florida Small Employer Benefit Plan Committee. He performed a premium pricing comparison between the 1995 SHBP and the 2003 SHBP, but neither his database nor his assumptions included data from the Converted Policy market. An OIR analysis of the actuarial impact of the 2003 SHBP in the Converted Policy market, undertaken by Dino following his deposition and before his hearing testimony on March 30, 2005, uses data provided by James Swenson of Blue Cross/Blue Shield of Florida, which confirms Litow’s opinion that a very small number of very high claims, which would result from the benefit increases from the 1995 SHBP to the 2003 SHBP, are extremely detrimental to the insurer issuing Converted Policies. Swenson’s Blue Cross data shows the following: 98.8 percent of claims averaged $10,000; only 1.2 percent of claims were over $100,000; but that 1.2 percent of the claims resulted in 22.3 percent of total the claims costs. Because the 2003 SHBP increases the potential of high cost benefits, and results in higher utilization of high cost medical services, the result is a very high trend increase in the whole insurance plan. OIR and personnel have failed to take into account medical cost trends from the date of the collected data to the projected current date. The medical cost trend from 1988 to 2005 has averaged in excess of 10 percent per year. For high cost claims (such as organ transplantation claims), the average annual increase is even higher, as much as 25 percent. At this rate of trend, claims costs for high expense procedures will double in less than three years. When claims costs for Converted Policies exceed what can be legally charged to the converted policyholders, that excess must be either absorbed by the carrier or passed on to the individually underwritten group members in the form of increased premiums. Those individually underwritten policyholders who are healthy, and can pass medical underwriting for new insurance coverage, will do so to lower their premiums. The result is that as the remaining insureds on average become less and less healthy as a result of this anti-selection process; and as claims among a carrier’s insureds become higher as a percentage of the total number of insureds, claims costs will tend inevitably to spiral still higher than rate increases can cover. In these circumstances, the insurer, particularly a small to medium-sized insurer, can never collect enough premium to cover claim losses. Applying appropriate actuarial analysis to the determination of the Impact of the 1995 SHBP contrasted to the 2003 SHBP, in the Converted Policy market, the evidence shows a significant adverse actuarial impact on Petitioner and similarly situated insurers of Converted Policies under Section 627.6675, Florida Statutes. Actuarial impact is determined by comparing the cost of one insurance scenario to another. One first analyzes a base scenario, then makes a change in the base scenario, and compares the expected cost of the base scenario to the expected cost of the changed scenario. Contrasting the base scenario (the 1995 SHBP) to the changed scenario (the 2003 SHBP), a variety of actuarially significant changes occur. The 2003 SHBP increases benefits for organ transplants, both in terms of types of transplants covered, and the removal of the dollar limit on coverage. The 1995 SHBP limited coverage of organ transplants to $200,000. The 2003 SHBP provides unlimited coverage and additional types of organ transplants not covered under the 1995 SHBP. These additional transplant procedures are extremely expensive, ranging currently in price from $200,000 to more than $400,000. Further, the 1995 SHBP limited lifetime benefits to $1 million-- the 2003 SHBP raises that limit five-fold. Using actuarial standards and practices developed by the Society of Actuaries, Litow opined, and it is found, that the actuarial impact of the changes from the 1995 SHBP to the 2003 SHBP in the Converted Policy market could reasonably result in increased insurance claims costs of 40 percent or more. The likely increased utilization caused by using the 2003 SHBP in the Converted Policy market is obvious when comparing the out-of-pocket expenses of someone needing a $350,000 transplant under the 1995 SHBP, compared to the 2003 SHBP. Assuming the transplant would have been covered at all under the 1995 SHBP, the patient’s out-of-pocket costs would have been $150,000. Under the 2003 SHBP, the out-of-pocket cost is $10,000. When out-of-pocket costs to the patient for the same procedure drop so dramatically, utilization will increase. Consequently, the challenged rule’s proposal to abandon the 1995 SHBP for use as a Converted Policy option and to substitute the 2003 SHBP in its place arbitrarily and capriciously exposes group carriers to unrecoverable business losses from Converted Policies issued under Section 627.6675(11). OIR’s asserted position and evidence presented in support of that position that compliance with the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Pub. Law 104-191, requires that Sections 627.6675(11) and 627.6699(12), Florida Statutes, be read as requiring that the most current standard plan (policy form) developed for use in the Small Employer Group market under Section 627.6699(12) (presently, the 2003 SHBP), be the available Conversion Policy option under Section 627.6675(11), is not credited. Such an interpretation of the pertinent statutes in that manner, as a condition of Florida’s maintaining an acceptable “State Alternative Mechanism” (“SAM”) to HIPAA’s guaranteed availability requirements in the individual market, is unpersuasive in view of the more credible testimony at hearing from Robert Roth, an expert witness regarding HIPAA requirements. Roth’s testimony establishes that HIPAA did not require Florida (or any state) to adopt a SAM. When the State of Florida elected to adopt a SAM, nothing in HIPAA required the SAM to include the offering of conversion plans as an element of the SAM. The vast majority of states with a SAM do not require the offering of conversion plans to satisfy HIPAA’s guaranteed availability requirements. Florida’s SAM would not violate HIPAA, even if neither of the Small Employer Group standard plans (the “1995 SHBP” or the “2003 SHBP”) were offered as a Conversion Policy. The provisions of 45 CFR Section 148.128 (a)(1)(iii)(A), allows Florida’s SAM to offer comprehensive coverage offered in the individual market. Availability of such coverage pursuant to Section 627.6675(10), Florida Statutes, allows Florida’s SAM to meet those requirements without regard to the SHBPs. HIPAA allows Florida the flexibility to adopt a SAM that complies with either 45 CFR Section 148.128 (a)(1)(iii)(A) or 45 CFR Section 148.128 (a)(1)(iii)(B). In order for a SAM to be in compliance with HIPAA, there is no requirement that HIPAA eligible individuals be offered policies under both sub-paragraphs (A) and (B) of that regulation. Even if Florida repealed Section 627.6675(11), Florida Statutes, altogether, such action would have no effect on Florida’s SAM under HIPAA. There is no evidence in the record that OIR referred to HIPAA in any of its notices or deliberations concerning development of the 2003 SHBP or the rule being challenged in these proceedings. The activities of the 2002 Benefits Committee constituted free-form agency action, and offered no point of entry concerning whether the 2003 SHBP could or should be a required Converted Policy form. OIR’s Order 69745-03-CO provided no pre-final order point of entry under Chapter 120, Florida Statutes. The proposed rule is arbitrary and capricious.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times relevant to this proceeding, Respondent, Barrett Chambers Miller, was licensed as an agent with Independent Life and Accident Insurance Company in the State of Florida. On March 11, 1981, Respondent signed a Combination Agent's Contract Form 1-7759 with the Independent Life and Accident Insurance Company. Part I, Article 2, of the contract requires the agent to "pay over all monies collected to the manager of the district" or to his representative and forbids the agent to retain any monies collected for any purpose. Part I, Article 1, of the contract requires the agent to "keep true records of the business on the books [and] to forward to the company on company forms a true account each week of his business. Among the "company forms" routinely used by agents in the conduct of their business are: (1) the Premium Receipt Book, (2) the Collection Book, (3) the Ordinary Remittance Report, (4) the Field Accounting Route List, and (5) the Balance Due Account Deficiency Sheet. The Premium Receipt Book is used to record the premium paid by the policyholder; is annotated whenever a premium is paid; and bears the premium paid, the date paid, and the signature or initials of the agent receiving the payment. The Collection Book page bears the name and address of the premium payer, the policy number(s), the type of plan, some statistics as to the insured, the death benefit, and the date on which the premium is paid each month. The Ordinary Remittance Report carries, as to each policy on the agent's debit (list of policyholders to be serviced), an account of the periodic premium collections recorded during the week covered by the report. The Field Accounting Route List is used by the agent to indicate weekly collections on weekly premium payments, and the Balance Due Account Deficiency Sheet is used to charge back deficiencies to the agent's account that are found in his collections turned in weekly. Count I: On May 26, 1981, Annie McKibben, owner of Policies A 39189 on the life of Carol L. Cox, A 39190 on the life of Ronny Cox, Jr., and A 39191 on the life of Stacey Cox, paid to the Respondent by check payable to Independent Life the amount of $13.96, total premium for the three policies listed. The premium card for that policy reflects an altered payment of $13.98 with the signature "B. C. Miller" for the May 1981 payment on the 26th of that month. The Collection Book page reflects collection on May 26, 1981. The Ordinary Remittance Report for the week of May 25, 1981, shows collection of $13.96. There is no Field Accounting Route List in evidence for this account, but the Balance Due Account Deficiency Sheet for the week of August 17, 1981, reflects deficiencies for money not turned in for all three policies for the collections made thereon on May 26, 1981. The check with which Mrs. McKibben paid the premiums in question was subsequently deposited to the account of Independent Life at the Florida First National Bank of Jacksonville. Respondent denies any wrongful withholding on this account. Count II: On some date in June, 1981, Wilma L. Robinson, owner of Policies B 03628 and A 67660, both in her name, wrote Check No. 348 on the Flagship Bank of Jacksonville in the amount of $48.68, payable to Independent Life Insurance and reflecting the notation "Ins. June." Someone, she is not sure who, gave that check to a representative of the company. Her payment book reflects a payment of $23.03 received by B. C. Miller on June 16, 1981. The Collection Book reflects collection on June 16, 1981. The Remittance Report reflects collection on June 16, 1981. The Deficiency Account Sheet, however, reflects a deficiency for money not turned in in the total amount of $23.03. Mrs. Robinson is not sure to whom her check was given. She was sick during that period, and it may be that her husband actually delivered the check; and in early 1981, she began mailing her payment checks in. However, to the best of her knowledge, she had never seen Respondent until he came to her home on January 4, 1983. Count III: In June, 1981, Mrs. Evelyn Reynolds had four policies with Independent Life: 017872 on Debbie Spivey, A0037496 on Angela Reynolds, A0010351 on Sherry D. Reynolds, and A14776 on Robert Reynolds. Though she cannot identify to whom she made her payment that month, her routine practice was to make the payment monthly, sometimes by check and sometimes by cash. On some occasions, Respondent and a Mr. McGroarty from the company both came to get her payment. On some occasions, she left the payment with her mother and does not know to whom it was made. Mrs. Reynolds' payment book shows a payment of $24.02 made on June 9, 1981, with the initials "BCM" reflected in the block for the signature of the agent. The Collection Book page shows collection on June 9, 1981; and the Remittance Report does as well, but the Deficiency Sheet shows a deficiency of $24.02 for monies not turned in but collected that date. Mr. Miller unequivocally denies the initials in the payment book were put there by him, nor was any entry on the Collection Book page relating to this account put there by him. Count IV: Mrs. Evie Bennett does not recognize the Respondent. She has only seen him once before in her life, on New Year's Day, 1983, when he came to her house. She did not meet with him on August 4, 1981, and did not make any payments to him. Her payment book for Policy No. B0000499 in her name reflects a premium payment in the amount of $9.51 made on August 4, 1981; and the entry in the block for the signature of the agent reads "Receipt Miller." The Collection Book page for this account reflects a collection on August 4, 1981, of $9.51. Other pertinent documents reflect a deficiency by reason of monies not turned in of $9.51 for this collection. Mr. Miller denies the entries in both the Payment Receipt Book and the Field Report were made by him. Mr. Edward Cooper owned Policies 05 18285A on Edward Thomas; and 0536115A and 0536115B, both on Mary Cooper. He normally paid his premiums by check once a month to whatever agent came to collect. He does not know to whom he made the payment on July 7, 1981, nor does he know whether he paid on that day by check or cash, notwithstanding his written statement on November 24, 1981, witnessed by Mr. Pat McGroarty, indicates he paid the payments on his Premium Receipt Book to the Respondent. The payment card for these policies reflects that on July 7, 1981, an individual who used the signature "B. C. Miller" received payment of $20.80, representing premiums of $4.16 for each of five weeks including June 29, 1981; July 6, 1981; July 13, 1981; July 20, 1981; and July 27, 1981. The Field Accounting Route List for this Respondent in the period in question reflects a remittance of $16.64 with a shortage of $4.61, which shortage is also reflected on the deficiency page. Mr. Miller admits the signature on the payment card is his, but contends the card was altered. Mr. Kerry Fossett is a field auditor for Independent Life Insurance Company and in November, 1981, was requested to conduct an audit of Respondent's agency. As a part of the audit, he checked policyholders' receipt books and compared them to the agent's account. His audit showed discrepancies on 19 premium receipt cards for a total shortage of $141.75, of which amount the sum of $100.98 occurred when Respondent had the agency. The remainder of the shortage occurred either before or after Mr. Miller was in the job. During the course of the audit, Mr. Fossett found at least one instance where Mr. McGroarty made a collection on Mr. Miller's account and failed to turn it in. In the opinion of the auditor, the shortages in the account of $30 before Mr. Miller took over, when it was handled by Mr. McGroarty, were theft. Mr. McGroarty was discharged from employment with Independent Life and Accident Insurance Company approximately one week after the audit was completed. Mr. Baucom, assistant vice president of the company and custodian of the personnel records, indicated the audit done on Respondent's records revealed a shortage of $361.50. This was subsequently adjusted to $126.18 as a result of the company withholding commissions due Respondent. On February 4, 1983, Mr. Baucom wrote to the Department of Insurance, State of Florida, requesting to withdraw a charge of deficiency against Respondent previously submitted on December 7, 1981, on the basis that the company was not satisfied with the documentation of the alleged deficiency. Thereafter, on April 5, 1982, he again wrote the Department of Insurance reinstating the charge based upon subsequent receipt of "satisfactory documentation" and Mr. Miller's "attitude." Gracie Williams, a policyholder with Independent Life, experienced somewhat of a problem with the company when she and her husband tore down a house on which they had been paying premiums. When the house was removed, they mentioned the fact to Mr. McGroarty, but he did nothing about it. As a result, they paid several months' premiums on property that did not exist. In fact, when Respondent complained about this to Mr. McGroarty, he was told to collect the money or McGroarty would take it from another policy. Jennie L. Wilder also had difficulties on her policy with Independent Life's agent named "Alligood" (sic). She had paid her premiums for six months in advance, but because the agent delayed remitting the premium, she got credit for only three months. On the other hand, Catherine C. DiPerna and her husband have been insured with Independent Life for quite a while. Part of that time, the Respondent was her agent/collector. On June 16, 1981, just about the time of the other alleged shortages in Respondent's remittances, she paid her premium payment to Mr. Miller by check. The check was cashed, she did not receive a notice of lapsed policy, nor did she have any problem with her policy, even though on the Ordinary Remittance Report for the same period used by the Petitioner in the allegations relating to Mrs. Robinson shows no money received from the DiPernas. On March 11, 1981, upon the recommendation of Mr. R. Brenner, an investigator with the Department of Insurance, Respondent went to work for Independent Life as a debit agent in Jacksonville, Florida, under the supervision of Mr. Pat McGroarty, who, also, had had the debit (account) before. After the basic company indoctrination course, Respondent underwent on-the-job training under McGroarty. He never, during the entire time he worked for the company, accepted total responsibility for the account because, in his opinion, there were large discrepancies between the premium receipt cards and the company records when he was assigned the account. Respondent discussed these difficulties with McGroarty and other officials of the company, such as Mr. Ivanoski, Mr. Tharpe, and Mr. Baucom. In April, 1981, Miller saw that his signature as agent was forged on a policy owned by the Petitioner's witness Cooper on the life of Cooper's nephew, Edward Thomas, who, at all times pertinent, was an inmate in the state penitentiary. When Respondent mentioned this to McGroarty, McGroarty told him that Cooper had forged the names and Respondent was with McGroarty when he delivered the policy to Cooper. This is one of the policies which form the allegation in Count V of the Complaint and about which there is an obvious alteration on the Premium Receipt Book showing an increase in the weekly premium of one cent because of a change from a health policy to a life policy. Other difficulties with this particular account were brought by Miller to the attention of the district manager who forced McGroarty to make up the shortage from his own pocket. During a part of the time Respondent worked with the company, he also handled fire policies on a temporary license. He found so many irregularities and such out-and-out corruption, he states, that he intentionally failed the state examination for an industrial fire license. Even after instructions came from the home office terminating Respondent's work in fire insurance, the district manager instructed him to continue to collect fire premiums and turn them over to McGroarty. As a result of all of this, deficiencies show up on his fire accounts for periods after the time he ceased fire business. In fact, documents show collections by Miller on his accounts, even after he left the employ of the company. Respondent unequivocally denies any wrongdoing with regard to his accounts.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law stated above, it is RECOMMENDED: That the Administrative Complaint against the Respondent dated August 27, 1982, and amended on September 24 and December 28, 1982, be DISMISSED. RECOMMENDED this 28th day of February, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1983. COPIES FURNISHED: Rhoda Smith Kibler, Esquire David Yon, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 S. Perry Penland, Esquire Penland, McCranie & Shad, P.A. Suite 1103, Blackstone Building Jacksonville, Florida 32202 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
Findings Of Fact At all times material hereto, Respondent has been licensed in the State of Florida as a life and health insurance agent. His licensure as a life and variable annuity contracts agent occurred on April 5, 1993. On September 9, 1994, Respondent pled nolo contendere to criminal charges pending before the Circuit Court of the Seventeenth Judicial Circuit, in and for Broward County, Florida. The charges were third degree grand theft, a felony, and practicing law while his license was suspended, a misdemeanor. Upon entry of his plea, adjudication was withheld, and Respondent was placed on probation for two years and ordered to make restitution in the amount of $400. Respondent did not notify Petitioner in writing within 30 days after pleading nolo contendere to that felony. Respondent's plea and criminal charges related to a fee in the amount of $l,000 which Respondent collected from a client to perform legal services at a time when Respondent's license to practice law was suspended. Although Respondent refunded $600 of that fee to the client, Respondent determined that the client had received $400 worth of services and refused to refund that amount until after the client filed litigation and obtained a civil judgment against Respondent. On or about October 20, 1995, the Florida Department of Corrections filed with the Broward County Circuit Court an affidavit alleging that Respondent had violated the Circuit Court's Order of Probation in a number of different ways. Based upon that affidavit, the Circuit Court issued a Warrant for Respondent's arrest on October 24, 1995. On January 11, 1996, Respondent was disbarred, effective immediately, by the Supreme Court of Florida. At the time of the final hearing in this cause, Respondent was not actively engaged in the insurance business. Rather, Respondent had been employed at the Miami Market for approximately 1-1 years, taking inventory and supervising crews.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of the allegations contained in the First Amended Administrative Complaint filed against him and revoking his licenses and his eligibility for licensure as an insurance agent. DONE and ENTERED this 5th day of March, 1996, at Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1996. APPENDIX TO RECOMMENDED DOAH CASE NO. 95-4700 Petitioner's proposed findings of fact numbered 1, 4-12, and 15 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 2 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law. Petitioner's proposed finding of fact numbered 3 has been rejected as not being supported by the weight of the competent evidence in this cause. Petitioner's proposed finding of fact numbered 13 has been rejected as being irrelevant to the issues under consideration in this cause. Petitioner's proposed finding of fact numbered 14 has been rejected as being subordinate to the issues herein. COPIES FURNISHED: Ross S. Burnaman, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Mr. David Felix Monaco Apartment 207E 7610 Stirling Road Hollywood, Florida 33024 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact At all times pertinent to this matter, the Respondent has been licensed by the Florida Department of Insurance as an ordinary life, including disability, agent and a general lines agent. During the years 1977 and 1978, the Respondent operated an insurance agency known as Florida Commercial Underwriters. During May, 1977, the Respondent was a general lines agent providing insurance coverages for The Fronton, Inc., West Palm Beach, Florida. During June, 1977, The Fronton, Inc., delivered a check to the Respondent in the amount of $41,229.00 as a premium payment for various insurance coverages to be provided by the Respondent. Approximately $23,795.00 of that amount represented the premium payment for Policy No. 7485844, issued by the Insurance Company of the State of Pennsylvania. The Insurance Company of the State of Pennsylvania issued the policy to The Fronton, Inc., for the policy period from May 1, 1977, through May 1, 1978. The Insurance Company of the State of Pennsylvania had a firm policy during this period that premiums would be due within forty-five days from inception of the policy, or within fifteen days from the date of billing, whichever was later. Due to errors on its part, the Insurance Company of the State of Pennsylvania did not submit its bill to the Respondent until November 30, 1977. The notice on the face of the bill itself indicated that the premium was due within fifteen days of the date of the bill. The Respondent did not pay the premium in accordance with the bill. By notice dated January 31, 1978, the Insurance Company of the State of Pennsylvania advised The Fronton, Inc., that its policy would be cancelled effective February 17, 1978, because the premium had not been paid. Donald Roberts, the Assistant General Manager of The Fronton, Inc., immediately contacted the Respondent. The Respondent advised Roberts that the problem was apparently of a bookkeeping sort, and that the premium had been paid. Within four or five days of the time that he received the Notice of Cancellation, Roberts again contacted the Respondent and requested that the Respondent produce the cancelled check verifying that the premium had been paid. Roberts followed that telephone contact with a visit to the Respondent's office approximately forty-five minutes later. The Respondent searched for a cancelled check, but told Roberts that he would need to get it from the bank. Roberts told him to produce the cancelled check later that day. When the Respondent failed to do that, Roberts took the matter to the office of the State Attorney. Despite the fact that he told Roberts that the policy had been paid, the Respondent had not paid the premium. In fact, he did not pay the premium until May 8, 1978, after he had raised some money from another source. He paid the premium by delivering the check personally to the insurance company's office in Atlanta. Apparently mindful of the fact that the Respondent was acting as its agent, and that the Respondent's receipt of the premium was thus binding upon it, the Insurance Company of the State of Pennsylvania reinstated the policy, and has acknowledged that despite its Notice of Cancellation, the policy was in full force and effect during its entire term. The Respondent had suffered financial reverses during this period of time. He had apparently forgotten that the premium had not been paid between the time that he received the check from The Fronton, Inc., and the bill from the Insurance Company of the State of Pennsylvania. When he received the bill, he did not have sufficient funds available to pay it. He had in effect used the money paid by The Fronton, Inc., to cover other debts that he had. Since May, 1978, the Respondent has been working as an employee with another insurance agency. His employer assisted him in paying off the obligations that the Respondent incurred in connection with his former business. It does not appear that the Respondent has had problems of this sort in his new position, and he currently teaches an insurance agent's course at a local school.
Findings Of Fact Martin Daniel Patrick has been a life insurance agent for some 32 years. At all times material hereto he was the owner of Dan Patrick & Associates insurance agency at Brooksville, Florida. By Consent Order dated January 7, 1983, MOP's license as an Ordinary Life, including Disability, agent was suspended for a period of 60 days. By Emergency Order of Suspension dated August 3, 1983, his license was suspended based upon the allegations contained in the Administrative Complaint dated August 23, 1983. James R. Patrick has been in the insurance business since 1976. He owned the Jim Patrick Insurance Agency at all times relevant hereto and in August, 1982, purchased the Wardwell Insurance Agency. JRP is licensed as an Ordinary Life, including Disability, agent and as a General Lines agent, and is authorized to sell casualty insurance as well as life and health insurance. By Consent Order dated September 15, 1982 (Exhibit 9), JRP's license was suspended for a period of six months from the date of that order. After purchasing the Wardwell Insurance Agency, JRP decided to open a branch office in Brooksville and so notified the Insurance Commissioner (Exhibit 7). He intended to have Larry Kinner as office manager for the Brooksville office. Kinner had passed his examination but awaited licensure for a much longer period than usual. While awaiting Kinner's licensure, JRP took application forms to Brooksville, was given space in his brother's (MDP) office in Brooksville; employed his niece, Beverly Patrick, to take applications for automobile and other casualty insurance; visited Brooksville frequently to meet with customers to sell casualty insurance; was available by telephone to the Brooksville office when not physically in Brooksville; had another agent in the Wardwell office go to Brooksville frequently to sell policies and accept applications; and had Beverly Patrick forward all applications and premiums received to the Wardwell office at Bartow. After waiting about three months without Kinner receiving his license, JRP closed the Brooksville branch of Wardwell Insurance Agency. During the time this branch office was in existence in Brooksville, the Wardwell name did not appear on the door nor did Wardwell have a telephone number separate from that of Dan Patrick & Associates. The evidence was unrebutted that Beverly Patrick worked for and was under the supervision and control of the Wardwell Insurance Agency and not MDP. One of MDP's clients is James Gordon, who is employed by the Hernando State Bank as loan officer. In the fall of 1982 Gordon wanted to update his policies and talked to MDP about this during an incidental visit by MDP to the bank. Gordon worked up a spread sheet on his policies and arranged an appointment for MDP to come to his house to present a program to him and his wife. The exact date of this meeting was not established. At this meeting MDP presented a program to the Gordons, who wanted additional time to think about it. Within about two weeks of this meeting, Gordon notified MDP that he accepted the program and would have a check for the premium available when MDP next visited the bank. Gordon signed this application on February 7, 1983 (Exhibit 23), and wrote a check for the premium the same date. The only one to whom Gordon spoke about this insurance was MDP; however, his signature on the application was witnessed by David Pugh, a son-in-law of MDP who is a licensed insurance agent and works in the Dan Patrick agency in Brooksville. For the 60- day period following January 7, 1983, the license of MDP was suspended. Although the information regarding the program was probably prepared by MDP before January 7, 1933, the meeting with the Gordons at which the program was explained occurred subsequent to January 7, 1983. MDP contacted Vera Cannon in April or May, 1983, to update life insurance policies. He had sold her the original policy some ten years ago. On August 1, 1983, MDP picked up the existing policies from Vera Cannon to prepare a proposal to update the policies. She made an appointmemt with MDP for August 17, 1983, at which meeting MDP presented to her a proposal. David Pugh accompanied his father-in-law at this appointment. Respondent testified that he told Curtis Cannon, the husband of Vera Cannon, that his license was suspended and that Pugh would be handling the insurance; however, at the meeting with Vera Cannon, Respondent presented the proposals. MDP also contacted Becky Cannon, wife of Mark and sister-in-law of Vera, on August 18, 1983, for the purpose of selling additional life insurance. An appointmemt was made for August 22, 1983; however, Becky Cannon cancelled the appointment with MDP and set up another appointment for the following week. Before that date arrived, Becky recalled seeing something in the paper about Respondent's emergency suspension and called the insurance department. When told that MDP's license was suspended, Becky cancelled the appointment and told Vera that MDP's license was suspended. Vera then called Respondent's office to demand the return of the premium she paid. Pugh returned her check immediately. Gene Daniel is part owner of Branche-Daniel Corp d/b/a Brooksville Crown and Bridge. He contacted MDP regarding health insurance for his employees and for casualty insurance for his property. For this insurance he was referred to JRP, and he testified he purchased health insurance for his employees from Brenda Coley, a licensed agent in the Wardwell agency. Daniel does not recall when he spoke to MDP regarding his application for health insurance. Exhibit 22 contains an application, which appears to be dated January 10, 1983 (and 3-7-83) which is signed by Deanna L. Pugh, as agent, and a check signed by Daniel dated January 11, 1983. Daniel described himself as an absentee owner of the business to which he comes sporadically to sign documents and checks. No credible evidence was presented regarding the date of his conversation with MDP or that the latter did more than refer him to an agent licensed to sell the insurance Daniel desired. None of the parties to whom Respondents sold insurance allegedly in violation of Chapter 626, Florida Statutes, suffered any loss or complained of the treatment received from Respondents. During the time the Wardwell agency worked out of MDP's office in Brooksville, JRP's license was under suspension yet he was always available by telephone, when not in Brooksville, to answer questions from and give instructions to, Beverly Patrick. JRP testified that he made frequent trips to Brooksville, sometimes several days in one week. During these visits he met with customers to sell insurance.
Recommendation It is RECOMMENDED that the license of James Royal Patrick as an Ordinary Life, including Disability, and General Lines agent be suspended for a period of one (1) year. It is further RECOMMENDED that the license of Martin Daniel Patrick as an Ordinary Life, including Disability, agent be suspended for a period of one (1) year. ENTERED this 14th day of December, 1983, at Tallahassee, Florida. K. N. AYERS, 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 14th day of December, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1300 East Lafayette Street Suite 112 Tallahassee, Florida 32301 Honorable Bill Gunter Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
The Issue The issues presented are (1) whether Respondent properly secured the payment of workers’ compensation insurance coverage and, if not, what penalty is warranted for such failure; and (2) whether Respondent conducted business operations in violation of a stop-work order and, if so, what penalty is warranted for such violation.
Findings Of Fact Respondent is a corporation domiciled in Georgia and engaged in the business of electrical work, which is a construction activity. On July 2, 2004, Petitioner's investigator Katina Johnson visited 6347 Collins Road, Jacksonville, Florida, on a random job site visit. Investigator Johnson inquired of Respondent's superintendent at the job site whether Respondent had secured the payment of workers’ compensation coverage. She was informed that Respondent had done so and was subsequently provided with a Certificate of Liability Insurance from Respondent’s agent in Georgia, the Cowart Insurance Agency, Inc. Investigator Johnson also obtained a copy of Respondent’s workers’ compensation insurance policy which had a policy period of September 23, 2003, to September 23, 2004. The policy and the information contained in the Certificate of Liability Insurance were not consistent. Keith Cowart, Respondent’s insurance underwriter in Georgia, testified in deposition that the certificate of insurance is not correct because it conflicts with Respondent’s workers’ compensation policy, 01-WC-975384-20, which does not have a Florida endorsement. Subsequent to the site visit, Investigator Johnson continued the investigation of Respondent utilizing the Department’s Coverage and Compliance Automated System (“CCAS”) database that contains information to show proof of coverage. She determined that Respondent did not have a Florida workers' compensation insurance policy. Johnson also checked the National Council for Compensation Insurance (“NCCI”) database and further confirmed that Respondent did not have a workers’ compensation insurance policy for the State of Florida. Petitioner also maintains a database of all workers’ compensation exemptions in the State of Florida. In consulting that database, Johnson did not find any current, valid exemptions for Respondent. Florida law requires that an employer who has employees engaged in work in Florida must obtain a Florida workers’ compensation policy or endorsement for such employees utilizing Florida class codes, rates, rules, and manuals to be in compliance. Further, any policy or endorsement used by an employer to prove the fact of workers' compensation coverage for employees engaged in Florida work must be issued by an insurer that holds a valid certificate of authority in the State of Florida. The insurance policy held by Respondent did not satisfy these standards. First, Respondent's policy was written by Cowart Insurance Agency, a Georgia agency which was not authorized to write insurance in Florida. Second, the premium was based on a rate that was less than the Florida premium rate; the policy schedule of operations page shows that Safeco Business Insurance insured Respondent for operations under class codes utilizing Georgia premium rates. On July 6, 2004, Investigator Johnson received a copy of another insurance policy declaration page from the Cowart Insurance Agency for Respondent that still did not have Florida listed as a covered state under Section 3A. In fact, none of Respondent’s workers’ compensation policies had a Florida endorsement with Florida listed in Section 3A. On July 7, 2004, after consulting with her supervisor, Investigator Johnson issued and served on Respondent a stop-work order and order of penalty assessment for failure to comply with the requirements of Chapter 440, Florida Statutes, specifically for failure to secure the payment of workers’ compensation based on Florida class codes, rates, rules and manuals. After the issuance of the stop-work order, Respondent produced a certificate of insurance with a Florida endorsement that would allegedly confer workers’ compensation coverage retroactively for Respondent. Such retroactive coverage does not satisfy Respondent’s obligation. Employers on job sites in Florida are required to maintain business records that enable Petitioner to determine whether the employer is in compliance with the workers' compensation law. Investigator Johnson issued to Respondent a request for the production of business records on July 7, 2004. The request asked the employer to produce, for the preceding three years, documents that reflected payroll and proof of insurance. Respondent produced payroll records for a number of employees. On August 2, 2004, Investigator Johnson issued a second business records request to Respondent because she noticed that the names of the workers that she interviewed during her site visit were not the same as the list of employees submitted by Respondent. Respondent failed to produce the requested records. When an employer fails to provide requested business records which the statute requires it to maintain and to make available to the Department, effective October 1, 2003, the Department is authorized by Section 440.107(7)(e), Florida Statutes, to impute that employer's payroll using the statewide average weekly wage multiplied by l.5. Petitioner therefore imputed Respondent's payroll for the entire period for which the requested business records were not produced. From the payroll records provided by Respondent, and through imputation of payroll from October 1, 2003, the Department calculated a penalty for the time period of July 7, 2001, through July 7, 2004, by assigning a class code to the type of work utilizing the SCOPES Manual. The Amended Order of Penalty Assessment which assessed a penalty of $115,456.14 was served on Respondent through its attorney on September 27, 2004. The Department issued and served on Respondent a second Amended Order of Penalty Assessment on November 10, 2004, with the penalty imputed back three years to July 7, 2001. The Department assessed a penalty of $100 per day for each day prior to October 1, 2003, for a total of $216,794.50. On April 28, 2005, the Department issued to Respondent a third Amended Order of Penalty Assessment with an assessed penalty of $63,871.02. The reduction in the amount of penalty was due to the Department’s determination that it did not have the authority at the time to impute the $100 per day penalty prior to October 1, 2003. On July 7, 2005, Respondent entered into a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from Stop-Work Order by the Department. Respondent made a down payment of ten percent of the assessed penalty; provided proof of compliance with Chapter 440, Florida Statutes, by obtaining a Florida endorsement on its workers’ compensation insurance policy; and agreed to pay the remaining penalty in sixty equal monthly payment installments. Respondent has since defaulted on those payments. Section 440.107(7)(c), Florida Statutes, requires the Department to assess a penalty of $1,000 per day for each day that the employer conducts business operations in violation of a stop-work order. Several months after issuing the stop-work order, Investigator Johnson was informed that Respondent was conducting business operations in Miami in violation thereof. She obtained documentation that showed Respondent was performing electrical work as part of a contract it entered into with KVC Constructors, Inc., on August 4, 2004. Investigator Johnson obtained the daily sign-in sheets of KVC Constructors, Inc., that indicated the names of each entity that performed work on the job site for each particular day. She determined from the records that Respondent had worked 187 days in violation of the stop-work order prior to entering into the Payment Agreement Schedule and obtaining the Order of Conditional Release from the Department. On October 7, 2005, the Department issued to Respondent a fourth Amended Order of Penalty Assessment which assessed a penalty of $250,871.02. That amount was comprised of the $63,871.02 from the third Amended Order plus $187,000 for the 187 days of violation of the stop-work order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order imposing a penalty against Respondent in the amount of $250,871.02 minus the amount of payments previously made by Respondent to the Department. DONE AND ENTERED this 8th day of June, 2006, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT 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 8th day of June, 2006. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 H.R. Electric, Inc. c/o Mr. Jeremy Hershberger 5512 Main Street Flowery Branch, Georgia 30542 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos Muñiz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times relevant to this proceeding, respondent Bradley Earl Wasserman was licensed as a disability insurance agent in the State of Florida. On or about July 1, 1981, respondent went to the home of Jose M. and Maida Maldonado for the purpose of discussing health insurance coverage. The Maldonados expressed their desires for the cheapest and best coverage for their money. The health insurance coverage purchased by the Maldonados from the respondent was to be issued through the Union Casualty Insurance Company and the Orange State Insurance Company. The dispute in this case involves the manner in which the premium payments were to be paid for the health insurance coverage. Respondent explained to the Maldonados that there were four methods of premium payment: annual, semiannual, quarterly and monthly payments. The only way monthly payments could be accepted was through an automatic bank draft plan. The Maldonados did not feel that they could afford to pay an annual, semiannual or quarterly payment and desired to pay for their coverage on a monthly basis. They gave respondent a check to cover the premiums for the first two months, and desired to pay on a monthly basis thereafter. Respondent explained that the automatic withdrawal from their checking account would result in a savings to them of about $3.55 per month. While the Maldonados each testified that they did not want their monthly premium payments to be automatically withdrawn from their checking account and did not authorize this form of payment, such testimony is inconsistent with the testimony of respondent and the documents received into evidence at the hearing. According to the respondent, it was against his company's policy to sell insurance with a monthly method of payment unless such payments were automatically withdrawn from the insured's bank account. The application for insurance bearing the signatures of both Jose and Maida Maldonado contains boxes for the type of billing and the mode of billing to be utilized. The "monthly" mode of billing was checked and the "ABC" type of billing was checked. (Respondent's Exhibit 1) "ABC" means "automatic bank check" plan or the automatic bank withdrawal method of payment. The application states that a Form 7139 must be completed for the "ABC" type of billing. The Maldonados both admitted that they signed this application for insurance. Form 7139 is entitled "Request for Automatic Bank Check Plan" and "Authorization to Honor Checks Drawn by Union Casualty Company of Omaha, Nebraska." These completed forms with a signature of Jose Maldonado were received into evidence (Respondent's Exhibit 2), as was a blank deposit ticket for the Maldonado's checking account. (Petitioner's Exhibit A). Neither of the Maldonados could recall giving respondent a blank deposit slip. Mr. Maldonado could not recall placing his signature on Form 7139, but he did recognize one of the two signatures as his own. Respondent recalled that at the time Mr. Maldonado was signing this document, a small child was sitting on his lap and respondent had to help him hold the form while he was signing it. A handwriting expert could not positively identify the two signatures as either being those of Jose Maldonado or as being forgeries. The original document was not available and the expert was working from a copy. For this reason, he was unable to positively reach a conclusion on the authenticity of the signatures of Jose Maldonado on respondent's Exhibit 2. Mr. Maldonado admitted that he had not read every document he signed for the respondent. The Maldonados became dissatisfied with their insurance coverage when they discovered that it would not pay for certain claims. On October 21, 1981, they instructed their bank to stop payment on the automatic drafts for their premiums. The Maldonados did not directly send a separate check to the insurance company for the September or October payments.
Recommendation Based upon the findings of fact and conclusions of law stated above, it is RECOMMENDED that the Administrative Complaint against the respondent dated December 29, 1981, be DISMISSED. Respectfully submitted and entered this 23rd day of July, 1982, in Tallahassee, Florida. DIANE D. TREMOR, 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 23rd day of July, 1982. COPIES FURNISHED: Daniel M. Sumner, Esquire 428A Larson Building Tallahassee, Florida 32301 Barry M. Steagall, Esquire 6500 Central Avenue St. Petersburg, Florida 33707 Honorable Bill Gunter Insurance Commissioner State of Florida The Capitol Tallahassee, Florida 32301
The Issue Whether Petitioner is entitled to a refund from the State of Florida Group Health Self Insurance Plan of pre-tax supplemental insurance premiums in the amount of $47.46 or $47.45 a month that were deducted from his pay for the 2007 and 2008 insurance plan years.
Findings Of Fact Petitioner, Detrick Murray ("Petitioner" or "Mr. Murray") was, at all times relevant to this proceeding, employed by the Florida Department of Corrections. As a state employee, he was given the option to participate in a pre-tax supplemental accident/disability insurance plan. Benefits, including insurance plans, are administered by a private contractor, Convergys, through a project called "People First," operated on behalf of Respondent, Department of Management Services, Division of State Group Insurance ("Respondent or the Division"). During the 2005 open enrollment period for the 2006 plan year, Mr. Murray elected to participate in a state- sponsored supplemental/accidental policy offered by Colonial Insurance Company ("Colonial"). The reverse side of the enrollment provided the following information and instructions: The enrollment form must be used to enroll in or change coverages. No changes will be accepted by e-mail or letter. Enrolling in a supplemental insurance plan, or changing options, does not automatically stop other coverages you currently have. To stop an existing coverage, you must place an "S" in the box provided for that Plan on the front of this form (Part 1). Only complete Part 2 on the front of this form if you wish to stop plans currently not offered. The Supplemental Enrollment Form must be submitted to the People First Service Center. Enrollment changes will not occur if forms and/or applications and the Supplemental Company Application are submitted directly to the supplemental insurance company. If you cancel or do not enroll in supplemental insurance, you will not be able to enroll again until the next annual open enrollment period, unless you experience a Qualifying Status Change. Supplemental premiums are deducted on a pre- tax basis. It is your responsibility to ensure that your enrollment selections are in effect. Check your payroll warrants to ensure that your deductions properly reflect your selections. Contact the People First Service Center immediately if these deductions are not correct. I understand my enrollment and/or changes will be effective the first of the month following a full payroll deduction. I also understand my elections are IRREVOCABLE until the next annual open enrollment period, unless I have a Qualifying Status Change as defined by the Federal Internal Revenue Code and/or the Florida Administrative Code. I understand that I must request such changes within thirty-one (31) calendar days of the Qualifying Status Change. The open enrollment period for the next year, the 2007 plan year, began on September 19, 2006, and ended on October 18, 2006. On October 14, 2006, Mr. Murray notified Colonial that he wanted to cancel the supplemental insurance for the 2007 plan year. He used a Colonial Request for Services form and sent it to the Colonial Processing Center in Columbia, South Carolina. In a letter dated February 14, 2007, Colonial acknowledged receiving Mr. Murray's request to cancel the insurance during the 2006 enrollment period, and informed him of its receipt of an "overpayment" of $47.46 monthly beginning January 1, 2007. Colonial directed Mr. Murray to contact his personnel officer "which will then work through the Division to issue your refund." After the open enrollment period ended, Mr. Murray had also contacted People First on November 14, 2006, and gave notice of his attempt to cancel with Colonial. He was informed that Colonial had not informed People First of the cancellation. Mr. Murray contacted People First again on January 29, 2007, questioning the continued payroll deductions and requesting a refund, as Colonial had suggested. He was told that he would have to cancel with People First during the open enrollment period, but he could send a letter of appeal to try to get a refund of premiums and try to cancel sooner. Despite repeated contacts, requests for refunds, and appeals to People First during 2007, Mr. Murray continued to have premiums for supplemental insurance deducted from his pay check. Ultimately, the Division denied his appeal. Although Mr. Murray was trying to get a refund for 2007 payroll deductions, he again failed to notify People First to cancel the insurance during the open enrollment period between September 17, 2007, and October 19, 2007, for the 2008 plan year. There is no evidence that Mr. Murray had a qualifying status change, as required by federal and state law, that would have permitted him to cancel the insurance at any time other than during open enrollment periods for the 2007 and 2008 plan years. The enrollment period for the 2009 plan year began on September 22, 2008, and ended on October 17, 2008. On September 24, 2008, Mr. Murray cancelled the supplemental insurance for the 2009 plan year by making a telephone call to a People First representative. In a late-filed exhibit produced by a manager for Convergys at the request of Petitioner, the Division showed that payments were made to Colonial to insure Mr. Murray through November 24, 2008. Sandi Wade, the Division's benefits administrator, noted that Colonial should not have canceled Mr. Murray's insurance policy. Colonial had no authority to send the letter of February 14, 2007, incorrectly telling Mr. Murray he was entitled to a refund. Ms. Wade's observations prompted Mr. Murray to question what, if any, remedies he might have with regard to Colonial's error. That issue is not and cannot be considered in this proceeding. In the absence of evidence that the Division or its agents were notified to cancel the supplemental insurance during open enrollment periods for 2007 and 2008, or based on a qualifying status change, Petitioner's request for a refund of premiums must be denied.
Recommendation Based on the foregoing, it is recommended that the Department of Management Services, Division of State Group Insurnace, enter a final order denying Petitioner, Detrick Murray, a refund of his accident/disability insurance coverage premiums paid in 2007 and 2008. DONE AND ENTERED this 12th day of May, 2010, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 2010. COPIES FURNISHED: Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399 Detrick Murray 4370 Northwest 187th Street Miami, Florida 33055 John Brenneis, General Counsel Division of State Group Insurance Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue At issue in this proceeding is whether Respondent committed the offense set forth in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact At all times material hereto, Respondent, Joseph Anthony Isabella, was licensed by Petitioner, Department of Insurance (Department), as a life insurance agent, having been issued license number A128269. On July 26, 1989, an Information was filed in the Circuit Court, Fifteenth Judicial Circuit, Palm Beach County, Florida, Case No. 89-10384CF A02, charging Respondent with one count of obtaining property or services in return for a worthless check, contrary to Section 832.05(4), Florida Statutes. Specifically, the Information alleged that: . . . JOSEPH ANTHONY ISABELLA on or about the 15th day of DECEMBER, 1988 in the County of Palm Beach and State of Florida, did unlawfully obtain services, goods, wares or other things of value from ABE GREEN, by means of a check in the amount of $8,515.00 drawn on the CAPITAL BANK, a banking corporation, bearing account number 4203001757, knowing at the time of the drawing, making, uttering, issuing or delivering of the said check that the said JOSEPH ANTHONY ISABELLA had not sufficient funds on deposit in or credit with such bank with which to pay the same on presentation. . . . Such offense constituted a felony of the third degree. On or about March 8, 1991, Respondent pled guilty to the charge, and on March 20, 1991, the court entered an order (nunc pro tunc to March 8, 1991) withholding adjudication of guilt and placing Respondent on probation for a period of one year under the supervision of the Department of Corrections. The conditions of probation included the following: PROBATION TO TERMINATE ONCE RESTITUTION IS PAID IN FULL. PAY $7,000.00 RESTITUTION TO ABE GREEN. Respondent failed to make restitution to Mr. Green, and on January 6, 1992, an affidavit of violation of probation was filed and a warrant was issued; however, the warrant was not executed, returned, and filed until September 22, 1994. Ultimately, by April 16, 1995, restitution had been paid, the notice of violation of probation was withdrawn, and Respondent's probation was "terminated successfully." At no time did Respondent inform the Department in writing of having pled guilty to the aforesaid crime.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be rendered which finds Respondent guilty of violating the foregoing provisions of law and that, for such violation, the final order suspend Respondent's license for a period of 12 months. DONE AND ENTERED this 25th day of May, 1999, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK 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 25th day of May, 1999.
Findings Of Fact Petitioner applied to the Respondent for licensure as a general lines, and a life and health insurance agent on or about February 8, 1990. By letter dated May 17, 1990, the Petitioner was informed that his applications for examination were denied based upon a finding that he lacked fitness or trustworthiness to engage in the insurance business. Petitioner timely requested a hearing to determine if he is qualified to take these licensure examinations. On or about January 3, 1986, the Petitioner entered a plea of guilty to two counts in a superseding indictment filed in Case Number 84-00603(S)-05 in the United States District Court for the Eastern District of New York. Based upon this plea, the Petitioner was found guilty of conspiracy to defraud an insurance company and filing a false insurance claim, each count being a felony involving moral turpitude. He was sentenced to three years probation, and ordered to pay a fine of $10,000. Special conditions of probation included prohibiting the Petitioner from engaging in the insurance business, and requiring that he make restitution to the Hartford Insurance Group in the sum of $1,778.08. On or about August 15, 1986, the Insurance Department of the State of New York revoked the Petitioner's insurance broker's license, based upon his felony conviction as set forth above. The Petitioner successfully completed his period of probation in New York on January 2, 1989, including payment of the $10,000 fine and restitution in the amount of $1,778.08. On or about September 22, 1989, the Board of Parole of the State of New York issued a Certificate of Relief from Disabilities to the Petitioner which removes bars to employment and licensure automatically imposed by the laws of the State of New York as a result of his conviction. However, this Certificate specifies that it shall not prevent any administrative or licensing body or board from relying upon this conviction as a basis for the exercise of its discretionary power to refuse to issue a license. The Petitioner failed to disclose on his applications for examination that his insurance broker's license in New York had been revoked. In fact, he specifically answered "no" to the question on these applications concerning whether his license had ever been revoked in another state. The Petitioner did disclose on his applications for examination that he had been charged with a felony in New York, and indicated that he had entered a plea to a single charge. He stated on his applications, however, that he had not been convicted by any court. The Petitioner claims that he did not know that his New York license had been revoked. Rather, he testified that he had sought to surrender his license in New York after his conviction in 1986, and thought that the administrative action had been concluded with his license surrender. He claims he never was notified of any hearing, and did not receive a copy of the order of revocation issued by the Insurance Department in New York. The Petitioner also claims that he entered his plea of guilty as a matter of convenience in order to avoid a long and expensive trial, and on the advise of his counsel. He maintains that he did not file a false insurance claim and did not conspire to defraud any insurance company. Rather, he testified that he was very ill at the time, and did not expect to live. In order to avoid the strain and expense of a trial, and since he did not believe he would ever again be physically able to engage in the insurance business, he agreed to resolve the criminal charges against him with a plea of guilty to two counts in the superseding indictment issued against him. Finally, he testified that he indicated on his applications that he had not been convicted by any court since he had not had a jury trial, and he was under the impression that a person can be convicted only if found guilty by a jury. Based upon his demeanor at hearing, it is found that the Petitioner is a credible witness and that his claims that he did not know his New York license had been revoked and that he thought a person could only be convicted if found guilty by a jury are truthful. Nevertheless, the Petitioner was in error regarding both claims, and as a result, he answered questions on his applications in a false and incomplete manner. He was convicted on two felony counts, and his license was revoked in New York based on those convictions.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing Petitioner's challenge to the determination that he is not qualified to take the examination for licensure as a general lines, and a life and health insurance agent. DONE AND ENTERED this 2nd day of April, 1991 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 1991. APPENDIX TO RECOMMENDED ORDER Rulings on the Petitioner's Proposed Findings of Fact: Adopted in Finding 1. Rejected as a summary of the evidence (Exhibit P-2) and not a proposed finding of fact. Adopted in Finding 1. Adopted and Rejected, in part, in Finding 6. Adopted, in part, in Finding 2, but otherwise rejected as unnecessary, simply a summation of testimony, and as not based on competent substantial evidence. Adopted in Finding 8. Rejected in Finding 9. Rejected as a comment on the record and not a proposed finding of fact. Rulings on the Respondent's Proposed Findings of Fact. COPIES FURNISHED: Mark E. Berman, Esquire 2450 Hollywood Boulevard Suite 401 Hollywood, FL 33020 Gordon Thomas Nicol, Esquire Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 Bill O'Neil, Esquire General Counsel The Capitol, PLaza Level Tallahassee, FL 32399-0300 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
