The Issue At issue is whether petitioner's request for a bond waiver under the provisions of Section 559.927(10)(b)5, Florida Statutes, should be approved.
Findings Of Fact Petitioner, Consolidated Cruises and Tours, Inc., is a "seller of travel," as that term is defined by Section 559.927(1)(a), Florida Statutes, and was formed in April 1993 by Steven Wolf, its president, to carry on the travel business he had previously operated through Consolidated Cruises, Inc., since October 1987. Effective October 1, 1988, Chapter 88-363, Laws of Florida, codified at Section 559.927, Florida Statutes (1989), required sellers of travel to register with the Department, and to post an annual performance bond. Failure to register with the Department or to conduct business as a seller of travel without the required bond was a violation of law, and subjected the person or business to civil and criminal penalties. Consolidated Cruises, Inc., the business through which Mr. Wolf was operating at the time, did not register with the Department as a seller of travel until November 1, 1991. Effective October 1, 1993, Chapter 93-107, Section 1, Laws of Florida, amended Section 559.927, Florida Statutes, to provide that: The department may waive the bond requirement in this subsection if the seller of travel has had 5 or more consecutive years of experience as a seller of travel in Florida. . . . On or about May 25, 1994, petitioner filed an application for registration as a seller of travel with respondent, Department of Agriculture and Consumer Affairs (Department), and requested a waiver of the annual performance bond requirement. Pertinent to this case, the request for waiver described the history of Consolidated Cruises, Inc., and Consolidated Cruises and Tours, Inc., as follows: Consolidated Cruises Inc. was established on 10/1/87 as a company that promoted cruises. The sales for the company was minimal for the first 2 years. The principal stock holder was Steven Wolf (100 percent). In March of 1990 Consolidated Cruises added 3 new major stock holders to the company and split the company stock as follows: Steven Wolf - 25 percent Miriam Wolf - 25 percent Yoav Tavory - 25 percent Judy Tavory - 25 percent In April of 1993 Consolidated Cruises ceased to function since the major stock holders had a disagreement as to the dissolution of the company. In the interim, to keep the company going a new corporation was formed by Steven Wolf & Miriam Wolf called, "CONSOLIDATED CRUISES & TOURS INC. For all practical purposes, the company continued to work the same as before but under the auspices of a new company name. In all the years that we have been providing our services, we have never had ONE complaint. On the basis of our past performance, we request that you waive the requested security bond of $10,000. Our previous registration number for CONSOLIDATED CRUISES INC. are as follows: certificate of registration No: 11347 certificate No. 00283 By letter of June 16, 1994, the Department denied petitioner's request for bond waiver. Such denial was premised on the Department's interpretation of Section 559.927, Florida Statutes, as allowing a waiver of the bond requirement only when the "seller of travel has had 5 or more consecutive years of experience as a seller of travel in Florida" that was lawfully obtained, i.e., that such experience occurred while the person or business was duly registered with the Department as required by law.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered denying petitioner's request for a performance bond waiver. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of January 1995. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of January 1995. APPENDIX Respondent's proposed findings of fact are addressed as follows: Addressed in paragraph 4. Addressed in paragraph 4, otherwise not relevant. See, paragraph 9. 3-5. Addressed in paragraph 6, otherwise unnecessary detail. 6. Addressed in paragraph 3, otherwise unnecessary detail. 7 & 8. Addressed in paragraph 5. 9. Addressed in paragraphs 4 and 5. 10 & 11. Addressed in paragraph 6. 12. Rejected as not relevant since the Department did not specify such reason as a basis for denial in its letter of June 16, 1994, did not seek to amend its reasons for denial prior to hearing, and did not raise such issue until after petitioner had presented its case-in-chief. See paragraph 9. COPIES FURNISHED: Steven Wolf, President Consolidated Cruises and Tours, Inc. 8181 Northwest 8th Manor Plantation, Florida 33324 Jay S. Levenstein, Esquire Department of Agriculture and Consumer Services Room 515 Mayo Building Tallahassee, Florida 32399-0800 The Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL - 10 Tallahassee, Florida 32399-0810 Richard Tritschler General Counsel Department of Agriculture The Capitol, PL - 10 Tallahassee, Florida 32399-0810
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation. It was incorporated on September 10, 1991. On August 25, 1995, it was administratively dissolved for failure to file its annual report. It has not been reinstated. At present, Petitioner has no assets. Its liabilities exceed $250,000.00 and include a judgment against it in the amount of $11,857.00 (plus interest) and numerous unpaid bills. Before its demise as an active corporation, 3/ Petitioner was a provider of travel services. It was registered as a "seller of travel" with the Agency in 1992 (from January 1 to December 31) and in 1993 (also from January 1 to December 31), during which time it held Seller of Travel Registration Number 14223. As part of the registration process, Petitioner posted with the Agency a $10,000.00 performance bond effective for the one year period commencing November 19, 1991 (the 1991-92 Performance Bond) and another $10,000.00 performance bond effective for the one year period commencing November 19, 1992 (the 1992-93 Performance Bond). 4/ The surety on these two performance bonds (the 1991-92 Performance Bond and the 1992-93 Performance Bond) was the Hartford Fire Insurance Company (the Hartford). Edward Volz, in his capacity as Petitioner's President, signed an indemnity agreement obligating Petitioner to indemnify the Hartford for any payments made by the Hartford "by reason or in consequence of its suretyship." 5/ Consumer claims against Petitioner were received by the Agency. By letter dated February 28, 1994, the Agency advised Petitioner of these "claims on the above referenced security" and of the Agency's intention "to make a demand under its [the security's] terms." By letter to the Hartford dated February 28, 1994, the Agency made "a demand on the surety bond." 6/ The letter read as follows: This is to notify your company that the Department of Agriculture and Consumer Services is in possession of claims made by persons who purchased travel-related services from the above-mentioned seller of travel [Petitioner]. This bond was issued by your company to secure the services of the seller of travel or to provide a refund to those customers who do not receive the services purchased. Please accept this letter as a demand on the surety bond. We would appreciate your advising this office in writing within fifteen (15) days from the date of this letter as to the form and information you require in order to make payment pursuant to the bonded obligation. If you have any questions please contact me at 904-922-2972 or Mr. Wayne Searcy, 904-922-2920. In or around March of 1994, Petitioner filed an application with the Agency to renew its "seller of travel" registration. In conjunction with the filing of its application, Petitioner posted with the Agency a $25,000.00 performance bond effective for the one year period commencing November 19, 1993 (the 1993-94 Performance Bond). The surety on the bond was the Hartford. 7/ By letter dated June 22, 1994, the Agency notified Petitioner that Petitioner's application for renewal of its registration had ben denied for failure "to provide a financial statement prepared by an independent public accountant." After receiving the Agency's June 22, 1994, letter, Petitioner discontinued its business operations. Having received additional claims against Petitioner since it had sent its February 28, 1994, demand letter to the Hartford and not having received any response from the Hartford to that letter, the Agency sent a second letter, dated September 29, 1994, to the Hartford. The letter read as follows: Subject: Excell Travel Club, Inc. 1239 East Newport Ctr., [Number] 113 Deerfield Beach, Florida 33442 Surety Bonds [Number] 41770-77 ($25,000) and [Number] 41770-77 ($10,000) Effective November 19, 1993/ Effective November 19, 1992 Dear Sir: The Department of Agriculture has claims exceeding the amount of the bonds [the 1992- 93 Performance Bond and the 1993-94 Performance Bond] from persons who purchased travel-related services from the above- mentioned seller of travel [Petitioner]. Therefore, the Department of Agriculture is making a demand on the bonds. The bonds were issued by your company to secure the services of the seller of travel or to provide a refund to those customers who do not receive the services purchased. Please accept this letter as a follow up demand on the surety bonds. We would appreciate your advising this office in writing within ten (10) days from the date of this letter as to the form and infor- mation you require in order to make payment to the bonded obligation. If you have any questions please contact me at 904-922-2820. A copy of this letter was sent to Petitioner. The Hartford sent a letter, dated October 18, 1994, to the Agency acknowledging receipt of the Agency's September 29, 1994, letter. Subsequently, the Hartford sent a second letter, dated November 2, 1994, to the Agency. The letter read as follows: RE: Our file: 319 S 26747 and 319 S 26748 Principal: Excell Travel Club, Inc. Dear Mr. Cloud: Enclosed are our checks totalling $35,000.00 which are in settlement of the two surety bonds with effective periods 11/19/92 to 11/19/93 and 11/19/93 to 11/19/94. Please acknowledge receipt of these two checks and acknowledge that our bonds are exonerated. Thank you for your advices concerning these matters. Appearing on both of the two checks that were enclosed with the Hartford's November 2, 1994, letter was the notation, "full and final settlement." Each of the checks also had a "loss date" written on it. The "loss date" written on the $10,000.00 check was November 18, 1993. The "loss date" written on the $25,000.00 check was September 29, 1994. Petitioner had no advance notice that the Hartford was going to make a "settlement" with the Agency. By letter dated May 17, 1995, the Agency advised Petitioner of its intention "to make distribution of the entire bond proceeds to the claimants on a pro rata basis." Thereafter, Petitioner filed a petition requesting an administrative hearing on such proposed action. Petitioner has not repaid any of the $35,000.00 that the Hartford paid the Agency for the benefit of those who filed claims against Petitioner, nor has the Hartford instituted legal proceedings to require Petitioner to indemnify it for having made such payment to the Agency.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Agency enter a final order dismissing, on the ground of lack of standing, Petitioner's petition requesting an administrative hearing on the Agency's proposed action to distribute the proceeds of the 1992-93 and 1993-94 Performance Bonds to claimants on a pro rata basis. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 8th day of October, 1996. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 8th day of October, 1996.
The Issue The issue is whether the proposed disqualification of Petitioner’s bid is contrary to the agency's governing statutes, rules, or policies or contrary to the bid solicitation specifications within the meaning of Subsection 120.57(3)(f), Florida Statutes (2007).1
Findings Of Fact Petitioner is a closely held Florida corporation licensed in the state as a general contractor. Mr. Milton “Mitt” Fulmer is the owner, sole director, and only stockholder. Respondent is a state agency. Respondent regularly solicits bids for construction services to build and maintain its facilities. On August 3, 2007, Respondent issued an invitation to bid identified in the record as Bid No. 03-07/08 (the ITB). The ITB solicited bids to construct a new headquarters for the Apalachicola National Estuarine Research Reserve, commonly referred to in the record as ANERR. Four companies responded to the ITB. Petitioner submitted the lowest bid. Intervenor submitted the next lowest bid. Intervenor is a Florida corporation licensed in the state as a general contractor. The ITB required bidders to submit a bid bond in an amount equal to five percent of the amount of the bid, plus alternates. A bid bond is not a performance bond. A bid bond is customarily provided for gratis or a nominal charge, and variations in bid bonds do not result in a competitive advantage among bidders. A bid bond merely insures the successful bidder will enter into the contract and provide whatever payment and performance bonds (performance bond) the ITB requires. The Instructions to Bidders for the ITB required all bonds to be issued by a surety company that “shall have at least the following minimum rating in the latest issue of Best’s Key Rating Guide (Best's): 'A'” (the bond rating requirement). The bond rating requirement was a bid solicitation specification required for a bond to be acceptable to Respondent. Petitioner submitted a bid bond issued by a surety identified in the record as International Fidelity Insurance Company (IFIC). IFIC has Best's rating of "A-." Respondent proposes to reject Petitioner's bid for failure to satisfy the bond rating requirement and to award the bid to Intervenor as the second lowest bidder. The bond rating for the surety company that issued the bid bond for Intervenor is not in evidence. For reasons stated in the Conclusions of Law, Petitioner has the burden of proof. The parties provided the trier of fact with a wealth of evidence during the final hearing. However, judicial decisions discussed in the Conclusions of Law confine the purpose of this proceeding to a review of the proposed disqualification of Petitioner's bid at the time Respondent exercised that agency discretion. This proceeding is not conducted to formulate final agency action that determines which bidder should receive the contract or whether all of the bids should be rejected. The review of proposed agency action is limited to a determination of whether the proposed action violates a statute, rule, or specification. If a violation occurred, the review must then determine whether the violation occurred because Respondent exercised agency discretion that was clearly erroneous, contrary to competition, or an abuse of discretion. A preponderance of evidence does not show that the proposed agency action violates a statute, rule, or specification. That finding ends the statutorily authorized inquiry. In the interest of completeness and judicial economy, however, the trier of fact also finds that the exercise of agency discretion that led to the proposed agency action is not clearly erroneous, contrary to competition, or an abuse of discretion. It is undisputed that the proposed agency action does not violate a statute or rule. Petitioner implicitly argues that the proposed agency action violates the bond rating requirement in the bid specifications because an "A-" rating is equivalent to an "A" rating. The Best's ratings of surety companies are not equivalent. Before discussing the differences, however, it is important to note that Respondent did not base its proposed rejection of Petitioner's bid on an independent evaluation of the data used to distinguish the two ratings. The failure to conduct an independent evaluation of the differences in Best's ratings criteria was neither clearly erroneous, contrary to competition, nor an abuse of discretion. The differences in Best's ratings criteria are complex and proprietary. Respondent lacks sufficient staff and expertise to evaluate the data underlying the Best's ratings or the quality of surety companies. Respondent relied on its own experience, custom and practice in the surety industry, and advice of counsel. Respondent also took into account the unusual size and complexity of the ANERR project, time constraints, and the added risk aversion to any delay in starting the project. The proposed rejection of Petitioner's bid is consistent with Respondent's past practice. Respondent has consistently required compliance with bond rating requirements for bid bonds in previous projects. In the course of bidding 500 to 600 projects over approximately an eight-year period, only one of the apparent low bidders offered Respondent a bid bond from an "A-" rated surety when an "A" was required by the bid specifications. Respondent disqualified that bid, which was for a project of approximately four million dollars; the only previous project that approaches the $5-$6 million cost of the ANERR project. All other low bidders complied with the specification as written. Respondent reasonably inferred that the surety company for the bid bond would be the same for the performance bond. Respondent's experience with industry practice in the 500 to 600 previous projects suggests the surety company that writes the bid bond will also write the performance bond. It is also customary for a surety company to provide the bid bond for gratis or for a nominal charge because the surety company collects its premium upon writing the subsequent payment and performance bonds. Respondent's experience also shows that contractors must qualify for their surety bonds, and not all contractors succeed in qualifying for surety bonds. Moreover, not all contractors can succeed in procuring surety bonds from an A-rated company. The temporal exigencies between the award of the bid and the provision of a performance bond also supported Respondent's inference that the surety company for the bid bond would be the surety company for the performance bond. The General Conditions of the contract required Petitioner to submit evidence of its ability to provide the requisite performance bond within two working days of being notified of a successful bid. Petitioner had ten days to actually furnish the bond. Establishing a surety is not perfunctory but entails a prequalification process. Petitioner had to supply its bonding agent with information including project history, credit references, reviewed financial statements, personal financials, and details on its assets. Any delay in the ANERR project, in contrast to its previous projects, for reasons of contractor default or otherwise, would expose Respondent to greater risk and greater expense. Respondent reasonably experienced a heightened risk aversion for the ANERR project than the risk aversion Respondent experienced during previous projects. The $5 or $6 million price tag for the ANERR project is about 400 percent greater than all but one previous project in Respondent's experience. Unusual aspects of the project, including its design elements and its environmentally sensitive location, could be irreparably harmed in the event of default or delay. The nature of the project's funding, part of which is a federal construction grant that expires on a date certain and part of which involved taxes paid by Floridians, contributes to the unique qualities of the project that support Respondent's greater risk aversion in connection with the ANERR project. At the time Respondent had to make a decision to reject or accept Petitioner's bid, Respondent believed in good faith a distinction existed between Best's "A" and "A-" ratings. The Best's ratings publication is a summary based on data, much of which is proprietary. It would be pointless for Respondent to "cross examine" a summary before rejecting Petitioner's bid if significant portions of the data underlying the summary are proprietary and unavailable to the cross-examiner. If Respondent were to have sufficient staff and expertise to independently evaluate the data underlying the Best's ratings, if some of the data were not proprietary, and if such an evaluation were the basis for the proposed rejection of Petitioner's bid, the outcome would not alter the proposed rejection of Petitioner's bid. The Best's ratings are based, in relevant part, on Best's Capital Adequacy Ratio, commonly referred to in the record as BCAR. The BCAR score estimates the ability of a surety company to pay claims. The minimum BCAR score for an "A" rating is 145, meaning the value of a surety company's assets exceed its estimated claims by a minimum of 45 percent. The minimum BCAR score for a surety with an "A-" rating is 130, meaning the value of its assets exceed its estimated claims by 35 percent. Although a 15-percent differential may appear small, Best's states the differentials by reference to a range of scores. The actual differential between individual sureties with an "A" rating and an "A-" rating may be as little as one percent or as great as 29 percent. An independent evaluation by Respondent would have revealed a margin of error as large as 29 percent in the standard used to evaluate a surety company's ability to pay claims. If the proposed rejection of Petitioner's bid were based on an independent evaluation of the data underlying the Best's rating summaries, it would have been reasonable for Respondent to reject Petitioner's bid. It would have been reasonable for Respondent to reject a 29-percent margin of error for a surety company in a project that is 400 percent larger than the typical project and for which Respondent reasonably has a greater risk aversion due to the temporal limit on the availability of funds, the complexity of the project, and its environmental sensitivity. Much of the data underlying Best’s published ratings is proprietary information. However, the available evidence shows that Best's adjusts BCAR values based on qualitative factors such as: business plan, management quality, liquidity of assets, liabilities, and other operational aspects of the surety company. A qualitative analysis shows that ratings of "A" and "A-" are not the “functional equivalent” of each other. Petitioner submitted evidence that Best's "bands" surety companies with ratings of "A" and "A-" together in the Best's rating guide. However, the relevant specification in the ITB did not express the bond rating requirement in terms of a band or category. Rather, Respondent requested an "A" or better rating according to Best’s Key Rating Guide. An independent evaluation by Respondent would have provided a reasonable basis for an inference that the surety company for the bid bond and performance bond would be the same company. Petitioner has used IFIC for more than one year. During that time, IFIC has issued all of Petitioner’s bid bonds. IFIC issued Petitioner two payment and performance bonds. Petitioner was unable to identify any other surety company that had issued its payment and performance bonds within the time period during which Petitioner has used IFIC. Petitioner did not ask its insurance broker to obtain a bid bond from a company other than IFIC. When Petitioner sent a bid bond order form to its broker, Petitioner provided information to the broker about the project and the amount of the bid and Respondent’s surety requirements. The Bid Bond Order Form does not indicate the minimum bond rating requirement specified in the ITB. Mr. Fulmer had a conversation with his broker about Respondent’s bid security requirements, but it is unclear whether the relevant specifications were faxed to the broker or whether Mr. Fulmer saw the Bid Bond Order Form before it was provided to the broker. In response to the Bid Bond Order Form, the broker generated a bid bond and sent the bond to Petitioner for signature. At the time Petitioner received the bid bond, Petitioner did not consult Best’s Key Rating Guide to confirm that its surety met the minimum bond rating requirement in the ITB. It is unnecessary to determine whether the bond rating requirement was a material or immaterial requirement. If it were material, Respondent had no discretion to waive it. If it were non-material, within the meaning of Florida Administrative Code Rule 60D-5.002(9)(Rule), evidence discussed in previous Findings in this Order shows that the exercise of agency discretion underlying the refusal to waive the bond rating requirement was reasonable and was not clearly erroneous, contrary to competition, arbitrary, or capricious. Petitioner's bid protest is not, in substance, a challenge to the bid solicitation specification identified in this Order as the bond rating requirement. If the substance of the bid protest were deemed to be a challenge to a bid specification requirement, the challenge is untimely. On October 30, 2007, Respondent opened the bids, identified Petitioner as the apparent low bidder, consulted Best's for information on the "A-" rating, consulted with counsel, and disqualified Petitioner's bid. Petitioner filed a Notice of Intent to Protest on November 8, 2007, and a Petition to Protest on November 13, 2007. A deemed challenge to the specification for the minimum bond rating requirement was untimely within the meaning of Subsection 120.57(3)(b).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent issue a final order dismissing the protest. DONE AND ENTERED this 21st day of March, 2008, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 21st day of March, 2008.
The Issue Should Respondent's license as a bail bond agent in the State of Florida be disciplined for the alleged violation of certain provisions of Chapter 648, Florida Statutes, as set forth in the Administrative Complaint and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 648, Florida Statutes. Respondent, at all times relevant to this proceeding, was licensed as a bail bond agent in the State of Florida and subject to the provisions of Chapter 648, Florida Statutes. Respondent, at all times relevant to this proceeding, was employed by Alliance Bail Bonds (Alliance), which was owned by Linda Jones. There was a verbal employment agreement between Alliance and Respondent, which provided for, among other things, Respondent's salary. However, the verbal employment agreement did not require that Respondent write bail bonds exclusively for Alliance. At all times relevant to this proceeding, Alliance's office was located in Respondent's home in Titusville, Brevard County, Florida, which had a separate entrance and separate telephone for Alliance. Alliance's files, both active and inactive, were also housed in this office. On March 30, 2000, a person identifying himself as Johnny Lamb contacted Respondent by telephone concerning a bail bond for an individual known as Bernard J. Dougherty who was being held in the Brevard County, Florida, jail. The bond amount was $8,500.00. Since Dougherty was not a resident of the State of Florida, Respondent wanted Lamb to put up the full amount of the bond as collateral. However, Lamb advised Respondent that he did not have enough cash to put up the full amount of the bond. Therefore, Respondent and Lamb eventually agreed on $7,000.00 cash as collateral. Additionally, Respondent advised Lamb that the premium for writing the bail bond would be $850.00 (10 percent of the bond amount). Later that same day, Lamb came to Respondent's office to complete the paperwork and put up the necessary funds for the collateral and bond premium. Lamb paid Respondent the collateral and bond premium in cash (U.S. currency, 20's, 50's, and 100's). Respondent prepared a Collateral Receipt and Informational Notice (Collateral Receipt), which was signed by Lamb. The Collateral Receipt indicated that Lamb had deposited the $7,000.00 collateral with Respondent and had executed an Indemnity Agreement and Promissory Note. Lamb also executed a Bail Application. Respondent gave Lamb the white copy of the Collateral Receipt for his records. The goldenrod copy of the Collateral Receipt was also given to Lamb to be delivered to Dougherty at the jail. The yellow copy and pink copy of the Collateral Receipt were retained by Respondent for Alliance's record. Lamb also paid Respondent $850.00 in cash (U.S. Currency) for the bail bond premium for which Respondent gave Lamb a receipt (number 20454) indicating that Lamb had paid the bail bond premium in the amount of $850.00. After completing the bond transaction with Lamb, Respondent prepared a file in Dougherty's name, which included the copies of the Collateral Receipt, Promissory Note, Indemnity Agreement, Bail Application, and a copy of the receipt for the bail bond premium. After preparing the file, Respondent prepared two Powers of Attorney (Powers), one in the amount of $5,000.00 and one in the amount of $3,500.00, and proceeded to the Brevard County jail to interview Dougherty. Upon arriving at the Brevard County jail, Respondent was advised that in addition to the Brevard County charges, there was an outstanding warrant for Dougherty from Volusia County and a hold for a parole violation in the State of Pennsylvania. Lamb was not present at the Brevard County jail at this time. Therefore, Respondent advised Dougherty of the Volusia County warrant and the hold from Pennsylvania. Respondent further advised Dougherty that although he could post bond for the Brevard County charges, Dougherty would not be released because of the Volusia County warrant and the hold for parole violation in Pennsylvania. Dougherty advised Respondent that he did not want to post bond. Whereupon, Respondent attempted to contact Lamb using the telephone numbers furnished Respondent by Lamb but was unsuccessful in locating Lamb. On March 31, 2000, Respondent called the Brevard County jail and had Lamb paged. Upon being advised that Lamb was present in the Brevard County jail, Respondent asked that they instruct Lamb to call Respondent at his office. Lamb called Respondent at his office and was advised of the situation concerning Dougherty. Respondent also advised Lamb that he was on his way to the jail and would bring Lamb's money with him. Upon arriving at the Brevard County jail, Respondent explained the circumstances regarding the posting of bail for Dougherty and proceeded to return Lamb's money. Lamb did not have the copies of the Collateral Receipt with him that had been given to Lamb on March 30, 2000. Therefore, Respondent took his copy of the Collateral Receipt and documented the return of the $7,000.00 collateral and the $850.00 premium fee. Lamb signed the documentation on the Collateral Receipt showing the return of the $7,000.00 collateral and the $850.00 premium fee. Respondent then placed all of the documents, including the Collateral Receipt with the documentation showing the return of the $7,000.00 collateral and the $850.00 bond premium, in Dougherty's file with Dougherty's name highlighted in blue for filing. Afterwards, Respondent voided the Powers by writing "Void" across the front of the Powers and had them sent to Linda Jones by UPS. Subsequently, the Powers were forwarded by Linda Jones to Charles A. Parish, Agent for Continental Heritage Insurance Co., on whom the Powers were written. On March 31, 2000, Respondent returned the $7,000.00 collateral plus the $850.00 bond premium fee to Lamb, notwithstanding the testimony of Lamb to the contrary, which lacks credibility. Respondent did not at any time present any of the paperwork for posting Dougherty's bond, including the Powers, to the Brevard County jail personnel. Since Alliance's Brevard County files were being kept at Respondent's office in Titusville, Florida, Respondent did not forward Dougherty's file to Linda Jones. However, as a caution, Respondent advised Linda Jones by telephone of what had occurred in regards to Dougherty, notwithstanding Linda Jones' testimony to the contrary, which lacks credibility. Sometime in January 2001, Linda Jones came into Respondent's office in Titusville, Florida, and removed all of Alliance's Brevard County files, both active and inactive, that were in the possession of Respondent. The Alliance files removed by Linda Jones included Dougherty's inactive file with the documentation concerning the return of the $7,000.00 collateral and the $850.00 bail bond premium, notwithstanding Linda Jones' testimony to the contrary, which lacks credibility. By letter dated May 10, 2001, after talking to William Travis and Linda Jones, Lamb filed a complaint with the Department alleging that Respondent had failed to return the $7,000.00 collateral and this proceeding ensued.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding Respondent, Michael Scott Kelly, not guilty of violating Subsections 648.442(1) and (3); and 648.45(2)(d),(e),(g),(h), (j), and (n), and (3)(a),(c),(d), and (e), Florida Statutes, and dismissing the Administrative Complaint filed against Michael Scott Kelly. DONE AND ENTERED this 23rd day of April, 2002, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of April, 2002. COPIES FURNISHED: Dickson E. Kesler, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street 612 Larson Building Tallahassee, Florida 32399-0333 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 Steven G. Casanova, Esquire 100 Rialto Place, Suite 510 Melbourne, Florida 32935
The Issue Whether the allegations of the Administrative Complaint are correct and, if so, what penalty should be imposed.
Findings Of Fact At all times material to this case, Myron Ihor Ostapchuk (hereinafter "Respondent") was eligible for and licensed as a non-resident life and health insurance agent in this state. In June, 1990, Mark Harold Johnson and Frances Conroy jointly met with the Respondent in Jacksonville, Florida, to discuss their potential licensure as health insurance agents with Western Fidelity Insurance Company. During the meeting, the Respondent represented that he had the authority to hire agents on behalf of Western Fidelity. After hearing of the opportunity, Ms. Conroy, a friend of Mr. Johnson's, left to attend to other matters, while Mr. Johnson remained and obtained additional information. Contrary to his representation to Mr. Johnson and Ms. Conroy, the Respondent was not authorized to hire agents on behalf of the Western Fidelity Insurance Company. At the time of the meeting, the Respondent requested $150 from Mr. Johnson to cover the cost of licensure. Mr. Johnson examined the materials provided by the Respondent and determined that the Western Fidelity administrative fee was $25 and the state's licensing fee was $40. Mr. Johnson mentioned the matter to the Respondent who agreed to accept $65 as the total fee. Mr. Johnson obtained the necessary forms for both himself and Ms. Conroy and the meeting ended. Ms. Conroy completed her forms and gave them to Mr. Johnson. After completing his forms, Mr. Johnson contacted the Respondent who resided in Tallahassee, and made arrangements to bring both his and Ms. Conroy's completed forms and required fees to the Respondent's home. Mr. Johnson paid the $65 fee by check number 2895 dated June 12, 1989 drawn on Southeast Bank of Jacksonville made payable to "United Financial". The check was deposited into the First Florida Bank of Tampa account number 612131053 of "United Financial Consultants Group, Inc.", a business entity controlled by the Respondent. Ms. Conroy paid the $65 fee by check number 4337 dated June 8, 1989 drawn on Barnett Bank of Jacksonville made payable to "United Financial Services". The check was deposited into the First Florida Bank of Tampa account number 612131053 of "United Financial Consultants Group, Inc." The Respondent was not authorized to accept the funds on behalf of, and failed to submit such funds to, the Western Fidelity Insurance Company. The Respondent has not refunded the funds to either Mr. Johnson or Ms. Conroy. In order to become licensed, both Mr. Johnson and Ms. Conroy submitted additional funds to Western Fidelity Insurance Company. On or about June 12, 1989, the Respondent met with and sold a policy of health insurance to Katherine Marinakis . Ms. Marinakis gave to the Respondent her check number 0854 in the amount of $232.00, dated June 12, 1989, drawn on First Florida Bank of Clearwater, and made payable to "U. F. C. G." The Respondent provided to Ms. Marinakis a receipt identifying her payment as the initial premium for the Western Fidelity Insurance Company policy. Ms. Marinakis' check cleared through the First Florida Bank of Tampa, Florida, and the funds were deducted from her checking account. The Respondent failed to submit the premium payment to Western Fidelity Insurance Company. The Respondent has not refunded the premium payment to Ms. Marinakis.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order revoking the licensure and eligibility for licensure of Myron Ihor Ostapchuk as a non- resident life and health insurance agent in this state. DONE and RECOMMENDED this 21st day of May, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 1991.
