Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times pertinent to the allegations of the First Amended Administrative Complaint, respondent Dennis Victor Daniels was licensed as an Ordinary Life including Disability Agent in Florida and was employed by Gulf Health/Life, Inc. in St. Petersburg, Florida. On or about January 14, 1980, Julie Stratton (then Julie Marzec) contacted respondent at the offices of Gulf Health/Life, Inc. for the purpose of purchasing health insurance. She and respondent discussed different insurance policies, and respondent informed her that if she joined the American Benevolent Society (ABS) she could obtain a lower rate for her policy and obtain the best policy for her money. Mrs. Stratton could not remember if respondent informed her of the exact amount of money she would save on her insurance if she joined the ABS. She was informed that other benefits and discounts from area businesses would be available to her as a member of the ABS. Mrs. Stratton joined the ABS in order to obtain less expensive insurance. She wrote two checks -- one in the amount of $15.00 payable to the ABS and the other in the amount of $54.26 payable to CNA Insurance Company. She obtained two insurance policies. The form numbers on these policies were 51831 and 52176. Based upon a referral from an agent with Allstate Insurance Company, John Valentine and his wife went to the offices of Gulf Health/Life in order to obtain hospitalization and surgical insurance coverage. Before moving to Florida, Mr. Valentine was covered by a group policy through his place of employment. Respondent informed Mr. Valentine that members of the ABS could obtain a policy at group rates which entailed a lesser premium than individual rates. Mr. Valentine wrote two checks -- one in the amount of $178.73 payable to CNA Insurance Company and the other in the amount of $25.00 payable to the ASS. Mr. Valentine received two policies from CNA -- one bearing form number 51831 and the other bearing form number 52176. He also received a brochure listing the places of business from which he could receive discounts as a member of the ABS. Gulf Health/Life, Inc. was a general agent for CNA. During the relevant time periods involved in this proceeding, CNA had different policies for health insurance. Policies with a form number of 51831 required the policyholder to be a member of an organization endorsing CNA in order to purchase that policy. Form 51831 policyholders paid a lesser premium for their policies. The difference in premiums between the group or organization policy and an individual policy with the same coverage is approximately $10.00. To obtain the policy bearing form number 52176, there is no requirement that the policyholder be a member of a group or an organization. Ms. Watkins, a secretary employed with Gulf Health/Life, Inc. between December of 1978 and June of 1979 observed a device known as a "light box" on the premises of Gulf Health/Life. This was a square-shaped plywood box with a slanted glass top and a high-intensity lightbulb within the box. On from a half-dozen to a dozen occasions on Fridays between January and April, 1979, Ms. Watkins observed respondent bent over the light box with a pen in his hand tracing a signature onto an insurance application. She could not produce any documents or recall any names of any insurance applicant whose signature was traced or copied by the respondent.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the First Amended Administrative Complaint filed against the respondent on April 29, 1982, be DISMISSED. Respectfully submitted and entered this 10th day of September, 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 10th day of September, 1982. COPIES FURNISHED: Curtis A. Billingsley, Esquire Franz Dorn, Esquire 413-B Larson Building Tallahassee, Florida 32301 William A. Patterson, Esquire Masterson, Rogers, Patterson and Masterson, P. A. 447 Third Avenue North St. Petersburg, Florida 33701 Honorable Bill Gunter Insurance Commissioner The Capitol Tallahassee, Florida 32301
Findings Of Fact Respondent administers the State of Florida Employees' Group Health Self Insurance Plan as a self insurance plan pursuant to Section 110.123(5), Florida Statutes. Prior to October 1 1981, Petitioner was an employee of the Department of Natural Resources. For some period of time, Petitioner purchased coverage under that health insurance plan. When she married an employee of the federal postal service, she dropped her health insurance with the State of Florida, since she preferred health insurance coverage under her husband's Policy with the federal government. Petitioner's employment with the Department of Natural Resources was reclassified so that she became a member of the Senior Management Service during September or October 1981. One of the benefits available to Senior Management Service employees is coverage under the State of Florida Employees' Group Health Self Insurance Plan free of charge to the employee. In the case of a Senior Management Service employee who accepts coverage under that Plan, the employing agency pays the full premium cost for the employee. On September 18, 1981, Ginger Bailey, an employee in the personnel office of the Department of Natural Resources, typed in the required information on insurance application forms for the various insurance policies available to Petitioner when her Senior Management status became effective on October 1, 1981. Bailey took the application forms to Petitioner, who was too busy at the time to discuss with Bailey the different insurance policies available and the forms themselves. Bailey left the forms with Petitioner. On October 8, 1981, Petitioner went to the personnel office so that Bailey could review with her the insurance benefits available to Senior Management status employees. Bailey explained each available insurance policy to the Petitioner individually and, for each, offered Petitioner an application form already completed by her. Petitioner accepted the offer of State-paid life insurance and disability insurance by signing the application form for such insurance in the acceptance block. When Bailey explained to Petitioner the health insurance, Petitioner commented that she would not need the insurance because her husband's policy was so good. Accordingly, Bailey directed Petitioner's attention to the portion of the application marked in bold letters, "Refusal." Petitioner signed the refusal portion of the application and dated her signature. Bailey struck through the September 18, 1981, date she had previously filled in for Petitioner in the acceptance section of the application. At no time did Bailey or any other agent or employee of the Department of Natural Resources or of the Department of Administration represent or state to Petitioner that she was covered by or was a member of the State of Florida Employees' Group Health Self Insurance Plan. In June 1982, Petitioner obtained a copy of the State of Florida Employees' Group Health Self Insurance Booklet containing an explanation of benefits effective July 1, 1982. On a sheet of paper, Petitioner typed the name of the Plan, the name and address of the administrator of the Plan, the group number, and the policy number. She taped this slip of paper to the front of the Booklet. During the month of June 1982, Petitioner's husband's 20-year-old daughter was admitted to a hospital. Petitioner showed hospital employees the health insurance explanation Booklet with the information she had placed on the front of it, since she could not "find" her insurance card, and the hospital accepted Petitioner's representations as proof of insurance. Coverage for Petitioner's stepdaughter was no longer available on Petitioner's husband's insurance policy, since she was over 19 years of age. Petitioner submitted a claim form to Blue Cross and Blue Shield of Florida, Inc., the administrator of the State of Florida Employees' Group Health Self Insurance Plan. The claim submitted by Petitioner to the Plan was rejected for lack of coverage. No evidence was presented as to whether a Senior Management Service employee's family members receive free coverage under the State's health insurance plan, and no evidence was presented as to whether Petitioner had any legal or financial responsibility for her adult stepdaughter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's request that she be deemed covered by the State of Florida Employees' Group Health Self Insurance Plan from and after October 1, 1981, without prejudice to the Petitioner's right to apply, if she desires, for prospective coverage under the Plan in accordance with the Plan's requirements, rules and regulations. DONE and RECOMMENDED this 25th day of April, 1983, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, 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 25th day of April, 1983. COPIES FURNISHED: Ms. Mary L. Davis Post Office Box 753 Havana, Florida 32333 Kevin X. Crowley, Esquire Department of Natural Resources Douglas Building, Suite 1003 3900 Commonwealth Boulevard Tallahassee, Florida 32303 Daniel C. Brown, Esquire Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Nevin G. Smith, Secretary Department of Administration 530 Carlton Building Tallahassee, Florida 32301
The Issue The issues are (1) whether respondent's licenses as a life and health (debit) agent, life, health and variable annuity contracts agent, life agent, life and health agent, general lines agent and health agent should be disciplined for the reasons stated in the amended administrative complaint, and (2) whether respondent's applications for the issuance and renewal of a resident license should be granted.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Stephen Schnur, was licensed and eligible for licensure as a life and health (debit) agent, life, health and variable annuity contracts agent, life agent, life and health agent, general lines agent - property, casualty, surety and miscellaneous lines, and health agent by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed as a property and casualty insurance agent for Clarendon National Insurance Company (CNIC) and had placed his license as a general lines agent with Devor Insurance Agency (DIA), an incorporated general lines insurance agency located at 6611 West Hillsborough Avenue, Tampa, Florida. He has been licensed by petitioner for approximately nineteen years. In August 1987 respondent was associated with Bill Ely Insurance (Ely) in Tampa, Florida. Because that firm was unable to write automobile insurance on young drivers, Schnur referred some of Ely's business to DIA, a firm owned by one Marcia Cline, who held no insurance licenses. In September 1987 Schnur received an offer from Cline of a weekly salary of $150 if he would place his property and casualty general lines agency license with DIA. After obtaining independent verification from petitioner that DIA had no pending "problems", and accepting Cline's representation, albeit false, that the firm had an errors and omissions policy, respondent accepted Cline's offer and placed his license with DIA effective that month. He continued to utilize his other licenses to sell insurance for Ely, his principal employer. It should also be noted that another unnamed general lines agent had placed her license at DIA during this same period of time. At first Schnur attempted to review all automobile insurance applications received by DIA. However, because of his duties at Ely, he was unable to devote more than a few hours per week to DIA. In view of this, he agreed to sign in blank applications and binders for Cline to use in his absence. In doing so, he relied upon Cline's honesty and integrity and assumed she would forward all applications and premiums to the insurance company and secure coverage for DIA's customers. Under this arrangement, Cline was considered to be an employee of DIA and operating under Schnur's direct supervision and control. In October 1987 five customers purchased various types of automobile insurance from Cline. 1/ Each customer gave Cline either cash or checks as payment for their policies. Although none of the customers met with or spoke with respondent, and dealt exclusively with Cline, each received a binder from Cline signed by respondent evidencing insurance with CNIC. In addition, Cline gave each customer a receipt of payment also carrying respondent's signature. As it turned out, Cline did not process the applications or forward them to CNIC. She also failed to remit any monies to the insurance company. Consequently, none of the customers received a policy from CNIC or any other insurance company. However, respondent had no reason to suspect anything since he periodically examined the office files during this period of time and found all documents in order. On January 3, 1988, respondent learned from other office personnel that there was a problem with Cline's handling of insurance applications. He immediately telephoned petitioner's Tampa district office the same day and advised that DIA applications were found unprocessed and in the waste basket. When Schnur asked if he should pull his license from DIA, he was told by petitioner's representative not to do anything. In the meantime, the other general lines agent at DIA pulled her license and left the state. On January 28, 1988 DIA sent a form letter to various customers, including the five who had purchased policies in October 1987. The letter read as follows: Dear We are writing you this letter concerning the insurance policy which you sought through our agency. Please consider this letter as official notification from our agency that you need to purchase insurance coverage from another agency or agencies as soon as possible. You have no insurance coverage on your vehicle or vehicles. Again, you must secure insurance on your vehicle or vehicles immediately, as in today!! Sincerely, Devor Insurance Agency It should be noted that none of the five customers received any refund of monies. In early February 1988 respondent pulled his license with DIA. Since then, he has worked full-time with Ely. Respondent has fully cooperated with the Department during the course of this investigation. At hearing, Schnur was can did and forthright and admitted he used extremely poor judgment in signing in blank the binders and receipts and relying on Cline's honesty. However, there was no intent on his part to violate the insurance code or otherwise harm the customers. He strongly desires to continue in the insurance profession, a field in which he has worked without a blemish for the last nineteen years. His present employer, Ely, has expressed complete trust and confidence in Schnur, allows him to handle all of the firm's money, and intends to reward him with a part ownership of that business. Other than the charges set forth in the pending amended administrative complaint, there is no basis upon which to deny the applications for renewal and issuance of a resident license.
Conclusions Paragraph 2 of Petitioner's exceptions takes exception to the Hearing Officer's Statement of the Issues, Preliminary Statement, Conclusions of Law, and Recommendation because none of these sections of the Recommended Order address the April 9, 1990 denial of the renewal of Respondent's resident license to represent C M Life Insurance Company as a life and health insurance agent. Petitioner filed a motion for consolidation regarding the April 9 denial on April 17, 1990. Although the record contains no Order ruling on-the last motion for consolidation, it appears that the parties agreed that the April 9 denial be considered together with the administrative complaint and the denial of Respondent's application to represent United States Life Insurance Company of NY as a life and health insurance agent (February 14, 1990) and the denial of Respondent's application to represent Acceleration Life Insurance Company as a life and health insurance agent (April 6, 1990). Because the three denials of Respondent's applications for licensure or renewal of licensure were based upon the allegations in the administrative complaint in this case, all three denials (February 14, April 6, and April 9, 1990) will be consolidated with the administrative complaint for disposition by this Final Order. Accordingly, Petitioner's exception numbered 2 is accepted. RULING ON PETITIONER'S EXCEPTION TO CONCLUSIONS OF LAW Paragraph 3 of Petitioner's Exceptions takes exception to the Hearing Officer's Conclusion of Law numbered 4 because that Conclusion of Law refers to Section 626.611(6), Florida Statutes, which was not alleged in the administrative complaint, and the Conclusion of Law does not refer to Section 626.611(7), Florida Statutes. Section 626.611(6), Florida Statutes addresses misrepresentations by insurance claims adjusters or agents in effecting claims settlements. Clearly, Section 626.611(6), Florida Statutes has no application to the instant case, and violation of that section was not charged in the administrative complaint. On the other hand, Section 626.611(7), Florida Statutes lists the demonstration of lack of fitness or trustworthiness to engage in the business of insurance as grounds for the-suspension or revocation of an insurance agent's license. This statute was included in the charges in each count of the administrative complaint. The hearing officer apparently considered Section 626.611(7), Florida Statutes, in his Conclusions of Law numbered 3 and 4. Accordingly, the citation to Section 626.611(6), Florida Statutes is deemed to be a typographical error and it is assumed that Section 626.611(7), Florida Statutes was the intended citation. In light of the foregoing, Petitioner's exception in Paragraph 3 is accepted. RULING ON PETITIONER'S EXCEPTION TO RECOMMENDATION Paragraph 4 of Petitioner's Exceptions takes exception to the Hearing Officer's Recommendation that Respondent's license be suspended for fifteen (15) days and that Respondent's applications for licensure be granted after the expiration of the fifteen-day suspension. After a complete evaluation of the record the hearing officer's recommended penalty of a 15-day suspension and acceptance of Respondent's applications after the 15-day suspension is hereby rejected for the following reasons: The Hearing Officer found, in Findings of Fact numbered 2, that Respondent accepted an offer to "place" his general lines insurance agent license with Marcia Cline, an unlicensed person. This finding is supported by the Respondent's testimony at hearing. (Tr. 71, 72) Respondent was compensated with a weekly salary of $150. (Tr. 72); The Hearing Officer found, in Findings of Fact numbered 3, that Respondent had signed, in blank, applications and binders for Cline to use in Respondent's absence. This finding is supported by Respondent's testimony at hearing. (Tr. 72, 79, 81); The Hearing Officer concluded, in Conclusions of Law numbered 4, that Cline wrongfully withheld premiums from the insurer, made willful misrepresentations to her customers, demonstrated a lack of trustworthiness, engaged in fraudulent and dishonest practices, and misappropriated monies belonging to others, as proscribed by sections 626.561(1), 626.611(5), 626.611(7), 626.611(9) and 626.611(10), Florida Statutes. The Hearing Officer further concluded that Respondent is responsible for Cline's wrongdoing pursuant to Section 626.734, Florida Statutes. (Concl. of Law #4); The Hearing Officer was of the opinion that Respondent was "the victim of circumstances which happened to place his license with the wrong person at the wrong time, and because of poor judgment, is now saddled with Cline's misconduct." (Concl. of Law #5). This circumstance, together with the facts that Respondent immediately notified the Department when he learned that Cline had misused his license (Finding of Fact #6) and that Respondent was candid and forthright under oath at the hearing of this matter and admitted that he used poor judgment (Finding of Fact *8), led the Hearing Officer to recommend the 15- day suspension. It should be noted that Respondent voluntarily "placed" his license with an unlicensed individual. (Tr. 71, 72). Not only was this "placing" of the license the result of poor judgment, but it is prohibited by Section 626.441, Florida Statutes. That section provides: 626.441 License or permit: transferability.--A license or permit issued under this part is valid only as to the person named and is not transferable to another person. S626.441, Fla. Stat. Accordingly, it is illegal to place an insurance agent's license on the wall of an agency in order to assist unlicensed persons in selling or servicing insurance policies in the absence of the licensed agent. However, because a violation of Section 626.441, Florida Statutes was not alleged in the Administrative Complaint, this final order does not rule on that issue. Additionally, agents are prohibited from supplying blank forms, applications and other supplies to unlicensed persons for use in soliciting, negotiating, or effecting contracts of insurance. S626.342, Fla. Stat. Respondent admitted that he signed blank applications and binders for Cline, an unlicensed individual, to use in his absence. (Fact Stipulation of March 5, 1990; Finding of Fact *3). Violation of Section 626.342, Florida Statutes was not alleged in the Administrative Complaint, and is not addressed by this Order. While Respondent was not charged with violation of Sections 626.342 and 626.441, Florida Statutes in the Administrative Complaint, his "poor judgment" in becoming involved in this illegal arrangement is an aggravating rather than a mitigating factor in this case. Accordingly, this aggravating factor should be considered together with the mitigating factors referred to by the Hearing Officer. The Hearing Officer concluded that Respondent is liable for the acts of Cline while his license and signature were used by Cline, and that therefore, Respondent is guilty of violating five subsections of Section 626.611, Florida Statutes. Section 626.611, Florida Statutes compels the Department of Insurance to deny, suspend, revoke, or refuse to renew or continue the license of any agent who commits any of the acts listed in Section 626.611, Florida Statutes. However, the mitigating factors found by the Hearing Officer in Conclusion of Law numbered 5, namely Respondent's immediate notification of the Department when he learned of possible wrongdoing and Respondent's cooperation in the investigation, make the 15-day suspension an appropriate, if lenient, penalty in this case. However, the aggravating factor of the improper situation entered into by Respondent in "placing" his license and supplying forms to Cline renders acceptance of Respondent's applications at the end of the 15-day suspension period inappropriate in this case. Petitioner's exception to the Hearing Officer's Recommendation is therefore accepted. IT IS THEREFORE ORDERED: That the Findings of Fact of the Hearing Officer are hereby adopted in toto as the Department's Findings of Fact. That the Conclusions of Law of the Hearing Officer are hereby adopted in toto with the exceptions noted above; That the recommendation of the Hearing Officer is hereby rejected for the reasons set forth in paragraph 4 above, Ruling on Petitioner's Exception to Recommendation; That Respondent is guilty of violating subsections 626.561(1), 626.611(1), 626.611(5), 626.611(7), 626.611(9), and 626.611(10), Florida Statutes; That as a result of Respondent's violations of the above referenced statutes, the licenses and eligibility for licensure of Respondent, Steven Schnur, are hereby SUSPENDED for a period of fifteen (15) days, effective upon the date of this Order. The denial letters dated February 14, 1990, April 6, 1990, and April 9, 1990 are hereby AFFIRMED. Upon expiration of the suspension period, Respondent is free to reapply for any insurance licenses, and the Department of Insurance shall not deny Respondent's applications based upon any of the facts and circumstances at issue in this action. Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120,68, Florida Statutes and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 412 Larson Building, Tallahassee, Florida 32399- 0300, and a copy of the same with the appropriate district court of appeal within thirty (30) days of the rendition this Order. ORDERED this 21 day of June , 1990. TOM GALLAGHER Treasurer and Insurance Commissioner Honorable Donald R. Alexander Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, FL 32399-1550 Alan J. Kerben, Esquire 8814 Rocky Creek Drive Tampa, FL 33615 C. Christopher Anderson, III, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300
Recommendation Based on the foregoing findings of fact and conclusions of law, it is: RECOMMENDED that respondent be found guilty of violating subsections 626.561(1) and 626.611(5),(6),(9) and (10) that his licenses be suspended for fifteen days. The other charge should be dismissed with prejudice. It is further recommended that his applications for renewal and issuance of resident licenses be approved after the suspension is lifted. DONE AND ORDERED this 19 day of April, 1990, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administative 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 19 day of April, 1990.
Findings Of Fact At all times pertinent to this hearing, Petitioner held a license issued by the Florida Department of Insurance as a general lines insurance agent. On or about April 3, 1979, Steven B. Atkinson entered the Okeechobee Insurance Agency in West Palm Beach, Florida, from whom he had purchased his auto insurance for approximately three years. His intention at this time was to purchase only that insurance necessary to procure the license tags for his automobile, a seven-year-old Vega. He told the person he dealt with at that time at the insurance agency that this was all he wanted. He did not ask for auto club membership, did not need it, and did not want it. He asked only for what he needed to get his tags. However, he was told by a representative of the agency that he needed not only "PIP" insurance, but also auto club membership and accidental death and dismemberment insurance. Of the $144 premium, $31 was for the required "PIP" coverage, $75 was for auto club membership (not required), and $38 was for accidental death and dismemberment (AD&D) (not required). Representatives of the agency told him that he needed all three to get the tags and, though he knew what he was getting and knew he was purchasing all three, he agreed because he was told by the agency representatives that he needed to have all three in order to get his tags. 3 Diane Phillipy McDonald contacted the Okeechobee Insurance Agency in April, 1979, because she had heard on the radio that their prices were inexpensive. All she wanted was personal injury protection (PIP), which was what she thought the law required to get tags on her automobile. When she first called the agency and asked how much the coverage she wanted would be, she was told she could pay a percentage down and finance the rest. When she entered the agency, she was waited on by a man whose name she cannot remember. However, she did not ask for auto club coverage or accidental death and dismemberment coverage, nor did those subjects ever come up in the conversation. She asked only for PIP, and she paid a $50 deposit on her coverage. In return for her deposit, she was given a slip of paper that reflected that she had purchased PIP coverage. She was not told she was charged for auto club membership or accidental death and dismemberment. The forms that she signed, including those which reflect a premium for all three coverages in the total amount of $137, bear her signature, and though she admits signing the papers, she denies having read them or having them explained to her before she signed them. In fact, she cannot recall whether they were even filled out when she signed them. In regard to the papers, the premium finance agreement signed by the witness on April 3, 1979, reflects in the breakdown of coverage total premium of $137. However, immediately below, the total cash premium is listed as $158, $21 more than the total of the individual premiums for the three coverages, and the financing charge is based on that amount1 less the down payment. Marvin W. Niemi purchased his auto insurance from the Okeechobee Insurance Agency in March, 1979, after he heard their advertisement on the radio and went in to get the insurance required by the State in order to get his license tags. When he entered the agency, he asked personnel there for the minimum insurance required to qualify for tags because he was strapped for money at the time and could not afford anything else. He definitely did not want auto club membership. In fact, discussion of that did not even arise, nor did he want the accidental death policy. When he left the agency, he thought he was only getting what he had asked for; to wit, the PIP minimum coverage. All the forms that he signed were blank when he signed them. This application process took place very quickly during his lunch hour from work. He admits giving his son's (David Robert) name as the beneficiary on his insurance, but did not realize at the time that he was purchasing coverage other than the minimum coverage required. His rationale for giving his son's name as beneficiary was that agency personnel asked and the witness felt if there was any money involved, it should go to his son. In fact, Mr. Niemi was sold not only the PIP, but membership in an auto club and PIP coverage with an $8,000 deductible. Again, the total premium was $137, when the actual premium for the coverage he asked for was only $24. Frank Johnson purchased his insurance from Okeechobee Insurance Agency in April, 1979, because he had heard and seen their advertisement on radio and television and it appeared to be reasonable. He wanted only PIP coverage as required by law sufficient to get his license tags. When he entered the agency, he spoke with a man whose name he does not know, who after consulting the books came up with the premium for the coverage to be purchased. During this meeting, the question of motor club or AD&D coverage was not mentioned. His signature does not appear on the statement of understanding, which outlines the coverage and the premium therefor. In this case, because Mr. Johnson had had some prior traffic tickets, his total premium came to $243. His coverage, however, included bodily injury liability, property damage liability, PIP, and auto club. After paying a $50 down payment, he made two additional payments which totaled approximately $50, but thereafter failed to make any additional payments. On August 1, 1980, Marguerite and Steven von Poppel entered the Federal Insurance Agency in Lake Worth, Florida, to purchase their automobile insurance coverage. They purchased policies which included bodily injury and property damage liability, PIP coverage, and comprehensive and collision coverage. The PIP coverage had a deductible of $8,000, and the comprehensive and collision coverage both had $200 deductibles. Mrs. von Poppel indicates that it was not their intention to have such large deductibles on their coverage. In any event, on that day, they gave a check for down payment in the amount of $320 and advised the employee of the agency that upon billing for the balance due of the $915 total premium, they would send the check. Neither Mrs. von Poppel nor Mr. von Poppel desired to finance the balance due of $595, and Mrs. von Poppel did not affix her signature to an application for premium financing with Devco Premium Finance Company dated the same day which bears the signature of Kevin D. Cox as agent. This premium finance agreement lists a cash premium of $966, as opposed to $915. The receipt given to the von Poppels initially reflects a down payment of $320, which is consistent with the receipt, and an amount financed of $646, as opposed to $595, which would have been the balance due under the cash payment intended and desired by the von Poppels. Somewhat later, Mrs. von Poppel received a premium payment booklet from Devco in the mail. When she received it, she immediately went to the Federal Insurance Agency, told them she did not desire to finance the payments, and that day1 September 3, 1980, gave them a check in the amount of $595, which was the balance due on their insurance coverage. This check was subsequently deposited to the account of Federal Insurance Agency and was cashed. This did not end the von Poppel saga, however, as subsequently the von Poppels were billed for an additional amount of $116.18, which reflects the interest on the amount ostensibly financed. When the von Poppels received this statement, they contacted the Federal Insurance Agency and were told that there was some mistake and that the matter would be taken care of. They therefore did not make any further payments, except a total payment of $20, which they were told was still owing. This $20 payment was made on May 29, 1981, after their insurance had been cancelled for nonpayment of the balance due on the finance agreement. The policy was, however, subsequently reinstated, back-dated to the date of cancellation, after the von Poppels complained. Their complaints, however, did nothing to forestall a series of dunning letters from a collection agency to which Devco had referred the von Poppels' account. It is obvious, therefore, that Federal Insurance Agency did not notify Devco of the fact that the amount due and payable had been paid, and did not clear the von Poppels with Devco or with the collection agency thereafter. As a result, the von Poppels filed a complaint with the Insurance Commissioner's office. That terminated their difficulty on this policy. On September 15, 1980, Federal Insurance Agency submitted a check in the amount $595, the amount paid to them by the von Poppels in full settlement of their account, to Devco. There appears to have been no additional letter of explanation, and though Devco credited this amount to the von Poppel account, it did not know to cancel the finance charges since the von Poppels' decline to finance their premium. Of the total amount of the von Poppel premium, the majority, $636, was attributable to the basic insurance in the amount of $10,000-$20,000 liability written by American Risk Assurance Company of Miami, Florida. The supplemental liability carrying a premium of $180 and covering $40,000-$80,000 liability was written by Hull and Company, Inc., out of Fort Lauderdale for Empire Fire and Marine Insurance Company. The third portion of the coverage carrying a charged premium in the amount of $150 covered the AD&D covered by Reliance Standard Life Insurance Company (RSLIC) of Philadelphia, Pennsylvania. This coverage, in the principal sum of $10,000 in the case of Mr. von Poppel and $5,000 in the case of Mrs. von Poppel, was included without the knowledge or the cosnet of the von Poppels. The policies, numbered 10753 R and 10754 R, were never delivered to the von Poppels as, according to an officer of RSLIC, they should have been, but are in the files of the Federal Insurance Agency. Further, the von Poppels were overcharged for the coverage. Respondent, however, did not remit any of the premium to Reliance Standard Life Insurance Company Instead, on August 1, 1980, the same day the von Poppels were in to purchase their insurance, he issued a sight draft drawn on Devco Premium Finance Company to Reliance Standard Life in the amount of $150. Reliance Standard Life was not the same company as Reliance Standard Life Insurance Company, was not controlled by Reliance Standard Life Insurance Company, and in fact had no relation to Reliance Standard Life Insurance Company. Reliance Standard Life was a corporation duly organized and existing under the laws of the State of Florida in which Kevin D. Cox was president and Howard I. Vogel was vice president-secretary. Of the $150 premium, 90 percent was retained by Respondent or his company as commission and 10 percent was transmitted to Nation Motor Club along with a 10 percent commission on policies written for other individuals. Nation Motor Club would then transmit the bona fide premium of 24 cents per $1,000 coverage to RSLIC. More than a year later, on October 16, 1981, Federal Insurance Agency reimbursed the von Poppels with a check for $42.50, representing the unearned portion of the unordered AD&D coverage. Clifford A. Ragsdale went to the Federal Insurance Agency in Lake Worth on April 19, 1982, to purchase his auto insurance because after calling several agencies by phone and advising them of the coverage he wanted, this was the least expensive. To do this, he would read off the coverage from his old policy and get a quote for the identical coverage. After getting this agency's quote, he went to the office where, after talking with two different ladies to whom he described the coverage he desired, he got to the person with whom he had talked on the phone and read his current coverage, and who already had some of the paperwork prepared. During all his discussions with the agency's employees on the phone and in person, he did not speak of, request, or desire auto club membership. He has been a member of AAA since 1977, and his membership there covers all the contingencies he is concerned with. Additional auto club membership in another club would be redundant. He gave the agency representative a check for $247 as a down payment and agreed to finance the balance due through Premium Service Company. Though he was given a receipt for the $247 deposit, the premium finance agreement he signed that day at the Federal Insurance Agency reflected a cash down payment of only $147, thus falsely inflating the balance due to be paid by the client. The $100 difference was refunded to Mr. Ragsdale by Federal Insurance Agency on October 25, 1982, some six months later after he complained to the Insurance Commissioner's office and was told that the $100 difference was for membership in a motor club that he did not desire or agree to. As late as December 29, 1982, over eight months later, the agency had still not remitted the $147 to Premium Service Company, who then added this deposit already paid by the client back to the account balance. Mr. Ragsdale did not read all the documents he signed at the agency, and he never received the policy he ordered. He was told he was signing an application for insurance and signed several instruments in blank at the request of the personnel at Federal Insurance Agency. He was told they would later fill in what wad needed. Respondent was the general lines agent of record for the Okeechobee Insurance Agency, located at 1874 Okeechobee Boulevard, West Palm Beach, Florida, during March and April, 1979, and at the Federal Insurance Agency, 3551 South Military Trail, Lake Worth, Florida, during the period which included August, 1980, and April, 1982. In each agency, he had instructed his' personnel how to serve and handle customers who came to the agency requesting the lowest minimum required insurance in which the agency specialized and which the agency, through its advertising program, purported to offer. As testified to by Linda Holly, an employee of Federal Insurance Agency, and as admitted by Respondent, when a prospective customer entered the agency requesting the minimum required coverage, the agent was to ask if the customer knew what the minimum was. The agent would then explain what was required and quote a premium which included not only the minimum required insurance, but also some additional service which, depending on the time, could be AD&D, towing, motor club, or the like, none of which was required by the State of Florida. Respondent instructed his employees to do this on the rationale that the premiums and commissions on the minimum required insurance were so low that the agency could not make sufficient profit on the sale of it, alone, to stay in business.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent's license as a general lines agent in the State of Florida be revoked. RECOMMENDED this 3rd day of August, 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 3rd day of August, 1983 COPIES FURNISHED: Daniel Y. Sumner, Esquire William W. Tharpe, Jr., Esquire Department of Insurance Legal Division 413-B Larson Building Tallahassee, Florida 32301 Mr. Kevin Denis Cox 1483 S.W. 25th Way Deerfield Beach, Florida 33441 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
The Issue Whether Respondent engaged in conduct proscribed by the Insurance Code as is particularly set forth in the Administrative Complaint filed December 7, 1993.
Findings Of Fact During times material, Respondent, Nelson Speer Benzing, was licensed with Petitioner, Department of Insurance and Treasurer, as a life insurance and as a life and health insurance agent. During times material, Respondent was an employee of U.S. Savings Trust Management (herein USSTM). During times material, Respondent was never appointed with Petitioner to represent Wisconsin National Life Insurance Company (herein Wisconsin). However, Respondent did attend a workshop sponsored by Wisconsin. At some time prior to March 5, 1992, Respondent met with George Cantonis, President of Mega Manufacturing, Inc. (herein Mega) in order to obtain Cantonis' permission to make a sales presentation to Mega's employees. Cantonis granted Respondent permission to make a sales presentation to Mega's employees. On March 5, 1992, Respondent made a sales presentation to Mega's employees. The purpose of said presentation was to enroll the employees of Mega in a "savings plan" offered by USSTM. The presentation lasted approximately 15- 30 minutes. Employees were told that the plan, as presented, incorporated an insurance savings plan which had a "liquid" component as well as a long term savings component. At no time during this sales presentation did Respondent explain to employees of Mega that he was a licensed life insurance agent. During the course of his presentation, Respondent described USSTM's product variously as an "insurance saving plan", as an "investment in insurance companies" and as a "retirement savings plan". At no time during the presentation did Respondent specifically state that he was selling life insurance. At the conclusion of the presentation, Respondent enrolled all interested employees in USSTM's plan. During the enrollment procedure, Respondent told the employees to complete portions of at least three documents which included a form entitled "Employee History", a Wisconsin's life insurance application, and an employee payroll deduction authorization. Cantonis enrolled through the above procedure and signed a blank Wisconsin National Life Insurance application. Subsequent to the group sales presentation, Respondent made a similar presentation to Tina Netherton, Mega's office manager, who was working in the office and answering the telephone. At the conclusion of the presentation to Netherton, she enrolled in the plan and also signed a blank Wisconsin National Life Insurance application pursuant to instructions from Respondent. Both Netherton and Cantonis believed that the "savings plan" consisted of both a short term "liquid cash element and a long term investment". Neither were aware that they had purchased life insurance. Both Netherton and Cantonis had, in their opinion, adequate life insurance at the time of Respondent's sales presentation, and would not have purchased additional life insurance if they had been told (by Respondent) that they were purchasing life insurance. Both Netherton and Cantonis executed beneficiary designations on their belief that such was needed so that disbursements, if any, could be made to their designee in the event of their death. Approximately three weeks after enrollment, Netherton and Cantonis received brochures from USSTM which acknowledged their enrollment and detailed the benefits of the "savings plan". The brochure advised that Netherton and Cantonis had enrolled in an insurance "savings plan" and failed to state that they had purchased life insurance. Cantonis and Netherton attempted to withdraw funds from the liquid portion of the plan and were unable to do so. Four to five months after their enrollment, Cantonis and Netherton received life insurance policies from Wisconsin. Pursuant to the insurance applications, Cantonis and Netherton were issued Wisconsin life insurance policy numbers L00566485 and L00566483, respectively. Cantonis and Netherton maintained their Wisconsin policies in order to realize some gain from their overall loss in dealing with Respondent and USSTM. At the time that Respondent made his presentation to Mega's employees and officials, he had never before made sales presentations in order to enroll employees in plans offered by USSTM. Respondent's general manager, Vincent Radcliff, was the agent of record of Wisconsin. The insurance application and policies issued to Cantonis and Netherton were signed by an agent other than Respondent. Respondent's supervisor, Vincent A. Radcliff, III, was disciplined by Petitioner and Respondent cooperated with the Petitioner in investigating the complaint allegations filed against his supervisor, Radcliff. Respondent was first licensed by Petitioner on November 15, 1989. Respondent has not been the subject of any prior disciplinary actions by Petitioner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner enter a Final Order suspending Respondent's life and health insurance licenses for a period of three (3) months. It is further RECOMMENDED that Petitioner order that Respondent engage in continuing education respecting the manner and means of soliciting on behalf of insurance companies, and to the extent that he completes the required courses within an acceptable time frame, that the suspension be suspended pending the outcome of Respondent's satisfactory completion of such continuing education courses. 1/ RECOMMENDED this 1st day of July, 1994, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of July, 1994.
The Issue The issue to be resolved in this proceeding concerns whether the Petitioner, as beneficiary of her deceased father's State of Florida life insurance policy, is entitled to a benefit of $10,000 or $2,500, and is related to how notice of a change in coverage amount and premium was provided to the decedent.
Findings Of Fact At the time of his death on November 29, 2008, Maurice Adkins was covered by the state life insurance plan, as a retired employee of the State of Florida. The Petitioner, Justina Mullennix, is the daughter of Mr. Adkins and is the beneficiary of any life insurance benefits paid or payable from the state life insurance plan on account of the death of her father. Effective January 1, 2000, the coverage for retirees was increased to $10,000.00. The premium for this coverage was $4.20 per month. The DSGI prepared a letter dated July 31, 2006, to notify the retirees that effective January 1, 2007, the life insurance benefit options provided to retirees would change. The changes allowed retirees to elect one of the following options: $2,500 benefit for a monthly premium of $ 4.20. $10,000 benefit for a monthly premium of $35.79. Termination of coverage. The letter dated July 31, 2006, informed retirees that their life insurance premium would remain the same, but that their coverage would be reduced to $2,500, unless they elected coverage in the amount of $10,000 and elected to pay the higher premium. The letter advised the retirees they could change their election up to and including January 19, 2007. Mike Waller, an employee of the DSGI, maintains benefits data for the People First/Division of State Group Insurance. In July 2006, Mr. Waller was asked to prepare a file containing the names and mailing addresses of all retirees who were covered by life insurance. Mr. Waller created the file, prepared in July 2006, to use in a "mail merge," to send all retirees a copy of the letter dated July 31, 2006. In preparing the file containing the mailing addresses of retirees covered by life insurance, Mr. Waller used the addresses of record that he maintained. In July 2006, the address of record for Mr. Adkins was 2877 Belair Road E., Jacksonville, Florida 32207, and was included in the file. Mr. Waller prepared the file and on July 3, 2006, delivered it to Dick Barnum and Thomas Lockeridge. Thomas Lockeridge delivered the file to Laura Cutchen, another employee of the DSGI. The DSGI contracted with Pitney Bowes to mail the letter of July 31, 2006, to all retirees. After obtaining copies of the letter from the print shop of the DSGI, Ms. Cutchen delivered the letters and the file containing names and addresses of retirees to Pitney Bowes to assemble. The letters dated July 31, 2006, in envelopes addressed to each retiree who carried life insurance at the time, were delivered to the U.S. Post Office, accompanied by Ms. Cutchen. The State of Florida first class mailing permit had been applied to each envelope. The letter dated July 31, 2006, was mailed to Mr. Adkins at the Belair address. The return address on the envelope containing the letter was the Division of State Group Insurance, 4050 Esplanade Way, Ste. 215, Tallahassee, Florida, 32399-0949. The letter was not returned to the Division. The letters that were returned to the DSGI were processed by Janice Lowe, an employee of the DSGI. Each letter that was returned to the Division of State Group Insurance was handled in one of two ways: a) if the envelope showed a different address on a yellow sticker applied by the US Postal Service (USPS), the letter was re-mailed to that address; b) if the returned envelope did not provide a different address, a manual search of the database of the Division of Retirement was made, a copy of the print screen showing the address in the Retirement database was made, if different from that on the database of the Division of State Group Insurance, and the original envelope and letter were placed in another envelope and mailed to the address from the Division of Retirement database. A copy of each Retirement screen that was accessed by Ms. Lowe was printed and inserted in alphabetical order in a binder. For every person whose letter was returned, and for which there was not another address, there would have been a Retirement print screen. The absence of a Retirement print screen indicates that the initial letter was not returned. There is no retirement print screen for Mr. Adkins, indicating that the letter to him dated July 31, 2006, was not returned to the DSGI. DMS has contracted with Convergys, Inc., to provide human resources management services, including assisting in the administration of employee benefits. Convergys primarily performs these tasks through an on-line system known as “People First.” Prior to Convergys assuming responsibility for the administration of benefits, DSGI maintained benefits information in the Cooperative Personnel Employment System (COPES). When Convergys assumed responsibility for the management of benefits, the benefits information from COPES was imported into the Convergys People First System. People First became the system of record for the DSGI beginning January 1, 2005. People First and the Division of Retirement do not share databases and each maintains its own database of names and addresses. Once a year the DSGI must hold Open Enrollment for the health program. § 110.123(3)(h)5, Fla. Stat.; Fla. Admin. Code R. 60P-1.003(16). Open Enrollment is the period designated by the DMS during which time eligible persons may enroll or change coverage in any state insurance program. Prior to Open Enrollment each year, the DSGI provides employees and retirees a package that explains the benefits and options that are available for the next plan year. The 2006 Open Enrollment period, for the 2007 Plan Year, ran from September 19, 2006, through October 18, 2006. During open enrollment for Plan Year 2007, the People First Service Center was charged with the responsibility of sending open enrollment packages to State of Florida retirees and other employees. People First mailed Mr. Adkins’s Open Enrollment Package to the 2877 Belair Road E., Jacksonville, Florida 32207 address, on September 3, 2006. The Open Enrollment Package for Plan Year 2007 was mailed by People First through the U.S. Post Office, first class postage paid. The Open Enrollment Package mailed to Mr. Adkins, for 2006 Open Enrollment, was not returned to People First. The Open Enrollment Package mailed to Mr. Adkins on September 3, 2006, contained Mr. Adkins’s 2007 Benefits Statement; a letter from John Mathews, former Director of the DSGI; "Information of Note"; a Privacy Notice; Notice Regarding Prescription Coverage; and a 2007 Benefits Guide. The Information of Note included the following statement: Retiree Life Insurance For Plan Year 2007, those currently enrolled with retiree life insurance may elect to retain the current $4.20 premium for a benefit of $2,500, retain the current benefit of $10,000 for a premium of $35.79, or cancel coverage. If no change is made during open enrollment, participation will continue at the $4.20 premium level. Neither Mr. Adkins nor anyone on his behalf affirmatively elected to continue $10,000.00 in life insurance coverage during the enrollment period in 2006 and 2007. Because the election was not made, at the death of Mr. Adkins, the benefit paid to the Petitioner was $2,500.00. Prior to January 1, 2007, the Life Insurance Trust Fund was used to augment the premiums paid by retirees for life insurance. The premium paid by the retirees did not support a $10,000 coverage level. In year 2006, the DSGI determined that the money in the life insurance trust fund, used to augment the retiree’s benefits from years 2000 through 2007, would not be available after 2007. Beginning January 1, 2007, the change in life insurance coverage was made because the funds in the Life Insurance Trust Fund were no longer available to augment the premium payment required to maintain a benefit level of $10,000.00, for a payment of $4.20 per month by the retirees. In 2006, the DSGI determined that the then-current life insurance premium of $4.20 would support a benefit of $2,500, and that the $10,000 benefits would cost $35.79. The notices provided by the July 31, 2006, letter and the 2006 Open Enrollment Package were sufficient notices of the increase in premium in that they provided a reasonable opportunity within which to make a selection of the level of coverage. On December 30, 1997, the Division of Retirement received a written notice of change of address for Mr. Adkins. The new address was 217 Skye Dr. W, Jacksonville, Florida 32221. Although Mr. Adkins had changed his address with the Division of Retirement, he did not notify the DSGI. A change of address with one division does not automatically change addresses in the other. The two divisions have different databases. During no time relevant to these proceedings have the two divisions shared databases. The DSGI, through People First, used the database of the Division of Retirement to send the 2004 Benefits Statement as an experiment to determine whether DSGI undeliverable returns would decrease. The same database was also used for the mailing of the letter dated September 2, 2003. However, neither DSGI nor People First changed its database after the 2004 Benefits Statement was sent and subsequent information was mailed to the DSGI address of record, based upon the COPES system. Therefore, the letter dated July 31, 2006, and the 2006 Open Enrollment Package for the Plan Year 2007, were mailed to the same Belair address, the address of record. A change of address for Mr. Adkins was not made in the database of the DSGI until December 1, 2008, when People First was provided a change of address. The only change of address that the Petitioner has alleged, was the one provided by Mr. Adkins to the Division of Retirement (only) in 1997.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings of the parties, it is RECOMMENDED that a Final Order be entered by the Department of Management Services, Division of State Group Insurance, dismissing the petition in its entirety. DONE AND ENTERED this 22nd day of January, 2010, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 22nd day of January, 2010. COPIES FURNISHED: Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399 Justina Mullennix 1217 Skye Drive West Jacksonville, Florida 32221 John Brenneis, General Counsel Division of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue A notice and order to show cause, issued to Respondent on January 15, 1992, seeks to terminate Respondent's grandfathered status under Section 626.988, F.S., and seeks to suspend or revoke Respondent's certificate of authority pursuant to Section 626.891, F.S. Various violations are alleged, including expanding the scope of functions being performed on April 2, 1974; soliciting prospective insurance customers by placing enclosures and solicitations in First Union Bank customers' bank statements; adding resident life agents; and allowing an unlicensed individual to solicit applications of insurance in Florida. The issues for resolution in this proceeding are whether the alleged violations occurred and if so, what discipline or remedial action is appropriate.
Findings Of Fact Respondent, First Union Mortgage Corporation (FUMC), is a North Carolina corporation with its principal place of business at 301 South Tryon Street, Charlotte, North Carolina. FUMC is a "financial institution agency" as defined in Section 626.988(1)(c), F.S. FUMC is a wholly-owned subsidiary of First Union Corporation, a registered bank holding company with headquarters in Charlotte, North Carolina. First Union Corporation is also a financial institution as defined in Section 626.988(1)(a), F.S. First Union National Bank of Florida, N.A., is a national bank authorized to do business in Florida and is a sister corporation of FUMC. Until February 8, 1987, FUMC was known as Cameron Brown Mortgage Company. Under that name it had engaged in certain insurance activities in Florida since the late 1960's. When Cameron Brown became FUMC there was no change in ownership, affiliation or corporate structure. Before and after the name change the company was owned by First Union Corporation. THE DECLARATORY STATEMENT On April 2, 1974, Section 626.988, F.S., took effect, prohibiting insurance agents or solicitors licensed by the Department of Insurance (DOI) from engaging in insurance agency activities as employees, officers, directors, agents or associates of a financial institution agency. The same section includes a "grandfather" provision for continued operation of financial institution agencies which were in existence and engaged in insurance agency activities as of April 2, 1974. FUMC represented to DOI that it was entitled to the grandfather exemption for its pre-1974 insurance agency activities, and in February 1988, FUMC filed a petition for declaratory statement pursuant to Section 120.565, F.S. for determination of its status. After notice to FUMC and to the public, a proceeding on the petition was conducted on March 30, 1988 by a staffperson of DOI appointed as hearing officer. On August 5, 1988, a declaratory statement was issued, and on September 2, 1988, an amended declaratory statement was issued. The latter statement finds in pertinent part: First Union Insurance Group (formerly the insurance division of Cameron Brown Company) was engaged in insurance agency activities prior to April 2, 1974. First Union Mortgage Corporation through First Union Insurance Group has continuously [word apparently deleted here] licensed agents and conducted insurance agency activities in Florida since and before April 2 1974. The scope of insurance agency activities continuously conducted by First Union Mortgage Corporation has been limited to: One life and health insurance agent, (Mr. Winifred Eugene Strickland), who served as an agent for the insurance division of Cameron-Brown Company while also serving as a salaried employee of American Heritage Life Insurance Company. Although Mr. Strickland apparently had one or more additional sub- agents involved in soliciting Cameron-Brown Customers, their involvement was sporadic and does not meet the test for "continuously engaged" so as to entitle First Union Mortgage Corporation to more than one life and health insurance agent. One non-resident property and casualty agent, (Charles Johnson). Mr. Johnson has been licensed as the successor agent for Mr. Hubert Reid Jones. Mr. Jones and Mr. Johnson sold, through countersignature relationships with Florida agents, property and casualty insurance prior and subsequent to April 2, 1974. The solicitation and servicing of customers of Cameron-Brown Company (now First Union Mortgage Corporation) was the focus of its insurance agency activities. . . . (Petitioner's Exhibit A Pages 3-4) The amended declaratory Statement also provides: . . . But for application of the "grandfathering" provisions of Section 626.988(5), Florida Statutes, any insurance agent or solicitor licensed by the Department of Insurance (the Department) would be prohibited from association with First Union Mortgage Corporation in insurance agency activities. . . . (Petitioner's Exhibit A Page 5) The amended declaratory Statement concludes as follows: . . . Pursuant to Section 626.988(5), Florida Statutes, the Petitioner's subsidiary, First Union Mortgage Corporation, is entitled to continue to engage in insurance agency activities through First Union Insurance Group by utilizing one licensed non-resident property and casualty insurance (Class 9-20) and one licensed resident life and health insurance agent. This recognition of grandfather status for Petitioner's subsidiary First Union Mortgage Corporation does not extend to Petitioner's subsidiary, First Union National Banks of Florida. First Union Mortgage Corporation may solicit prospective insurance customers so long as neither the Petitioner, First Union Corporation, nor any subsidiary bank plays an active role in such insurance solicitation through endorsements, bank mailings, providing space within bank offices, or similar activities. . . . (Petitioner's Exhibit A Pages 7-8) emphasis added. CERTIFICATE OF AUTHORITY AS "THIRD PARTY ADMINISTRATOR" In addition to its activities described in the amended declaratory statement, FUMC (then, Cameron Brown) was engaged in other insurance related activities prior to 1970. Under contracts with various life and health insurers Cameron Brown provided third party administrator services including receiving and reviewing applications, issuing policies, explaining and collecting premiums and accounting for and remitting premiums to the insurance companies. The insurance companies with whom Cameron Brown contracted handled the actual solicitation and sale of the policies. The contracts in effect in 1968, 1970 and 1978 between Cameron Brown and Minnesota Mutual Life Insurance Company were typical of the arrangements with other companies, according to Charles Johnson, Jr., retired vice president in charge of insurance agency operations at Cameron Brown. (Transcript, p. 102). As provided in the contracts with Minnesota Mutual Life Insurance Company, the administrative services were in connection with the mortgage insurance program made available by the insurance company to borrowers of Cameron Brown. (Respondent's Exhibits number 1, 2, 3). This included borrowers in the State of Florida, although the services were being provided out of Cameron Brown/FUMC's principal offices in Charlotte, North Carolina. Prior to 1983, when Chapter 626 Part VII, Florida Statutes was enacted, Florida did not regulate third party administrators as such. Section 626.8805, F.S. now requires a certificate of authority to be issued by the Department of Insurance (DOI). On or about September 26, 1986, Cameron Brown applied to DOI for authorization to operate in the State of Florida as a third party administrator. The application was prepared by Peter Nagle, senior vice-president of FUMC who had just recently joined what was then Cameron Brown. On the application, and later in October, in response to DOI's request for additional information, Nagle indicated that Cameron Brown had operated as an administrator of insurance plans since December 1983 and that the company was not providing such services on plans for Florida residents. This information was an inadvertent error, primarily the result of Nagles unfamiliarity with the company's history. There is no evidence that the information was material to a determination of the company's eligibility for certification. Nor is there evidence of any scheme by the company to conceal its past practices at the time of application in 1986. In its application Cameron Brown disclosed its affiliation with First Union Corporation, and further provided that First Union National Bank of Florida conducted only credit insurance activities in First Union Corporation locations in Florida. DOI issued a certificate of authority for Cameron Brown to operate as an administrator in the State of Florida on October 14, 1986. The cover letter provides, "the certificate is perpetual and shows no expiration date contingent upon your annual filing, due March 1st". (Petitioner's exhibit B, p.17) Those annual filings have been made, and on May 18, 1987, the certificate of authority was reissued in the name of FUMC. During the declaratory statement proceeding, the company's third party administrator status was never an issue. DOI never asked about, and FUMC never mentioned, the existence of its certificate or the company's insurance administration activities. The staff of DOI involved in the declaratory statement proceeding did not know about their agency's grant of the certificate to FUMC. Their pique at FUMC"s failure to affirmatively raise the certificate issue, however, is misplaced in the absence of any evidence that the outcome of the declaratory statement would have been altered with that knowledge. At most, the staff can only say that their investigation would have been different had they realized that FUMC was providing insurance administration services. INVESTIGATION AND ALLEGED VIOLATIONS After the third party administrator certificate was issued, and after the amended declaratory statement was issued, sometime in 1989, DOI began investigating all financial institutions claiming grandfathered status under Section 626.988, F.S. This included FUMC, and during a two day visit to the Charlotte, North Carolina headquarters, DOI staff, obviously other than staff involved in the certificate process, learned for the first time that FUMC was operating as an administrator of insurance plans. Even then this did not trigger further investigation of the administrator activities, as there was no evidence that the company was out of compliance with its amended declaratory statement. Approximately a year later, in the summer of 1990, DOI's Bureau of Agent and Agency Investigations began receiving inquiries regarding Monumental General Insurance solicitations mailed to First Union Bank customers in Florida. Gail Connell, DOI Analyst II, opened her investigation. A few months later complaints were received from insurance agents who were also customers of First Union Bank regarding solicitations done by American Heritage Life. The brochure from Monumental General sent to First Union Bank customers listed a toll-free number for the plan administrator, First Union Insurance Group, a division of FUMC. The mailing included letters from the president of Monumental General and the senior vice-president of First Union National Bank of Florida, with an enrollment form for a $1,000 no-cost accidental death group policy and optional additional coverage. Benefits and premiums for the additional coverage were explained in the brochure. A pre-paid postage reply envelope was addressed to "First Union Insurance Group, Plan Administrator, Attn: Daniel J. McPherson, Licensed Resident Agent, P. O. Box 2678, Jacksonville, Florida 32203-9851". (Petitioner's Exhibit C; pp. 157-163.) Daniel McPherson is not one of FUMC's grandfathered agents nor a successor to a grandfathered agent. The American Heritage Life mailings were stuffed in bank statements of customers of First Union National Bank. These mailings included a simple check- off form for the customer to return for more information and for a personalized quotation for term life insurance. Some mailings indicated return to "C. Dennis Wiggins, Resident Licensed Agent, P. O. Box 2678, Jacksonville, Florida 32203- 9851", and others required return to "Robert T. Jones, Sr. Resident Licensed Agent, P. O. Box 2678, Jacksonville, Florida 32203-2678" (Petitioner's Exhibit C, p 141, 154). Neither of these agents are FUMC's grandfathered agents or their successors. The American Heritage mailings also included a toll-free number for information. Gail Connell called that number and was eventually connected to a person identified as Sheila Auten, an insurance specialist for FUMC in North Carolina. Ms. Connell said to Ms. Auten that she was interested in more information about the term life policy addressed in the brochure. Ms. Auten asked questions about Ms. Connell's name, address, age, occupation and general health. Ms. Auten gave some history about American Heritage Life, estimated a premium for Ms. Connell, and offered to take her application over the phone. In response to Ms. Connell's question, she indicated that the completed application would be mailed to American Heritage Life in Jacksonville. Ms. Connell did not reveal her occupation as DOI investigator. Ms. Connell said she needed to think about the decisions and asked Ms. Auten to mail her something. A few days later Ms. Connell received a brochure explaining the product, a premium rate sheet and an application form. A few weeks later, when Ms. Connell did not return the application she received this letter from Sheila Auten: Dear Ms. Connell: Recently we sent you a proposal for term life insurance from American Heritage Life Insurance Company. I regret I have been unable to reach you by telephone to discuss it and answer any questions you may have. This term insurance is one of the best values on the market today. You can be sure it will provide you with a high level of life insurance protection at a very competitive rate. Once you decide to apply for this valuable insurance coverage, I would be happy to answer your questions or help you apply. Don't delay. Call me now at 1-800-366-8703. (Petitioner Exhibit C, p. 176) Ms. Auten is not licensed in Florida as an insurance agent or customer account representative. DOI considers it necessary for third party administrators to use licensed agents if they are engaged in solicitation of insurance. Based on her investigation, including a review of the compensation paid to FUMC for its agency activities compared to its administrator activities, Ms. Connell concluded that FUMC was using its administrator status to perform functions beyond the scope of its amended declaratory statement. She also concluded that FUMC was using unlicensed agents (Sheila Auten) to solicit insurance. These conclusions form the basis for the allegations in the agency's Notice and Order to Show Cause issued to FUMC on January 15, 1992. FUMC concedes that no grandfathered agent participated in the Monumental and American Heritage solicitations which triggered Ms. Connell's investigation. The two insurance companies solicit customers through direct mailings conducted by their licensed agents, which mailings go to customer lists provided by First Union National Bank of Florida or are enclosed in bank statements sent out by that institution. The bank has endorsed some of the products offered by the insurance companies. Other than provide marketing advice to the insurance company, FUMC plays no part at all in the sending or preparation of the mail solicitations. The bank sends out its statements; the insurance company or its agent, unaffiliated with FUMC, sends the inserts to the place where the bank statements are prepared; and a machine stuffs the inserts. The returned inquiry forms go to a Florida post office box, as indicated in paragraphs 18 and 19 above, and are forwarded to FUMC for its administrative support services. Those services include the further response to inquiries (as evidenced by Ms. Connell's encounter with Sheila Auten), review and approval of applications based on the insurance company's underwriting guidelines, entry into the administrative system, issuance of the policy and explanation to the customer, drafting the premiums out of the customer's account, and general servicing of the policy. These functions are consistent with administrator agreements between FUMC and Monumental General effective October 1, 1986; and FUMC and American Heritage Life effective November 1, 1989. There is no evidence that FUMC has been subject to discipline in the past, has operated unprofessionally or has caused harm or risk of harm other than through what DOI asserts is the impermissible involvement of a financial institution in the insurance business. It is primarily its status as a financial institution that has resulted in this proceeding against FUMC.
Recommendation Based upon the foregoing, it is hereby RECOMMENDED that the amended notice and order to show cause be dismissed. DONE AND ENTERED this 22nd day of October, 1992, in Tallahassee, Leon County, Florida. MARY CLARK 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 22nd day of October, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-1476 The following constitute rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings of Fact Adopted generally in paragraph 1. Adopted in paragraph 2. Adopted in paragraph 1. Adopted in paragraph 14. Adopted in paragraph 6. Adopted generally in paragraph 7, but the implied characterization of that order as establishing the only way that insurance activities might be conducted is rejected as discussed in the conclusions of law. Rejected as irrelevant. Rejected as an inappropriate characterization as a grant of exemption, as discussed in the conclusions of law. Adopted in part in paragraph 7, but the characterization of the order as a permit is rejected. See paragraph 8, above. Rejected as contrary to the evidence and law. Rejected as improperly precluding the possibility of Respondent's later presenting evidence of other activities in which it engaged as of April 2, 1974, if it is determined that third-party administrator status must also be grandfathered in order to continue. This was not an issue in the prior proceeding. Rejected as contrary to the evidence, as to deliberate concealment. Adopted in paragraph 14. Adopted in part, as to the first sentence. Otherwise, rejected as unsupported by the evidence. Rejected as argument rather than proposed finding of fact. Adopted in paragraph 12. 17-18. Adopted generally but Respondent's contention as to evidence in this proceeding is rejected, as provided in conclusions of law, paragraph 32. 19. Rejected as unnecessary. 20-27. Rejected as argument. 28-29. (not included in the filing). 30-33. Rejected as contrary to the weight of the evidence. Adopted in paragraphs 20-22, except for the characterization of the activity as "soliciting". Rejected as unsubstantiated by the evidence. This case establishes only that the department now interprets FUMC's administrator activities as solicitation, not that it is a policy supported by rule, procedure or reason. Rejected as contrary to the evidence. The level of compensation did not establish the association the department theorizes. Rejected as unsupported by the weight of the evidence. The response given by the witness on page 189 was a qualified, inconclusive response. Respondent's Proposed Findings of Fact Adopted in paragraph 1. Adopted in paragraph 2. Adopted in paragraph 7. Adopted in paragraph 8. Adopted in paragraph 3. Included in Conclusions of Law. Adopted in paragraph 11. Adopted by implication in paragraph 11. 9-10. Adopted in paragraph 8. 11-14. Adopted in substance in paragraph 9. 15. Rejected as unnecessary. 16-17. Adopted in paragraph 12. Adopted in paragraph 14. Adopted in paragraph 12. Adopted in paragraph 13. Adopted in substance in paragraph 9, but there is no competent evidence that the same kinds of services were being provided since 1970. Rejected as unnecessary. Adopted in paragraphs 4 and 14. Adopted in paragraph 7. 25-26. Adopted in substance in paragraph 6. 27-31. Rejected as unnecessary. Adopted in paragraph 13. Adopted in paragraph 15. Adopted in substance in paragraph 7. Adopted in paragraph 15. 36-37. Adopted in paragraph 7. Addressed in Conclusions of Law. Rejected as unnecessary and cumulative. Adopted in paragraph 25. 41-42. Adopted in paragraph 26. 43-44. Rejected as cumulative and unnecessary. 45. Adopted in paragraph 26. 46-49. Adopted in paragraphs 20-22. Included in Conclusions of Law. Rejected as cumulative and unnecessary. 52-53. Adopted in paragraph 27. COPIES FURNISHED: Lisa S. Santucci, Esquire Dennis Silverman, Esquire Department of Insurance Division off Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 J. Thomas Cardwell, Esquire Virginia B. Townes, Esquire Akerman, Senterfitt & Eidson, P.A. Post Office Box 231 255 South Orange Avenue Orlando, Florida 32802 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-2152 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact The Respondent is a licensed insurance agent licensed in the State of Florida as a general lines agent. He was the primary agent of Emerald Coast Insurance Agencies, Inc. (Agency) for Pensacola, Florida. The agency at all times pertinent to the events and times treated in the Amended Administrative Complaint was a general lines insurance agency incorporated under the laws of the State of Florida. The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of insurance and regulating the practice of agents and other insurance professionals already licensed by the State of Florida, including the imposition of disciplinary measures. The Respondent had been an insurance agent, as of the time of the hearing, for approximately four years. During that time, he has typically written 50-60 applications for automobile insurance and related coverage per week. The owner of the Agency would not allow the Respondent to issue checks from the Respondent's own office. All processing of insurance application files was completed at the Tallahassee, Florida office. The files with client information for insurance applicants, whose business was initiated by the Respondent, was sent by UPS to the Tallahassee, Florida office on the morning following the taking of the applications. The forms, which the Respondent was required to have completed and asked customers to sign, were pre-printed and issued from the Tallahassee, Florida office. The Respondent had no part in the creation of these forms as to content, format, and the disclosures depicted on their face. The Respondent inquired of the Department's local office as to whether the forms comported with pertinent statutes and regulations, and the Department expressed no objection to them. Indeed, the forms in question do make disclosures of the coverage or products which the customer is purchasing and contain an acknowledgment, which the customer is required to sign, indicating that the coverage has been explained to the customer. In particular, the motor club product is depicted on the relevant form as being an optional product and that it has been explained to the customer, with a blank after that pertinent statement for the customer to sign an acknowledgment of that fact. The issue in this case does not involve whether the customer paid for such a product without executing any consent but, rather, whether the customer was misled or whether the products sold were actually, in fact, explained fully to them; whether they were misled in making a decision to buy such coverage in the belief that it was required in order to obtain the insurance they knew they needed. THE TRANSACTIONS AT ISSUE No evidence was submitted as to Count I, concerning Cheryl Ginsterblum nor Count VIII, concerning Joseph Shelton. Therefore, no findings of fact can be made and these counts should be dismissed. Pam Shivers of Gulf Breeze, Florida, required insurance coverage for her 1988 Dodge Caravan. Because the van was still financed with a lender, "full coverage" was required, that is, she needed personal injury protection (PIP), property damage (PD) coverage, comprehensive risk coverage, and collision damage coverage. On March 8, 1993, she went to the Respondent's Agency, and the Respondent handled the requested insurance transaction. She requested "full coverage", and the transaction was handled while she was standing at the counter, in just a few minutes. PIP and PD insurance was placed with Security Insurance Company of Hartford (Security). Comprehensive and collision coverage was placed with Florida International Indemnity Company (FIIC). The premium for Security was $350.00, and the premium for FIIC was $399.00. The purchase of this coverage was financed so that Ms. Shivers would not have to pay the entire $749.00 premium for all of the coverage at one time. In return for the premium financing arrangement, a $187.00 down payment was required for the insurance coverage. During the transaction, Ms. Shivers was quickly presented with approximately six documents to sign. Included in those documents was a document containing a disclosure that the motor club product which she purchased was optional, that is, not required by law; that she had been offered to purchase automobile insurance by the Agency without an optional motor club and chose to purchase that optional coverage of her own free will at an additional cost of $150.00; that she examined the benefits being offered, and that it was her decision to request enrollment as a member of the motor club association. It is true that Ms. Shivers signed these acknowledgments and disclosures, which on their face, would indicate that she had been informed about the nature of the motor club product or coverage and its cost, including the fact that it was not required by law and was optional. In fact, however, her apparent consent was not an actual, knowing and informed consent. She was presented with the six documents to sign hurriedly, with the places to sign simply marked for her to make quick signatures. She did not, in the course of the transaction, have significant time to read the documents or reflect on what she was signing, what her signatures obligated her for, and what specific products she was purchasing. She was not, in actual fact, informed that she was purchasing a motor club membership. She did not request that product, and the Respondent did not give her any actual explanation about it. She was not informed that she had any choice in whether or not to take that product. She later discovered that the product was optional and that it was, therefore, not an integral, unseverable part of the insurance coverage she did want to purchase. Moreover, Ms. Shivers was confused about the $749.00 premium quote and the amount she was actually required to pay. Her confusion involved the $749.00 premium for insurance quoted to her because of the fact that she was actually required to pay an $899.00 purported "premium". The receipt issued at the end of the purchase transaction indicated a total "premium" of $899.00. In fact, however, the actual cost of the insurance was $749.00. The additional $150.00 was for a motor club membership which was hidden in the receipt amount and what was represented on the receipt as a "total premium". The down payment of $337.00 quoted to her was also deceptive because actually, only $187.00 of that was the down payment on the actual insurance coverage premium. This is shown by the premium finance agreement in evidence. The Respondent had concealed the cost of the motor club membership within what was purported to be the total insurance premium amount reflected on the receipt and included the entire $150.00 charge for that membership within the down payment, simply and misleadingly calling the down payment of $337.00 as the down payment on insurance coverage. Thereafter, on March 21, 1993, Ms. Shivers went back to the Agency to cancel her insurance, related to the fact that her vehicle had been involved in an accident. Upon doing that, she left thinking that her insurance had been effectively cancelled. Later, she received notices from the premium finance company but was told by the Respondent to ignore them. On May 7, 1993, however, the Respondent informed her that she had to come back to the Agency and fill out a cancellation request. Thus, 47 days after she had attempted to cancel her coverage, her request was finally processed by the Agency. In the meantime, she was apparently being charged for premiums on the coverage she thought she had cancelled. Thus, from January 21, 1994, the premium finance company turned an amount it claimed was due of $43.26 over to its attorney for collection purposes, which impinged on Ms. Shivers' credit standing. She had already paid the Respondent $190.00 in premiums under the premium financing agreement, with her down payment, but did not receive any returned unearned premium representing the period after she thought she had cancelled her policy but, instead, was billed the additional $43.26 directly due to the Respondent's 47-day delay in processing her cancellation request. Count III In June, 1993, Laura O'Donohue of Pensacola, Florida, purchased her first vehicle, a 1993 Chevrolet Cavalier. The automobile dealership, where she purchased the vehicle, gave her a card for the Respondent's insurance agency. Therefore, never having established a relationship with an insurance agency, she went to that Agency to purchase insurance. Her mother, Lynn O'Donohue, accompanied her to the Agency. Before coming to the Agency while at the automobile dealership, she had received a quote for the insurance she wanted from the Agency. When she arrived at the Agency, she informed Donald Grubb, an employee of the Agency and the Respondent, that she just wanted "basic coverage". This was the first time she had purchased insurance, and she relied entirely for her decisions regarding that upon the representations of the Respondent and his colleague. Therefore, in a transaction, which took approximately 20 minutes, the Respondent and/or Mr. Grubb assisted her in filling out the paperwork required to place the insurance coverage she requested. During the course of the brief insurance purchase transaction, Ms. O'Donohue learned that she would be required to pay a higher premium amount than the quote she had received from the Agency while she was at the automobile dealership earlier that day. This is consistent with the Agency's custom and practice, established by former agent, James Self's, testimony to the effect that motor club coverage was typically added to the normal insurance coverage requested by customers, which resulted in higher purported "premium" quotes and charges than had initially been quoted to the customer, typically by telephone, before a customer came to the Agency office. When Ms. O'Donohue and her mother arrived at the Agency after having received the lower quote earlier, they were thus not prepared to pay the higher amount of the so-called premium. Ms. O'Donohue did not need a motor club because, through her mother, she was covered by AAA Motor Club for towing and other benefits. She had no knowledge that she had purchased a motor club product from the Respondent. All of the documents were presented to her, in response to her request for just basic insurance coverage, in the context that this was what the law required her to have and what she needed. She totally relied, as did her mother, upon the representations of the Respondent and his agent or employee, Mr. Grubb, concerning what the law required and what she needed in the way of insurance coverage. The testimony of Ms. O'Donohue's mother, Lynn O'Donohue, confirms the fact that they had no intent to purchase towing coverage or "auto club" because they already had a membership with AAA and wanted to pay nothing extra other than the basic insurance coverage. The Respondent or his agent or employee, Mr. Grubb, indicated, as shown on page 91 of the transcript, that "towing was all part of it", that is, they meant that the basic insurance package sought by Ms. O'Donohue included towing as part of its coverage. In fact, that was not the case, and the motor club product was clearly optional, at extra cost, and not legally required. Ms. O'Donohue purchased it unknowingly, based upon the representations and business practice used by the Respondent in connection with her transaction, in spite of the presence of her signatures on the disclosure portion of the application documents for the reasons referenced with regard to the Shivers transaction. The insurance requested was placed with two insurance companies. The PIP and PD were issued by Security at a premium of $223.00. The comprehensive and collision coverage was placed with General Insurance Company (General) at a premium of $411.00. Thus, the premiums for actual insurance coverage, which is all Ms. O'Donohue wanted, totaled $634.00. That was financed by the ETI Premium Finance Company (ETI) on periodic installment payments, with a required down payment of $127.00. The Respondent, however, required Ms. O'Donohue to make a down payment of $277.00 on a purported total premium due of $784.00. This amount, unbeknownst to Ms. O'Donohue, happened to include a motor club purchase (Atlantic Travel Association), which cost $150.00, thus, the difference between the $634.00 actual insurance premium and the $784.00 purported premium due. The $150.00 fee for motor club benefits was concealed in the "total premium" amount falsely represented to the customer by the Respondent. The deceptive and misleading nature of this transaction is further pointed out by the form of the receipt issued to Ms. O'Donohue upon consummating the transaction. That receipt indicates that the "total premium" is $784.00. Actually, the cost of the insurance was only $634.00, as referenced above, and the additional $150.00 of that purported total premium amount was the motor club fee. Likewise, the down payment quoted to her of $277.00 was deceptive because only $127.00 of that was applied to the actual insurance coverage. The remaining amount was the motor club fee which the agent collected in its entirety at the beginning of the transaction, as part of the down payment, while the insurance premiums, in excess of the $127.00 actual down payment for insurance, were financed through ETI. The Respondent did this because, by collecting all of the motor club fee in a lump sum at the outset of the transaction, he could get his entire commission immediately. His motor club sales commission was at a considerably higher rate than the commission he earned on the sale of insurance itself. In fact, his commission was 90 percent of the $150.00 motor club fee. Since Ms. O'Donohue did not have the entire $277.00 at the time of the transaction, because she had been relying on the lower quote for the insurance given to her over the telephone, she only paid $200.00 down payment at the time of the transaction, with a balance owed of $79.00, as reflected on her receipt. Her mother had reservations concerning the purchase of this insurance from the Respondent and told her daughter that she thought that because the insurance she purchased involved financing the premium, she could save money by going to GEICO insurance company. Therefore, the following day, she went to GEICO and secured new coverage at a lower premium rate and then called the Respondent's Agency to confirm that she could cancel her policy, with no penalty. They replied that she could cancel her policy just so long as she brought them proof that she had secured new insurance, since the law presently does not allow them to cancel the coverage until they are shown proof that the insured has obtained other coverage. Ms. O'Donohue, therefore, went to GEICO, purchased new insurance for her vehicle, and then brought proof to the Agency and requested that the Respondent cancel her insurance. This request was made on June 19, 1993. At that time, she requested a refund of the $200.00 down payment which she had made two days before and was assured that she would receive it within 60 days. In fact, she never received a refund and continued to receive past-due and delinquency notices from ETI, the premium finance company. She notified the Agency of this problem on numerous occasions to no satisfaction. Due to ETI's belief that her coverage was still in force and that they were still owed the premium payments, her credit was endangered. This was all directly related to the Respondent's failure to properly and timely process her cancellation request. On June 20, 1993, Terre Thompson of Pensacola, Florida, also went to the Respondent's Agency to purchase insurance for her 1993 GEO Metro automobile. The Respondent met her at the automobile dealership, where she purchased the vehicle. He had already prepared documents for the purchase of insurance to be underwritten by Security and General, along with a premium financing agreement and other documents. He had marked X's where Ms. Thompson was supposed to sign all contracts and disclosure forms. The Respondent filled out all of the information on the documents and merely told her, in effect, to "sign here, here and here". The transaction was conducted very quickly and with little or no explanation of coverage or benefits. Although Ms. Thompson needed full coverage for her vehicle, because it was financed, she did not want towing and rental benefits. The Respondent, however, gave her to understand that it was required in the coverage package she purchased. Accordingly, on June 20, 1993, she made a down payment of $100.00, with an additional amount due of $51.00 by June 27, 1993. Although the receipt was dated June 20, 1993, Ms. Thompson did not actually receive it until June 27, 1993, when she returned to the Respondent's Agency to pay the $51.00 owed. The receipt falsely depicts that the "total premium" was $834.00. Actually, the cost of the insurance was only $754.00. The additional $80.00 was for a motor club product, although the $80.00 was buried in and represented to be part of the total insurance premium for the transaction. The down payment of $231.00 quoted, likewise, was deceptive because only $151.00 of that was actually applied to insurance coverage, which was all of the coverage that Ms. Thompson had requested. The Respondent collected the $100.00 on June 20, 1993 and entered into a financing arrangement with the customer, Ms. Thompson, for the $51.00 to be paid on June 27, 1993. In fact, this was only enough to cover the down payment for the actual insurance coverage because the Respondent forgot to include the fee for the motor club coverage on the "front end" or in the down payment, as was his normal practice. This is why Ms. Thompson became upset when she learned she owed an additional $71.00 when she returned on June 27, 1993, when she thought she had only owed approximately $60.00. In any event, the receipt finally received by her reflected payments of $100.00, $60.00, and $71.00, which totals $231.00. This amount includes the $151.00 down payment for actual insurance coverage and the remaining $80.00 for motor club membership, which Ms. Thompson did not know she had purchased at the time and did not desire to purchase. Indeed, Ms. Thompson, and the other customers referenced in the Amended Administrative Complaint, who testified, signed the disclosure in the standard package of documents presented to them by the Respondent. It indicated that they acknowledged that the motor club benefit or the "nations safe driver" medical benefit was an optional coverage, not required by law and that, after explanation of it, they had elected to purchase it. In fact, they signed those documents, albeit imprudently, without actual knowledge that they were obtaining that coverage and without explanation that it was not legally required. No disclosure was made to them that the purported "total premium" amount actually included payment for the motor club benefit, which was not actually part of the insurance premium and which, at least in the case of those customers with AAA memberships, was totally unnecessary. Timothy Malden of Jacksonville, Florida, purchased a vehicle on or about August 31, 1993. He needed full coverage because the vehicle was financed, that is, he needed PIP, PD, comprehensive coverage, and collision coverage. He went to the Respondent's Agency on that date to purchase coverage on his 1986 Pontiac Fiero. During the course of the transaction, handled by the Respondent, Mr. Malden was asked if he had motor club coverage or benefits and he told the Respondent that he had AAA membership and showed the Respondent his AAA card. The Respondent and Mr. Malden entered into a transaction to sell Mr. Malden insurance. The transaction involved approximately seven different documents and took a total of about 15 to 20 minutes. Mr. Malden merely signed the documents. The Respondent told him that he just needed his signature on the documents and the Respondent did not explain the coverage. The procedure seemed rushed or hurried to Mr. Malden. Although Mr. Malden signed the disclosure (inadvertently, because apparently he did not read it) stating, in effect, that the motor club coverage was optional, not required and that after having it explained to him, he had decided to purchase it, he, in fact, did not know at the time that he had purchased the motor club coverage and it had not been explained to him. Moreover, as stated above, he had explained to the Respondent that he did not need it because he already had AAA motor club coverage. Nevertheless, the Respondent, knowing that Mr. Malden had AAA, still sold him the motor club coverage with the Atlantic Travel Association for an additional fee of $150.00. Mr. Malden made no informed consent to purchase that benefit. The PIP and PD coverage was placed with Security at a premium of $395.00. The comprehensive and collision coverage was placed with Continental American Insurance Company (Continental) for a premium of $525.00. The total premium for "insurance" was $920.00, with a $230.00 down payment. The premiums were financed by ETI. Mr. Malden, however, was required to pay a "down payment" of $380.00. The receipt issued to him reveals a "total premium" of $1,070.00. The actual cost of insurance was only $920.00. The additional $150.00 was for motor club coverage, and the charge for that was hidden in what was represented on the receipt as "total premium". Likewise, the down payment of $380.00 was deceptive in nature because only $230.00 of it was actually a down payment for insurance coverage. The remainder of it, as explained above with regard to the other customers, was actually full payment for the unnecessary, unwanted motor club benefit. On March 8, 1994, Karen Sigler of Pensacola, Florida, went to the Agency to purchase automobile insurance for a 1990 Plymough Voyager. She stated to the Respondent that she only wanted the minimum automobile insurance required by Florida law. She told the Respondent that she needed new insurance because her previous insurance company had gone out of business. The Respondent handled the transaction for her and she specified that she wanted only that coverage which the State of Florida required. Ms. Sigler had been originally quoted a $324.00 premium amount. When she actually entered into the insurance transaction, however, an additional $65.00 was added on to that amount because the Respondent sold her an additional "Nations Safe Drivers, Inc." enrollment. This is not an insurance product but, rather, is a form of supplemental medical benefit. Ms. Sigler had not requested this and did not understand the nature of it, believing that it was unnecessary because she was already qualified as a "safe driver" based upon her driver's record. She was given no explanation as to what that enrollment form, and benefit was nor that there was an extra charge for it. Even as reflected on the enrollment form, Ms. Sigler merely thought that the Nations Safe Drivers membership was a part of the required insurance purchase package. This is not true, in fact, since only PIP and PD coverages are required by law. Ms. Sigler was thus sold a product she did not request, which was not required by law and which was not explained to her. The entire transaction took approximately one- half hour. The receipt issued to Ms. Sigler shows that the "total premium" was $324.00. In fact, however, the actual cost of insurance was a $259.00 premium. The additional $65.00 of the $324.00 amount was the fee for the Nations Safe Drivers membership, which was hidden in what was represented as a "total premium". Moreover, the down payment she paid of $98.00 was deceptive because only a part of it was applied to automobile insurance coverage and the remainder was the fee for the Nations Safe Drivers membership. The Respondent's business practice in this regard resultingly misled Ms. Sigler into believing that Nations Safe Drivers, Inc. was required by State law and that it was an insurance product, which it was not. Here, again, in spite of the disclosure she signed and the documents that she was hurriedly urged to execute by the Respondent, the clear and convincing evidence shows that she did not actually, knowingly consent to purchase the extra non-insurance product referenced above. The Respondent's business practice, the way he represented the nature of her insurance coverage and in the manner in which he conducted the transaction did not involve an actual explanation of the non-insurance product he misled her into purchasing. Thus, there was no informed consent to purchase that product. Rosa Johnson went to the Respondent's Agency on March 21, 1994. She wanted to purchase the "minimum" automobile insurance required by State law for her 1971 Plymouth. She dealt with the Respondent and another gentleman who worked under the Respondent's direction and control. She told them she only wanted the basic, legally-required coverage. PIP and PD coverage was issued through Security. Ms. Johnson was also sold the Nations Safe Drivers product. This product was not actually explained to her, in spite of the fact that she may have signed a written disclosure that it had been, including the fact that it was an optional benefit and not part of the legally-required insurance coverage. She did not request this product nor was it explained to her so that its meaning and coverage was understood by her. Upon conclusion of the transaction, Ms. Johnson had purchased PIP and PD coverage from Security for a premium of $248.00, plus an unrequested enrollment in Nations Safe Drivers, Inc. for a fee of $35.00. All of this amount was financed by ETI. Here, again, as with the other customers, the receipt furnished to Ms. Johnson indicates a total "premium" of $283.00. The actual cost of insurance or true premium was $248.00. The additional $35.00 of the $283.00 amount was the cost of the Nations Safe Drivers, Inc. product, which was hidden in what was represented to her on the receipt as the "total premium". Likewise, the purported down payment of $85.00 was deceptive in the manner in which it was presented and required of Ms. Johnson, because only part of it was applied to insurance coverage, the remainder being the $35.00 fee for the added non- insurance product referenced above. The Respondent's authority to bind coverage with Security Insurance Company had been terminated on March 14, 1994 due to excessive late submissions of insurance applications to the carrier. The problem was later alleviated and his authority to bind insurance for Security was restored by that company. However, during the period of time his binding authority had been terminated, the Respondent kept taking applications and binding policies. This caused the insureds to believe that they had coverage when, in fact, they did not, because the carrier, Security, through its managing agent, U.S. Underwriters, did not, for a period of time, allow the Respondent to obligate that company for coverage. Accordingly, in due course, Ms. Johnson was notified by U.S. Underwriters, on behalf of Security, that she had no coverage. She became upset and filed a complaint with the Insurance Commissioner because she had understood that as soon as the transaction with the Respondent was completed, her coverage had been bound and timely filed and processed with the underwriting insurance carrier. Charles Meadows of Gulf Breeze, Florida, required insurance on his 1986 Chrysler LeBaron. He wanted to purchase the minimum amount of legally- required coverage and went to the Respondent's Agency for that purpose on May 17, 1994. He needed the minimum amount of legally-required insurance so that he could obtain a tag for his automobile from the county tag office. He was in a hurry because he had taken leave from work and needed to get his insurance transaction consummated, as well as to obtain his automobile tag before 4:30 p.m. He conferred with a lady who was employed by the Respondent at the Agency who handled his transaction. She completed all of the documents, spread them across the counter, and marked and told him the places to sign to effect the binder of the coverage that day. The transaction occurred quickly, lasting only approximately 15 minutes. He received no effective explanation of any of the coverages. Rather, he relied on her representations that he was getting what he had asked for, that is, the minimum legally-required Florida insurance coverage. The coverage he obtained was placed with Security as to the PIP and PD coverage. The premium for that coverage was $321.00. The total premium quoted to him was $421.00, which included a $100.00 membership in the Gulf Coast Travel Association, a motor or travel club. Mr. Meadows was not aware that he had this extra amount of coverage or membership until he conferred with Mr. Spencer of the Department at a later time, who informed him of such. If he had known that the agreements he was signing during the hurried, unexplained transaction with the Respondent's employee included the motor club coverage, he would have declined it because his wife already had coverage with AAA for towing and related benefits. Mr. Meadows made a down payment of $190.00 on May 17, 1994. The receipt issued to him revealed a "total premium" of $421.00. The actual cost of insurance was $321.00, with the additional $100.00 being for the motor club, although the total amount was represented as "total premium". Additionally, the down payment of $190.00, which he paid, was deceptive in that only $90.00 was actually applied to insurance coverage and the remaining $100.00 was the total up-front fee for the motor club coverage, although it was represented to Mr. Meadows as being the $190.00 down payment on the insurance premium itself. Later, Mr. Meadows learned that he had the motor club benefits which he did not want or need and so he demanded a refund of his money from the Respondent. He spoke to the Respondent personally about this but did not receive immediate satisfaction. There was a substantial delay in receiving his refund after the Respondent told him that he would receive one. The Respondent justified this by stating to him that it had to come from "another office" and that it would not come from his Agency itself. Dorothy Weber of Pensacola, Florida, required automobile insurance for her 1986 Chevrolet Blazer and a 1978 Chevrolet Caprice. She went to the Respondent's Agency on June 15, 1994 and indicated to one of his employees that she was interested in the cheapest coverage available. She wanted nothing extra, except that required by law. She received very little explanation of the coverages and benefits, other than in response to questions she asked. The transaction of insurance was conducted in a similar manner to those referenced earlier in these Findings of Fact. The PIP and PD coverage was placed with the Florida Joint Underwriting Association. It carried a premium of $787.00. Despite Ms. Weber's request for only the minimum, legally-required insurance, she was also sold a motor club (Gulf Coast Travel Association) unbeknownst to her at the time at an additional fee of $150.00. In spite of the fact that Ms. Weber signed the disclosure concerning the optional nature of the motor club and related fee and so forth, as described in further detail in the above Findings of Fact, in actual fact, it was not explained to her. The fact that the fee for it was separate from the insurance premium for the insurance coverage was not explained to her and she effectively was not informed that she was purchasing that product. During the transaction, she was informed that if her vehicle broke down, she could obtain wrecker service. Nothing was mentioned to her, however, about Gulf Coast Travel Association or that the $150.00 was an extra fee. She merely had all of the forms presented to her in rapid fashion and was asked to sign them. The explanation simply was that the "total policy" cost $937.00, and there was a down payment of $318.00 supposedly for premium only. The entire transaction took approximately one-half hour. Later, Ms. Weber discovered that she had been misinformed and complained to the Department and the Respondent's Agency, specifically indicating that she had not been informed that the $150.00 for the motor club was separate nor that she had purchased motor club coverage. The receipt furnished to Ms. Weber concerning the amounts she paid to secure her coverage is misleading. It indicates a total premium of $937.00, when the actual cost of the insurance was $787.00. The additional $150.00 was for the undisclosed motor club coverage hidden in what was represented on the receipt as a "total premium". The down payment of $308.00 was deceptive or misleading in that only $158.00 of it was actually a down payment on insurance coverage. Barry and Deeana Walker of Pensacola, Florida, needed automobile insurance for a 1990 Plymouth Laser. They wanted the cheapest coverage legally required and available to them. The Respondent dealt with the Walkers and was their agent of record. Mr. Walker remembers nothing being mentioned about a motor club, but Mrs. Walker remembers that the agent mentioned "Nations Safe Drivers, Inc."; however, she specifically informed him that she did not want it. In fact, Nations Safe Drivers is a non-insurance membership plan which includes a medical supplement coverage benefit. It is not a motor club. The PIP and PD and bodily injury coverages were placed with Underwriters Guaranty Insurance Company (UGIC) for a premium of $641.00. The premium was originally financed by Underwriters Financial. Also executed on May 4, 1994 was another premium finance agreement with ETI. It provided for an insurance premium of $441.00 for a policy issued by UGIC and the financing of a Nations Safe Drivers enrollment for $100.00. This document was not signed by the Walkers. On May 4, 1994, the Walkers paid $150.00 by check and were required to pay an additional $143.00 by May 20, 1994. The $143.00 was paid; and subsequently, the Walkers received a notice of additional premium of $190.00 due and they paid an additional down payment of $76.00. The Walkers made payments on the ETI premium financing agreement up until October, 1994, even though it had never actually been signed. They made down payments of $369.00 and monthly payments totaling $333.63, for a total of $702.63. Sometime in October of 1994, they received a letter from the Department of Highway Safety and Motor Vehicles, Division of Drivers Licenses in Tallahassee, Florida, stating that Mr. Walker's driver's license was suspended because his insurance had been cancelled, effective July 16, 1994. The Walkers had received a notice from the insurance company of cancellation (because apparently that company would not insure co-owned vehicles) and had gone to the Respondent to see what to do about that problem. The Respondent told them to fill out a form which he gave them and that everything would be taken care of. They filled out the form at his behest so as to indicate that Mr. Walker's father, the co-owner, would not be a driver of the vehicle. Accepting the Respondent's representation, they believed that that would take care of the cancellation of coverage problem, and they continued to make their monthly payments on their premium financing agreement until October of 1994 based upon what the Respondent told them. In fact, the coverage was cancelled effective July 16, 1994; and soon thereafter, Mr. Walker's driver's license was suspended due to failure to carry valid insurance on his automobile. If the Respondent had acted with promptness in correcting the underwriting error, upon being apprised of the situation by the Walkers, the lapse in coverage and suspension of the driver's license need not have occurred and the payments on the original coverage need not have been made until October 11, 1994, when new coverage was finally obtained by the Respondent at the Walkers' behest. Although, on November 11, 1994, ETI credited the Respondent and the Walkers for $169.41 of unearned premium, the damage had already been done by that point in terms of the lapse of coverage and the suspension of Mr. Walker's driver's license, with attendant financial risk and inconvenience to Mr. Walker. Moreover, the receipt issued to the Walkers in the original insurance transaction indicates a total premium of $741.00. As in the other situations, the actual insurance cost was $641.00, and the additional $100.00 was for the Nations Safe Drivers non-insurance medical payment product, wrapped up in what was represented as "total premium". The down payment of $293.00 was similarly misleading because only $193.00 of that applied to actual insurance coverage. The Respondent received his fee of $100.00 for the added-on product mentioned above entirely out of the up-front, down payment amount. Thus, the Respondent received the entire fee for the Nations Safe Drivers product within a purported "premium receipt" amount described to the customer as an insurance down payment. On January 26, 1995, Ms. Betty Cook of Walnut Hill, Florida, needed to purchase insurance for her 1994 Thunderbird and her 1993 Chevrolet C1500 pickup truck. She went to the Respondent's Agency to accomplish her insurance renewal transaction. A lady by the name of Sonya handled the transaction for her that day. The Cooks' insurance was placed with UGIC for a premium of $1,123.00. The premium was financed through Underwriters Financial of Florida, Inc. The transaction was initiated on January 26, 1995 but ultimately concluded on January 28, 1995, after Mrs. Cook had received and signed all of the paperwork. Mrs. Cook made a premium down payment of $339.00 and mailed her first payment when it was due. She thereupon was sent a notice stating that no policy existed. She called the Agency to see what was wrong and someone at the Agency indicated to her that it would taken care of immediately. A lienholder on the pickup truck sent a notice to her that they had not been notified that the insurance had been renewed. Mrs. Cook became very concerned and the Respondent offered to refund her premium; however, three months had evidently elapsed since she first renewed her insurance or thought she had. Thus, Mrs. Cook, without knowing at the time, was driving her automobiles without insurance coverage for approximately a three-month period. Mrs. Cook contacted the Department and got her insurance reinstated and placed with another servicing agent. The policy was issued by UGIC, without requiring the payment of a premium down payment by the Respondent. The Respondent had still not forwarded the $339.00 down payment originally received from Mrs. Cook as of April 19, 1995. This lapse or failure to forward the insurance down payment obviously resulted in the coverage never being bound with the company. Therefore, the company had not issued and had no record of coverage for Mrs. Cook's vehicles. The agent for this company was required to account for and promptly forward insurance premium down payments, such as this, to the insurer he represented and on behalf of the insured he also represented in the transaction. Christopher Camus of Pensacola, Florida, went to the Respondent's Agency to purchase insurance for a 1983 Oldsmobile Cutlass. He went to the agency on August 25, 1993, and the Respondent placed his coverage with Security. The total premium was quoted as $274.00. Mr. Camus signed an application on that date and paid the full amount to the Respondent. The Respondent failed to forward the application and premium to the insurance carrier, and the policy of insurance was not actually issued until November 30, 1993. Mr. Camus was thus left without coverage for approximately two months. He made repeated telephone calls to the Agency to no avail. Agency personnel maintained that the problem was occurring with the insurance company itself and was not the fault of the Respondent's Agency. The Respondent deposited Mr. Camus' check in August of 1993, but the application for his insurance was never received by Security until December 23, 1993. The Respondent thus did not promptly and appropriately handle the insurance premium funds in question and forward the application so as to promptly bind the coverage for the customer. Indeed, it is noteworthy that this company revoked the Respondent's authority to bind coverage for customers on March 14, 1994 due to an excessive amount of such late submissions of insurance applications and premiums. In 1993, of the 1,299 applications taken by the Respondent and his Agency, only 58 percent reached the insurer's office within the required time period. In summary, the evidence presented in this case indicates that the Respondent engaged in the general business practice of selling ancillary products to insureds without truly obtaining "informed consent" of those insureds. The pattern running through the testimony of the above-described witnesses, none of whom were shown to have any motive to falsify their testimony, was that, although they signed the various disclosures on the insurance underwriting or binding documents, indicating that they understood that the ancillary products were optional, were not insurance, and were not required to be purchased. They did not receive any significant explanation of the optional nature of those products concerning the advisability of their purchase (particularly as to those customers who had AAA coverage), nor the extra cost attributable to those products. Each insured witness consistently maintained that he or she had not read the numerous documents presented to them. Certainly, they should have, in an abundance of caution, read the documents and attempted to understand them. Their failure to do so, however, does not absolve the Respondent of his duty to specifically explain to each customer the exact nature of the coverage being offered, whether or not it was legally optional, particularly, as to those customers who stated definitely that they only wanted the bare minimum coverage required by law, and the fact that it was optional at an extra cost, and was not included in the basic insurance coverage being sold. It is clear from these witnesses' testimony that none had requested motor club benefits or any other ancillary product and yet, in effect, these were automatically added to the policies involved in this proceeding in each transaction and were clearly not explained to the customers. The general business practice of the Respondent involved in the sale of the motor club and ancillary products belies the existence of "informed consent" on the part of the customers. Mr. James Self is a former agent for the Respondent, who testified regarding the Respondent's business practices. He was trained by the Respondent and worked for the Agency from August, 1993 to June, 1994. The Agency had a policy of giving telephone quotes for insurance premiums, without including the amount represented by motor club or other add-on optional products. The Agency would then add such products to the insurance package when the customer came in to purchase insurance. According to Mr. Self, any sort of explanation or disclosure of these add-on products to the customer would be merely to the effect that the insurance "quote" included towing or rental. There was little else explained about it. In many of the situations with witnesses in this case, the insureds only requested the minimum coverage and, therefore, no optional or ancillary products were justified without full explanation to the customer. Mr. Self described how the Respondent specifically trained him in "clubbing", which meant adding motor club coverage to the insurance coverage requested by customers. The Respondent's own testimony shows the economic necessity for the pervasive sale of such motor club benefits to as many customers as possible, when he stated: It's really the only way to exist . . . Q: So you're telling me that the only way for you to exist is to sell motor clubs? A: Financially, it's -- really for most businesses in this market it's the only way to be able to survive. Transcript, page 175. The Respondent further acknowledged the pecuniary interest he had in selling travel or motor clubs since he described his average commission as being 90 percent of the fee for writing that coverage, which is higher than the commission on insurance products. Moreover, he recovered all of that money from the down payment the customers were making, supposedly for their insurance coverages. Therefore, his incentive was multiplied because he was getting the high commission percentage rate, plus he was getting all of it in cash on the initial portion of the transaction, the down payment. Mr. Self also explained that salesmen would never tell the insured exactly how much the motor club cost. On occasions, when Mr. Self would try to partially disclose the motor club, the Respondent would tell him to "hurry up", that he was taking too much time in effecting the transaction. It was Mr. Self's experience that approximately 99 percent of the customers coming into the Agency for insurance left having purchased motor club benefits. Eventually, Mr. Self was terminated because he did not sell enough motor club products. The overall gravamen of his testimony shows that he attempted to make some disclosure or explanation of the motor club and other ancillary products but was discouraged from doing so by the Respondent, with the implication being that this ultimately resulted in his termination from employment with the Respondent's Agency. The evidence thus establishes that, for the most part, the insureds in question did not really know what "minimum coverage" or "full coverage" really consisted of when they came in to purchase such insurance. In making this lay description of the coverage they desired, they then relied on the agent, the Respondent or his employees, to sell them coverage which comported with their wishes and needs, since they were not schooled in the insurance business and related laws themselves. Since they were not so schooled, they almost totally relied on any explanation given to them by the Respondent or his agents or employees. In spite of the signing of the disclosure documents referenced in the above Findings of Fact, the reality of the situation, as a continuing, consistent pattern throughout the testimony adduced from these insureds, and from Mr. Self, reveals that no regular business practice of obtaining an informed consent from customers, such as these, was carried out by the Respondent.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is RECOMMENDED that the Respondent, Daniel Lee Alison, be found guilty of the violations set forth and discussed above, that his license as an insurance agent in the State of Florida be revoked for a period of two years and that he be ordered to pay a fine in the amount of $9,000.00, within a time to be set by the Department. DONE AND ENTERED this 2nd day of October, 1996, in Tallahassee, Florida. P. MICHAEL RUFF 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 2nd day of October, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 95-2690 Petitioner's Proposed Findings of Fact 1-35. Accepted, except to the extent that they do not comport with the Administrative Law Judge's findings of fact on these subject matters to which they are subordinate. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter and because of the editorial comment. Accepted, in part, but subordinate to the Administrative Law Judge's findings of fact on this subject matter and rejected, as to the editorial comment. 39-40. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. 41-44. Accepted, in part, but rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. Respondent's Proposed Findings of Fact 1-13. Accepted, but not as materially dispositive of the issues presented for resolution. Accepted, in part, but rejected, as subordinate and somewhat contrary to the Administrative Law Judge's findings of fact on this subject matter. Accepted, but not itself materially dispositive to the issues presented for resolution in this case. 16-17. Accepted. 18. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 19-25. Accepted, but not themselves materially dispositive to the resolution of the issues presented to the Administrative Law Judge. 26. Accepted. 27-29. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 30-32. Accepted. 33-36. Accepted, in part, but rejected, as to the overall material import and as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 37-43. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter and to some extent, as immaterial. 44. Accepted, as technically correct, but witness Self, a former employee and a witness who purchased insurance, did establish in his testimony that purchase of an ancillary product was a pre-condition to premium financing by Agency policy. 45-47. Accepted, in part, but otherwise rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 48. Accepted. 49-52. Accepted, but not in and of themselves dispositive of the material issues presented concerning this witness' transaction(s). Rejected, as immaterial. COPIES FURNISHED: Michael K. McCormick, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Charles J. Grimsley, Esquire Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Background Information Respondent is now, and has been at all times material to the instant case, licensed by the Department as a life insurance agent, health insurance agent, life and health insurance agent and dental health service contract agent. At no time has he ever been disciplined by the Department. On or about February 6, 1991, Gauthier Insurance Services, Inc., was organized under the laws of Florida. The corporation was administratively dissolved on October 9, 1992. At all times material to the instant case, Gauthier Services, Inc., was the alter ego and under the direct supervision and control of Respondent. Count I On or about August 5, 1990, Respondent entered into a General Agent's Agreement with United Insurance Company of America (hereinafter referred to as "United"). Paragraph 6. of the Agreement addressed the subject of "compensation and accounting." It provided as follows: General Agent shall bear all expenses incurred in the performance of this Agreement and, subject to the terms of this Agreement, will be paid as full compensation for all services connected herewith, new and renewal commissions and service fees as set forth in the Compensation Schedule attached hereto, and made a part hereof, or any supplement thereto which is in effect on the effective date of each policy issued pursuant to an application solicited by General Agent or one of General Agent's Representatives, provided that premiums on such policies are received by Company in cash, and subject to Company's right of offset. Company will pay Representatives the compensation due them under agreements made with them. Compensation paid the General Agent will be the total compensation due, reduced by compensation paid directly to Representatives. Compensation for policy conversions, plan changes, reinstatements and replacements will be paid in accordance with company rules and regulations in effect at the time of the occurrence of any such event. Company may unilaterally change all or any part of the Schedule of Compensation and will provide General Agent with notice of such change thirty (30) days prior to the effective date thereof. If Company for any reason whatsoever refunds any premium or any part thereof, on any policy or contract, General Agent shall promptly reimburse Company all commissions paid or advanced on such policy or contract, or at the option of the Company all such commissions may be deducted from other compensation payable under this Agreement. Paragraph 7. of the Agreement addressed the subject of "guaranty of representatives' indebtedness." It provided as follows: General Agent hereby guarantees the prompt repayment of any indebtedness of General Agent's Representatives to Company, of any kind whatsoever arising under Representative's agreement with Company, provided that Company shall first have made written demand for repayment upon Representative at Representative's last known address. This guaranty shall survive the termination of the Representative's Agreement. Paragraph 11. of the Agreement addressed the subject of "termination." Subparagraph b. thereof provided as follows: Upon termination of this Agreement for any reason, all General Agent's obligations to Company shall become immediately due and payable and General Agent shall promptly return to Company all Company property. On or about August 5, 1990, Respondent and United also executed an Advanced Commission Addendum. Paragraph 1. of the Addendum addressed the subject of "advances." It provided as follows: Pursuant to the General Agent's authorization of the Company to advance commission payments to Agent, the Company agrees to advance commissions, pursuant to the amounts and schedules and subject to the terms set forth herein, to Agent on account of those commissions which would otherwise be paid to Agent on new individual life business produced providing for premiums to be paid by the policyholder. All applications eligible for advances must be payroll deduction products and subject to the guidelines set forth by the Company. Under paragraph 2. of the Addendum, United agreed to make advanced "[c]ommission payments based upon 50 percent of the annualized first year commission otherwise to be paid." Paragraph 3. of the Addendum addressed the subject of "offset." It provided as follows: Advances made by the Company of first-year commissions shall be charged to the Agent as a debit and shall be immediately due and payable to the Company upon the occurrence of either of the following: there is forecasted an insufficiency of Agent's projected earned first-year and renewal commissions to eliminate the debit balance; or six (6) months following the termination of this Addendum there is a remaining debit balance. The entire amount of indebtedness due will bear interest at the annual rate of three percent (3 percent) above prime rate of interest announced from time to time by First National Bank of Chicago calculated from the date of the termination until paid. Upon termination of this Addendum, to the extent necessary to eliminate Agent indebtedness to the Company, including but not limited to any forecasted indebtedness, the Company may offset same against any and all compensation, whether or not vested, payable to Agent under any agreement or contract with the Company. Pursuant to paragraph 5. of the Addendum, Respondent acknowledged "that all amounts paid in advance to [him] under this Addendum in excess of actual earned commission based on the amount of premium actually paid by policyholders [would] constitute a personal obligation" of his to United. Under paragraph 6. of the Addendum, Respondent guaranteed "full and prompt payment of any indebtedness to the Company related to commissions . . . advanced to [him]" and he further agreed to "indemnify the Company against any and all cost, reasonable attorney fees, and other expenses that may be incurred by the Company in collecting or attempting to collect any advance commission not earned by [him]." In accordance with the provisions of the Addendum, Respondent received advanced commission payments from United for business that he and his representatives produced during the period of his association with the company. On or about September 4, 1990, Respondent and United entered into a Computer Purchase Agreement, which provided as follows: General Life Division [of United] will provide the use of a computer for a period of 12 months, beginning September 1, 1990. If at the end of 12 months the Agency's production credits equal $87,000 or greater, the Agency may keep the computer and owe nothing to General Life Division. If the Agency's production credits are less than $87,000 at the end of the 12 month period, the Agency will have the opportunity at that time to purchase the computer on a pro-rated basis or return it to General Life Division. Pro-rated Basis is as follows: General Life Division will deduct $225 from the full purchase price of $2,695 for every $7,250 production credits the Agency earns in the 12 month period, starting Sep. 1, 1990, i.e., if my total production credits equal $43,500 on Sep 1, 1991 the Agency agrees to pay $1,350 to General Life Division or return the computer. At the end of the 12 month period (Sep. 1, 1991) if the Agency's total production credits are less than $87,00 the Agency will either return the computer to General Life Division or pay $2,695 to General Life Division, less the amount deducted for production credits as explained in 3. above. In the event the undersigned's General Agent's Agreement with General Life Division is terminated, whether voluntary or involuntary, including death, disability or retirement, prior to having purchased the computer either with monies paid to General Life Division or earned production credits, the balance due, as determined by General Life Division, shall become immediately due and payable. The terms of provision 8. entitled "Indebtedness, Liens and Setoff" of the undersigned's General Agent's Agreement will apply to any unpaid balance. By letter dated November 21, 1991, United notified Respondent that his General Agent's Agreement with the company would be terminated, effective 30 days from the date of the letter, because he had "not written sufficient business." At the time of his termination, Respondent owed United more than $2,500.00 for "amounts paid in advance to [him] under th[e Advanced Commission] Addendum in excess of actual earned commission based on the amount of premium actually paid by policyholders." More than a year later, an attorney retained by United sent Respondent the following letter demanding payment from him: United Insurance Company of America ("United") terminated its Agency Agreement with you on February 16, 1992. At that time, your debit balance showed an amount owing to United in excess of $2500.00. Your current year-to-date earnings (through November 30, 1992), have been $133.35, reducing your current debit balance to $2,571.93. Your debit balance represents unearned commission advances to you. Additionally, you signed a Computer Purchase Agreement on September 4, 1990 (copy enclosed for your convenience). Pursuant to that agreement, you still owe United $2,355 for the computer provided to you. Your total debt to United is therefore $4,926.93. United hereby demands payment of the $4,926.93 on or before January 15, 1993. If that payment is made in a timely fashion, United will waive its contractual right to interest on that amount. If you fail to pay the $2,571.93 by January 15, 1993 and you fail to otherwise work out a payment arrangement acceptable to United, my client will then assert its legal rights in order to collect the aforementioned debt. As you are aware, the General Agency Agreement allows United to recover its cost of collection from you, as well as the interest on the outstanding debit balance. Please send a draft in the amount of $2,571.93 made payable to United Insurance Company of America to the undersigned so that it is received on or before January 15, 1993 or telephone the undersigned to attempt a satisfactory workout of this debt. Respondent, in fact, had returned the computer that was the subject of the September 4, 1990 Computer Purchase Agreement referenced in the letter and therefore, contrary to the claim made in the letter, did not owe United $2,355 for the computer under that agreement. Although he did not dispute that he owed United 2,571.93 for unearned advanced commissions, he did not repay the debt because he felt that, having just started a new sports recruiting business, he was not financially able to make such repayment. United subsequently filed suit in Palm Beach County Court against Respondent to obtain the monies it claimed he owed the company for unearned advanced commissions and for the computer that was the subject of the Computer Purchase Agreement he had entered into with the company. On or about September 3, 1993, a default judgment was entered in favor of United. United was awarded $4,899.96 in principal, plus $212.30 in court costs and $173.88 in prejudgment interest. 2/ Following the entry of the judgment, Respondent and United attempted to negotiate a payment schedule. United initially indicated a willingness to accept payments of $290.00 a month from Respondent, which was all Respondent believed he was able to afford to pay. Respondent made one such $290.00 payment. United, however, later advised Respondent that it would accept no less than $400.00 a month from him. Since being so advised, Respondent has not made any further payments to United. Count II Monies Owed USG Annuity and Life Company On or about February 6, 1989, Respondent entered into an Agent's Licensing Contract with United Services General Life Company, which subsequently changed its name to USG Annuity and Life Company (hereinafter referred to as "USG"). Subparagraph 8.d. of the Contract provided as follows: Upon any termination of this Contract, you shall immediately pay in cash any sums due hereunder and shall immediately deliver to us all of the previously furnished materials, supplies, advertising and any other printed matter which mentions the Company by name, our rate books, and all other such supplies connected with our business, excepting only those items which the Company shall specifically notify you in writing you are then permitted to maintain for servicing purposes. Paragraph 10, of the Contract addressed the subject of "commissions." It provided as follows: First year and renewal commissions shall be fully vested to you as they accrue. We shall pay you the commissions computed on the commissionable premiums paid to, received and accepted by us on applications procedured by you in accordance with this Contract at the rate and under the conditions as set forth in the Commission schedule referred to on the signature page, as amended from time to time by the Company. Any commission designated in any schedule shall not be deemed a "service fee" for any period of time. No commissions will be payable on premiums paid in advance until after the due dates of the respective premiums so paid in advance and then only if the policy is in force and effect on such due date. We reserve the right to revise the commission rates or conditions on any one or all of the policies or schedules at any time we deem such revision advisable, but such revision shall apply only to applications for insurance thereafter received by us. If any insurance procured hereunder is subsequently converted to, or replaced by, some other form of policy, the commissions payable, if any, under new insurance shall be paid to you only if such conversions or replacement is effected by or through you. Commissions shall be payable no less than monthly. If the premium on any policy secured hereunder is not paid within ninety (90) days from the premium due date and such policy is subsequently reinstated, you shall be entitled to further commissions thereon only if said policy is reinstated by or through you. You shall not be entitled to commissions on premiums waived or paid by us under the disability waiver of premium provisions or waiver of premium upon death or disability of the applicant (payer benefit) provisions of any policy. Should the Company, in its sole discretion, deem it appropriate at any time to cancel a policy and refund any premium on which you were paid any compensation, then such compensation shall be charged back to you. Commissions on benefit riders, term riders, replacement policies and conversions shall be payable in accordance with Company practices at the time the coverage is issued, converted or replaced, as the case may be. You are responsible for the obligations to us of all agents or brokers appointed by you and shall be debited on the books of the Company with the amount of such obligation when the same is due and unpaid from said agents or brokers to us, and on demand, shall promptly pay us the amount for such debt. At the outset of his relationship with USG, Respondent was licensed as a USG agent though Carnes Insurance Agency, which operated as a "recruiting agency" for USG. In or around October, 1991, he was "transferred," without his consent, to another of USG's "recruiting agencies," Investors Marketing Services, Inc. (hereinafter referred to as "IMS"), at IMS's request. The owners of IMS were Jan and Theodore Charles. In or around December of 1991, Respondent, acting in his capacity as a licensed USG agent, sold an annuity policy to the Gorman family. He received a commission from USG in the amount of $11,385.21 for the sale. By letter dated January 21, 1992, USG notified Respondent that his Agent's Licensing Contract with the company would be terminated, effective February 5, 1992. No reason for the termination was given in the letter. At around the time of Respondent's termination, the Gorman annuity policy was cancelled pursuant to the Gormans' request. As a result, the $11,385.21 that Respondent had received as a commission for the sale of the policy was "charged back" to him in accordance with subparagraph 10.h. of his Agent's Licensing Contract with USG, as well as paragraph E. of the Addendum to the Annuity Commission Schedule- DMD, which was incorporated by reference in subparagraph 10.b. of the Contract. (Paragraph E. of the Addendum to the Annuity Commission Schedule provided that "[f]ull surrender of any policy will result in commission paid or credited during the prior twelve (12) months being charged back on a pro rata basis.") On February 20, 1992, USG sent Respondent a letter advising him of this $11,385.21 debt and demanding that he make arrangements to repay it. Respondent never made such arrangements. The debt was ultimately repaid in full by IMS in four installments, the last of which was made in or around May of 1992. Monies Owed LifeUSA Insurance Company On or about August 9, 1990, Respondent entered into an Agent Agreement with LifeUSA Insurance Company (hereinafter referred to as "LifeUSA"). Subparagraphs 2.e. and f. of the Agreement addressed the subjects of "commissions" and "vesting of commissions." They provided as follows: Commissions. We will pay you, as full compensation for all services rendered and expenses incurred by you, first year and renewal commissions at the rates provided and subject to the terms and conditions contained in the attached SCHEDULE OF COMMISSIONS. These Commissions will accrue on premiums paid in cash to us for policies issued from applications procured by you while this AGREEMENT is in effect. Vesting of Commissions. All first year and renewal commissions are vested unless you are terminated for cause. Commissions will continue to be paid until total commissions earned annually amount to less than $500, at which time the Company has the option of paying, in a lump sum, the present value of future commissions. In subparagraph 2.j. of the Agreement LifeUSA agreed to provide Respondent "[o]n a prompt and timely basis . . . with statements of [his] earnings, commission loans, charges and reductions or repayments of indebtedness." Subparagraph 4.l. of the Agreement addressed the subjects of "final accounting, payment obligations and recovery rights." It provided as follows: Within a reasonable time after termination of this AGREEMENT for cause or without cause, each party will receive a full and accurate accounting from the other party. Upon termination of this AGREEMENT for cause or without cause, the entire amount of all monies due from you and any and all of your agents, will be immediately due and payable on demand, and you are responsible for assuring that the debt is repaid in full. You have the right to recover from your agents amounts owed to you by your agents under the terms of this AGREEMENT, together with interest, all costs of collection, and attorney's fees. To enter into his Agent Agreement with LifeUSA Respondent needed to obtain the sponsorship of one of the company's "field marketing organizations." IMS was the "field marketing organization" that sponsored Respondent's appointment as a LifeUSA agent. Like USG's "recruiting agencies," LifeUSA's "field marketing organizations" were responsible for the unpaid debts and obligations of the agents they sponsored. These debts included those resulting from the return to policyholders of premiums on which commissions had been paid. Respondent incurred such debts as a LifeUSA agent, as the commission statements he received from the company in accordance with subparagraph 2.j. of his Agent Agreement reflected. The commission statement covering the period from March 11, 1991, to March 17, 1991, that Respondent was sent reflected that, as of the latter date, Respondent had a debit balance of $3,056.065. On or about March 27, 1991, LifeUSA wrote Respondent a letter encouraging him to "writ[e] new business to liquidate [this] debit balance." The commission statement covering the period from April 15, 1991, to April 21, 1991, that Respondent was sent reflected that, as of the latter date, Respondent had reduced his debit balance to $3,011.93. On or about May 1, 1991, LifeUSA sent Respondent the following letter: We previously advised you of your $3,011.93 debit balance with LifeUSA, and to date, no response has been received. Therefore, we have developed a repayment schedule of $100.00 per month for you to liquidate your debt. Your first payment is due on May 15, 1991. Please write your agent number 100-001797 on your check or money order and return it in the enclosed postage paid envelope. If the first, or subsequent, payments are not received by the above date, we will be forced to turn this matter over to our attorney. If you have further questions, please feel free to contact us at 1-800-950-7045 or 1-800-950-9323. We are looking forward to working with you to resolve this matter. Thank you, in advance, for your cooperation. Respondent did not take any action to reduce his debit balance. Accordingly, as it said it would, LifeUSA turned the matter over to its attorney, who sent a letter to Respondent, dated June 6, 1991, demanding that Respondent pay LifeUSA $3,011.93 to settle his account. The letter elicited no response from Respondent. The $3,011.93 that Respondent owed LifeUSA was ultimately paid by IMS in seven installments, the last being made on October 27, 1991. In 1992, LifeUSA terminated its Agent Agreement with Respondent. It took such action because of Respondent's lack of production and his failure to have repaid the monies it owed the company. Respondent's Agreement with Theodore Charles During his association with LifeUSA, Respondent had accumulated approximately $70,000.00 worth of LifeUSA stock. Respondent transferred his LifeUSA stock to Theodore Charles, who, as mentioned previously, was one of the owners of IMS. Charles was also a stockbroker. It was Respondent's understanding that he would receive back from Charles cash in an amount equal to the market value of the stock less the total amount that IMS had paid USG and LifeUSA to settle Respondent's accounts with these companies. There was no written agreement between Respondent and Charles concerning the matter. As of the date of the final hearing in this case, Respondent had received only approximately $3,600.00 from Charles. IMS' Lawsuit Against Respondent On or about July 12, 1993, IMS filed suit against Respondent in Palm Beach County Circuit Court seeking to recoup from Respondent, among other things, the monies it had paid USG and LifeUSA to settle Respondent's accounts with these companies. Although he believed that he had already reimbursed IMS through the transfer of his LifeUSA stock to Charles, Respondent nonetheless, due to financial considerations, did not defend against the lawsuit. On or about October 4, 1994, a judgment was entered against him in the case. The judgment ORDERED AND ADJUDGED that the Plaintiff, [IMS], recover from the Defendant, Gary Gauthier, the sum of $14,595.14 based upon the evidence presented, including the depositions of Bernadette Berger, Kathy Doherty and Theodore Charles, to the effect that GARY GAUTHIER entered into contracts with insurance companies which required him to repay charged back commissions, that GARY GAUTHIER failed to repay charged back commissions and that the Plaintiff, [IMS], has been required to repay the debts of GARY GAUTHIER in the aforementioned amount; together with costs in the sum of $604.30, prejudgment interest pursuant to Florida Statute Section 687.01 in the amount of $4,065.37, and attorneys fees in the amount of $8,820.00, with the total judgment being $29,084.81, which shall bear interest at the rate of 12 percent per annum and for which let execution issue. 3/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding Respondent guilty of the violations of Sections 626.611(7) and 626.621(6), Florida Statutes, alleged in Counts I and II of the Amended Administrative Complaint; (2) suspending his license for a period of six months for having committed these violations; and (3) dismissing the remaining allegations of wrongdoing advanced in the Amended Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 5th day of July, 1995. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of July, 1995.