The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees and, if so, what penalty should be assessed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation ("Division") is the state agency responsible for enforcing the requirement within the state that employers cover employees with workers' compensation insurance. § 440.107, Fla. Stat. (2009). Respondent, Jurgenson Trading Corporation, is owned, in part, by Julio Raudsett, and operates a "Subway" sandwich restaurant franchise in Hialeah, Florida. It is a family-owned business with a total of five employees, three of whom are related. Cesar Tolentino, an investigator for the Division, conducted a field interview of Raudsett, who admitted that he did not carry workers' compensation insurance. Tolentino checked the database in the Coverage and Compliance Automated System ("CCAS"), and there were no records showing workers' compensation coverage for the Subway employees, nor any notices of applicable exemptions. Martha Aguilar, Tolentino's supervisor authorized the issuance of a Stop-Work Order that was personally served on Raudsett by Tolentino by hand-delivery on April 17, 2009. At the same time, Tolentino served a Request for Production of Business Records for Penalty Assessment Calculation. Raudsett provided his business records, including payroll journals and unemployment tax returns. Based on Aguilar's review of the business records, the Division issued its Amended Order of Penalty Assessment ("Order") on June 8, 2009, with an assessed penalty of $19,873.79. Aguilar determined the amount of the penalty, using the following steps: (1) assigning each employee the National Council on Compensation Insurance (NCCI) class code that was applicable for restaurant workers; (2) determining how much the employee had been paid from April 2006 to April 2009 (the period of non-coverage); and (3) assigning the rate to the gross pay to calculate the insurance premium that should have been paid, then multiplying that by 1.5, as required by rule. The NCCI class codes for employees administrative staff as compared to restaurant workers are lower and, therefore, their workers' compensation insurance premiums would be lower. The business records available to Aguilar did not distinguish among employee's responsibilities. Absent that information, the penalty is, by law, calculated using the highest NCCI class code associated with that kind of business, and was correctly done in this case. Raudsett has entered into a payment plan with the Division. He objected only to that portion of the penalty that was based on his earnings, and those of his wife, Maribel Medina, who works part-time, and his father-in-law, Rolando Medina. He claims an exemption for the three of them as owners and managers of the corporation. Excluding their salaries and associated penalties, according to Joseph Cabanas, Respondent's accountant, would reduce the penalty by $10,267.67, to $9,606.12. Cabanas testified that Raudsett, an immigrant from Venezuela, was not aware of workers' compensation laws, and that was why the three owners/officers of the Respondent's corporation failed to file a Notice of Elections to be Exempt from coverage until after the Division's investigation began.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, that upholds the assessment of a penalty of $19,873.79. DONE AND ENTERED this 15th day of December, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of December, 2009. COPIES FURNISHED: Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Joseph Cabanas 10520 Northwest 26 Street, Suite C-201 Doral, Florida 33172
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency charged with the responsibility of regulating the insurance industry within the State of Florida. At all times material to the allegations of this case, the Respondent was licensed in Florida as a life and variable annuity agent; life, health and variable annuity agent; life insurance agent; life and health insurance agent; and health insurance agent. All such activities are regulated pursuant to Chapter 626, Florida Statutes. Aurore Giroux is approximately 86 years of age. She currently lives in an assisted living facility in Waltham, Massachusetts. At all times material to the allegations of this case, Mrs. Giroux resided at 12 Cozumel Lane, Port St. Lucie, Florida. By way of her background, Mrs. Giroux attended grade school but did not complete high school. Although well spoken, she is not well-educated either by formal school or training. She has limited retirement income, and is not particularly well versed in investment opportunities. At the time of her husband's death in 1989, Mrs. Giroux had a life savings of approximately $230,000. This was accomplished primarily due to her modest life style and careful spending habits. At all times material to the allegations of this case, Mrs. Giroux's income was limited to social security and her husband's retirement. Her total monthly income does not exceed $1,300. In order to afford the costs of her current residence, Mrs. Giroux must use portions of her savings every month. Mrs. Giroux is an independent person and has never wanted to rely on others for her financial care. Although she maintains close relationships with her children, Mrs. Giroux has always written checks on her account to pay her own bills and has managed her own funds without the interference of the children. Following her husband's death, Mrs. Giroux began spending two months in the summer with her daughter, Elaine O'Toole, in Massachusetts. Mrs. O'Toole also would visit her mother in Florida on occasion. After Mr. Giroux passed away, the Respondent contacted Mrs. Giroux under the guise of offering her Medicare supplement insurance. Mrs. Giroux purchased a supplement from the Respondent. Thereafter, the Respondent would from time to time go by and visit Mrs. Giroux. Over the course of time the Respondent developed a relationship with Mrs. Giroux and he offered her other insurance products for purchase. Among those known are the annuities and the viatical which are the subject of the instant case. Additionally, the Respondent sold Mrs. Giroux a second Medicare supplement policy in 1998 that contained a life insurance benefit in the amount of $2500. The premium for that life insurance benefit was $50 per month. Although she spent over $60,000 to purchase the viatical from the Respondent, Mrs. Giroux did not recall investing that amount and is unable to explain what the product is. Although she signed a "Statement of Understanding of Viaticals" dated September 21, 1998, Mrs. Giroux was unaware of the illiquid nature of the viatical product. Moreover, if the viator lives more than 12 months beyond his estimated date of demise, Mrs. Giroux was unaware that she would be required to remit the premiums to the insurance company for the policy. Failing same, Mrs. Giroux will lose her entire investment. To attempt to cover the questionable prudence of the viatical investment, the Respondent had Mrs. Giroux write and sign several documents, none of which were remembered by her. Similarly, the Respondent sold Mrs. Giroux two annuities. She liquidated certificates of deposit to purchase the annuities based upon documents the Respondent brought her to sign. Again, Mrs. Giroux has no recollection of signing the authorization forms that were presented to the bank. Prior to selling Mrs. Giroux the viatical and the annuities, the Respondent did not perform a written client financial analysis to determine if there were valid tax reasons for either type of investment. In fact, there are no tax advantages to Mrs. Giroux. Although the annuities were subsequently refunded to her, there is no credible evidence that they would have been preferable to the return earned by the certificates of deposit. As to the viatical, unless the viator dies within 12 months of the estimate dated of death, Mrs. Giroux will have to remit the premium amounts to keep the policy in effect just to preserve her investment. Thus the unknown return and illiquid nature of the investment may prove a significant hardship for her. Family concerns regarding Mrs. Giroux's investments arose after Mrs. O'Toole learned of the viatical purchase. During a visit to Florida Mrs. O'Toole met with the Respondent to attempt to gather information regarding her mother's investments. Of particular concern was the fact that Mrs. Giroux's understanding of the terms of the annuities did not match the paperwork Mrs. O'Toole was able to locate. Mrs. Giroux's annuities did not allow for any annual withdrawal of principal despite the Respondent's assertions that Mrs. Giroux could draw down funds. When challenged on that point, the Respondent maintained that the company issued the wrong policy. He did not take responsibility for the error until the administrative charges were filed with the Department by Mrs. O'Toole. He then assisted all parties in securing the refund of the annuity amounts. In fact, as of the date of hearing, such amounts had been refunded to Mrs. Giroux. As to the viatical, Mrs. Giroux does not know who the viator is. Presumably the viator is alive. How her estate would benefit should Mrs. Giroux predecease the viator is unknown. It is known, however, that Mrs. Giroux is not in a tax bracket mandating tax consideration of tax deferred income opportunities. The total amount of funds invested by Mrs. Giroux in reliance on the Respondent's suggestions was $131,000, over one-half of her life savings. The Respondent has had his insurance license previously disciplined for misrepresentation. Nevertheless, prior to allowing Mrs. Giroux, an elderly, uneducated, and unsophisticated investor to purchase the products described herein, he did nothing to encourage her to seek the independent advice that might be obtained from an accountant, a lawyer, a banker, or family member.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance enter a final order revoking the Respondent's license and eligibility for license. DONE AND ENTERED this 26th day of October, 2001, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 2001. COPIES FURNISHED: David J. Busch, Esquire Department of Insurance 645A Larson Building 200 East Gaines Street Tallahassee, Florida 32312 Lawrence H. Sussman 56 Southwest Riverway Boulevard Palm City, Florida 34990 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue Whether or not Respondent violated provisions of Chapter 626, Florida Statutes, as more specifically alleged in the Administrative Complaint dated August 9, 1991.
Findings Of Fact Petitioner, the Department of Insurance and Treasurer, is the regulatory agency which is authorized to, and regulates the insurance industry in the State of Florida. Respondent, Shirley Ann Cramer, during times material, was licensed by Petitioner as a Series 218 and 220 licensee (life and health and property and casualty insurance), respectively. On September 28, 1990, Petitioner entered a final order imposing a disciplinary suspension for a period of one year effective September 28, 1990 (Case No. 89-L-413RCB) of all licenses issued to Respondent. On October 13, 1990, Respondent's counsel, John Waller, advised Respondent that Petitioner had suspended her license and that he would appeal the matter if she desired, however he advised that to do so would require a substantial cash outlay. Waller suggested that they consider that option, and, to that end, Respondent scheduled an appointment to discuss whether or not an appeal would be feasible. Waller advised Respondent that she had until October 28, 1990, to file her appeal. Respondent received a copy of the final order on or about October 25, 1990. Respondent ordered a copy of that order from Petitioner, by Federal Express delivery. On the following day, October 26, 1990, Respondent filed a pro se notice of appeal and submitted the necessary filing fee of $250. Subsequent thereto, Respondent contacted another attorney who had been formerly employed by the Department of Professional Regulation, Drucilla Bell, and the possibilities of an appeal was discussed with Ms. Bell. During late December, a fee arrangement was agreed upon, and Respondent paid Bell a down payment of $2500 to initially file a brief and a motion to stay the suspension pending the outcome of the appeal. Motions to stay the suspension were filed, both with Petitioner and with the Second District Court of Appeal. On February 6, 1990, Petitioner entered an order denying a stay of the final order, and on February 8, 1990, Respondent's counsel, Bell, filed a Petition For Supersedeas response to the Petition In Opposition To Stay Pending Appeal in the Second District Court of Appeal wherein she requested a grant of her motion. On February 14, 1991, the Second District Court of Appeal denied Respondent's Petition For Supersedeas. On October 10, 1990, Respondent, based on a referral by an associate, Gary Bingham, contacted Kenneth Newsome, the owner of Apollo International Incorporated, d/b/a Alpha Metal Products, located in Clearwater, Florida (herein Apollo) for the purpose of obtaining workers' compensation insurance. To that end, on October 17, 1990, Respondent received a premium payment check from Apollo in the amount of $5547.22 for workers' compensation insurance. Respondent initiated efforts to place coverage for Apollo by working up a rate quote based on the Form 940's which were submitted by Apollo's bookkeeper. Apollo's check was returned for insufficient funds after being deposited in the account of Respondent's insurance agency, A.S.A.P. On or about November 28, 1990, Apollo provided Respondent another check in the amount of $3000 as a premium payment for Apollo's workers' compensation insurance. That check was also deposited in A.S.A.P.'s account which was a premium trust account for customer funds. On two occasions during December 1990, to wit, December 6 and December 27, the balance on that account went below $3000. After receiving the $3000 check as payment toward Apollo's insurance, Respondent advised Apollo's owner, Newsome, that an additional premium was due based on an audit of the most recent Form 940's by the issuing carrier, the Florida assigned risk plan, and Newsome complained about the payment of any additional premium monies. During this period of time, Respondent received two telephone calls from entities who needed verification that Apollo had in fact obtained workers' compensation insurance. Respondent took those calls and advised the inquirers that a procedure was in place to obtain that coverage for Apollo. On October 7, 1990, when Agent Bingham advised Respondent that Apollo needed assistance in obtaining workers' compensation insurance she was being visited by Horace Smith, an insurance producer who was making a routine call and trying to market new business. Mr. Smith is a marketing manager for Guardian Property and Casualty, TransFlorida Casualty Insurance Company. Mr. Smith is the holder of an 055 series administrative license. Smith has been licensed in Florida since 1946. Smith has known Respondent approximately 18 years. Smith visited with Respondent at the Apollo site to determine whether or not that risk would be a coverage that his company was interested in writing. Smith inspected Apollo's premises and indicated a possibility of writing the commercial auto and commercial fire and general liability for Apollo when the existing coverage expired. Throughout the course of events, Respondent was under the impression both from her counsels Waller and Bell, that she could continue writing business during the pendency of her appeal. Respondent did not engage in any further acts of transacting insurance business other than the Apollo workers' compensation account. Respondent's failure to place insurance for Apollo was based on Apollo's failure to pay the premiums due. Respondent returned the unused premium to Apollo, although there was a slight delay in doing so. In this regard, Respondent had made repeated requests to Apollo to submit the additional premium monies, and within a month after the last demand was made and when the premiums were not remitted, Apollo received a return premium payment from Respondent within 30 days. Respondent attempted to complete the application for the Apollo worker's compensation insurance coverage. To this end, she visited the site and used all the documentation necessary to prepare a quote which was based on the requisite payroll information supplied by Apollo. The Apollo transaction was initiated prior to Respondent's receipt of the Final Order suspending her licenses.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner enter a final order dismissing the Administrative Complaint filed herein. DONE AND ENTERED this 25th day of June, 1992, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 1992. APPENDIX Rulings on Petitioner's proposed findings: Paragraph 1, adopted as modified, Paragraphs 1, 2, and 3, Recommended Order. Paragraph 2, Recommended Order. adopted as modified, Paragraph 4, Paragraph 6, Recommended Order. adopted as modified, Paragraph 6, Paragraph 8, Recommended Order. adopted as modified, Paragraph 9, Paragraph 9, rejected, contrary to the weight of evidence, Paragraphs 7, 11 and 18, Recommended Order. Paragraph 10, adopted as relevant, Paragraph 19, Recommended Order. Remainder rejected as contrary to the greater weight of evidence, Paragraphs 7, 11, 12, 14 and 18, Recommended Order. Paragraph 11, rejected, unnecessary. Rulings on Respondent's proposed findings: Respondent's proposed findings are accepted and are substantially incorporated in this Recommended Order. Proposed findings not found herein were deemed irrelevant and were unnecessary to resolve the issues posed. COPIES FURNISHED: David D. Hershel, Esquire Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300 Peter C. Clement, Esquire 2650 Tampa Road, Suite A Palm Harbor, FL 34684 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue The issues are whether Respondent has made unauthorized payments to Superior Insurance Group, its corporate parent, and whether Respondent has properly disclosed these payments on its financial reports filed with Petitioner.
Findings Of Fact Respondent is a domestic stock insurance company operating under a certificate of authority to transact in Florida the business of property and casualty insurance. As a nonstandard automobile insurer, Respondent primarily deals with policyholders whose driving records and accident histories preclude their coverage by standard automobile insurers. Superior Insurance Group, Inc. (formerly GGS Management, Inc. (GGS)) owns Respondent; Symons International Group, Inc. (Symons) owns Superior Insurance Group, Inc. (Superior Group); and Goran Capital, Inc. (Goran) owns 73 percent of Symons. Although publicly traded, Goran was founded, and probably is still controlled, by the Symons family. Superior Group serves as Respondent’s managing general agent. GGS changed its name to Superior Group in early 2000; where appropriate, this Recommended Order refers to this entity as GGS/Superior Group. Respondent owns Superior American Insurance Company (Superior American) and Superior Guaranty Insurance Company (Superior Guaranty), which are both domestic stock insurance companies authorized to conduct in Florida the business of property and casualty insurance. Also engaged in the nonstandard automobile insurance business, Superior American and Superior Guaranty transfer all of their premiums and losses to Respondent under a reinsurance agreement. All financial information concerning Superior American and Superior Guaranty, which, for the purpose of this case, are mere conduits to Respondent, are included in the financial information of Respondent. On or about April 30, 1996, GGS acquired the stock of Respondent, as well as other assets, from an unrelated corporation, Fortis, Inc. or one of its subsidiaries. From the regulatory perspective, the acquisition started when, as required by law, on or about February 5, 1996, GGS filed with Petitioner a Form A application for Petitioner’s approval of the acquisition of Respondent. This was an extensive document, consisting of more than 1000 pages. One of the purposes of the application process, as described in Section 628.461, Florida Statutes, is to assure the adequacy of the funds used by the entity acquiring the insurer. The proposed acquisition is described by the Statement Regarding the Acquisition of More Than Five Percent of the Outstanding Voting Securities of Superior Insurance Company . . . by GGS Management, Inc., dated February 5, 1996 (Acquisition Statement). The Acquisition Statement states that GGS Management Holdings, Inc. owned GGS. (The distinction between GGS and GGS Management Holdings, Inc. is irrelevant to this case, so “GGS,” as used in this Recommended Order, shall also refer to GGS Management Holdings, Inc.) According to the Acquisition Statement, Symons owned 52 percent of GGS; GS Capital Partners II, L.P., owned 30 percent of GGS; GS Capital Partners II Offshore, L.P., owned 12 percent of GGS; and three mutual funds (probably all affiliates of Goldman Sachs) owned the remaining 6 percent of GGS. GS Capital Partners II, L.P., was owned by 100 investors, including The Goldman Sachs Group, L.P. (16.54 percent), “wealthy individuals and trusts, corporate pension funds, foundations and endowments, family trusts/corporations and one state pension fund.” The ownership of GS Capital Partners II Offshore, L.P., resembled the ownership of GS Capital Partners II, L.P. The Acquisition Statement states that GGS “will be the manager of all insurance operations for [Respondent] and will act as the holding company for [Respondent] and [an Indiana nonstandard automobile insurer known as Pafco whose stock Symons was contributing to GGS].” The Acquisition Statement projects the stock-purchase price, which was expressed as a formula, to be about $60 million. Citing the $2 billion in capital of the two Goldman Sachs limited partnerships and the $50 million in capital of Goran, the Acquisition Statement assures that “GGS has tremendous wherewithal to fund the growth needs of [Respondent] . . ..” Alluding to Goran’s 20 years’ experience in managing nonstandard automobile insurance companies, the Acquisition Statement represents that the Goldman Sachs limited partnerships and Goran “possess the capital and leadership resources to support the proposed activities of [Respondent].” According to the Acquisition Statement, the Goldman Sachs limited partnerships and Goran “anticipate that the acquisition of [Respondent] is but the first step in an effort to build a significant non-standard auto insurance company.” The Acquisition Statement describes the respective contributions of the two owners of GGS: Symons will contribute Pafco, which then had a current GAAP book value of $14 million, and the Goldman Sachs limited partnerships will contribute $20 million in cash. With the backing of Symons and the Goldman Sachs limited partnerships and secured by all of the stock of Respondent and GGS, GGS will execute a six-year promissory note with The Chase Manhattan Bank (Chase) for $44 million. Drawing $40 million from this credit extension and using the $20 million cash contribution of the Goldman Sachs limited partnerships, GGS will fund the anticipated cash purchase price of $60 million. The Acquisition Statement represents that GGS will be able to service the debt. Due to the cash contribution of the Goldman Sachs limited partnerships, the Chase debt represents only two-thirds of the purchase price. Due to the cash contribution of the Goldman Sachs limited partnerships and the stock contribution by Symons, the Chase debt represents only about one-half of the initial capital of GGS. The Acquisition Statement states that GGS will service the Chase debt in part by “the combination of the management activities of both Pafco and [Respondent] within GGS, billing fees, other non-insurance company activities and anticipated insurance company operating economies which will result from the combination of these two operations [Pafco and Respondent].” The equity contributions of cash and stock “contribute significantly to the financial stability of GGS, allowing GGS to service the debt using operating cash flows only, including, if necessary, normal dividends from earned surplus as a secondary source of debt service funds. GGS does not anticipate using dividends from either Pafco or [Respondent] as a primary source of debt service funds.” The Chase Credit Agreement, which is dated April 30, 1996, requires GGS to use its best efforts to cause Respondent to pay "cash dividends or other distributions or payments in cash including . . . the payment of Billing Fees and Management Fees" in sufficient amounts to pay all principal and interest due under the financing instrument. The Chase Credit Agreement defines "Billing Fees" as: "fees with respect to the payment of premiums on an installment basis that are received by an Insurance Subsidiary from policyholders and in turn paid to [GGS] or received directly by [GGS] . . .." The Chase Credit Agreement defines "Management Fees" as: "all fees paid by an Insurance Subsidiary to [GGS] that are calculated on the basis of gross written premiums." With respect to the "Management Fees" described in the Chase Credit Agreement, the Acquisition Statement describes a five-year management agreement to be entered into by GGS with Pafco and Respondent (Management Agreement). The Management Agreement, which GGS and Respondent executed on April 30, 1996, provides that GGS “will provide management services to both Pafco and [Respondent] and will receive from [Respondent] as compensation 17% of [Respondent’s] gross written premium” and a slightly lower percentage of premiums from Pafco (Management Fee). Under the Management Agreement, Respondent “will continue to pay premium taxes, boards and bureaus costs, legal and audit fees and certain computer costs.” The Acquisition Statement states that Respondent’s “operating costs" were about 21%, so the 17% cap “will allow [Respondent] to see a significant and immediate improvement in its overall financial performance”-- over $1 million in 1994, which was the last year for which financial information was then available. The Management Agreement gives GGS the exclusive right and nondelegable and nonassignable obligation to perform a broad range of business actions on Respondent’s behalf. These actions include accepting contracts, issuing policies, appointing adjustors, and adjusting claims. The Management Agreement requires GGS to "pay [Respondent’s] office rent and occupancy operating expenses from the amounts that it receives pursuant to this Agreement.” In return, the Management Agreement requires Respondent to pay GGS “fees for the business placed with [Respondent as follows:] Agents commission plus 17% not to exceed 32% in total.” The scope of the services undertaken by GGS in the Management Agreement is similarly described in the Plan of Operation, which GGS filed with Petitioner as part of the application. The Plan of Operation provides that, in exchange for the 17 percent “management commission,” GGS assumes the responsibility for all aspects of the operating expenses of the book including underwriting, claims handling and administration. The only expenses which remain the responsibility of [Respondent] directly are those expenses directly related to the insurance book, such as premium taxes, boards and bureaus, license fees, guaranty fund assessments and miscellaneous expenses such as legal and audit expenses and certain computer costs associated directly with [Respondent]. In response to a request for additional information, Goran’s general counsel, by letter dated March 13, 1996, to Petitioner’s application coordinator, added another document, Document 26. The new document was a pro forma financial projection for 1996-2002 (Proforma) showing the sources of funds for GGS to service the Chase debt. The seven-year Proforma contains only two significant sources of income for GGS: “management fee income” and “finance & service fee income" (Finance and Service Fees). By year, starting with 1996, these respective figures are $28.6 million and $7.0 million, $34.2 million and $8.6 million, $38.1 million and $9.9 million, $42.6 million and $11.0 million, $47.5 million and $12.3 million, $53.0 million and $13.7 million, and $59.3 million and $15.3 million. Accounting for the principal and interest payments over the six-year repayment term of the Chase Credit Agreement, the Proforma shows ending cash balances, during each of the covered years, culminating in a final cash balance, in 2002, of $43.9 million. By letter dated March 29, 1996, Goran’s general counsel informed Petitioner that an increase in Respondent’s book value had triggered an increase in the purchase price from $60 million to $66 million. Also, the book value of Pafco had increased from $14 million to $15.3 million, and the cash required of the Goldman Sachs limited partnerships had increased from $20 million to $21.2 million. Additionally, the letter states that Chase had increased its commitment from $44 million to $48 million. A revised Document 26 accompanied the March 29 letter and showed the same income projections. Reflecting increased debt-service projections, the revised Proforma projected lower cash balances, culminating with $39.8 million in 2002. During a meeting in March 1996, Mr. Alan Symons, president and chief executive officer of Goran and a director of Superior Group and Respondent, met with three of Petitioner's representatives, including Mary Mostoller, Petitioner's employee primarily responsible for the substantive examination of the GGS application. During that meeting, Mr. Symons informed Petitioner that GGS would receive Finance and Service Fees from Respondent's policyholders who paid their premiums by installments. Ms. Mostoller did not testify, and the sole representative of Petitioner who attended the meeting and testified candidly admitted that he could not recall whether they discussed this matter. In response to another request for additional information, Respondent’s present counsel, by letter dated April 12, 1996, informed Petitioner that the “finance and service fee income” line of the Proforma “is composed primarily of billing fees assessed to policyholders that choose to make payments on a monthly basis,” using the same rate that Respondent had long used. The letter explains that the projected increase in these fees is attributable solely to a projected increase in business and not to a projected increase in the rate historically charged policyholders for this service. In an internal memorandum dated April 18, 1996, Ms. Mostoller noted that GGS would pay the Chase Credit Agreement through a “combination of the management fees and other billing fees of both Pafco and [Respondent].” Later in the April 18 memorandum, though, Ms. Mostoller suggested, among other things, that Petitioner condition its approval of the acquisition on the right of Petitioner to reevaluate annually the reasonableness of the “management fee and agent’s commission”--omitting any mention of the "other billing fees." On April 30, 1996, Petitioner entered a Consent Order Approving Acquisition of Stock Pursuant to Section 628.461, Florida Statutes (Consent Order). Incorporating all of Ms. Mostoller's recommendations, the Consent Order is signed by Respondent and GGS, which "agree to and consent to all of the above cited terms and conditions . . .." The Consent Order does not incorporate by reference the application and related documents, nor does the Consent Order contain an integration clause, which, if present, would merge all prior written and unwritten agreements into the Consent Order so as to preclude the implementation of such agreements in conjunction with the Consent Order. Among other things, the Consent Order mandates the following: [Respondent] shall give advance notice to [Petitioner] of any proposed changes in the [Management Agreement] and shall receive written approval from [Petitioner] prior to implementing those changes. In addition, for a period of three (3) years, [Petitioner] shall reevaluate at the end of each calendar year the reasonableness of the fees as reflected on Addendum A of the [Management] Agreement[.] Furthermore, [Petitioner] may at its sole discretion, and after consideration of the performance and operating percentages of [Respondent] and any other pertinent data, require [Respondent] to make adjustments in the [M]anagement [F]ee and agent's commission. GGS . . . shall file each year an audited financial statement with [Petitioner] . . .. In addition to the above, for a period of 4 years from the date of execution of this Consent Order . . .: [Respondent] shall not pay or authorize any stockholder dividends to shareholders without prior written approval of [Petitioner]. Any direct or indirect contracts, agreements or transactions of any type or nature including but not limited to the sale or exchange of assets among or between [Respondent] and any member of the Goran . . . holding company system shall receive prior written approval of [Petitioner]. That failure to adhere to one or more of the above terms and conditions shall result WITHOUT FURTHER PROCEEDINGS in the Treasurer and Insurance Commissioner DENYING the above acquisition, or the REVOCATION of the insurers' certification of authority if such failure to adhere occurs after the issuance of the Consent Order approving the above acquisition. The Consent Order addresses the Management Fees and the commissions payable to the independent agents who sell Respondent's insurance policies. However, the Consent Order omits any explicit mention of the Finance and Service Fees, even though GGS and Respondent had clearly and unambiguously disclosed these fees to Petitioner on several occasions prior to the issuance of the Consent Order. On its face, the Consent Order requires prior approval for the payment of Finance and Service Fees, which arise due to a contract or agreement between Respondent and GGS/Superior Group. The Consent Order prohibits "direct or indirect contracts, agreements or transactions of any type or nature including . . . the sale or exchange of assets among or between [Respondent] and any member of the Goran . . . holding company system," without Petitioner's prior written approval. The exact nature of these Finance and Service Fees facilitates the determination of their proper treatment under the Consent Order and the facts of this case. Ostensibly, the Finance and Service Fees pertain to items not covered by the Management Fees, which cover a wide range of items. In fact, the Finance and Service Fees arise only when a policyholder elects to pay his premium in installments; if no policyholder were to pay his premium by installments, no Finance and Service Fees would be due. The testimony in the record suggests that the Finance and Service Fees pertain to services that necessarily must be performed when policyholders pay their premiums by installments. This suggestion is true, as far as it goes. Installment payments require an insurer to incur administrative and information-management costs in billing and collecting installment payments. Other costs arise if late installment payments necessitate the cancellations and if reinstatements follow cancellations. Installment-payment transactions are undeniably more expensive to the insurer than single-payment transactions. The record as to these installment-payment costs, which are more in the nature of a service charge, is well- developed. However, the Finance and Service Fees also pertain to the cost of the loss of the use of money when policyholders pay their premiums by installments. Installment-payment transactions cause the insurer to lose the use of the deferred portion of the premium for the period of the deferral. The record as to these costs, which are more in the nature of a finance charge or interest, is relatively undeveloped. At the hearing, Mr. Symons testified that an insurer does not lose the use of the deferred portion of the premium for an established book of business. Mr. Symons illustrated his point by analyzing over a twelve-month period the development of a hypothetical book of business consisting of twelve insureds. If an insurer added its first insured in the first month, added a second in the third, and so forth, until it added its twelfth insured in the twelfth month, and each insured chose to pay a hypothetical $120 annual premium in twelve installments of $10 each, the cash flow in the twelfth and each succeeding month (assuming no changes in the number of insureds) would be $120-- the same that it would have been if each of the insureds chose to pay his premium in full, rather than by installment. Thus, Mr. Symons' point was that, after the first eleven months, installment payments do not result in the loss of the use of money by the insurer. Mr. Symons' illustration assumes a constant book of business after the twelfth month. However, while the insurer is adding installment-paying insureds, the insurer loses the use of the portion of the first-year premium that is deferred, as is evident in the first eleven months of Mr. Symons' illustration. Also, if the constant book of business is due to a constant replacement of nonrenewing insureds with new insureds--a distinct possibility in the nonstandard automobile market--then the insurer will again suffer the loss of the use of money over the first eleven months. Either way, Mr. Symons' illustration does not eliminate the insurer's loss of the use of money when its insureds pay by installments; the illustration only demonstrates that the extent of the loss of the use of the money may not be as great as one would casually assume. The Finance and Service Fee is sufficiently broad to encompass all of the terms used in this record to describe it: "installment fee," "billing fee," "service charge," "premium fee," and even "premium finance fee." However, only "installment fee" is sufficiently broad as to capture both types of costs covered by the Finance and Service Fee. The dual components of the Finance and Service Fee are suggested by the statute authorizing its imposition. Section 627.902, Florida Statutes, authorizes an insurer or affiliate of the insurer to "finance" premiums at the "service charge or rate of interest" specified in Section 627.901, Florida Statutes, without qualifying as a premium finance company under Chapter 627, Part XV, Florida Statutes. If the insurer or affiliate exceeds these maximum impositions, then it must qualify as a premium finance company. The "service charge or rate of interest" authorized in Section 627.901, Florida Statutes, is either $1 per installment (subject to limitations irrelevant to this case) or 18 percent simple interest on the unpaid balance. The charge per installment, which is imposed without regard to the amount deferred, suggests a service charge, and the interest charge, which is imposed without regard to the number of installments, suggests a finance charge. The determination of the proper treatment of the Finance and Service Fees under the Consent Order is also facilitated by consideration of the process by which these fees were transferred to GGS/Superior Group. As anticipated by the parties, after the acquisition of Respondent by GGS, Respondent retained no employees, and GGS/Superior Group employees performed all of the services required by Respondent. The process by which Respondent transferred the Finance and Service Fees to GGS/Superior Group began with Respondent issuing a single invoice to the policyholder showing the premium and the Finance and Service Fee, if the policyholder elected to pay by installments. As Mr. Symons testified, Respondent calculated the Finance and Service Fee on the basis of the 1.5 percent per month on the unpaid balance, rather than the specified fee per installment. The installment-paying policyholder then wrote a check for the invoiced amount, payable to Respondent, and mailed it to Respondent at the address shown on the invoice. Employees of GGS/Superior Group collected the checks and deposited them in Respondent's bank account. From these funds, the employees of GGS/Superior Group then paid the commissions to the independent agents, the Management Fee (calculated without regard to the Finance and Service Fee) to GGS/Superior Group, and the Finance and Service Fee to GGS/Superior Group. Respondent retained the remainder. Finance and Service Fees can be considerable in the nonstandard automobile insurance business. Many policyholders in this market lack the financial ability to pay premiums in total when due, so they commonly pay their premiums in installments. At the time of the 1996 acquisition, for instance, about 90 percent of Respondent's policyholders paid their premiums by installments. For 1996, on gross premiums of $156.4 million, Respondent earned net income (after taxes) of $1.978 million, as compared to gross premiums of $97.6 million and net income of $5.177 million in 1995. At the end of 1996, Respondent's surplus was $57.1 million, as compared to $49.3 million at the end of the prior year. "Surplus" or "policyholder surplus" for insurance companies is like net worth for other corporations. In 1996, Respondent received $2.154 million in Finance and Service Fees, as compared to $1.987 million in the prior year. However, Respondent did not pay any Finance and Service Fees to GGS in 1996. For related-party transactions in 1996, Respondent's financial statements disclose the payment of $155,500 to GGS and Fortis for "management fees," assumed reinsurance premiums and losses, and a capital contribution of $5.558 million from GGS, of which $4.8 million was in the form of a note. These related-party disclosures for 1996 were adequate. In August 1997, Symons bought out Goldman Sachs' interest in GGS for $61 million. Following the 1996 acquisition, Goldman Sachs had invested another $3-4 million, but, with a total investment of about $25 million, Goldman Sachs enjoyed a handsome return in a little over one year. Mr. Symons attributed the relatively high price to then-current valuations, which were 100 percent of annual gross premiums. More colorfully, Mr. Symons' brother, also a principal in the Goran family of corporations, attributed the purchase price to Goldman Sachs' "greed. " At the same time that Symons bought out Goldman Sachs, Symons enabled GGS to retire the Chase acquisition debt. The elimination of Goldman Sachs and Chase may be related by more than the need for $61 million to buy out Goldman Sachs. The 1996 Annual Statement that Respondent filed with Petitioner reports "total adjusted capital" of $57.1 million and "authorized control level risk-based capital" of $20.7 million, for a ratio of less than 3:1. Section 8.10 of the Chase Credit Agreement states that GGS "will not, on any date, permit the Risk Based Capital Ratio . . . of [Respondent] to be less than 3 to 1." Section 1 of the Chase Credit Agreement defines the ”Risk-Based Capital Ratio" as the ratio of Respondent's "Total Adjusted Capital" to its "Authorized Control Level Risk-Based Capital." In August 1997, Symons raised $135 million in a public offering of securities that probably more closely resemble debt than equity. After paying $61 million to Goldman Sachs and the $45-48 million then due Chase under the Credit Agreement (due to additional advances), Symons applied the remaining loan proceeds to various affiliates, as additional capital contributions, and possibly itself, for cash-flow purposes. The $135 million debt instrument, which remains in place, requires payments over a 30- year term, provides for no repayment of principal until the end of the term, and allows for the deferral of the semi-annual dividend/interest payments for up to five years. Symons exercised its right to defer dividend/interest payments for an undetermined period of time in 2000. The payments that are the subject of this case took place from 1997 through 1999. During this period, on a gross basis, Respondent paid GGS $35.2 million in Finance and Service Fees. In fact, $1.395 million paid in 1999 were not Finance and Service Fees, but were SR-22 policy fees, which presumably are charges attributable to the preparation and issuance by GGS of certificates of financial responsibility. Because Respondent's financial statements did not separate any SR-22 fees from Finance and Service Fees for 1997 or 1998, it is impossible to identify what, if any, portion of the Finance and Service Fees in those years were actually SR-22 fees. Even though SR-22 fees represent a service charge without an interest component, they are included in Finance and Service Fees for purposes of this Recommended Order. For 1997, on gross premiums of $188.3 million, Respondent earned net income of $379,000. For 1998, on gross premiums of $179.8 million, Respondent suffered a net loss of $8.122 million. For 1999, on gross premiums of $170.5 million, Respondent suffered a net loss of $19.232 million. Respondent's surplus decreased from $65.1 million at the end of 1997, to $57.6 million at the end of 1998, to $34.2 million at the end of 1999. In its Quarterly Statement filed as of September 30, 2000, Respondent disclosed, for the first nine months of 2000, a net loss of $5.89 million and a decline in surplus to $24.0 million. By the end of 2000, Respondent's surplus decreased to $21.6 million. However, at all times, Respondent's surplus exceeded the statutory minimum. For 1999, for example, Respondent's surplus of $34.2 million doubled the statutory minimum. Respondent also satisfied the statutory premium-to-surplus ratio, although possibly not the statutory risk-based capital ratio. As of the final hearing, Petitioner had required Respondent to file a risk-based capital plan, Respondent had done so, Petitioner had required amendments to the plan, Respondent had declined to adopt the amendments, and Petitioner had not yet taken further action. From 1997-1999, Respondent's annual statements, quarterly statements, and financial statements inadequately disclosed the payments that Respondent made to GGS. The annual statements disclose "Service Fee on Ceded Business," which is a write-in item described in language chosen by Respondent. Petitioner's contention that this item appears to be a reinsurance transaction in which Respondent is ceding risk and premiums to a third-party is rebutted by the fact that the Schedule F, Part 5, on each annual statement discloses relatively minor reinsurance transactions whose ceded premiums would not approach those reported as "Service Fee on Ceded Business." Notwithstanding the unconvincing nature of Petitioner's contention as to the precise confusion caused by Respondent's reporting of the payment of Finance and Service Fees, Respondent's reporting was clearly inadequate and even misleading. The real problem in the annual statements, quarterly statements, and financial statements is their failure to disclose Respondent's payments to a related party, GGS. Respondent unconvincingly attempts to explain this omission by an imaginative recharacterization of the Finance and Service Fee transactions as pass-through transactions. These were not pass-through transactions in 1996 when Respondent retained the Finance and Service Fees. These were not pass- through transactions in 1997-1999 when Respondent properly accounted for these payments from policyholders as income and payments to GGS as expenses. The proper characterization of these transactions involving the Finance and Service Fees does not depend on the form that Respondent and GGS/Superior Group selected for them-- in which policyholders pay Respondent and Respondent pays GGS/Superior Group--although this form does not serve particularly well Respondent's present contention. Even if Respondent had changed the form so that the policyholders paid the Finance and Service Fees directly to GGS/Superior Group, the economic reality of the transactions would remain the same. Even if policyholders paid their installments to Respondent, GGS/Superior Group, or any other party, the Finance and Service Fees would initially vest in Respondent, which, under an agreement, would then owe them to GGS/Superior Group. The inadequacy of the disclosure of the Finance and Service Fees is a relatively minor issue, in itself, in this case. In its proposed recommended order, Respondent invites direction as to how Petitioner would like Respondent to report these payments in the future. The major impact of Respondent's nondisclosure of these payments is that none of the statements filed after the 1996 acquisition notified Petitioner of the existence of these payments. It is thus impossible to infer an agreement or even acquiescence on the part of Petitioner regarding Respondent's payment of Finance and Service Fees to GGS/Superior Group. The major issue in this case is whether the Consent Order authorizes Respondent to pay $35 million in Finance and Service Fees after the 1996 acquisition or, if not, whether Petitioner has approved of such payments by any other means. As already noted, the Consent Order authorizes the payment of agents' commissions and Management Fees, but not Finance and Service Fees. To the contrary, the Consent Order prohibits the payment of Finance and Service Fees for four years, at least without Petitioner's approval, because of the provision otherwise prohibiting agreements, contracts, and the transfer of assets involving Respondent and its affiliates. As noted in the Conclusions of Law, the absence of an integration clause invites consideration of oral agreements that may have preceded the execution of the Consent Order. The Consent Order is somewhat of a hybrid: Petitioner orders and Respondent consents. However, the Consent Order is sufficiently an agreement to be subject to interpretation under normal principles governing the interpretation of contracts. Respondent contends that such agreements encompassed the payment of Finance and Service Fees because Respondent disclosed such payments several times to Petitioner prior to the issuance of the Consent Order. (Any testimonial assertion of an explicit agreement by Petitioner to the payment of the Finance and Service Fees is discredited.) Respondent repeated disclosures to Petitioner of the Finance and Service Fees began with the Acquisition Statement at the start of the application process. The parties discussed these fees in March 1996. The Proformas disclose two main revenue sources from which GGS/Superior Group could service its acquisition debt: Management Fees and Finance and Service Fees. And the Proformas project almost exactly the amount that Respondent paid GGS in Finance and Service Fees from 1997-99. Although the ratio of Management Fees to Finance and Service Fees was 4:1 in the Proformas, this ratio does not minimize the role of the Finance and Service Fees. Based on gross revenues, this ratio is no indication of the relative profitability of these two sources of revenue. In fact, in 1999, the expenses covered by the Management Agreement exceeded the Management Fees by $3 million. The Finance and Service Fees are thus an important component of the revenue on which GGS intended to rely in servicing the acquisition debt. However, neither the clear disclosure of the Finance and Service Fees nor Petitioner's recognition of the importance of these fees in servicing the acquisition debt necessarily means that Petitioner agreed to their payment. By a preponderance of, although less than clear and convincing, evidence, the record precludes the possibility that Petitioner agreed in preclosing discussions or the Consent Order to preapprove the Finance and Service Fees. In this respect, Petitioner treated the Finance and Service Fees differently from the Management Fees, which Petitioner agreed to preapprove, subject to annual reevaluation for the first three years. At the level of a preponderance of the evidence, it is possible to harmonize this construction of the Consent Order with Respondent's repeated disclosures of the Finance and Service Fees. The Acquisition Statement mentions dividends as a revenue source--although a "secondary" source--and the Consent Order clearly did not impliedly preapprove the payment of dividends. Aware of the reliance of GGS upon the Finance and Service Fees to service the Chase acquisition debt, Petitioner may have chosen, for the first four years, to consider Respondent's requests for approval of the Finance and Service Fees, based on the circumstances in existence at the time of the requests. This interpretation is consistent with the testimony of Petitioner's employee that he believed that Petitioner would be able to restrict Respondent's payment of Finance and Service Fees to GGS/Superior Group because Petitioner's approval was required for the payment of dividends. The payments are pursuant to a contract or agreement for services and, as such, are not dividends, but the Consent Order requires Petitioner's approval for all contracts and agreements during the first four years. The common point is that Petitioner understood that its approval would be required for Finance and Service Fees, which had not been preapproved like Management Fees. During the application process, GGS may not have been concerned by Petitioner's failure to preapprove the Finance and Service Fees. At the time of the 1996 acquisition, as contrasted to the period after the 1997 refinancing, GGS enjoyed a relatively light debt load due to Goldman Sachs' equity investment and the "tremendous wherewithal" of its 48 percent co-owner. Another practical distinction between the Finance and Service Fees and the Management Fees militates against finding that the Consent Order impliedly approves the Finance and Service Fees and militates in favor of a finding that GGS viewed these fees as more contingent and less likely to be needed than the Management Fees. At the start of the application process, GGS submitted to Petitioner a form Management Agreement. At no time did GGS ever submit to Petitioner a form Finance and Service Agreement. The contingent nature of the Finance and Service Fees, relative to the Management Fees, is reinforced by the fact that, in 1996, Respondent retained the Finance and Service Fees. Respondent's contention that the Finance and Service Fees were a component of the agreement between it and Petitioner is not without its appeal. The contention is sufficient to preclude a finding by clear and convincing evidence that the agreement between the parties did not include a preapproval of Finance and Service Fees. Unlike the Management Fees, the maximum amount of the Finance and Service Fees is set by statute. Two consequences follow. First, Petitioner might not have found it necessary to incorporate these fees in a written agreement, as long as the maximum amount were acceptable to Petitioner, because the law establishes a ceiling on the fees and identifies the services for which they are compensation. Second, Petitioner might not have found it necessary provide for annual reevaluation of the fees, again due to the applicable statutory maximum. In one respect, the relatively contingent quality of the Finance and Service Fees inures to Respondent's benefit, at least in theory. If no policyholder paid by installments, there would be no Finance and Service Fees; however, as a practical matter, the Finance and Service Fees are almost as pervasive as the Management Fees. More importantly, though, the Finance and Service Fees, especially when imposed as a percentage of the unpaid balance, contain a significant interest component. Paying these fees to GGS/Superior Group, Respondent denies itself the investment income attributable to this forbearance. Alternatively, to the extent that the Finance and Service Fees defray services, as they do to some unknown extent, the greater weight of the evidence, although not clear and convincing evidence, establishes that these services are among the services that GGS/Superior Group undertook in the Management Agreement. These factors militate strongly against treating the Finance and Service Fees as an implied exception to the provision of the Consent Order requiring approval of all contracts or agreements with affiliates during the first four years. For these reasons, Petitioner has proved by a preponderance of the evidence, although not clear and convincing evidence, that GGS/Superior Group and Respondent needed Petitioner's approval for all payments of Finance and Service Fees prior to April 30, 2000. To the extent that, as discussed in the Conclusions of Law, Petitioner withholds such approval, the next issue is to determine the amount of Finance and Service Fees that GGS/Superior Group must return to Respondent. The determination of the amount of the repayment is substantially affected by two facts. First, Petitioner's approval is not required for any Finance and Service Fees that Respondent paid GGS/Superior Group after April 30, 2000. The Consent Order did not require Petitioner's approval for such payments, which were not dividends, for which approval would always be required, if inadequate surplus existed. Second, GGS/Superior Group is entitled to a dollar-for-dollar credit, against any liability for improperly received Finance and Service Fees, for about $20 million that it directly or indirectly transferred to Respondent since the 1996 acquisition. Half of the $20 million credit arises from Management Fees that GGS did not collect from Respondent in 1996 and 1998. As Petitioner notes, there is little, if any, documentation concerning these uncollected fees. Mr. Symons persuasively testified that the proper characterization of these amounts is dependent upon the outcome of Petitioner's effort to disallow the Finance and Service Fees already paid by Respondent. Petitioner must credit to GGS/Superior Group these $10 million in fees as an offset to the $35.2 million (or such lesser amount remaining after any retroactive approvals from Petitioner) that Respondent improperly paid GGS/Superior Group in Finance and Service Fees. Also, in 1997, GGS contributed about $10 million to Respondent's capital. As was the case with the uncollected Management Fees in 1996 and 1998, the record contains little, if any, documentation concerning the transfer, including any conditions that may have attached to it. Petitioner should credit GGS/Superior Group with this sum as an offset against the $35.2 million (or such lesser amount remaining after any retroactive approvals from Petitioner) that Respondent improperly paid GGS/Superior Group in Finance and Service Fees. As for the remaining $15 million in Finance and Service Fees that Respondent improperly paid to GGS through 1999 and any additional amounts through April 30, 2000, the impropriety arises because Respondent failed first to obtain Petitioner's approval--not because any transaction was otherwise necessarily improper. Concerning the remaining $15 million, then, Petitioner should give Respondent and GGS/Superior Group an opportunity to request retroactive approval for the payment of all or part of this sum, without regard to the lateness of the request. Applying any and all factors that Petitioner would ordinarily apply in considering such requests, Petitioner can then reach an informed determination as to the propriety of this $15 million in Finance and Service Fees. If Petitioner determines that Respondent must obtain from GGS/Superior Group repayment of any Finance and Service Fees, then Petitioner may consider the issue of the timing of the repayment. As Petitioner mentions in its proposed recommended order, an evidentiary hearing might be useful for this purpose. Obvious sources would be setoffs against Management Fees and Finance and Service Fees that Respondent is presently paying Superior Group.
Recommendation It is RECOMMENDED that the Department of Insurance enter a final cease and desist order: Determining that, without the prior written consent of the Department, Superior Insurance Company paid Finance and Service Fees to GGS/Superior Group in the net amount of approximately $15 million, plus all such amounts paid after the period covered by this case through April 30, 2000. Requiring that Superior Insurance Company immediately file all necessary documentation with the Department to seek the retroactive approval of all or part of the sum set forth in the preceding paragraph. If any sum remains improperly paid after implementing the procedure set forth in the preceding paragraph, establishing a reasonable repayment schedule for Respondent to impose upon Superior Group--if necessary, in the form of setoffs of Management Fees and Finance and Service Fees due at the time of, and after, the Final Order. Determining that Superior Insurance Company inadequately disclosed related-party transactions and ordering that Superior Insurance Company comply with specific guidelines for the reporting of these transactions in the future. DONE AND ENTERED this 1st day of June, 2001, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 2001. COPIES FURNISHED: Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307 S. Marc Herskovitz Luke S. Brown Division of Legal Services Department of Insurance 200 East Gaines Street, Sixth Floor Tallahassee, Florida 32399-0333 Clyde W. Galloway, Jr. Austin B. Neal Foley & Lardner 106 East College Avenue, Suite 900 Tallahassee, Florida 32301
Findings Of Fact Having listened to the testimony and considered the evidence presented in this cause, it is found as follows: Dr. Melvin J. Hellinger is licensed to practice dentistry in the State of Florida by the State Board of Dentistry. Dr. Melvin J. Hellinger is currently practicing dentistry in Miami, Florida. Dr. Melvin J. Hellinger was indicted on three counts of income tax evasion in the United States District Court, District of Massachusetts. The indictment charged that Dr. Melvin J. Hellinger did willfully and knowingly attempt to evade and defeat a large part of the income taxes due and owing by him and his wife to the United States of America for the calendar years 1969, 1970 and 1971, by filing and causing to be filed with the District Director of Internal Revenue for the Internal Revenue District of Boston, in the District of Massachusetts, a false and fraudulent joint income tax return for the calendar years 1969, 1970 and 1971, each calendar year constituting a separate count. On March 10, 1975, Dr. Melvin J. Hellinger pled guilty to and was convicted of the offense of willfully and knowingly attempting to evade and defeat a large part of the income taxes due and owing by him and his wife to the United States of America by filing and causing to be filed with the Internal Revenue, a false and fraudulent joint income tax return, in violation of Section 7201, I.R.C., Title 26, U.S.C., Sec. 7201, as charged in Counts 2 and 3 of the aforementioned indictment. Count 2 charged that Dr. Hellinger did evade income taxes by filing an income tax return wherein it was stated that his and his wife's taxable income for calendar year 1970 was $47,883.08 and that the amount of tax due and owing thereon was $16,401.58, whereas, as he then and there well knew, their joint taxable income for said calendar year was $101,503.07, upon which said taxable income there was owing an income tax of $47,264.70. Count 3 charged that Dr. Hellinger did evade income taxes by filing an income tax return wherein it was stated that his and his wife's taxable income for calendar year 1971 was $50,877.52 and that the amount of tax due and owing thereon was $17,498.76, whereas, as he then and there well knew, their joint taxable income for said calendar year was $67,786.12, upon which said taxable income there was owing an income tax of $26,502.36. The United States District Court for the District of Massachusetts sentenced Dr. Melvin J. Hellinger to imprisonment for a period of three months, execution of prison sentence to be suspended and Dr. Hellinger placed on probation for a period of two years. As a special condition of his probation, he is to spend two days a month doing work at a charitable hospital or some similar institution under the supervision of the probation office. It was further ordered that Dr. Hellinger pay a fine in the amount of $10,000, payable on or before March 17, 1975. Dr. Melvin J. Hellinger is presently performing voluntary work one day a week at Jackson Memorial Hospital in Miami, Florida. Dr. Melvin J. Hellinger is a competent oral surgeon. Dr. Melvin J. Hellinger currently holds a valid license to practice dentistry in the state of Massachusetts, which license was renewed after his conviction for income-tax evasion. By his own statement, Dr. Hellinger can return to Massachusetts to practice dentistry. Dr. Melvin J. Hellinger was removed from the staff at Miami-Dade General Hospital because of the subject conviction for income tax evasion and omissions he made from his application to Miami-Dade General Hospital, which omissions reflected upon his character. Dr. Melvin J. Hellinger's membership in the American Dental Association and the American Society of Oral Surgeons has been revoked as a result of accusations by Blue Cross-Blue Shield concerning duplicate claims filed by Dr. Hellinger, which accusations have now been settled between Dr. Hellinger and Blue Cross-Blue Shield. Dr. Melvin J. Hellinger became a diplomate of the American Board of Oral Surgery in 1965, when in his late 20's. He has published in dental journals and taught at Tuft's University in oral pathology and Boston University in oral surgery. Dr. Melvin J. Hellinger came to Florida in December of 1974 from Wakefield, Massachusetts. In Wakefield, Massachusetts, Dr. Melvin J. Hellinger was very active in civic and religious affairs, contributing a substantial amount of time to community service. During the time within which Dr. Hellinger committed the subject felonies, his wife discovered that she had a cancer malignancy, which is presently being treated by a specialist in Miami. Also at that time, Dr. Hellinger's father-in-law, of whom he thought highly, suffered several strokes. Further, during that time, Dr. Hellinger suffered large stock-losses, putting a severe financial burden on him. Dr. Hellinger and his wife have four children, ages seven to twelve. Since moving to Florida, Dr. Hellinger has been active in his temple and coaches children's league football. Dr. Hellinger has no other criminal record. Dr. Melvin J. Hellinger pled guilty to and was adjudged guilty of a felony under the laws of the United States involving income tax evasion as set forth in Counts and 2 of the Accusation filed herein by the Florida State Board of Dentistry.
The Issue The issue in this case is whether the Petitioner should be issued a sales tax exemption certificate either as a "church" or as a "religious organization."
Findings Of Fact The Petitioner, In His Service, is a not-for-profit organization formed to give structure to a Bible study and prayer group Shirley B. Cole leads. Cole is the Petitioner's "pastor," but she is not ordained, does not officiate at weddings or funerals, and has no formal religious training other than participation in similar study groups in the past. The Petitioner is affiliated with an organization called the Federation of Independent Churches, which has an office on East Bird Street in Tampa, Florida. (In a post-hearing submission, Cole asserted that the Petitioner's "outreach is from Greater Ministries International, basically functioning as a satellite church, but there was no evidence regarding Greater Ministries International.) Portions of the Petitioner's by-laws were admitted in evidence at the final hearing. The by-laws make reference to three officers--president, vice-president, and secretary-treasurer--but Cole testified that she was the secretary and that someone else was the treasurer, and she did not seem to know anything about a president or vice-president. In addition, while the by-laws refer to a board of directors and meetings of the board of directors, Cole does not know anything about either. The Petitioner is small (not more than 15 members). It consists primarily of Cole and her friends and neighbors and some others who hear about the meetings. The group has met in various locations, including Cole's home at 5155 20th Avenue North, St. Petersburg, Florida, and the homes of other members of the group. In addition to Bible study and prayer, the group discusses health issues and other topics of interest and shares reading materials and tapes on topics of interest. From time to time, the group collects items of donated personal property for the use of members of the group and others in need who could use the items. In late June 1998, the Petitioner applied for a sales tax exemption certificate as a church. In response to a question from a representative of the Respondent DOR Cole stated that the Petitioner held services in her home every Thursday from 7:30 to 9:30 or 10 p.m. A DOR representative attempted to confirm Cole's representation by attending a meeting in Cole's home on Thursday, October 8, 1998, but no services were being held there, and no one was home. If there was a meeting on that day, it was held somewhere else. On or about December 28, 1998, DOR issued a Notice of Intent to Deny the Petitioner's application because the Petitioner did not have "an established physical place of worship at which nonprofit religious services and activities are regularly conducted and carried on." In January 1999, Cole requested an administrative proceeding on the Petitioner's application, representing that she was holding the Petitioner's meetings at her home every Monday from 7:30 p.m. On Monday, April 5, 1999, a DOR representative visited Cole's home at 7:30 or 7:35 p.m., but no one was home. At final hearing, Cole testified that she went to pick someone up to attend the meeting and was late returning. Cole had an April 1999 newsletter admitted in evidence. It indicates that she holds weekly Bible study meetings on Mondays at her home. It also indicates: "The week of April 19th will be our maintenance [health] meeting." It also indicates that the Monday, April 26, 1999, meeting would be a "covered dish dinner with prayer and praise fellowship afterward." Cole also had a book/tape loan check-out list admitted in evidence. The list indicates that two items were checked out on January 21, one on February 8, two on February 14, one on February 15, one on March 8, one on March 21, two on March 22, one on April 4, one on April 5, and four on April 12, 1999. (Two entries dated April 13 precede two on April 12, so it is assumed that all were on April 12, 1999). Cole owns her home, pays the taxes, and pays the utility bills. Cole also claims a homestead exemption. There are no signs, no physical attributes, or anything else that would identify Cole's house as a church. No part of the home is set aside for the Petitioner's exclusive use. The Petitioner pays no rent to Cole and does not reimburse Cole for any of her expenses (such as taxes and utility bills) of home ownership. Under local City of St. Petersburg zoning ordinances, Cole would have to obtain a special exception from the Environmental Development Commission to use her home as a church. Cole has not attempted to do so. Had she tried, the special exception would be denied because her home does not meet the ordinance's minimum lot and yard size criteria for such a special exception. (It is not clear whether Cole's home would meet the ordinance's parking, maximum floor area ratio, and maximum surface ratio criteria for a special exception for a church.) In light of past discrepancies between the Petitioner's representations and the facts, it was not clear from the evidence presented in this case that meetings have taken place, are taking place, or will take place in Cole's home on a regular basis.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the DOR enter a final order denying the Petitioner's application for a tax exemption certificate. DONE AND ENTERED this 18th day of May, 1999, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of May, 1999. COPIES FURNISHED: Shirley Cole, Pastor In His Service 5155 20th Avenue, North St. Petersburg, Florida 33710 Kevin ODonnell, Assistant General Counsel Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether Respondent, G and G General Contracting, Inc., failed to comply with the coverage requirements of the Workers’ Compensation Law, chapter 440, Florida Statutes, by not obtaining workers’ compensation insurance for its employees, and, if so, what penalty should be assessed against Respondent pursuant to section 440.107, Florida Statutes (2014).
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of the Workers’ Compensation Law that employers secure the payment of workers’ compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. G and G General Contracting, Inc. (Respondent or G and G), is a domestic business corporation organized on July 5, 2013, pursuant to the laws of the State of New York. Respondent’s primary business address is 88 Lincoln Avenue, Ardsley, New York. Gino Uli is Respondent’s President. Respondent is not a Florida corporation. On December 4, 2014, the Department’s investigator, Aysia Elliott, conducted a random workers’ compensation compliance check at a worksite in Naples, Florida. Ms. Elliott observed seven men at the worksite engaged in interior and exterior painting of a newly-constructed residence. The residence was but one in a large residential subdivision under construction. The central issue in this case, and one that is fiercely contested, is whether the painters Ms. Elliott observed at the worksite were employees of G and G. In response to her verbal inquiries to the painters on site, Ms. Elliott testified that the workers first identified Pacific Construction as their employer. Ms. Elliott attempted to contact Pacific Construction, but her calls to that company were not returned. Ms. Elliott testified that upon her further inquiry, one of the painters, Leonardo Gudiel, stated he was an employee of G and G. At this point, Ms. Elliott was unsure which company to investigate for workers’ compensation coverage for the painters at the worksite. The permit sign at the worksite identified Minto Communities as the general contractor. Ms. Elliott contacted Minto Communities via telephone to determine the name of the company to which painting had been subcontracted. At hearing, Ms. Elliott was unable to recall the names of any of the companies identified by Minto Communities as subcontractors for the job. Ms. Elliott did recall that at least two subcontractors were identified by Minto. Mr. Gudiel gave Ms. Elliott a telephone number for a man named “Edison,” alleged to be the foreman. Ms. Elliott called Edison, and testified that he informed her he was on another call and would have to call her back. Edison did not return Ms. Elliott’s call. Ms. Elliott next received a phone call from Mr. Uli. Ms. Elliott testified that, during that phone conversation, Mr. Uli identified the painters at the worksite as employees of his company, G and G. Mr. Uli denied having ever told Ms. Elliott the painters were his employees. Mr. Uli provided Ms. Elliott with the certificate of insurance demonstrating workers’ compensation insurance coverage for employees of G and G. Mr. Uli told Ms. Elliott he would be in Florida in a few days and would meet with Ms. Elliott in person. Ms. Elliott verified the existence of G and G through the State of New York Division of Corporations’ website. Ms. Elliott then verified, through the Department’s Coverage and Compliance Automated System, that G and G had no workers’ compensation coverage in Florida, nor any exemption from coverage requirements for any of its corporate officers. Ms. Elliott also contacted the New York insurance carrier identified by Mr. Uli and confirmed that the carrier did not cover any G and G employees in Florida. On December 8, 2014, Ms. Elliott reviewed the results of her December 4, 2014, workers’ compensation investigation with Maria Seidler, the Ft. Myers district Supervisor. A determination was made that sufficient evidence and information existed to issue a Stop-Work Order against G and G for failure to provide workers’ compensation insurance, as required by chapter 440. Ms. Elliott met with Mr. Uli on December 8, 2014. Ms. Elliott personally served Mr. Uli with a Stop-Work Order for the construction site in Naples and a request for specified business records on which to base the penalty calculation. Mr. Uli did not provide any records to the Department in response to the records request. The Department’s penalty auditor, Lyna Ty, was assigned to calculate the penalty to be assessed against G and G for failure to secure workers’ compensation insurance during the penalty period. The penalty period was for the two years prior to the date the Stop-Work Order was issued: December 9, 2012 to December 8, 2014. Having no employer records from G and G, Mr. Ty imputed the statewide average weekly wage as Respondent’s payroll for the seven painters at the worksite on December 4, 2014. Mr. Ty calculated a penalty of two times the workers’ compensation insurance premium that would have applied to the purchase of insurance for those specific employees during the penalty period. § 440.107(7)(e), Fla. Stat. Mr. Ty assigned NCCI code 5474, which is the classification code for painting contractors according to the SCOPES manual adopted by the Department for imputing wages associated with various occupations. On January 9, 2015, the Department issued an Amended Order of Penalty Assessment against G and G in the amount of $254,697.38 However, because G and G was not formed until July 5, 2013, the original penalty calculation was based on an incorrect penalty period. Mr. Ty recalculated the penalty based on a penalty period from July 5, 2013 through December 8, 2014. On May 26, 2015, the Department issued a Second Amended Order of Penalty Assessment against G and G in the amount of $185,354.68. Mr. Uli’s testimony provided no more clarity than Ms. Elliott’s as to the identity of the employer for the painters at the worksite on December 4, 2014. Mr. Uli previously lived in Florida for seven years and was engaged in “restaurant business.” Mr. Uli met Leonardo Gudiel, a contractor, while he was living in Florida. While living in Florida, Mr. Uli also met James Cartisano, the purported owner of Facility Construction. When Mr. Uli relocated to New York, he stayed in touch with Mr. Gudiel. According to Mr. Uli, he planned to give to Mr. Gudiel any work G and G obtained in Florida and asked Mr. Gudiel to “be registered as a vendor with [him].” Mr. Uli testified that Mr. Cartisano contacted him in New York and told him that he had been engaged by Minto Communities (Minto) to paint a model home in a new residential neighborhood under construction in Naples, Florida. Presumably, if Mr. Cartisano’s work was satisfactory to Minto, Facility Construction would be hired for the larger job. According to Mr. Uli, he referred Mr. Cartisano to Mr. Gudiel to supply painters for the job. Mr. Uli described himself as the “middle man.” Upon inquiry from the undersigned as to how Mr. Uli or G and G construction would profit from his position as the middle man, Mr. Uli stated, “No arrangement as per se on paper, Judge, but this is on – on [Mr. Cartisano’s] word to me; that if you get me the right guys down there that can do this for me, I’ll take care of you.”1/ On December 4, 2014, when Ms. Elliott conducted her random worksite inspection, Mr. Uli received a telephone call from Mr. Gudiel informing him that Ms. Elliott was onsite asking questions about workers’ compensation insurance. According to Mr. Uli, he called Mr. Cartisano, who “did not want to deal with this.”2/ Mr. Uli explained that he telephoned Ms. Elliott on December 4, 2014, to explain that the guys onsite were painting a model home for Minto, and if Minto was satisfied, Facility Construction would get the overall job (estimated at 700 houses). At hearing, Mr. Uli strongly denied that he told Ms. Elliott the workers were his employees, either on the phone on December 4, 2014, or when he met with her in person on December 8, 2014. The evidence, or lack thereof, leaves the undersigned with many unresolved questions: Why would Facility Construction contact a contractor in New York to provide painters for a job in Florida? Why did Mr. Uli supply Ms. Elliott with a copy of his certificate of insurance for workers’ compensation insurance in New York? Moreover, if the painters were not his employees, why did Mr. Uli travel to Florida from New York and meet with Ms. Elliott? From the evidence as a whole, it can be inferred that Mr. Uli had a significant interest in the work being done at the Naples worksite on December 4, 2014. However, it cannot be inferred that G and G was the employer of the painters at the worksite. That fact must be proven by the Department.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order dismissing the Stop-Work Order and Second Amended Penalty Assessment against Respondent, G and G Contracting, Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 13th day of November, 2015, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 13th day of November, 2015. 1/ T.83:12-15.
The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
Findings Of Fact Respondent Judy Louise Robinson is currently licensed by the Florida Department of Insurance as a general lines agent, a health agent, and a dental health agent and has been so licensed since November 21, 1984. At all times material, Respondent engaged in the business of insurance as Fleming Island Insurer. At all times material, Respondent maintained two business bank accounts in the name of Fleming Island Insurer: Account No. 1740043215 at Barnett Bank in Orange Park and Account No. 11630004614 at First Union Bank, Park Avenue Office. First Union Bank is currently First Performance Bank. All funds received by Respondent from or on behalf of consumers, representing premiums for insurance policies, were trust funds received in a fiduciary capacity and were to be accounted for and paid over to an insurer, insured, or other persons entitled thereto in the applicable regular course of business. Respondent solicited and procured an application for a workers' compensation insurance policy from Linda Smith on September 13, 1989, to be issued by CIGNA. Respondent quoted Ms. Smith an annual workers' compensation premium of two thousand six hundred four dollars and forty cents ($2,604.40). Linda Smith issued her check payable to Fleming Island Insurer in the amount quoted by Respondent on September 13, 1989, as premium payment for the CIGNA workers' compensation insurance coverage. On September 14, 1989, Respondent endorsed and deposited Linda Smith's $2,604.40 check into Fleming Island Insurer's business bank account No. 1740043215 at Barnett Bank, Orange Park, Florida. On September 17, 1989, Respondent forwarded her check in the amount of two thousand six hundred eighty nine dollars and forty cents ($2,689.40) to NCCI ATLANTIC for issuance of a workers' compensation policy with CIGNA for Linda Smith, Inc. The difference between the amount paid to Respondent by Linda Smith ($2,604.40) and the amount paid by Respondent to CIGNA via NCCI ATLANTIC ($2,689.40) amounts to $85.00 advanced by Respondent because she misquoted the premium amount to Linda Smith. On September 17, 1989, Respondent notified Linda Smith that another $85.00 was due. Linda Smith never paid this amount to Respondent. On September 19, 1989, CIGNA issued a workers' compensation policy for Linda Smith, Inc. Respondent's check was thereafter returned to CIGNA due to insufficient funds. On or about October 20, 1989, CIGNA notified Respondent that her agency check had been returned as unpayable and requested substitute payment within ten days to avoid interruption in Linda Smith, Inc.'s workers' compensation insurance coverage. Respondent asserted that she was injured in an automobile accident on October 1, 1989 and could not work through July of 1990 due to chronic dislocation of her right arm, but she also asserted that she never closed her insurance business and operated it out of her home. Respondent's home is the address at which CIGNA notified her on October 20, 1989 concerning Ms. Smith's policy. Respondent failed to timely submit substitute payment to CIGNA, and as a result, Linda Smith, Inc.'s policy was cancelled January 1, 1990. On January 4, 1990, Linda Smith forwarded her own check in the full amount of $2,689.40 directly to CIGNA and her policy was reinstated. Respondent did not begin to repay Linda Smith the $2,604.40 proceeds of Linda Smith's prior check paid to Respondent until May 1991. At formal hearing, Respondent maintained that she was never notified that Linda Smith paid for the policy a second time. Even if such a protestation were to be believed, it does not excuse Respondent's failure to account to either Linda Smith or CIGNA for the $2,604.40, which Respondent retained. Respondent also testified that Barnett Bank's failure to immediately make available to Respondent the funds from Linda Smith's check, which cleared, resulted in Barnett Bank reporting to CIGNA that there were insufficient funds to cover Respondent's check to CIGNA. From this testimony, it may be inferred that Respondent knew or should have known that she owed someone this money well before May 1991. On November 11, 1989, Lewis T. Morrison paid the Traveler's Insurance Company six thousand forty-three dollars ($6,043.00) as a renewal payment on a workers' compensation policy for Morrison's Concrete Finishers for the policy period December 30, 1988 through December 30, 1989. At the conclusion of the 1988-1989 policy period, Traveler's Insurance Company conducted an audit of Morrison's Concrete Finishers' account. This is a standard auditing and premium adjustment procedure for workers' compensation insurance policies. It is based on the insured's payroll and is common practice in the industry. This audit revealed that Morrison's Concrete Finishers was due a return premium of two thousand one hundred fifty-three dollars and eighty- seven cents ($2,153.87) from the insurer. On March 30, 1990, Traveler's Insurance Company issued its check for $2,153.87 payable to Fleming Island Insurer. This check represented the return premium due Morrison's Concrete Finishers from Traveler's Insurance Company. On April 6, 1990, Respondent endorsed and deposited Traveler's Insurance Company's return premium check into the Fleming Island Insurer's business bank account No. 11630004614 at First Union Bank. The standard industry procedure thereafter would have been for Respondent to pay two thousand two hundred forty-eight dollars ($2,248.00) via a Fleming Island Insurer check to Morrison's Concrete Finishers as a total returned premium payment comprised of $2,153.87 return gross premium from Traveler's Insurance Company and $94.13 representing her own unearned agent's commission. When Respondent did not issue him a check, Lewis T. Morrison sought out Respondent at her home where he requested payment of his full refund. In response, Respondent stated that she would attempt to pay him as soon as she could, that she was having medical and financial problems, and that the delay was a normal business practice. Respondent testified that on or about April 19, 1990, in an attempt to induce Mr. Morrison to renew Morrison's Concrete Finishers' workers' compensation policy through Fleming Island Insurer, she offered him a "credit" of the full $2,248.00 owed him. Pursuant to this offer of credit, Respondent intended to pay Traveler's Insurance Company or another insurance company for Morrison's Concrete Finisher's next year's premium in installments from Fleming Island Insurer's account. This "credit" represented the return premium Respondent had already received from Traveler's Insurance Company on behalf of Morrison's Concrete Finishers for 1988-1989 which she had already deposited into Fleming Island Insurer's business account. Whether or not Mr. Morrison formally declined Respondent's credit proposal is not clear, but it is clear that he did not affirmatively accept the credit proposal and that he declined to re-insure for 1989-1990 through Respondent agent or Traveler's Insurance Company. Respondent still failed to pay the return premium and commission which she legitimately owed to Morrison's Concrete Finishers. On June 28, 1990, the Traveler's Insurance Company issued a check directly to Mr. Morrison for the full amount of $2,248.00. Respondent did not begin repaying Traveler's Insurance Company concerning Mr. Morrison's premium until after intervention by the Petitioner agency. At formal hearing, Respondent offered several reasons for her failure to refund the money legitimately due Mr. Morrison. Her first reason was that the district insurance commissioner's office told her to try to "work it out" using the credit method outlined above and by the time she realized this method was unacceptable to Mr. Morrison, he had already been paid by Traveler's Insurance Company. However, Respondent presented no evidence to substantiate the bold, self-serving assertion that agency personnel encouraged her to proceed as she did. Respondent also testified that she did not know immediately that Traveler's Insurance Company had reimbursed Mr. Morrison directly. However, it is clear she knew of this payment well before she began to pay back Traveler's, and since Mr. Morrison did not reinsure through her or Traveler's she should have immediately known the "credit" arrangement was unacceptable to him. Respondent further testified that she did not want to repay Mr. Morrison until a claim on his policy was resolved. However, there is competent credible record evidence that the Traveler's Insurance Company 1988-1989 workers' compensation policy premium refund was governed solely by an audit based on payroll. Mr. Morrison's policy premium or refund consequently was not governed by "loss experience rating", and the refund of premium would not be affected by a claim, open or closed. Thus, the foregoing reasons given by Respondent for not refunding Mr. Morrison's money are contradictory or not credible on their face. They also are not credible because Respondent admitted to Mr. Morrison in the conversation at her home (see Finding of Fact 24) that she was having trouble paying him because of medical and financial difficulties. Further, they are not credible because Respondent testified credibly at formal hearing that she would have paid Mr. Morrison but for her bank account being wiped out by a fraudulent check given her by an unnamed third party. On August 10, 1992, Respondent was charged by Information with two counts of grand theft. See, Section 812.014(2)(c) F.S. The allegations in the Information charged Respondent with theft of insurance premiums from Linda Smith and Lewis T. Morrison, and arose out of the same facts as found herein. On December 17, 1992, Respondent entered a nolo contendere plea to only the first count of grand theft as to matters involving Linda Smith and the other count was "null prossed." Respondent secured a negotiated sentence on the first count. "Grand theft" is a felony punishable by imprisonment by one year or more. Adjudication was withheld pending satisfactory completion of probation, including community service and payment of restitution and court costs. Respondent has been complying with her probation, including restitution payments.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Department of Insurance enter a final order finding Respondent guilty of violations of Sections 626.561(1), 626.611(7), (9), (10), and (13); 626.621(2) and (6) F.S. under Count I, violations of Sections 626.561(1), 626.611(7), (9), (10), and (13), and 626.621(2) and (6) under Count II, and violations of Sections 626.611(14) and 626.621(8) F.S. under Count III, finding Respondent not guilty of all other charges under each count, and revoking Respondent's several insurance licenses. RECOMMENDED this 23rd day of June, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of June, 1993. APPENDIX TO RECOMMENDED ORDER 92-2060 The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: As modified to more correctly reflect the whole of the record evidence and avoid unnecessary, subordinate, or cumulative material, all of Petitioner's proposed findings of fact are accepted. Respondent's PFOF: Sentence 1 is accepted as a paraphrased allegation of the Second Amended Administrative Complaint. Sentence 2 is covered in Findings of Fact 4-18. Sentence 3 is accepted but subordinate and to dispositive. Sentence 4 is apparently Respondent's admission that she owed $2,604.40 to Linda Smith and paid her $500.00 of it. Accepted to that extent but not dispositive in that full payment was not made timely. Sentence 1 is accepted as a paraphrased allegation of the Second Amended Administrative Complaint but not dispositive. Sentence 2 is accepted but immaterial. Sentence 3 is rejected as argument and not dispositive. As stated, the proposal also is not supported by the record. Sentence 4 It is accepted that Mr. Morrison admitted he had a claim. However, the record does not support a finding that he requested Respondent to contact Traveler's Ins. Co. about it. Even if he had, that is subordinate and not dispositive of the ultimate material issues. Sentence 5 is rejected as not supported by the credible record evidence. Covered in Findings of Fact 23-28. Sentence 6 is rejected as not supported by the record and as argument. Sentence 7 Accepted. Sentence 8 Accepted. The "Descriptive Narrative" is accepted through page 4, but not dispositive. Beginning with the words "In summary" on page 5, the remainder of the proposal is not supported by the record in this cause which closed April 16. 1993. COPIES FURNISHED: Daniel T. Gross, Esquire Division of Legal Services Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300 Judy Louise Robinson 4336 Shadowood Lane Orange Park, FL 32073-7726 Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, FL 32399-0300
Findings Of Fact On December 31, 1997, the Department of Insurance issued a Notice of Intent to Issue Cease and Desist Order against Petitioner, alleging that Petitioner is engaged in the legal expense insurance business in the State of Florida without being licensed. The Department alleges that Petitioner is in violation of several statutory provisions requiring licensure. Petitioner timely requested an evidentiary proceeding regarding the allegations contained within that Notice of Intent to Issue Cease and Desist Order. Jurisdiction over the matter was transferred to the Division of Administrative Hearings on January 28, 1998, to conduct the evidentiary proceeding. The matter was assigned DOAH Case No. 98-0442. By Notice of Hearing entered February 17, 1998, that cause was scheduled for final hearing on June 15 and 16, 1998, and the parties have engaged in extensive discovery. By agreement of the parties that cause was re-scheduled several times and then was placed in abeyance. On February 24, 1999, Petitioner filed with the Division of Administrative Hearings its Petition for Administrative Determination of Invalidity of Existing Rule and Unpromulgated Rule. That Petition was assigned DOAH Case No. 99-0771RX, was consolidated with DOAH Case No. 98-0442, and is the subject of this Final Order. The Petition asserts the invalidity of the Department's Rule 4-201.003, Florida Administrative Code, and the invalidity of an alleged unpromulgated rule consisting of a statement by the Department that the amount of the membership fee Petitioner charges its members will determine whether Petitioner is a legal expense insurance corporation subject to regulation under Chapter 642, Florida Statutes. The existing Rule and the alleged unpromulgated rule are the subject of the Petitioner's Motion for Summary Final Order and the Department's Cross Motion for Summary Final Order. Petitioner alleges that Rule 4-201.003, Florida Administrative Code, is an invalid exercise of delegated legislative authority because (a) it enlarges, modifies, and contravenes specific provisions of the statute it purports to implement; (b) the Department exceeded its rulemaking authority; and (c) the Department materially failed to follow the requirements set forth in Chapter 120, Florida Statutes, by failing to repeal a rule for which there was no legislative rulemaking authority. Petitioner argues that the Department's alleged unpromulgated rule is an invalid exercise of delegated legislative authority because (a) the statement is an unpromulgated rule; (b) the statement enlarges, modifies, and contravenes specific provisions of the statute it purports to implement; and (c) the statement is vague, fails to establish adequate standards for the Department's decisions, and vests unbridled discretion in the agency. The Department's Cross Motion for Summary Final Order alleges that Petitioner lacks standing to assert its challenges, that the challenge to the existing Rule is moot, and that the alleged unpromulgated rule does not exist. Rule 4-201.003, Florida Administrative Code, relates to exemptions from the statutory definition of "legal expense insurance." The Department's Notice of Intent to Issue Cease and Desist Order does not allege that Petitioner has violated that Rule and does not even cite to that Rule as a basis for the Department's action against Petitioner. Since Petitioner is not charged with violating that Rule, Petitioner cannot show that it is substantially affected by the Rule. Further, the Department has now commenced the repeal of that Rule and has filed in this cause an affidavit from the Department's Bureau Chief of Specialty Insurers that Rule 4-201.003, Florida Administrative Code, has not been and will not be used against Petitioner in DOAH Case No. 98-0442 or in any other enforcement proceeding. As to the alleged unpromulgated rule, the record in this cause reveals that the Department in both correspondence and conversations with Petitioner raised a concern about the amount of Petitioner's membership fees in re-considering whether Petitioner is a lawyer referral service or a legal expense insurer. However, Petitioner does not allege that the amount of the membership fee has been considered as to any entity other than Petitioner. Conversely, the Department has filed affidavits from the Bureau Chief of Specialty Insurers and from the employee charged with handling licensure of legal expense insurers on a day-to-day basis that they have never heard of a Department policy in which the price of a legal service plan determines whether that plan is legal expense insurance. Those affidavits further state that no such policy has been applied by the Department and that the first time the Department heard of such a policy is when Petitioner asserted that such a policy existed. Accordingly, since it has not been shown that such a policy exists, it cannot be shown that the alleged policy constitutes an unpromulgated rule.
