The Issue The issues are whether Respondent is guilty of any violations of the Insurance Code, including Chapter 626, Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a general lines insurance agent, holding license number A129688. At all material times, Respondent has been the sole owner and director of America Security Insurance Agency, Inc., formerly known as America Auto Security Insurance Agency, Inc. (America Security). On April 1, 2000, Dionne Jacques purchased a motor vehicle from Sawgrass Ford in Fort Lauderdale. She did not own a vehicle at the time and testified that she purchased a model that was selected for her by someone at the dealership. In closing on the purchase, Ms. Jacques dealt extensively with a dealer employee named Herbert McKenzie. Ms. Jacques financed the motor vehicle purchase with Ford Credit. In the course of completing the required paperwork at the dealership, Mr. McKenzie referred Ms. Jacques to American Security for motor vehicle insurance. Mr. McKenzie mentioned that he dealt with someone named "AJ" at the insurance agency. According to Ms. Jacques, Mr. McKenzie informed Ms. Jacques that one year's insurance would cost $468 or $468.99. Mr. McKenzie did not testify, but Respondent testified that he spoke with Ms. Jacques on the telephone and explained the relevant features of the policies that were available to her. Although it is unclear who quoted the premium to Ms. Jacques, Petitioner has failed to prove by clear and convincing evidence that Mr. McKenzie did so. Ms. Jacques agreed to purchase the insurance and produced a credit card for the amount due. The testimony of Ms. Jacques suggests that she allowed Mr. McKenzie to charge her credit card for the insurance premium. However, the more definitive testimony of Respondent, which is credited, is that he took her credit card information over the telephone and arranged for the card debit. In return, according to Ms. Jacques, Mr. McKenzie gave her a document that she believed would document her coverage until she received an insurance policy in the mail in about 30 days. It is impossible to determine on this record that Mr. McKenzie attempted to bind coverage on behalf of the insurer. At no time prior to the purchase of the insurance did Respondent, Mr. McKenzie, or anyone else disclose to Ms. Jacques that she was purchasing other ancillary products besides insurance. Likewise, no one informed her that she was financing part of the annual insurance premium. For unclear reasons, Respondent did not obtain insurance coverage for Ms. Jacques until May 2000. At that time, he took the $468 that she had charged and, without her knowledge, applied only $143 of this sum toward the policy premium. Without Ms. Jacques' knowledge, Respondent, or someone at his direction, signed Ms. Jacques' name to a premium finance agreement, evidencing an unpaid premium balance of $504. At the same time, also without Ms. Jacques' knowledge, Respondent used $300 of the initial $468 that Ms. Jacques paid to purchase ancillary coverage that she had not agreed to purchase. This ancillary coverage included towing, supplemental medical coverage, replacement rental car, and emergency cash. These coverages supplemented a $647 personal injury protection policy containing no personal liability or uninsured motorist coverage. At no time has American Security designated a primary agent. By Immediate Final Order entered March 12, 1991, the Florida Department of Insurance, now known as Petitioner, ordered Respondent to cease and desist from the unlicensed sale of insurance. However, Respondent has made substantial restitution to Ms. Jacques, who suffered no significant financial injury as a result of Respondent's misdealings.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order suspending Respondent's license for one year. DONE AND ENTERED this 18th day of November, 2004, in Tallahassee, Leon County, Florida. S 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 18th day of November, 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Gregg S. Marr Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Charles P. Randall Charles P. Randall, P.A. Bank of America Tower, Suite 500 150 East Palmetto Park Road Boca Raton, Florida 33432-4832
Findings Of Fact THE INSURANCE AGENCY At all times material to the instant case, Lloyd Eldo Register was a licensed insurance agent in the State of Florida, licensed as an Ordinary Life, including Disability, General Lines and Disability Agent. The Respondent, Lloyd Eldo Register (hereinafter Register) at all times material herein, was the president, owner, and registered agent for Friendly Auto Insurance, Incorporated (hereinafter referred to as Friendly Auto). In his capacity as president and registered agent, the Respondent, Register, was responsible for and exercised supervision and control over the employees and sales agents employed by Friendly Auto. At all times material herein, Respondent, Shirley Jean Hopkins was a licensed insurance agent and was employed by Friendly Auto to sell various types of auto insurance and coverages. Specifically, Shirley Hopkins was licensed as an Ordinary Life, including Disability Agent, General Lines Agent, and an Independent Adjuster. As an employee of Friendly Auto, she worked under the supervision and control of the Respondent, Lloyd Register. At the time of the various transactions which are the subject of this administrative proceeding, Florida law required personal injury protection (hereinafter PIP) insurance coverage for each owner of a motor vehicle in Florida. (See Section 627.733 and 627.736, Florida Statutes (1981)). Because it was necessary to show proof of such PIP coverage in order to purchase a license tag for an automobile, this type of insurance was and is commonly referred to as "tag insurance." Friendly Auto offered and sold PIP or tag insurance as well as other types of insurance, including motor club policies, which included as its primary benefit an accidental death benefit. The accidental death benefit (hereinafter referred to as ADB) which was sold by Friendly Auto, was one of the benefits under a motor club policy very similar to that sold by AAA (American Automobile Association). The motor club policies also included such benefits as theft reward, hit and run services, rental car discounts, credit card services, vacation travel arrangements, trip routing, and lost baggage service. The amount of premium paid and type of plan applied for determined the benefits to be received. During the period of the transactions in this action, the Respondent, Lloyd Register, had established a policy of not selling PIP alone. Customers were required to buy PIP coupled with a motor club policy. The reason for this policy was that the commission on minimum PIP coverage was too low to justify the cost of selling it alone. The commission on the motor club policies was as high as 80 percent of the premium charged. The sales agents were instructed by Mr. Register to not sell a customer PIP unless they also purchased the ADB policy. This policy was followed by the sales agents during 1981 and the first eight months of 1982. Customers, upon entering the Friendly Auto office, would indicate the kind of insurance they wanted and they were then given a quote by a sales agent for the coverage requested plus ADB. The cost of the ADD or ADB policy was added to the cost of the coverage requested without informing the purchaser and a single quote was given to the customer. If a customer inquired about the ADB coverage, they were told it was part of the coverage and that the requested coverage could not be purchased without the accidental death benefit. The customers were not informed by the salesperson nor the forms used in the transaction that they were being charged a separate and distinct premium for the ADB or that they could reject the ADB coverage. The basic PIP coverage also included a death benefit Although the Respondent, Lloyd Register, testified that in order to make a profit, it was necessary to sell the ADB with the minimum PIP coverage, the ADB was sold inn the same manner to persons purchasing PIP, as well as liability and collision coverage. The premium for the ADB ranged from $15 to $25. The decision as to which premium to charge was made by the employee of Friendly Auto and was not discussed with the customer. The sales agents had been instructed by the Respondent, Lloyd Register, to base premium charged for ADB on the customer's driving record. However, the premium charged only affected what motor club benefits would be received. No reason was given as to what effect a person's driving record had upon the premium or benefits or risk involved. After the customer was given the quote and agreed to purchase, the sales agent then filled out and gave to the customer several documents to be signed and initialed. The places to be initialed were marked by the sales agent with a red square, rubber stamped onto the appropriate points of the forms by the sales agent, and a check mark or "X" was placed next to where they were to sign. One of the documents was an application for the motor club or ADB. Respondents contend that by signing the application and the acknowledgement at the bottom of the liability coverages rejection form, the customers were made aware that they were purchasing a separate coverage for ADB. However, when inquiry was made by customers about the ADB, they were told it was part of the coverage and had to be purchased. They were not told a separate premium was involved or that it was a separate policy. The majority of the complaining witnesses in this case were not even aware they had purchased the motor club or ADB. Most of the complaining witnesses admitted they did not read the documents they were asked to sign. The sales agents did not pressure them to sign or hurry them in any way that prevented them from reading the documents. Most of the complaining witnesses had limited education, very little knowledge of insurance and basically relied upon the sales agent to give them the coverage they requested. No complaining witness requested ADB or motor club coverage. Anne Zugelder, office manager for Friendly Auto, and Shirley Hopkins testified generally regarding the procedures used, but neither person testified about the facts of the specific transactions in this case. Shortly after January 18, 1982, Mr. John A. Hoback, an investigator for the Department of Insurance, went to the offices of Friendly Auto where he reviewed approximately 35 to 40 files relating to customers who had purchased insurance from Friendly Auto. He discovered that many of these files contained the original policy for ADB coverage; the identification card on PIP coverage; and the original policy for PIP coverage. Some of these policies had been in the files for four, five, and six months. Specifically, Mr. Hoback examined the file of James Richard Johns and found the original copy of the auto policy issued by Fortune and the ADD policy issued by American Travelers Association. The auto policy had been issued on June 4, 1981. Mr. Hoback examined the file of Charles Meadows and found that the Fortune PIP policy had been issued on June 2, 1981, and the original was still in the file. The original ADD policy issued by American Travelers was also in the file. In the file of Phillip Johnson, Mr. Hoback found the original copy of the Fortune auto policy issued to Mr. Johnson on June 1, 1981, and also found the original ADD policy in the file. The file relating to Ruben Simpson was also examined and the original copies of the Fortune auto policy and the ADD policy were still in the file. These original policies were supposed to have been sent to the insureds by the agency upon receipt from the insurance company. The deposition of Mr. James T. Harrison, Jr., was admitted and considered. However, because Mr. Harrison's opinion was based upon incomplete facts in terms of the actual sales procedures used, his opinion relating to Respondents' meeting the standard of care in the industry was given no weight. FORMS In each of the purchases involved in this action, Friendly Auto's agents used several preprinted forms as part of each sale. These forms include primarily: (1) a quote sheet, (2) rejection of liability coverages form, (3) prenumbered receipts, and (4) motor club or ADB application. QUOTE SHEET The quote sheet is a small yellow form with spaces for entering information about the insured and the cars to be insured. The quote sheet in the Section titled "Type of Coverage" reflects "PIP, LIAB, COMP, COLL". These terms refer to personal injury protection, liability, comprehensive, and collision. Nowhere on the form does ADB or motor club coverage appear. There is a space at the bottom of the form for computations. LIABILITY COVERAGES REJECTION FORM The Rejection of Liability Coverages form is divided into four main parts. The top part of the form informed the customer that they had the right to purchase liability coverage and that they can also reject liability coverage. If the customer desired to reject liability coverage, there was a signature block where the customer signed rejecting such coverage. The second portion of the form dealt with PIP and had optional blocks to be checked in order to reflect the deductible desired. The deductible ranged from $250 to $8,000. There were also optional blocks to select the type of PIP coverage and at the bottom of this section was again a signature block. The third section dealt with uninsured motorist coverage and had a block where the customer entered the limits of coverage desired if they were purchasing uninsured motorist coverage. There was a block to be checked if the customer was rejecting uninsured motorist coverage. At the bottom of this section, was again a signature block. The last section referred to an accidental death benefit and contained the following language: I UNDERSTAND THE ACCIDENTAL DEATH BENEFIT THROUGH MY NATION MEMBERSHIP IS A SEPARATE ITEM, THAT PAYS IN ADDITION TO MY AUTO INSURANCE POLICY. I UNDERSTAND THE ADDITIONAL CHARGE FOR THIS COVERAGE IS INCLUDED IN WITH MY DOWN PAYMENT. The above language was followed only by a signature block. There were no blocks to be checked or initialed rejecting or accepting the accidental death benefit. (this statement is referred to hereafter as the acknowledgement.) The Rejection of Liability Coverages form was used in all sales of automobile insurance at Friendly Auto. The reference in the acknowledgement above to "MY NATION MEMBERSHIP" refers to a company which provided an ADB policy prior to the time Friendly Auto began using American Travelers Association. Once Friendly Auto decided to stop using the Nation Company, the Respondent, Register, elected not to reprint the form. He also considered, but did not feel it necessary, to have the sales agents mark through Nation and pencil in American Travelers Association. Mr. Register felt that the American Travelers Association policy could be interpreted to be a "Nation membership" because it covered the insured anywhere in the nation. However, Mr. Register could not specifically recall having instructed his sales agents to give this explanation to the customers. Prior to July or August of 1982, Mr. Register had not instructed his employees to explain that the accidental death benefit referred to in the form was optional. Beginning in July or August, 1982, Mr. Register instructed his sales agents to begin telling customers the ADB was optional. This change occurred about the same time the law relating to the $8,000 deductible PIP changed and was due in part to "heat" which Friendly Auto had been getting from the Department of Insurance. RECEIPT The receipt form contained basic information blocks for date, amount, received from, and signature block for the sales agent of Friendly Auto. There was a line preceded by "In re:" which was used to reflect the coverages for which the premium was being paid. A copy of the receipt was kept in the Friendly Auto file on each customer. AMERICAN TRAVELERS ASSOCIATION APPLICATION The last of the four forms was a motor club application for "Travel/Accident Benefits including Accidental Death and Dismemberment Coverage." The form contained spaces for the name and address of the applicant and name and address of their beneficiary. Just above the signature block of the applicant, were spaces for the effective date, the expiration date, the plan, amount of ADD coverage, and the fee. (See Respondent's Exhibit 24.) An almost identical form was used when the ADB policy was written with Southern Management Company. THE SALES Each count of the First Amended Administrative Complaint against Respondent, Lloyd Register, relates to a sale to a particular customer. Several of these same transactions were also the subject of the Administrative Complaint against the Respondent, Shirley Hopkins. The following facts are found as to both the counts of the First Amended Administrative Complaint against Lloyd Register and the Administrative Complaint against Respondent Shirley Hopkins: (the count number refers to the First Amended Administrative Complaint in Case No. 82-2048). COUNT I SALE TO BRENDA CONNER On October 9, 1981, Brenda Conner went to Friendly Auto to purchase PIP insurance. She informed the Respondent, Shirley Hopkins, that she wanted to purchase PIP only. No other coverages were explained to her, but there was some discussion about who she wanted as her beneficiary. She signed the documents she was requested to sign but did not read them. She thought she had paid for PIP only. Her receipt from Friendly Auto was for $37.00 and listed only PIP as the only coverage purchased. The receipt was signed by the Respondent, Shirley Hopkins. She never received a policy from American Travelers Association. She was charged $15.00 as part of the $37.00 premium for the American Travelers Association ADB policy. She received her policy for the PIP coverage. COUNT II SALE TO BRUCE T. EDWARDS On September 15, 1981, Bruce T. Edwards purchased insurance from Friendly Auto. Mr. Edwards was sold the insurance by Respondent, Shirley Hopkins. The receipt received by Mr. Edwards reflected a total premium of $43.00 and listed only "PIP" as the coverage purchased. Mr. Edwards was unaware that as part of the $43.00 premium, he purchased accidental death and dismemberment coverage (ADB) from American Travelers Association. The premium for the ADB was $20.00. Mr. Edwards signed but did not fill out the yellow ADB application form. Shirley Hopkins explained the PIP coverage but made no mention that he was purchasing a separate ADB insurance policy. He did not read the documents he signed, but merely initialed and signed the blocks Ms. Hopkins marked. He did not request ADB coverage and thought he was getting PIP only. He had no intention of buying any insurance other than PIP. Prior to Mr. Edwards going to Friendly Auto, his wife had called and obtained a quote of $43.00 for tag insurance. She specifically told the person on the phone that her husband wanted the cheapest coverage necessary to get a tag. COUNT III SALE TO PATRICIA EDWARDS On or about August 28, 1981, Patricia Edwards purchased insurance from Friendly Auto through its sales agent Shirley Hopkins. Patricia Edwards first called Friendly Auto and requested a quote for PIP coverage only. She also gave the person all the necessary information over the phone for the needed documentation. The person who actually went to Friendly Auto and purchased the insurance and signed the documents was Bruce Edwards, Patricia Edwards' husband. Patricia Edwards requested only minimum coverage needed to get her tag. She was given a quote of $37.00. The receipt given by Friendly Auto was signed by the Respondent, Shirley Hopkins, and reflected a $37.00 payment for PIP coverage only. The total payment of $37.00 included a $15.00 payment for an Accidental Death and Dismemberment (ADB) and travel benefits with Southern Management Company. Mr. Edwards signed the Accidental Death and Dismemberment application as well as the accident death benefits acknowledgement at the bottom of the Rejection of Liability Coverages form. The acknowledgement referred to "Accidental Death Benefit Through My Nation Membership" and not to an "Accidental Death and Dismemberment" coverage with Southern Management Company. (See Respondent's Exhibit 5.) Neither Bruce Edwards nor Patricia Edwards requested Accidental Death and Dismemberment coverage and neither was aware that such coverage had been purchased. COUNT IV SALE TO ELIZABETH JONES On September 1, 1981, Elizabeth Jones purchased insurance from Friendly Auto. She first called and asked for a quote for PIP and liability insurance for a `71 Oldsmobile Delta 88. She was given a quote of $42.00 for PIP and liability. Ms. Jones then went to the office of Friendly Auto where she first talked with two different men and then Respondent, Shirley Hopkins. Shirley Hopkins informed her the premium would be $63.00 rather than $42.00. Ms. Jones had obtained quotes from several agencies for the PIP and liability in an attempt to obtain the needed coverage for no more than the 560.00 which she had available for insurance. Ms. Jones has a fifth grade education and had never purchased insurance before. She specifically told the sales people at Friendly Auto that she did not understand insurance. Because the cost was $63.00 rather than $42.00, Ms. Jones had to return home to obtain additional money. When she returned, Ms. Hopkins had the forms prepared and had marked with an the places where she needed to sign. The receipt from Friendly Auto reflects that Ms. Jones purchased "Liab. PIP. ADB" for a premium of $63.00. Ms. Jones signed the accidental death and dismemberment coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverage form. Prior to returning home, Ms. Jones was told by one of the sales agents that she needed the accidental death benefit that could be willed to her daughter. Ms. Jones asked if that was included in the liability and PIP and did not recall whether the person replied or not. She was not aware nor did she understand that she was purchasing a separate travel and accidental death benefit policy and paying a separate premium. She did not read the documents before she signed them and relied upon Ms. Hopkins and the other two agents to give her the coverage she had requested. Ms. Jones did not receive her ADB policy. COUNT V SALE TO BARBARA BARBATO On September 21, 1981, Barbara Barbato purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto agency. Before going to the agency, Ms. Barbato called and obtained a quote for "full coverage" on her new Camero. She spoke with a gentleman named Mike. When she arrived at the agency, she informed Ms. Hopkins that she wanted full coverage on her Camero. Ms. Hopkins did not explain the various coverages to her. Ms. Barbato paid for the insurance and signed the documents without reading them. The Friendly Auto receipt received by Ms. Barbato was signed by Shirley Hopkins and reflected a payment of $138.00 for "Liab. and Coll. and Comp.". Ms. Barbato signed the ADD coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. She named her mother as beneficiary of the accidental death benefit and understood that benefit to be part of the auto insurance she was purchasing. She was not aware the accidental death benefit was separate and extra. She did not receive a policy for the ADB coverage with American Travelers Association. COUNT VI Count VI was voluntarily dismissed by Petitioner and no evidence was presented as to Count VI. COUNT VII Mary Beth Jones did not appear and testify and no other testimony was presented as to Count VII. COUNT VIII SALE TO JOANN BROOKS On September 1, 1981, Joann Brooks purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto Agency. Ms. Brooks is a farm laborer who completed the eleventh grade. Upon arriving at Friendly Auto, Ms. Brooks informed Ms. Hopkins that she wanted full coverage on her automobile. Ms. Brooks understood full coverage to include collision, liability, and PIP and she had no intention of purchasing any type of coverage other than these. Although Ms. Brooks received some explanation of the accidental death and dismemberment coverage, she signed the accidental death application form and named herself as beneficiary. Ms. Brooks thought the death benefit was part of the full coverage she requested. This was the first time she had purchased insurance and did not understand insurance matters. Ms. Brooks signed and initialed the documents she was given by Ms. Hopkins. She did not read them. The receipt Ms. Brooks received from Friendly Auto was signed by Shirley Hopkins and reflected that she paid $86.00 for "Liab. & Comp. & Coll.". COUNT IX SALE TO RUBEN SIMPSON On May 7, 1981, Ruben Simpson purchased auto insurance from Friendly Auto. Mr. Simpson is from Jamaica and does not read because of his very limited education. When he arrived at Friendly Auto, Mr. Simpson informed the sales agent that he wanted to buy PIP insurance in order to get his tag. Mr. Simpson could not recall the full details of the discussion but remembered giving them his mother's name as the person who would receive money if he were killed in an accident. Mr. Simpson signed his name where he was shown to sign. When he left the agency, Mr. Simpson believed he had purchased only the PIP insurance required to get his tag. Mr. Simpson signed the Southern Management Company Accidental Death and Dismemberment application and received a copy of it when he left the agency. (See Respondent's Exhibit No. 13.) The receipt given to Mr. Simpson at Friendly Auto reflects he paid $44.50 for "PIP ADB". The premium for the ADB was $22.50. At no time did Mr. Simpson request or agree to purchase anything other than tag insurance. Mr. Simpson signed the acknowledgement of the ADB at the bottom of the Rejection of Liability Coverages form, but was unaware that he was paying a separate premium for a policy which was neither PIP nor required to obtain his tag. COUNT X Prior to taking evidence in the formal hearing, Petitioner voluntarily dismissed Count X of the First Amended Administrative Complaint. No evidence was presented in support of Count X. COUNT XI On September 3, 1981, Mr. Ellison J. Eady, Jr., purchased insurance from Friendly Auto. Mr. Eady informed the sales agent at Friendly Auto that he wanted the necessary minimum insurance to get a tag for a new car he had purchased. The agent asked Mr. Eady some brief questions about his driving record and then gave him a quote for the price of the insurance he requested. The agent did not suggest any coverages in addition to what Mr. Eady had requested, but included the cost of an ADB policy in the quote he gave Mr. Eady. Mr. Eady agreed to the price quoted, and the agent then brought out several forms for Mr. Eady to fill out and sign. All Mr. Eady wanted was insurance for his tag and to his knowledge, that was all he purchased. At the time he purchased his insurance, Mr. Eady signed and received a copy of the American Travelers Association application form. (See Petitioner's Exhibit 2.) He did not ask any questions about the form. Mr. Eady thought that the American Travelers Association coverage was part of the insurance he was purchasing. However, the agent did not specifically tell him it was part of the insurance he was purchasing. At the time he purchased his insurance, Mr. Eady already had a motor club policy with Montgomery Ward which provided similar services to the American Travelers coverage. Mr. Eady did not read the various forms he signed. The agent gave him a brief explanation of what each form was. Mr. Eady just relied upon what the agent told him. Mr. Eady had no knowledge of Florida insurance. When he left Friendly Auto, he thought the only thing he had purchased was the minimum required by the state. One of the documents he signed was the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. (See Respondent's Exhibit 14.) Mr. Eady already had separate life insurance coverage. The agent did not explain the accidental death benefit to him. Mr. Eady did not request any coverage other than the state minimum to get his tag. The receipt given Mr. Eady reflected an $82.00 payment for "PIP. . . ADB. . . C&C". (See Respondent's Exhibit 14.) Fifteen dollars of the premium paid by Mr. Eady was for the American Travelers Association motor club policy. COUNT XII SALE TO MARY GOOD On March 17, 1981, Mr. Edward T. Good and his wife Mary Good purchased insurance at Friendly Auto. Mr. Good informed the sales agent at Friendly Auto that he wanted the cheapest insurance required by the state to get his license tag. The agent explained to him the other auto coverages he could obtain, but Mr. Good insisted that he only wanted minimum tag insurance. He was then given a lump sum quote by the agent. One of the forms Mr. Good signed was an ADB application for Southern Management Company. The agent explained that this would pay he or his wife money if they were killed in an auto accident. The agent did not explain that there was an extra charge for this benefit or that it was optional. Mr. and Mrs. Good understood the ADB coverage to be part of the PIP coverage they had requested. The receipt they were given at Friendly Auto reflected a payment of $37.00 but did not list the coverages purchased. (See Respondents' Exhibit 1.) When Mr. and Mrs. Good left Friendly Auto, they thought they had purchased only tag insurance. However, $15.00 of the $37.00 premium paid was for the ADB policy with Southern Management Company. COUNT XIII SALE TO ALICE LEAR DICKSON On or about September 3, 1981, Alice Lear Dickson (formerly Alice J. Lear) purchased auto insurance from a sales agent of Friendly Auto. Ms. Dickson called Friendly Auto to obtain quotes for full coverage for a newer automobile and minimum coverage for an older one. After obtaining these quotes, Ms. Dickson went to the office of Friendly Auto where she informed the sales agent on duty that she wanted full coverage insurance on two autos. She informed the sales agent she wanted fire, theft, windstorm, collision, liability, and uninsured motorist coverage. The sales agent also suggested a coverage for such things as towing charges. Ms. Dickson informed the agent she did not want that coverage because she already was a member of an auto club. In signing the various documents to purchase the insurance, Ms. Dickson was asked to sign a document designating a beneficiary of a life insurance benefit. She did not want this life insurance coverage, but was told by the sales agent that it was required and went along with her automobile policy and had to be purchased. In reliance upon this representation, Ms. Dickson accepted the coverage. Ms. Dickson paid a total premium of $144.03 for collision, liability, PIP, and accidental death benefit. Her receipt from Friendly Auto reflected the $144.03 was for "C&C, LIAB., PIP, ADB." (See Respondents' Exhibit 11.) The accidental death benefit purchased by Ms. Dickson was one of the travel and accident benefits provided in the American Travelers Association policy which cost Ms. Dickson $15 of the $144.03 premium she had paid. At the bottom of a Rejection of Liability Coverage form used by Friendly Auto, Ms. Dickson signed the acknowledgement relating to the ADB, but she was not aware that she could reject this coverage or that it was part of a separate motor club policy. Ms. Dickson did not desire to purchase a motor club policy and would not have purchased the motor club policy had she been aware that it was not required as an included coverage with the PIP coverage. COUNT XIV Prior to the taking of evidence at the formal hearing, the Petitioner voluntarily dismissed Count XIV of the First Amended Administrative Complaint and presented no testimony in support of that Count. COUNT XV SALE TO CHARLES MEADOWS On June 2, 1982, Charles Meadows purchased auto insurance from Friendly Auto. Mr. Meadows went to Friendly Auto to purchase PIP insurance, and upon arriving at Friendly Auto's office, he informed the sales agent he wanted only PIP insurance. When he left the Friendly Auto office, Mr. Meadows thought he had only purchased PIP. At the time he purchased his insurance, Mr. Meadows signed an American Travelers Association application. (See Respondents' Exhibit 2.) The only explanation he was given by the sales agent regarding this coverage was that if he were killed, someone would receive some money and he needed to designate who that would be. The amount of the fee charged for the American Travelers Association policy was not reflected in the appropriate block on the application form. He was not given any explanation regarding the price of this coverage. In purchasing the insurance, Mr. Meadows initialed and signed several forms. He did not read them before signing. Mr. Meadows does not read and write very well and has a problem understanding insurance policies. He completed the seventh grade in school. One of the forms signed by Mr. Meadows was the acknowledgement relating to the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The quote sheet used to give Mr. Meadows his quote of $48.00 makes no reference to any coverage other than PIP. PIP is circled on the form. The receipt Mr. Meadows received from Friendly Auto reflects a $48.00 premium for "PIP. . .ADB". The cost of the PIP coverage was $23.00 and the cost of the American Travelers Association policy was $25.00. Mr. Meadows never received a policy or certificate informing him of the coverages under the American Travelers Association policy. Mr. Meadows never intended to purchase any coverage other than PIP to obtain his tag. He never requested any coverage other than PIP. COUNT XVI SALE TO PHILLIP JOHNSON On July 1, 1982, Mr. Phillip Johnson purchased auto insurance from a sales agent at Friendly Auto. Mr. Johnson went to Friendly Auto to purchase tag insurance. He informed the sales agent that he wanted just the PIP or tag insurance. The agent then prepared the necessary forms and Mr. Johnson initialed and signed the documents where he was instructed by the agent to sign and initial. No explanation of the coverages was given by the agent. Mr. Johnson was asked to name a beneficiary and was given a pink copy of an American Travelers Association application which he had signed. That form reflects a $20.00 fee was charged for the American Travelers Association policy. The receipt which Mr. Meadows received at Friendly Auto reflects a $42.00 premium paid for "8,000 PIP". (See Respondents' Exhibit 3.) Mr. Johnson also signed the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. Mr. Johnson felt when he left Friendly Auto that he had purchased only PIP insurance. Mr. Johnson completed the ninth grade in school and has difficulty reading and writing. COUNT XVII SALE TO JAMES RICHARD JOHNS On June 4, 1982, Mr. James Richard Johns purchased insurance from the Respondent, Shirley Hopkins at Friendly Auto. Mr. Johns told Shirley Hopkins he would like to purchase PIP insurance in order to get his tag for his car. Ms. Hopkins then gave him a quote for PIP and also a quote for liability coverage and she then gave him several forms to initial and sign. She gave no explanation regarding the forms and he did not read them before signing. Although Mr. Johns thought he was only purchasing PIP insurance, he was, in fact, sold PIP with an $8,000 deductible plus an American Travelers Association policy. The cost of the PIP coverage was $24.00 and the cost of the American Travelers Association policy was $25.00. Mr. Johns signed the American Travelers Association application and was given a copy of it. He also designated a beneficiary. At the time of purchase, Mr. Johns understood that the death benefit was part of the PIP insurance he was purchasing. No explanation was given by Ms. Hopkins regarding the American Travelers Association policy or coverage. Mr. Johns also signed the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The receipt he received from Friendly Auto was for $50.23 paid for "PIP. . . ADB. . . 123(illegible)". When Mr. Johns left the Friendly Auto Agency, he felt he had purchased only PIP insurance. He did not receive an American Travelers Association policy and did not receive his Fortune Insurance policy for his PIP insurance until December of 1982 or January, 1983.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent, Lloyd Register, guilty of the violations as set forth above and that his insurance licenses be suspended for a period of one (1) year. That the Department of Insurance enter a Final Order finding Respondent, Shirley Hopkins, guilty of the violations as set forth above and that her license be suspended for a period of 90 days and that she be required to pay a civil penalty of $500. DONE and ENTERED this 1st day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
The Issue The issue posed for decision herein is whether or not the Respondent's license and eligibility for licensure as an Ordinary Life, Disability and a General Lines agent should be revoked, suspended, or otherwise disciplined for reasons set forth hereinafter by the Administrative Complaint filed by the Petitioner on September 24, 1982. EXHIBITS The following exhibits were made part of the record: An Insurance Binder dated October 7, 1980, issued to Colon Aveiga by Center Insurance Agency, Inc., and signed by Jon Scott Robbins evidencing payment of $554 for an auto insurance policy issued by Dixie Insurance Company (Petitioner's Exhibit 53). An application for a Fireman's Fund auto insurance policy, dated October 10, 1980, signed by Colon Aveiga and Jon Scott Robbins evidencing payment of $514 (Petitioner's Exhibit 44). An Insurance Binder dated April 20, 1981, issued to Colon Aveiga and signed by Jon Scott Robbins evidencing payment of $767 credit for premiums paid and $299 for premiums due (Petitioner's Exhibit 56). A copy of a cancelled personal check (numbered 128) written by Colon Aveiga, dated April 20, 1981, made payable to Metro Insurance Agency in the amount of $299 for payment of premiums due (Petitioner's Exhibit 57). A Notice of Cancellation of a Fireman's Fund auto insurance policy dated March 25, 1981, and issued to Colon Aveiga for nonpayment of premiums due (Petitioner's Exhibit 52). An Amended Fireman's Fund Auto Insurance Policy dated February 6, 1981, issued to Colon Aveiga and showing a premium adjustment of $271 due (Petitioner's Exhibit 49). A Fireman's Fund Interoffice Memo dated March 23, 1981, written by Albert Sons, FJUA Underwriting Manager for Fireman's Fund Insurance Companies, discussing Colon Aveiga's insurance policy application (Petitioner's Exhibit 42). A Fireman's Fund FJUA Underwriters Request for Information from Metro Insurance Agency regarding Colon Aveiga, dated December 1, 1980 (Petitioner's Exhibit 46) A Fireman's Fund Underwriting memo dated January 14, 1981, requesting information about Colon Aveiga from Metro Insurance Agency and containing a new address for Colon Aveiga (Petitioner's Exhibit 47). A Florida Department of Highway Safety and Motor Vehicles' transcript of Gaston Aveiga's certified driving record, dated September 16, 1981 (Petitioner's Exhibit 43). An Insurance Binder dated October 2, 1980, issued to Marc Gavidia by Metro Insurance Agency and signed by Jon Scott Robbins, evidencing a payment of $140 for an auto insurance policy issued by Fireman's Fund (Petitioner's Exhibit 97). An Insurance Premium Finance Agreement dated October 23, 1980, issued to Marc Gavidia by the Metro Insurance Agency and signed by Jon Scott Robbins (Petitioner's Exhibit 98). A Florida Department of Highway Safety and Motor Vehicles' transcript of Marc Gavidia's certified driving record, dated September 16, 1981 (Petitioner's Exhibit 99). An application for a Fireman's Fund auto insurance policy, dated October 9, 1980, signed by Marc Gavidia and Jon Scott Robbins (Petitioner's Exhibit 101). A Policy Change Request for a Fireman's Fund auto insurance policy, dated February 10, 1981, issued by Metro Insurance Agency, signed by Jon Scott Robbins, concerning Marc Gavidia's policy and listing his address as 5361 S.E. 11th Street, Tallahassee, Florida (Petitioner's Exhibit 111). A Notice of Cancellation of Marc Gavidia's auto insurance policy, dated February 27, 1981, issued by Fireman's Fund and citing material misrepresentation as the grounds for the cancellation (Petitioner's Exhibit 112). A copy of a cancelled personal check (No. 1726) written by Juana Perez, dated March 12, 1981, made payable to Metro Insurance Agency in the amount of $299 for payment of premiums due (Petitioner's Exhibit 62). An Insurance Binder dated March 12, 1981, issued to Rogelio Perez by Metro Insurance Agency and signed by Jon Scott Robbins, evidencing auto insurance coverage by Utah Home Insurance Company (Petitioner's Exhibit 63). An Insurance Premium Finance Agreement dated March 12, 1981, issued to Rogelio Perez by Metro Insurance Agency, and signed by Jon Scott Robbins (Petitioner's Exhibit 78). An application for a Fireman's Fund auto insurance policy, dated March 12, 1981, signed by Rogelio Perez and Jon Scott Robbins (Petitioner's Exhibit 65). A Declarations Form for auto insurance coverage by Rogelio Perez by Fireman's Fund showing a premium due of $978 (Petitioner's Exhibit 75). A Declarations Form for auto insurance coverage by Rogelio Perez by Fireman's Fund showing a premium due of $881 (Petitioner's Exhibit 66). A receipt from Luby's Chevrolet of Miami, Florida, showing $1,084 received from Luis G. Capon (Petitioner's Exhibit 80). An Insurance Binder dated January 26, 1981, issued to Luis Capon by Metro Insurance Agency, signed by Jon Scott Robbins and evidencing auto insurance coverage provided by Utah Home Insurance Company (Petitioner's Exhibit 81). An application for a Fireman's Fund auto insurance policy dated January 28, 1981, signed by Jon Scott Robbins (Petitioner's Exhibit 84). A Policy Change Request for a Fireman's Fund auto insurance policy stating that Luis Capon's address had been changed to 2560 S.W. 34th Street, Gainesville, Florida, and signed by Jon Scott Robbins (Petitioner's Exhibit 86). A Florida Department of Highway Safety and Motor Vehicles' transcript of Luis Capon's certified driving record, dated September 12, 1981 (Petitioner's Exhibit 79). A cancelled policy advisal dated July 8, 1981, regarding Luis Capon's Fireman's Fund auto insurance policy (Petitioner's Exhibit 90). A letter from Albert M. Sons, dated September 22, 1981, in his capacity as FJUA Manager stating that an inspection by Fireman's Fund established that Luis Capon had not moved to Gainesville, Florida, and that in fact he lived in Miami and was therefore in a higher rating zone (Petitioner's Exhibit 89). An Interoffice Memo from the file of Fireman's Fund dated March 23, 1981, in reference to Luis Capon questioning certain inconsistencies in that individual's application for insurance (Petitioner's Exhibit 83). An application for a Fireman's Fund auto insurance policy, dated September 10, 1980, issued to Javier Alvarez, showing a signature of "Javier Alvarez" and signed by Jon Scott Robbins (Petitioner's Exhibits 3 and 4). A Declarations Form for auto insurance coverage of Javier Alvarez by Fireman's Fund showing a premium due of $737 (Petitioner's Exhibit 5). A Return to Sender letter from Fireman's Fund to Javier Alvarez bearing the address of 4902 S.W. 84th Street, Plantation, Florida (Petitioner's Exhibit 6). A Fireman's Fund FJUA Underwriters request for Javier Alvarez' correct address, issued to Metro Insurance Agency, dated November 14, 1980 (Petitioner's Exhibit 7). An Insurance Premium Finance Agreement allegedly signed by Javier Alvarez, issued by Metro Insurance Agency, and signed by Jon Scott Robbins (Petitioner's Exhibit 19). A letter from the National Insurance Finance Company to Javier Alvarez, 251 Crandon Boulevard, Miami, Florida, informing Alvarez of dates and terms of due payments (Petitioner's Exhibit 20). Deposition of A. M. Beverly, taken February 22, 1983 (Petitioner's Exhibit 1). FJUA Rating Manual (Petitioner's Exhibit 2). Fireman's Fund FJUA Rating Examination (Petitioner's Exhibit 3). The following witnesses testified on behalf of the Petitioner: Gaston Aveiga, Albert M. Sons, Peter Gavidia, Marc Gavidia, Juana Perez, Luis Capon, and Javier Alvarez. The Respondent testified on his own behalf. Based upon my observation of the witnesses and their demeanor while testifying, post-hearing memoranda, documentary evidence received, pre-hearing stipulations and the entire record compiled herein, I hereby make the following relevant:
Findings Of Fact The Respondent, Jon Scott Robbins, was, during times material herein, licensed as an Ordinary Life, Disability and General Lines agent. By its Administrative Complaint filed herein dated September 24, 1982, Petitioner, Department of Insurance, charged that the Respondent engaged in the following acts and/or conduct (in summary fashion) which amounts to conduct violative of Chapter 626, Florida Statutes, to wit: Respondent failed to account for or pay to the insurer, insured, or other persons entitled to premiums or other funds received belonging to insurers or others in transactions under his license in a fiduciary capacity, in violation of Section 626.561(1), Florida Statutes. Respondent diverted or appropriated such funds or portions thereof for his own use, in violation of Section 626.561(2), Florida Statutes. Respondent collected a sum as premium or charge for insurance in excess of or less than the premium or charge applicable to such insurance, in violation of Section 626.9541(15)(b), Florida Statutes. Respondent misappropriated, converted, or unlawfully withheld monies belonging to insurers, insureds, beneficiaries, or others received in the conduct of business under his license, in violation of Section 626.611(10), Florida Statutes. Respondent knowingly filed with a supervisor or other public official, or made, published, disseminated, circulated, delivered to any person, or placed before the public, or caused directly or indirectly to be filed with a supervisor, or other public official, or made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement, in violation of Section 626.9541(d), Florida Statutes. Respondent knowingly made a false material statement, in violation of Section 626.9541(5)(a)2, Florida Statutes. Respondent knowingly made a false entry of material fact in a book, report, or statement of any person, or knowingly omitted to make a true entry of a material fact pertaining to the business of such person in a book, report, or statement of such person, in violation of Section 626.9541(5)(b), Florida Statutes. Respondent made false or fraudulent statements or representation on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from an insurer, agent, broker or individual, in violation of Section 626.9541(11)(a), Florida Statutes. Respondent knowingly made a false or fraudulent statement or representation in or with reference to an application or negotiation for insurance, in violation of Section 626.9541(11)(b), Florida Statutes. Respondent willfully violated a provision or provisions of the Insurance Code, in violation of Section 626.611(13), Florida Statutes. Respondent demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Section 626.611(7), Florida Statutes. Respondent engaged in fraudulent or dishonest practices, in violation of Section 626.611(9), Florida Statutes. Respondent engaged in unfair methods of competition or in unfair or deceptive acts as prohibited under Part VII of Chapter 626, Florida Statutes, in violation of Section 626.621(6), Florida Statutes. Respondent violated a provision of the Insurance Code, in violation of Section 626.611(10), Florida Statutes. Respondent has shown himself to be a source of injury or loss to the public, or detrimental to the public interest, in violation of Section 626.621(6), Florida Statutes. During times material herein, Respondent served as a General Lines agent and represented Fireman's Fund Insurance (Fireman's Fund). The complaint allegations, in summary fashion, may be grouped in two classifications; (1) that Respondent knowingly filed false statements of material facts concerning insureds in an attempt to attract more insureds by offering lower rates and (2) Respondent received premiums from insureds in excess of the actual premiums he submitted to Fireman's Fund and thereby unlawfully appropriated the excess monies to his own use. Albert Sons is the underwriting manager for the Florida Joint Underwriters Association (FJUA) in his capacity for Fireman's Fund and is a direct contact for Fireman's Fund with the Respondent. All FJUA premium rates are identical given the same variables such as age, type of vehicle, use and territory. Any variation of these factors changes the rate in a uniform manner and that change is uniform throughout the industry. As an example, Miami is a substantially higher rated territory than Gainesville (TR 31-32). An insured who cancels his insurance coverage is charged the amount of premium based on the amount of time that the coverage remained in effect plus a service charge exacted by the company for processing the application. Pursuant to negotiations for the purchase of auto insurance, Gaston Aveiga, speaking on behalf of his father Colon Aveiga, informed Respondent of his Florida driver's license number and date of birth. The same information was provided to the Respondent on behalf of Colon Aveiga. Gaston advised the Respondent that he would be the principal driver of the car to be insured. Colon Aveiga purchased an auto insurance policy from the Respondent on October 7, 1980 and was quoted a premium of $544. Colon received an insurance binder from Respondent reflecting his correct address: 1215 NE 110th Street, Miami, Florida (Petitioner's Exhibit No. 53). Approximately three days later, an application was made to Fireman's Fund on October 10, 1980, reflecting that Colon Aveiga's address is 1534 SW 34th Street, Gainesville, Florida. The Aveigas have never lived in Gainesville nor have they indicated any intention of moving to Gainesville (TR 15). The insurance application further provides that Colon Aveiga is the only driver of the car and that he had an international drivers license whereas the Aveigas only have Florida driver's licenses; they specifically informed the Respondent of the same and that Gaston would be the principal driver of the insured car. The application submitted to Fireman's Fund on behalf of the Aveigas reflects a total premium of $514 which is, of course, $30 less than the premium quoted and collected from Colon Aveiga. On October 2, 1980, Marc Gavidia, and his father, Peter, purchased an auto insurance policy from the Respondent, doing business as Metro Insurance Agency. 2/ Respondent provided the Gavidias an insurance binder containing their correct address: 10441 SW 50th Street, Miami, Florida and evidencing a payment of $140 towards the balance due (Petitioner's Exhibit No. 97). The insurance was purchased to insure Marc Gavidia's Dodge van of which he was the principal driver. Marc Gavidia purchased the auto insurance from Respondent because of the cheaper rate (TR pp. 41-45). On October 4, 1980, an auto insurance application was tendered to Fireman's Fund on behalf of Marc Gavidia reflecting that he was self-employed (Petitioner's Exhibit No. 101). Marc Gavidia did not list himself as self- employed on the application (TR 49). Marc Gavidia gave Respondent his Florida driver's license which reflected a birth date of February 7, 1960 whereas the application submitted by Respondent on behalf of Marc Gavidia reflects a birth date of February 14, 1950 with a different driver's license number (Petitioner's Exhibit No. 101). On February 14, 1981 Respondent sent a policy change request for Florida auto insurance stating that the insured, Marc Gavidia, transferred schools to Tallahassee and now lives at 5361 SE 11th Street, Tallahassee, Florida (petitioner's Exhibit No. 111). Marc Gavidia has never lived in Tallahassee nor has he communicated to the Respondent any intent of moving to Tallahassee. (TR pp. 49-50). Juana Perez and her husband, Rogelio Perez purchased auto insurance from the Respondent based on the low rate quoted by Respondent. Ms. Perez wrote a check in the amount of $275 payable to Metro Insurance and received an insurance binder (TR pp. 53-54). Ms. Perez gave David Einhorn (a salesman of a local automobile dealership who was representing Respondent) Mr. Perez's Florida driver's license and Mr. Einhorn made a copy of the license (TR p. 56). An application for insurance was submitted to Fireman's Fund on behalf of the Perezes and reflects a total premium of $893. The application states further that the applicant has an international drivers license whereas Mr. Perez has never had an international drivers license (TR p. 59). The application reflects further that Mr. Perez was unemployed whereas he was employed at the time of his application for insurance (TR pp. 59, 63 and 65). An insurance premium finance agreement dated December 30, 1981, entered into by Mr. Perez shows $978 as a total amount of premiums minus the $275 downpayment leaving $704.20 as the amount to be financed (Petitioner's Exhibit No. 78). This represents approximately eighty-five ($85.00) dollars more than the premium sent to Fireman's Fund. On January 28, 1981, Luis Capon, purchased auto insurance from the Respondent and an application was submitted to Fireman's Fund reflecting a total premium of $789. At that time, Luis Capon paid $1,084 in cash to the Metro Insurance Company (TR p. 68). The application submitted by Respondent reflected further that Luis Capon had an international drivers license No. 1581934 and was born on January 15, 1944. At the time Luis Capon made application with the Respondent for auto insurance, he provided his Florida Drivers license which reflected his correct address: 419 NW 15th Avenue, Miami, Florida and his birth date, November 28, 1956 (TR p. 71). A policy change request for Fireman's Fund issued to Luis Capon states that Capon changed his address to 2560 SW 34th Street, Gainesville, Florida. The policy change request form was signed by Respondent. Luis Capon has never lived in Gainesville nor has he evidenced to Respondent any intent of living in Gainesville. Further, Luis Capon has never received any refund from Respondent and in fact had to pay additional premiums (TR p. 73). The additional premium seems to have stemmed from additional violations as reflected by a DMV Driving Report. Javier Alvarez purchased an auto insurance policy from Respondent and was advised that the total cash premium for the policy was $830. Javier Alvarez paid $250 and financed the remaining $580 (Petitioner's Exhibit No. 19). An application submitted on behalf of Mr. Alvarez reflects a total premium of $730 which was submitted with the application. Mr. Alvarez has not received a refund of the difference in the amount quoted i.e. $830 and the amount $730 actually paid to Fireman's Fund by Respondent. When negotiating for the purchase of the auto insurance policy from the Respondent, Javier Alvarez gave the Respondent his Florida driver's license which contained his license number, birth date and address. The application submitted on behalf of Mr. Alvarez shows a Plantation, Florida address and reflects that Javier Alvarez has a Massachusetts driver's license and a birth date of August 16, 1940 whereas his correct birth date is February 22, 1961 and his address is 251 Crandon Boulevard, Apartment 342, Key Biscayne, Florida (TR p. 106). Mr. Alvarez has never had any address other than the Key Biscayne, Florida address and has never possessed a Massachusetts driver's license. On April 2, 1981, Respondent sent an endorsement request to Fireman's Fund advising that Javier Alvarez had transferred schools and was living in Gainesville, Florida (Petitioner's Exhibit No. 2). Javier Alvarez has never attended any school in Gainesville, Florida nor has he indicated to Respondent any intent to do so (TR p. 110). THE RESPONDENT'S POSITION The Respondent testified on his own behalf and has been licensed since 1978. Respondent was first employed as a managing agent and as an underwriter for several years with another agency. During that employment, Respondent did not have the guidance and/or the assistance of a tutor. Respondent acknowledged that there were indeed numerous errors in addresses but he attributes same to the fact that he was a new agent without proper checks and balances in his office at the time, and that he, more than anyone else, was the victim of such mistakes. Respondent points to the fact that he earns commissions based on the amount of premiums and that the lower premiums quoted result in lower commissions to him. Finally, Respondent points to the fact that other agencies such as the chief complaining party in this case, Fireman's Fund, had a greater error ratio than the Respondent in the conduct of its insurance agency and that these errors were the result of sloppy clerical work and language barriers more than any intentional act on Respondent's part. 3/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Respondent's insurance license as referred to herein be suspended for a period of two (2) years. It is further RECOMMENDED that eighteen (18) months of the subject suspension be suspended during which time the Respondent's license shall be placed on probation. RECOMMENDED this 2nd day of September, 1983 in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1983
Findings Of Fact At all times pertinent to this hearing, Petitioner held a license issued by the Florida Department of Insurance as a general lines insurance agent. On or about April 3, 1979, Steven B. Atkinson entered the Okeechobee Insurance Agency in West Palm Beach, Florida, from whom he had purchased his auto insurance for approximately three years. His intention at this time was to purchase only that insurance necessary to procure the license tags for his automobile, a seven-year-old Vega. He told the person he dealt with at that time at the insurance agency that this was all he wanted. He did not ask for auto club membership, did not need it, and did not want it. He asked only for what he needed to get his tags. However, he was told by a representative of the agency that he needed not only "PIP" insurance, but also auto club membership and accidental death and dismemberment insurance. Of the $144 premium, $31 was for the required "PIP" coverage, $75 was for auto club membership (not required), and $38 was for accidental death and dismemberment (AD&D) (not required). Representatives of the agency told him that he needed all three to get the tags and, though he knew what he was getting and knew he was purchasing all three, he agreed because he was told by the agency representatives that he needed to have all three in order to get his tags. 3 Diane Phillipy McDonald contacted the Okeechobee Insurance Agency in April, 1979, because she had heard on the radio that their prices were inexpensive. All she wanted was personal injury protection (PIP), which was what she thought the law required to get tags on her automobile. When she first called the agency and asked how much the coverage she wanted would be, she was told she could pay a percentage down and finance the rest. When she entered the agency, she was waited on by a man whose name she cannot remember. However, she did not ask for auto club coverage or accidental death and dismemberment coverage, nor did those subjects ever come up in the conversation. She asked only for PIP, and she paid a $50 deposit on her coverage. In return for her deposit, she was given a slip of paper that reflected that she had purchased PIP coverage. She was not told she was charged for auto club membership or accidental death and dismemberment. The forms that she signed, including those which reflect a premium for all three coverages in the total amount of $137, bear her signature, and though she admits signing the papers, she denies having read them or having them explained to her before she signed them. In fact, she cannot recall whether they were even filled out when she signed them. In regard to the papers, the premium finance agreement signed by the witness on April 3, 1979, reflects in the breakdown of coverage total premium of $137. However, immediately below, the total cash premium is listed as $158, $21 more than the total of the individual premiums for the three coverages, and the financing charge is based on that amount1 less the down payment. Marvin W. Niemi purchased his auto insurance from the Okeechobee Insurance Agency in March, 1979, after he heard their advertisement on the radio and went in to get the insurance required by the State in order to get his license tags. When he entered the agency, he asked personnel there for the minimum insurance required to qualify for tags because he was strapped for money at the time and could not afford anything else. He definitely did not want auto club membership. In fact, discussion of that did not even arise, nor did he want the accidental death policy. When he left the agency, he thought he was only getting what he had asked for; to wit, the PIP minimum coverage. All the forms that he signed were blank when he signed them. This application process took place very quickly during his lunch hour from work. He admits giving his son's (David Robert) name as the beneficiary on his insurance, but did not realize at the time that he was purchasing coverage other than the minimum coverage required. His rationale for giving his son's name as beneficiary was that agency personnel asked and the witness felt if there was any money involved, it should go to his son. In fact, Mr. Niemi was sold not only the PIP, but membership in an auto club and PIP coverage with an $8,000 deductible. Again, the total premium was $137, when the actual premium for the coverage he asked for was only $24. Frank Johnson purchased his insurance from Okeechobee Insurance Agency in April, 1979, because he had heard and seen their advertisement on radio and television and it appeared to be reasonable. He wanted only PIP coverage as required by law sufficient to get his license tags. When he entered the agency, he spoke with a man whose name he does not know, who after consulting the books came up with the premium for the coverage to be purchased. During this meeting, the question of motor club or AD&D coverage was not mentioned. His signature does not appear on the statement of understanding, which outlines the coverage and the premium therefor. In this case, because Mr. Johnson had had some prior traffic tickets, his total premium came to $243. His coverage, however, included bodily injury liability, property damage liability, PIP, and auto club. After paying a $50 down payment, he made two additional payments which totaled approximately $50, but thereafter failed to make any additional payments. On August 1, 1980, Marguerite and Steven von Poppel entered the Federal Insurance Agency in Lake Worth, Florida, to purchase their automobile insurance coverage. They purchased policies which included bodily injury and property damage liability, PIP coverage, and comprehensive and collision coverage. The PIP coverage had a deductible of $8,000, and the comprehensive and collision coverage both had $200 deductibles. Mrs. von Poppel indicates that it was not their intention to have such large deductibles on their coverage. In any event, on that day, they gave a check for down payment in the amount of $320 and advised the employee of the agency that upon billing for the balance due of the $915 total premium, they would send the check. Neither Mrs. von Poppel nor Mr. von Poppel desired to finance the balance due of $595, and Mrs. von Poppel did not affix her signature to an application for premium financing with Devco Premium Finance Company dated the same day which bears the signature of Kevin D. Cox as agent. This premium finance agreement lists a cash premium of $966, as opposed to $915. The receipt given to the von Poppels initially reflects a down payment of $320, which is consistent with the receipt, and an amount financed of $646, as opposed to $595, which would have been the balance due under the cash payment intended and desired by the von Poppels. Somewhat later, Mrs. von Poppel received a premium payment booklet from Devco in the mail. When she received it, she immediately went to the Federal Insurance Agency, told them she did not desire to finance the payments, and that day1 September 3, 1980, gave them a check in the amount of $595, which was the balance due on their insurance coverage. This check was subsequently deposited to the account of Federal Insurance Agency and was cashed. This did not end the von Poppel saga, however, as subsequently the von Poppels were billed for an additional amount of $116.18, which reflects the interest on the amount ostensibly financed. When the von Poppels received this statement, they contacted the Federal Insurance Agency and were told that there was some mistake and that the matter would be taken care of. They therefore did not make any further payments, except a total payment of $20, which they were told was still owing. This $20 payment was made on May 29, 1981, after their insurance had been cancelled for nonpayment of the balance due on the finance agreement. The policy was, however, subsequently reinstated, back-dated to the date of cancellation, after the von Poppels complained. Their complaints, however, did nothing to forestall a series of dunning letters from a collection agency to which Devco had referred the von Poppels' account. It is obvious, therefore, that Federal Insurance Agency did not notify Devco of the fact that the amount due and payable had been paid, and did not clear the von Poppels with Devco or with the collection agency thereafter. As a result, the von Poppels filed a complaint with the Insurance Commissioner's office. That terminated their difficulty on this policy. On September 15, 1980, Federal Insurance Agency submitted a check in the amount $595, the amount paid to them by the von Poppels in full settlement of their account, to Devco. There appears to have been no additional letter of explanation, and though Devco credited this amount to the von Poppel account, it did not know to cancel the finance charges since the von Poppels' decline to finance their premium. Of the total amount of the von Poppel premium, the majority, $636, was attributable to the basic insurance in the amount of $10,000-$20,000 liability written by American Risk Assurance Company of Miami, Florida. The supplemental liability carrying a premium of $180 and covering $40,000-$80,000 liability was written by Hull and Company, Inc., out of Fort Lauderdale for Empire Fire and Marine Insurance Company. The third portion of the coverage carrying a charged premium in the amount of $150 covered the AD&D covered by Reliance Standard Life Insurance Company (RSLIC) of Philadelphia, Pennsylvania. This coverage, in the principal sum of $10,000 in the case of Mr. von Poppel and $5,000 in the case of Mrs. von Poppel, was included without the knowledge or the cosnet of the von Poppels. The policies, numbered 10753 R and 10754 R, were never delivered to the von Poppels as, according to an officer of RSLIC, they should have been, but are in the files of the Federal Insurance Agency. Further, the von Poppels were overcharged for the coverage. Respondent, however, did not remit any of the premium to Reliance Standard Life Insurance Company Instead, on August 1, 1980, the same day the von Poppels were in to purchase their insurance, he issued a sight draft drawn on Devco Premium Finance Company to Reliance Standard Life in the amount of $150. Reliance Standard Life was not the same company as Reliance Standard Life Insurance Company, was not controlled by Reliance Standard Life Insurance Company, and in fact had no relation to Reliance Standard Life Insurance Company. Reliance Standard Life was a corporation duly organized and existing under the laws of the State of Florida in which Kevin D. Cox was president and Howard I. Vogel was vice president-secretary. Of the $150 premium, 90 percent was retained by Respondent or his company as commission and 10 percent was transmitted to Nation Motor Club along with a 10 percent commission on policies written for other individuals. Nation Motor Club would then transmit the bona fide premium of 24 cents per $1,000 coverage to RSLIC. More than a year later, on October 16, 1981, Federal Insurance Agency reimbursed the von Poppels with a check for $42.50, representing the unearned portion of the unordered AD&D coverage. Clifford A. Ragsdale went to the Federal Insurance Agency in Lake Worth on April 19, 1982, to purchase his auto insurance because after calling several agencies by phone and advising them of the coverage he wanted, this was the least expensive. To do this, he would read off the coverage from his old policy and get a quote for the identical coverage. After getting this agency's quote, he went to the office where, after talking with two different ladies to whom he described the coverage he desired, he got to the person with whom he had talked on the phone and read his current coverage, and who already had some of the paperwork prepared. During all his discussions with the agency's employees on the phone and in person, he did not speak of, request, or desire auto club membership. He has been a member of AAA since 1977, and his membership there covers all the contingencies he is concerned with. Additional auto club membership in another club would be redundant. He gave the agency representative a check for $247 as a down payment and agreed to finance the balance due through Premium Service Company. Though he was given a receipt for the $247 deposit, the premium finance agreement he signed that day at the Federal Insurance Agency reflected a cash down payment of only $147, thus falsely inflating the balance due to be paid by the client. The $100 difference was refunded to Mr. Ragsdale by Federal Insurance Agency on October 25, 1982, some six months later after he complained to the Insurance Commissioner's office and was told that the $100 difference was for membership in a motor club that he did not desire or agree to. As late as December 29, 1982, over eight months later, the agency had still not remitted the $147 to Premium Service Company, who then added this deposit already paid by the client back to the account balance. Mr. Ragsdale did not read all the documents he signed at the agency, and he never received the policy he ordered. He was told he was signing an application for insurance and signed several instruments in blank at the request of the personnel at Federal Insurance Agency. He was told they would later fill in what wad needed. Respondent was the general lines agent of record for the Okeechobee Insurance Agency, located at 1874 Okeechobee Boulevard, West Palm Beach, Florida, during March and April, 1979, and at the Federal Insurance Agency, 3551 South Military Trail, Lake Worth, Florida, during the period which included August, 1980, and April, 1982. In each agency, he had instructed his' personnel how to serve and handle customers who came to the agency requesting the lowest minimum required insurance in which the agency specialized and which the agency, through its advertising program, purported to offer. As testified to by Linda Holly, an employee of Federal Insurance Agency, and as admitted by Respondent, when a prospective customer entered the agency requesting the minimum required coverage, the agent was to ask if the customer knew what the minimum was. The agent would then explain what was required and quote a premium which included not only the minimum required insurance, but also some additional service which, depending on the time, could be AD&D, towing, motor club, or the like, none of which was required by the State of Florida. Respondent instructed his employees to do this on the rationale that the premiums and commissions on the minimum required insurance were so low that the agency could not make sufficient profit on the sale of it, alone, to stay in business.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent's license as a general lines agent in the State of Florida be revoked. RECOMMENDED this 3rd day of August, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1983 COPIES FURNISHED: Daniel Y. Sumner, Esquire William W. Tharpe, Jr., Esquire Department of Insurance Legal Division 413-B Larson Building Tallahassee, Florida 32301 Mr. Kevin Denis Cox 1483 S.W. 25th Way Deerfield Beach, Florida 33441 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
