Findings Of Fact Respondent, Kathryn Genevieve Saviak, did business as J & J Insurance Agency at all times pertinent to these proceedings. As a general lines insurance agent, she maintained five offices at one time or another in Dade, Broward and Hillsborough counties, for the sale of automobile insurance. Respondent did not deal with customers directly herself. She visited her offices occasionally, perhaps once a month, and spoke to the office managers more frequently by telephone. Some of her employees travelled among offices. Respondent authorized her employees to write insurance policies on behalf of the FJUA under an arrangement with the United States Fidelity and Guaranty Company (USF&G), a servicing carrier for the FJUA. Prior to December, 1978, respondent was the only licensed agent with the J & J Insurance Agency assigned to USF&G. Agents like respondent who represented the FJUA were required to forward to the servicing carrier money thee received in payment of premiums on the date received or, at the latest, on the following day. An agent need not require payment of the entire premium in order to write an insurance policy, so long as the agent collected a specified minimum deposit. Any money actually collected above the amount of the minimum deposit, however, was to be forwarded to the servicing carrier daily. E.R. Milbourne, Jr., the USF&G employee with direct charge of FJUA operations, personally apprised respondent at various times, including prior to 1978, of the requirement that monies be forwarded upon receipt. Agents were first advised of this requirement in writing on or about September 17, 1973. Respondent is one of approximately 250 agents for whom USF&G has been designated the servicing carrier by FJUA. Respondent's offices wrote 60 to 70 policies a month as compared to USF&G's 25,000 FJUA policies a year. The FJUA policies respondent's offices wrote became effective on the date they were written. USF&G then had thirty days in which to issue the policy. In its last audit before the final hearing began, USF&G determined that two percent of its private passenger vehicle policies and four percent of its commercial vehicle policies had not been issued within the thirty-day period. Routinely, USF&G issued a notice of termination if the premium for a policy had not been paid in full within thirty days, but, in some cases, as many as sixty days might have elapsed from the date of application before USF&G issued a notice of termination. On March 30, 1978, Carlene Grigg made application for automobile insurance at respondent's Ft. Lauderdale Office. She made payment of $309.00 at that time. USF&G received the application on May 15, 1978, accompanied by only $200.00. In late July, Carlene's husband, Marvin, received a notice of termination from USF&G dated July 26, 1978, stating that USF&G was owed $188.00. Petitioner's exhibit No. 5. In September, Mr. and Mrs. Grigg paid an additional $73.00 to respondent's Ft. Lauderdale office. On or about November 6, 1978, USF&G received an additional $139.00 from respondent's Ft. Lauderdale office. Together with the initial $200.00, this constituted full payment of the premium for the policy Ms. Grigg applied for on March 30, 1978 (which has subsequently been revised to eliminate physical damage coverage, resulting in a decrease in premium.) (Count I) On August 14, 1978, Constantine A. Ronca made application for an automobile insurance policy at respondent's Ft. Lauderdale office and paid $257.00. USF&G received Mr. Ronca's application later in August, accompanied by $100.00. USF&G sent a notice of termination dated October 26, 1973, to be effective November 9, 1978, for the stated reason of unpaid premium. (Count II) On June 27, 1978, Antonio Vettorazzi purchased automobile insurance at respondent's Ft. Lauderdale office. Against a total premium of $437.00, Mr. Vettorazzi made a down payment of $153.00. The balance of the premium, $284.00, was financed. USF&G received Mr. Vettorazzi's application from respondent's Ft. Lauderdale office accompanied by a check for $284.00. Thereafter Mr. Vettorazzi received a notice of termination from USF&G dated November 15, 1978, threatening to terminate the policy effective November 29, 1978, for alleged nonpayment of a premium balance of $153.00. In late November or early December of 1978, USF&G received a check for $153.00 from respondent's Ft. Lauderdale office. Although Mr. Vettorazzi made his payments to the premium finance company, he made no additional payments directly to respondent after June 27, 1978. (Count III) Also on June 27, 1978, Linda Diane Moray Blair purchased automobile insurance from respondent's Ft. Lauderdale office. Against a total premium of $308.00 she made a cash down payment of $112.00, for which she received a receipt. Petitioner's exhibit No. 2 attached to petitioner's exhibit No. 3. The balance of the premium was financed by Capitol Premium Plan, Inc. Ms. Blair made monthly payments of $29.20 to Capitol Premium Finance in a timely fashion. Subsequently she received a notice from J & J Insurance that another $10.00 was due. In September of 1978, Ms. Blair sent a $10.00 money order to respondent's Ft. Lauderdale office. Thereafter, Ms. Blair received from USF&G a notice of termination dated October 12, 1978, stating that a balance was owed the company of $122.00. On October 27, 1978, USF&G received from respondent's Ft. Lauderdale office a check in the amount of $122.00. (Count IV) On October 18, 1978, David G. Fuerst purchased automobile insurance at respondent's Ft. Lauderdale office. He wrote a check for $210.00, half the annual premium. On November 21, 1978, Mr. Fuerst wrote another check in favor of J & J Insurance for the remainder of the premium in the amount of $210.00. Petitioner's exhibit No. 8. When USF&G received Mr. Fuerst's application, respondent's check in the amount of $150.00 accompanied the application. Eventually USF&G issued a notice of termination dated December 18, 1978, advising Mr. Fuerst that his policy would be terminated on account of an unpaid balance of $270.00. Petitioner's exhibit No. 9. Shortly after receiving the notice of termination, Mr. Fuerst received from respondent's Ft. Lauderdale office a form "Special Notice" stating that the cancellation of the policy "was due to a computer error. Petitioner's exhibit No. 10. On January 9, 1979, USF&G received the $270.00 balance from respondent's Ft. Lauderdale office. (Count XXVIII) On October 30, 1978, William Patrick Pete went into respondent's Ft. Lauderdale office. He purchased an automobile insurance policy for which he paid the entire premium of $170.00. Additionally, he purchased membership in an automobile club for which he paid $30.00. USF&G received Mr. Pete's application on November 8, 1978, accompanied by respondent's check for $50.00. On December 26, 1978, USF&G sent Mr. Pete a notice of termination for the stated reason that he owed $120.00 toward his premium. On January 9, 1979, USF&G received $120.00 from respondent's Ft. Lauderdale office. (Count XXIX) On October 3, 1978, Linda J. Brown purchased insurance from respondent's Ft. Lauderdale office. On that date she made a do payment of $96.00 against a total premium of $275.00. She financed the remainder of the premium, $179.00, under an agreement with Time Premium Company. Petitioner's exhibit No. 15. USF&G received Ms. Brown's application on October 18, 1978, accompanied by a check for $179.00. On December 11, 1978, USF&G directed a notice of termination to Ms. Brown for the stated reason that she owed $96.00 on her premium. Petitioner's exhibit No. 16. On January 2, 1979, USF&G received from respondent a check in the amount of $96.00. (Count xxx) 12. In July, 1978, Robert Charles Oberheim purchased insurance from respondent's Ft. Lauderdale office. He made a down payment of $249.00 against a quoted premium of $711.00. He financed the balance of $462.00, and made regular monthly payments of $63.00. When USF&G issued Mr. Oberheim's policy, it adjusted the premium downward by $40.00 so that the total premium was in fact $671.00. On October 2, 1978, USF&G issued a notice of termination for the stated reason of a balance owing by Mr. Oberheim of $209.00. Thereafter, some time before October 16, 1978, USF&G received respondent's check in the amount of $209.00. Not until August 1, 1979, did J & J Insurance draw a check in favor of Mr. Oberheim in the amount of $40.00, representing the refund he was owed. Petitioner's exhibit No. (Count XXXI) On November 4, 1977, Jean L. Snyder, wife of Paul Snyder, purchased automobile insurance from respondent's Miami office. She was quoted a premium of $1,153.00 and wrote a check for the full amount on November 16, 1977. Petitioner's exhibit No. 20. USF&G received this application on February 13, 1978, accompanied by a check in the amount of $400.00. (Count XXXII) On February 9, 1978, Joseph J. Guido purchased automobile insurance from respondent's Ft. Lauderdale office. He made a down payment of $221.00 against a total premium of $631.00, and financed the balance of $410.00 under an agreement with Time Premium Company. Petitioner's exhibit No. 25. He subsequently sold the vehicle he had insured and, on August 8, 1978, cancelled the policy. On August 28, 1978, Time Premium Company received a $490.00 refund check from USF&G. Brooksie Peeples, Time Premium Company's manager, deposited this check against Mr. Guido's account. The check was enough to pay off Mr. Guide's indebtedness to Time Premium Company in its entirety, with $207.73 remaining. This balance was forwarded to respondent's Ft. Lauderdale office on September 13, 1978. Petitioner's exhibit No. 26. The check was deposited on September 19, 1978. Beginning in November of 1978, Mr. Guido and his wife made repeated demands for the refund. Finally, when Mr. Guide refused to leave the premises until the check was written, on March 29, 1979, the manager of respondent's Ft. Lauderdale office wrote Mr. Guide a check for $207.73. (Count XXXIV) On December 7, 1978, Shirley Payne purchased automobile insurance from respondent's Ft. Lauderdale office. On that date she made a down payment in the amount of $300.32 against a quoted premium of $682.32. She was told she would receive her policy within thirty days, along with a bill for the balance due. In fact, she received her policy in March of 1979. She paid respondent another $100.00 on March 20, 1979, petitioner's exhibit No. 28, and the final $282.00 on March 28, 1979. Petitioner's exhibit No. 29. USF&G received Ms. Payne's application on February 28, 1979, accompanied by a check in the amount of $214.00. (Count XXXVI) Lena Sabel accompanied her daughter, Sylvia Robbins, to purchase automobile insurance at respondent's Hollywood office on July 25, 1978. On that date Ms. Sabel wrote a check in the amount of $556.23 in favor of J & J Insurance Agency. Petitioner's exhibit No. 22. The total premium for the policy she purchased was $406.00. When USF&G received the Robbins' application from respondent it was accompanied by a check in the amount of $150.00. On October 23, USF&G issued a notice of termination for the stated reason that $256.00 was owed for the premium. On receipt of this notice, Ms. Robbins' son sent USF&G a check for $256.00. It arrived shortly after a check in the same amount that respondent's office sent. Having received duplicate checks, USF&G wrote a refund check to the order of Sylvia Robbins in the amount of $256.00 and forwarded the check to respondent. Sylvia Robbins' endorsement was forged and the check was deposited to the J & J Insurance Premium account at the Commercial Bank and Trust Company in Miami. About two weeks before the final hearing began, Ms. Sabel received a refund check in the amount of $256.00. (Count XXXVIII) USF&G drew Check No. 111558 in favor of Robert K. Kaganac in the amount of $44.00 on December 11, 1978, and forwarded the check in care of respondent's Hollywood office. Mr. Kaganac's endorsement was forged and the check was deposited to J & J Insurance Premium account at Commercial Bank and Trust Company in Miami. (Count XXXIX) On December 1, 1978, USF&G drew a check to the order of J. Bruce Garland in the amount of $54.00 and forwarded it to respondent's Ft. Lauderdale office. There Mr. Garland's endorsement was forged and the check was deposited to the J & J Insurance Premium account at the Commercial Bank & Trust Company in Miami. On August 1, 1979, respondent mailed Mr. Garland a check in the amount of $24.00. (Count XLI) Guillermo Citelli purchased automobile insurance at respondent's Hollywood office. On November 22, 1978, USF&G drew its check No. F110271 in favor of Mr. Citelli in the amount of $91.00 and forwarded it to respondent's Hollywood office. Mr. Citelli's endorsement was forged and the check was deposited to the J & J Insurance Premium account at the Commercial Bank & Trust Company in Miami. (Count XLIII) On October 11, 1978, Kevin B. McGuire purchased automobile insurance at respondent's Hollywood office. On that day he paid a premium of $108.00. He later requested that the policy be cancelled. On December 5, 1975, USF&G drew its check No. F110568 in favor of Kevin B. McGuire in the amount of $53.00 and forwarded the check to respondent's Hollywood office. Mr. McGuire's endorsement was forged and the check was deposited to the J & J insurance Premium account at the Commercial Bank & Trust Company in Miami. In January, 1979, Mr. McGuire received a refund from respondent in the amount of $53.00. (Count XLIV) In each instance in which it was shown that USF&G had cancelled a policy for which respondent had failed to forward the entire premium, USF&G later reinstated the policy, effective retroactively to the date of cancellation. Paula Davis, who managed respondent's Hollywood office from March of 1978, until January of 1979, was instructed by respondent to forge endorsements on refund checks and did so. This practice antedated Ms. Davis' employment at the Hollywood office. Marie Vernon, also employed by respondent at her Hollywood office, forged endorsements on refund checks, believing respondent had directed that this be done. Before each forgery, a photostat of the refund check was made and attached to the pertinent file against the possibility that the payee might make demand for the refund. Deborah Goldberg's testimony on this and other points has not boon credited. With respect to certain classes of insurance, respondent instructed Ms. Davis to forward to USF&G only a specified minimum deposit even when the office received more than the minimum deposit toward payment of the premium. With respect to these policies, respondent gave Ms. Davis standing instructions to forward the premium balances only upon receipt of notices of termination from USF&G. These instructions were followed, and monies belonging to USF&G were diverted to a separate account. Respondent also represented an Alabama insurance company to whom she forwarded premiums as promptly as that company required. Many of her employees engaged in no improper conduct of any kind and were completely unaware of what was going on. Both parties have furnished proposed findings of fact which have been considered in preparation of the foregoing findings of fact. Proposed findings of fact inconsistent with the foregoing are hereby expressly rejected.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner revoke respondent's license and her eligibility for licensure. DONE and ENTERED this 16th day of April, 1980, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Patrick F. Maroney, Esquire S. Strom Maxwell, Esquire Department of Insurance The Capitol Tallahassee, Florida 32301 Edward S. Jaffry, Esquire. S. Jack Carrouth, Esquire Suite 300, Barnett Bank Building Tallahassee, Florida 32302
The Issue The issue for consideration in this hearing is whether the Respondent's licenses as an insurance agent in Florida should be disciplined because of the matters set forth in the Administrative Complaint filed in this case.
Findings Of Fact At all times pertinent to the allegations contained herein, the Department of Insurance was the state agency in Florida responsible for the licensing of insurance professionals and the regulation of the insurance industry in this state. Respondent, Harold R. Leiffer, was licensed by the state as a life and health (debit) agent, a life agent, a life and health agent, a general lines agent, and a public adjuster (for fire and allied lines, including marine casualty and motor vehicle damage and mechanical breakdown insurance), and was engaged in the practice of the insurance profession under those licenses in Florida. In January, 1991, Donna L. Devor, at the time, the owner of Cobra Construction Co., a corporation, was contacted by the Respondent after she received a bid for the construction of a fire station in Florida. Ms. Devor had previously known the Respondent as an insurance agent through a company she was associated with to which he had provided construction bonds in the past. On this occasion, in January, 1991, according to Ms. Devor, Respondent called to say he was with a new company and could get her the bond she needed to support the bid she had been awarded. Ms. Devor invited him over to talk about it and they discussed it. Again, he indicated he would be able to get her the bond she needed. The next day, when he came back with the preliminary paperwork, he asked for a check in the amount of $850.00. According to Ms. Devor, he indicated that of that sum, $500.00 was to cover setup fees and other fees by the bonding company and $300.00 was to go to DSI, his agency. In response, Ms. Devor gave him a check for $850.00 made payable, at his request, to ICI, Respondent's other company, after which he left with the forms she had signed, some in blank. When he left, he promised to process the paperwork immediately in response to her stressing the urgency of the need for the bond. After several days passed with no response, Ms. Devor attempted to contact Respondent by phone but was unable to reach him. When she finally was able to speak with him, he asked her to come to his office to discuss the bonding company's requirement that she place her house as collateral for the bond. Ms. Devor immediately declined to do this but nonetheless went to his office at DSI to talk with him. When she arrived, he immediately called the bonding company which again requested she place her house as security, and she again refused. When this happened, Respondent asked her to come back the next day as he would try another source for the bond. When she contacted him the following day, he indicated he could get the bond from an Atlanta firm but she would have to go there to pick it up. She agreed to do this and Respondent, in addition, asked for a financial statement which she arranged to have provided. Ms. Devor flew to Atlanta and was met there by Respondent who drove her to the bonding company's office. When she met with company officials, she was told they imposed a coinsurance requirement of $100,000.00 in the company's name be put up by her and she did not have this cash available. Respondent, she claims, knew this. Nonetheless, she was furnished an office and a telephone to try to get the money but was unable to do so and as a result, the bonding company declined to issue the bond. After that failure, she returned to Orlando and, realizing that Respondent was apparently unable to help her, started to look for another bonding company. She called Respondent's secretary several times attempting to reach him to get her money back but, when she was unable to do so, finally sent him a letter requesting the return of her $850.00 payment. Respondent failed to respond to that letter and she continued to try to reach him, unsuccessfully, by phone. Finally, she was able to contact DSI's owner who indicated she had never heard of Ms. Devor and asked she be shown proof that the bond premium was paid. When Ms. Devor sent a copy of the check she had given to Respondent, the owner evidenced some dissatisfaction with Respondent but failed to refund the money. Ms. Devor continued to try to reach Respondent by phone without success. When she found where he lived, she wrote him another letter asking not only for the return of the amount she had paid him but also for reimbursement of expenses she had incurred in flying to Atlanta. She received neither. However, about a week or so later, she received a call from Respondent on her answering machine which left no return number. She was thereafter unable to again contact Respondent nor did she ever receive reimbursement of her payment to him. The $850.00 check was endorsed by Respondent with his own name and deposited to his personal account, Number 1307004115, at the Orange Bank in Winter Park, Florida. According to Mr. Leach, Vice-President of security operations for Pinnacle Insurance in Carrolton, Georgia, the company to which Ms. Devor flew at Respondent's request, the company file for Cobra Corporation shows no bond was ever issued to that company. Florida does not allow a charge for setup fees in any case, and he would not have received one in connection with this application even if the bond had been issued. It is company policy not to charge a fee of any kind if a bond is not issued. Only if the application is approved and the applicant then withdraws is a fee charged. In any case, the premium on a $100,000.00 bond such as that sought here would be $2,500.00. Respondent at one point owned Statewide Insurance and sold it to DSI, the company with whom he was associated at the time he took the bond application from Ms. Devor. His story of the transaction differs somewhat from that of Ms. Devor, however, in that he denies calling her to solicit her business. Instead, he claims, she called him and begged that he get her the bond she needed for this contract. In fact, he claims, she said she'd do anything she had to do, or pay any fee necessary, to get the bond. When he explained what the fees would be, she agreed to them. Respondent contends he got the bond through United American Security in Boston, which charges a setup fee of $500.00. When Ms. Devor, however, could not live with the company's conditions, indicating she could not get the required additional credit from her bank, she rejected that condition and Respondent agreed to try with Pinnacle. It is, he claims, Ms. Devor, who suggested they go to Atlanta where Mr. Mathieson, the representative of the insurance company at the time, imposed the requirement for collateral. He also contends she agreed to this. Afterwards, he asserts, Ms. Devor claimed to have gotten a bond without collateral from a company in Ft. Lauderdale which she presented to the contracting party. From the check for $850.00 which Respondent received from Ms. Devor, he paid $500.00 to United American as its setup fee, and $250.00 to Pinnacle for its fees. Respondent did not provide a cancelled check as evidence of either payment, however. He cannot account for the additional $100.00. In any case, he contends, after Ms. Devor requested a refund, he contacted both United American and Pinnacle to request reimbursement, but both refused because, they claimed, they had accepted her and had done credit checks on her. Respondent claims that Ms. Devor was offered two bonds, both of which she rejected because she did not want to put up the collateral or security requested by the bonding companies. He went to the companies under those conditions because, he contends, she had previously stated she would accept conditions, implying she would do anything necessary to get the bonds. In support of Mr. Leiffer's assertions, he introduced an enrollment form with United American Contractor's Association signed by Ms. Devor which indicates Cobra Construction Corp. applied for enrollment in the association and submitted a check for $500.00 as an enrollment fee. He also introduced a contractor's questionnaire reflecting the payment of a $250.00 application setup fee with Pinnacle to cover underwriting reviews and efforts in establishing a bond account. Ms. Devor, however, while admitting her signature appears thereon, does not recall having signed either document, contending that they may have been among those documents Respondent asked her to sign at the beginning of their relationship regarding this bond, some of which she signed in blank. Respondent, who had previously been with DSI and had just recently gone with ICI, nonetheless could give no reasonable justification for placing the $850.00 fee paid to him by Ms. Devor in his personal bank account and not in the account of one of the two companies.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Administrative Complaint in this case, alleging misconduct by Respondent, Harold Rush Leiffer, be dismissed. RECOMMENDED this 10th day of December, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK 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 10th day of December, 1992. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: - 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. Accepted and incorporated herein. First sentence not a FOF. Second sentence accepted but evidence was presented by Respondent to show that Respondent signed an application for membership in UACA ($500.00) and with some other unspecified concern for 1 $250.00 setup fee. Balance of paragraph accepted. Rejected as unproven by clear and convincing evidence. FOR THE RESPONDENT: No Proposed Findings of Fact submitted. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance 412 Larson Building Tallahassee, Florida 32399-0300 Harold R. Leiffer 2026 St. George Avenue Winter Park, Florida 32789 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neill General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issue for determination is whether Respondent committed the offenses set forth in the Administrative Complaint and, if so, what action should be taken.
Findings Of Fact At all times material hereto, John Morris Ale, hereinafter Mr. Ale, was licensed as a general lines agent in the State of Florida. On or about December 5, 1994, Mr. Ale telephoned Ms. Kristen Stryker informing her that he had started his own insurance business, Doctors Insurance Agency, and inquiring if she wanted to obtain her automobile insurance coverage from him. Mr. Ale was acquainted with Ms. Stryker due to his having obtained her present coverage for her. It was almost time for renewal of her present coverage. Ms. Stryker agreed to obtain her automobile coverage from Mr. Ale. Further, Mr. Ale inquired if Ms. Stryker would allow his son, James Ale, to come to her home and write the coverage. Mr. Ale indicated that his son was learning the insurance business, but assured her that he, Mr. Ale, would review all documents prepared by his son. Relying on that assurance and believing that Mr. Ale's son was a licensed agent, Ms. Stryker agreed for Mr. Ale's son to write her automobile coverage. On the evening of December 5, 1994, James Ale came to Ms. Stryker's home. He completed an automobile insurance application for coverage on her 1993 Jeep Cherokee and explained the coverage to her. Ms. Stryker presented to James Ale a check for $222, made payable to Doctors Insurance, as down payment for the insurance premium. Additionally, James Ale presented to Ms. Stryker an E.T.I. Financial Corporation premium finance agreement to sign. She signed the premium finance agreement. E.T.I. is a premium finance company. The premium finance agreement is dated December 6, 1994. It is signed by Respondent and indicates, among other things, Ms. Stryker's down payment, the total premium, and coverage effective on December 6, 1994, by two insurance companies, Fortune and New Alliance. Ms. Stryker's down payment check for $222 was endorsed and deposited by Doctors Insurance Agency. At no time material hereto was James Ale licensed by the State of Florida to transact insurance. At all times material hereto, Mr. Ale knew or should have known that his son, James Ale, was not licensed by the State of Florida to transact insurance. Subsequently, James Ale forwarded to Ms. Stryker an undated letter, together with additional applications for insurance coverage with insurance companies other than Fortune and New Alliance. In the letter, James Ale requested, among other things, that Ms. Stryker sign the applications and return them to him so that he could forward the applications to the insurance companies. Also, included with the undated letter was a copy of an automobile insurance binder, which indicated, among other things, that her vehicle coverage was with two insurance companies, Armor Insurance and Service Insurance, and that the binder period was from March 10, 1995 through March 10, 1996. The binder, according to the undated letter, could be used for proof of insurance. E.T.I. Financial Corporation authorized Doctors Insurance Agency, by and through Mr. Ale, to finance insurance premiums through E.T.I. Mr. Ale was the licensed agent for Doctors Insurance Agency. As an authorized insurance premium finance agent for E.T.I., Doctors Insurance Agency had possession of blank bank drafts from E.T.I. The process and procedure utilized in financing insurance premiums through an insurance company authorized by E.T.I. to represent it included forwarding blank bank drafts, bearing E.T.I.'s name, to the authorized insurance company. The bank draft is completed by the authorized insurance company, which includes making the drafts payable for the entire premium to the insurance company providing the coverage and is signed by the licensed agent of the authorized insurance company. The completed bank draft is forwarded, along with the premium finance agreement and any down payment, to E.T.I. which forwards the draft to the specified insurance company providing the coverage. If a draft is not signed by the licensed agent, the draft is not honored by E.T.I. and, therefore, is not issued to the insurance company providing the coverage. Consequently, no coverage is provided for a vehicle. No premium finance agreement from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker. No premium finance agreement was ever received by E.T.I. from Doctors Insurance Agency. No down payment for the insurance premium on behalf of Ms. Stryker was received by E.T.I. from Doctors Insurance Agency. No bank draft from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker and payable to Fortune or New Alliance. No bank draft from Doctors Insurance Agency was received by E.T.I. on behalf of Ms. Stryker and payable to Armor Insurance or Service Insurance. No bank drafts were ever received by E.T.I. from Doctors Insurance Agency. Due to the failure of Doctors Insurance Agency to submit the proper documents to E.T.I., including the bank drafts, no insurance company, which was to provide automobile insurance coverage to Ms. Stryker, received a premium from E.T.I. Therefore, none of the insurance companies provided Ms. Stryker with coverage for her vehicle. Even though Ms. Stryker had a binder for insurance coverage, unbeknownst to her, she had no automobile insurance coverage in effect. On or about May 24, 1995, Ms. Stryker was involved in an automobile accident. Believing that she had automobile insurance coverage in effect, Ms. Stryker contacted Mr. Ale regarding the accident. Mr. Ale informed her that she did not have insurance coverage with his insurance company and never did. Shortly afterwards, Ms. Stryker spoke with James Ale who informed her that he would attempt to locate her documents. She was not contacted again by James Ale. Because she had no automobile insurance coverage, Ms. Stryker was personally liable for the damages resulting from her accident, which exceeded $3,000. Also, she was exposed to potential personal liability for claims of injuries or damages suffered by the driver of the other vehicle involved in the accident. Neither Doctors Insurance Agency nor Mr. Ale paid any monies to Ms. Stryker for the damages that she suffered. On or about June 7, 1995, Ms. Stryker filed a consumer's assistance request with the Department of Insurance and Treasurer, hereinafter the Department. On or about October 18, 1995, almost 5 months after her automobile accident, Doctors Insurance Company issued a refund to Ms. Stryker of her $222 down payment on the insurance premium. Ms. Stryker had paid the down payment more than 10 months earlier.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer enter a final order: Finding that John Morris Ale violated Subsections 626.611(4), (7), (8), and (13), and 626.621(2) and (12), Florida Statutes (1993), in Count I and violated Subsections 626.561(1), 626.611(7), (8), and (13), and 626.621(2), Florida Statutes (1993), in Count II. Imposing a 21-month suspension of the license of John Morris Ale. DONE AND ENTERED this 29th day of September, 1997, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1997.
The Issue The issues in this case are whether Respondents violated Subsections 626.611(7), 626.611(9), 626.611(10), and 626.611(13), Florida Statutes (2008),1 and, if so, what discipline should be imposed.
Findings Of Fact At all times material to the allegations in the Administrative Complaints, Mr. Holliday, III, was a licensed Florida surplus lines (1-20) agent, a life and health (2-18) agent, a general lines (property and casualty) (2-20) agent, an independent adjuster (5-20), and agent in charge at International Brokerage and Surplus Lines, Inc. (IBSL). Mr. Holliday, III, had been associated with IBSL since its inception in 1993. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, IV, was licensed in Florida as a general lines (2-20) agent. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, III, and Mr. Holliday, IV, were officers and owners of IBSL. Most recently, Mr. Holliday, III, was the secretary of IBSL. He handled the underwriting and risk placement for the agency. From approximately March 1993 to April 2009, Mr. Holliday, IV, was the president of IBSL. As president of IBSL, Mr. Holliday, IV's, duties included signing agreements which established IBSL's business function as that of a general managing agent and signing agreements which empowered IBSL to collect premiums on behalf of insureds. IBSL ceased doing business on May 1, 2009. In the insurance industry, a common method of procuring insurance involves a retail producer, a wholesale broker, and a program manager. A customer desiring insurance contacts its local insurance agent, which is known as a retail producer, and applies for insurance. The retail producer has a producer agreement with a wholesale broker, who has a producer agreement with a program manager. The program manager represents insurance companies. The retail producer sends the customer's application to the wholesale broker, and the wholesale broker contacts the program manager and forwards the application to the program manager. The program manager will provide a quote if the insurance company is willing to insure the customer. The quote is passed back to the customer via the wholesale broker and the retail producer. If the customer decides to take the insurance, the program manager will issue a binder to the wholesale broker, who will submit the binder to the retail producer. The wholesale broker will issue an invoice for the premium to the retail producer. The program manager pays a commission to the wholesale broker pursuant to its producer agreement with the wholesale broker, and the wholesale broker pays a commission to the retail producer pursuant to its producer agreement with the retail producer. When the retail producer sends the premium payment to the wholesale broker, the retail producer will deduct its commission. The wholesale broker sends the premium amount to the program manager less the wholesale broker's commission. If the customer is unable to pay the entire amount of the premium, part of the premium may be financed through a premium finance company. The premium finance company may pay the premium to the retail producer or to the wholesale broker. International Transportation & Marine Agency, Inc. (ITMA), is a program manager and is engaged in the business of selling, brokering, and servicing certain lines of policies of insurance written or issued by insurance companies. ITMA is a program manager for Pennsylvania Manufacturers Insurance Association (Pennsylvania Manufacturers), an insurance company. IBSL, a wholesale broker, entered into a producer's contract with ITMA on January 4, 2008. Wimberly Agency, Incorporated (Wimberly), is a retail producer located in Ringgold, Louisiana. In 2008, Wimberly had a producer's agreement with IBSL. Carla Jinks (Ms. Jinks) is the administrative manager for Wimberly. In October 2008, R.L. Carter Trucking (Carter) was a customer of Wimberly and applied for motor truck cargo insurance with Wimberly. Wimberly submitted an application to IBSL and requested that coverage be bound effective October 28, 2008, for Carter. IBSL contacted ITMA and received a binder for a policy with Pennsylvania Manufacturers. The cost of the policy was $9,500.00 plus a policy fee of $135.00 for a total of $9,635.00. Carter paid Wimberly $2,500.00 as a down payment and financed the remainder of the cost with Southern Premium Finance, LLC, who paid the financed portion directly to Wimberly. Wimberly deducted a ten percent commission of $950.00 and sent the remainder, $8,635.00 to IBSL. The check was deposited to IBSL's clearing account. On January 22, 2009, Carter contacted Ms. Jinks and advised that he had received a notice of cancellation effective January 22, 2009, due to non-payment to Pennsylvania Manufacturers. On the same date, Ms. Jinks received a facsimile transmission from IBSL, attaching the notice of cancellation and stating: "There was some confusion with the payment we send [sic] and we are working on getting it reinstated." There were some e-mails between Wimberly and Mr. Holliday, III, concerning the placement of coverage with another company. IBSL was unable to place coverage for Carter. By e-mail dated January 30, 2009, Ms. Jinks advised Mr. Holliday, III, that she had been able to place coverage for Carter and requested a return of the premium paid on a pro rata basis. She advised Mr. Holliday, III, that the return premium should be $7,651.35. By e-mail dated January 30, 2009, Mr. Holliday, III, stated: We will tender the return as quickly as it is processed by accounting. I do sorely regret the loss of this account, and our inability to get the Travelers quote agreed on a timely basis. By February 19, 2009, Wimberly had not received the return premium from IBSL. Ms. Jinks sent an e-mail to Mr. Holliday, III, on February 19, 2009, asking that the return premium be rushed to Wimberly so that it could be used to pay for the replacement policy. As of the date of Ms. Jinks' deposition on November 16, 2009, neither Mr. Holliday, III; Mr. Holliday, IV; nor IBSL had given the return premium to Wimberly. K.V. Carrier Services, Inc. (K.V.), is a retail producer located in Medley, Florida. In 2007, K.V. and IBSL entered into a business arrangement with IBSL. Under the arrangement, K.V. was the retailer, IBSL was the wholesale broker, ITMA was the program manager, and Pennsylvania Manufacturers was the insurance company. K.V. collected the down payments for the policy premiums from its customers and sent the down payments to IBSL. The remainder of the premiums were financed by financing companies, who sent the remainder of the premiums to IBSL. IBSL was supposed to send the monies paid for the premiums to ITMA. The following customers made down payments to K.V. and financed the remainder of their premiums with a financing company. E & E Trucking Service OD Transport, Inc. Fermin Balzaldua Eduardo Bravo Carlos Ramirez Edwin Bello Janet Rodriguez UTL, Inc. Prestige Transport USA JNL Transportation, Inc. Valdir Santos DJ Express PL Fast Carrier Ysis Transport K.V. sent the down payments for these customers to IBSL. The financing company sent the remainder of the premiums for these customers to IBSL. The total amount of premiums sent to IBSL for these customers was $19,768.45. IBSL did not send the premium payments for these customers to ITMA. The policies for these customers were cancelled for non-payment. K.V. found another company that was willing to insure K.V.'s customers. K.V. paid the down payments for the new policies from its own funds, hoping that IBSL would repay the finance company with any unearned premiums that would be returned to IBSL as a result of the cancellations. ITMA sent an invoice called an Account Current Statement to IBSL for the business conducted in the month of November 2008. The total amount owed to ITMA was listed as $55,116.32. The invoice included the premium for the policy issued for Carter, less IBSL's commission. The premiums for the policies issued to Eduardo Bravo; Fermin Bazaldua; JNL Transportation, Inc.; Janet Rodriguez; OD Transport, Inc.; and Prestige Transport USA were also included in the Account Current Statement for the business that IBSL conducted in November. IBSL was required to pay the $55,116.32 by December 15, 2008, but did not do so. ITMA received a check from IBSL dated December 31, 2008, for $25,000.00. A notation on the check indicated that it was a partial payment for the November business. The check was unallocated, meaning IBSL did not state to which premiums the partial payment should be applied. Mr. Holliday, III, claimed that IBSL had sent a bordereaux along with the check showing to which policies the payment applied. Mr. Holliday, III's, testimony is not credited. Donald Kaitz (Mr. Kaitz), the president of ITMA, communicated with one of the Respondents, who advised Mr. Kaitz that he needed another week or so to collect some premiums from his retail producers. On January 12, 2009, ITMA received a telephone call from IBSL, stating that IBSL could not pay the balance owed to ITMA and that ITMA should take whatever action it felt necessary. As a result of the communication from IBSL, ITMA issued notices of policy cancellation on all applicable policies listed in the Account Current Statement which was to be paid on December 15, 2008. Copies of the cancellation notices were sent to the insureds and IBSL. ITMA issued pro rata return premiums based on the number of days that each policy had been in effect. The return premiums were sent to IBSL by a check for $18,790.06. Additionally, ITMA sent IBSL a list of the policies that had been cancelled, showing the earned premiums which had been deducted from the $25,000.00. IBSL received and retained a net of $30,116.32, which was owed to ITMA. This amount is derived by deducting the $25,000.00, which IBSL sent to ITMA, from the $55,116.32, which was owed to ITMA. By letter dated April 2, 2009, IBSL sent K.V. a check for $524.80, which stated: We have totaled all amounts owing to IBSL by KV Carrier Service, and we have totaled all pro rated commissions owing by IBSL to KV Carrier Services for the benefit of your clients and have included our check # 1025 in the final amount of $524.80 to settle the account. All net unearned premiums for other than unearned commissions which are funded herein you must contact the insurance carriers involved and request payment under the provisions of Florida Statutes #627.7283. Federal Motor Carriers Risk Retention Group, Incorporated (FMC), is an insurance company, which sells commercial auto liability insurance, specifically targeted to intermediate and long-haul trucking companies. CBIP Management, Incorporated (CBIP), is a managing general underwriter for FMC. FMC had an agreement effective June 1, 2008, with IBSL, allowing IBSL to act as a general agent for FMC. As a general agent for FMC, IBSL was given the authority to accept risk on behalf of FMC. IBSL was given a fiduciary responsibility to accept insurance applications, provide quotes, and bind coverage. Once IBSL binds a policy for FMC, FMC issues a policy and is responsible for the risk. IBSL would receive the down payment from the retail agency, and, in most cases, the finance company would pay the balance of the premium directly to IBSL. The agreement between FMC and IBSL provided that IBSL was to provide FMC a monthly report of premiums billed and collected, less the agreed commission. The report was due by the 15th of the month following the reported month. In turn, FMC was to issue a statement for the balance due, and IBSL was required to pay the balance due within 15 days of the mailing of the statement following the month in which the policy was written. In August 2008, FMC began to notice that IBSL was selling premiums lower than FMC's rating guidelines. IBSL owed FMC approximately $186,000.00, which was due on August 15, 2008. IBSL sent FMC a check, which was returned for insufficient funds. FMC contacted IBSL and was assured that the check was returned due to a clerical error and an error by the bank. Assurances were given to FMC that funds would be transferred to FMC the following day; however, FMC did not receive payment until five days later. In September 2008, Joseph Valuntas (Mr. Valuntas), the chief operating officer for FMC, paid a visit to Mr. Holliday, III, and Mr. Holliday, IV. Mr. Valuntas expressed his concerns about the delay in receiving payment in August. He also pointed out that IBSL had taken some risks which were not rated properly and that there were some risks in which IBSL was not following the underwriting guidelines. After his visit with the Hollidays, Mr. Valuntas wrote a letter to IBSL, restricting IBSL to writing in Florida and limiting the amount of gross written premium to no more than $100,000.00 per month. IBSL did not adhere to Mr. Valuntas' instructions. An example of IBSL's conduct involved the writing of a policy for Miami Sunshine Transfer, which is a risk category designated as public delivery. Public delivery was not a standard that FMC insured and, as such, was not covered by FMC's reinsurance. Beginning on or about September 21, 2008, FMC began getting complaints from policyholders and retail agents about cancellations of policies that had been paid timely and in full. Although the retail agents had paid the premiums in full to IBSL, IBSL had not forwarded the premiums to FMC. By October 2008, IBSL owed FMC approximately $120,000.00 in past due premiums. FMC officially terminated the IBSL agreement in October 2008. IBSL sued FMC for breach of contract. On December 22, 2008, FMC received a check from IBSL in the amount of $25,122.80, but IBSL did not specify what premiums were being paid by the check. From February 1, 2006, through November 20, 2008, IBSL had a business relationship with Markel International Insurance Company Limited (Markel), an entity for which IBSL was writing insurance. IBSL was a coverholder for Markel, meaning that IBSL could produce insurance business for Markel and had the authority to collect and process premiums and bind insurance on Markel's behalf. Once the premiums were collected by IBSL, they were to be reported to Markel, and, within a maximum of 45 days, IBSL was to remit to Markel the aggregate gross written premiums less IBSL's commission. T. Scott Garner (Mr. Garner) is an expert auditor and financial analyst who currently works for Northshore International Insurance Services (Northshore), an insurance and reinsurance consulting firm. Markel retained Mr. Garner to determine the amount of money that IBSL should have sent to Markel for business transacted by IBSL for the period between February 1, 2006, and November 20, 2008. In doing his analysis, Mr. Garner used the bordereauxs which IBSL prepared and provided to Markel. Bordereauxs are monthly billing reports or accounts receivable reports. Mr. Garner also used data from Omni, which is a software system that was used by IBSL. Mr. Garner used the following procedure to determine what IBSL owed Markel. He determined how much risk IBSL wrote during the time period, that is, the gross written premium. He identified the amount of money that Markel had received from IBSL for the time period. Next he determined the amount that should have been received from IBSL, the gross written premiums minus IBSL's commissions. He compared what should have been remitted to Markel with the amount that was actually received by Markel. Based on his analysis, Mr. Garner calculated that IBSL owed Markel $1,208,656.61. Mr. Garner's analysis is credited. Respondent submitted a FSLSO Compliance Review Summary, which was done by the Florida Surplus Lines Office. At the final hearing, Mr. Holliday, III, viewed the report to mean that Markel was incorrect in the amount of money that was owed to it by IBSL. The report does not indicate that the policies on which the premium variances were noted were policies issued by Markel. Additionally, in his review, Mr. Garner eliminated duplicate transactions in determining the amount owed to Markel. The report did give a long list of policies, which should have been reported to Florida Surplus Lines Office, but IBSL had failed to report the policies.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Respondents committed the violations alleged in Counts I through V of the Administrative Complaints, dismissing Count VI of the Administrative Complaints, and revoking the licenses of Respondents. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 October, 2010.
Findings Of Fact At all times pertinent to this proceeding, Respondent was licensed in this state by the Petitioner as an insurance agent. Respondent was licensed, pursuant to the Florida Insurance Code (Chapter 626, Florida Statutes) as a general lines agent, a health insurance agent, and a residential property and casualty joint underwriting association representative. In February 1990, Maria del Carmen Comas, who was subsequently known as Maria del Carmen Diaz (hereinafter referred to as Maria Diaz), was licensed by Petitioner as an insurance agent. By Final Order entered September 20, 1994, the licensure of Ms. Diaz was revoked by the Petitioner. At all times pertinent to this proceeding, Respondent and Ms. Diaz maintained a close personal and professional relationship. On October 12, 1990, an entity known as The First Assurance, Inc., (hereinafter referred to as FIRST) was incorporated under the laws of the State of Florida. At all times pertinent to this proceeding, Respondent was the president and sole officer of FIRST, which is a Florida incorporated general lines insurance agency. FIRST operated out of offices located at 10680 Coral Way, Miami, Florida (hereinafter referred to as the Coral Way location) until June 1994, when Respondent moved the office of FIRST to 8780 Sunset Drive, Miami, Florida. On September 21, 1993, an entity known as The First Assurance of Miami, Inc., (hereinafter referred to as FIRST OF MIAMI) was incorporated under the laws of the State of Florida by Respondent and Maria Diaz. At all times pertinent to this proceeding, Respondent was the president and sole officer of FIRST OF MIAMI, a Florida incorporated general lines insurance agency doing business at 8780 Sunset Drive, Miami, Florida (hereinafter referred to as the Sunset Drive location). Respondent and Ms. Diaz were equal owners of FIRST OF MIAMI until that corporation ceased its operation in February 1995. On August 26, 1994, an entity known as Marlin Insurance Agency, Inc., (hereinafter referred to as MARLIN) was incorporated under the laws of the State of Florida. Respondent was the sole incorporator of MARLIN. At all times pertinent to this proceeding, Respondent was the president and sole officer of MARLIN, a Florida incorporated general lines insurance agency doing business at the Sunset Drive location where Respondent operated FIRST and FIRST OF MIAMI. MARLIN was originally incorporated for the purpose of purchasing the business of Rodal Insurance Agency in Hialeah, Florida. After the purchase of Rodal was rescinded by court order, MARLIN remained dormant until February 1995, when MARLIN began operating as a general lines insurance agency at the Sunset Drive location. At all times pertinent to this proceeding, Respondent was the supervising agent of MARLIN. As long as FIRST and FIRST OF MIAMI maintained separate offices, Respondent managed the day to day affairs of FIRST and Ms. Diaz managed the day to day affairs of FIRST OF MIAMI. After FIRST moved its offices into those of FIRST OF MIAMI, the separation of management became less distinct. At all times pertinent to this proceeding, Carlos Gonzalez was an employee of FIRST or of FIRST OF MIAMI. Mr. Gonzalez was hired and trained by Respondent and worked under his direct supervision. At no time pertinent to this proceeding did Mr. Gonzalez hold any license or appointment under the Florida Insurance Code. At all times pertinent to this proceeding, Alvaro Alcivar was an employee of FIRST OF MIAMI or of MARLIN. Mr. Alcivar acted under the supervision of either Maria Diaz or of Respondent. At no time pertinent to this proceeding did Mr. Alcivar hold any license or appointment under the Florida Insurance Code. At all times pertinent to this proceeding, Respondent had sole signatory authority of the FIRST's account number Number33080870-10 (the FIRST expense account) and of FIRST's account Number0303043975-10, both maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had joint signatory authority with Maria Diaz of the FIRST's account number Number33095150-10 maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had joint signatory authority with Maria Diaz of the FIRST OF MIAMI's account number Number33095630-10 maintained at Ready State Bank in Hialeah, Florida. At all times pertinent to this proceeding, Respondent had sole signatory authority of the FIRST OF MIAMI's account number Number0303116492-10 maintained at Ready State Bank in Hialeah, Florida. All premiums, return premiums and other funds belonging to insureds, insurers, and others received in transactions under his license were and remain trust funds held by Respondent in a fiduciary capacity. Respondent obtained a power of attorney from his customers as a routine business practice. Respondent has repeatedly issued checks in payment of fiduciary funds that have subsequently been dishonored by the bank because the account on which the checks were drawn had insufficient funds. ARCAMONTE TRANSACTION (COUNT ONE) On or about July 14, 1993, Susan Arcamonte of Miami, Florida, purchased a new car. Susan Arcamonte needed insurance for this automobile and discussed that need with Carlos Gonzalez, who was employed by FIRST. As a result of her discussions with Mr. Gonzalez, Ms. Arcamonte agreed to purchase a policy of insurance that would be issued by Eagle Insurance Company. The annual premium quoted by Mr. Gonzalez for this policy totaled $1,618.00. Mr. Gonzalez advised her that there would be additional charges if the premium was paid by a premium finance company. Because she did not have the funds to pay the lump sum annual premium and did not want to finance the premium, she had her parents, Edmond and Nancy Arcamonte, pay the annual premium. As instructed by Carlos Gonzalez, this check was in the amount of $1,618.00 and was made payable to "The First Assurance, Inc." This check was in full payment of the annual premium for the automobile insurance policy that was to be issued by Eagle Insurance Company. After receiving the check from Mr. and Mrs. Arcamonte, Mr. Gonzalez issued to Susan Arcamonte an insurance card containing the name "The First Assurance, Inc." and binder numbers 12873 and 931374 written across the top. Mr. Gonzalez represented to Ms. Arcamonte that this was a binder of the coverage they had discussed. Mr. Gonzalez thereafter delivered the check and the completed application for insurance to FIRST. Respondent reviewed the application for insurance and signed the application. The Arcamontes' check was thereafter deposited by Respondent into the FIRST expense account at Ready State Bank, Hialeah, Florida. In July 1993, Respondent or some person in his employ at FIRST and acting with his knowledge under his direct supervision and control, affixed the signature of Susan Arcamonte to a Century Premium Insurance Finance Co., Inc. (Century PFC) premium finance agreement and, in the space provided for her address, filled in the office address of FIRST. Ms. Arcamonte's signature was affixed to this agreement without her knowledge or consent. Respondent personally signed the premium fiance agreement that was sent to Century PFC. Because the address of FIRST was inserted on the premium finance agreement, Ms. Arcamonte did not receive payment coupons, cancellation notices, and other correspondence from Century PFC. Consequently, the existence of the premium finance agreement was concealed from Ms. Arcamonte. The original application for insurance signed by Susan Arcamonte contained a power of attorney purporting to grant Respondent the authority to sign Ms. Arcamonte's name to "applications or similar papers including premium finance contracts". There was no disclosure that the signature on the premium finance agreement was not that of Ms. Arcamonte or that FIRST was executing her signature pursuant to a power of attorney. Respondent contends that the premium finance agreement was executed pursuant to the power of attorney because the check from Mr. and Mrs. Arcamonte was inadvertently separated from her application for payment and erroneously deposited into the FIRST expense account. This contention lacks credibility and is rejected. The fact that Respondent deposited the check in his expense account, that the paperwork for the premium finance agreement contained the FIRST address, that Respondent took no action to rectify this alleged error even after receiving correspondence from the finance company, and that Ms. Arcamonte's signature was forged on the application belie Respondent's contention that this was an innocent mistake. On or about September 20, 1993, the Eagle Insurance policy that Ms. Arcamonte purchased was cancelled for nonpayment of premiums because Respondent, or persons acting under his direct supervision and control, failed to make a regular installment payment on the premium finance agreement. Ms. Arcamonte never received the 10 Day Notice of Cancellation Notices that Century PFC mailed to FIRST's address. It was not until October 1993 when she received a Notice of Cancellation from Eagle mailed September 27, 1993, that she learned that her policy had been cancelled effective September 20, 1993. As a result of Respondent's actions and those of Carlos Gonzalez, Susan Arcamonte failed to timely receive automobile insurance, suffered a finance charge for automobile insurance without her knowledge or consent, had her automobile insurance cancelled, and incurred higher premium charges for subsequent coverage because of a gap in her coverage. Following a criminal complaint filed against him by Ms. Arcamonte, Respondent was arrested and placed in a pretrial intervention program. It was only after this action was taken that Respondent made restitution to the Arcamontes for the $1,618.00 premium they paid. At no time during the transaction, did the Arcamontes deal with anyone from the FIRST other than Carlos Gonzalez. Mr. Gonzalez held himself out to be and acted as an insurance agent during this transaction. Specifically, Carlos Gonzalez did the following: Was introduced to the Arcamontes as an insurance agent and did not correct that misidentification. Interviewed Susan Arcamonte to gather the information necessary to determine level of coverage and to quote a premium for that coverage. Discussed coverage options and requirements including whether Ms. Arcamonte needed personal injury protection. Discussed deductible options and answered general questions about insurance. Selected an insurer for Ms. Arcamonte, quoted a premium for that coverage, and made representations as to the quality of the insurer. Offered to bind insurance coverage for the automobile Ms. Arcamonte was in the process of purchasing and sent a binder to her at the automobile dealership via fax. Personally completed the insurance application and related paperwork. Personally completed an insurance identification card, including binder numbers, as proof of insurance, and presented the identification card to Ms. Arcamonte. Presented Ms. Arcamonte with a business card that identified himself as a representative of FIRST. Respondent knew or should have known of the acts of Carlos Gonzalez. Respondent received from Mr. Gonzalez the application for insurance he had completed for Ms. Arcamonte so that all Respondent had to do was sign it. JOHNSON - MOREL TRANSACTION (COUNT TWO) On May 31, 1993, Linda E. Johnson and her husband, Miguel Morel, visited the residence of Wilfreido Cordeiro, an employee of FIRST who was acting on behalf of FIRST. As a result of their conversation with Mr. Cordeiro about their insurance needs, Mr. Morel and Ms. Johnson completed an application for automobile insurance from Armor Insurance Company (Armor) to be issued through FIRST. Mr. Cordeiro, who was not licensed by Petitioner for any purpose, held himself out to be an agent. He represented to these consumers that coverage with Armor was bound and gave them an identification card with the FIRST name on it that purported to be a binder of coverage. The FIRST insurance identification card was issued without authorization from Armor and in violation of the established policies and practices of Armor. Because Mr. Cordeiro was unlicensed, Respondent acted as the agent of record for this transaction. On or about May 31, 1993, Mrs. Linda E. Johnson tendered to Respondent, or persons acting with his knowledge and under his direct supervision and control, a check in the amount of $500.00 payable to FIRST as a premium down payment for the automobile insurance from Armor. On or about June 4, 1993, Respondent, or persons acting with his knowledge and under his direct supervision and control, deposited Mrs. Johnson's check in the FIRST expense account at the Ready State Bank. On or about June 29, 1993, Mrs. Johnson was contacted by her bank and informed that she had no automobile insurance. She immediately contacted Respondent who provided the bank with a certificate of insurance indicating coverage was placed with American Skyhawk Insurance (American Skyhawk) effective June 1, 1993. No authority to bind coverage had been extended by American Skyhawk prior to the submission of the application two and one-half months after the coverage effective date indicated on the certificate of insurance. On or about August 18, 1993, Respondent, or persons acting with his knowledge and under his direct supervision and control, completed a Century PFC and affixed thereto the signature of Mr. Morel without his knowledge or consent. This agreement reflected that Mr. Morel had paid the sum of $400.00 as a downpayment, despite the fact that Mrs. Johnson's check, in the amount of $500.00, had been received and deposited in the Respondent expense account. As a result of Respondent's action, Mrs. Johnson and Mr. Morel failed to timely receive automobile coverage; suffered a finance charge for automobile insurance without their knowledge or consent; and suffered the loss in at least the amount of $100.00. At no time during the transaction with FIRST did Mr. Morel or Mrs. Johnson knowingly execute a power of attorney. HWANG TRANSACTION (COUNT THREE) On August 29, 1992, Mr. Show Ming Hwang of Miami, Florida, purchased via telephone a policy of insurance for a car he was purchasing. Mr. Hwang called from a car dealership and spoke to an employee of FIRST who was acting under Respondent's direct supervision. Mr. Hwang tendered to FIRST a check in the amount of $869.00 as the full premium for this insurance, which was to be issued by an insurer named Security National. Respondent was the agen t of record for this transaction. Security National issued policy NumberSN00127048 providing insurance coverage for Mr. Hwang effective August 29, 1992. On December 22, 1992, Mr. Hwang asked FIRST to cancel his policy with Security National because he had moved and had secured other coverage. On January 15, 1993, Security National cancelled insurance policy NumberSN00127048 in response to Mr. Hwang's request. On January 26, 1993, Security National sent to Respondent its check Number216878 in the sum of $366.35 payable to Mr. Hwang. This check was a refund of the unearned premium for the cancelled policy. In addition to the unearned premium, Mr. Hwang was also entitled to a refund of the unearned commission from FIRST. The amount of the unearned commission was $64.55 and should have been paid by FIRST directly to Mr. Hwang. On February 8, 1993, Respondent, or an employee of FIRST acting under his direct supervision, endorsed the check from Security National in the name of Mr. Hwang and deposited that check in the FIRST expense account at Ready State Bank. Mr. Hwang was unaware that his name had been endorsed on the check and had not authorized such endorsement. This endorsement was not pursuant to a validly executed power of attorney. Mr. Hwang made repeated attempts to obtain the refunds to which he was entitled. Finally, he secured the intervention of the Petitioner. After that intervention, Respondent issued a FIRST check on December 17, 1993, payable to Mr. Hwang in the amount of $431.00 as payment of the refunds. Less than a month later, this check was dishonored because there were insufficient funds in the account on which it was drawn. After further intervention by the Petitioner, Respondent issued a cashier's check in the amount of $431.00 payable to Mr. Hwang. This check, dated March 22, 1994, was thereafter received and deposited by Mr. Hwang. Respondent failed to return the refunds to Mr. Hwang in the applicable regular course of business and converted the refund from Security National to his own use until the intervention of the Petitioner. As a result of Respondent's actions, Mr. Hwang failed to timely receive these refunds. MARIA DIAZ (COUNT FOUR) On September 20, 1994, the Petitioner entered a Final Order that revoked all licenses that it had previously issued to Maria Diaz (who was at that time known as Maria del Carmen Comas). In September 1994, Ms. Diaz, accompanied by Respondent, visited the Petitioner's office in Miami where she was told that the revocation of her license was forthcoming. After that information was given to them, Respondent and Ms. Diaz knew or should have known that the revocation of her licensure was imminent. There was insufficient evidence to establish when Ms. Diaz received a written copy of the order revoking her licensure. Ms. Diaz and Respondent assert that they did not know about the revocation until the end of January, 1995. The order entered in September 1994 prohibited Ms. Diaz from engaging in or attempting to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly owning, controlling, or being employed in any manner by any insurance agent or agency. After Respondent and Ms. Diaz had been told that the revocation of her licensure was imminent, Ms. Diaz engaged in transactions requiring licensure and acting in violation of the order revoking her licensure. This activity included applying to Seminole Insurance Company (Seminole) in December 1994 seeking appointment as a general lines insurance agent by Seminole, the submission of a large number of applications to Seminole, and the mishandling of an insurance transaction with Johannah Rexach in July and August 1995. Ms. Diaz began a business as a travel agent at the MARLIN office and continued to be present in the MARLIN office long after she had received written notice of the revocation of her licensure by Petitioner. At least on one occasion in May 1995, Ms. Diaz answered the MARLIN telephone by saying "insurance". Ms. Diaz continued to greet her former insurance customers and mailed out renewal notices after both she and Respondent had actual knowledge of the revocation of her licensure. Respondent knew or should have known of Ms. Diaz's activities. While there was insufficient evidence to establish that Ms. Diaz was formally on MARLIN's payroll, the evidence is clear and convincing that Respondent permitted Ms. Diaz to share office space while she attempted to develop her travel agency and that, in return, Ms. Diaz helped out at the MARLIN office. Respondent employed the services of Ms. Diaz and he placed her in a position to engage in transactions that required licensure after he knew or should have known that her licensure had been revoked. MARTINEZ TRANSACTION (COUNT FIVE) On April 23, 1994, Mr. and Mrs. Santiago Martinez of Miami, Florida, completed applications for automobile insurance from Fortune Insurance Company (Fortune) and Aries Insurance Company (Aries). The record is unclear as to whether the insurance was to be issued through FIRST or FIRST OF MIAMI. The individual with whom Mr. and Mrs. Martinez dealt was Alvaro Alcivar. This was during the time that FIRST and FIRST OF MIAMI maintained separate offices and it was before Respondent and Ms. Diaz had been told that her licensure was about to be revoked. The greater weight of the evidence established that Mr. Alcivar was, at that time, an employee of FIRST OF MIAMI and that he was working under the supervision of Maria Diaz. Succinctly stated, premiums paid by Mr. and Mrs. Martinez were deposited into a FIRST OF MIAMI bank account that showed First Assurance of Miami, Inc., d/b/a Complete Insurance as the owner of the account. The premium payment was not forwarded to the insurer. Because of this failure, Mr. and Mrs. Martinez did not receive insurance coverage for which they had paid. While Petitioner established that Mr. Alcivar and whoever was his supervising agent mishandled this transaction, there was insufficient evidence to establish that Respondent was aware of this transaction until Mr. and Mrs. Martinez demanded a refund of the premium they had paid. At that juncture, he attempted to resolve the problem. Consequently, it is found that the evidence failed to establish that Respondent was responsible for these violations of the Florida Insurance Code. ZAFRANI TRANSACTION (COUNT SIX) In July 1992, Mr. Issac Zafrani and his son, Ramon, of Miami, Florida, purchased automobile insurance with Oak Casualty Insurance Company (Oak) after dealing with Carlos Gonzalez. The various documents associated with this transaction refer to the agency issuing this policy as FIRST, FIRST OF MIAMI, or Rodal Insurance Agency. Mr. Gonzalez was an employee of FIRST and operated under the direct supervision of Respondent. The entire transaction was completed by Mr. Gonzalez at the automobile dealership where Mr. Zafrani was purchasing an automobile. All subsequent dealings by Mr. Zafrani was through Mr. Gonzalez by telephone or at locations other than the offices of FIRST. Mr. Gonzalez held himself out to be and acted as an insurance agent during this transaction. Specifically, Carlos Gonzalez did the following: Was introduced to the Zafranis as an insurance agent and did not correct that misidentification. Personally completed the insurance application and related paperwork. Discussed coverage and deductible options. Selected an insurer for the Zafranis, deter- mined the premium for the coverage, and accepted the payment for the premium. Personally completed an insurance identifi- cation card, including what purported to be proof of insurance, and presented the identification card to the Zafranis. Presented the Zafranis with a business card that identified himself as a representative of FIRST. The Zafranis paid for the renewal of their policy through FIRST each year on an annual basis. On September 1, 1994, the Zafranis tendered to Mr. Gonzalez their check in the amount of $1,748.00 as payment in full of the annual premium for the policy year 1994-95. This check was made payable to FIRST OF MIAMI and was deposited in the FIRST Expense Account at Ready State Bank ( Number0303080870- 10). Respondent was the only person with authority to sign on this account. On September 30, 1994, an employee of FIRST completed a premium finance agreement that purported to finance the Zafranis' premium for the Oak Casualty insurance and forged Issac Zafrani's signature to that agreement. This false document reflected that the total premium was $1,748.00 and that the Zafranis had made a downpayment of $524.00 and had an unpaid balance of $1,224.00. This action was taken without Issac Zafrani's knowledge or consent. Mr. Zafrani had not executed a power of attorney to authorize these acts. Respondent knew or should have known of this act. On September 30, 1994, Respondent, or an employee of FIRST working under his direct supervision, issued a premium finance draft from Artic to Oak in the amount of $1,485.80 based upon this false application. A few weeks after they paid the renewal premium, the Zafranis complained to Mr. Gonzalez that they had not received their renewal policy from Oak. Mr. Gonzalez advised them that the company had cancelled their policy in error. He promised that he would investigate the matter and take corrective action. On December 23, 1994, Respondent, or an employee of FIRST acting under his direct supervision, submitted an automobile insurance application to Seminole Insurance Company indicating that coverage had been bound for Issac Zafrani. On December 23, 1994, Respondent issued FIRST check Number1196 payable to Seminole in the amount of $1,681.65 in payment of the policy he was attempting to secure on behalf of the Zafranis. On or about December 27 1994, Mr. Gonzalez issued to the Zafranis a FIRST card with what purported to be a binder number from Seminole Insurance Company. No authorization to bind that coverage had been issued by Seminole. On January 3, 1995, Artic issued a cancellation notice on the Oak Casualty policy because of missed payments on the premium finance agreement. The Zafranis did not know about this premium finance agreement and Respondent failed to make the payments. In January 1995, FIRST check Number1196 that had been tendered to Seminole was dishonored by Respondent's bank because the account on which the check was drawn had insufficient funds to pay the check. As a result of these actions, the Zafranis failed to timely receive automobile insurance for which they had fully paid and suffered the loss of the sum of $1,748.00. Respondent knew or should have known of these actions. DEBT TO WORLD PREMIUM FINANCE COMPANY (COUNT SEVEN) On August 29, 1995, a final judgment was entered in a Dade County Court action brought by World Premium Finance Co., Inc. (World PFC) against FIRST OF MIAMI and the Respondent, individually, as defendants. This final judgment awarded damages against FIRST OF MIAMI in the sum of $7,203.03 and awarded damages against both defendants in the sum of $15,000 plus attorney's fees of $1,000. The World PFC complaint was based on worthless checks FIRST OF MIAMI and Respondent had issued in connection with premium finance contracts and included debts for unpaid downpayments and unearned commissions on premium finance contracts that had been cancelled. Respondent's assertion that these debts were the responsibility of Maria Diaz is rejected. While Ms. Diaz initially made the arrangements for FIRST OF MIAMI to finance through World PFC and was the agent responsible for some of these transactions, it is clear that Respondent was the agent for many of these underlying transactions. Further, some, if not all, of these worthless checks were drawn on accounts for which Respondent was the only person with signatory authority. The downpayments and unearned commissions constitute fiduciary funds for which Respondent is responsible. Respondent has failed to pay these fiduciary funds to World PFC after repeated demands for payments. GUTIERREZ TRANSACTION (COUNT EIGHT) On October 11, 1993, Ms. Madalina N. Gutierrez of Miami, Florida, completed an application for automobile insurance. Aries Insurance Company was the insurer for this policy and FIRST was the insurance agency. The premium for this policy was to have been $574.00. The person with whom Ms. Gutierrez dealt with was Carmen "Mela" Babacarris, an employee of FIRST OF MIAMI. Ms. Babacarris has never held any license or appointment under the Florida Insurance Code. Ms. Gutierrez paid to FIRST the sum of $287.00 on October 11, 1993, when she applied for this insurance. On that date, Ms. Babacarris gave to Ms. Gutierrez an insurance card that purported to bind coverage with Aries. She returned on November 1, 1993, and paid to FIRST the balance owed of $287.00. Both of these payments were tendered to and received by Ms. Babacarris on behalf of FIRST. The sums paid by Ms. Gutierrez for this insurance coverage were not remitted by the FIRST to Aries or to any other insurer. As a consequence, Ms. Gutierrez did not receive the insurance coverage for which she had paid. Ms. Gutierrez was unable to obtain a refund of the sums that she had paid to FIRST. Respondent knew or should have known of the acts pertaining to this transaction by Ms. Babacarris since the transaction was processed through the FIRST, the agency for which Respondent was the sole supervising agent. RICO TRANSACTION (COUNT NINE) On June 27, 1994, Mr. Rafael Rico of Miami, Florida, completed an application for automobile insurance from Aries Insurance. It is unclear from the documents whether this insurance was to be issued through FIRST or through FIRST OF MIAMI. This confusion in the record is attributable to the fact that the persons involved in this transaction and associated with these two agencies made little distinction between the two agencies. This application was completed at the automobile dealership from which Mr. Rico was purchasing the vehicle to be insured. The individual with whom Mr. Rico dealt was Alvaro Alcivar. At all times during the transaction with Mr. Rico, Mr. Alcivar held himself out to be and acted as an insurance agent. Specifically, Mr. Alcivar did the following: Personally completed the insurance application and related paperwork. Discussed coverage and deductible options and answered Mr. Rico's general insurance questions. Selected the insurer for Mr. Rico's coverage. Personally completed an insurance identification card, including a policy number, as proof of insurance and provided it to Mr. Rico. Indicated that coverage was bound immediately and gave to him a card that purported to be a Florida Automobile Insurance Identification Card indicating that Mr. Rico had insurance coverage through Aries. Developed the premium and downpayment. Accepted payment from Mr. Rico. Presented Mr. Rico with a business card identifying himself as a representative of FIRST OF MIAMI. Mr. Alcivar was the only representative of the FIRST or of the FIRST OF MIAMI with whom Mr. Rico dealt. On June 27, 1994, Mr. Rico tendered to Mr. Alcivar the sum of $947.00 as payment for this insurance with the sum of $500.00 being paid in cash and the balance being charged to Mr. Rico's Mastercard. This Mastercard entry was processed through the account of the FIRST, not that of the FIRST OF MIAMI. Despite the payments by Mr. Rico, the premium to which Aries was entitled for this coverage was not remitted by FIRST or by FIRST OF MIAMI. As a result of this failure, Aries cancelled the binder that had been issued to Mr. Rico. Mr. Rico was damaged as a result of this failure. He lost the premium he had paid and the lending institution that financed his vehicle placed insurance on the vehicle at a higher premium than that charged by Aries. Based on the relationship between FIRST and FIRST OF MIAMI, the relationship between Respondent and Ms. Diaz, the repeated references to FIRST in the documentation of this transaction, and the deposit of at least $447.00 in the Mastercard account of FIRST, it is concluded that Respondent knew or should have known about this transaction. CHERI TRANSACTION (COUNT ELEVEN) On November 19, 1994, Mr. Dieuseul Cheri of Miami, Florida, completed an application for automobile insurance that was to be issued by Seminole Insurance Company as the insurer. The application for insurance reflects that Maria Diaz was the agent for this transaction, but the name of the agency is FIRST, not FIRST OF MIAMI. Likewise, the premium finance agreement pertaining to this transaction reflects that FIRST is the producing agency. The entire transaction was handled by Alvaro Alcivar at an automobile dealership where Mr. Cheri was purchasing a vehicle and occurred after Ms. Diaz had been told in September that the revocation of her licensure was imminent. Mr. Cheri gave to Mr. Alcivar the sum of $205.00 in cash as the downpayment for the premium for this Seminole policy. At all times Mr. Alcivar held himself out to be and acted as an insurance agent. Specifically, Mr. Alcivar: Was introduced to Mr. Cheri as an insurance agent and did not correct that misidentification. Personally completed the insurance application and related paperwork. Discussed coverage and deductible options and answered Mr. Cheri's general insurance questions. Selected the insurer for Mr. Cheri's coverage. Personally completed an insurance identification card, including a policy number, as proof of insurance and provided it to Mr. Cheri. Completed a named driver exclusion agreement for Mr. Cheri's policy, which had a significant effect on the coverage provided under the policy, and completed a vehicle inspection. Developed the premium and downpayment. Accepted payment from Mr. Cheri on behalf of FIRST OF MIAMI. Presented Mr. Cheri with a business card identifying himself as a representative of FIRST OF MIAMI. Mr. Alcivar was the only representative of the FIRST or of the FIRST OF MIAMI with whom Mr. Cheri dealt. FIRST OF MIAMI failed to bind coverage with Seminole on Mr. Cheri's behalf until November 22, 1994. As a result, there was a lapse in Mr. Cheri's coverage from November 17 until November 22, 1994. On November 19, 1994, FIRST OF MIAMI submitted a premium finance agreement on Mr. Cheri's insurance policy to World Premium Finance Co., Inc. (World PFC). The World PFC contract as well as the application were signed by Maria Diaz. Ms. Diaz never met Mr. Cheri. The premium finance agreement submitted to World PFC by FIRST OF MIAMI indicated that he had made a premium downpayment of only $105.00 despite the fact that Mr. Cheri had made a downpayment of $205.00. The evidence is not clear that Respondent knew or should have known of this transaction because of the involvement of Ms. Diaz. Instead, this is an example of the Respondent permitting Ms. Diaz to continue to participate in insurance transactions that require licensure after Respondent and Ms. Diaz had been told in September 1994 that revocation was imminent. ALVARO ALCIVAR (COUNT TWELVE) Petitioner established by clear and convincing evidence that Alvaro Alcivar performed acts and made representations to consumers that require licensure pursuant to the Florida Insurance Code. Petitioner also established that Respondent knew or should have known of these acts and that he aided and abetted these violations by Mr. Alcivar. CARLOS GONZALEZ (COUNT THIRTEEN) Petitioner established by clear and convincing evidence that Carlos Gonzalez performed acts and made representations to consumers that require licensure pursuant to the Florida Insurance Code. Petitioner also established that Respondent knew or should have known of these acts and that he aided and abetted these violations by Mr. Gonzalez.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that Petitioner revoke all licensure and appointment held by Respondent pursuant to the Florida Insurance Code and that it impose against Respondent an administrative fine in the amount of $10,000.00. DONE AND ENTERED this 15th day of April 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 15th day of April 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0317 The following rulings are made as to the proposed findings of fact submitted by Petitioner. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5,6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 27, 25, 27, 28, 29, 30, 31, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 73, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 123, 125, 126, 127, 139, 140, 141, and 142 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in part by the Recommended Order. The testimony at the formal hearing that the office was moved in June 1994. The proposed findings of fact in paragraphs 10, 17, and 81 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the findings made. The proposed findings of fact in paragraphs 26, 32, 72, 74, 75, 76, 83, 129, 130, 131, 136, 137, 143, and 144 are subordinate to the findings made. The proposed findings of fact in paragraphs 46, 61, 82, and 124 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 77, 78, 79, 80, 128, 132, 133, 134, 135, and 136 are rejected as being contrary to the findings made. The following rulings are made as to the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 3, 4, 5, 7, 8, 9, 13, 15, 17, 18, 19, 20, 23, 26, 32, 33, 34, 35, 36, 37, 40, 41, 49, 50, 53, 54, 55, 64, 72, and 73 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in part by the Recommended Order, but are rejected in part since Respondent moved the offices of the FIRST from Coral Way to Sunset Drive at a time pertinent to this proceeding. The proposed findings of fact in paragraphs 6 and 52 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the findings made. The proposed findings of fact in paragraphs 10, 11, 21 and 27 are rejected as being unsubstantiated by credible evidence. The evidence that supports these proposed findings lacks credibility. The proposed findings of fact in paragraphs 12 and 31 are adopted in part by the Recommended Order, but are rejected to the extent the proposed findings mischaracterize the evidence. The proposed findings of fact in paragraphs 16 are adopted in part by the Recommended Order, but are rejected to the extent they are unnecessary to the conclusions reached. The proposed findings of fact in paragraph 24 are adopted in part by the Recommended Order, but are rejected to the extent they are contrary to the finding that they knew that the revocation of Ms. Diaz's licensure was imminent. The proposed findings of fact in paragraphs 25, 28, 30, 38, 39, 40, 45, 46, 47, 51, 56, 58, 59, 60, 61, 62, 65, 66, 67, 69, 71, 74, 75, 76, 77, and 78 are rejected as being contrary to the findings made. The proposed findings of fact in paragraphs 29 and 57 are subordinate to the findings made. The proposed findings of fact in paragraph 31 are rejected since they contain an inference that Respondent told Ms. Diaz to move as soon as he knew of her interaction with insurance customers. The proposed findings of fact in paragraph 42 are rejected as being a mischaracterization of the evidence. The proposed findings of fact in paragraphs 48, 63, 68, and 70 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: John R. Dunphy, Esquire Department of Insurance and Treasurer Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Honorable Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact At all times material hereto Respondent was licensed as an Ordinary Life and General Lines Agent (Exhibit 1) and was the agent for Dixie Insurance Company at the Bartow office. As such, he had the authority to write policies binding the insurer. At all times relevant hereto, Respondent was president and principal stockholder of Friendly Insurance Companies of Bartow, Winter Haven, Lake Wales and Haines City. The corporate records (Exhibit 3 for Polk County) show this to be the same as Friendly Auto Insurance of Lake Wales, Inc. Respondent was the agent for Dixie Insurance Company only at the Bartow office. Dixie Insurance Company qualifies agents, not offices, to sell their policies. Respondent had no authority to act as agent for Dixie Insurance at any of these offices other than the Bartow office as the insurance company has but one agent per office. To support the allegations in count 34 of the Administrative Complaint, Edward Bland testified, and Exhibits 21 through 23 were admitted. Bland applied for automobile insurance at Friendly Auto Insurance at the Winter Haven office, which he paid for by check in the amount of $728 (Exhibit 23) as full payment for the one year premium. Subsequent thereto, a Premium Finance Agreement was prepared on which Bland's signature was forged showing $546 of the premium to be financed. This finance agreement was signed by T. R. Shaw as agent. Upon learning that the finance agreement had been issued on his coverage, Bland contacted the Winter Haven office manager, and after a few weeks of "run around" contacted the Department of Insurance and "got his money back." Bland never saw Shaw or Respondent. Rafael Gomez, M.D. purchased automobile insurance on his three cars from Friendly Auto Insurance of Winter Haven in December 1985 for which he paid $3452.71 for the annual premium. Subsequently thereto, he received a call from the Barnett Bank, which had financed one of the cars, to tell him that the bank needed evidence of insurance on the financed auto. Dr. Gomez contacted Ruth Kent, the office manager at the Winter Haven office, who assured him she would supply the bank with the necessary documentation. When the bank contacted Dr. Gomez later to again demand proof of insurance, Gomez went to the Winter Haven office and demanded to see his file. He made copies of certain documents which he took to the bank. Dr. Gomez subsequently learned that a finance agreement had been entered into on his behalf, but without his knowledge or consent, and that the address shown on the agreement under his name was that of Ruth Kent. Although when accosted by Dr. Gomez with this information, Ms. Kent denied such an intentional act, this would have allowed her to hold the finance coupons and get all information supplied by the finance company to the borrower without Dr. Gomez learning that the policy for which he had paid in full was subsequently financed. After learning of the subterfuge, Dr. Gomez contacted the Department of Insurance. Ruth Judd was office manager at the Friendly Insurance Agency of Haines City for a period of time ending in 1987 when she was terminated by Respondent. Ms. Judd contends she was only the office manager, and Respondent was the boss of the office and hired all employees. During the time she worked in the office, Ms. Judd testified several different people served as the licensed agent for the office, but they spent little time in the office with Donald Leroy Flentke, towards the end of his tenure, coming in only for his weekly paychecks. No evidence was presented from which a determination could be made that for a specific period of time any of the four offices were not being supervised by a licensed agent. Ms. Judd testified she was aware of one policy for which the insured had paid the premium in full being submitted for a premium finance agreement with forged documents. She also was aware that monthly financing payments were made by the Haines City office on some three or four other premium finance agreements. Ms. Judd testified on March 2, 1988, that she was presently unemployed. Respondent called one witness that testified and produced documentary evidence (Exhibits 24 through 26) that on March 2, 1988, this witness purchased insurance from Ms. Judd at New Horizons and was required to buy an accidental death policy in order to obtain PIP coverage. Exhibit 7 shows that an automobile insurance policy was issued to Jackie Bryan, the policy was sold through Friendly Insurance of Winter Haven, Inc., that the premium was financed, the borrower owed an additional $142.66 on the finance agreement, and the policy expired 2-26-86. Respondent acknowledged that his signature appears on the premium finance application. Some 5000 policies are sold by Respondent's agencies per year, and Respondent has no independent recollection of that finance agreement. Dixie Insurance Company issued a policy to Johnny Davis which was also financed through Envoy, but this application was signed by Shaw. Although Dixie Insurance Company had their own premium finance organization and, if the premium is financed, preferred to do the financing, Respondent testified that occasionally, if a client did not want to finance their premium through Dixie, the agency would go through another premium finance company such as Envoy. Exhibits 9, 10, 11 and 12 show premium finance agreements were contracted for on behalf of Raymond Scott, Mark Turner, Kathy Smith and Cathy Phillips, but no auto insurance policies were issued by Dixie Insurance Company to these individuals. Only one of these finance agreements (Exhibit 12) purports to be prepared at the Bartow office, and two of the drafts (Exhibits 9 and 12) purport to be signed by Respondent. Respondent testified he neither signed those drafts nor authorized someone else to sign for him. The forgery on both Exhibits 9 and 12 appear to have been perpetrated by the same person. Cathy Phillips, a friend of Ruth Kent, testified without contradiction that the signature purporting to be hers on Exhibit 12 was forged, that she never entered into a premium finance agreement with Envoy Finance Corporation, and that she had never seen Exhibit 14 until presented to her by the Petitioner's attorney. Ms. Phillips did receive a past-due notice on one occasion and called Ruth Kent who told her not to worry about it, that everything was taken care of. Subsequently, Ms. Phillips' husband wrote a letter to Envoy Finance Corporation denying any knowledge of any insurance policy written by Friendly Insurance of Bartow. Considerable testimony was submitted regarding the activities of Chuck Evans who was, at one time, employed by Respondent at the Winter Haven agency as a non-licensed employee with authority to write checks on the Trust Account. While the statements made by Evans to Department of Insurance officials contributed to the initiation of the investigation of Respondent's agencies, none of this testimony was relevant to the charges here at issue.
Findings Of Fact The Respondent is a licensed insurance agent licensed in the State of Florida as a general lines agent. He was the primary agent of Emerald Coast Insurance Agencies, Inc. (Agency) for Pensacola, Florida. The agency at all times pertinent to the events and times treated in the Amended Administrative Complaint was a general lines insurance agency incorporated under the laws of the State of Florida. The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of insurance and regulating the practice of agents and other insurance professionals already licensed by the State of Florida, including the imposition of disciplinary measures. The Respondent had been an insurance agent, as of the time of the hearing, for approximately four years. During that time, he has typically written 50-60 applications for automobile insurance and related coverage per week. The owner of the Agency would not allow the Respondent to issue checks from the Respondent's own office. All processing of insurance application files was completed at the Tallahassee, Florida office. The files with client information for insurance applicants, whose business was initiated by the Respondent, was sent by UPS to the Tallahassee, Florida office on the morning following the taking of the applications. The forms, which the Respondent was required to have completed and asked customers to sign, were pre-printed and issued from the Tallahassee, Florida office. The Respondent had no part in the creation of these forms as to content, format, and the disclosures depicted on their face. The Respondent inquired of the Department's local office as to whether the forms comported with pertinent statutes and regulations, and the Department expressed no objection to them. Indeed, the forms in question do make disclosures of the coverage or products which the customer is purchasing and contain an acknowledgment, which the customer is required to sign, indicating that the coverage has been explained to the customer. In particular, the motor club product is depicted on the relevant form as being an optional product and that it has been explained to the customer, with a blank after that pertinent statement for the customer to sign an acknowledgment of that fact. The issue in this case does not involve whether the customer paid for such a product without executing any consent but, rather, whether the customer was misled or whether the products sold were actually, in fact, explained fully to them; whether they were misled in making a decision to buy such coverage in the belief that it was required in order to obtain the insurance they knew they needed. THE TRANSACTIONS AT ISSUE No evidence was submitted as to Count I, concerning Cheryl Ginsterblum nor Count VIII, concerning Joseph Shelton. Therefore, no findings of fact can be made and these counts should be dismissed. Pam Shivers of Gulf Breeze, Florida, required insurance coverage for her 1988 Dodge Caravan. Because the van was still financed with a lender, "full coverage" was required, that is, she needed personal injury protection (PIP), property damage (PD) coverage, comprehensive risk coverage, and collision damage coverage. On March 8, 1993, she went to the Respondent's Agency, and the Respondent handled the requested insurance transaction. She requested "full coverage", and the transaction was handled while she was standing at the counter, in just a few minutes. PIP and PD insurance was placed with Security Insurance Company of Hartford (Security). Comprehensive and collision coverage was placed with Florida International Indemnity Company (FIIC). The premium for Security was $350.00, and the premium for FIIC was $399.00. The purchase of this coverage was financed so that Ms. Shivers would not have to pay the entire $749.00 premium for all of the coverage at one time. In return for the premium financing arrangement, a $187.00 down payment was required for the insurance coverage. During the transaction, Ms. Shivers was quickly presented with approximately six documents to sign. Included in those documents was a document containing a disclosure that the motor club product which she purchased was optional, that is, not required by law; that she had been offered to purchase automobile insurance by the Agency without an optional motor club and chose to purchase that optional coverage of her own free will at an additional cost of $150.00; that she examined the benefits being offered, and that it was her decision to request enrollment as a member of the motor club association. It is true that Ms. Shivers signed these acknowledgments and disclosures, which on their face, would indicate that she had been informed about the nature of the motor club product or coverage and its cost, including the fact that it was not required by law and was optional. In fact, however, her apparent consent was not an actual, knowing and informed consent. She was presented with the six documents to sign hurriedly, with the places to sign simply marked for her to make quick signatures. She did not, in the course of the transaction, have significant time to read the documents or reflect on what she was signing, what her signatures obligated her for, and what specific products she was purchasing. She was not, in actual fact, informed that she was purchasing a motor club membership. She did not request that product, and the Respondent did not give her any actual explanation about it. She was not informed that she had any choice in whether or not to take that product. She later discovered that the product was optional and that it was, therefore, not an integral, unseverable part of the insurance coverage she did want to purchase. Moreover, Ms. Shivers was confused about the $749.00 premium quote and the amount she was actually required to pay. Her confusion involved the $749.00 premium for insurance quoted to her because of the fact that she was actually required to pay an $899.00 purported "premium". The receipt issued at the end of the purchase transaction indicated a total "premium" of $899.00. In fact, however, the actual cost of the insurance was $749.00. The additional $150.00 was for a motor club membership which was hidden in the receipt amount and what was represented on the receipt as a "total premium". The down payment of $337.00 quoted to her was also deceptive because actually, only $187.00 of that was the down payment on the actual insurance coverage premium. This is shown by the premium finance agreement in evidence. The Respondent had concealed the cost of the motor club membership within what was purported to be the total insurance premium amount reflected on the receipt and included the entire $150.00 charge for that membership within the down payment, simply and misleadingly calling the down payment of $337.00 as the down payment on insurance coverage. Thereafter, on March 21, 1993, Ms. Shivers went back to the Agency to cancel her insurance, related to the fact that her vehicle had been involved in an accident. Upon doing that, she left thinking that her insurance had been effectively cancelled. Later, she received notices from the premium finance company but was told by the Respondent to ignore them. On May 7, 1993, however, the Respondent informed her that she had to come back to the Agency and fill out a cancellation request. Thus, 47 days after she had attempted to cancel her coverage, her request was finally processed by the Agency. In the meantime, she was apparently being charged for premiums on the coverage she thought she had cancelled. Thus, from January 21, 1994, the premium finance company turned an amount it claimed was due of $43.26 over to its attorney for collection purposes, which impinged on Ms. Shivers' credit standing. She had already paid the Respondent $190.00 in premiums under the premium financing agreement, with her down payment, but did not receive any returned unearned premium representing the period after she thought she had cancelled her policy but, instead, was billed the additional $43.26 directly due to the Respondent's 47-day delay in processing her cancellation request. Count III In June, 1993, Laura O'Donohue of Pensacola, Florida, purchased her first vehicle, a 1993 Chevrolet Cavalier. The automobile dealership, where she purchased the vehicle, gave her a card for the Respondent's insurance agency. Therefore, never having established a relationship with an insurance agency, she went to that Agency to purchase insurance. Her mother, Lynn O'Donohue, accompanied her to the Agency. Before coming to the Agency while at the automobile dealership, she had received a quote for the insurance she wanted from the Agency. When she arrived at the Agency, she informed Donald Grubb, an employee of the Agency and the Respondent, that she just wanted "basic coverage". This was the first time she had purchased insurance, and she relied entirely for her decisions regarding that upon the representations of the Respondent and his colleague. Therefore, in a transaction, which took approximately 20 minutes, the Respondent and/or Mr. Grubb assisted her in filling out the paperwork required to place the insurance coverage she requested. During the course of the brief insurance purchase transaction, Ms. O'Donohue learned that she would be required to pay a higher premium amount than the quote she had received from the Agency while she was at the automobile dealership earlier that day. This is consistent with the Agency's custom and practice, established by former agent, James Self's, testimony to the effect that motor club coverage was typically added to the normal insurance coverage requested by customers, which resulted in higher purported "premium" quotes and charges than had initially been quoted to the customer, typically by telephone, before a customer came to the Agency office. When Ms. O'Donohue and her mother arrived at the Agency after having received the lower quote earlier, they were thus not prepared to pay the higher amount of the so-called premium. Ms. O'Donohue did not need a motor club because, through her mother, she was covered by AAA Motor Club for towing and other benefits. She had no knowledge that she had purchased a motor club product from the Respondent. All of the documents were presented to her, in response to her request for just basic insurance coverage, in the context that this was what the law required her to have and what she needed. She totally relied, as did her mother, upon the representations of the Respondent and his agent or employee, Mr. Grubb, concerning what the law required and what she needed in the way of insurance coverage. The testimony of Ms. O'Donohue's mother, Lynn O'Donohue, confirms the fact that they had no intent to purchase towing coverage or "auto club" because they already had a membership with AAA and wanted to pay nothing extra other than the basic insurance coverage. The Respondent or his agent or employee, Mr. Grubb, indicated, as shown on page 91 of the transcript, that "towing was all part of it", that is, they meant that the basic insurance package sought by Ms. O'Donohue included towing as part of its coverage. In fact, that was not the case, and the motor club product was clearly optional, at extra cost, and not legally required. Ms. O'Donohue purchased it unknowingly, based upon the representations and business practice used by the Respondent in connection with her transaction, in spite of the presence of her signatures on the disclosure portion of the application documents for the reasons referenced with regard to the Shivers transaction. The insurance requested was placed with two insurance companies. The PIP and PD were issued by Security at a premium of $223.00. The comprehensive and collision coverage was placed with General Insurance Company (General) at a premium of $411.00. Thus, the premiums for actual insurance coverage, which is all Ms. O'Donohue wanted, totaled $634.00. That was financed by the ETI Premium Finance Company (ETI) on periodic installment payments, with a required down payment of $127.00. The Respondent, however, required Ms. O'Donohue to make a down payment of $277.00 on a purported total premium due of $784.00. This amount, unbeknownst to Ms. O'Donohue, happened to include a motor club purchase (Atlantic Travel Association), which cost $150.00, thus, the difference between the $634.00 actual insurance premium and the $784.00 purported premium due. The $150.00 fee for motor club benefits was concealed in the "total premium" amount falsely represented to the customer by the Respondent. The deceptive and misleading nature of this transaction is further pointed out by the form of the receipt issued to Ms. O'Donohue upon consummating the transaction. That receipt indicates that the "total premium" is $784.00. Actually, the cost of the insurance was only $634.00, as referenced above, and the additional $150.00 of that purported total premium amount was the motor club fee. Likewise, the down payment quoted to her of $277.00 was deceptive because only $127.00 of that was applied to the actual insurance coverage. The remaining amount was the motor club fee which the agent collected in its entirety at the beginning of the transaction, as part of the down payment, while the insurance premiums, in excess of the $127.00 actual down payment for insurance, were financed through ETI. The Respondent did this because, by collecting all of the motor club fee in a lump sum at the outset of the transaction, he could get his entire commission immediately. His motor club sales commission was at a considerably higher rate than the commission he earned on the sale of insurance itself. In fact, his commission was 90 percent of the $150.00 motor club fee. Since Ms. O'Donohue did not have the entire $277.00 at the time of the transaction, because she had been relying on the lower quote for the insurance given to her over the telephone, she only paid $200.00 down payment at the time of the transaction, with a balance owed of $79.00, as reflected on her receipt. Her mother had reservations concerning the purchase of this insurance from the Respondent and told her daughter that she thought that because the insurance she purchased involved financing the premium, she could save money by going to GEICO insurance company. Therefore, the following day, she went to GEICO and secured new coverage at a lower premium rate and then called the Respondent's Agency to confirm that she could cancel her policy, with no penalty. They replied that she could cancel her policy just so long as she brought them proof that she had secured new insurance, since the law presently does not allow them to cancel the coverage until they are shown proof that the insured has obtained other coverage. Ms. O'Donohue, therefore, went to GEICO, purchased new insurance for her vehicle, and then brought proof to the Agency and requested that the Respondent cancel her insurance. This request was made on June 19, 1993. At that time, she requested a refund of the $200.00 down payment which she had made two days before and was assured that she would receive it within 60 days. In fact, she never received a refund and continued to receive past-due and delinquency notices from ETI, the premium finance company. She notified the Agency of this problem on numerous occasions to no satisfaction. Due to ETI's belief that her coverage was still in force and that they were still owed the premium payments, her credit was endangered. This was all directly related to the Respondent's failure to properly and timely process her cancellation request. On June 20, 1993, Terre Thompson of Pensacola, Florida, also went to the Respondent's Agency to purchase insurance for her 1993 GEO Metro automobile. The Respondent met her at the automobile dealership, where she purchased the vehicle. He had already prepared documents for the purchase of insurance to be underwritten by Security and General, along with a premium financing agreement and other documents. He had marked X's where Ms. Thompson was supposed to sign all contracts and disclosure forms. The Respondent filled out all of the information on the documents and merely told her, in effect, to "sign here, here and here". The transaction was conducted very quickly and with little or no explanation of coverage or benefits. Although Ms. Thompson needed full coverage for her vehicle, because it was financed, she did not want towing and rental benefits. The Respondent, however, gave her to understand that it was required in the coverage package she purchased. Accordingly, on June 20, 1993, she made a down payment of $100.00, with an additional amount due of $51.00 by June 27, 1993. Although the receipt was dated June 20, 1993, Ms. Thompson did not actually receive it until June 27, 1993, when she returned to the Respondent's Agency to pay the $51.00 owed. The receipt falsely depicts that the "total premium" was $834.00. Actually, the cost of the insurance was only $754.00. The additional $80.00 was for a motor club product, although the $80.00 was buried in and represented to be part of the total insurance premium for the transaction. The down payment of $231.00 quoted, likewise, was deceptive because only $151.00 of that was actually applied to insurance coverage, which was all of the coverage that Ms. Thompson had requested. The Respondent collected the $100.00 on June 20, 1993 and entered into a financing arrangement with the customer, Ms. Thompson, for the $51.00 to be paid on June 27, 1993. In fact, this was only enough to cover the down payment for the actual insurance coverage because the Respondent forgot to include the fee for the motor club coverage on the "front end" or in the down payment, as was his normal practice. This is why Ms. Thompson became upset when she learned she owed an additional $71.00 when she returned on June 27, 1993, when she thought she had only owed approximately $60.00. In any event, the receipt finally received by her reflected payments of $100.00, $60.00, and $71.00, which totals $231.00. This amount includes the $151.00 down payment for actual insurance coverage and the remaining $80.00 for motor club membership, which Ms. Thompson did not know she had purchased at the time and did not desire to purchase. Indeed, Ms. Thompson, and the other customers referenced in the Amended Administrative Complaint, who testified, signed the disclosure in the standard package of documents presented to them by the Respondent. It indicated that they acknowledged that the motor club benefit or the "nations safe driver" medical benefit was an optional coverage, not required by law and that, after explanation of it, they had elected to purchase it. In fact, they signed those documents, albeit imprudently, without actual knowledge that they were obtaining that coverage and without explanation that it was not legally required. No disclosure was made to them that the purported "total premium" amount actually included payment for the motor club benefit, which was not actually part of the insurance premium and which, at least in the case of those customers with AAA memberships, was totally unnecessary. Timothy Malden of Jacksonville, Florida, purchased a vehicle on or about August 31, 1993. He needed full coverage because the vehicle was financed, that is, he needed PIP, PD, comprehensive coverage, and collision coverage. He went to the Respondent's Agency on that date to purchase coverage on his 1986 Pontiac Fiero. During the course of the transaction, handled by the Respondent, Mr. Malden was asked if he had motor club coverage or benefits and he told the Respondent that he had AAA membership and showed the Respondent his AAA card. The Respondent and Mr. Malden entered into a transaction to sell Mr. Malden insurance. The transaction involved approximately seven different documents and took a total of about 15 to 20 minutes. Mr. Malden merely signed the documents. The Respondent told him that he just needed his signature on the documents and the Respondent did not explain the coverage. The procedure seemed rushed or hurried to Mr. Malden. Although Mr. Malden signed the disclosure (inadvertently, because apparently he did not read it) stating, in effect, that the motor club coverage was optional, not required and that after having it explained to him, he had decided to purchase it, he, in fact, did not know at the time that he had purchased the motor club coverage and it had not been explained to him. Moreover, as stated above, he had explained to the Respondent that he did not need it because he already had AAA motor club coverage. Nevertheless, the Respondent, knowing that Mr. Malden had AAA, still sold him the motor club coverage with the Atlantic Travel Association for an additional fee of $150.00. Mr. Malden made no informed consent to purchase that benefit. The PIP and PD coverage was placed with Security at a premium of $395.00. The comprehensive and collision coverage was placed with Continental American Insurance Company (Continental) for a premium of $525.00. The total premium for "insurance" was $920.00, with a $230.00 down payment. The premiums were financed by ETI. Mr. Malden, however, was required to pay a "down payment" of $380.00. The receipt issued to him reveals a "total premium" of $1,070.00. The actual cost of insurance was only $920.00. The additional $150.00 was for motor club coverage, and the charge for that was hidden in what was represented on the receipt as "total premium". Likewise, the down payment of $380.00 was deceptive in nature because only $230.00 of it was actually a down payment for insurance coverage. The remainder of it, as explained above with regard to the other customers, was actually full payment for the unnecessary, unwanted motor club benefit. On March 8, 1994, Karen Sigler of Pensacola, Florida, went to the Agency to purchase automobile insurance for a 1990 Plymough Voyager. She stated to the Respondent that she only wanted the minimum automobile insurance required by Florida law. She told the Respondent that she needed new insurance because her previous insurance company had gone out of business. The Respondent handled the transaction for her and she specified that she wanted only that coverage which the State of Florida required. Ms. Sigler had been originally quoted a $324.00 premium amount. When she actually entered into the insurance transaction, however, an additional $65.00 was added on to that amount because the Respondent sold her an additional "Nations Safe Drivers, Inc." enrollment. This is not an insurance product but, rather, is a form of supplemental medical benefit. Ms. Sigler had not requested this and did not understand the nature of it, believing that it was unnecessary because she was already qualified as a "safe driver" based upon her driver's record. She was given no explanation as to what that enrollment form, and benefit was nor that there was an extra charge for it. Even as reflected on the enrollment form, Ms. Sigler merely thought that the Nations Safe Drivers membership was a part of the required insurance purchase package. This is not true, in fact, since only PIP and PD coverages are required by law. Ms. Sigler was thus sold a product she did not request, which was not required by law and which was not explained to her. The entire transaction took approximately one- half hour. The receipt issued to Ms. Sigler shows that the "total premium" was $324.00. In fact, however, the actual cost of insurance was a $259.00 premium. The additional $65.00 of the $324.00 amount was the fee for the Nations Safe Drivers membership, which was hidden in what was represented as a "total premium". Moreover, the down payment she paid of $98.00 was deceptive because only a part of it was applied to automobile insurance coverage and the remainder was the fee for the Nations Safe Drivers membership. The Respondent's business practice in this regard resultingly misled Ms. Sigler into believing that Nations Safe Drivers, Inc. was required by State law and that it was an insurance product, which it was not. Here, again, in spite of the disclosure she signed and the documents that she was hurriedly urged to execute by the Respondent, the clear and convincing evidence shows that she did not actually, knowingly consent to purchase the extra non-insurance product referenced above. The Respondent's business practice, the way he represented the nature of her insurance coverage and in the manner in which he conducted the transaction did not involve an actual explanation of the non-insurance product he misled her into purchasing. Thus, there was no informed consent to purchase that product. Rosa Johnson went to the Respondent's Agency on March 21, 1994. She wanted to purchase the "minimum" automobile insurance required by State law for her 1971 Plymouth. She dealt with the Respondent and another gentleman who worked under the Respondent's direction and control. She told them she only wanted the basic, legally-required coverage. PIP and PD coverage was issued through Security. Ms. Johnson was also sold the Nations Safe Drivers product. This product was not actually explained to her, in spite of the fact that she may have signed a written disclosure that it had been, including the fact that it was an optional benefit and not part of the legally-required insurance coverage. She did not request this product nor was it explained to her so that its meaning and coverage was understood by her. Upon conclusion of the transaction, Ms. Johnson had purchased PIP and PD coverage from Security for a premium of $248.00, plus an unrequested enrollment in Nations Safe Drivers, Inc. for a fee of $35.00. All of this amount was financed by ETI. Here, again, as with the other customers, the receipt furnished to Ms. Johnson indicates a total "premium" of $283.00. The actual cost of insurance or true premium was $248.00. The additional $35.00 of the $283.00 amount was the cost of the Nations Safe Drivers, Inc. product, which was hidden in what was represented to her on the receipt as the "total premium". Likewise, the purported down payment of $85.00 was deceptive in the manner in which it was presented and required of Ms. Johnson, because only part of it was applied to insurance coverage, the remainder being the $35.00 fee for the added non- insurance product referenced above. The Respondent's authority to bind coverage with Security Insurance Company had been terminated on March 14, 1994 due to excessive late submissions of insurance applications to the carrier. The problem was later alleviated and his authority to bind insurance for Security was restored by that company. However, during the period of time his binding authority had been terminated, the Respondent kept taking applications and binding policies. This caused the insureds to believe that they had coverage when, in fact, they did not, because the carrier, Security, through its managing agent, U.S. Underwriters, did not, for a period of time, allow the Respondent to obligate that company for coverage. Accordingly, in due course, Ms. Johnson was notified by U.S. Underwriters, on behalf of Security, that she had no coverage. She became upset and filed a complaint with the Insurance Commissioner because she had understood that as soon as the transaction with the Respondent was completed, her coverage had been bound and timely filed and processed with the underwriting insurance carrier. Charles Meadows of Gulf Breeze, Florida, required insurance on his 1986 Chrysler LeBaron. He wanted to purchase the minimum amount of legally- required coverage and went to the Respondent's Agency for that purpose on May 17, 1994. He needed the minimum amount of legally-required insurance so that he could obtain a tag for his automobile from the county tag office. He was in a hurry because he had taken leave from work and needed to get his insurance transaction consummated, as well as to obtain his automobile tag before 4:30 p.m. He conferred with a lady who was employed by the Respondent at the Agency who handled his transaction. She completed all of the documents, spread them across the counter, and marked and told him the places to sign to effect the binder of the coverage that day. The transaction occurred quickly, lasting only approximately 15 minutes. He received no effective explanation of any of the coverages. Rather, he relied on her representations that he was getting what he had asked for, that is, the minimum legally-required Florida insurance coverage. The coverage he obtained was placed with Security as to the PIP and PD coverage. The premium for that coverage was $321.00. The total premium quoted to him was $421.00, which included a $100.00 membership in the Gulf Coast Travel Association, a motor or travel club. Mr. Meadows was not aware that he had this extra amount of coverage or membership until he conferred with Mr. Spencer of the Department at a later time, who informed him of such. If he had known that the agreements he was signing during the hurried, unexplained transaction with the Respondent's employee included the motor club coverage, he would have declined it because his wife already had coverage with AAA for towing and related benefits. Mr. Meadows made a down payment of $190.00 on May 17, 1994. The receipt issued to him revealed a "total premium" of $421.00. The actual cost of insurance was $321.00, with the additional $100.00 being for the motor club, although the total amount was represented as "total premium". Additionally, the down payment of $190.00, which he paid, was deceptive in that only $90.00 was actually applied to insurance coverage and the remaining $100.00 was the total up-front fee for the motor club coverage, although it was represented to Mr. Meadows as being the $190.00 down payment on the insurance premium itself. Later, Mr. Meadows learned that he had the motor club benefits which he did not want or need and so he demanded a refund of his money from the Respondent. He spoke to the Respondent personally about this but did not receive immediate satisfaction. There was a substantial delay in receiving his refund after the Respondent told him that he would receive one. The Respondent justified this by stating to him that it had to come from "another office" and that it would not come from his Agency itself. Dorothy Weber of Pensacola, Florida, required automobile insurance for her 1986 Chevrolet Blazer and a 1978 Chevrolet Caprice. She went to the Respondent's Agency on June 15, 1994 and indicated to one of his employees that she was interested in the cheapest coverage available. She wanted nothing extra, except that required by law. She received very little explanation of the coverages and benefits, other than in response to questions she asked. The transaction of insurance was conducted in a similar manner to those referenced earlier in these Findings of Fact. The PIP and PD coverage was placed with the Florida Joint Underwriting Association. It carried a premium of $787.00. Despite Ms. Weber's request for only the minimum, legally-required insurance, she was also sold a motor club (Gulf Coast Travel Association) unbeknownst to her at the time at an additional fee of $150.00. In spite of the fact that Ms. Weber signed the disclosure concerning the optional nature of the motor club and related fee and so forth, as described in further detail in the above Findings of Fact, in actual fact, it was not explained to her. The fact that the fee for it was separate from the insurance premium for the insurance coverage was not explained to her and she effectively was not informed that she was purchasing that product. During the transaction, she was informed that if her vehicle broke down, she could obtain wrecker service. Nothing was mentioned to her, however, about Gulf Coast Travel Association or that the $150.00 was an extra fee. She merely had all of the forms presented to her in rapid fashion and was asked to sign them. The explanation simply was that the "total policy" cost $937.00, and there was a down payment of $318.00 supposedly for premium only. The entire transaction took approximately one-half hour. Later, Ms. Weber discovered that she had been misinformed and complained to the Department and the Respondent's Agency, specifically indicating that she had not been informed that the $150.00 for the motor club was separate nor that she had purchased motor club coverage. The receipt furnished to Ms. Weber concerning the amounts she paid to secure her coverage is misleading. It indicates a total premium of $937.00, when the actual cost of the insurance was $787.00. The additional $150.00 was for the undisclosed motor club coverage hidden in what was represented on the receipt as a "total premium". The down payment of $308.00 was deceptive or misleading in that only $158.00 of it was actually a down payment on insurance coverage. Barry and Deeana Walker of Pensacola, Florida, needed automobile insurance for a 1990 Plymouth Laser. They wanted the cheapest coverage legally required and available to them. The Respondent dealt with the Walkers and was their agent of record. Mr. Walker remembers nothing being mentioned about a motor club, but Mrs. Walker remembers that the agent mentioned "Nations Safe Drivers, Inc."; however, she specifically informed him that she did not want it. In fact, Nations Safe Drivers is a non-insurance membership plan which includes a medical supplement coverage benefit. It is not a motor club. The PIP and PD and bodily injury coverages were placed with Underwriters Guaranty Insurance Company (UGIC) for a premium of $641.00. The premium was originally financed by Underwriters Financial. Also executed on May 4, 1994 was another premium finance agreement with ETI. It provided for an insurance premium of $441.00 for a policy issued by UGIC and the financing of a Nations Safe Drivers enrollment for $100.00. This document was not signed by the Walkers. On May 4, 1994, the Walkers paid $150.00 by check and were required to pay an additional $143.00 by May 20, 1994. The $143.00 was paid; and subsequently, the Walkers received a notice of additional premium of $190.00 due and they paid an additional down payment of $76.00. The Walkers made payments on the ETI premium financing agreement up until October, 1994, even though it had never actually been signed. They made down payments of $369.00 and monthly payments totaling $333.63, for a total of $702.63. Sometime in October of 1994, they received a letter from the Department of Highway Safety and Motor Vehicles, Division of Drivers Licenses in Tallahassee, Florida, stating that Mr. Walker's driver's license was suspended because his insurance had been cancelled, effective July 16, 1994. The Walkers had received a notice from the insurance company of cancellation (because apparently that company would not insure co-owned vehicles) and had gone to the Respondent to see what to do about that problem. The Respondent told them to fill out a form which he gave them and that everything would be taken care of. They filled out the form at his behest so as to indicate that Mr. Walker's father, the co-owner, would not be a driver of the vehicle. Accepting the Respondent's representation, they believed that that would take care of the cancellation of coverage problem, and they continued to make their monthly payments on their premium financing agreement until October of 1994 based upon what the Respondent told them. In fact, the coverage was cancelled effective July 16, 1994; and soon thereafter, Mr. Walker's driver's license was suspended due to failure to carry valid insurance on his automobile. If the Respondent had acted with promptness in correcting the underwriting error, upon being apprised of the situation by the Walkers, the lapse in coverage and suspension of the driver's license need not have occurred and the payments on the original coverage need not have been made until October 11, 1994, when new coverage was finally obtained by the Respondent at the Walkers' behest. Although, on November 11, 1994, ETI credited the Respondent and the Walkers for $169.41 of unearned premium, the damage had already been done by that point in terms of the lapse of coverage and the suspension of Mr. Walker's driver's license, with attendant financial risk and inconvenience to Mr. Walker. Moreover, the receipt issued to the Walkers in the original insurance transaction indicates a total premium of $741.00. As in the other situations, the actual insurance cost was $641.00, and the additional $100.00 was for the Nations Safe Drivers non-insurance medical payment product, wrapped up in what was represented as "total premium". The down payment of $293.00 was similarly misleading because only $193.00 of that applied to actual insurance coverage. The Respondent received his fee of $100.00 for the added-on product mentioned above entirely out of the up-front, down payment amount. Thus, the Respondent received the entire fee for the Nations Safe Drivers product within a purported "premium receipt" amount described to the customer as an insurance down payment. On January 26, 1995, Ms. Betty Cook of Walnut Hill, Florida, needed to purchase insurance for her 1994 Thunderbird and her 1993 Chevrolet C1500 pickup truck. She went to the Respondent's Agency to accomplish her insurance renewal transaction. A lady by the name of Sonya handled the transaction for her that day. The Cooks' insurance was placed with UGIC for a premium of $1,123.00. The premium was financed through Underwriters Financial of Florida, Inc. The transaction was initiated on January 26, 1995 but ultimately concluded on January 28, 1995, after Mrs. Cook had received and signed all of the paperwork. Mrs. Cook made a premium down payment of $339.00 and mailed her first payment when it was due. She thereupon was sent a notice stating that no policy existed. She called the Agency to see what was wrong and someone at the Agency indicated to her that it would taken care of immediately. A lienholder on the pickup truck sent a notice to her that they had not been notified that the insurance had been renewed. Mrs. Cook became very concerned and the Respondent offered to refund her premium; however, three months had evidently elapsed since she first renewed her insurance or thought she had. Thus, Mrs. Cook, without knowing at the time, was driving her automobiles without insurance coverage for approximately a three-month period. Mrs. Cook contacted the Department and got her insurance reinstated and placed with another servicing agent. The policy was issued by UGIC, without requiring the payment of a premium down payment by the Respondent. The Respondent had still not forwarded the $339.00 down payment originally received from Mrs. Cook as of April 19, 1995. This lapse or failure to forward the insurance down payment obviously resulted in the coverage never being bound with the company. Therefore, the company had not issued and had no record of coverage for Mrs. Cook's vehicles. The agent for this company was required to account for and promptly forward insurance premium down payments, such as this, to the insurer he represented and on behalf of the insured he also represented in the transaction. Christopher Camus of Pensacola, Florida, went to the Respondent's Agency to purchase insurance for a 1983 Oldsmobile Cutlass. He went to the agency on August 25, 1993, and the Respondent placed his coverage with Security. The total premium was quoted as $274.00. Mr. Camus signed an application on that date and paid the full amount to the Respondent. The Respondent failed to forward the application and premium to the insurance carrier, and the policy of insurance was not actually issued until November 30, 1993. Mr. Camus was thus left without coverage for approximately two months. He made repeated telephone calls to the Agency to no avail. Agency personnel maintained that the problem was occurring with the insurance company itself and was not the fault of the Respondent's Agency. The Respondent deposited Mr. Camus' check in August of 1993, but the application for his insurance was never received by Security until December 23, 1993. The Respondent thus did not promptly and appropriately handle the insurance premium funds in question and forward the application so as to promptly bind the coverage for the customer. Indeed, it is noteworthy that this company revoked the Respondent's authority to bind coverage for customers on March 14, 1994 due to an excessive amount of such late submissions of insurance applications and premiums. In 1993, of the 1,299 applications taken by the Respondent and his Agency, only 58 percent reached the insurer's office within the required time period. In summary, the evidence presented in this case indicates that the Respondent engaged in the general business practice of selling ancillary products to insureds without truly obtaining "informed consent" of those insureds. The pattern running through the testimony of the above-described witnesses, none of whom were shown to have any motive to falsify their testimony, was that, although they signed the various disclosures on the insurance underwriting or binding documents, indicating that they understood that the ancillary products were optional, were not insurance, and were not required to be purchased. They did not receive any significant explanation of the optional nature of those products concerning the advisability of their purchase (particularly as to those customers who had AAA coverage), nor the extra cost attributable to those products. Each insured witness consistently maintained that he or she had not read the numerous documents presented to them. Certainly, they should have, in an abundance of caution, read the documents and attempted to understand them. Their failure to do so, however, does not absolve the Respondent of his duty to specifically explain to each customer the exact nature of the coverage being offered, whether or not it was legally optional, particularly, as to those customers who stated definitely that they only wanted the bare minimum coverage required by law, and the fact that it was optional at an extra cost, and was not included in the basic insurance coverage being sold. It is clear from these witnesses' testimony that none had requested motor club benefits or any other ancillary product and yet, in effect, these were automatically added to the policies involved in this proceeding in each transaction and were clearly not explained to the customers. The general business practice of the Respondent involved in the sale of the motor club and ancillary products belies the existence of "informed consent" on the part of the customers. Mr. James Self is a former agent for the Respondent, who testified regarding the Respondent's business practices. He was trained by the Respondent and worked for the Agency from August, 1993 to June, 1994. The Agency had a policy of giving telephone quotes for insurance premiums, without including the amount represented by motor club or other add-on optional products. The Agency would then add such products to the insurance package when the customer came in to purchase insurance. According to Mr. Self, any sort of explanation or disclosure of these add-on products to the customer would be merely to the effect that the insurance "quote" included towing or rental. There was little else explained about it. In many of the situations with witnesses in this case, the insureds only requested the minimum coverage and, therefore, no optional or ancillary products were justified without full explanation to the customer. Mr. Self described how the Respondent specifically trained him in "clubbing", which meant adding motor club coverage to the insurance coverage requested by customers. The Respondent's own testimony shows the economic necessity for the pervasive sale of such motor club benefits to as many customers as possible, when he stated: It's really the only way to exist . . . Q: So you're telling me that the only way for you to exist is to sell motor clubs? A: Financially, it's -- really for most businesses in this market it's the only way to be able to survive. Transcript, page 175. The Respondent further acknowledged the pecuniary interest he had in selling travel or motor clubs since he described his average commission as being 90 percent of the fee for writing that coverage, which is higher than the commission on insurance products. Moreover, he recovered all of that money from the down payment the customers were making, supposedly for their insurance coverages. Therefore, his incentive was multiplied because he was getting the high commission percentage rate, plus he was getting all of it in cash on the initial portion of the transaction, the down payment. Mr. Self also explained that salesmen would never tell the insured exactly how much the motor club cost. On occasions, when Mr. Self would try to partially disclose the motor club, the Respondent would tell him to "hurry up", that he was taking too much time in effecting the transaction. It was Mr. Self's experience that approximately 99 percent of the customers coming into the Agency for insurance left having purchased motor club benefits. Eventually, Mr. Self was terminated because he did not sell enough motor club products. The overall gravamen of his testimony shows that he attempted to make some disclosure or explanation of the motor club and other ancillary products but was discouraged from doing so by the Respondent, with the implication being that this ultimately resulted in his termination from employment with the Respondent's Agency. The evidence thus establishes that, for the most part, the insureds in question did not really know what "minimum coverage" or "full coverage" really consisted of when they came in to purchase such insurance. In making this lay description of the coverage they desired, they then relied on the agent, the Respondent or his employees, to sell them coverage which comported with their wishes and needs, since they were not schooled in the insurance business and related laws themselves. Since they were not so schooled, they almost totally relied on any explanation given to them by the Respondent or his agents or employees. In spite of the signing of the disclosure documents referenced in the above Findings of Fact, the reality of the situation, as a continuing, consistent pattern throughout the testimony adduced from these insureds, and from Mr. Self, reveals that no regular business practice of obtaining an informed consent from customers, such as these, was carried out by the Respondent.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is RECOMMENDED that the Respondent, Daniel Lee Alison, be found guilty of the violations set forth and discussed above, that his license as an insurance agent in the State of Florida be revoked for a period of two years and that he be ordered to pay a fine in the amount of $9,000.00, within a time to be set by the Department. DONE AND ENTERED this 2nd day of October, 1996, in Tallahassee, Florida. P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 95-2690 Petitioner's Proposed Findings of Fact 1-35. Accepted, except to the extent that they do not comport with the Administrative Law Judge's findings of fact on these subject matters to which they are subordinate. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter and because of the editorial comment. Accepted, in part, but subordinate to the Administrative Law Judge's findings of fact on this subject matter and rejected, as to the editorial comment. 39-40. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. 41-44. Accepted, in part, but rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. Respondent's Proposed Findings of Fact 1-13. Accepted, but not as materially dispositive of the issues presented for resolution. Accepted, in part, but rejected, as subordinate and somewhat contrary to the Administrative Law Judge's findings of fact on this subject matter. Accepted, but not itself materially dispositive to the issues presented for resolution in this case. 16-17. Accepted. 18. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 19-25. Accepted, but not themselves materially dispositive to the resolution of the issues presented to the Administrative Law Judge. 26. Accepted. 27-29. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 30-32. Accepted. 33-36. Accepted, in part, but rejected, as to the overall material import and as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 37-43. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter and to some extent, as immaterial. 44. Accepted, as technically correct, but witness Self, a former employee and a witness who purchased insurance, did establish in his testimony that purchase of an ancillary product was a pre-condition to premium financing by Agency policy. 45-47. Accepted, in part, but otherwise rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 48. Accepted. 49-52. Accepted, but not in and of themselves dispositive of the material issues presented concerning this witness' transaction(s). Rejected, as immaterial. COPIES FURNISHED: Michael K. McCormick, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Charles J. Grimsley, Esquire Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue This case involves an Administrative Complaint filed by the petitioner, State of Florida, Office of Treasurer/Insurance Commissioner, against James H. Bowling and Premium Budget Service, Inc., Respondents. The action is brought under the authority of Chapters 626 and 627, Florida Statutes. The petitioner is attempting to take disciplinary action against the licenses of the Respondents pertaining to their performance in insurance business transactions conducted in the State of Florida. Originally, the Administrative Complaint contained eight counts. At the commencement of the hearing, Count IV of the Administrative Complaint was dismissed. The remaining Counts I through VII accuse Respondent Bowling with a series of substantive violations related to his business transactions with individual customers with whom be allegedly was involved in the selling of insurance in the State of Florida. Specifically, Respondent Bowling is charged with: Receiving premiums or other funds belonging to insurers or others in transactions under his license which were trust funds received by him in a fiduciary capacity, which funds he failed to account for or pay to the insurer, insured or other persons entitled thereto in violation of Subsection 626.561(1), Florida Statutes. Willfully, under his license, circumventing the prohibitions of the Insurance Code, in violating of Sub section 626.611(4), Florida Statutes. Demonstrating a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Subsection 626.611 (7), Florida Statutes. Demonstrating a lack of reasonable and adequate knowledge and technical competence to engage in the transactions authorized by the license or permit, in violation of Subsection 626.611(8), Florida Statutes. Engaging in fraudulent or dishonest practices in violation of Subsection 626.611(9), Florida Statutes. Misappropriating, converting or unlawfully withholding moneys belonging to insurers, insureds, beneficiaries or others received in the conduct of his business pursuant to license, in violation of Subsection 626.6II(10), Florida Statutes. In connection with the purported violation set forth in the aforementioned issue a., willfully violating an order, rule or regulation of the Insurance Department, or willfully violating provisions of the Insurance Code, contrary to Subsection 626.611(13), Florida Statutes. In connection with the purported violation set forth in the aforementioned issue a, violating provisions of the Insurance Code by an act contrary to Subsection 626.621(2), Florida Statutes. The Respondent, James H. Bowling, is accused through Count VIII of a violation of all those provisions set out in the accusations found in the statements a. through h. set out herein, related to remaining Counts I through VII and is an accusation that encompasses the cumulative effect of the violations in remaining Counts I through VII. If the Respondent, James H Bowling, is found to be guilty of the offenses set out in the Administrative Complaint, it is the petitioner's intention to revoke his license and eligibility for future licenses and/or to refuse the issuance of additional licenses as an insurance agent, or to impose as many lesser penalties as may be proper under the provisions of Sections 626.611, 626.621 and 626.681, Florida Statutes, and the Florida Insurance Code. Count VIII, related to the Respondent, Premium Budget Service, Inc., seeks to suspend or revoke its license as a premium finance company, and the basis for such action is premised upon the evidential facts alleged in remaining Counts I through VII and under authority of Subsection 627.832(1)(c), Florida Statutes.
Findings Of Fact THIS CAUSE comes on for consideration based upon the Administrative Complaint of petitioner, State of Florida, Office of Treasurer/ Insurance Commissioner, filed against James H. Bowling and Premium Budget Service, Inc., Respondents. The general details of the nature of the allegations may be found in the issues statement of this Recommended Order, and the particular allegations in each count will be discussed in the course of these findings of fact and the conclusions of law. The Petitioner, State of Florida, Office of Treasurer/Insurance Commissioner, is an agency of the State of Florida charged by statute with the duty to regulate the insurance industry in this state. The authority for such regulation, related to the case sub judice, is established in Chapters 626 and 627, Florida Statutes. The Respondent, James H. Bowling, is a licensed 2-20 insurance agent in the State of Florida, who holds such license with the permission of the Petitioner. Premium Budget Service, Inc., is licensed by the Petitioner pursuant to the provisions of Chapter 627, Florida Statutes. For the period January, 1975, to December, 1978, the Respondent, James H. Bowling, owned and operated as a licensed 2-20 insurance agent in the State of Florida, a company known as Atlas Insurance Agency, Inc. During that time, Bowling was the president of that corporation and was a 50 percent shareholder of its stock issue. Atlas had eight offices throughout Duva1 County, Florida, in which Bowling was transacting the business of the company. His specific function in connection with Atlas was that of the overall responsibility for the operation of Atlas insurance Agency, Inc., in managerial terms. In addition, Respondent Bowling served as the president of Premium Budget Service, Inc., during the period January, 1975, through December, 1978. This company was owned by Sandra R. Bowling, Respondent Bowling's wife. The business of Premium Budget Service, Inc., in the years in question was that of financing premium accounts to be paid by customers of Atlas Insurance Agency, Inc. to the company offering the insurance coverage. Under this arrangement, Premium Budget Service, Inc., financed the amount of the premium for insurance which was being handled by Atlas, and the customer agreed to pay back the amount of premium financed on an installment basis under terms and conditions of an installment contract. Some of the contracts which Premium Budget Service, Inc., had received from Atlas insurance Agency, Inc., for financing were subsequently assigned by Premium Budget to Devco Premium Finance Company. Devco, as a condition of the assignment, paid Premium Budget the amount of principal financed together with a transfer fee and was then reimbursed by the customer who made Installment payments of principal and interest to Devco on the amount of policy premium financed. This arrangement commenced in September, 1975, and was in operation during the pendency of some of the contracts which are at issue in this Administrative Complaint. The contracts which the Administrative Complaint focuses on were contracts involving customers through the Joint Underwriters Association program in Florida. The Joint Underwriters Association Is an organization made up of insurance companies who do business in the State of Florida in which members of the association have as their principal purpose the writing of insurance for high risk automobile drivers who operate automobiles in the State of Florida. Under this plan, Atlas insurance Agency, Inc., used United States Fidelity and Guaranty Company, hereinafter referred to as "U.S.F.&G.", as its servicing carrier in the time sequence relevant to this complaint. The first allegation in the Administrative Complaint concerns an insurance policy which Atlas sold to one Daniel Lashley. Lashley paid the full amount of the insurance premium by money order No. 1306407044 made out in the amount of $307. U.S.F.&G. issued policy No. 8-90-104607. This policy was issued after Atlas had mailed a down payment of $100 to U.S.F.&G. The check from Atlas was written on Bowling's signature. Lashley had paid the money order on April 4, 1977, and U.S.F.&G. had received the $100 deposit on April 28, 1977. The policy was mailed by U.S.F.&G. to Atlas on May 12, 1977, and the down payment check was deposited in the bank account of U.S.F.&G. on May 15, 1977. The effective date of the policy was April 8, 1977, to April 8, 1978. In addition, there was a premium billing requirement of $1.00 which Lashley paid on June 4, 1977. Apparently, this $1.00 payment was made to Atlas, because on November 23, 1977, a notice of termination was sent to Atlas and to David Lashley indicating an outstanding balance of $208. This notice was sent because U.S.F.&G. was unable to locate any payment other than the initial down payment of $100 which had been submitted with the application for policy; notwithstanding the fact that the total policy amount called for $308, which full amount should have been paid within thirty days of the date of issue of the policy. Final cancellation notice was mailed on December 21, 1977. This final cancellation notice was only forwarded to the agent, Atlas; however, on January 5, 1978, a notice was sent to Lashley indicating $103 earned premium due on the policy to keep the policy in effect until the end of the term. Lashley contacted the Florida Department of Insurance to determine why the policy had been cancelled and at that time he furnished proof of payment for the full amount of premium. An investigator with the Florida Department of Insurance contacted U.S.F. &G. who reinstated the policy on April 19, 1978, to be effective December 4, 1977. This reinstatement was made in spite of U.S.F.&G.'s records which showed no payment of the outstanding $208, nor contact from anyone connected with Atlas insurance Agency on the issue of why the policy had been cancelled. The Respondent, James H. Bowling, contended in the course of the hearing that a second check in connection with the Lashley premium had been forwarded to U.S.F.&G. on the Atlas account, check No. 19837, dated May 31, 1977. He also stated that his files indicated a notice of cancellation of November, 1977, to be effective December 4, 1977, but he took no action because a review of the file indicated that full payment had been received by U.S.F.&G., as evidenced by a memorandum from U.S.F.&G., indicating reinstatement and a note from an unnamed Atlas employee to the effect that the policy was to be reinstated, which led him to believe that someone in the Atlas office conferred with the U.S.F.&G. office and believed that the money on the second check of $208 had been found. Bowling's further explanation for the delayed payment of the balance of the policy was to the effect that normally on policies which were financed, only the initial installment was paid down and the balance paid at a later date, and he felt that one of his employees had treated the cash premium payment in Lashley's case in the same manner, by mistake. Testimony in the hearing established that certain checks forwarded to U.S.F. &G. had been mishandled, and those occurrences were happening around the time Lashley's's policy was purchased. Therefore, it has not been satisfactorily shown that the additional amount of $208 was not forwarded by a check dated May 31, 1977. Nonetheless, this does not excuse Atlas nor its managing agent, Bowling, from the necessity to forward all moneys received from Lashley on April 4, 1977, when it was received, and in one lump sum. Nor does It excuse the fact that even though Atlas knew of the cancellation in November/December of 1977, it left it to Lashley to take the initiative to rectify the problem, which was not accomplished until April, 1978; instead of immediately inquiring of U.S.F.&G. about the missing money when they were told of the problem. Accepting Bowling's representations that contacts were made with U.S.F.&G. on the subject of the Lashley account, it is apparent that those contacts took place after Lashley had set matters in motion. leading to the April, 1978, reinstatement. Count II of the Administrative Complaint involves a transaction between Atlas and a Bobby R. McGowan, Sr., to sell McGowan insurance policies. One of the policies was an automobile policy through U.S.F. &G. and a second was a personal effects policy through Parliament Insurance Company. The automobile policy was No. 8-90-056330 and the personal effects policy was No. PIM-18643. The premium on the automobile policy was $546 and the premium on the personal effects policy was $20. The terms of the policies ran from January 13, 1976, through January 13, 1977. There was a contract which McGowan entered into with Premium Budget Service, Inc. to finance the premiums due in the two policies. The total premium of both policies was $566, with a down payment of $198 from McGowan and an amount financed of $368. This contract was assigned to Devco Premium Finance Company in January, 1976. Devco paid for the assignment by having Respondent Bowling execute a sight draft which contained the amount due to Premium Budget on the McGowan account. This execution of the sight draft was on January 14, 1976, and it was honored by Devco on January 16, 1976. The proceeds pertaining to McGowan which were received by Premium Budget Service, Inc., were then transmitted by check to Atlas and Atlas at that point had the total premium amounts of $566. Atlas in turn forwarded $150 to U.S.F.&G by a check bearing Bowling's signature, which was deposited in the U.S.F.&G. account on June 2, 1976. In the interim, Devco requested a cancellation of U.S.F.&G.'s policy on McGowan and that request was made on March 10, 1976. The policy was cancelled and U.S.F. &G. returned $42 of unearned premiums to Devco. A notice of the cancellation was forwarded to Atlas and to McGowan. The reason for the cancellation action by Devco was related to McGowan's nonpayment on the installment contract to Devco. Devco claims to be short $361 in what should have been returned to them as unearned premiums. U.S.F. &G. did not forward that amount because they never received it from Atlas. Respondent, James H. Bowling, sent $366.63 to Devco on the McGowan account under check No. 18779 dated April 7, 1977, by his signature. Devco never received that amount and the cancelled check cannot be found, and Devco has never received its money. The reason for the delay in repaying Devco, according to the Respondent, was because he had an agreement with Devco in the person of their former owner, Doyle E. Varnes, to the effect that the premium money other than the necessary down payment would be held by Atlas, and if a policy was cancelled before it was issued, that the money other than the down payment would be sent by Atlas to Devco and not to U.S.F.&G.; otherwise, after issue the balance could go to the insurer. Varnes testified and did not acknowledge that agreement; additionally, any such agreement would be contrary to the requirement that the full amount of the premium be submitted by Atlas and, more importantly, Bowling's explanation about withholding moneys on this or any other case in which Devco paid Premium Budget for an assigned contract is not believable. Count III deals with a transaction in which Atlas sold Dorothy G. Morgan a policy from U.S.F.&G. This transpired in December, 1975. Dorothy G. Morgan made the down payment of $95, leaving an amount to be financed of $175 of the total premium of $270. This was an instance in which Premium Budget Service, Inc., assigned the contract to Devco under the same arrangement described in the transaction involving the customer, McGowan. On December 25, 1975, Bowling signed the draft for payment to Premium Budget. The term of the policy was December 15, 1975, to December 15, 1976, and the automobile insurance policy number was 8-90-49673. Atlas received the full amount of premium of $270, including the amount to be financed and paid $100 to U.S.F.&G. as a down payment deposited by U.S.F.&G. on May 20, 1976. After the down payment was mailed by a check drawn by Bowling on an Atlas bank account, Devco asked U.S.F.&G. to cancel the policy and a notice of cancellation was forwarded to Atlas and Morgan. This notice of cancellation, as all notices of cancellation involved in a transaction with U.S.F.&G. alluded to in this Administrative Complaint, contained a statement of the down payment amount and the outstanding premium amount. At that point of the notice of cancellation, U.S.F.&G. had not received the balance of the premium payments beyond the $100, the initial installment, and it did not return any moneys to Devco after the policy was cancelled because the amount of the earned premium was $109 which exceeded the amount of down payment by $9, leaving a negative balance. Devco was eventually paid the amount of money that it had outstanding, to-wit, the $170; by a check dated March 21, 1979, drawn on the account of The insurance Store, Inc. The draft on The Insurance Store, Inc., carries Respondent Bowling's signature and may be found as the Respondent's Exhibit No. 5 admitted into evidence. (Count IV had been dismissed prior to the hearing.) Count V involves the transaction between Atlas Insurance Agency, Inc., and one Willard I. Rader. This transaction involved the sale of an automobile policy through U.S.F.&G. with the premium amount of $370 which was subsequently adjusted to $428, policy No. 8-90-49616, and a personal effects policy through Parliament Insurance Company, No. PIM-232l3, with a premium of $20 produced by Atlas. The terms of the two policies were January 12, 1976, to January 12, 1977. The policies were assigned by Premium Budget Service, Inc., to Devco under the arrangement described above and on Bowling's signature to a draft dated January 14, 1976, which draft was honored by Devco on January 16, 1976. Premium Budget having received the proceeds from the assignment of the contract to Devco, paid Atlas moneys sufficient to leave Atlas with the full amount of the premium. In the beginning, the total premium for both policies was $390, with the down payment of $137, leaving $253 to be financed. Atlas forwarded $100 to U.S.F.&G.`s representative as a minimum down payment and U.S.F.&G. deposited that amount of money on June 21, 1976. U.S.F.&G. did not receive any further moneys from Atlas. Devco subsequently requested that the policy be cancelled and the policy was cancelled and Atlas and Radar were notified of the cancellation. U.S.F.&G. returned no money to Devco, in view of the fact that the earned premium was $177 and the amount of down payment was $100. On April 25, 1978, Atlas Insurance Agency, Inc., wrote a check under the signature of the Respondent, Bowling, in the amount of $270 which was paid to Devco. This $270 represented the balance of the premium down payment which should have been forwarded to U.S.F.&G. with the $100 down payment. The check may be found as the Respondent's Exhibit No. 6 admitted into evidence. Count VI involves the sale of an automobile policy by Atlas to Gerda M.Weidman. This policy was issued by U.S.F.&G. under No. 8-90-49695. The amount of premium was $184 which was later adjusted to the amount of $211. The term of the policy was from December 8, 1975, to December 8, 1976. The Weidman policy was financed to the extent of $120 of the original $184, the down payment being $64. The finance agreement was arranged by Premium Budget Service, Inc., who assigned the contract to Devco under terms described above. The sight draft was executed under Bowling's signature on December 9, 1975, and was honored by Devco, which assignment proceeds were transmitted through Premium Budget to Atlas, leaving Atlas with $184. Atlas transmitted $50 of that $184 as a down payment, instead of the proper amount of $184. This $50 amount was deposited by U.S.F.&G. on March 30, 1976. Devco had in February, 1976, requested the cancellation of the policy and the policy was cancelled with Atlas and Weidman being notified of the cancellation. U.S.F.&G. returned $9 of unearned premium to Devco. On April 25, 1978, a check was issued from Atlas Insurance Agency, Inc., to Devco in the amount of $134 under signature of James H. Bowling. This $134 represented the balance of the moneys due to Devco on the premium amount financed by Devco. The check in the amount of $134 may be found as Respondent's Exhibit No. 7 admitted into evidence. Count VII of the Administrative Complaint charges this Respondent, James H. Bowling, with violations connected with the sale of an automobile insurance policy by Atlas to one John K. Detmer. On May 5, 1977, John K. Detmer paid Atlas $210 as a down payment. An additional $428.08 was financed by Premium Budget Service, Inc., which amount reflected interest and other charges. The payment was for the purchase of a policy from U.S.F.&G., which issued policy No. 8-90-104724 effective May 8, 1977. The policy was issued after they received only $200 as a down payment, compared to the full amount of premium required, which would have been the $210 Detmer paid together with that portion of the $428.08 balance related to the premium. Detmer subsequently paid the entire amount required under the finance contract with Premium Budget Service, Inc. On November 21, 1977, U.S.F.&G. cancelled the policy after notifying Atlas and Detmer of the cancellation, in view of the fact that they had only received the $200 deposit and other moneys were due and owing on the premium. This policy has never been reinstated by U.S.F. &G. The Respondent claims that the additional amount of $399 was mailed to U.S.F.&G. under check No. 20512 from the account of Atlas drawn on July 13, 1977; however, U.S.F.&G. claims that they never received the additional payment. The Respondent's files indicate the cancellation notice and the effective date of that notice to be December 4, 1977, and a note that the policy was to be reinstated. There are no notes in the files with U.S.F.&G. of any conversation pertaining to the subject of reinstatement. Accepting the representation that the second check was forwarded on July 13, 1977; the Respondent, Bowling, as the managing agent of Atlas and Premium Budget, acted inappropriately in not forwarding the full amount of premium as one lump sum payment and in the task of following up the cancellation of the policy. Furthermore, even if it is assumed that there was some conversation between employees of Respondent Bowling's office and U.S.F.&G. and a note placed in the Atlas file to the effect that there would be reinstatement, there should have been a follow-up with Detmer to make certain that the policy had been reinstated, particularly since the cancelled check in the amount of $399 has never been returned and, had the policy been reinstated, it is reasonable to expect some notification memorandum would have been given such as was given in the Lashley matter. (Section 120.57, Florida Statutes, allows the parties to submit proposed findings of fact, conclusions of law and recommendations. The Respondents have availed themselves of that opportunity and those proposals have been reviewed prior to the rendition of this Recommended Order. To the extent that the proposals are not inconsistent with this Recommended Order, they have been taken into account and utilized in rendering the Recommended Order. To the extent that the proposals by the Respondents are inconsistent with this Recommended Order, they are hereby specifically rejected.)
Recommendation It is recommended that the license of the Respondent, James H. Bowling, to operate as a 2-20 insurance agent in the State of Florida be REVOKED. It is further recommended that the action against the license of Premium Budget Service, Inc., be DISMISSED DONE AND ENTERED this 6th day of August, 1979, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Patrick F. Maroney, Esquire Office of Treasurer/Insurance Commissioner 428-A Larson Building Tallahassee, Florida 32301 John London Arnold, Esquire 919 East Adams Street Jacksonville, Florida 32202 =================================================================
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the July 20 rate filing of Colonial Penn Insurance Company in Case No. 82-148 be APPROVED. It is further RECOMMENDED that the November 12 rate filing of Colonial Penn Insurance Company in Case No. 82-1048 be APPROVED. DONE and ENTERED this 18th day of August, 1982, in Tallahassee, Florida. DONALD R. ALEXANDER 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 18th day of August, 1982.
