Findings Of Fact The Petitioner takes exception to the findings of fact contained in the Recommended Order at paragraphs 12, 19, and 27, wherein the Hearing Officer found that the evidence did not prove that the Respondent had committed the violations charged as referenced in each finding. This conclusion is not supported by competent and substantial evidence as required by section 120.57(1)(a) 10., Florida Statutes. The Hearing Officer was convinced that the multitude of forms utilized by the Respondent in selling the non-insurance products (motor clubs) to Hulan Mitchell, Jenna Chester and Michele Humose demonstrated that they had given their informed consent. However, the Hearing Officer overlooked the blatant misrepresentation and false statement contained in the "premium" receipts issued to each of the insureds. Although the Hearing Officer is free to determine the credibility of the witness' testimony, the Hearing Officer cannot ignore or reject unrefuted competent and substantial evidence in the record that clearly and convincingly demonstrates that the premium receipts are a misrepresentation of fact or false statement. No witness testimony is necessary to make this finding. The documents speak for themselves and were not otherwise questioned or refuted. The record unequivocally established the following: Hulan Mitchell - The "premium" receipt (Pet. Ex. "1") issued to Mr. Mitchell indicates a total premium of $378. The actual cost of the "insurance" was $328 with a downpayment of $98 required. See Premium Finance Agreement (Pet. Ex. "1") This is absolutely unrefuted on the record. The premium receipt includes $50 for the cost of the motor club, which is not a policy of insurance and accordingly is not "premium". Also the downpayment required, purportedly for insurance, included $50 for the motor club ($98 + $50 = $148). Furthermore, based on clear documentary evidence in the record, Mr. Mitchell was again subject to a misrepresentation of fact (undisputed) wherein on July 9, 1993 he received a letter (Pet. Ex. "1") threatening to cancel his "insurance" policy because he did not pay a $48 balance due on the motor club. Accordingly the record clearly indicates that the Respondent has made a false or misleading statement with reference to the insurance transaction for Mr. Mitchell. The fact that the Hearing Officer held that Mr. Mitchell knew (despite his testimony otherwise) that he had purchased a motor club, does not negate the fact that the Respondent made a false or misleading statement. JENNA CHESTER - The deceptive premium receipt practice was visited upon Ms. Chester on two occasions. First on February 1, 1994 a "premium" receipt (Pet. Ex. "2") was issued in an amount of $670 for "total premium" due and a required downpayment of $261. The actual cost of the "insurance" was $585 with a required downpayment of $176. See Premium Finance Agreement (Pet. Ex. "2") The "premium" receipt and downpayment included a non-insurance fee for a motor club in the amount of $85. On May 23, 1994 Ms. Chester went to the Respondent to repurchase coverage which had been cancelled. At that time, another "premium" receipt was issued to her in the amount of a "total premium" of $719 and a required downpayment of $286 (Pet. Ex. "2") The actual cost of the insurance was $619 and a required downpayment of $186. See Premium Finance Agreement (Pet. Ex. "2") The additional $100 was for the non-insurance motor club which was sold to Ms. Chester. Although the Hearing Officer held that Ms. Chester knew she was purchasing this motor club (despite Ms. Chester' s testimony otherwise) this does not negate the fact that the Respondent has made false or misleading statement in this insurance transaction with Ms. Chester. Michelle Humose - The unrefuted documentary evidence indicates that on May 5, 1994, Ms. Humose was issued a "premium" receipt (Pet. Ex. "3") indicating a "total premium" in the amount of $926 and a required downpayment of $348. The actual cost of the "insurance" was $826 with a required downpayment of $248 See Premium Finance Agreement (Pet. Ex. "3") The additional $100 included in the "premium" receipt was for the non-insurance motor club sold to Ms. Humose. Again despite the Hearing Officer's finding contrary to Ms. Humose's direct testimony that she did not know she was purchasing a motor club, the Respondent has clearly and convincingly made a false or misleading statement with respect to this insurance transaction with Ms. Humose. It is implicit in the Findings of Fact by the Hearing Officer that each referenced transaction took place as described herein. The Hearing Officer merely failed to explicitly state in the Recommended Order that the unrefuted documentary evidence establishes a prima facie misrepresentation of fact. Indeed, the exact factual scenario established herein was determined to constitute a misrepresentation in In the Matter of: Kenneth Michael Whitaker, Case Number 93-L-432DDH (Final Order dated July 3, 1995). It was specifically determined "that the Respondent's standard business practice of combining the costs of insurance coverages with the costs of the auto club memberships and then calling such costs "total premium" on receipts issued to customers constituted a misrepresentation and was deceptive." Also, it was further determined "that the Respondent's standard business practice of deducting all or part of the ancillary product fee up front resulted in false statements on other documents that the full downpayment for premium or financing of premium had been made, when in actuality it had not." Whitaker Final Order at pp's 9-10. The Department determined that this activity was a violation of section 626.611(9), Florida Statutes. This finding was also affirmed on appeal in Whitaker v. Department of Insurance and Treasurer, Case No. 95-2702, (21 FLW 1353, Slip Opinion dated June 13, 1996). The court upheld this violation when it summarized the practice in the opinion as follows: Appellant took all or part of the ancillary product from the required premium downpayment and gave the consumer a receipt which listed the full downpayment as "Total Premium". The receipt did not reveal that part of the "premium" went to purchase an ancillary product. Whitaker Slip Opinion at pp's 3-4. This type of fraudulent and deceptive practice also constitutes a violation of section 626.9541(1)(b), Florida Statutes, by placing before the public a representation or statement which is untrue, deceptive or misleading. The Hearing Officer has already considered the unrefuted facts on the record and was clearly in error to make a finding otherwise. Accordingly, pursuant to section 120.57(a)(a) 10., Florida Statutes, which reads in part: The agency may not reject or modify the findings of fact, including findings of fact that form the basis for an agency statement, unless the agency first determines from a review of the complete record, and states with particularity in the order, that findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law. the Department may modify the findings of fact. In this case there was no competent and substantial evidence to make a finding that the Respondent did not make a false or misleading statement with the premium receipts issued in this cause. A review of the entire record demonstrates unrefuted documentary evidence which supports the modified findings of fact contained herein. Therefore, Petitioner's exceptions to findings of fact 12, 19 and 27 are hereby GRANTED. RULINGS ON EXCEPTIONS TO CONCLUSIONS OF LAW The Petitioner takes exception to conclusions of law at paragraphs 30 and 31, based on the Hearing Officer's rejection of unrefuted facts established on the record, i.e., deceptive and misleading premium receipts. Conclusions of Law 30 and 31 are revised to reflect that the premium receipts issued to insureds constitute fraudulent and deceptive practices as well as placing before the public a representation or statement which is untrue, deceptive, or misleading. Conclusion of Law 30 is modified as follows: In this case, the Respondent was charged with violating sections 626.611(4), 626.611(5), 626.611(7), 626.611(9), 626.611(13), 626.621(2), 626.621(6), 626.9541(1)(b), 626.9541(1)(e), 626.9541(1)(k)1., and 626.9541(1)(z), Florida Statutes. Boiled down to the essentials the Department alleged that Respondent violated the provisions listed above by unlawfully selling insureds motor club memberships without their informed consent, made false and misleading statements regarding the coverage provided and falsely represented and illegally required insureds to purchase motor club membership as part of their purchase of automobile insurance and that Respondent engaged in the prohibited practice of "sliding" additional coverages or products into the purchase of the insured without the informed consent of the insured. This revision is necessary because the Hearing Officer failed to include sections 626.9541(1)(b) and 62.9541(1)(e), Florida Statutes, as alleged violations. Conclusion of Law 31 is likewise revised as follows: The Department failed to establish by clear and convincing evidence that Respondent attempted to "slide" coverage or ancillary products involved in this case. Likewise, the evidence did not clearly or convincingly demonstrate that Respondent did not obtain the informed consent of her customers prior to selling them the auto club memberships involved here. However, based on the unrefuted evidence in the record, the Respondent has violated sections 626.611(9) and 626.9541(1)(b), Florida Statutes, by issuing "premium receipts" which falsely and deceptively represented "total premium" which included a fee for a non-insurance product, ie. motor club membership. Accordingly, the Respondent is guilty of three counts of violating sections 626.611(9) and 626.9541(1)(b), Florida Statutes. The Petitioner's exceptions to conclusions of law 30 and 31 are hereby GRANTED. RULING ON EXCEPTIONS TO RECOMMENDATION The Petitioner takes exception to the recommendation that the Administrative Complaint be dismissed. The Penalty Guidelines contained in Chapter 4-231, Florida Administrative Code, should be applied in this case. There are three documented violations (one for each count) of engaging in fraudulent and dishonest practices as prohibited in section 626.611 (9), Florida Statutes, and placing before the public a representation or statement which is untrue, deceptive or misleading in violation of section 626.9541(1)(b), Florida Statutes. Under the penalty guidelines, a violation of section 626.611(9), Florida Statutes, requires a suspension of 9 months per count. Under the penalty guidelines, a violation of section 626.9541(1)(b), Florida Statutes, requires a suspension of 6 months per count. Based on Rule 4-231.040, Florida Administrative Code, the highest penalty per count should be assessed, therefore the appropriate penalty is three counts at 9 months for a total suspension period of 27 months. Since the total required suspension exceeds 2 years, the appropriate sanction is the revocation of the Respondent's licenses in accordance with section 626.641(1), Florida Statutes. The violation of section 626.9541(1)(b), Florida Statutes, permits the assessment of an additional fine on top of any other administrative sanction, pursuant to section 626.9521, Florida Statutes. This section permits fines for wilful violations of up to $10,000 per violation not to exceed $100,000. The Petitioner recommends that a fine of $3,000 be assessed against the Respondent. However, insufficient grounds have been demonstrated to justify the assessment of a $3,000 administrative fine. Therefore, Petitioner's exceptions to the recommendation are hereby GRANTED, except for the Petitioner's argument for an additional sanction in the form of a $3,000 administrative fine which is hereby DENIED. PENALTY Rule 4-231.160, Florida Administrative Code, prescribes the aggravating and mitigating factors which the Department shall consider and, if warranted, apply to the total penalty in reaching the final penalty. Aggravating factors in this matter, as delineated in Rule 4-231.160, Florida Administrative Code, are the willfulness of the Respondent's conduct and the existence of secondary violations established in Counts I-III of the Administrative Complaint. Only minimal mitigating factors exist which are outweighed by the aggravating factors. The existence of these aggravating factors would increase the Respondent`s total penalty, thereby resulting in a higher final penalty. Increasing the Respondent's total penalty would be pointless, however, for section 626.641(1), Florida Statutes, limits a licensee's period of suspension to a maximum of 2 years. The Respondent's 27-month total penalty already exceeds the two-year statutory limit. Consequently, the Department has determined that a revocation of the Respondent's insurance agent license is warranted and appropriate in this matter, and is necessary to adequately protect the insurance-buying pubic. IT IS THEREBY ORDERED: All licenses and eligibility for licensure held by TARA JEANNE SMITH, are hereby REVOKED, pursuant to the provisions of sections 626.611, 626.621, 626.641(2) and 626.651(1), Florida Statutes, effective the date of this Final Order. As of the date of this Final Order, the Respondent shall not engage in or attempt or profess to engage in any transaction or business for which a license or permit is required under the Florida Insurance Code, or directly or indirectly own, control or be employed in any manner by an insurance agent or agency. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a Notice of Appeal with the General Counsel, acting as the agency clerk, at 612 Larson Building, Tallahassee, Florida 32399-0333, and a copy of the same and the filing fee with the appropriate District Court of Appeal within thirty (30) days of rendition of this Order. DONE and ORDERED this 4th day of September, 1996, in Tallahassee, Florida. BILL NELSON Treasurer and Insurance Commissioner COPIES FURNISHED: Tara Jeanne Smith 2588 Panther Creek Road, Apt. A Tallahassee, Florida 32308-5628 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Diane Cleavinger, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Stephen C. Fredrickson, Esquire Division of Legal Services 200 E. Gaines Street Tallahassee, Florida 32399-0333
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent not guilty of violating Chapter 626, Florida Statues and dismissing the Administrative Complaint. DONE and ENTERED this 12th day of July, 1996, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SunCom 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1996. APPENDIX The facts contained in paragraphs 1, 2, 3, 4, 7, 8 and 16 of Petitioner's Proposed Findings of Fact are adopted. The facts contained in paragraphs 5, 6 and 9 of Petitioner's Proposed Findings of Fact are subordinate. The facts contained in paragraphs 10, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22 and 23 of Petitioners' Proposed Findings of Fact were not shown by the evidence. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 25 and 26 of Respondent's Proposed Findings of Fact are adopted. The facts contained in paragraph 23 of Respondent's Proposed Findings of Fact are subordinate. COPIES FURNISHED: Stephen C. Frederickson, Esquire Division of Legal Services 645A Larson Building Tallahassee, Florida 32399-0333 Charles J. Grimsley, Esquire Charles J. Grimsley and Associates 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether Petitioner should be disciplined pursuant to a nine count administrative complaint, each count containing allegations of multiple violations of the Insurance Code.
Findings Of Fact Emerald Coast Insurance Agencies, Inc. (Emerald Coast) is a nonstandard automobile insurance agency, insuring high risk drivers who normally have a difficult time procuring insurance. Emerald Coast advertises. Some customers named in the administrative complaint responded to advertisements featuring "high risk, low down payment." At all times material, Respondent was licensed as a life agent, as a life and health agent, and as a general lines agent and was the corporate president, director and registered agent of Emerald Coast. Respondent was present and actively overseeing all of the applications involved in this case, even when information was written on forms by the customer, another agent, or an unlicensed employee. Most of the complaining witnesses were able to identify Respondent as being present and/or assisting while their forms were made out. DOI did not affirmatively prove that any unlicensed employee of Emerald Coast spent more than 10 percent of his employment time interacting with customers. Prior to these proceedings, DOI has never taken action against Emerald Coast or Respondent. Respondent went to DOI on two occasions prior to the filing of this administrative complaint and discussed optional coverages in an effort to avoid situations that might lead to disciplinary action. Emerald Coast has four offices in three cities. All of the events underlying the charges herein occurred in Tallahassee. Emerald Coast has written between 15,000 and 18,000 automobile insurance policies in the three years it has been open. Approximately 70 percent of Emerald Coast's customers who purchase automobile insurance policies cancel those policies prior to the renewal date. Eighty percent of these cancelled policies are cancelled for nonpayment of premium. Among these cancellations are individuals called "tag runners." Tag runners purchase the minimum required insurance for receipt of an automobile license tag, with the intent of having the policy cancelled after they have made one or two payments and taking the chance that the Division of Highway Safety and Motor Vehicles will not catch up with them to suspend their licenses because insurance cancellations may take up to six months, even for non-payment. Once the policy information is taken from the customer, it is entered in a computer and, within three to five days, checks are written from Emerald Coast to the insurance carriers for initial premiums. If the proposed insured fails to make a payment or stops payment on a check, the agency loses money on the transaction because the agency has already forwarded the money to the insurance company. Emerald Coast provides the option of financing a premium if a customer cannot pay it in a lump sum annually. When a customer cannot pay in full for an insurance policy, Emerald Coast offers the option of purchasing an ancillary product like an auto club for a set price in addition to paying for the insurance with a low down payment. The club cost is in addition to the total insurance premium, and the low down payment for the insurance premium is conditional upon the customer's paying for the club's product. If the customer does not want the auto club product, Emerald Coast still permits him to finance his insurance premium with a 50 percent down payment. Emerald Coast's purpose of requiring a 50 percent down payment or payment in full, or the purchase of the auto club when a small down payment is made, is to offset cancellation rates and the agency's losses incurred thereby. The premium finance companies which finance insurance policies require fees. There are no premium finance companies that require Respondent to sell auto clubs in order to sell their premium finance products. The insurance carriers charge a premium for the risk they assume with the contract of insurance. There are no insurance carriers that require Respondent to sell auto clubs in order to sell their insurance. Approximately 60 percent of the people to whom Emerald Coast has sold policies also purchased auto clubs, including towing and rental features. The larger the fee paid by the customer for the club, the greater the towing, rental and other benefits that the club provides and the greater amount the seller makes. Respondent received a 90 percent commission from Atlantic Travel Association of North Florida, Inc. for the auto clubs he sold and sent to them. Respondent also sold American Travelers Association death and dismemberment benefit contracts at a similar commission. Respondent and Emerald Coast used to sell Atlantic Travelers Association, Inc. auto clubs. As of January 1, 1992, they switched to selling Atlantic Travelers Association of North Florida, Inc. clubs. The two clubs are not associated in any way. By agreement with the new club's owner, Respondent and Emerald Coast continued to use the old forms bearing the wrong company name and submitted them to the new club. The forms do not provide the address of the club, and members are expected to submit claims through Emerald Coast. Atlantic Travelers Association of North Florida, Inc. is a valid auto club and pays valid claims. Atlantic Travelers Association of North Florida, Inc.'s owner testified that his company was prepared to honor each misnamed form that Respondent sent to him with a fee, but it is probable that the form issued in the wrong name would not be legally binding. If the form was never received by the new club, Emerald Coast's customer would have an even more tenuous claim. Therefore, Respondent's auto club customers were protected only at the new club's whim as to whether or not a contract they paid for would be honored, and each form issued by Respondent or Emerald Coast with the wrong auto club name on it constituted a misrepresentation, deceptive to the customer on several levels. Respondent also continued to use the Atlantic Traveler's Association, Inc. name on all the acknowledgments he asked his customers to sign, signifying that they understood that the auto club cost was optional and in addition to their automobile insurance. The use of the wrong name on these acknowledgment forms also was a misrepresentation. Due to space considerations, and for greater clarity, Atlantic Traveler's Association, Inc. will hereafter be referred to as "the old auto club," and Atlantic Traveler's Association of North Florida, Inc. will hereafter be referred to as "the new auto club." None of the customers named in the administrative complaint lost money as a result of any auto club sold by Respondent or Emerald Coast. The auto club contracts offered 38 different choices of benefit levels. Each of the benefit levels was an option which should have been discussed with and knowingly accepted by the customer. Respondent gave the individuals selling the auto clubs no instructions on which of the options they should sell to a customer or how they should judge which option(s) a customer needed. Routinely, neither Respondent nor any of his employees ever offered all 38 options to each customer. Rather, dependent upon the car insurance coverage the customer selected, or upon the unbridled discretion of the salesperson, each salesperson sold what he felt like. Respondent and Emerald Coast use an acknowledgment form to let the customer know he is purchasing an ancillary product, that the total cost of the ancillary product is in addition to insurance premiums, and that the ancillary product is optional and not required by law. They use a document called an "affidavit" to inform the customer of other coverages and when the coverages will go into effect and to hopefully insure that the information received from the customer is accurate. These so-called "affidavits" are neither notarized nor attested-to by anyone. Respondent acknowledged that the DOI and the insurance industry consider the word, "premium," as applying to insurance premiums only, not ancillary products such as auto clubs. See, Section 627.041(2) F.S. Laymen likewise regard the word "premium" as reflecting the cost of insurance. Respondent and Emerald Coast use generic receipts which say "premium," not "insurance premium." Where insurance premium collections and ancillary product sales were conducted simultaneously, Respondent used the word "premium" on these receipts to cover the total amount tendered by each customer as a down payment on both the insurance policy premium and on the ancillary product. He then listed only the insurance premium down payment (total amount tendered by the customer minus ancillary product full fee or down payment) on the insurance premium finance agreement because only insurance premiums can be financed on those forms. Where receipts specified "total premium" he lumped in the cost of the ancillary product. Respondent thus misused the word "premium" on receipts issued to customers. Accordingly, the receipts provided to Respondent's customers were misrepresentations and deceptive. One result of the misuse of the term "premium" was that customers sometimes were led to believe that their deposits against both auto clubs or death and dismemberment policies and insurance coverage were down payments on the insurance policies alone, even where the receipts specified "premiums" and "deposit." Accordingly, Respondent's deductions of all or part of the ancillary product fee up front resulted in false statements on other documents that the full down payment for premium or financing of premium had been made when it had not. Respondent testified that his standard operating procedure was for himself or another licensed insurance agent to explain the coverages on each of the policy application forms executed at Emerald Coast; that where marks occurred on the summary of coverage pages, they were made by himself or another Emerald Coast representative during these explanations; that he explained the cost coverage breakdown for each customer he saw; and that he instructed each customer he saw to read all documents before signing. However, the juxtaposition of the "total" space block and the column where premiums and other costs are added on the "summary of coverages and cost breakdown" form makes it impossible for the customer to quickly add up the premiums for each type of insurance coverage and the cost of ancillary product in a straight line. Also, due to the confusion of Respondent's use of the word "premium" for different purposes on different documents, the figure for total "premium" frequently cannot be reconciled among the receipt, the financing document, the insurance application, and/or the summary of coverages and cost breakdown form. Even a reasonably attentive customer would be confused by the several forms. Reading the summary before signing it would not necessarily have revealed what funds were being applied to which purpose. In some instances, more specifically set out by customer and count infra., the completed summary of coverages and cost breakdown forms were misleading or unexplainable as to what amounts were being charged to the customer. Count I (David K. Register) On January 31, 1992, David K. Register went to Emerald Coast to purchase insurance. The applications made out at that time were executed by Respondent as brokering agent. Mr. Register signed all documents without reading them. Nonetheless, he understood that he was purchasing personal injury protection, property damage coverage, comprehensive and collision coverage, and what the deductibles were at the time he signed the documents. He also knew he was purchasing an auto club at the cost of $150. The total cost of the insurance coverage he was seeking was approximately $750. Respondent required Mr. Register to purchase an auto club contract as a condition of obtaining premium financing for his insurance policies. Respondent completed a premium finance agreement for financing the unpaid premiums for the policies showing that Mr. Register had tendered a $197 premium down payment. Respondent advised Mr. Register that he owed an additional $135, due February 14, 1992. Respondent issued a receipt to Mr. Register showing the total premium was $937. When he applied with Emerald Coast, Mr. Register had four offenses on his driving record, three for unlawful speed and one for violation of the alcoholic beverage open container law. His complete driving record was not disclosed on the documents prepared. If it had been disclosed, an additional premium would have been charged. The testimony is in direct conflict on whether or not Mr. Register orally disclosed his prior violations to Emerald Coast: Mr. Register maintained that he did; Respondent maintained that he did not. There is no direct evidence to show which witness was accurate on this issue. Circumstantially, there was no reason Respondent should fail to write down violations told him by Mr. Register since Respondent was prepared to write insurance in the high risk category anyway and one way or another Respondent could have insured Mr. Register for the amount Mr. Register was prepared to pay that day. Subsequently, Mr. Register made a down payment and executed an insurance application with Progressive Insurance through Swann Insurance Agency on which he also failed to disclose his entire driving record. He did so with the explicit understanding at that time that the new carrier would run a license check on him and an additional premium would be required due to his bad driving record which he had disclosed orally to Swann Insurance Agency. The "safety net" when a bad driving record is not disclosed on an application is that carriers routinely run independent driving license checks and adjust the premium upward or refuse coverage if they discover an undisclosed bad driving record. What Swann Insurance Agency and its carrier did after the carrier researched David Register's driving history is not clear on the record. When Emerald Coast and its carrier discovered his history, they demanded a higher premium. The evidence falls short of showing that Respondent deliberately left information provided by Mr. Register off his application at Emerald Coast. On February 6, 1992, Armor, the carrier with whom Emerald Coast had placed Mr. Register's PIP and property damage coverage, notified Mr. Register and Respondent that the policy binder would be cancelled if required photographs of the vehicle were not received. On February 10, Mr. Register took the vehicle to Emerald Coast for photographs. On February 13, Respondent wrote Mr. Register a letter threatening to cancel his "policy" if the $135 "premium" were not paid by February 14. Respondent testified that the letter referred to cancellation of the auto club towing "policy" and therefore he was not threatening to cancel Mr. Register's automobile insurance policy for failure to pay for an ancillary product. However, on its face, the letter was misleading. Respondent's unique "wordology" had the effect on Mr. Register of a threat to cancel his automobile insurance policy for non-payment of the ancillary product fee. On February 14, David Register and his father wrote Respondent requesting cancellation of the insurance policies and return of all money paid, since they had purchased duplicate coverage at Swann Insurance Agency. Respondent did not forward the cancellation request to Nu-Main, general agent for the carrier with whom he had placed Mr. Register's comprehensive and collision policy. Respondent did not forward the car photographs to Armor. As a result of the photographs not being received, on February 18, Armor cancelled its binder to David Register. On March 9, 1992, the finance company sent David Register and Emerald Coast its cancellation notice for nonpayment of premiums. David Register never paid the additional $135 due on February 14 for the auto club and the new auto club had no record of his old auto club form being received. Due to his February 14 cancellation, Respondent eventually refunded Mr. Register $140 of the $212 he had paid on January 31, 1992. Mr. Register's father testified that the $72 difference was accounted for by the cost of coverage from January 31 to February 14 and cancellation fees charged by the carriers. Count II (Diedre Hawks Johnson) On August 15, 1992, Diedre Hawks went to Emerald Coast to buy minimum insurance for a used car she had just purchased and financed. She executed an application for property damage, comprehensive, collision, and PIP insurance coverages. These coverages are more than the minimum required by law, but may not be more than the minimum required by the financing of Baldwin-Foster Motors, where Ms. Hawks had just purchased the car. The record is unclear on this distinction. Ms. Hawks tendered $165. Respondent actively supervised Dan Allison, a licensed insurance agent, during this transaction. Contrary to Ms. Hawks' testimony, it is found that she understood on August 15 that she had purchased an auto club. Although she did not read them at the time, Ms. Hawks executed the premium finance agreement to obtain financing for the remainder of the automobile insurance policy premium and the application for an auto club at $150. Ms. Hawks likewise signed both an acknowledgment showing she knew she was getting an auto club for $150 and an "affidavit." She also signed a summary of coverages and cost breakdown acknowledging that Emerald Coast employees had explained the coverages, that she fully understood them, and that she had received a completed copy of that document. Her explanation at formal hearing for why she did not read what she signed was that she was in a hurry because it was late in the day and the Emerald Coast employees were rushing to get out. However, she acknowledged that Respondent gave her an opportunity to read the documents which clearly set out that she was buying an auto club for $150. However, even if she had read them, the documents presented to Ms. Hawks were ambiguous as to what the amounts paid or owing were to cover. The enumerated coverages on the cost breakdown form add up to $745 (including a $150 auto club) plus a policy fee of $25 and a "grand total" of $770. The financial agreement shows a $620 premium total with $465 financed, a $155 down payment and $65.49 per month due in monthly payments. The receipt issued to Ms. Hawks by Emerald Coast on August 15 showed that she had tendered a $165 deposit, was paying for a $770 annual premium, and owed an additional $140 deposit. Upon the foregoing, Ms. Hawks' testimony was convincing that even though she initialled the receipt requiring the additional deposit, she did not know that she still owed a $140 down payment when she left Emerald Coast and that she believed that she only had to pay her premium in monthly increments of $65.49. The next day, August 16, 1992, Underwriters Guaranty Insurance Company issued Ms. Hawks an insurance policy with an annual premium of $620. The difference of $150 between the $770 and $620 figures was the total $150 cost of the auto club which she was required to buy in order to get financing with Emerald Coast. Ms. Hawks signed a contract with the old travel club. Emerald Coast sent the contract to the new travel club. Ten dollars of Ms. Hawks' initial $165 had been applied by Emerald Coast as a down payment on the auto club. No paper specifically shows this diversion of funds. On September 8, Emerald Coast wrote Ms. Hawks that she must come in and pay $140 more on her down payment for "premium" or her insurance would be cancelled. Ms. Hawks purposefully ignored the letter since communications with the carrier clarified that the money was actually to be applied to the auto club fee. Beginning September 13, Respondent telephoned her several times to come in and make the payment. Ms. Hawks still did not pay the $140. Therefore, Respondent refused to turn over to her a copy of her automobile insurance policy when it was issued. Ms. Hawks again dealt with the carrier directly and the carrier assigned her to a new agent. She never paid the auto club fee. Count III (Christine Maddux Vollenweider) On March 16, 1992, Christine Maddux asked to finance part of a $242 premium. Respondent told her that the additional cost of financing insurance with the $242 annual premium would be $317. Respondent also told her that Emerald Coast had a condition of financing which required her to buy an auto club. Ms. Maddux executed an application for a PIP and property damage automobile insurance policy with a total annual premium of $242. Respondent told her that she must pay a $143 down payment. Ms. Maddux had only $80 with her, so she tendered $80 to Respondent, who told her she must pay the remaining $68 the following week. On her first visit, the "total premium" was $317 on the receipt ($80 received and $68 deposit due). She paid the $68 the following week, as agreed. That amount was also receipted as "total premium." On March 16, Ms. Maddux executed a premium finance agreement to obtain premium financing on the balance of the premium amount and applied for an auto club. The premium financing agreement showed that she had tendered only $73 down payment on the insurance premium. The $7 balance of her $80 went for the auto club, but no document specifically shows that diversion of funds. Ms. Maddux did not read the summary of insurance coverages and cost breakdown prior to signing it. She was not told that she could not read the document, and she signed a statement acknowledging that the coverages had been explained to her, that she fully understood them, and that she had received a completed copy of the document. All of the documents except the financing agreement consistently reflect the $75 for the auto club. Ms. Maddux applied for the auto club at a cost of $75 even though she already received equal or better auto club benefits from AAA-Plus, and had told Respondent so. No one at Emerald Coast told Ms. Maddux that she was required by law to purchase it. She applied for the auto club only because of Respondent's specific agency business practice to require an auto club purchase of any customer who had to finance insurance premiums after a down payment of less than half of the entire annual premium. The auto club contract Ms. Maddux signed was with the old club showing a cost of $75. Emerald Coast sent the contract to the new club. Ms. Maddux was issued a policy by Security Insurance Company of Hartford. Count IV (Candy Bassett) On March 16, 1993, Candy Bassett wanted to purchase the minimum required non-owner's automobile insurance to get back her driver's license, which had been suspended. She incorrectly stated to Emerald Coast that she had only four points on her driving record, when in fact she had twelve points. The points had been accumulated for speeding tickets, for driving under the influence of alcohol (DUI) with serious bodily injury, and for a conviction for failure to identify upon an accident. Ms. Bassett signed Emerald Coast's summary of coverages and cost breakdown form and the policy application form, stating therein that her violations and offenses as revealed by her were accurate and acknowledging that the coverages had been explained to her and were fully understood by her. Ms. Bassett executed both a cost breakdown and summary and an acknowledgment. The cost breakdown and summary showed she was purchasing a travel club including accidental death coverage for $100. Her acknowledgment showed she was purchasing a motor club including towing and rental reimbursement for $187. Ms. Bassett executed an application for an automobile insurance policy to be issued by Underwriters. The application listed the total annual premium as $334. Ms. Bassett tendered her down payment check in the amount of $187. The receipt showed the "total premium" to be $449 and the amount received to be $187. Ms. Bassett executed a premium finance agreement to obtain financing for the remainder of the policy premium. It showed that Ms. Bassett had tendered only an $87 down payment on a total premium of $349. Underwriters issued Ms. Bassett an insurance policy for an annual term. Respondent actively supervised her transaction and executed the policy application as brokering agent. As part of this transaction and as part of a specific Emerald Coast business practice, Respondent required Ms. Bassett to execute an American Travelers Association, Inc. accidental death and dismemberment benefits contract reflecting a fee of $100, not a towing contract as reflected on some of her other paperwork. The $100 for this death and dismemberment product constituted the difference between the $87 shown on the finance agreement as the amount tendered and the $187 check Ms. Bassett actually tendered. There is no evidence as to the status of American Travelers Association Inc. or whether it received Ms. Bassett's contract. Contrary to other documents she executed, Ms. Bassett signed an acknowledgment form to the effect that she knew the club, including towing and rental reimbursement, were optional at a fee of $187 separate from her automobile insurance and that she understood that it was not insurance. Ms. Bassett testified that she thought the death and dismemberment benefits were included in her insurance, that she was not informed that she would have to pay an additional $100 for those benefits, and that she did not intend to pay any monies for such benefits. The foregoing testimony is not entirely credible in light of the rest of the evidence. Ms. Bassett also specifically testified that she was told that the travel/accident feature was "included in the -- I can't remember how much the premium was, it was four hundred and something, he said it was included in that." (Emphasis supplied.) She also signed an acknowledgment indicating the towing fee would be in addition to the insurance premium and a paper showing the amount for financing the insurance premium totalled only $349, and she was asked to name, and did name, a beneficiary on the death and dismemberment form. Further, she admitted that she understood that she was receiving travel/accident benefits through American Travelers, and that it was required for premium financing. However, she is credible and clear that all the amounts she had paid and was going to have to pay were not fairly represented to her and that Respondent made out forms showing she was being charged $187 for an auto club or towing feature which, having no car she could not very well use, as well as forms showing she was purchasing a death and dismemberment feature at $100, purely as a requirement of financing automobile insurance. Count V (Cynthia Mann) On January 24, 1992, Cynthia Mann made application for full coverage automobile insurance. Respondent actively supervised her transaction. Respondent was the brokering agent for the policy. Ms. Mann tendered a check for $180 and was advised that an additional down payment of $95 was due on the policy. She tendered the additional $95 down payment to Respondent on February 3, 1992. Charter American Casualty Insurance Company issued her standard automobile policy. Ms. Mann also executed a premium finance agreement to obtain premium financing for the policy. This agreement indicated that the total down payment for the policy was $165. Respondent required Ms. Mann to execute an old auto club contract in order to get the financing. She signed an acknowledgment that she had been offered an opportunity to purchase insurance from Emerald Coast without any auto club. The new auto club had no record of receiving Ms. Mann's Atlantic Travel Association, Inc. contract. The record is silent as to whether or not the old auto club received her contract. The annual fee specified on the old auto club contract was $110. Emerald Coast took $110 from Ms. Mann's $180 deposit and applied it to the auto club contract. Ms. Mann signed an application form, an acknowledgment form similar to those signed by the other complainants, and an "affidavit." Ms. Mann contended that Respondent had told her that she had a towing benefit as part of the automobile insurance policy purchased. The reconciled and understandable portion of her paperwork shows otherwise. She was not told she could not read the documents placed before her for reading and signature, but she did not read any of the documents prior to signing. She did not want to spend additional time reading documents because she "knew [she] had to have insurance." However, reading the documents would not have eliminated some of the contradictory and therfore false statements as to what constituted insurance premium. Count VI (Jacque Flowers) Respondent was actively involved in both of Jacque Flowers' transactions. At all times material, Paul Wettrich, an unlicensed employee of Emerald Coast, spent less than ten percent of his time actually filling out forms for customers or taking information from customers. On December 31, 1992, Jacque Flowers went to Emerald Coast to purchase automobile insurance and executed an application for various coverages for two automobiles. On December 31, 1992, Ms. Flowers tendered $160 as a down payment to Mr. Wettrich. Mr. Wettrich signed a receipt as "salesman," and assisted Ms. Flowers in filling out the required forms. The receipt showed a total premium of $849. The Respondent executed the application as brokering agent. Mr. Wettrich never signed any of the applications on behalf of Respondent or any other licensed agent. Also, on December 31, 1992, Ms. Flowers executed an Underwriters Financial premium finance agreement to obtain financing for the remainder of the policy premium. Respondent executed that agreement as agent of record. The agreement incorrectly specified that a $187 down payment already had been made. As part of the December 31, 1992 transaction, and pursuant to Emerald Coast's standard business practice, Ms. Flowers was required to contract with Atlantic Travel Association, Inc. for an auto club at a $100 fee. The $100 auto club fee was deducted from the $160 cash payment made on that date. On December 31, 1992, Ms. Flowers was in a hurry to complete her transaction because she had her three-year-old child with her. Without reading them, Ms. Flowers signed an application form, a premium finance agreement, an acknowledgment form, an Atlantic Travel Association, Inc. form, and a summary and cost breakdown form, acknowledging the truth and accuracy of the statements contained in each document, that the coverages had been fully explained to her, and that she understood them. Effective January 1, 1993 and pursuant to the policy application, Underwriters issued to Ms. Flowers a policy with a total annual premium of $749. On January 27, 1993, pursuant her agreement on December 31, 1992, Ms. Flowers tendered to Respondent an additional $127. ($160 plus $127 would equal $287 paid up to that date.) Also on January 27, 1993, Ms. Flowers deleted one car from the policy. On February 15, 1993, Ms. Flowers deleted the second car from the policy and added a third car. This resulted in an increased premium and an addendum to the policy which had been issued January 1. Ms. Flowers paid $92 more to Respondent's brother Scott, an unlicensed employee of Emerald Coast, who signed the receipt. The addendum stated that the additional policy premium was $167, and that $67 had been the cash down payment. Respondent executed the addendum as brokering agent. In accord with its standard business practice, Emerald Coast, through Scott Whitaker, required Ms. Flowers to execute an accidental death and dismemberment contract with American Travelers Association, Inc. Twenty-five dollars for this item was taken from her $92 paid that day. The receipts and other documents provided Ms. Flowers at this time were inconsistent, and Respondent was unable to explain the inconsistencies at formal hearing. Although Ms. Flowers testified that the two ancillary product packages (auto club and death and dismemberment benefits) were never explained to her and that she would never have purchased either package if she had understood that there were additional charges therefor, her paperwork shows otherwise. Also, she specifically testified that when she went to Emerald Coast the first time, on December 31, 1992, her insurance had just been cancelled by Florida Farm Bureau due to her husband's driving record, and that when she requested full coverage, she understood "full coverage" to include towing, based on her experience with Florida Farm Bureau. Therefore, it is concluded that she wanted the towing benefit however she could get it. She also admitted that each paper was explained to her before she signed on December 31, 1992. Therefore, she knew on December 31, 1992 that she was getting towing and was paying for it through an auto club, even though the totality of the paperwork is misleading as to what amounts were paid for each purpose, and even though the several options within each type of ancillary product were not explained to her and the Emerald Coast employees chose what benefit amount to sell her each time. The December 31, 1992 old auto club package was sent to the new auto club. The record is silent as to what became of the February 15, 1993 American Travelers Association, Inc. death and dismemberment form. Count VII (Sebrena McPhaul) On September 21, 1992, Sebrena McPhaul went to Emerald Coast to purchase automobile insurance and executed applications for bodily injury, property damage, and PIP coverages with Underwriters and for physical damage coverage with Nu-Main, for a total premium of $651, to be divided appropriately between the two carriers as they required. Ms. McPhaul executed a finance agreement stating that the down payment for her insurance policies was $163. Ms. McPhaul tendered a $163 down payment check with the understanding that she would tender an additional $100 in two subsequent $50 installments. Ms. McPhaul also signed an Atlantic Travel Association, Inc. form, even though she informed Emerald Coast employees that she did not need an auto club since she had AAA. The application she signed was for an auto club at a cost of $130, a portion of which was to be taken from the down payments to be made by Ms. McPhaul. Ms. McPhaul signed a summary of coverages and cost breakdown form which stated that an auto club was covered, including payment for bail bonds, towing and labor and owner protection at a cost of $130, but she did not read it before she signed it. Ms. McPhaul admitted that the coverages had been explained to her by Scott Whitaker, an unlicensed employee of Emerald Coast, prior to her signing the summary of coverages and cost breakdown form, but maintained that he had not adequately explained that the $130 for the auto club was in addition to her insurance premium instead of part of it. Ms. McPhaul signed an acknowledgment form concerning the purchase of the auto club and an "affidavit" concerning the truthfulness of her responses, but she read neither of them, either. She conceded that if she had taken the time to read the acknowledgment form instead of just signing it, she would have understood the difference. Scott Whitaker issued her a receipt showing her total premium was $781. Respondent was in charge of the office, was actively involved in her transaction, and signed the applications as brokering agent. Emerald Coast sent the old club form to the new club. Ms. McPhaul executed a premium finance agreement to obtain financing for the remainder of the premiums for her policies which were executed by Respondent as agent of record. Ms. McPhaul was issued insurance policies for her purchased coverages, on September 21 and 22, respectively. At this point, Ms. McPhaul understood that she was paying $130 for an auto club above and beyond her premiums and financing costs. Previously, she had thought that towing was part of her standard automobile insurance contract. She blamed the misunderstanding upon misrepresentations made by Scott Whitaker, but the acknowledgment she signed is clear on this portion of the disclosure. Ms. McPhaul stopped payment on a check she had used to pay the down payment on her insurance. Emerald Coast thereby incurred a loss of $90 it had forwarded to the carriers, and also lost the cost of processing her applications. The receipts and other documents provided Ms. Flowers were inconsistent. Respondent was unable to explain the inconsistencies. Count VIII (Steve Reeves) On March 20, 1993, Steve Reeves went to Emerald Coast to purchase automobile insurance for a new truck he was leasing. He did so because he had unilaterally formed the opinion that his current truck insurance would not cover a new truck he had just leased. Mr. Reeves tendered to Emerald Coast a down payment of $175 with the understanding that he would make an additional $45 premium payment to Emerald Coast. That additional premium payment was paid by Mr. Reeves at a later date. Mr. Reeves executed a premium finance agreement to obtain financing for the remainder of his policy premium. The financing agreement showed the down payment was $120, not $175. This is the only significant discrepancy among Mr. Reeves' documents except for the wrong use of the word "premium" on the receipt and the wrong auto club being named in the acknowledgment and auto club form. Respondent executed the policy application as agent of record. The application stated that the premium was $453 plus a $25 policy fee for a total of $478. The receipt to Mr. Reeves for the down payment lists the total premium as $578, as does the cost breakdown form. The $100 difference was applied to an auto club fee. Mr. Reeves also purchased an auto club from Emerald Coast. He knew he had purchased the auto club as a condition of getting his insurance from Emerald Coast. His companion suggested going elsewhere for cheaper insurance without the auto club, but Mr. Reeves declined this suggestion because it was late in the day and he wanted to get his truck insured right then and drive it home. The auto club contract reflected a fee of $100 and bore the name of the old auto club. It was sent to the new auto club. Mr. Reeves signed an acknowledgment form which also reflected a $100 auto club fee, an "affidavit," a summary and coverage cost breakdown form, and a travel association form, but did not fully read them. Executive Insurance Company issued a policy to Mr. Reeves, which he paid on monthly for five or six months. He eventually allowed the policy to lapse for non-payment because he got in a dispute with Emerald Coast about the agency's refusal to accept payments made in its office by way of a third party check.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Department of Insurance enter a final order suspending Respondent's licenses for thirteen months for eight violations of Section 626.9541(1)(x)4. and eight violations of Section 626.621(6) F.S. RECOMMENDED this 4th day of April, 1995, at Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1995. APPENDIX TO RECOMMENDED ORDER 93-5436 The following constitute specific rulings, pursuant to Section 120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: 1-5 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 6-7 Rejected as not proven. 8-10 Subordinate to the facts as found. 11-15 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer counts. Subordinate to the facts as found. Rejected as a conclusion of law 19-29 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 30-31 Subordinate to the facts as found. 32 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. 33-38 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective count. Rejected as a conclusion of law. 43-47 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 48 The first sentence is rejected as a conclusion of law. The second sentence is accepted,. 49-50 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 51 Accepted as covered in FOF 18. 52-53 Subordinate to the facts as found. 54-55 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 56 Rejected in part as a conclusion of law. The remainder is covered in substance. 57-59 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 60 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 61-62 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 63 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 64-71 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 72 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 73-74 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected in part as a conclusion of law. Otherwise accepted. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 78-79 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 66-68. 80-83 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 86-87 Accepted in part and rejected in part upon the greater weight of the credible evidence. See FOF 20,24, 72-76. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 90-95 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected because not proven as stated. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 98-99 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 100-102 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 106-111 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as a conclusion of law. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 117-118 Rejected in part and accepted in part as covered in FOF 90-91. 119-124 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Rejected as misstating the primary party. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 123 and respective customer count. 128-130 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 133-138 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 139 Rejected as contrary to the record as a whole. 140-145 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 146-147 Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. 148-150 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Accepted as modified to more closely approximate the record as a whole. See FOF 23 and respective customer count. Rejected as a conclusion of law. 153-157 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. 158 Rejected as a conclusion of law. 159-162 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Respondent's PFOF: 1-18 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 19-20 Rejected because misleading and non-dispositive as stated. See FOF 17-20. 21 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 22-25 Unnecessary. Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. Immaterial 28-37 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 38 Accepted but not dispositive 39-42 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. 43 Rejected as not proven. 44-103 Accepted in substance, except that unnecessary, subordinate, and/or cumulative material has not been utilized, and some further explanation has been added. Some matters have been considered on the issue of credibility but not incorporated. 104 Rejected because not proven as stated. 105-108 Covered only as necessary in FOF 23-24 109-112 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. The primary party has been indicated. 113-124 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, and as stating a conclusion of law. 125-128 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized. Legal argumentation has also been excluded. 129-133 Rejected as quoting isolated, unreconciled testimony, as mere legal argument, an as stating a conclusion of law. 134-137 Accepted in substance, except that unnecessary, subordinate and/or cumulative material has not been utilized.Legal argumentation has also been excluded. COPIES FURNISHED: Michael K. McCormick, Esquire David D. Hershel, Esquire Daniel T. Gross, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Robert S. Cohen, Esquire Post Office Box 10095 Tallahassee, Florida 32302 Bill O'Neil, Esquire Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399 Dan Sumner Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact The Respondent, Jeffrey Allan Azis, is licensed by the Florida Department of Insurance as a General Lines Agent and did business as the American Automobile Insurance Agency, Inc., 603 NW 10th Avenue, Gainesville, Florida, during the period of time delineated in the Amended Administrative Complaint. The Respondent transacted the sale of motor vehicle insurance and an automobile club membership to the persons identified in Counts I, II, IV and V of the Administrative Complaint. Each of the persons identified in Counts I, II, IV and V of the Amended Administrative Complaint was charged for membership in an automobile club by the Respondent or his employees. With respect to Counts I through VI of the Amended Administrative Complaint, the following findings are made: Count I James E. Rippy, Jr., purchased automobile insurance directly from the Respondent at the American Auto Insurance Agency, Inc., Gainesville, Florida, on or about June 10, 1979. He requested the minimum coverage necessary to insure his vehicle to obtain a license tag. (Vol. 1, T-35) Mr. Rippy did not request motor club coverage and was not aware of what a motor club covered. (Vol. 1, T- 32) Sometime after purchasing insurance from the Respondent, Mr. Rippy discovered that his coverage included membership in a motor club. (Vol. 1, T- 33-34) At the Respondent's office, Mr. Rippy and his wife Norma, signed documents which included a membership application in Nation Motor Club with a membership fee of $25.00 [Respondent Exhibit 2(1)] and an application for coverage which included the following disclosure statement also signed by Mr. Rippy in addition to the application form: I understand the Nation Motor Club (NMC) membership applied for this date 6/30/79, through the American Auto Insurance Agency, Inc. is a separate item, that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included with my down payment. Applicant (signed) Mr. Rippy was not pressured by the Respondent to sign these documents and could have taken additional time to read and ask questions if he had desired. (Vol. 1, T-49-50) write and do mathematics at a basic level. Count II On or about December 4, 1979, Deborah M. Zapp purchased automobile insurance from American Auto Insurance Agency, Inc. Gainesville, Florida, from an employee of the Respondent's identified as "Judy". (Vol. 1, T-17) Ms. Zapp was unclear regarding the coverage she requested from Judy, but was sure that she would not have purchased motor club membership since she regarded it as an "extra". (Vol. 1, T-18-20) While at the agency on December 4, 1979, Ms. Zapp was asked to sign various papers which she read before signing. (Vol. a, T-20) These included a membership application in Nation Motor Club (Respondent's Exhibit 1) and an application form which contained the following disclosure statement: I understand the Nation Motor Club membership applied for this date 12/4/79, though the American Auto Insurance Agency, Inc. is a separate item, that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included in my down payment. Applicant (signed) (Respondent's Exhibit 1) Ms. Zapp was not rushed while reading the documents presented to her for signing and could have taken as much time as she wanted to go over them. (Vol. 1, T-20) However, notwithstanding reading and signing the membership application and disclosure statement regarding the motor club, Ms. Zapp did not know she had purchased motor club coverage when she left the Respondent's office. (Vol. 1, T-21) Ms. Zapp is a graduate of Sante Fe Community College and attended a university for one year following her graduation. (Vol. 1, T-16) At the hearing on February 5, 1981, she appeared bright and fairly assertive. Count III In Count III, Petitioner alleges that the Respondent in the conduct of business under his license violated various provisions of the Insurance Code. The allegations of Count III requires an application of the facts found in Counts I and II to Sections 626.9521, 626.9541(11)(a), 626.9541(5)(a), 626.9541(15)(b), and 626.621(b), Florida Statutes. Count III is duplicated by Count VI and calls for legal conclusions which will be discussed in the conclusions of law section of this Recommended Order. Count IV The deposition of Charles D. Smith was admitted into evidence as Petitioner's Exhibit 10. Mr. Smith currently holds an insurance license and has a bachelor's degree. (Petitioner's Exhibit 10 at 4) Mr. Smith purchased automobile insurance from the American Auto Insurance Agency, Inc. on or about May 1, 1980 (Petitioner's Exhibit 10 at Appendix) Mr. Smith thought he was purchasing only Personal Injury Protection (PIP). (Petitioner's Exhibit 10 at 4) In order to get an auto tag, Mr. Smith requested the minimum coverage. (Petitioner's Exhibit 10 at 5) Like Mr. Rippy and Ms. Zapp, Mr. Smith signed an application for motor club membership and disclosure statement stating he understood he was purchasing motor club coverage at the time of his application for insurance. (Petitioner's Exhibit 10 at 7) Mr. Smith intended to purchase the minimum amount of insurance at the lowest price but did not require of either the Respondent or his employees whether motor club coverage was included in the price quoted. (Petitioner's Exhibit 10 at 8,9) Neither the Respondent nor his employees orally explained motor club coverage to Mr. Smith. At the bottom of Mr. Smith's insurance application the following disclosure statement was signed by him: I understand the interstate membership applied for this date 5/1/79, through the American Auto Insurance Agency, Inc. is a separate item that pays in addition to my auto insurance policy. I understand the additional charge for this coverage is included in my down payment. Applicant (signed) (Petitioner's Exhibit 10 at Appendix) Mr. Smith's decision to purchase from the Respondent was based solely on cost and not on any information provided by the Respondent or his employees. (Petitioner's Exhibit 10 at 13). Count V The deposition of Richard B. Divins was admitted into evidence as Petitioner's Exhibit 11. Mr. Divins' testimony parallels the other witnesses in that he also signed an application for motor club membership and a disclosure statement acknowledging the purchase and price. (Petitioner's Exhibit 11 at 11, 15, 16, 26) He purchased insurance and motor club coverage on July 13, 1979, from an employee of the Respondent at American Auto Insurance Agency, Inc., 603 NW 10th Avenue, Gainesville, Florida. (Petitioner's Exhibit 11 at 4,5) Mr. Divins thought he was purchasing only minimum liability insurance and was unaware that he had also purchased motor club coverage. (Petitioner's Exhibit 11 at 7,8) Mr. Divins is a senior in the School of Architecture at the University of Florida. (Petitioner's Exhibit 11 at 4. Count VI In Count VI, Petitioner alleges that the Respondent in the conduct of business under his license violated various provisions of the Insurance Code. Count VI requires an application of the facts found in Counts IV and V to Sections 626.9521, 626.9541 (11)(a), 626.9541(5)(a), 626.9541(15)(b) and 626.621(b), Florida Statutes. Count VI duplicates Count III and calls for legal conclusions and will therefore, be discussed in the legal conclusion section of this Recommended Order. Assuming that the witnesses who testified at the final hearing were representative of the Respondent's customers, his business was generally directed at persons who desired minimum automobile insurance coverage at the lowest possible price. (Vol. 1, T-17 and 31, Petitioner's Exhibit 11 at 7-8, Petitioner's Exhibit 10 at 8,9) An economic incentive existed to sell motor club memberships among agents whose customers desired minimum coverage due to the high commission rates associated with motor club policies. (Petitioner's Exhibit 9, Vol. 1, T-94-95, 97) Mr. Andrew Beverly was qualified as an expert witness on insurance matters and testified on behalf of the Respondent. (Vol. 1, T-29) Mr. Beverly owns the Florida Insurance School, serves as a consultant for several hundred insurance agencies and is a member of the Advisory Committee on Insurance Education of the Florida Insurance Department. (Vol. 1, T-78-79) A study by Mr. Beverly completed in 1979 for the Professional Insurance Agents Association of Florida demonstrated that insurance agents have been contacted by claimants or attorneys for claimants for failure to provide coverage or what is known in the industry as "errors and omissions." (Vol. 1, T-81-82) The Respondent is the first agent that Mr. Beverly has ever encountered who had difficulties arising from selling too much coverage. (Vol. 1, T-82-83) Mr. Beverly's conclusion concerning the value of motor club coverage and supplemental coverage generally is shared by Dr. Ronald T. Anderson, a colleague of Mr. Beverly's on the national faculty of the Society of Certified Insurance Counselors and an Insurance Commissioner of Colorado. (Vol. 1, T-83-85) In particular regard to this case, Mr. Beverly examined the application and disclosure statement signed by the witnesses for the Petitioner and responded to questions from counsel as follows: Q. Now, these documents -- if you would just take a look through those, you'll see in Respondent's Exhibits 3 and 4, I believe -- Respondent's Exhibit 1, for example, where in boldface type, the applicant for the insurance signs a statement regarding Motor Club. is that a common practice in the industry? A. It's a practice that is becoming extremely common with the careful and appropriate insurance agents to have a thorough documentation of each coverage, accepted or rejected by an injured. Q. And why is that? A. Partially because of the high incidents (sic) of Errors and Omissions insurance, claims coming in against insurance agents, and then partly so that the client himself will be completely aware of what it is that he's throwing away when he rejects a coverage so he'll know he hasn't bought that. Q. Does the type of procedure meet the standards of the industry in Florida for fire and casualty agents? A. It exceeds them. Q. Okay. What else, in your opinion, could Mr. Azis do in this type of situation other than have him sign the statements and advise him as he has testified to. A. Mr. Woods, there's nothing an insurance agent could possibly do, in my opinion, beyond explaining the coverage to the insured and then having him sign in his own handwriting. I can't believe that there is anything else that he could do. He's being as cautious as he possibly can. Q. You're not aware of any other practices or procedures that might even be better than this? A. I can't think of anything that you could do that could add to this great amount of documentation of the insurers election of what they purchased. Q. In your experience, is it common for people who have bought insurance to come back and question coverages? A. Yes, sir, it happens all the time. I have more than a hundred insurance agencies under contract at this hour, and I am constantly receiving long distance calls from agents: What do you do with this? What's the answer to it? Q. So, that's why they require the need for this documentation? A. Yes, sir. (Vol. 1, T-85-87) Mr. Beverly's testimony was not rebutted by the Petitioner and is accepted as credible. Although Respondent's license as a general lines agent in Florida expired as of August 30, 1980, he retains eligibility to become licensed for a period of two years from the date of licensure. Section 626.221(3)(f), Florida Statutes. (Petitioner's Exhibit 8)
Recommendation It is therefore RECOMMENDED that the Amended Administrative Complaint filed against the licensee, Jeffrey Allan Azis, be dismissed. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 3rd day of June, 1981. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 1981. COPIES FURNISHED: Richard P. Harris, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 David Yon, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 =================================================================
Findings Of Fact THE INSURANCE AGENCY At all times material to the instant case, Lloyd Eldo Register was a licensed insurance agent in the State of Florida, licensed as an Ordinary Life, including Disability, General Lines and Disability Agent. The Respondent, Lloyd Eldo Register (hereinafter Register) at all times material herein, was the president, owner, and registered agent for Friendly Auto Insurance, Incorporated (hereinafter referred to as Friendly Auto). In his capacity as president and registered agent, the Respondent, Register, was responsible for and exercised supervision and control over the employees and sales agents employed by Friendly Auto. At all times material herein, Respondent, Shirley Jean Hopkins was a licensed insurance agent and was employed by Friendly Auto to sell various types of auto insurance and coverages. Specifically, Shirley Hopkins was licensed as an Ordinary Life, including Disability Agent, General Lines Agent, and an Independent Adjuster. As an employee of Friendly Auto, she worked under the supervision and control of the Respondent, Lloyd Register. At the time of the various transactions which are the subject of this administrative proceeding, Florida law required personal injury protection (hereinafter PIP) insurance coverage for each owner of a motor vehicle in Florida. (See Section 627.733 and 627.736, Florida Statutes (1981)). Because it was necessary to show proof of such PIP coverage in order to purchase a license tag for an automobile, this type of insurance was and is commonly referred to as "tag insurance." Friendly Auto offered and sold PIP or tag insurance as well as other types of insurance, including motor club policies, which included as its primary benefit an accidental death benefit. The accidental death benefit (hereinafter referred to as ADB) which was sold by Friendly Auto, was one of the benefits under a motor club policy very similar to that sold by AAA (American Automobile Association). The motor club policies also included such benefits as theft reward, hit and run services, rental car discounts, credit card services, vacation travel arrangements, trip routing, and lost baggage service. The amount of premium paid and type of plan applied for determined the benefits to be received. During the period of the transactions in this action, the Respondent, Lloyd Register, had established a policy of not selling PIP alone. Customers were required to buy PIP coupled with a motor club policy. The reason for this policy was that the commission on minimum PIP coverage was too low to justify the cost of selling it alone. The commission on the motor club policies was as high as 80 percent of the premium charged. The sales agents were instructed by Mr. Register to not sell a customer PIP unless they also purchased the ADB policy. This policy was followed by the sales agents during 1981 and the first eight months of 1982. Customers, upon entering the Friendly Auto office, would indicate the kind of insurance they wanted and they were then given a quote by a sales agent for the coverage requested plus ADB. The cost of the ADD or ADB policy was added to the cost of the coverage requested without informing the purchaser and a single quote was given to the customer. If a customer inquired about the ADB coverage, they were told it was part of the coverage and that the requested coverage could not be purchased without the accidental death benefit. The customers were not informed by the salesperson nor the forms used in the transaction that they were being charged a separate and distinct premium for the ADB or that they could reject the ADB coverage. The basic PIP coverage also included a death benefit Although the Respondent, Lloyd Register, testified that in order to make a profit, it was necessary to sell the ADB with the minimum PIP coverage, the ADB was sold inn the same manner to persons purchasing PIP, as well as liability and collision coverage. The premium for the ADB ranged from $15 to $25. The decision as to which premium to charge was made by the employee of Friendly Auto and was not discussed with the customer. The sales agents had been instructed by the Respondent, Lloyd Register, to base premium charged for ADB on the customer's driving record. However, the premium charged only affected what motor club benefits would be received. No reason was given as to what effect a person's driving record had upon the premium or benefits or risk involved. After the customer was given the quote and agreed to purchase, the sales agent then filled out and gave to the customer several documents to be signed and initialed. The places to be initialed were marked by the sales agent with a red square, rubber stamped onto the appropriate points of the forms by the sales agent, and a check mark or "X" was placed next to where they were to sign. One of the documents was an application for the motor club or ADB. Respondents contend that by signing the application and the acknowledgement at the bottom of the liability coverages rejection form, the customers were made aware that they were purchasing a separate coverage for ADB. However, when inquiry was made by customers about the ADB, they were told it was part of the coverage and had to be purchased. They were not told a separate premium was involved or that it was a separate policy. The majority of the complaining witnesses in this case were not even aware they had purchased the motor club or ADB. Most of the complaining witnesses admitted they did not read the documents they were asked to sign. The sales agents did not pressure them to sign or hurry them in any way that prevented them from reading the documents. Most of the complaining witnesses had limited education, very little knowledge of insurance and basically relied upon the sales agent to give them the coverage they requested. No complaining witness requested ADB or motor club coverage. Anne Zugelder, office manager for Friendly Auto, and Shirley Hopkins testified generally regarding the procedures used, but neither person testified about the facts of the specific transactions in this case. Shortly after January 18, 1982, Mr. John A. Hoback, an investigator for the Department of Insurance, went to the offices of Friendly Auto where he reviewed approximately 35 to 40 files relating to customers who had purchased insurance from Friendly Auto. He discovered that many of these files contained the original policy for ADB coverage; the identification card on PIP coverage; and the original policy for PIP coverage. Some of these policies had been in the files for four, five, and six months. Specifically, Mr. Hoback examined the file of James Richard Johns and found the original copy of the auto policy issued by Fortune and the ADD policy issued by American Travelers Association. The auto policy had been issued on June 4, 1981. Mr. Hoback examined the file of Charles Meadows and found that the Fortune PIP policy had been issued on June 2, 1981, and the original was still in the file. The original ADD policy issued by American Travelers was also in the file. In the file of Phillip Johnson, Mr. Hoback found the original copy of the Fortune auto policy issued to Mr. Johnson on June 1, 1981, and also found the original ADD policy in the file. The file relating to Ruben Simpson was also examined and the original copies of the Fortune auto policy and the ADD policy were still in the file. These original policies were supposed to have been sent to the insureds by the agency upon receipt from the insurance company. The deposition of Mr. James T. Harrison, Jr., was admitted and considered. However, because Mr. Harrison's opinion was based upon incomplete facts in terms of the actual sales procedures used, his opinion relating to Respondents' meeting the standard of care in the industry was given no weight. FORMS In each of the purchases involved in this action, Friendly Auto's agents used several preprinted forms as part of each sale. These forms include primarily: (1) a quote sheet, (2) rejection of liability coverages form, (3) prenumbered receipts, and (4) motor club or ADB application. QUOTE SHEET The quote sheet is a small yellow form with spaces for entering information about the insured and the cars to be insured. The quote sheet in the Section titled "Type of Coverage" reflects "PIP, LIAB, COMP, COLL". These terms refer to personal injury protection, liability, comprehensive, and collision. Nowhere on the form does ADB or motor club coverage appear. There is a space at the bottom of the form for computations. LIABILITY COVERAGES REJECTION FORM The Rejection of Liability Coverages form is divided into four main parts. The top part of the form informed the customer that they had the right to purchase liability coverage and that they can also reject liability coverage. If the customer desired to reject liability coverage, there was a signature block where the customer signed rejecting such coverage. The second portion of the form dealt with PIP and had optional blocks to be checked in order to reflect the deductible desired. The deductible ranged from $250 to $8,000. There were also optional blocks to select the type of PIP coverage and at the bottom of this section was again a signature block. The third section dealt with uninsured motorist coverage and had a block where the customer entered the limits of coverage desired if they were purchasing uninsured motorist coverage. There was a block to be checked if the customer was rejecting uninsured motorist coverage. At the bottom of this section, was again a signature block. The last section referred to an accidental death benefit and contained the following language: I UNDERSTAND THE ACCIDENTAL DEATH BENEFIT THROUGH MY NATION MEMBERSHIP IS A SEPARATE ITEM, THAT PAYS IN ADDITION TO MY AUTO INSURANCE POLICY. I UNDERSTAND THE ADDITIONAL CHARGE FOR THIS COVERAGE IS INCLUDED IN WITH MY DOWN PAYMENT. The above language was followed only by a signature block. There were no blocks to be checked or initialed rejecting or accepting the accidental death benefit. (this statement is referred to hereafter as the acknowledgement.) The Rejection of Liability Coverages form was used in all sales of automobile insurance at Friendly Auto. The reference in the acknowledgement above to "MY NATION MEMBERSHIP" refers to a company which provided an ADB policy prior to the time Friendly Auto began using American Travelers Association. Once Friendly Auto decided to stop using the Nation Company, the Respondent, Register, elected not to reprint the form. He also considered, but did not feel it necessary, to have the sales agents mark through Nation and pencil in American Travelers Association. Mr. Register felt that the American Travelers Association policy could be interpreted to be a "Nation membership" because it covered the insured anywhere in the nation. However, Mr. Register could not specifically recall having instructed his sales agents to give this explanation to the customers. Prior to July or August of 1982, Mr. Register had not instructed his employees to explain that the accidental death benefit referred to in the form was optional. Beginning in July or August, 1982, Mr. Register instructed his sales agents to begin telling customers the ADB was optional. This change occurred about the same time the law relating to the $8,000 deductible PIP changed and was due in part to "heat" which Friendly Auto had been getting from the Department of Insurance. RECEIPT The receipt form contained basic information blocks for date, amount, received from, and signature block for the sales agent of Friendly Auto. There was a line preceded by "In re:" which was used to reflect the coverages for which the premium was being paid. A copy of the receipt was kept in the Friendly Auto file on each customer. AMERICAN TRAVELERS ASSOCIATION APPLICATION The last of the four forms was a motor club application for "Travel/Accident Benefits including Accidental Death and Dismemberment Coverage." The form contained spaces for the name and address of the applicant and name and address of their beneficiary. Just above the signature block of the applicant, were spaces for the effective date, the expiration date, the plan, amount of ADD coverage, and the fee. (See Respondent's Exhibit 24.) An almost identical form was used when the ADB policy was written with Southern Management Company. THE SALES Each count of the First Amended Administrative Complaint against Respondent, Lloyd Register, relates to a sale to a particular customer. Several of these same transactions were also the subject of the Administrative Complaint against the Respondent, Shirley Hopkins. The following facts are found as to both the counts of the First Amended Administrative Complaint against Lloyd Register and the Administrative Complaint against Respondent Shirley Hopkins: (the count number refers to the First Amended Administrative Complaint in Case No. 82-2048). COUNT I SALE TO BRENDA CONNER On October 9, 1981, Brenda Conner went to Friendly Auto to purchase PIP insurance. She informed the Respondent, Shirley Hopkins, that she wanted to purchase PIP only. No other coverages were explained to her, but there was some discussion about who she wanted as her beneficiary. She signed the documents she was requested to sign but did not read them. She thought she had paid for PIP only. Her receipt from Friendly Auto was for $37.00 and listed only PIP as the only coverage purchased. The receipt was signed by the Respondent, Shirley Hopkins. She never received a policy from American Travelers Association. She was charged $15.00 as part of the $37.00 premium for the American Travelers Association ADB policy. She received her policy for the PIP coverage. COUNT II SALE TO BRUCE T. EDWARDS On September 15, 1981, Bruce T. Edwards purchased insurance from Friendly Auto. Mr. Edwards was sold the insurance by Respondent, Shirley Hopkins. The receipt received by Mr. Edwards reflected a total premium of $43.00 and listed only "PIP" as the coverage purchased. Mr. Edwards was unaware that as part of the $43.00 premium, he purchased accidental death and dismemberment coverage (ADB) from American Travelers Association. The premium for the ADB was $20.00. Mr. Edwards signed but did not fill out the yellow ADB application form. Shirley Hopkins explained the PIP coverage but made no mention that he was purchasing a separate ADB insurance policy. He did not read the documents he signed, but merely initialed and signed the blocks Ms. Hopkins marked. He did not request ADB coverage and thought he was getting PIP only. He had no intention of buying any insurance other than PIP. Prior to Mr. Edwards going to Friendly Auto, his wife had called and obtained a quote of $43.00 for tag insurance. She specifically told the person on the phone that her husband wanted the cheapest coverage necessary to get a tag. COUNT III SALE TO PATRICIA EDWARDS On or about August 28, 1981, Patricia Edwards purchased insurance from Friendly Auto through its sales agent Shirley Hopkins. Patricia Edwards first called Friendly Auto and requested a quote for PIP coverage only. She also gave the person all the necessary information over the phone for the needed documentation. The person who actually went to Friendly Auto and purchased the insurance and signed the documents was Bruce Edwards, Patricia Edwards' husband. Patricia Edwards requested only minimum coverage needed to get her tag. She was given a quote of $37.00. The receipt given by Friendly Auto was signed by the Respondent, Shirley Hopkins, and reflected a $37.00 payment for PIP coverage only. The total payment of $37.00 included a $15.00 payment for an Accidental Death and Dismemberment (ADB) and travel benefits with Southern Management Company. Mr. Edwards signed the Accidental Death and Dismemberment application as well as the accident death benefits acknowledgement at the bottom of the Rejection of Liability Coverages form. The acknowledgement referred to "Accidental Death Benefit Through My Nation Membership" and not to an "Accidental Death and Dismemberment" coverage with Southern Management Company. (See Respondent's Exhibit 5.) Neither Bruce Edwards nor Patricia Edwards requested Accidental Death and Dismemberment coverage and neither was aware that such coverage had been purchased. COUNT IV SALE TO ELIZABETH JONES On September 1, 1981, Elizabeth Jones purchased insurance from Friendly Auto. She first called and asked for a quote for PIP and liability insurance for a `71 Oldsmobile Delta 88. She was given a quote of $42.00 for PIP and liability. Ms. Jones then went to the office of Friendly Auto where she first talked with two different men and then Respondent, Shirley Hopkins. Shirley Hopkins informed her the premium would be $63.00 rather than $42.00. Ms. Jones had obtained quotes from several agencies for the PIP and liability in an attempt to obtain the needed coverage for no more than the 560.00 which she had available for insurance. Ms. Jones has a fifth grade education and had never purchased insurance before. She specifically told the sales people at Friendly Auto that she did not understand insurance. Because the cost was $63.00 rather than $42.00, Ms. Jones had to return home to obtain additional money. When she returned, Ms. Hopkins had the forms prepared and had marked with an the places where she needed to sign. The receipt from Friendly Auto reflects that Ms. Jones purchased "Liab. PIP. ADB" for a premium of $63.00. Ms. Jones signed the accidental death and dismemberment coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverage form. Prior to returning home, Ms. Jones was told by one of the sales agents that she needed the accidental death benefit that could be willed to her daughter. Ms. Jones asked if that was included in the liability and PIP and did not recall whether the person replied or not. She was not aware nor did she understand that she was purchasing a separate travel and accidental death benefit policy and paying a separate premium. She did not read the documents before she signed them and relied upon Ms. Hopkins and the other two agents to give her the coverage she had requested. Ms. Jones did not receive her ADB policy. COUNT V SALE TO BARBARA BARBATO On September 21, 1981, Barbara Barbato purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto agency. Before going to the agency, Ms. Barbato called and obtained a quote for "full coverage" on her new Camero. She spoke with a gentleman named Mike. When she arrived at the agency, she informed Ms. Hopkins that she wanted full coverage on her Camero. Ms. Hopkins did not explain the various coverages to her. Ms. Barbato paid for the insurance and signed the documents without reading them. The Friendly Auto receipt received by Ms. Barbato was signed by Shirley Hopkins and reflected a payment of $138.00 for "Liab. and Coll. and Comp.". Ms. Barbato signed the ADD coverage application and the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. She named her mother as beneficiary of the accidental death benefit and understood that benefit to be part of the auto insurance she was purchasing. She was not aware the accidental death benefit was separate and extra. She did not receive a policy for the ADB coverage with American Travelers Association. COUNT VI Count VI was voluntarily dismissed by Petitioner and no evidence was presented as to Count VI. COUNT VII Mary Beth Jones did not appear and testify and no other testimony was presented as to Count VII. COUNT VIII SALE TO JOANN BROOKS On September 1, 1981, Joann Brooks purchased insurance from Respondent, Shirley Hopkins, at the Friendly Auto Agency. Ms. Brooks is a farm laborer who completed the eleventh grade. Upon arriving at Friendly Auto, Ms. Brooks informed Ms. Hopkins that she wanted full coverage on her automobile. Ms. Brooks understood full coverage to include collision, liability, and PIP and she had no intention of purchasing any type of coverage other than these. Although Ms. Brooks received some explanation of the accidental death and dismemberment coverage, she signed the accidental death application form and named herself as beneficiary. Ms. Brooks thought the death benefit was part of the full coverage she requested. This was the first time she had purchased insurance and did not understand insurance matters. Ms. Brooks signed and initialed the documents she was given by Ms. Hopkins. She did not read them. The receipt Ms. Brooks received from Friendly Auto was signed by Shirley Hopkins and reflected that she paid $86.00 for "Liab. & Comp. & Coll.". COUNT IX SALE TO RUBEN SIMPSON On May 7, 1981, Ruben Simpson purchased auto insurance from Friendly Auto. Mr. Simpson is from Jamaica and does not read because of his very limited education. When he arrived at Friendly Auto, Mr. Simpson informed the sales agent that he wanted to buy PIP insurance in order to get his tag. Mr. Simpson could not recall the full details of the discussion but remembered giving them his mother's name as the person who would receive money if he were killed in an accident. Mr. Simpson signed his name where he was shown to sign. When he left the agency, Mr. Simpson believed he had purchased only the PIP insurance required to get his tag. Mr. Simpson signed the Southern Management Company Accidental Death and Dismemberment application and received a copy of it when he left the agency. (See Respondent's Exhibit No. 13.) The receipt given to Mr. Simpson at Friendly Auto reflects he paid $44.50 for "PIP ADB". The premium for the ADB was $22.50. At no time did Mr. Simpson request or agree to purchase anything other than tag insurance. Mr. Simpson signed the acknowledgement of the ADB at the bottom of the Rejection of Liability Coverages form, but was unaware that he was paying a separate premium for a policy which was neither PIP nor required to obtain his tag. COUNT X Prior to taking evidence in the formal hearing, Petitioner voluntarily dismissed Count X of the First Amended Administrative Complaint. No evidence was presented in support of Count X. COUNT XI On September 3, 1981, Mr. Ellison J. Eady, Jr., purchased insurance from Friendly Auto. Mr. Eady informed the sales agent at Friendly Auto that he wanted the necessary minimum insurance to get a tag for a new car he had purchased. The agent asked Mr. Eady some brief questions about his driving record and then gave him a quote for the price of the insurance he requested. The agent did not suggest any coverages in addition to what Mr. Eady had requested, but included the cost of an ADB policy in the quote he gave Mr. Eady. Mr. Eady agreed to the price quoted, and the agent then brought out several forms for Mr. Eady to fill out and sign. All Mr. Eady wanted was insurance for his tag and to his knowledge, that was all he purchased. At the time he purchased his insurance, Mr. Eady signed and received a copy of the American Travelers Association application form. (See Petitioner's Exhibit 2.) He did not ask any questions about the form. Mr. Eady thought that the American Travelers Association coverage was part of the insurance he was purchasing. However, the agent did not specifically tell him it was part of the insurance he was purchasing. At the time he purchased his insurance, Mr. Eady already had a motor club policy with Montgomery Ward which provided similar services to the American Travelers coverage. Mr. Eady did not read the various forms he signed. The agent gave him a brief explanation of what each form was. Mr. Eady just relied upon what the agent told him. Mr. Eady had no knowledge of Florida insurance. When he left Friendly Auto, he thought the only thing he had purchased was the minimum required by the state. One of the documents he signed was the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. (See Respondent's Exhibit 14.) Mr. Eady already had separate life insurance coverage. The agent did not explain the accidental death benefit to him. Mr. Eady did not request any coverage other than the state minimum to get his tag. The receipt given Mr. Eady reflected an $82.00 payment for "PIP. . . ADB. . . C&C". (See Respondent's Exhibit 14.) Fifteen dollars of the premium paid by Mr. Eady was for the American Travelers Association motor club policy. COUNT XII SALE TO MARY GOOD On March 17, 1981, Mr. Edward T. Good and his wife Mary Good purchased insurance at Friendly Auto. Mr. Good informed the sales agent at Friendly Auto that he wanted the cheapest insurance required by the state to get his license tag. The agent explained to him the other auto coverages he could obtain, but Mr. Good insisted that he only wanted minimum tag insurance. He was then given a lump sum quote by the agent. One of the forms Mr. Good signed was an ADB application for Southern Management Company. The agent explained that this would pay he or his wife money if they were killed in an auto accident. The agent did not explain that there was an extra charge for this benefit or that it was optional. Mr. and Mrs. Good understood the ADB coverage to be part of the PIP coverage they had requested. The receipt they were given at Friendly Auto reflected a payment of $37.00 but did not list the coverages purchased. (See Respondents' Exhibit 1.) When Mr. and Mrs. Good left Friendly Auto, they thought they had purchased only tag insurance. However, $15.00 of the $37.00 premium paid was for the ADB policy with Southern Management Company. COUNT XIII SALE TO ALICE LEAR DICKSON On or about September 3, 1981, Alice Lear Dickson (formerly Alice J. Lear) purchased auto insurance from a sales agent of Friendly Auto. Ms. Dickson called Friendly Auto to obtain quotes for full coverage for a newer automobile and minimum coverage for an older one. After obtaining these quotes, Ms. Dickson went to the office of Friendly Auto where she informed the sales agent on duty that she wanted full coverage insurance on two autos. She informed the sales agent she wanted fire, theft, windstorm, collision, liability, and uninsured motorist coverage. The sales agent also suggested a coverage for such things as towing charges. Ms. Dickson informed the agent she did not want that coverage because she already was a member of an auto club. In signing the various documents to purchase the insurance, Ms. Dickson was asked to sign a document designating a beneficiary of a life insurance benefit. She did not want this life insurance coverage, but was told by the sales agent that it was required and went along with her automobile policy and had to be purchased. In reliance upon this representation, Ms. Dickson accepted the coverage. Ms. Dickson paid a total premium of $144.03 for collision, liability, PIP, and accidental death benefit. Her receipt from Friendly Auto reflected the $144.03 was for "C&C, LIAB., PIP, ADB." (See Respondents' Exhibit 11.) The accidental death benefit purchased by Ms. Dickson was one of the travel and accident benefits provided in the American Travelers Association policy which cost Ms. Dickson $15 of the $144.03 premium she had paid. At the bottom of a Rejection of Liability Coverage form used by Friendly Auto, Ms. Dickson signed the acknowledgement relating to the ADB, but she was not aware that she could reject this coverage or that it was part of a separate motor club policy. Ms. Dickson did not desire to purchase a motor club policy and would not have purchased the motor club policy had she been aware that it was not required as an included coverage with the PIP coverage. COUNT XIV Prior to the taking of evidence at the formal hearing, the Petitioner voluntarily dismissed Count XIV of the First Amended Administrative Complaint and presented no testimony in support of that Count. COUNT XV SALE TO CHARLES MEADOWS On June 2, 1982, Charles Meadows purchased auto insurance from Friendly Auto. Mr. Meadows went to Friendly Auto to purchase PIP insurance, and upon arriving at Friendly Auto's office, he informed the sales agent he wanted only PIP insurance. When he left the Friendly Auto office, Mr. Meadows thought he had only purchased PIP. At the time he purchased his insurance, Mr. Meadows signed an American Travelers Association application. (See Respondents' Exhibit 2.) The only explanation he was given by the sales agent regarding this coverage was that if he were killed, someone would receive some money and he needed to designate who that would be. The amount of the fee charged for the American Travelers Association policy was not reflected in the appropriate block on the application form. He was not given any explanation regarding the price of this coverage. In purchasing the insurance, Mr. Meadows initialed and signed several forms. He did not read them before signing. Mr. Meadows does not read and write very well and has a problem understanding insurance policies. He completed the seventh grade in school. One of the forms signed by Mr. Meadows was the acknowledgement relating to the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The quote sheet used to give Mr. Meadows his quote of $48.00 makes no reference to any coverage other than PIP. PIP is circled on the form. The receipt Mr. Meadows received from Friendly Auto reflects a $48.00 premium for "PIP. . .ADB". The cost of the PIP coverage was $23.00 and the cost of the American Travelers Association policy was $25.00. Mr. Meadows never received a policy or certificate informing him of the coverages under the American Travelers Association policy. Mr. Meadows never intended to purchase any coverage other than PIP to obtain his tag. He never requested any coverage other than PIP. COUNT XVI SALE TO PHILLIP JOHNSON On July 1, 1982, Mr. Phillip Johnson purchased auto insurance from a sales agent at Friendly Auto. Mr. Johnson went to Friendly Auto to purchase tag insurance. He informed the sales agent that he wanted just the PIP or tag insurance. The agent then prepared the necessary forms and Mr. Johnson initialed and signed the documents where he was instructed by the agent to sign and initial. No explanation of the coverages was given by the agent. Mr. Johnson was asked to name a beneficiary and was given a pink copy of an American Travelers Association application which he had signed. That form reflects a $20.00 fee was charged for the American Travelers Association policy. The receipt which Mr. Meadows received at Friendly Auto reflects a $42.00 premium paid for "8,000 PIP". (See Respondents' Exhibit 3.) Mr. Johnson also signed the accidental death benefit acknowledgement at the bottom of the Rejection of Liability Coverages form. Mr. Johnson felt when he left Friendly Auto that he had purchased only PIP insurance. Mr. Johnson completed the ninth grade in school and has difficulty reading and writing. COUNT XVII SALE TO JAMES RICHARD JOHNS On June 4, 1982, Mr. James Richard Johns purchased insurance from the Respondent, Shirley Hopkins at Friendly Auto. Mr. Johns told Shirley Hopkins he would like to purchase PIP insurance in order to get his tag for his car. Ms. Hopkins then gave him a quote for PIP and also a quote for liability coverage and she then gave him several forms to initial and sign. She gave no explanation regarding the forms and he did not read them before signing. Although Mr. Johns thought he was only purchasing PIP insurance, he was, in fact, sold PIP with an $8,000 deductible plus an American Travelers Association policy. The cost of the PIP coverage was $24.00 and the cost of the American Travelers Association policy was $25.00. Mr. Johns signed the American Travelers Association application and was given a copy of it. He also designated a beneficiary. At the time of purchase, Mr. Johns understood that the death benefit was part of the PIP insurance he was purchasing. No explanation was given by Ms. Hopkins regarding the American Travelers Association policy or coverage. Mr. Johns also signed the acknowledgement of the accidental death benefit at the bottom of the Rejection of Liability Coverages form. The receipt he received from Friendly Auto was for $50.23 paid for "PIP. . . ADB. . . 123(illegible)". When Mr. Johns left the Friendly Auto Agency, he felt he had purchased only PIP insurance. He did not receive an American Travelers Association policy and did not receive his Fortune Insurance policy for his PIP insurance until December of 1982 or January, 1983.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Insurance enter a Final Order finding Respondent, Lloyd Register, guilty of the violations as set forth above and that his insurance licenses be suspended for a period of one (1) year. That the Department of Insurance enter a Final Order finding Respondent, Shirley Hopkins, guilty of the violations as set forth above and that her license be suspended for a period of 90 days and that she be required to pay a civil penalty of $500. DONE and ENTERED this 1st day of August, 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire 1030 East Lafayette Street Suite 112 Tallahassee, Florida 32301 Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32301
Findings Of Fact The Respondent, Mary Lou Finn, is licensed by Petitioner as a general lines insurance agent. During the period of May 5, 1979 until November 1, 1980, she was the agent of record at the Ocala, Florida, office of University Insurance. During that time she held a 220 license and was the only agent responsible for that office. From April 1979 until November 1, 1980 Mr. Robert Vittitoe was the manager and owner of the Ocala office. Through an arrangement, which Respondent described as a consulting contract, she supervised the operation of the office. She also had a consulting contract but no supervising duties with University Insurance offices in Lake City and Tallahassee. In the course of her supervision and consulting advice for the University Insurance offices Ms. Finn issued a blizzard of memoranda on the operation of those offices. One of the memoranda which was received at the Ocala office on August 27, 1979 gave instructions concerning the sale of automobile motor club memberships. It states in pertinent part: The new yellow I.D. cards are for the following reason--When you write PIP only and a club, do not tell the insured he has towing and road service. Simply quote him the total rate, get all required signatures and TYPE them the yellow ID. card. When PIP policy and club policy [come] in we WILL NOT MAIL. We will keep their policies in their file. This will save on cancelled clubs when insured sees everything, plus it will save loads of postage. Remember - DO NOT MENTION motor club, towing and road svc., etc. They do not have to take the club anymore. Simply say the coverage they want (PIP) is $44.00 or whatever get signatures, type them their card and say good-bye. (Get money) This memorandum was shortly followed by one dated September 2, 1979, which said in part: In Gainesville we are not mailing policies. Instead having insured pick up. We will try it & see. Last week I sent a memo to you to explain. Had some calls that you didn't understand memo & thought I meant keep policies in file NO! No one has enough room in file cases for that. It is to save on postage. If you want to save yourselves money give it a try Re: The motor club, don't overemphasize the towing and road svc. We have too many claims. Explain all the coverages and emphasize the bail bond, legal fees, trip routing etc. Subsequently by a memorandum dated September 26, 1979, Respondent sent further instructions regarding motor clubs. The memorandum stated: When you write a motor club with other coverages and finance, be sure to list premiums separately on finance contract and get all signatures incl. club app. Make sure that the ins. knows all coverages on club. We are having a lot of towing claims and company is complaining so go into detail on other coverages as well. The last memorandum concerning this issue sent from Respondent to the Ocala office was written in the early part of 1980. It says: Please use the small statements for insureds to sign in addition to motor club app. so they are well aware of what they are purchasing. Will protect you too. Make sure they understand all coverages, BI, PD, PIP, COLL, COMP, UM, motor club if written & explain all deductibles. VERY IMPORTANT. 3 weeks after they leave office they won't know what they have, so be explicit. Get all signatures required especially motor club apps. & the statement that insured understands they have motor club & its [sic] a separate charge. The foregoing memoranda were sent by Ms. Finn with the intent that the sales personnel at the Ocala office follow her instructions contained therein. I find that the memorandum received on August 27, 1979 constituted an instruction to misrepresent the full nature of the insurance purchase transaction between the Ocala office and its customers. Ms. Finn's instructions were that "when PIP policy and club policy [come] in we will not mail. We will keep their policies in their file. This will save on cancelled clubs when the insureds see everything, plus it will save loads of postage." The implication is clear that the insureds are not to know that they have purchased automobile club coverage so they will not cancel it. This finding is supported by the following instruction: "Remember - DO NOT MENTION motor club, towing and road svc., etc. They do not have to take the club anymore. Simply say the coverage they want (PIP) is $44.00...". The three later memoranda in varying degrees countermanded the instructions of the August 27 memo. As soon as September 2, 1979 Respondent instructed the Ocala office to explain all the coverages and emphasize the bail bond, legal fees and trip routing features of the motor club memberships. If the sales people followed this directive they would necessarily inform the applicants that they were purchasing motor club memberships. The taint of the August 27 memorandum which arises from the instruction not to mail out insurance policies was eliminated by the September 2, 1979 memorandum which suggests that rather than mailing policies, the office request the insureds to pick the policies up. I find by September 26, 1979 Respondent was no longer instructing the Ocala office to "slide" motor clubs. 2/ Her memorandum of that date required listing the motor club fee separately on the premium finance agreements signed by the applicants. That instruction is incompatible with sliding. By the time her memorandum of early 1980 was written, Ms. Finn was instructing the Ocala office to add additional statements to insure that the insured knew they were purchasing motor club memberships and it was a separate charge. At the final hearing Ms. Finn gave testimony in an attempt to resolve the contradiction between the August 27, 1979 memorandum and the subsequent three memoranda received into evidence. She stated she intended by the August 27, 1979 memorandum to have the sales personnel only de-emphasize the towing and road service portion of the motor club memberships being purchased. While her explanation coincides directly with the instructions in the September 2, 1979 memorandum, it does not adequately explain the clear language of the instructions received in Ocala on August 27, 1979. Ms. Finn's testimony on that point is not accepted as credible. This finding rests in part on the evasiveness and demeanor the witness showed in answering both direct and cross- examination questions during her testimony. Individual Transactions On June 4, 1979 Ms. Lillie Mae Young purchased an automobile insurance policy at University Insurance in Ocala. 3/ As part of the transaction she also purchased a membership in the Nation Motor Club. During the course of that transaction she executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement. When Ms. Young went to the Ocala office of University Insurance she asked to purchase the minimum insurance required by law to have her automobile registered. Whoever sold her the insurance did not mention to Ms. Young that she was purchasing a motor club membership. Ms. Young did not carefully read the documents she executed when she purchased her insurance. She believed that the person who sold her the insurance was a man. If Ms. Young had known that she was paying $35 for a motor club membership, she would not have bought it. On June 2, 1979, Ms. Willie Mae McCray purchased personal injury protection and bodily injury insurance for $163 at the Ocala office of University Insurance. As part of that transaction she also purchased a membership in the Nation Motor Club for $35. In the course of the transaction she executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement. Both the motor club application and the premium finance agreement indicated the fee for the motor club was $35, but the evidence is not clear whether these documents were completed when Ms. McCray executed them. When Ms. McCray went to the Ocala office she asked to purchase PIP insurance. She was told by the salesperson that she could not buy just PIP alone, but must also purchase "liability". Ms. McCray agreed to purchase both coverages because she needed to register her automobile. She was not aware on June 2, 1979 that she had purchased a motor club membership. She was not told by the salesperson, who was not Ms. Finn, that she was making such a purchase. If Ms. McCray had known that the motor club membership was a $35 charge over and above her insurance premium she would not have paid it. At the time Ms. McCray bought her insurance she signed the documents mentioned above without reading them because she was in a hurry to get her insurance. She has difficult reading but did not mention her difficulty to the salesperson. On June 15, 1979 Mr. Alton Starker purchased personal injury protection and bodily injury insurance for $183 at University Insurance in Ocala. As part of that transaction he also purchased a membership in the Nation Motor Club for $35. In the course of the transaction he executed three documents: an insurance application, a Nation Motor Club application, and a premium finance agreement. The Nation Motor Club application which he signed indicated the club membership fee was $35. There is no evidence on whether the application was filled in at the time he signed it. There are two duplicate parts of the premium finance agreement in evidence. One part, the assured's copy, has only the dollar amounts filled in and Mr. Starker's signature; the other part, the agent's copy, is completely filled in and shows a $35 charge for Nation Motor Club membership. These two copies are part of a manifold tear- apart form. The original was not in evidence; therefore, it is impossible to tell which part of the premium finance agreement was filled in at the time Mr. Starker executed the original. The copy which was given to him to retain for his records was the assured's copy which does not show an itemized charge for the motor club. Mr. Starker's memory of the transaction is not accepted as credible. His testimony at the final hearing was impeached by a prior inconsistent statement he made in a discovery deposition. He denied signing the insurance application, yet without his signature he could not have purchased insurance which he testified he bought. On May 5, 1980 Mr. James Clark purchased personal injury protection and bodily injury insurance for $274 from University Insurance in Ocala. As part of the transaction he also purchased a membership in the Associated Motor Club for $35. In the course of that transaction he executed two documents: an insurance application and a premium finance agreement. The finance agreement indicated the charge for the motor club was $35 but there is no evidence on whether the document was filled in at the time Mr. Clark signed it. When Mr. Clark, who was accompanied by his wife, went to the Ocala office he asked to purchase the insurance necessary to "cover the vehicle, that's required for the law, and that was it." The salesperson who handled Mr. Clark's purchase did not show him anything which Mr. Clark thought indicated he purchased a motor club membership. Ms. Finn was not the salesperson in his transaction. Mr. Clark did not know he had paid a motor club membership fee until the investigation of this case by Petitioner began. On December 14, 1979 Mr. Mark Alfarone purchased bodily injury, liability, property damage liability, comprehensive including collision, and uninsured motorist coverage for $579 at University Insurance in Ocala. As part of the transaction he also purchased a membership in the Nation Motor Club for $35. In the course of the transaction he executed three documents: an insurance application, a premium finance agreement and a Nation Motor Club application. Both the motor club application and the premium finance agreement indicated that the membership fee was $35 but there is no evidence whether the documents were filled in at the time Mr. Alfarone executed them. When Mr. Alfarone went to purchase his insurance he asked for full coverage because the new Corvette he was insuring was financed. He did not request a motor club membership. He already belonged to AAA. Sharyn Vittitoe, the wife of the office manager Robert Vittitoe, handled his purchase. Mr. Alfarone did not read all the documents Ms. Vittitoe handed him to sign. She did not fail to answer any of his questions about his coverage which she explained to him. He did not tell her that he was a member of AAA. At the time he purchased his insurance Mr. Alfarone was not aware that he was charged for a motor club. He does not recall anything about a motor club being discussed then. He also does not recall receiving any documentation in the mail which identified him as a member of the Nation Motor Club. Mr. Alfarone does not recall signing any document for the purchase of a motor club membership although in his cross-examination he admitted probably seeing the Nation Motor Club application before he signed it. On September 26, 1979 Mr. James Curry purchased personal injury protection and bodily injury insurance on two automobiles for $299 at University Insurance in Ocala. As part of that transaction he also purchased two memberships, one per car, in the Nation Motor Club for a total of $53. In the course of the transaction he executed four documents: two Nation Motor Club applications, an insurance application and a premium finance agreement. One motor club application indicated that the membership fee was $35. The other application showed a fee of $18 for a second car. The premium finance agreement indicated a charge of $53 for "NMC". There is no evidence on whether the documents were filled in at the time Mr. Curry signed them. The evidence does not show what type of coverage Mr. Curry requested when he went to the Ocala office. At the final hearing he testified as follows: (Mr. Sumner) Q All right. Did you have any particular insurance coverages in mind? (Mr. Curry) A Well, I just wanted some where I could get my tag and, you know, cover some liability. (Mr. Sumner) Q Did you explain that to the people at the University Insurance Agency? (Mr. Curry) A I don't know what I did. I don't know, really I don't. But I just told them I wanted some coverage, you know, to protect me on the road and, you know-- He did not remember the details of what happened during the transaction. He did not remember signing either his insurance application or his premium finance agreement. He did not read the documents he was asked to sign. At the end of the transaction he did not understand that he had purchased motor club membership. On June 18, 1979 Ms. Betty Jean Nobles purchased personal injury protection and bodily injury insurance for $163 at University Insurance in Ocala. As part of that transaction she also purchased a membership in the Nation Motor Club for $35. In the course of her transaction she executed three documents: a premium finance agreement, an insurance application, and a Nation Motor Club application. Both the premium finance agreement and the motor club application indicated that the motor club membership fee was $35 but there is no evidence on whether the documents were filled in when Ms. Nobles signed them. Ms. Nobles' testimony about the details of her insurance purchase has not given any weight here because at the final hearing she did not remember the transaction well. The following testimony is typical of her recollection: (Mr. Sumner) Q Did you have any particular insurance coverages in mind when you bought -- went down there to buy insurance? (Ms. Nobles) A Not really, just full coverage. I needed insurance for a tag. (Mr. Sumner) Q Did you ask for full coverage, or did you explain what you wanted to the people there? (Ms. Nobles) A Well, I think I asked -- I really don't remember. I think I asked for full coverage. I didn't ask for insurance just for a tag, no. (Mr. Sumner) Q Okay. Miss Nobles, it's also been established that at the time you bought your automobile insurance, that you were charged for an automobile club membership. Were you aware that you had paid for that particular item at the time that you bought your insurance? (Ms. Nobles) A Well, to tell the truth, I can't say yes, and I can't say no, because I don't remember asking for one, no. On July 6, 1979 Mr. Vernajor Parker purchased personal injury protection and bodily injury insurance for $293 from University Insurance in Ocala. As part of that transaction he also purchased a membership in the Nation Motor Club for $35. In the course of the transaction he executed three documents: an insurance application, a premium finance agreement and a Nation Motor Club application. Both the premium finance agreement and the motor club application indicated that the motor club membership fee was $35. There is no evidence on whether or not the motor club application and the premium finance agreement were completely filled in at the time Mr. Parker signed them. 4/ Mr. Parker went to the Ocala office with the intention of purchasing the minimum insurance he needed to register his car. He does not remember whether or not the man who sold him his insurance discussed towing and road service with him. Mr. Parker remembers reading what he considered the important parts of all the documents he signed. The insurance policies of Mr. Parker, Mr. Curry and Ms. Young were not delivered to them but were retained in their file at University Insurance in Ocala. The Nation Motor Club Service contracts of Ms. Young, Mr. Alfarone and Mr. Parker were similarly retained in their files. These documents are necessary to a full understanding of the insurance coverage and motor club benefits the insureds purchased. Because certain dates in these findings are crucial to the following legal conclusions the dates are summarized here: Chronology of Transactions and Memoranda June 2, 1979 Willie Mae McCray June 4, 1979 Lillie Mae Young June 15, 1979 Alton Louis Starker June 18, 1979 Betty Jean Nobles July 6, 1979 Vernajor K. Parker August 27, 1979 Memo received instructing no disclosure of motor clubs. September 2, 1979 Memo written instructing explain all coverages but do not overemphasize towing and road service. September 26, 1979 Memo written instructing make sure insureds know all coverages on motor clubs. September 26, 1979 James Alfred Curry, Jr. December 14, 1979 Mark Alfarone Early 1980 Memo written instructing use small statements that applicants understand they have purchased a motor club for a separate charge. May 5, 1980 James Franklin Clark CONCLUSIONS OF LAW The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Sections 120.57(1) and 120.65, Florida Statutes (1981). By its Amended Administrative Complaint the Department seeks to suspend or revoke Respondent's license as a general lines insurance agent. Authorization for such action is found in both Sections 626.611 (compulsory revocation or suspension) and 626.621 (discretionary revocation or suspension), Florida Statutes. 5/ As alleged by the Administrative Complaint the pertinent portions of Section 626.611 are: The department shall deny, suspend, revoke, or refuse to renew or continue the license of any agent ... and it shall suspend or revoke the eligibility to hold a license or permit of any such persons if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist: * * * If the license or permit is willfully used, or to be used, to circumvent any of the requirements or prohibitions of this code. Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of information or advertising. * * * (7) For demonstrated lack of fitness or trustworthiness to engage in the business of insurance. * * * (9) Fraudulent or dishonest practices in the conduct of business under the license or permit. * * * (13) Willful failure to comply with, or willful violation of, any proper order, rule, or regulation of the department or willful violation of any provision of this code. Section 626.621, Florida Statutes provides: The department may, in its discretion, deny, suspend, revoke, or refuse to renew or continue the license of any agent...and it may suspend or revoke the eligibility to hold a license or permit of any such persons if it finds that as to the applicant, licensee, or permittee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611: * * * (2) Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit. * * * (6) If in the conduct of business under the license or permit he has engaged in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited under part VII of this chapter, or has otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. The relevant provisions of Part VII of Chapter 626 referenced above include Sections 626.9521 and 626.9541, Florida Statutes (1981). Section 626.9521 provides in part: No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to s.626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance. Any person who violates any provision of this part shall be subject to the penalties provided in s.627.381. Section 626.9541 explicates the alleged unfair competition charged in the Amended Administrative Complaint as follows: The following are defined as unfair methods of competition and unfair or deceptive acts or practices: * * * Filing with any supervisory or other public official, Making, publishing, disseminating, circulating, Delivering to any person, Placing before the public, Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement. * * * Knowingly making false or fraudulent statements or representations on, or relative to, an application for an insurance policy for the purpose of obtaining a fee, commission, money, or other benefit from any insurer, agent, broker, or individual. * * * Knowingly collecting as a premium or charge for insurance any sum in excess of or less than the premium or charge applicable to such insurance, in accordance with the applicable classifications and rates as filed with and approved by the department, and as specified in the policy; or, in cases when classifications, premiums, or rates are not required by this code to be so filed and approved, premiums and charges in excess of or less than those specified in the policy and as fixed by the insurer. This provision shall not be deemed to prohibit the charging and collection, by surplus lines agents licensed under part VI of this' chapter, of the amount of applicable state and federal taxes in addition to the premium required by the insurer. Compared with the foregoing legal labyrinth the factual allegations of the Amended Complaint are simple. Eight transactions are charged. The allegations as to each transaction are the same except for the dates and the customers. The following count is representative: COUNT VI That you, MARY LOU FINN, as the general lines agent of record for the University Insurance Agency, Ocala, Florida, or one of your agents or employees acting under your direction or supervision, on or about December 14, 1979, sold to Mark Alfarone automobile insurance coverage. That you, MARY LOU FINN, or one of your agents or employees acting under your direction or supervision, charged Mark Alfarone for membership in an automobile club in the price of his automobile insurance premium without his knowledge or consent. That Mark Alfarone neither requested nor desired to pay additional monies for membership in an automobile club and would not have knowingly purchased the same at additional cost. IT IS THEREFORE CHARGED that in the conduct of business under your license, you, MARY LOU FINN: [Legal Conclusions Follow] Standard Of Proof In license revocation cases such as this the Petitioner has the burden to prove the allegations of the Amended Administrative Complaint. Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st D.C.A. 1980). The standard by which the agency's proof is tested has not been clear in Florida. Fact finders such as judges, jurors and hearing officers are familiar with three standards of proof: preponderance of the evidence, clear and convincing, and beyond and to the exclusion of a reasonable doubt. Traditionally findings of fact once made by the fact finder have been reviewed by appellate bodies under the test of "competent substantial evidence." The fact finding tests are essentially weighing devices. Because appellate bodies do not reweigh evidence, 6/ they review a record only to determine if someplace in that record there appears evidence of sufficient reliability (competent substantial evidence) which should be allowed to support a factual determination. Town of Indialantic v. Nance, 400 So.2d 37, 40 (Fla. 5th D.C.A. 1981); Hughes v Office of the Comptroller, So.2d 6 FLW 2490 (Fla. 2nd D.C.A. November 18, 1981); 5 Am Jur.2d, Appeal and Error 839 at 282 (1962). Once reliable evidence can be gleaned from the record which supports a finding, the appellate body cannot upset that finding. 5 Am Jur.2d, Appeal and Error 882 (1962). Unfortunately the foregoing concepts have been confused in recent opinions concerning professional license revocation cases. Gans v. Department of Professional and Occupational Regulation, 2 FALR 239J (Fla. 3rd D.C.A. April 29, 1980) is an example. There the appellant argued in a license revocation case that a preponderance of the evidence test had been used by the Hearing Officer instead of the clear and convincing test, contrary to the holding of Walker v. State Board of Optometry, 322 So.2d 612 (Fla. 3rd D.C.A. 1975). In his opinion for the Court Judge Hendry asserted that the preponderance of the evidence is the correct test to be used in an administrative proceeding. Judge Nesbitt, specially concurring, argued that the proper test was competent substantial evidence. Judge Hubbart dissented. He correctly reasoned that competent substantial evidence was not a test to be employed by fact finders but was really a standard of review by appellate bodies. Because his argument cannot be better restated by the undersigned, it is quoted here: Finally, I find nothing in Florida's Administrative Procedure Act which dictates a contrary result. It is true that an administrative agency in reviewing the findings of fact of a hearing examiner, as contained in the recommended order, may not reject or modify such findings unless it first determines that the findings of fact were not based on "competent, substantial evidence" in the record; Section 120.57(1)(b)9, Fla. Stat. (1979); moreover, an appellate court in reviewing final administrative agency actions may not substitute its judgment for that of the agency as to the weight of evidence on the disputed findings of fact and is authorized to set aside such agency action only if it finds that such action depends on a finding of fact that is not supported by a "competent, substantial evidence" in the record. Section 120.68(10), Fla. Stat. (1979). These are, however, standards by which an administrative agency and an appellate court must review findings of fact previously made by an hearing examiner or other administrative finder of fact; they do not speak to the burden of proof which a hearing examiner, as here, must employ in making his findings of fact after a full evidentiary hearing. As such, these review standards have no relevance to the central issue of this case and in no sense conflict with the rule of the Walker decision. In this regard, I find the following principle of law entirely controlling: "There is a distinction between the standard by which an administrative tribunal measures the proof presented to it. . .and the standard by which a reviewing court measures the correctness of an administrative order under review... See DeGroot v. Sheffield, (Fla. 1957), 95 So.2d 912, 916. The functions of the two tribunals are dissimilar and the standards are not interchangeable." Florida Dep't of Health and Rehabilitative Servs., Div. of Health v. Career Service Comm'n of the State of Fla., Dep't of Admin., 289 So.2d 412, 415, n.2 (Fla. 4th DCA 1974), quoted with approval in Fitzpatrick v. City of Miami Beach, 328 So.2d 578, 579 (Fla. 3d DCA 1976). It should be noted that the Hearing Officer in the Gans case actually employed a competent substantial evidence test. Board of Chiropractic Examiners v. Gans, Case No. 78-101 (Florida Division of Administrative Hearings, Recommended Order October 2, 1978). The District Court of Appeal, Third District, became aware of that fact after issuing its original opinion which was subsequently withdrawn. The replacement opinion, with all three judges in agreement states: The administrative order under review is affirmed upon a holding that: (a) the standard of proof employed by the hearing examiner in reaching the findings of fact in this cause was not one of preponderance of the evidence, as both parties to this appeal have mistakenly assumed, and, accordingly, we have no occasion to determine whether the utilization of such a standard would in the abstract, constitute reversible error, as urged by appellant, it being abundantly clear that such an alleged error did not occur in this case. Gans v. Department of Professional and Occupational Regulation, 390 So.2d 107 (Fla. 3rd D.C.A. 1980). The opinions in Gans were followed by Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st D.C.A. 1981). The Court there held that the Hearing Officer (whose recommended order was adopted by the Department) erred in finding that Bowling had violated statutes regulating the conduct of insurance agents. In deciding the case the court properly applied the appropriate review standard, competent substantial evidence, and found that there was insufficient evidence in the record to support certain findings. Unfortunately the opinion contains language which can be interpreted to mean that the competent substantial evidence test should be used to determine the existence or nonexistence of facts during an administrative hearing. See for example, Smith v. School Board of Leon County, 405 So.2d 183, 186 (Fla. 1st D.C.A. 1981); Office of Treasurer, Insurance Commissioner v. Azis, Case No. 80- 1278 (Florida Division of Administrative Hearings Recommended Order, June 3, 1981); Department of Professional Regulation, Board of Real Estate v. Miller, 3 FALR 2317A, 2319A (Florida Division of Administrative Hearings Recommended Order, August 14, 1981). It frequently happens during a trial or a hearing that there is competent substantial evidence to support the existence of an alleged fact and there is also competent substantial evidence to support the non-existence of that fact. Because of its roots in the review process, competent substantial evidence provides no assistance to the fact finder in weighing evidence which may be equally competent and substantial yet contradictory. The task of the fact finder is to resolve the contradiction. This is where the traditional standards of proof give direction. The fact finder knows if the appropriate standard is preponderance of the evidence, then one scintilla of evidence more in favor of the existence of a fact than that evidence to the contrary will require him to find the fact exists. If the appropriate test is beyond and to the exclusion of the reasonable doubt he knows the evidence in favor of a fact must be so overwhelming as to exclude any reasonable contrary conclusion. For the foregoing reasons I conclude that competent substantial evidence as discussed in Bowling is not the appropriate standard of proof to be used in this proceeding. Since license revocation cases are penal in nature, 7/ clear and convincing evidence is the applicable criterion for determining whether or not Petitioner has established the facts alleged in its Amended Administrative Complaint. Walker v. Board of Optometry, 322 So.2d 612 (Fla. 3rd D.C.A. 1975); Reid v. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd D.C.A. 1966). Proof Of Allegations The Respondent had no direct contact with any of the alleged customers of University Insurance in Ocala. None of the insurance purchasers remembers Ms. Finn as the person who sold him his policy. Because they were not called as witnesses there is no evidence from the Ocala salespeople who actually had contact with the complaining witnesses that Ms. Finn told them to "slide" motor clubs. The only link between Ms. Finn and the transactions alleged in the Administrative Complaint to violate the Insurance Code is the instructions she gave the Ocala office in her memorandum received on August 27, 1979. It is therefore concluded that no nexus has been established here between Ms. Finn and all transactions which antedate August 27, 1979. See the chronology of transactions set out in Finding of Fact 30. For this reason, Counts I, II, III, VIII and IX should be dismissed. The fact that Ms. Finn was the agent in charge of the Ocala office is not by itself sufficient to find her guilty of the alleged violations set out in the Counts above. Mere negligence in supervision of the salespeople even if proven, is not sufficient to sustain discipline in a license revocation case of this kind. Bach v. State Board of Dentistry, supra at 36. Counts IV, VI and VII concern transactions subsequent to the August 27, 1979 memorandum. Mr. Curry purchased his insurance on September 26, 1979. That was the same day Respondent wrote her memo which purged her earlier instructions to slide motor clubs. The record is barren of evidence on when the September 26, 1979 memorandum was received or acted on in Ocala. If I assume arguendo that the Ocala office was operating under a continuing taint from the August 27, 1979 memorandum, it is still not permissible to conclude that Petitioner has proven a violation by clear and convincing evidence. Mr. Curry, when testifying three years after he bought his insurance, did not remember what coverage he asked for or many other significant details of his transaction. When asked on cross-examination whether he remembered what happened at his transaction on September, 1979 he stated "No, I can't remember." Count VII of the complaint therefore must be dismissed for a lack of proof. Counts VI and IV, alleged transactions which took place subsequent to September 26, 1979, when the improper instructions of the August 27, 1979 memorandum had been effectively countermanded. The link between Respondent and any misrepresentations which occurred in the sale of insurance to Mr. Alfarone and Mr. Clark had been severed. For this reason, Counts VI and IV should be dismissed. Summary The facts established here by clear and convincing evidence do not support a conclusion that Ms. Finn has violated any provisions of the Insurance Code as alleged in the Amended Administrative Complaint. This determination is not meant to condone in any way Respondent's instructions in her August 27, 1979 memorandum. Had she been charged with instructing her subordinates to violate the Insurance Code and therefore demonstrating a lack of fitness to be licensed as an insurance agent, this might have been a different case. Since no such facts were pled here, the Amended Administrative Complaint must be dismissed in its entirety. 8/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: The Department of Insurance and Treasurer enter a final order dismissing the Amended Administrative Complaint against Mary Lou Finn. DONE and RECOMMENDED this 12th day of January, 1982, in Tallahassee, Florida. MICHAEL PEARCE DODSON 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 12th day of January, 1982.
Findings Of Fact By Emergency Suspension Order dated May 23, 1983, Petitioner suspended Respondent's Florida licenses as an Ordinary Life Insurance Agent, as an Ordinary Life, including Disability Insurance Agent, and as a General Lines Insurance Agent. At all times material to the charges in the Administrative Complaint, Respondent held those licenses above-noted. During the times of the hearing he was under the Emergency Suspension. The continuance of the hearing from August 2 to September 26, 1983, was requested by Respondent. Roosevelt King Jones is the owner of Heart of Florida Insurance Agency, Tampa, Florida, and was the sole owner of that agency at all times here relevant. All of the charges relate to automobile insurance policies. Respondent employed an underwriter, who does not require licensing by petitioner, to assist in the preparation of applications for insurance, quote rates to applicants, take deposits, give receipts for payments, issue cards to show insurance in effect for applicant, and make changes in policies as necessary; a secretary; receptionist; and an office manager. At times more than one underwriter was employed. Respondent testified that a former employee, Shirley Cook, was licensed and authorized to accept applications for the agency, but Cook was not in the employ of Respondent at the time the transactions here involved occurred. Respondent is also President of Heart of Florida Bank Supply and Heart of Florida Mining Company, and he is involved with the creation of the National Association of Federated Churches. Respondent spent two or three hours per day at the insurance agency where he signed the applications and handled complaints his secretary or underwriter were unable to resolve. Respondent was the only person authorized to accept the applications on behalf of the insurance company after Cook's employment had been terminated. The office procedure was for the receptionist/secretary to refer a person seeking insurance to the underwriter who would look up the rates for the coverage desired, advise the applicant, prepare the application form for the signature of the applicant, accept applicant's payment, or down payment if the premium was to be financed, and, if so, prepare the premium finance agreement. The underwriter would issue an insurance card to the applicant, give applicant a receipt for any moneys received, call the insurer for a Binder number if required by the insurer, and, when all of the documents were completed, put them on Respondent's desk, with the payment received, for Respondent's signature. Respondent was the only person authorized to draw checks on the agency's bank account, although he testified that while Shirley Cook was employed she had "banking authority." The quoted phrase was not explained, so it is unclear that Cook could write checks against this account. After Respondent bad checked the application file placed on his desk and signed the necessary documents, a check would bed cut to be signed by Respondent to forward to insurer with the application. Henry C. Daniels was notified by Heart of Florida Insurance Agency that his automobile insurance was up for renewal. He went to the agency on February 1, 1983, paid $335 cash for which he was issued a receipt (Exhibit 1). Daniels never received a policy. When an investigator from the Department of Insurance visited Daniels on May 8, 1983, the latter was unaware that he did not have insurance on his car. Daniels contacted Respondent to ask why he had not received a policy and Jones told him the company had not sent out the policies. Respondent, on May 10, 1983, executed an insurance Binder on Integrity Insurance Company effective February 1, 1983 (Exhibit 1). When Associated Insurance Brokers, who represented Integrity Insurance Company, was contacted in May, 1983, no record of an application from Daniels could be found in their files and they had not issued a policy. Before the August 2 hearing, Associated Insurance Company again checked their files and found an application for Daniels dated May 10, 1983 (Exhibit 2). A policy was issued to Daniels for one year effective May 16, 1983. Associated Insurance Company does not issue Hinders. When their agents call in an application, the agent is given a Binder number which is good only after the insurer gets the application and premium payment. Respondent corroborated Daniels' testimony that the latter visited him on May 10, 1983, with the news that the Department of Insurance had advised Daniels he was without automobile insurance, that he, Jones, checked the file and found his application had not been sent in, that he had Daniels execute another application dated May 10, 1983, which was sent in and the policy was issued. Respondent provided no explanation for the failure to submit Daniels' original application. Darlene Thompson went to Heart of Florida Insurance Agency for automobile insurance on July 30, 1982. She paid the premium of $125.30 by check dated July 30, 1982 (Exhibit 6) and was given a receipt (Exhibit 7). She was told her policy would be received In three to four weeks. When the policy did not arrive, she called the agency several times and was assured the policy was in the mail. She finally went down to Heart of Florida Insurance Agency and talked to Jones. She was shown an application dated September 27, 1982, on which she recognized her signature was forged (Exhibit 4) and was told she owed additional premiums. She demanded her policy be cancelled and her money refunded. By letter dated October 27, 1982 (Exhibit 8) Jones refunded $76.00 to Ms. Thompson as her prorata share of the premium for the period 7/31/82 to 12/31/82. Her check (Exhibit 6) was deposited by Heart of Florida Insurance Agency October 19, 1982. Heritage Insurance Company, on whose application form Thompson's signature had been forged, never issued a policy to Ms. Thompson (Exhibit 9). Following an inquiry by petitioner's branch office, Respondent remitted the additional $49.30 to Thomspon (Exhibit 65). Patrick Mulkins went to Heart of Florida Insurance Agency on September 23, 1982, and made a cash payment of $449 for automobile insurance to be paid in installments (Exhibit 12). The application was prepared on Allstate Insurance Company as a member of Florida Joint Underwriting Association. A couple of months later Mulkins was advised by the bank that was financing his car that he had no insurance. He went to Heart of Florida agency and was issued a Binder (Exhibit 15) dated January 4, 1983. When his bank again notified Mulkins he had no insurance he again advised the agency. At this time a forged application dated April 18, 1983, was prepared and forwarded to the insurance company with the proper payment, and the insurance policy was issued--some seven months after Mulkins initial application. By letter dated May 26, 1983 (Exhibit 23) Allstate Insurance Company notified Mulkins that his policy was void because the check accompanying the application drawn on the account of Heart of Florida group was dishonored. Respondent testified that when be learned his employee, Hunt, who prepared Mulkins' application, had not forwarded the $449 to the carrier, he referred the matter to the State's Attorney apparently claiming Hunt had absconded with the funds. No evidence was submitted that Mulkins received a policy or refund of the $449 paid by him to Respondent. Lisa Vallenga went to Heart of Florida Insurance Agency on December 15, 1982, to procure automobile insurance for her husband, Perry Vallenga. She paid $56 for the coverage, was issued an insurance identification card (Exhibit 17) with effective date of 12-15-82, and a receipt for the $56 paid (Exhibit 18). Vallenga never received a policy for the coverage his wife purchased, but was unaware he did not have coverage until he received his policy from Allstate Insurance Company in May, 1983, showing coverage from April 16, 1983, to April 16, 1984 (Exhibit 19). The application Mrs. Vallenga had signed December 15, 1982 (Exhibit 20) had been altered to show the date of 4-15-83 vice 12-15-82. By letter dated 5/18/83 (Exhibit 21) Allstate advised Vallenga the policy previously issued to him (Exhibit 19) was declared void because the Heart of Florida check in the amount of $56 which accompanied the application was stamped Check Returned Uncollected Funds." In explanation of the Vallenga transaction, Respondent only stated the policy shows Vallenga was issued PIP coverage and the signature on the application was not that of Respondent. No evidence was submitted that Vallenga received the insurance for which he paid Respondent or a refund of the premium. Mary Coy went to Hear of Florida Insurance Agency in April, 1982, to purchase automobile insurance. She completed an application, paid $66 and executed a premium finance agreement whereby she agreed to make monthly payments to Insurance Services, Inc., to cover the balance of tee premium of $155 plus interest (Exhibit 30). The application was forwarded to Florida International Indemnity Company, who issued a policy (Exhibit 26) covering the period 5/22/82 to 5/22/83. By check dated 5-25-82 Insurance Services, Inc., sent $312 to Heart of Florida Insurance (Exhibit 29) to cover the premiums of $155 for Coy's policy. Coy made the monthly payments to Insurance Services, Inc., in compliance with her agreement to do so (Exhibit 27). By Notice of Cancellation dated 10-28- 82, Florida International Indemnity notified Ms. Coy that the policy was cancelled effective 11-9-82 for nonpayment of premium (Exhibit 28). Florida International Indemnity's witness claimed his company was never notified the policy was financed, and that when policies are financed the carrier is usually paid by the premium finance company. Respondent testified that once his company submits the application for a premium finance policy they have no further input in the process unless there is a change to the policy. He presented no reason for not forwarding the $155 premium received from Insurance Services, Inc., for Coy's policy, but contended the carrier had no right to cancel Coy's policy because Respondent was the representative of the carrier and their dispute should have been with him rather than the policyholder. Eloise Philyor went to Heart of Florida Insurance Agency on February 2, 1983, to purchase automobile insurance. She made a down payment of $102 (Exhibit 32), executed a premium finance agreement with Insurance Services, Inc. (Exhibit 34) and was issued an insurance Binder effective 2-3-83 (Exhibit 33) on Integrity Insurance Company by Respondent. Integrity Insurance Company received the Philyor application dated 5/10/83 on May 16, 1983. Before the application was processed Capital Premium Plan, Inc., on whom Respondent had written the draft for the financed premium payment cancelled the draft and Integrity did not issue a policy. In the interim Ms. Philyor was making payments to Insurance Services, Inc. When the latter realized no policy had been issued, they returned Ms. Philyor's payment by check dated May 18, 1983 (Exhibit 38). A copy of the application that should have been signed by Philyor on February 3, 1983, was not produced. What was produced was a copy of a combination car policy application dated 5-10-83 written on Associated Insurance Brokers, Inc., who represents Integrity Insurance Company. What is clear from the evidence is that on February 3, 1983, Ms. Philyor applied for insurance, executed a premium finance agreement, paid $102 to Heart of Florida Insurance Agency as the difference in the cost of the premium over that part of the premium financed, commenced payment to the premium finance company, but was not issued the insurance policy for which she had paid. Freddy McGruder went to Heart of Florida Insurance Agency on January 3, 1983, to purchase automobile insurance. He paid $59 to the agency (Exhibit 41), was issued an automobile insurance identification card (Exhibit 42), executed a premium finance agreement dated 1-3-83 (Exhibit 43) which was later changed to 3-3-83 without the knowledge or consent of McGruder, and signed an application for an insurance policy to commence 1-4-83 on Allied Fidelity Insurance Company. This application was signed by Respondent as brokering agent. After about two months had passed, McGruder received a premium payment book, but no policy. When he went to make his second payment to the finance company, he was advised he might not have been issued a policy and it was suggested he contact the Department of Insurance. McGruder called the Heart of Florida Insurance Agency and requested his policy be cancelled. McGruder has not received the policy. A combination car policy application form dated 5-9-83 (Exhibit 48) has McGruder's name in the applicant's signature spaces. This is not McGruder's signature and no portion of the premium he paid has been returned to him. Respondent could give no explanation for failure of the insurer to issue a policy to McGruder. The automobile insurance identification card given to McGruder has the insurer's name, Allied Fidelity Insurance Company, typed thereon. Allied Fidelity issues such a card with its name printed there on only after it receives and approves the application. It then sends the card to the agent for delivery to the insured. Agents of Allied Fidelity are not authorized to issue identification cards until the policy is accepted. Andrew Archible went to Heart of Florida Insurance Agency on January 5, 1983, to purchase automobile insurance. He paid $51 down (Exhibit 50), executed a premium finance agreement dated 1-5-83 to finance the balance of the premium (Exhibit 53) and was given an automobile identification card dated 1-5- 83 (Exhibit 51)(on the same card form used for McGruder) The original application was subsequently offered into evidence as Exhibit 59. This exhibit clearly shows the dates opposite McGruder's signature on the back of the document to have been altered, as the dates 3-3-83 (in-three places) have been written over white-out. The gold copy of the premium finance agreement (Exhibit 55) also clearly shows the dates to have been altered. Exhibit 52 appears to be a facsimile copy of Exhibit 55. Archible made two payments on the Premium finance agreement, but has not received a copy of his policy. Casualty Underwriters, to whom Archible's and McGruder's applications should have been sent (as agent for Allied Fidelity Insurance Company) had no record of these applications. Their date stamp of March V, 1983, is contained on the original applications of Philyor, McGruder, and Achible. The procedure in effect at the time the applications of Philyor, McGruder, and Archible were presented was for the agent (Respondent) to write a draft to the insurance company on Insurance Services, Inc., and to send this draft with the application. When the draft is presented to the bank, the bank calls Insurance Services, Inc., to clear the draft before honoring it. Insurance Services never received the call from the bank to clear a draft for the McGruder or Archible policies. Respondent offered into evidence a draft dated 1-3-83 payable to Autosure Underwriters in the amount of $136 for applicant Freddy McGruder (Exhibit 57). This draft was marked "VOID" and there was no indication it had ever been presented for payment. A check drawn on Heart of Florida group dated 3-3-83 payable to Autosure Underwriters, Inc., in the amount of $50.15, signed by Respondent for the policy of Freddy McGruder, was admitted as Exhibit 60. This check was also marked "VOID" and showed no evidence that it had ever been presented for payment. Shirley Cook was office manager for Respondent from August, 1981, until June, 1982. Cook was a licensed 220 agent. She and Respondent had disagreements which led to her departure. Cook complained to the Department of Insurance about office practices resulting in clients not receiving policies and about bad checks being written by Heart of Florida group. After her departure Respondent forwarded to Petitioner documents tending to show Richard Heaney, another former employee of Respondent and son of Cook, had filed a fraudulent insurance claim (Exhibit 63) and suggested the claim be forwarded to the fraud division. As a result of Cook's complaints and consumer complaints regarding Heart of Florida Insurance Agency, Petitioner commenced an investigation In August, 1982. Bobbie Graham started working for Respondent in September, 1982, as an underwriter. When she began getting threatening calls from clients about not receiving policies, she called the local office of Petitioner to ascertain what problems she might be subject to as a result of her work for Respondent. She was contacted by the investigator and she provided names of individuals, including those named in the charges involved in this Administrative Complaint, who had not received policies they had paid for. When called as a witness by Respondent; Graham denied she had ever withheld policies, wrongfully taken or withheld any money, failed to deliver all applications to Respondent with all moneys received, ever took policies or files from the office, or ever changed the date on any application or other form without being directed to do so by Respondent. Graham further testified she made timely entries in a "binder" book or ledger regarding policies. Respondent was unaware there was such a ledger book in the agency and if there was one, testified it was not authorized by him, but was personal to the underwriter. The investigator in charge of the investigation of Respondent was also called as a witness by Respondent. This agent met with Respondent in August, 1982, and told Jones that he was investigating complaints received about Heart of Florida Insurance Agency. Respondent's testimony, that he first became there was any problem with the Archible policy was when he saw the charge in the Administrative Complaint, is not credible. Respondent also testified that after Ms. Cook left he was the only one in the agency authorized to accept applications and all application files were put on his desk for his signature. A review of the applications admitted into evidence in these proceedings show only three were signed by Respondent, three were signed by employee Leamon Hunt, and someone in the agency wrote Respondent's name on the other two. One of the three Binders admitted into evidence was signed on behalf of the agency by Delores Janacek, the secretary; the other two were signed by Respondent. These facts, plus the limited time Respondent spent at the office, lend credibility to Respondent's testimony that he let the people he hired run the business.
Findings Of Fact Respondent Albert Wade Anderson holds a business degree from Washington University and a theology degree from Princeton University. After six years, he left the ministry to sell insurance. In 1965, he was licensed to sell life insurance in Minnesota, and continued selling life insurance after he moved to Fort Myers, Florida, in 1967. Respondent is licensed in Florida as an ordinary life, including disability, insurance agent and as a general lines agent. Petitioner's Exhibit No. 1. In May of 1980, Mr. Anderson, newly licensed by petitioner to sell property and casualty insurance, took a job with Atlas Insurance Agency's Fort Myers office. Atlas Insurance Agency paid respondent a weekly salary of $200 plus "$6.75 per program or deal," (T. 62), i.e., per customer. Almost invariably, respondent sold a motor club membership to any customer who bought a personal injury protection policy; Mr. Anderson could not recall with certainty a single exception. (T. 66.) "A motor club is an organization which provides certain designated services to motorists, including such things as guaranteed arrest bond certificates, towing and labor for disabled automobiles, map drawing services, often accidental death benefits, and similar related services . . . [for] motorists." Deposition of Andrew M. Beverly (Deposition), p. 6. Among motor club membership benefits are many services which are not included in "standard coverage." Deposition, p. 7. Motor club membership is "an important coverage . . . [An] insured should be made aware of this coverage." Deposition, p. 9. An insurance agent "should explain the different [motor club] coverages and options to a potential insured." Deposition, p. 19. COUNT ONE Jeanne Whyte, assistant head nurse at Lee Memorial Hospital on the 11- to-7 shift, came into the Fort Myers office of Atlas Insurance Agency on June 10, 1980. Ms. Whyte graduated from high school and has attended about a year's worth of college courses from time to time, in addition to her training as a nurse. When she went to the Atlas Insurance Agency, it was with the intent to purchase the least expensive automobile insurance available. She was already a member of the American Automobile Association. Respondent Anderson persuaded her, however, that she should also purchase liability insurance to protect her home and other assets. In explaining her potential benefits, Mr. Anderson said "something about towing, but [Ms. Whyte] didn't connect it with . . . a club or anything." (T. 27.) Before she left the office, she wrote a check for $275, and signed documents, including a membership application for American Touring Association, Inc., Respondent's Exhibit No. 1. Of the $275, $186 was used to purchase bodily injury liability, property damage liability, and personal injury protection, in the form of a combination automobile policy from Kenilworth Insurance Company, No. C-1-826686, Petitioner's Exhibit No. 3; $75 was used to purchase a membership in American Touring Association, Petitioner's Exhibit No. 4; and $14 was not accounted for by the evidence. When Ms. Whyte discovered that $75 had been used to purchase a membership in American Touring Association, she tried to obtain a refund from Atlas Insurance Agency, originally without success; but she eventually obtained a $75 refund, after contacting the Insurance Commissioner's office. This experience notwithstanding, Ms. Whyte purchased automobile insurance a year later from respondent, who by that time was employed with another insurance agency, "because [she didn't really think it was his idea to put [her] in the American Touring Club." (T. 29.) COUNT THREE When James Hanney, a high school graduate, entered Atlas Insurance Agency's office in Fort Myers, on or about August 11, 1980, he was under the impression that his parents' membership in the American Automobile Association inured to his benefit. Whether this impression was accurate was not clear from the evidence. In any case, Mr. Hanney told the woman he found in the Atlas Insurance Agency office that he wanted minimal insurance coverage. She sold him a $10,000 personal injury protection policy with an $8,000 deductible, issued by Fortune Insurance Company, No. AP 1-10-02821 with a premium of less than $50, and a membership in the Nation Motor Club for $35. Respondent and Mr. Hanney each signed the insurance policy. Petitioner's Exhibit No. 7. Among other documents, Mr. Hanney signed an application for membership in the Nation Motor Club, Inc., Respondent's Exhibit No. 2. COUNT FIVE On or about May 17, 1980, James Allen Foster, a high school graduate, went to the Fort Myers office of the Atlas Insurance Agency to buy whatever insurance was necessary to register the car he and Barbara Gonzalez (now Foster) had recently purchased. He did not ask for a motor club membership and would not have purchased such a membership if he had known it was optional. He did, however, sign an application for membership in the American Touring Association, Inc., Respondent's Exhibit No. 3, among other documents. After telling Mr. Foster and Ms. Gonzalez about potential benefits, including "towing and lost key coverage, Mr. Anderson sold them a $10,000 personal injury protection policy with an $8,000 deductible written on the American Specialty Insurance Company, No. PA 02 03 59, Petitioner's Exhibit No. 9, with a premium of $44, in addition to the membership in the American Touring Association. Howard Vogel and Kevin Cox were the principals of Atlas Insurance Agency, a Florida corporation owned by Cox, Vogel, Inc., during the time respondent Anderson worked for the agency. They instructed respondent to attempt to sell motor club memberships along with every automobile insurance policy he might sell, and told him how to go about it. The "technique was to package the benefits and quote one price," (T. 56; Testimony of Respondent), the aggregate of the motor club membership fee and the policy premium. Respondent was told by his employers "to not emphasize" the motor club memberships. Jeanne Whyte, James Hanney, and James Allen Foster each signed a form application for motor club membership, but only the application Mr. Hanney signed listed the membership fee or otherwise indicated that a separate fee or premium was being charged for the motor club membership. Respondent deliberately withheld this fact from Ms. Whyte and Mr. Foster when making his oral presentation and no document furnished to Ms. Whyte or to Mr. Foster disclosed the fact. Neither did respondent offer either of these customers a choice between memberships in different motor clubs. An insurance "agent has an absolute duty to the insured to explain to him what he is selling him and what it does for him," Deposition, p. 14, although the name of the policy is not nearly as important as the explanation of the coverage. Simply omitting the formal policy name would not fall below "the minimum standards of the business, the industry." Deposition, p. 16. "[T]he important thing is to explain to the insured he's buying something, and that what he is paying for is this." Id. Before making a sale, the insurance "agent owes it to the insured to explain each coverage and tell him he's paying for it and what the benefits of the coverage are." Deposition, p. 22. Both petitioner's recommended order to hearing officer and respondent's proposed order have been given careful consideration. Findings proposed by the parties which are not included in the foregoing findings of fact have been rejected as inconsistent with the evidence or omitted as irrelevant.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner suspend respondent's licensure under Chapter 626, Florida Statutes (1979), for a period of sixty (60) days. DONE AND ENTERED this 16th day of December, 1981, in Tallahassee, Florida. ROBERT T. BENTON, II 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 16th day of December, 1981. COPIES FURNISHED: David A. Yon, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 Thomas F. Woods, Esquire Suite 112 1030 East Lafayette Street Tallahassee, Florida 32301 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32301
