Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times pertinent to the allegations of the First Amended Administrative Complaint, respondent Dennis Victor Daniels was licensed as an Ordinary Life including Disability Agent in Florida and was employed by Gulf Health/Life, Inc. in St. Petersburg, Florida. On or about January 14, 1980, Julie Stratton (then Julie Marzec) contacted respondent at the offices of Gulf Health/Life, Inc. for the purpose of purchasing health insurance. She and respondent discussed different insurance policies, and respondent informed her that if she joined the American Benevolent Society (ABS) she could obtain a lower rate for her policy and obtain the best policy for her money. Mrs. Stratton could not remember if respondent informed her of the exact amount of money she would save on her insurance if she joined the ABS. She was informed that other benefits and discounts from area businesses would be available to her as a member of the ABS. Mrs. Stratton joined the ABS in order to obtain less expensive insurance. She wrote two checks -- one in the amount of $15.00 payable to the ABS and the other in the amount of $54.26 payable to CNA Insurance Company. She obtained two insurance policies. The form numbers on these policies were 51831 and 52176. Based upon a referral from an agent with Allstate Insurance Company, John Valentine and his wife went to the offices of Gulf Health/Life in order to obtain hospitalization and surgical insurance coverage. Before moving to Florida, Mr. Valentine was covered by a group policy through his place of employment. Respondent informed Mr. Valentine that members of the ABS could obtain a policy at group rates which entailed a lesser premium than individual rates. Mr. Valentine wrote two checks -- one in the amount of $178.73 payable to CNA Insurance Company and the other in the amount of $25.00 payable to the ASS. Mr. Valentine received two policies from CNA -- one bearing form number 51831 and the other bearing form number 52176. He also received a brochure listing the places of business from which he could receive discounts as a member of the ABS. Gulf Health/Life, Inc. was a general agent for CNA. During the relevant time periods involved in this proceeding, CNA had different policies for health insurance. Policies with a form number of 51831 required the policyholder to be a member of an organization endorsing CNA in order to purchase that policy. Form 51831 policyholders paid a lesser premium for their policies. The difference in premiums between the group or organization policy and an individual policy with the same coverage is approximately $10.00. To obtain the policy bearing form number 52176, there is no requirement that the policyholder be a member of a group or an organization. Ms. Watkins, a secretary employed with Gulf Health/Life, Inc. between December of 1978 and June of 1979 observed a device known as a "light box" on the premises of Gulf Health/Life. This was a square-shaped plywood box with a slanted glass top and a high-intensity lightbulb within the box. On from a half-dozen to a dozen occasions on Fridays between January and April, 1979, Ms. Watkins observed respondent bent over the light box with a pen in his hand tracing a signature onto an insurance application. She could not produce any documents or recall any names of any insurance applicant whose signature was traced or copied by the respondent.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the First Amended Administrative Complaint filed against the respondent on April 29, 1982, be DISMISSED. Respectfully submitted and entered this 10th day of September, 1982, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 1982. COPIES FURNISHED: Curtis A. Billingsley, Esquire Franz Dorn, Esquire 413-B Larson Building Tallahassee, Florida 32301 William A. Patterson, Esquire Masterson, Rogers, Patterson and Masterson, P. A. 447 Third Avenue North St. Petersburg, Florida 33701 Honorable Bill Gunter Insurance Commissioner The Capitol Tallahassee, Florida 32301
The Issue The issues in this case are whether Respondent is guilty of violating provisions of the Florida Insurance Code as charged in Petitioner's Amended Administrative Complaint, and, if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency with the statutory authority and duty to license and regulate insurance agents. Respondent holds License No. A003228 as a General Lines (Property & Casualty 2-20) insurance agent in Florida. He first received the license in 1998. Respondent's license has not previously been the subject of disciplinary action by Petitioner. Since receiving his license, Respondent has continuously worked as an insurance agent and as a salaried employee of Insurance Depot of Charlotte County (Insurance Depot), which is located in Port Charlotte, Florida. Insurance Depot is solely owned and operated by Respondent's father, Jack Alexander, Sr. Respondent is not a co-owner, officer, or director of Insurance Depot. Among the types of insurance sold by Respondent at Insurance Depot is homeowners insurance. The normal procedure followed by Respondent when selling homeowners insurance is to first obtain some basic information from the customer about his or her home, either over the telephone or in person; determine what insurance company or companies represented by Insurance Depot were likely to have the lowest rates for the particular type of home; check the rate schedules of the selected companies; and give the customer a rate quote. If the quoted rate is acceptable to the customer, an application form is either filled out by hand or, for some insurance companies that provided software application forms, the application form is word-processed on a computer and then printed out. The application form is then signed by Respondent and the customer. The insurance companies represented by Insurance Depot require a premium payment, as well as certain additional documentation, in order to issue a homeowners' insurance policy. The insurance companies involved in this case require photographs of the home to be insured. The agents at Insurance Depot ask customers to provide the photographs, and Insurance Depot has two or three Polaroid cameras to lend to customers who do not have cameras. Petitioner elicited testimony from two insurance company representatives that they prefer the photographs to be taken by the agents, rather than by the homeowners. Despite this preference, the insurance companies routinely accept photographs taken by homeowners. Respondent testified that he always tells the prospective customers when he is preparing the insurance application form that photographs are needed. That testimony was disputed by three witnesses who said they were not asked to provide photographs when they met with Respondent at Insurance Depot to apply for insurance. Respondent's testimony is more persuasive, because it is unlikely that he would fail to ask for photographs when they are always needed. Respondent testified that if a customer applied for insurance and paid a premium, it was his usual practice to turn the customer's file over to the clerks in the office for further processing, which would include sending the signed application form, other documentation, and the premium payment to the insurance company. In the case of customers who had not yet provided photographs or other required information, the application was sometimes held until the information was submitted by the customer so that the application was complete when it was sent to the insurance company. The clerks would follow up with the customers to make sure the photographs or other information was submitted. Respondent is not the supervisor of the clerks. How soon coverage is "bound" depends on the requirements or policies of the various insurance companies. In some cases, coverage is bound immediately, but will be cancelled by the insurance company if it does not receive all of the information it requires within a specified time period, such as 30 days. When the insurance is cancelled because the application is incomplete, it is sometimes "flat cancelled," which means the insurance company does not recognize coverage to ever have been bound. Annette and Anthony Wiley2 The Wileys live in Arcadia. They went to Insurance Depot on February 6, 2004, to obtain automobile insurance. While they were there, they inquired about insuring their mobile home and were directed to Respondent for assistance. The Wileys asked Respondent for a rate quote to insure their mobile home for $42,000. The Wileys were satisfied with the rate Respondent quoted for American Reliable Insurance Company (American Reliable). The Wileys gave Respondent $189 as a down payment on the annual premium of $533, and Respondent and Anthony Wiley signed a contract to finance the balance with Duval Premium Budget, Inc. Insurance Depot acts as agent for the financing company. Counsel for Respondent points out that no insurance application form for the Wileys was offered into evidence, but Respondent testified that there "absolutely" was an application prepared for the Wileys, and they did not dispute that there was an application. When the contract with the financing company was signed, Respondent created a document which contained a check ("draft") in the amount of $533 made out to American Reliable and Irvin B. Green & Associates (I.B. Green). I.B. Green is the managing agent for a number of insurance companies, including American Reliable. The document indicates that the policy number is "Pending." The document is perforated so that it can be divided into three parts: the check and two identical receipts, one for Insurance Depot and the other for the Wileys, showing the draft number, down payment, and policy premium balance. The document was never divided. The draft was never sent to American Reliable or I.B. Green. Respondent told the Wileys he needed photographs of their home to send to the insurance company. Respondent testified that when the Wileys left his office, he put their file "in the pending status on my dad's desk" to await the photographs. There is a "Producer Agreement" between I.B. Green and Insurance Depot, which includes a statement that Insurance Depot will "transmit promptly to [I.B. Green] complete applications and binders for all insurance made along with all premiums, taxes, and applicable expenses or fees required." Petitioner alleged in its Amended Administrative Complaint that Respondent did not forward the Wileys' application and premium to I.B. Green in accordance with the Producer Agreement. However, Petitioner's witness, Howard Johnston, Jr., the executive vice president of I.B. Green, was not asked whether he believed Insurance Depot had violated the requirement in the Producer Agreement for prompt transmission of the complete application in the matter of the Wileys. Mr. Johnston might have considered it to be acceptable under the Producer Agreement for the agents at Insurance Depot to wait until applications were complete before transmitting them to I.B. Green. Mr. Johnston testified that I.B. Green never received the insurance application or other paperwork for the Wileys. The Wileys thought their mobile home was insured when they left Insurance Depot on February 6, 2004. They continued to believe they were insured, even though months went by without their ever receiving an insurance policy in the mail or a coupon book to make monthly payments to the financing company. They never made another premium payment after their down payment. Mr. Wiley testified that the Wileys did not make another premium payment because "they said not to make a payment right now."3 Mr. Wiley hand-delivered his car insurance payments to Insurance Depot each month, but when doing so, he never inquired about the status of his home insurance policy. Mr. Wiley testified that some time in July 2004, five months after the Wileys applied for homeowner insurance, a woman called to ask for photographs of the Wileys' home. A reasonable inference from the record evidence is that the person who called was one of the clerks at Insurance Depot.4 The Wileys testified that they took photographs of their home soon after the telephone call, and they took the photographs to Insurance Depot. Mrs. Riley said Respondent was not in, and she gave the photographs to Robert Schmidt, another insurance agent employed by Insurance Depot, who placed the photographs on Respondent's desk. Mr. Schmidt does not remember seeing Ms. Riley or accepting photographs from anyone to give to Respondent. Hurricane Charley hit Florida on August 13, 2004. It destroyed the Wileys' mobile home. Mr. Wiley testified that they still owed about $45,000 on the mobile home that was destroyed. After the hurricane, the Wileys' went to Insurance Depot to make a claim for the loss of their mobile home. They were informed by Jack Alexander, Sr., that they had no insurance coverage. They did not speak to Respondent. A Federal Emergency Management Agency (FEMA) representative advised the Wileys to get a written statement from Insurance Depot about their lack of insurance coverage, which FEMA would use to determine whether the Wileys qualified for federal disaster assistance. Mr. Wiley received a written statement from Jack Alexander, Sr., that states in part: Due to a mix up or miss communication [sic] due to the insurance company never receiving pictures of her home the policy was never bound by the company. The Wileys received a FEMA grant of $19,000, which they used as a down payment to purchase a new mobile home. Jack Alexander, Sr., repaid the Wileys the $189 premium down payment they had given Respondent in February 2004. Cecilia Hembree Cecilia Hembree resides in Port Charlotte and owns her single-family residence. Ms. Hembree testified that she visited Insurance Depot in December 2003, and Respondent assisted her in applying for homeowners insurance. Before she left Insurance Depot that day, she paid the annual premium in full with a check in the amount of $728. Ms. Hembree testified that sometime in January 2004, she became concerned when she had not received an insurance policy for her home. She testified that she spoke to Respondent, and he informed her that the policy had been mailed to her, but he would mail it again. She never got a copy of the policy in the mail. Respondent was not questioned about the alleged January 2004 conversation with Ms. Hembree. Neither Respondent nor Ms. Hembree was asked to explain how a Federated National Insurance Company (Federated) application form signed by Respondent and Ms. Hembree on February 10, 2004 (Petitioner' Exhibit 23), came into existence. No earlier application was presented. Without an explanation in the record, it is found that Ms. Hembree was mistaken about the date she applied for insurance. She did not apply in December 2003, but on February 10, 2004. Similarly, it is found that Ms. Hembree was mistaken about calling Respondent in January 2004 to inquire about her policy. If she made such an inquiry, it must have been after February 10, 2004. Ms. Hembree testified that Respondent did not ask for photographs of her home on the day she applied for insurance, but she got a call from Respondent "a couple of days later" in which he told her that he needed photographs "by the end of the week." Respondent testified that it is his regular practice to ask customers for photographs when he first meets with them, because photographs are always required by the insurance companies and that he asked Ms. Hembree for photographs on the first day he met with her. To the extent that it is material, it is found that Respondent asked for photographs at their first meeting. Ms. Hembree testified that she went to Insurance Depot the same day she was asked for the photographs and gave the photographs to Respondent after waiting for him to finish with another customer. Respondent testified that he remembered Ms. Hembree coming into Insurance Depot, waiting for a while, and then leaving without seeing him. He claims she never gave him photographs. Respondent's testimony on this point is problematic because he saw and recognized Ms. Hembree and should have understood that she was there to give him the photographs he had requested. Yet, he did not describe any effort on his part to get the photographs from Ms. Hembree before she left. Furthermore, it is difficult to believe that Ms. Hembree made a trip to Insurance Depot to give Respondent the photographs, but left without giving the photographs to Respondent or asking someone in the office to give them to Respondent or ever returning thereafter with the photographs. Finally, Respondent did not mention the issue of missing photographs in his subsequent discussions with Ms. Hembree that are discussed below. Therefore, it is found that Ms. Hembree provided photographs to Respondent, probably in February 2004. Unlike American Reliable, Federated had an internet website that its authorized agents could use to prepare applications and generate a declaration page showing the basic terms of coverage. Insurance coverage was bound for Ms. Hembree on February 10, 2004, subject to later cancellation by Federated. Federated never received the signed application form or Ms. Hembree's check for $728. Ms. Hembree did not reconcile her bank statements during this period and did not notice that the check had never come to her bank for payment, and the amount was not deducted from her checking account. Vicki Ruggiano, an underwriting supervisor at Federated, testified that when the webpage interface with Federated is used by an agent to generate an application and declaration page, the software system automatically triggers a cancellation notice in 30 days if all required documentation has not been received by Federated. Federated issued a Notice of Cancellation of Ms. Hembree's policy on March 9, 2004. The notice indicated "No application/premium received." Respondent testified that he was never informed about Federated's cancellation of Ms. Hembree's policy. Ms. Hembree testified that on or about March 23, 2004, she noticed that her bank had made a large withdrawal from her checking account to purchase insurance coverage. Ms. Hembree inquired about the withdrawal, and she was told that the bank purchased insurance for her home because they had no evidence that she had obtained insurance coverage.5 Ms. Hembree then called Respondent to tell him what the bank told her, and Respondent said he had mailed the bank proof of coverage, but he would do it again. Ms. Hembree told Respondent she had never received an insurance policy and asked Respondent to "fax" proof of insurance to her and to the bank. Respondent sent her the declaration page for Ms. Hembree's Federated policy that he downloaded from the Federated website. On the same date, Respondent told Ms. Hembree she would have to sign a "no loss statement." Respondent provided Ms. Hembree with a no loss statement form on Insurance Depot letterhead, which contained a Federated policy number, and the following statement: I, [space provided for insured's name], as a condition precedent to the reinstatement of my policy, state that no losses have occurred for which coverage might be claimed under my policy between the date of [space provided for a date] and the date and time indicated above. The no loss statement signed by Ms. Hembree was dated March 23, 2004. However, there was no beginning date filled in on the form. Without a beginning date, the no loss statement would seem to be meaningless, unless the absence of a date would be deemed by Federated to cover all possible dates. When asked why he requested that Ms. Hembree sign a no loss statement, Respondent testified that Federated would reinstate a policy if the customer stated that no losses had occurred in the interim. That testimony contradicts Respondent's testimony that on March 23, 2004, he thought Ms. Hembree's policy was still "pending" for lack of photographs. He did not explain why a pending policy would need to be reinstated or why the need for reinstatement was not an indication that the policy had been cancelled. He did not describe any effort he made to inform Ms. Hembree about the continued need for photographs or to solve that alleged problem. After Hurricane Charley hit on August 13, 2004, Ms. Hembree went to Insurance Depot to ask for an insurance adjuster to view the damage to her home. Ms. Hembree said she talked to a female employee who, after looking at Ms. Hembree's file, told Ms. Hembree her insurance company was Federated and gave Ms. Hembree Federated's telephone number. When Ms. Hembree called Federated, she was told she had no insurance coverage. In August or September 2004, Ms. Hembree called Insurance Depot and spoke to Jack Alexander, Sr. On September 24, 2004, Mr. Alexander prepared an application for Ms. Hembree for coverage by Universal Property and Casualty Insurance Company (Universal). The application indicates that the annual premium was $1,149. Mr. Alexander paid the premium, although it was about $400 more than the premium Ms. Hembree had paid for the Federated policy.6 Neither Mr. Alexander nor Ms. Hembree said whether Ms. Hembree had to provide new photographs of her home to send to Universal. Mr. Alexander testified that when he was confronted by Ms. Hembree about her Federated insurance, he discussed it with Respondent, who told Mr. Alexander that "it was taken care of and should have been in force." Respondent testified that he was unaware of his father's conversations with Ms. Hembree and that his father had purchased a Universal policy for her. Ms. Hembree presented invoices showing that she paid $9,576 to repair damage to her home she claimed was caused by Hurricane Charley. The Palmers William and Terese Palmer went to Insurance Depot on February 23, 2004, to purchase homeowner insurance for their residence in Port Charlotte. They were assisted at Insurance Depot by Respondent. Most insurance companies charge a higher premium for insurance on a seasonal residence, because the risk of loss is greater. Mr. Palmer testified that the Port Charlotte residence is now his primary residence, but when he applied for insurance in 2004, he was living in McHenry, Illinois, and he told Respondent that the Port Charlotte property was for seasonal use. Respondent denies that he was told that the Port Charlotte residence was only used seasonally by the Palmers. The Federated application form prepared by Respondent and signed by Terese Palmer and Respondent indicates that the insurance was for a primary residence. One of the documents provided to Respondent at the time the Palmers were applying for insurance was a settlement statement used in conjunction with the Palmer's loan from the U.S. Department of Housing and Urban Development to purchase the Port Charlotte residence. It shows the address of Mr. Palmer, the "borrower," as McHenry, Illinois. Petitioner argues that this is proof that Respondent knew that the Palmers' primary residence was in Illinois and the Port Charlotte residence had to be seasonal. However, the address on the loan form was also consistent with Respondent's belief that the Palmers had purchased the Port Charlotte residence to make it their primary residence. There was no motive for Respondent to falsify the application form by indicating the Palmers' residence was primary, rather than seasonal. The application form was signed by Mrs. Palmer, attesting to the accuracy of the information on the form. It is found that Respondent either was not told by the Palmers or did not hear them say that the Port Charlotte residence was seasonal. On the same day they met with Respondent, February 23, 2004, the Palmers paid the premium of $1,014 by credit card. Admitted into evidence was an Insurance Depot check to Federated, signed by Respondent and dated February 24, 2004, in the amount of $1,014. The Palmers' next credit card statement showed the premium was paid. On March 29, 2004, Federated issued a notice of cancellation of the Palmers' insurance policy. The notice showed the reason for cancellation as "No application/premium received." Mr. Palmer said he received Federated's notice of cancellation in the mail. He called and informed Respondent, who told Mr. Palmer that "it occasionally happens" and Respondent would "reapply" and the problem would be corrected. The record evidence shows that Federated received a check for the Palmers' insurance premium from Insurance Depot by mail on April 5, 2004, but Federated did not accept the payment because the policy had been cancelled. The Palmers were not informed that Federated had not reinstated their insurance policy. Subsequently, Mr. Palmer visited Insurance Depot to inquire about occupational insurance and asked about the deductible provision on his homeowner policy while he was there. The woman he spoke to informed him that she could not find a file on him. Mr. Palmer then complained to Petitioner about the handling of his insurance by Respondent. Following his complaint, Mr. Palmer got a postcard from Insurance Depot requesting that he come in to discuss the problem. When Mr. Palmer went in, Respondent gave him a check to reimburse him for the unused premium payment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order suspending Respondent's license for six months. DONE AND ENTERED this 22nd day of June, 2007, in Tallahassee, Leon County, Florida. S BRAM D. E. CANTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 2007.
The Issue This is a license discipline proceeding in which the Petitioner seeks to take disciplinary action against the Respondent on the basis of allegations of misconduct set forth in an Administrative Complaint. The violations charged in the Administrative Complaint relate primarily to alleged mishandling of funds received on behalf of an insurer.
Findings Of Fact The Respondent, Louis Iannucci, is currently eligible for licensure and is licensed in this state as a life insurance agent, life and health insurance agent, and health insurance agent, and was so eligible and so licensed at all times relevant to these proceedings. At all times pertinent to these proceedings the Respondent was an officer and director of Certified Insurance Associates, Inc., an incorporated insurance agency doing business in Fort Lauderdale, Florida. At all times pertinent to these proceedings, the Respondent was a duly appointed agent in this state under contract with United American Insurance Company. At all times relevant to these proceedings, Respondent was the sole authorized signatory on his business bank account with Capital City Bank, now known as Union Planters Bank. On or about February 12, 1997, Respondent received a check from Gretchen Smith of Titusville, Pennsylvania, in the amount of $1,833.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payment of Mrs. Smith's United American Medicare supplement insurance policy. Respondent endorsed this check and deposited it into his business bank account on February 18, 1997. Even though the premium was due on or before March 1, 1997, the Respondent waited until April 14, 1997, to remit only $486.00 of the money received from Gretchen Smith to United American Insurance Company in payment of a quarterly premium on her policy. Respondent retained the remainder of the funds for his own use and benefit. A short while later it was brought to the attention of United American Insurance Company that Gretchen Smith had paid an annual, not quarterly, premium for the policy. United American Insurance Company wrote to Mrs. Smith and requested a copy of her cancelled check for $1,833.00 that she had given to the Respondent. Upon receiving Gretchen Smith's response and a copy of her premium check, the insurance company credited her account with payment of an annual premium and reversed out the quarterly payment that had been posted to her account. The Respondent was charged for the difference of $1,347.00. On or about September 6, 1996, Respondent received a check from Mr. and Mrs. Lew Kisver of Plantation, Florida, in the amount of $3,666.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payments of Mr. and Mrs. Kisvers' United American Medicare supplement insurance policies. Respondent endorsed this check and deposited it into his business account. The Respondent, on or about September 25, 1996, remitted only $1,894.00 of the money received from Mr. and Mrs. Kisver to United American Insurance Company in payment of a semi-annual premium on each Kisver policy. Respondent retained the remainder of the funds for his own use and benefit. On or about March 7, 1997, it was brought to the attention of United American Insurance Company by Mr. and Mrs. Kisver that they had paid an annual, not semi-annual, premium for each of their policies. United American requested Mr. and Mrs. Kisver to provide a copy of their cancelled check or receipt for their payment of the premium. In response, the Kisvers mailed to the insurance company a copy of their cancelled check for $3,666.00 that they had given to the Respondent to pay their policy premiums. Upon receiving the Kisvers' response and copy of their premium check, the insurance company credited their account with payment of annual premiums and reversed out the semi-annual payments that had been posted to their accounts. The Respondent was charged the difference of $1,894.00. By coincidence, at this same time in March 1997, Respondent remitted $1,894.00 to the insurance company in payment of the next semi-annual premium due on the Kisver policies. The insurance company subsequently credited the money to Mr. Iannucci's account as he had already been charged for the premiums. The Respondent's agency contract then in effect with United American Insurance Company provided in relevant part: The Agent shall immediately remit to the Company all premiums collected by the Agent or sub-agents in excess of the Agent's initial commission thereon. In addition, the contract limited the agent's authority to collect premiums by specifically providing that the Agent shall not "collect or receipt for premiums other than initial premiums with applications for insurance." At all times material, the United American Insurance Company had on file at the Capital Bank a letter of authorization. The letter of authorization read as follows, in pertinent part: This letter will authorize the captioned General Agent of United American Insurance Company [the Respondent] to endorse and deposit to the General Agent's account with your bank checks made payable to the United American Insurance Company for premiums collected at the time of application for insurance with this Company. The General Agent may also withdraw or disburse any such funds so deposited. Pursuant to both the agency contract and the letter of authorization on file with the bank, the Respondent lacked authority to deposit and cash checks received from customers in payment of their renewal premiums. Similarly, the Respondent lacked authority to hold premium funds in his bank account for lengthy periods of time. The Respondent was aware, or should have been aware, of these limitations on his authority. Between September 1996 and April 1997, the balance of Respondent's business bank account with Capital City Bank at the end of each month was less than the amount of the premium funds that Respondent had received from the Kisvers and Gretchen Smith but had not remitted to the insurance company. At the end of September and October 1996, Respondent's bank account had an ending balance of $1,659.91, and $1,589.82 respectively. At this time he should have been holding $1,894.00 of unremitted funds in trust on behalf of the Kisvers and the insurance company. In February 1997, the end of the month balance of the business account was only $71.19, even though Respondent should have been holding not only the $1,894.00 previously received from the Kisvers but also the $1,347.00 received from Gretchen Smith on February 12, 1997, but not remitted to the insurance company. Respondent had apparently applied the insurance premium payments received from the insureds for his own use and benefit, even though the funds were fiduciary in nature and were held in trust. At all times material to this case, it was the practice of United American Insurance Company to forward monthly statements to the Respondent. If the Respondent had a credit balance, the statement would be accompanied by a check in the amount of the credit balance. If the Respondent had a debit balance, the statement would request that the Respondent make "payment in full by return mail." Although the United American Insurance Company debited the Respondent's account for the portions of the Smith and Kisver funds that were not promptly forwarded to the insurance company, there is no clear and convincing evidence that the United American Insurance Company ever made demand on the Respondent to pay those specific amounts. There is no clear and convincing evidence that the Respondent had any fraudulent or dishonest intent in connection with his handling of the Smith and Kisver funds discussed above. The Respondent's handling of those funds does, however, demonstrate a lack of fitness to engage in the business of insurance as well as a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by his license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order to the following effect: Concluding that the Respondent violated Sections 626.611(7), 626.611(8), and 626.611(10), Florida Statutes, as charged in Count One and in Count Two of the Administrative Complaint; Concluding that the allegations that the Respondent violated Sections 626.611(9) and 626.621(4), Florida Statutes, should be dismissed for lack of clear and convincing evidence to establish those violations; and Imposing a penalty consisting of a suspension of the Respondent's License for a period of six months. DONE AND ENTERED this 18th day of November, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1998.
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalties should be imposed.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Respondent's Licensure and Work History Respondent is now, and has been at all times material to the instant case, licensed by Petitioner as a general lines (property and casualty) insurance agent. At no time material to the instant case has he been licensed as a surplus lines agent. In the 30 plus years that he has been in the insurance business, no licensing agency has taken any disciplinary action against him. From January of 1997 until July of 1997 (which includes the entire period during which the events described in the Administrative Complaint took place), Respondent worked as an insurance agent for Braishfield of Florida, Inc. (Braishfield), an insurance agency/brokerage firm. (In July of 1997, he started his own insurance agency/brokerage firm, Bandel and Associates, which he still operates.) The Saxony Condominium Association The Saxony Condominium Association (Association) consists of the owners of the 672 units (located in 14 buildings) in the "Saxony" section of the Kings Point condominium development in Delray Beach. The development is approximately seven to ten miles from the Atlantic Ocean. For the past six years, Elinor Lichten has been the president of the Association. The Association's Insurance Committee In August of 1992, before Ms. Lichten became president of the Association, Hurricane Andrew made landfall in the South Florida area and caused extensive property damage. In the years that followed, the premiums that the Association paid for insurance increased dramatically. In February of 1996, in an effort to contain these escalating insurance costs, the Association formed an insurance committee. Ms. Lichten named Dan Miller to serve as the chairman of the committee. Mr. Miller appointed the remaining members on the committee. Ed Greenbaum was among those Mr. Miller appointed to the committee. Ms. Lichten was not a voting member of the committee, although she did attend some (but not all) of the committee's meetings. The Association's Fireman's Fund Policies At the time the insurance committee was formed, the Association was insured by Fireman's Fund. It obtained this insurance coverage through Sedgwick James of Florida, Inc. (Sedgwick). The insurance agent who represented Sedgwick in its dealings with the Association was J. Simione. In October of 1996, the Association received a notice that the Fireman's Fund policies would not be renewed. Upon receiving the notice, Ms. Lichten telephoned Mr. Simione, who advised her that he was "negotiating to reinstate that policy and that in all probability it would be reinstated." Mr. Simione subsequently contacted Ms. Lichten and advised her that the negotiations had been successful. The Fireman's Fund policies were thereafter renewed. The renewed policies had an effective date of December 1, 1996, and an expiration date of December 1, 1997. The Association agreed to the renewal notwithstanding the renewed policies' high premiums and deductibles. Members of the insurance committee, who had met with Mr. Simione "between three to five times" prior to the renewal of the policies, had advised the committee members that there were no better options available and that they should "be absolutely delighted [to] have the coverage [they] had since insurance companies were not renewing policies." When they asked Mr. Simione to "find [a] layered program [for the Association, like those other condominium associations in the area had] where the [risk] is divided so that the premiums are reduced," Mr. Simione told them that it "wasn't possible," explaining that "all of the layering programs [they] had referred to had since fallen apart." The Insurance Committee's Discussions with Respondent Following the renewal of the Fireman's Fund policies, members of insurance committee, at the direction Mr. Miller, "start[ed] to interview" other insurance agents "to see whether or not Mr. Simione's comment to [them concerning the unavailability of a layered program for the Association] had any validity." Respondent was the second agent to be "interview[ed]." He was initially contacted by Ed Greenbaum, who told him that the insurance committee "was very upset by the current coverage package they had" and wanted to see if "there was something better." Respondent spoke subsequently with both Mr. Greenbaum and Mr. Miller. Following this conversation, he sent Mr. Greenbaum the following letter, dated February 23, 1997: It was pleasure talking to you and Dan Miller and I appreciate your candor. Based on the information you provided on the phone, it appears the premiums and deductibles that are currently in force are excessive. My comment is based on what is available in the marketplace today. It appears that the earliest I can sit down and discuss this with the board is in May. My recommendation is that we move our meeting up to March or April. This will enable us to obtain the best possible terms and conditions as we will have ample time prior to the beginning of the hurricane season. The association has nothing to lose and potentially a lot to gain. My evaluation requires a minimum amount of time. After our meeting and a review of the current program and losses, I will be in a position to confirm in writing what improvements can be made. I look forward to hearing from you. Respondent provided the "marketing person" at Braishfield with the information he had been provided by Mr. Greenbaum and Mr. Miller concerning the Association's insurance needs and loss history. The "marketing person" thereupon canvassed the market to determine if there were any alternatives to the Fireman's Fund policies. Such canvassing revealed that there did exist an alternative to the Fireman's Fund policies, in the form of a layered program in which three of the participating insurers were not "authorized insurers," as that term is used in Florida's "Surplus Lines Law." The "marketing person" prepared the following "Statement of Diligent Effort" for Respondent's signature as the "producing agent": Pursuant to [sic] Section 626.914(4), Florida Statutes, requires producing agents to document that a diligent effort has been made to place a risk with at least three (3) authorized insurers prior to contacting a surplus lines agent to export the risk in the surplus lines market. The following form, prescribed by the Department, must be completed IN FULL for each risk. Name of person contacted and telephone number are MANDATORY. COUNTY OF RISK: Palm Beach County NAME OF INSURED: Saxony A-N Condominium Association TYPE OF COVERAGE: Property AUTHORIZED INSURER #1 NAME- Hartford Insurance TELEPHONE NUMBER- 800-824-1732 PERSON CONTACTED- Ben Wilson DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- General Accident Ins. TELEPHONE NUMBER- 407-660-1985 PERSON CONTACTED- Bob Rayser DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- RISCORP TELEPHONE NUMBER- 800-226-7472 PERSON CONTACTED- Bryan Flowers DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Risk does not qualify for program Respondent signed this "Statement of Diligent Effort" on the line provided for the "[s]ignature of [p]roducing [a]gent." He did so in good faith based upon the representations made to him by the "marketing person." In April of 1997, Respondent met with members of the insurance committee and Ms. Lichten at Mr. Miller's residence to discuss the possibility of the Association obtaining, through Braishfield, the layered program of insurance described above to replace the Fireman's Fund policies that were then in effect. Respondent, on behalf of Braishfield, made a "conceptual" proposal at the meeting. After the meeting, Respondent sent the following letter, dated April 16, 1997, to Dan Miller: It was a pleasure meeting with you and the committee and again I want to apologize for arriving late. Per our discussions, we will provide our final proposal after receiving written confirmation regarding the three year loss history for property and liability. Our proposal will be effective June 1, however we will use whatever date is acceptable to the committee. We anticipate, it will take us approximately two weeks from the time we go into the marketplace until everything is finalized. It appears, there is minimal exposure for equipment, such as heating, cooling and electrical systems. Consequently, we will not include machinery and equipment breakdown in our final proposal. I strongly recommend that you obtain an updated appraisal on your buildings as it is extremely important that your replacement cost reflect today's cost. This will eliminate any potential coinsurance or under insurance problem in the event of a loss. I look forward to working with you and the committee and being appointed as your broker to assist you in all your insurance needs. In May of 1997, Respondent, on behalf of Braishfield, presented a detailed formal written proposal (Braishfield's Written Proposal) to the Association. Braishfield's Written Proposal contained an "Executive Summary" which read as follows: Executive Summary Per our conceptual proposal and correspondence of April 16, we are pleased to present our final program including terms and conditions. Our proposal is based on information provided by the Insurance Committee on policies that are currently in force. Our comparison of coverages incorporates this information. The differences are what we believe to be the key or salient features of each program. The bottom line is, we are offering a substantial premium savings, significantly lower deductibles with comparable coverage. Our recommendation is to appoint Braishfield of Florida as your broker to place all coverage in effect as soon as possible. The "final program" referenced in the "Executive Summary" was a layered program. The "[p]articipating [c]arriers" in the program and their "Best's Ratings" were listed as follows in Braishfield's Written Proposal: PARTICIPATING CARRIERS Property Insurance Carriers Best's Rating Lexington Insurance A++15 General Star Insurance A++7 Royal Surplus Lines A-7 General Liability/Crime New Hampshire Insurance A++15 Directors & Officers Liability Chubb Insurance Group A++15 Umbrella Liability Great American Insurance A+11 The three "carriers" providing "property insurance" coverage were not "authorized insurers," within the meaning of the "Surplus Lines Law." The "[b]enefits of the Braishfield [p]roposed [p]rogram [o]ver [c]urrent [p]rogram" were described in Braishfield's Written Proposal as follows: A Premium Savings of $42,529 Annually.* No Coinsurance Penalty. A 2% Deductible per building as respect to the perils of wind and hail. A $5,000,000 limit for Excess Liability A $5,000 AOP Deductible * Our premium savings is based on the following: Company Coverage Premiums Fireman's Fund Package $144,071 Fireman's Fund Umbrella $2,168 TOTAL $146,239 $ 12,966 (Agent's Fee) TOTAL $159,205 Proposal Cancellation Date June 1, 1997 Pro Rata Return Premium- $79,761 Short Rate Return Premium- $71,801 NOTE: A $1,000,000 Umbrella would produce a further savings of $3,395 Braishfield's Written Proposal also contained a "Program Comparison," which provided as follows: Coverage Current Proposed Program Program $20,454,000 Blanket As Per Limit on Schedule Real and Personal Property Coinsurance Yes No Demolition $250,000 Cost Law & $5,000,000 $500,000 Ordinance Deductible -Wind 3% of $20,454,00 2% Per Building -AOP $10,000 $5,000 Valuation Replacement Cost Re- Placement Cost Unnamed Yes See Note Storm Deductible Umbrella $1,000,00 $5,000,000 Limit NOTE: Our comparison does not include unnamed storm wind coverage. This will be discussed during the presentation. Respondent met with the committee members and Ms. Lichten for about eight hours on or about May 6, 1997. At the meeting, he explained Braishfield's Written Proposal in detail and answered questions. On or about May 9, 1997, Respondent sent the following letter to Mr. Miller for the insurance committee's consideration: The benefits to the association under Braishfield's proposal are: A $5,000 AOP deductible Significantly lower premium No co-insurance penalty A superior wind deductible in the event of a catastrophe such a hurricane. The elimination of any rate increase in 1997 even if this is a bad year for the insurance industry. Outstanding insurance service will include a renewal strategy meeting 120 days prior to expiration. This meeting will disclose options, market conditions and pricing projections. This will allow the committee to act proactively instead of reactively in the best interest of the association. -$5,000,000 Umbrella. One other point to consider involves the payment of premium. If you cancel the Fireman's Fund Package policy on June 1, the earned premium is estimated to be $72,035. If you include a short rate penalty this increases to $79,239. Including the May installment the association has paid $96,165. The difference or the return premium due the association is $24,130 which should be refunded within 60 days. Since you have paid more premium than is earned no payment should be made for June. This enables the association to apply June's payment of $12,015 toward the down payment under Braishfield's program of $26,557.16. The net amount the association has to come up with is $14,542.16. I trust this will be helpful to the committee. It has not been shown that that Respondent at any time knowingly provided the Association (through its officers and representatives) with any false or misleading information or that he knowingly, with the intent to deceive, hid any information from the Association. He disclosed, among other things, that Braishfield's proposed layered program, unlike the Fireman's Fund policies, included "unauthorized insurers" and explained the differences between "unauthorized" and "authorized" insurers. In explaining these differences, he talked about the Florida Insurance Guaranty Act, which protects those insured by "authorized insurers" in the event of insurer insolvency, but does not offer similar protection to those insured by "unauthorized insurers." Respondent also advised that the mid- term cancellation of the Fireman's Fund policies would result in a "short rate" penalty and, in addition, he discussed how Braishfield's proposed layered program would be financed and the interest rates that would be charged. The Association's Acceptance of Braishfield's Written Proposal The insurance committee brought Braishfield's Written Proposal before the Association's board of directors, which voted 15 to 14 in favor of accepting the proposal and replacing the Fireman's Fund policies with the layered program proposed by Braishfield. Post-Acceptance Activities After learning of the results of the vote, Respondent sent the following letter, dated May 27, 1997, to Mr. Miller: I was delighted to hear that the board has made their decision in favor of Braishfield. If we are looking at a May 31, 1997, effective date it is essential that the following matters be addressed immediately: The original finance agreement signed in the appropriate places indicated by "x." A check in the amount of $26,557.67 should be made payable to Braishfield of Florida for the down payment. Both the finance agreement and the check must be available to be picked up by me prior to May 31, 1997. A broker of record letter naming Braishfield on the Director's and Officer's liability policy must be executed and signed. The specific policy number should be included in the caption. A sample letter was included in our final proposal. We will be sending you a completed statement of values form which will require signature of a board or insurance committee member. I have taken the liberty of drafting a letter advising the agent to cancel all coverages effective May 31, 1997. Included is a request to confirm the return premium due the association as well as any unearned fee that will be returned. This letter should be written on Saxony letterhead and signed by you or the President of the association. In accordance with Respondent's suggestion, Ms. Lichten sent the following letter, dated May 28, 1997, to Mr. Simione: Re: Fireman's Commercial Insurance Pkg. Policy #S15MZX80662013 Fireman's Umbrella Insurance Policy #XSC 00074217738 Dear Mr. Simione: Effective May 31, 1997, please cancel above captioned policies. The Saxony Board of Directors at a Special Meeting held on May 27, 1997 voted to appoint a new agent. Please acknowledge the above cancellation in writing and also confirm the return premium due under each policy, including any penalty. Confirmation of any unearned brokerage fee should also be included. All calculations should be based on a May 31, 1997 cancellation date. Thank you for your cooperation and consideration you have given Saxony over the past few years. The following day, May 29, 1997, Ms. Lichten sent the following letter, with the described enclosures, to Respondent: Enclosed herewith please find the following: Duly signed Finance Agreement for our Insurance as agreed upon. Check #001 payable to Braishfield of Florida date May 28, 1997 drawn on Sun Trust in the amount of $26,557.67, which represents our down payment. Please send us [a] letter acknowledging receipt of the above together with [a] letter indicating that we will indeed have insurance as we agreed to commencing May 31, 1997. Looking forward to working with you. That same day, May 29, 1997, Respondent sent Ms. Lichten "copies of binders confirming coverage effective May 31, 1997 as per [Braishfield's] May 6th proposal." On June 5, 1997, Ms. Lichten sent Mr. Simione a signed (by Ms. Lichten) and dated (May 29, 1997) "Cancellation Request/Policy Release" form formally requesting cancellation of the Fireman's Fund policies, effective May 31, 1997. On or about June 20, 1997, Ms. Lichten was sent a Certificate of Insurance "certify[ing] that the policies listed [which had been described in Braishfield's Written Proposal] ha[d] been issued to the [Association] for the policy period indicated [May 31, 1997, to May 31, 1998]." On or about June 30, 1997, the appraiser that the Association had hired (Allied Appraisal Service) completed the "updated appraisal on [the Association's] buildings" that Respondent had recommended. Respondent reviewed the appraisal report and prepared a written analysis of the report, which he subsequently discussed with the members of the insurance committee and Ms. Lichten. In his written analysis, Respondent stated, among other things, the following: This proposal analyzes the appraisal made by Allied Appraisal Service on June 30, covering the building and surrounding improvements at Saxony "E," Delray Beach, Florida 33446. The purpose is two fold. To ascertain if the values being reported to the insurance companies reflect as closely as possible the exposure at risk. This includes the impact on coverages such as limits and deductibles. The other area is the premium which includes various options. The property coverage is underwritten in a layered program using three companies. The total limit of coverage is $20,454,000, which is subject to a sublimit per building of $1,461,000. Based on the updated appraisal, the 100% replacement cost on buildings and improvements is $24,561,978 which breaks down to $1,754,427 per building. These amounts were arrived at by eliminating and or reducing those items that were not the responsibility of the association. Other adjustments were made regarding contingencies and contractor's profit which should be discussed. The breakdown is provided on Exhibit I attached. The difference or the amount of increase required to comply with the appraisal is $4,107,978. The change in values increases the wind deductible from $29,220 to $35,088 per building. On or about July 18, 1997, Respondent (who, by this time, had left the employ of Braishfield and had started his own insurance agency/brokerage firm) sent Ms. Lichten a letter, which read as follows: Per our meeting with the insurance committee on Wednesday, July 16, it was recommended the building values be amended based on the property appraisal made by Allied Appraisal Service[] on June 30, 1997. The 100% replacement value including improvements is $24,561,978. The total amount of insurance in force is $20,454,000. The net result is a[n] increase of $4,107,978. Also included in the appraisal is the cost to change certain items revised by current building codes. This is known as law or ordinance coverage. We recommend an increase in the limit by $850,000 to $1,350,000 to cover the additional exposure. Both of the above increases place the property insurance in compliance with the appraisal. The underwriter has agreed to provide blanket coverage using 90% coinsurance. The blanket amount excluding law or ordinance coverage is $22,105,760. This is an improvement over the existing program as the blanket amount would apply to any one loss and the basis for determining the premium would be significantly less. Using an effective date of July 31, the additional premium including taxes and fees is $8,446.20. In addition to the improvement in coverage and key deductibles, our program provides a net savings in excess of $34,000 a year over the Fireman's Fund policy. The changes that Respondent had recommended based upon the "updated Appraisal" were "bound," as Respondent advised Ms. Lichten by the following letter dated August 12, 1997: This will confirm that effective July 31, the following changes have been bound: The total insurable value increased to $22,105,780. The Law or Ordinance coverage increased to $1,350,000. Coverage is on a blanket basis. The coinsurance clause has been amended to 90%. The 2% wind deductible per building is increased to $31,580. All of these changes were based on the property appraisal made by Allied Appraisal Service on June 30, with some exceptions, such as Misc. & Contingencies and Overhead/Profits. It was agreed by the insurance committee not to include these items. Attached is our invoice amount of $8,446.20 representing the additional premium due hereunder. Please make your check payable to Braishfield of Florida and send it to me. In October of 1997, Respondent submitted a renewal proposal to the Association. The proposal was accepted and renewed coverage was bound, effective December 1, 1997, for a period of three years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order dismissing the Administrative Complaint issued against Respondent. DONE AND ENTERED this 7th day of July, 2000, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 2000.
Findings Of Fact Introduction At all times relevant hereto, respondent, Charles Lee Anderson, was licensed as a general lines insurance agent by petitioner, Department of Insurance and Treasurer. Respondent presently resides at 2291 Northwest 12th Court, Pompano Beach, Florida. He has been licensed by petitioner since 1968, and, prior to this proceeding, had no blemishes on his record. When the events herein occurred, Anderson was the president and director of Payless and Save Insurance Underwriters Corporation (Payless), an insurance agency located and doing business at 2401 Northwest 21st Avenue, Fort Lauderdale, Florida. Anderson was also the general lines agent of record for the corporation. Count I In early January, 1984 Anderson was working from midnight until 8:00 a.m. as a security guard. Because of this, he hired one Mamie Baugh as an independent contractor to operate his insurance agency. Anderson authorized Baugh to sell policies and sign his name on insurance applications and other documents. Anderson would drop by his office two or three times a week to "check on (Baugh)" and "look at the paperwork." On or about January 3, 1984 Blanche Jones went to Payless to purchase an automobile insurance policy. She chose Payless because it was located just around the corner from her home in Fort Lauderdale, and was more convenient than her former insurance agent in Hallandale. Because Anderson was not present, Jones met with Baugh and discussed her insurance needs. Baugh filled out an application on behalf of Jones for automobile insurance with Industrial Fire and Casualty Insurance Company (Industrial) in Hollywood, Florida. Anderson was a licensed agent with Industrial, and authorized to act as a brokering agent for that company. Baugh signed Anderson's name on the application as brokering agent. Jones then gave Baugh a check for $456 as payment for the policy and was given a receipt. In February Jones had not received her policy or any evidence that she was insured. Her husband decided to visit the Payless office and obtain an insurance identification card in the event they had an accident. He met with Anderson who promised to give him a card. The following day, Anderson went to Jones' house and dropped off a business card. 1/ While there, Jones told Anderson she had paid for a policy but had never received anything. Anderson promised to "check into the particulars." After not hearing from Anderson for two months, Jones' husband went to Payless' office and found it closed. Jones thereafter went to her old insurance agent in Hallandale, and then to Public Insurance Agency (Public) in Hollywood. Public was the managing general agent for Industrial, the insurance company with whom Jones thought she had a policy. Public had no record of having received Jones' application or the $456 premium paid to Anderson. It also had no record of Anderson having telephoned Public on its "application telephone", a procedure that Anderson should have followed in order to have a binder issued on the policy. Consequently, Public never issued a policy insuring Jones. In late 1985 Jones was reading a copy of the Hollywood Sun Tattler, a local newspaper, and noticed an article about Anderson, who was then running for chief of police in Dania. She contacted the reporter who wrote the story who in turn contacted Anderson. Respondent telephoned Jones the next day and promised to return her money. A week later (January 10, 1986) Jones received a $456 money order from Anderson. A representative of Public established that Anderson was given a copy of an underwriting guide which contained explicit instructions on how to bind coverage and fill out applications. Among other things, the guide required that Anderson, and not his surrogate, sign all applications. Therefore, he was not authorized to allow Baugh to sign in his stead. Count II On or about December 20, 1983 Joseph V. Baxter visited Payless for the purpose of purchasing insurance coverage on various rental properties he owned. Baxter met with Anderson who prepared six "Homeowners Application for Quotation Only" with International Bankers Insurance Company (IBIC). Baxter gave Anderson a check for $818 as payment for the coverage. Anderson later endorsed the check. On January 11, 1984 Baxter returned to Payless and made application for a seventh insurance policy on another rental property. He gave Anderson a $318 check which Anderson subsequently endorsed. At that time Baxter was given a certificate of insurance indicating coverage with Great Southwest Fire Insurance Company (GSFIC). Several months later Baxter received a telephone call from a representative of the lending institution which held the mortgages on his property. Baxter then instructed Anderson to contact the institution and certify that Baxter had coverage on his properties. Anderson telephoned the institution in Baxter's presence and told the representative that Baxter was insured. Sometime later Baxter was again contacted by the mortgagee concerning his insurance coverage. Baxter attempted to visit Anderson but found Payless had closed its offices and gone out of business. Baxter then filed a complaint with petitioner. He never received insurance policies from IBIC or GSFIC. On January 10, 1986 Anderson repaid Baxter $1,136, the amount received by Anderson some two years earlier. A representative of IBIC established that Anderson never remitted the premiums or mailed the six quotation forms to the home office. It was further established that although GSFIC quoted a rate for Anderson on Baxter's seventh piece of property, it never received the follow-up application or premium. Respondent's Case Respondent blamed the Jones mishap on Baugh, who he claimed may have misplaced the application and taken the money. According to Anderson, she now lives in California and was unable to attend the hearing. However, he had no explanation for failing to follow up on Baxter's applications. Anderson said he closed his business in February, 1984 after a series of break- ins at his office, and left a note on the door giving a telephone number where he could be reached. However, he made no effort to personally contact those persons who held policies. Anderson further stated that he was unaware of the Jones and Baxter complaints until contacted by the newspaper reporter and petitioner, and then promptly repaid all monies due.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of the violations set forth in the Conclusions of Law portion of this order, and that his license and eligibility for licensure be REVOKED. DONE and ORDERED this 10th day of September, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 1986.
Findings Of Fact The Respondent, Teresa Jean Watson, at all times material to this proceeding was licensed as an ordinary life agent, a disability insurance agent and a general lines insurance agent. She was the only general lines agent licensed to sell insurance at the T. J. Watson Insurance Agency, Inc. and all insurance sold by that firm at times pertinent hereto was sold and issued under authority of her license. During times material to this proceeding, Teresa Jean Watson sold insurance coverage under authority of her general lines license either as direct agent for various insurance companies for whom she was general agent or, on behalf of MacNeill and Son, Inc. (MacNeill), her managing agency, which represented various insurance companies for whom the Respondent wrote coverage. Between February 1st and February 15, 1982, a homeowner's insurance policy was sold to Tony and Martha Williams by the Respondent's agency under the authority of the Respondent's general lines insurance agent's license. That homeowner's policy required a premium of $211.00. The policyholder, Tony Williams, wrote two checks to the T. J. Watson Agency dated January 22, 1982 and February 12, 1982. Those two checks totalled $174.00. The checks were cashed by the Respondent's agency on January 26, 1982 and on February 6, 1982. The Independent Fire Insurance Company issued the policy to Tony and Martha Williams and on August 4, 1982 a representative of the Independent Fire Insurance Company wrote the Respondent to advise her that she owed that company a balance of $179.35, as of May 1982. Petitioner asserts that the $179.35 represents the amount of Tony Williams' premium owed to the insurer, less the Respondent's commission, which if added together would equal the $211.00 premium on the Williams' policy. Although it was established that $179.35 was owed by the Respondent to the Independent Fire Insurance Company, and never paid, it was not established that it represented the premium due specifically for the Williams' policy as was charged in count 1 of the Administrative Complaint. For instance, the checks paid by the Williamses to the Watson Agency total $174.00 and therefore there is a discrepancy between the total of those checks and the $179.35 amount Independent Fire Insurance company was owed by the Respondent. This fact coupled with the fact that the dates on the checks from the Williamses (January and February) substantially predate the May 1982 billing date to Respondent from Independent Fire, renders it unproven that the checks written to the Watson Agency which Respondent negotiated and retained the benefit of, related to the amount of unremitted premium owed by Respondent to the Independent Fire Insurance Company. In short, it was established that $174.00 was paid the Respondent and her agency by the Williamses. But, it was not established that the premium paid by the Williamses became misappropriated fiduciary funds converted by the Respondent to her own use and benefit. It was merely established that as of May 1982 the Respondent owed the Independent Fire Insurance Company $179.35 as a past-due account It was not established that the Williamses ever suffered a lapse of insurance coverage or were otherwise harmed by the Respondent's failure to pay Independent Fire the $179.35. Indeed, the $179.35 figure was not proven to be more than a mere debt owed by Respondent to Independent Fire Insurance Company. The figure was not shown to have been related to any particular policy. The Respondent and her insurance agency in the regular course of business wrote insurance coverage for companies represented by MacNeill and Son, Inc., the Respondent's managing agency. The regular business practice between the Respondent and MacNeill was for the Respondent to write coverage on behalf of insurers represented by MacNeill and to remit on a regular open account" basis insurance premiums due MacNeill on behalf of its insurance company principals on a monthly basis. The Respondent became delinquent in submitting premiums to MacNeill and Son in November 1981. After unsuccessful efforts to collect the delinquent premium funds from the Respondent, MacNeill and Son, Inc. suspended T. J. Watson Insurance Agency and the Respondent from writing further coverage for companies they represented in January 1982. The Respondent purportedly sold her agency to one Thomas Zinnbauer in December 1981, but had already fallen into a pattern of failing to remit insurance premiums over to MacNeill before that time. In any event, the purported sale to Thomas Zinnbauer was a subterfuge to avoid collection of delinquent premiums inasmuch as the Respondent held herself out, in correspondence with MacNeill, (See Petitioner's Exhibit 4) to be the president of the agency at least as late as April 1982 and, at that time and thereafter, the agency continued to sell insurance under the aegis of the Respondent's license. After the Respondent made up the delinquency in premium remissions to the MacNeill Agency that agency restored her underwriting authority in January 1982. Shortly thereafter however, the Respondent and the T. J. Watson Agency again became delinquent in remitting insurance premiums to the MacNeill Agency and followed a quite consistent pattern of failing to forward these fiduciary funds to MacNeill for some months. Ultimately the Respondent and her agency failed to forward more than $6500.00 in premium payment funds to MacNeill and Son, Inc. as was required in the regular course of business. MacNeill and Son, Inc. made repeated futile attempts to secure the misappropriated premium payments from the Respondent and her agency. MacNeill made several accountings of the amount of the acknowledged debt to the Respondent. The Respondent communicated with MacNeill concerning the delinquent premium payments and acknowledged the fact of the debt, but sought to reach an amicable arrangement for a repayment schedule. Re- payment was never made, however, and ultimately the Petitioner agency was informed of the deficiencies and prosecution resulted. The Respondent knew that the premiums had been collected by herself and her agency and had not been forwarded to those entitled to them. She knew of and actively participated in the improper withholding of the premium payments. This withholding and diversion of premium payments from the agency and companies entitled to them was a continuing pattern of conduct and Respondent failed to take action to halt the misappropriation of the premium payments. Further, it is established by the testimony of Matthew Brewer, who investigated the delinquent premium accounts for MacNeill, that Ms. Watson failed to advise MacNeill of the purported sale of her agency until November of 1982, almost a year after it is supposed to have occurred and then only in response to Brewer's investigation. When confronted by Mr. Brewer concerning the ownership of her agency Ms. Watson refused to tell him to whom she had sold the agency. When Mr. Brewer learned that Thomas Zinnbauer had apparently bought the agency from the Respondent Mr. Brewer conferred with him and he refused to release the agency records unless Ms. Watson gave her permission. This fact, together with the fact that Ms. Watson held herself out as president of the agency some four months after she had purportedly sold the agency to Zinnbauer, establishes that Respondent, by representing to Brewer and other personnel of MacNeill and Sons, Inc. that she had sold her agency, was attempting to evade liability for failure to forward the fiduciary premium funds obtained under the authority of her agent's license. As a result of the failure to forward the above- mentioned premium payments some of the insureds who had paid those premiums suffered lapses in coverage and cancellations of policies because MacNeill and Company and the insurers they represented believed that no premiums had ever been paid. Ultimately, MacNeill and Company learned that the premiums had been paid by the policyholders, but not remitted by the Respondent and her agency and undertook steps to reinstate coverage, but those policyholders in some instances had substantial periods of time when their coverage was lapsed due to the Respondent's failure to remit the premium funds to the managing agency and the insurance companies involved. MacNeill and Company ultimately reimbursed the appropriate insurers and insureds at its own expense, incurring substantial financial detriment as a result of the Respondent's failure to have premium payments obtained under her licensed authority properly forwarded. Had the insureds who had their policies cancelled suffered losses for which claims could have been filed during the period of the lapses of coverage, they could have encountered substantial financial difficulty.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is therefore recommended that the General Lines Insurance Agent's license of Respondent Teresa Jean Watson be revoked. DONE and ORDERED this 27th day of December, 1985, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 FILED with the Clerk of the Division of Administrative Hearings this 27th day of December, 1985. APPENDIX RULING OF PETITIONER'S PROPOSED FINDINGS OF FACT: Accepted. Accepted, although the amount represented by the two subject checks totalled $174.00 instead of $175.00. Accepted. Rejected as not comporting with the competent, substantial credible evidence adduced. Rejected inasmuch as it was not established that the amount of $179.35 owed the Independent Fire Insurance Company represented the premium on the Williamses' insurance policy. Accepted. Accepted. Accepted. Accepted, although the last sentence in that Proposed Finding constitutes, in reality, mere argument of counsel. Accepted. Rejected as not comporting with the competent, substantial credible testimony and evidence actually before the Hearing Officer. Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. RULINGS ON RESPONDENT'S PROPOSED FINDINGS OF FACT: Respondent submitted a post-hearing document entitled "Proposed Findings of Fact." There are few actual Proposed Facts in that one-and-a-half page pleading which is interlaced throughout with argument of counsel. However, to the extent the six paragraphs of that document contain Proposed Findings of Fact they are ruled on as follows: This Proposed Finding is rejected, but for reasons delineated in the above Conclusions of Law, Count 1 has been recommended to be dismissed anyway. This Finding is accepted but is immaterial and irrelevant to, and not necessary to, the Findings of Fact reached herein and the Conclusions of Law based thereon. Paragraph Number 3 does not really constitute a Proposed Finding of Fact or even multiple Proposed Findings of Fact in the same paragraph. In reality, it constitutes argument of Respondent's counsel concerning admissibility of certain documents into evidence which have already been ruled to be admissible by the Hearing Officer during the course of the hearing. To the extent that the last two sentences in the third paragraph of the Respondent's Proposed Findings of Fact are proposed findings of fact, they are accepted, but are immaterial, irrelevant and unnecessary to the findings of fact made herein and the conclusions predicated thereon and recommendation made herein. Rejected as not being in accordance with the competent, substantial credible testimony and evidence adduced. Rejected as constituting mere argument of counsel and not being in accordance with the competent, substantial, credible evidence adduced. Rejected as not in accordance with the competent, substantial, credible evidence presented as to Count 2. In reality, counsel obviously intended to refer to the two checks referenced in Count 1 of the complaint which has been recommended to be dismissed anyway. COPIES FURNISHED: Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Mark A. Steinberg, Esquire Post Office Box 2366 Ft. Myers, Florida 33902 Bill Gunter Insurance Commissioner and Treasurer The Capitol Tallahassee, Florida 32301
The Issue This is a license discipline case in which the Petitioner seeks to take disciplinary action against a licensee on the basis of alleged violations set forth in a one-count Administrative Complaint. It is alleged that the Respondent has violated numerous specified provisions of Chapters 626 and 631, Florida Statutes, by failing to satisfy a judgment entered against him in favor of the Department in its capacity as receiver for an insurance company.
Findings Of Fact At all times material to this case, the Respondent, Steven Peter Alicino, has been licensed to engage in the insurance business in the State of Florida. On or about December 21, 1993, a Consent Order was entered by the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, appointing the Florida Department of Insurance as Receiver for General Insurance Company. On or about August 12, 1996, a Final Judgment was entered by the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, in the amount of $2,377.40 in favor of the Department of Insurance as Receiver for General Insurance Company, and against Stephen Peter Alicino and Budget Insurance, jointly and severally. The judgment was for unearned insurance commissions retained by the Respondent and owed to General Insurance Company. On or about May 12, 1997, the Department of Insurance sent a certified letter to the Respondent demanding payment of the judgment described above. The Respondent received the letter on or about May 15, 1997. The judgment remains outstanding and unpaid.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that a Final Order be issued revoking the Respondent's license. DONE AND ENTERED this 22nd day of December, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1998. COPIES FURNISHED: Patrick Creehan, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Stephen Peter Alicino 634 Castilla Lane Boynton Beach, Florida 33435 Honorable Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Insurance and Treasurer The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Ralph Edward Carter, was licensed and eligible for licensure as a life and health insurance agent and general lines agent - property, casualty, surety and miscellaneous lines by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was licensed as a property and casualty insurance agent for Bankers Insurance Company (BIC) and Underwriters Guarantee Insurance Company (UGIC). In March 1987 respondent purchased an insurance franchise and began operating an insurance firm under the corporate name of Mr. Auto of South St. Petersburg, Inc. Records on file with the Department of State reflect that effective June 25, 1988 the name of the corporation was changed to Reliable Insurance of South St. Petersburg, Inc. Since February 1989 the business has been located at 3135 18th Avenue, South, No. C- 3, St. Petersburg, Florida. The corporation was primarily engaged in doing business as a general lines insurance agency. Respondent has been licensed as an agent since 1968, and during his tenure as an agent, has worked in sales with several large insurance companies. In January 1988 Betty Andrews purchased from respondent liability and property damage coverage on her two automobiles, a 979 Ford station wagon and a 1980 Chrysler. The insurance was written through UGIC and was effective for the year beginning January 8, 1988. Shortly after May 16, 1988 Andrews received a notice from UGIC reflecting that she owed an additional $38.90 on her policy. For some undisclosed reason, Andrews did not pay the additional premium owed. On July 6, 1988 Andrews visited respondent's office for the purpose of adding comprehensive and collision coverage on her two automobiles. After respondent quoted a rate, she agreed to purchase the additional coverage, filled out an application, and gave respondent two checks totaling $166. These monies were deposited into respondent's business account. The balance was to be paid in three monthly payments of approximately $55 each month through a finance company. Respondent gave Andrews a document entitled "Receipt and Binder Certificate" reflecting she had comprehensive and collision coverage with "Bankers" effective from July 6, 1988 to January 6, 1989. "Bankers" was in fact Bankers Insurance Company. When Andrews did not receive a policy from BIC, she attempted to contact respondent on several occasions to ascertain its whereabouts. Andrews could not recall when or how many times she telephoned respondent's office but indicated she was never able to reach him. This was probably because respondent operated a one-man office with no clerical help and was frequently absent from his office. In late August 1988 Andrews received a notice from UGIC advising that UGIC intended to cancel her policy effective September 7, 1988 because she failed to pay the $38.90 premium still due. At about this same time Andrews' husband sold the station wagon and purchased a truck. Accordingly, Andrews needed to transfer her insurance to the new vehicle. She went to respondent's office in early September 1988 and asked him why she had never received the new policy. She also asked him to find out why her existing policy was being cancel led and requested him to transfer coverage from the station wagon to the new truck. In Andrews' presence, respondent made a telephone call to UGIC and learned that Andrews' husband had failed to disclose on the insurance application that he had received a traffic ticket. This in turn caused a $38.90 increase in the annual premium, and because that amount had not been paid, the policy was being cancelled. Respondent attempted to persuade UGIC to reinstate the policy but was unsuccessful. Dissatisfied, Andrews told respondent she intended to file a complaint with the Department of Insurance. Respondent then wrote her a check for $166 which represented a full refund of her monies. There is no evidence to establish that respondent intended to defraud Andrews or to evade the requirements of the insurance code. Despite the fact that Andrews did not receive a policy, she was covered until September 1988 by her original policy and respondent's errors and omissions policy. Through testimony by an underwriting manager for BIC, David R. Wardlow, it was established that respondent had entered into a correspondent agreement with an agent of BIC. Wardlow's review of BIC's records reflected that BIC had never received Andrews' application and premium nor was a policy written on her behalf. However, there was no evidence to establish how promptly respondent was required to remit a new application and premium to BIC or whether respondent violated BIC policy by retaining the application and monies for some sixty days until he learned that the existing policy had been cancel led. Respondent readily conceded that he never forwarded the application and premium monies to BIC. He explained his actions by pointing out that after Andrews left his office he decided to secure the coverage from UGIC rather than BIC in order to have the entire coverage with one company at a cheaper rate. When he later learned that UGIC intended to cancel Andrews' policy for nonpayment of premium, he thought he might be able to persuade UGIC to reinstate the policy but was unsuccessful. He offered no excuse except inadvertence as to why he had not promptly followed up on Andrews' application. Petitioner also presented the testimony of Johnnie Ruth Bell who purchased automobile insurance from respondent in October 1988. Although Bell's testimony was often vague and confusing, the following facts were established. On or about October 1, 1988 Bell went to respondent's office to purchase full insurance coverage on her 1987 Toyota Corolla. After discussing various options with respondent, Bell agreed to purchase a policy issued through Redmond-Adams, a Sarasota underwriter for UGIC. Bell gave respondent a check in the amount of $227 as a down payment and agreed to finance the balance through a finance company at a rate of $78 per month for eight months. These monies were deposited into respondent's bank account. Respondent issued a "Receipt and Binder Certificate" reflecting coverage with "Underwriter - Redmond Adams". Because Bell had financed the car with a local bank, it was necessary for respondent to furnish the bank with evidence of insurance. Through inadvertence, but not intentionally or willfully, respondent misplaced the application and never forwarded the application and premium to the insurance company nor did he notify the bank of Bell's insurance coverage. However, Bell was covered during this period of time by respondent's errors and omissions policy. After Bell did not receive a copy of her policy from Redmond-Adams, but received a number of telephone calls and notices from her bank, she met with respondent around December 2, 1988. Respondent accepted an additional $156 in cash from Bell and issued her a new binder effective that date which was identical to the first binder except for the date. It is unknown why the additional money was collected. He then tore up the first binder. When Bell had still not received her policy by April 1989, she filed a complaint with petitioner. After respondent learned that Bell had filed a complaint, he contacted her in May 1989 and refunded all of her monies. There was no evidence to establish how promptly respondent was required to submit applications and premiums to UGIC or how that company construed the term "in the regular course of business" in the context of agents remitting applications and premiums. Respondent blamed his problems on the fact that he is the sole employee of his office and, according to his estimate, services some 500 active clients per year and more than 1,500 accounts. He desires to continue in the insurance profession and points to the fact that, of the many insurance transactions handled by him over the last twenty-two years, the Andrews and Bell transactions are the only two that have spawned any significant problems. Moreover, he has never been disciplined by petitioner during his tenure as an agent. Respondent asks that any penalty be limited to a period of probation during which time he can have the opportunity to improve his management and bookkeeping skills. There was no evidence to establish whether respondent's conduct demonstrated a lack of fitness or trustworthiness to engage in the insurance profession. As to respondent's knowledge and technical competence to engage in the transactions authorized by his licenses, he conceded he lacks training in bookkeeping and management skills, both needed for a general lines agent, but denied that he lacks the necessary skills in the sales part of the business. This was not contradicted. Finally, respondent has taken curative steps to insure that applications are not misplaced and the customer receives the requested insurance.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating sections 626.611(8) and 626.734 and that his general lines license be suspended for thirty days. All other charges should be dismissed with prejudice. DONE AND ORDERED this 13 day of March, 1990, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 13 day of March, 1990. APPENDIX Petitioner: 1-4. Partially adopted in finding of fact 1. 5-7. Partially adopted in finding of fact 3. 8-11. Partially adopted in finding of fact 6. Note - Where a finding has been partially adopted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, subordinate, not supported by the evidence, or a conclusion of law. Respondent: A Partially adopted in findings of fact 5 and 6. Rejected as being irrelevant. Partially adopted in finding of fact 3. Partially adopted in finding of fact 5. Partially adopted in finding of fact 6. Rejected since respondent did not move his office until February 1989. Partially adopted in finding of fact 4. Partially adopted in finding of fact 6. I. Partially adopted in findings of fact 3 and 8. Partially adopted in findings of' fact 7 and 8. Partially adopted in findings of fact 6 and 7. Partially adopted in finding of fact 10. Partially adopted in finding of fact l. Partially adopted in finding of fact 10. Partially adopted in finding of fact 1. Note - Where a finding has been partially used, the remainder has been rejected as being irrelevant, cumulative, unnecessary, subordinate, not supported by the evidence or a conclusion of law. COPIES FURNISHED: Honorable Tom Gallagher Insurance Commissioner Plaza Level, The Capital Tallahassee, FL 32399-0300 Willis F. Melvin, Jr., Esquire 412 Larson Building Tallahassee, FL 32399-0300 Richard J. DaFonte, Esquire O. Box 41750 St. Petersburg, FL 33743-1750 Donald A. Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 =================================================================
