Findings Of Fact Introduction At all times relevant hereto, respondent, Florence Mounts Williams (Williams or respondent), was licensed as an insurance agent by petitioner, Department of Insurance and Treasurer (Department or petitioner). When the events herein occurred, Williams was an officer and director of Mr. Auto Insurance of Okeechobee, Inc. (Mr. Auto), an incorporated general lines insurance agency located in Okeechobee, Florida. She was also an officer and director of Florida Insurance Agency, Inc. (FIA), an insurance agency doing business in the same city. Respondent sold insurance to the public through both businesses. Williams is charged with violating the Florida Insurance Code while dealing with nine customers during the period between 1984 and 1986. These business transactions were made either through Mr. Auto or FIA, and, with certain exceptions, generally relate to Williams accepting a premium for a policy and then failing to procure a policy for the customer, or falling to refund the premium after the customer cancelled the policy. Some of these customers eventually filed complaints with the Department, and after an investigation was conducted, the administrative complaint, as amended, was issued. That prompted this proceeding. The State of the Industry and Williams in 1984-86 Before discussing the specific charges, it is appropriate to describe the industry conditions and practices as they existed in 1984-86. These were established without contradiction by expert witness Beverly. It is within this broad framework that Williams operated when the transactions in question occurred. The expert's bottom line conclusion, after reviewing the nine customers' files, was that no impropriety had occurred. The agent-customer interface normally begins when a customer visits an insurance agent to purchase a policy. The agent will generally get a rate quotation by telephone from a managing general agent (MGA) who brokers policies on behalf of various insurance companies. An MGA may more accurately be described as a branch office of the insurance company under contract. If the rate quoted by the MGA to the agent is acceptable to a customer, the agent has the applicant complete an application and pay the quoted premium, or at least make a down payment on the same. The application and premium are then forwarded by the agent to the MGA for risk review to determine if the applicant meets underwriting requirements. At the same time, the agent will issue a binder to the customer which evidences temporary coverage until the application is accepted or rejected by the insurance company. In the event coverage is later declined, industry practice dictates that the agent obtain coverage with another company as soon as possible since the agent has the responsibility to maintain coverage on a customer. However, what constitutes a reasonable period of time to do so was not disclosed. In obtaining new coverage, the agent need not have the customer execute a new application since the validity of the original application is not affected. The customer should, however, be notified at the earliest convenient time that coverage is with a different company. In some cases, a customer may choose to finance his premium through a premium finance company. If he does, the finance company pays the entire premium to the MGA or insurer when application is made, and the customer pays the amount owed (plus a finance charge) to the finance company through installment payments over an agreed period of time. If for some reason an application is not accepted by the insurer, it is the responsibility of the MGA or insurer to so notify the premium finance company and return the money. The finance company must then refund any money paid by the insured. When the events herein occurred, it was established through expert testimony that the Florida insurance marketplace was in a "chaotic" condition and could be described as a "zoo." During this time, a small agent such as Williams might find herself doing business with as many as fifteen different MGAs, each with a different set of rules. Thus, it was common for an agent to be confused as to her binding authority with a particular MGA and whether the proper amount of coverage was obtained. Moreover, because of the chaotic marketplace, it became increasingly difficult to find companies who would write coverage on certain types of policies. It was further established that in 1984-1986 the MGAs were "overflowed with work" thereby causing delays of up to "months" for an agent to learn from an MGA if the risk had been accepted and a policy issued. Applications and checks were also lost or misplaced by the MGA and carrier during this time period. Consequently, the agent would think that coverage had been obtained, and so advise the customer, but would later learn that the application had been rejected, or the company had no record of one ever being filed. There were also lengthy delays in MGAs and insurance companies returning unearned premiums to the agent for repayment to the customers. According to industry practice, once a refund is received by an agent, checks to customers would typically be issued only once a month. In Williams' case, she made refunds on the twenty-fifth day of each month. A further prohibition on an agent is that a refund can be paid to a customer only after the agent receives the refund check from the insurance company or MGA. In other words, refunds from an agent's own funds are prohibited. As a result of this confusion, the number of occasions when an agent was cited for an error or omission (E&O) went up "astronomically." Indeed, industry statistics tell us that one in six insurance agents has a claim filed against his E&O policy for failure to provide coverage as promised. For this reason, no reasonable agent, including Williams, would do business without an E&O policy. When the policies in question were sold, Williams had approximately 4,000 active and inactive files in her office. Her office help was mainly persons with no prior training in insurance, and who only stayed on the job for a matter of weeks or months. Consequently, there was some confusion and disarray in her two offices. Even so, Williams was responsible for the conduct of her employees. At the same time, however, it was not unreasonable for Williams to assume that, due to the overload of work on the MOAs, an agent could expect no action on an application to be taken by an MGA or carrier for many months, and that applications and checks might be misplaced or lost. Count I This count involves an allegation that Williams violated nine sections of the Insurance Code in conjunction with the sale of a boat insurance policy to David and Margaret Copeland on September 19, 1984. The evidence reflects that Margaret Copeland applied for insurance on her boat with Mr. Auto on or about September 19, 1984. Copeland had previously been turned down for insurance by several other local agents. After Williams received a telephonic quote of $168 per year from an MGA, and relayed this advice to Copeland, Copeland gave a $30 check as a down payment on her policy. The remaining premium was paid by two partial payments made on October 6 and November 7, 1984, respectively. Copeland was issued a binder to evidence her insurance coverage, and a receipt for the $30 down payment. The binder indicated that Barnett Bank was the loss payee and that coverage was with "Professional." In actuality, "Professional" was Professional Underwriters Insurance Agency, Inc. (Professional), an MOA in Altamonte Springs for various insurance companies doing business in the state. According to Williams, the application and check were forwarded to Professional shortly after the application was executed. Because the boat was being financed with Barnett Bank, and the lender required evidence of insurance, Copeland instructed Mr. Auto to furnish a copy of the policy to the bank. A copy of the binder was furnished by Williams to the bank on November 19, 1984, and again on December 7, 1984. However, after Margaret Copeland did not receive a copy of a policy, she contacted Mr. Auto on several occasions to obtain a copy but was given "excuses" why one had not been issued. At this point Williams simply believed Professional was "dragging its feet" since past experience had taught her Professional typically took three to four months to forward a copy of the policy. Nonetheless, in response to Copeland's requests, Williams wrote Professional on December 3, 1984, asking that it "please check on the (Copelands') boat policy which was written 9-19-84" because the lienholder needed a copy. Professional did not respond to Williams' request. After no policy was received, Margaret Copeland contacted Professional's office in Altamonte Springs by telephone and learned no policy had been issued by that firm. The Copelands then requested Mr. Auto to cancel their policy on March 12, 1985, and demanded a full refund of their premium. After having the Copelands execute a notice of cancellation, the same was forwarded by Williams to Professional with a note reading "Karen, check this out and see what is happening," together with a copy of her previous request that Professional check on the whereabouts of the policy. Again, Professional did not respond to this inquiry. Williams then telephoned Professional and spoke to its office manager seeking advice on the amount of refund due the Copelands. She was told to make a proration. On May 19, 1985, Williams offered David Copeland a partial refund ($89) of his premium but he declined. This amount of refund was based on Williams' belief that coverage existed from September 18, 1984, when she received a quotation, until March 12, 1985, or for approximately six months, and $59 represented the remaining unearned premium. Given the climate of the industry at that time, it was reasonable for Williams to make such an assumption. After Copeland declined her offer, Williams wrote Professional seeking further assistance and stating that "Insured was in here today, wanted his refund. I tried to prorate it and give it to him." Again, Williams received no formal reply from the MGA. To date, a policy has not been produced. Williams eventually refunded the entire premium to the Copelands in February 1987. Through testimony from a Professional representative, it was established that Williams had no binding authority with Professional except on homeowners and dwelling fire policies. On all others, including the type the Copelands desired, it was necessary for the agent to first telephone Professional and receive a "telephone bind" from a Professional representative. In a letter to petitioner dated August 7, 1985, Professional acknowledged that there was "a possibility this risk may have been quoted," but it could find no record of an application having been filed or verification of coverage bound through a binder number or cashed check. It did acknowledge receiving the Copelands' request to cancel their policy in March 1985. If a binder had been authorized, it would have been recorded in a binder book with a number assigned to that binder unless the company lost the policy or otherwise inadvertently failed to record this information. The representative also confirmed that Professional routinely brokered this type of policy in 1984, and that it binds several thousand policies per year. Given this volume of work, the representative acknowledged it was possible that Williams or an employee of her firm may have been given a telephone quote for the Copeland policy, or that the application could have been misplaced. C. Count III On June 19, 1985, William C. Norton, a retired railroad conductor, went to Mr. Auto to purchase an insurance policy for two automobiles. After being quoted an annual premium of $315 by an MGA (Jergen & Roberts), Williams gave this advice to Norton who then gave her a check in that amount. Norton was given a receipt and a binder to evidence his coverage. The binder reflected Norton's application had been placed with "Foremost," which is Foremost Insurance Company (Foremost) in Grand Rapids, Michigan. Williams forwarded the application to the MGA but it was later returned unbound because of several traffic violations by Norton. She then "shopped" the application around and was able to procure a policy from Orion Insurance Company (Orion) through Standard Underwriters, an MGA, at an estimated cost of $528.70 instead of the previously quoted rate of $315 per year. It should be noted that during this period of time, Norton was covered through binders executed by Williams. After Williams paid the amount ($528.70) due the MGA, a policy number (PA-102390) was issued. However, through "neglect" Williams never billed Norton for the difference between the originally quoted premium and the $528. After Orion reviewed Norton's driving record, it increased the annual premium to $622. When Williams received a bill for $622 per year, she sent Norton a notice on October 24, 1985, requesting an additional $144. 2/ When he refused, the policy was cancelled by the company for nonpayment in February 1986. By this time, Norton had gone to another company to obtain coverage. He had also requested from Williams a copy of his policy on four or five occasions but one was never produced. Norton also demanded a full refund of his money even though he had been covered by binders and a policy from June 1985 until February 1986, and was not entitled to a refund. When Williams refused, Norton filed an action in small claims court in February 1986, and won an uncontested judgment for $315. Williams stated she did not contest the matter because of several stressful events then occurring (e.g., a divorce and an employee theft) and the expense of hiring legal counsel. Mobile Home Division of Florida (MHD) is an MGA in Fort Lauderdale that reviews applications for automobile insurance with Foremost (and others), and determines if the applicant meets Foremost's underwriting requirements. It is one of five MGAs in the State representing Foremost. A representative of MHD reviewed his firm's records, and found no evidence of having received the Norton application. However, this was not surprising since Williams had not used MHD to obtain Norton's policy. Count VI Terryl J. Wisener is a college student with numerous traffic violations on his record. Because of this, he was forced to obtain automobile insurance through the Florida Joint Underwriters Association (FJUA), a small group of companies who write policies for high risk drivers such as Wisener. Insurance agents are "assigned" to one of the companies writing policies, even though they are not a regular agent of that company. Allstate Insurance Company (Allstate) happened to be a servicing carrier for FJUA in 1986, and Williams accordingly filed FJUA applications with that carrier when seeking insurance for high-risk customers. Under then existing rules, Williams could temporarily "bind" Allstate by writing a binder on a policy, but approval of the application and issuance of permanent coverage rested with Allstate. Until the application was rejected by Allstate, the driver was insured through the binder. During this same time period, it was "commonplace" for an FJUA carrier to return an application because of an "insignificant error" to avoid having to write a policy on a high-risk customer. On December 30, 1985, Wisener purchased a six-month automobile insurance policy through Williams. When the policy was due to expire on June 30, 1986, he returned seeking a renewal. Williams attempted to place the liability coverage with Allstate and the physical damage coverage through "Coastal," an MGA for Adriatic Insurance Company. She was quoted premiums of $996.70 and $814.70, respectively, for the two policies. After accepting a down payment of $552 from Wisener, she issued a binder and mailed the application to Allstate and Coastal with drafts for the entire premiums due. Because Wisener's Chevrolet Camaro was an eight-cylinder automobile, Coastal rejected the application in October 1986. Williams then attempted to replace the physical damage coverage with Allstate in November 1986. By virtue of Williams' binding authority, Wisener had coverage with Allstate until it rejected his application. The application, along with about fifty or sixty others, was eventually rejected by Allstate on February 27, 1987, because of a lack of "information." Until this occurred, Williams properly assumed that Wisener was covered and that Allstate was reviewing his application. In the meantime, and apparently without advising Williams, Wisener decided in October 1986 to purchase a policy through his parents' Allstate insurance agent in Port St. Lucie. He did so because he "believed" he had no insurance. However, he never made inquiry with Williams to confirm or deny this, or asked for a refund of his money. A representative of Allstate searched his firm's records and could find no evidence that a policy was ever written for Wisener through Williams. The company does acknowledge that it received Wisener's application and that it eventually returned the same "unbound" almost four months later. It gave no explanation for the delay. Although Wisener had not received a refund as of the time of hearing, this responsibility rests with Allstate (and not Williams) since it has never refunded to Williams the money paid by her for Wisener's policy. Count VII This count concerns a mobile home insurance policy purchased by Samuel and Mary Jo Moore in June 1985 from FIA. On June 25, 1985, Mary Jo Moore made application to renew her insurance policy on the mobile home. The policy had been in force for some ten years. Moore paid Williams $118 by check which was deposited and cashed by Williams. A check for $23 was also paid at a later date due to a premium increase. Williams issued Moore a binder evidencing coverage with Mobile Home Insurance Association (MHIA), an MGA in Gainesville, Florida. Shortly afterward, Williams learned from the MGA that the Moores' previous carrier, American Pioneer, had gone bankrupt and that there was a limited market for the Moores' application. Williams thereafter forwarded the application to another MGA, Jerger & Sons, Inc. (Jerger), in early August 1985. Temporary coverage was eventually issued by Jerger on August 23, 1985. However, the application was deemed to be incomplete because information regarding the number of spaces in the Moores' trailer park was lacking. This was not surprising since the Moores lived on private property and not in a trailer park. The application was returned to Williams with a reminder that unless the missing information was submitted to Jerger by September 6, 1985, coverage would be terminated. When no information was filed by that date, Jerger cancelled its coverage and returned the unbound policy on September 12, 1985. The Moores were not notified of this lapse in coverage. By allowing the coverage to lapse, and not notifying the Moores, Williams was negligent in her duties as an agent. After Jerger returned the application to Williams in late August 1985, Williams attempted to get the Moores to furnish photographs of the trailer site, and to sign the new application. Because both worked at jobs during business hours, Williams claimed she was unable to reach them prior to September 6, 1985. Williams continued her efforts to place the insurance and eventually filed the application with Foremost in March 1986. Although Williams concedes a lapse in coverage did occur, there is no evidence that this was an intentional or debilitate act on her part. After having the application returned twice, coverage was finally obtained for $201 in July 1986, or almost a year after the Moores first approached her concerning a renewal of their policy. This policy is effective through July 1987. Williams paid out of her own funds the difference between the original premium ($141) and the $201. In view of the original premium being applied to the 1986-87 premium, the Moores are not due a refund. On October 31, 1985, a tornado struck in the Okeechobee area causing damage to the Moores' trailer. The Moores contacted respondent who, at her own expense, had an adjuster from Vero Beach survey the damage in November. The adjuster learned no coverage was in force. The Moores then contacted respondent who, for some reason, had Jerger search for a policy. As might be expected, none was found, and Jerger would not agree to cover the loss. Williams instructed the Copelands to proceed against her E&O carrier for payment of their claim. At the time of final hearing, the claim had not yet been resolved. Count VIII On or about February 19, 1986, William A. McClellan, a retiree, purchased an automobile insurance policy from FIA. He paid $201 by check to Williams and received from her a receipt and binder evidencing coverage with "AIB" (Associated Insurance Brokers), the MGA for Balboa Insurance Company in Newport Beach, California. After the application was forwarded to AIB, it was initially returned because the agency check was drawn on insufficient funds. Thereafter, the check was made good (with no lapse in coverage) and Williams subsequently received a bill from Balboa for $247, or $46 more than she had previously quoted McClellan. When McClellan was presented the bill for an additional premium on May 1, 1986, McClellan told Williams to cancel his policy and to refund the unearned premium. She relayed this request to AIB and coverage was cancelled effective June 13, 1986. Thereafter, McClellan visited Williams' office at least seven or eight times seeking his refund, but was always told it was still being processed. This was a correct representation by Williams since AIB was less than diligent in processing a refund check. McClellan also filed a complaint with petitioner. Upon inquiry by petitioner, Williams advised the Department that McClellan would be paid as soon as AIB issued her a check. On or about July 29, 1986, AIB finally cut a check in the amount of $91.22 payable to Williams, and eventually issued a second check in the amount of $25.38 on October 1, 1986. The delay in issuing the checks was attributable to AIB and not Williams. After Williams received the first check, she offered McClellan a partial refund of $91.22 but he declined the offer. On October 10, 1986, or the day after Williams received the second check by mail, a representative of AIB flew by private plane to Okeechobee and obtained $133 in cash from Williams, who by then had received the second check from AIB. 3/ The representative paid McClellan the same day. Count IX On or about March 16, 1985, Luther B. Starnes purchased an insurance policy for his two automobiles from Mr. Auto for which he paid $473 by four installments over the next few months. After Williams received a telephone bind, Starnes was issued a binder evidencing insurance with a company called "Integrity." He also received a "Florida Vehicle Identification Card" evidencing PIP and liability coverage on his vehicles. In this case, Williams placed the coverage by telephone with AIB, the MGA for Integrity, which authorized her to temporarily bind the coverage. The application and check were thereafter sent by Williams to the MGA. After not receiving a policy by the fall of 1985, Starnes telephoned a district office of Integrity and learned his name was not on its computer. However, he did not contact Williams after that, or ask for a refund of his premium. Despite the accusation that Williams had no basis to believe that a policy had ever been issued by Integrity, an AIB representative confirmed at hearing that Starnes' application and premium had been received by AIB, and that AIB had issued a policy number covering Starnes. Indeed, respondent's exhibit 10 reflects that Integrity cashed the check, and simultaneously placed a sticker on the check which read "Integrity Insurance Co. Private Passenger Auto 100-FAB- 0206809." This indicated that AIB had assigned a policy number on behalf of Integrity and that Starnes' coverage was in effect. Indeed, Williams properly relied upon her cancelled check in believing that Starnes was insured. Moreover, it was appropriate for Starnes to pay for this coverage until Integrity formally rejected his application. Although Starnes never received a copy of a policy, the responsibility to issue one rested upon MGA or Integrity, but not Williams. Count X On or about July 11, 1986, David and Carolyn Douglas purchased an insurance policy for two trucks owned by David. The policy cost $1300 per year and Carolyn paid Williams this amount by check. A binder was given to Carolyn reflecting coverage through Dana Roerig and Associates (Roerig), an MGA in St. Petersburg for Canal Insurance Company (Canal). Under the MGA's then existing policy, it was necessary for Williams to forward the application to Roerig and request a rate quotation. After receipt of the application Roerig would normally telephone the agent, quote a rate, and then bind if the rate was acceptable. In this case, the quoted rate was unsatisfactory, and Roerig returned the application unbound on August 10, 1986. Williams then attempted to place the coverage through an MGA in Lakeland (E&S Agency). However, Williams was quoted a rate on September 25 which she knew was too expensive. After obtaining the second excessive quote, Williams immediately bound coverage with Allstate and forwarded the Douglas application to that carrier with an agency check on September 25, 1986. Because Allstate accepted only money orders or cashiers checks, and the application was undated, the application and check were returned by Allstate to Williams on October 7. Williams then sent Allstate a dated application and a money order in the amount of $1500, or $200 more than the original Douglas policy required. Although Allstate did not formally issue a policy, it assigned the Douglas application a policy number on December 15, 1986, and simultaneously issued a refund check for $121 to Douglas, since the policy cost $1,179 and not $1,300 as had been originally quoted to Carolyn Douglas. Therefore, at that point the coverage remained in effect. On December 23 Allstate issued another refund check to Douglas in the amount of $776 and advised it was cancelling coverage effective February 6, 1987. Allstate later returned the remainder of the $1,300 owed David and Carolyn Douglas. Therefore, even though they had coverage for some six months through various binders and the policy itself, the Douglases paid no premium. Although Carolyn Douglas made several attempts to obtain a copy of the policy, Williams could not produce one since the two MGAs and Allstate had held the application almost continuously for six months. It is noted that Allstate has never repaid Williams the $1500 sent by her with the Douglas application in October, 1986. Count XI Francis Carr is a locktender on Lake Okeechobee whose duties require him to open and close the locks. The job is subject to bids, and all bidders must have evidence of general liability insurance. Desiring to submit a bid, Carr purchased a one-year general liability policy from Mr. Auto on September 20, 1985, and paid Williams $540.75 for the coverage. Carr received a copy of a policy from Scottsdale Insurance Company (Scottsdale) on a later date. On April 15, 1986, Carr asked that his policy be cancelled. This was done the next day. Carr was due a $181 refund as unearned premium. Through no fault of Williams, the refund check was not issued by Scottsdale until October 21, 1986, or some six months later. Williams later endorsed the check without recourse to a local dress shop. In July 1986, Carr again bid on the locktender job, and, through his wife, made application on July 7 for a new policy so that he could submit a bid. Although the annual premium had now increased to approximately $1,500 per year, Mrs. Carr paid only a $215 down payment. Under this type of policy, Carr was responsible for thirty-five percent of the entire year's premium even if he cancelled the policy after one day. Therefore, the policy had a minimum cost of $525 regardless of its term. Because he had not paid this minimum amount, Williams applied Carr's $181 refund check from the prior year to the minimum amount owed. This was consistent with the industry practice of agents applying credit refunds to new policies of this nature. She also paid $85 from her own funds in early October 1986 to meet the thirty-five percent threshold amount. By then, however, Carr had instructed another employee to cancel his policy since his bid had not been accepted. When he didn't get a refund from the prior year, Carr filed a complaint with petitioner. However, Carr is not entitled to a refund from either year since he still owes Williams $85 for the 1986-87 policy, even after the 1985-86 refund is applied to the second policy. I. Count XII Frank I. Henry and Margaret J. Henry (no relation) lived together in a rented mobile home in 1984. Margaret purchased a policy on the mobile home contents from Mr. Auto in July 1984. She paid Williams a $40 premium, and then made three payments of $47.28 each to Envoy Finance Corporation (Envoy), a Deerfield Beach finance company which financed the balance of the amount owed. Margaret received a binder from Williams reflecting coverage with Mobile Homes Division (MHD), an MGA in Fort Lauderdale Envoy submitted a check for $118.50 to MHD on July 16, 1984, reflecting full payment for the policy. After forwarding the application to MHD, Williams assumed Henry had coverage through American Fidelity Company (AFC), a company which later went out of business that fall. According to MHD, however, the application should have been returned to Williams a few days after it was received because it had no insurance company writing those types of policies. Williams denied receiving the application, and MHD had no record of the application being returned. Williams' version is corroborated by the fact that MHD never advised Envoy that the policy had been returned, something MHD should have done if coverage was rejected. Moreover, MHD has never refunded the $118.50 paid by Envoy in July 1984. According to uncontradicted expert testimony, it is the responsibility of the MGA or carrier to advise the finance company of a coverage denial, and to make a refund to the finance company, which then makes a refund to the customer. Therefore, MHD or AFC, but not Williams, is at fault for not refunding Henry's money. Around April 20, 1985, Frank's mobile home was damaged by a fire. His claim was rejected by MHD since it had no record of coverage. Prior to this time, no request for a copy of the policy had been made by Henry, and Williams properly assumed that Henry's coverage was in effect. Williams has since notified her E&O carrier of a possible liability. As of the time of hearing, Henry's claim was still unpaid and he has not received a refund of his premium from MHD, AFC or Envoy.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of a single violation of Subsection 626.621(6), Florida Statutes (1985), and that all other charges be dismissed. Respondent should be given a reprimand for this violation. DONE AND ORDERED this 29th day of May 1987, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of May 1987.
The Issue Whether Respondent committed the offenses described in the administrative complaint? If so, what punishment should he receive?
Findings Of Fact Based on the record evidence the Hearing Officer makes the following Findings of Fact: Respondent is now, and has been for approximately the past 20 years, licensed by Petitioner as a general lines insurance agent. On July 3, 1986, Petitioner received a complaint concerning Respondent from Elsa Garcia. Garcia reported that she had purchased automobile insurance through Dixie Insurance Brokers and had been given a temporary insurance binder bearing the signature of a "Paul J. Lovelace" reflecting that her coverage was to be effective March 11, 1985. According to Garcia, however, she had subsequently discovered, after having been involved in an automobile accident on March 23, 1985, that her insurance coverage had not taken effect until after the accident. Garcia's complaint was assigned to one of Petitioner's employees, Burton Powell, to review and investigate. As part of his investigation, Powell contacted Alan D. Kruger, Garcia's attorney. Kruger supplied Powell with Garcia's affidavit and other pertinent documents, including a copy of Garcia's automobile insurance application and the temporary insurance binder she had been given by Dixie Insurance Brokers. The application reflects that Garcia was seeking coverage for the period from April 2, 1985, to October 2, 1985. The binder, on the other hand, indicates that it was to be effective for one month commencing, not April 2, 1985, but March 11, 1985. Someone other than Respondent signed his name to both the application and the binder. 1/ On various occasions prior to December 18, 1987, Respondent was the general lines insurance agent of record for Dixie Insurance Brokers. 2/ On these occasions he never personally signed any insurance applications, nor did he otherwise play any role in the operation and control of the agency. By his own admission, he simply allowed the agency to use his license, without any restrictions imposed by him, in exchange for monetary consideration. In so doing, he willfully engaged in a scheme designed to circumvent the licensing requirements of the Florida Insurance Code.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Petitioner enter a final order (1) dismissing Count I of the administrative complaint; (2) finding Respondent guilty of Count II of the administrative complaint; and (3) revoking Respondent's general lines insurance agent license for his having engaged in the conduct specified in Count II of the administrative complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 2nd day of November, 1989. STUART M. LERNER 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 2nd day of November, 1989.
The Issue The issues are whether Respondent is guilty of any violations of the Insurance Code, including Chapter 626, Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a general lines insurance agent, holding license number A129688. At all material times, Respondent has been the sole owner and director of America Security Insurance Agency, Inc., formerly known as America Auto Security Insurance Agency, Inc. (America Security). On April 1, 2000, Dionne Jacques purchased a motor vehicle from Sawgrass Ford in Fort Lauderdale. She did not own a vehicle at the time and testified that she purchased a model that was selected for her by someone at the dealership. In closing on the purchase, Ms. Jacques dealt extensively with a dealer employee named Herbert McKenzie. Ms. Jacques financed the motor vehicle purchase with Ford Credit. In the course of completing the required paperwork at the dealership, Mr. McKenzie referred Ms. Jacques to American Security for motor vehicle insurance. Mr. McKenzie mentioned that he dealt with someone named "AJ" at the insurance agency. According to Ms. Jacques, Mr. McKenzie informed Ms. Jacques that one year's insurance would cost $468 or $468.99. Mr. McKenzie did not testify, but Respondent testified that he spoke with Ms. Jacques on the telephone and explained the relevant features of the policies that were available to her. Although it is unclear who quoted the premium to Ms. Jacques, Petitioner has failed to prove by clear and convincing evidence that Mr. McKenzie did so. Ms. Jacques agreed to purchase the insurance and produced a credit card for the amount due. The testimony of Ms. Jacques suggests that she allowed Mr. McKenzie to charge her credit card for the insurance premium. However, the more definitive testimony of Respondent, which is credited, is that he took her credit card information over the telephone and arranged for the card debit. In return, according to Ms. Jacques, Mr. McKenzie gave her a document that she believed would document her coverage until she received an insurance policy in the mail in about 30 days. It is impossible to determine on this record that Mr. McKenzie attempted to bind coverage on behalf of the insurer. At no time prior to the purchase of the insurance did Respondent, Mr. McKenzie, or anyone else disclose to Ms. Jacques that she was purchasing other ancillary products besides insurance. Likewise, no one informed her that she was financing part of the annual insurance premium. For unclear reasons, Respondent did not obtain insurance coverage for Ms. Jacques until May 2000. At that time, he took the $468 that she had charged and, without her knowledge, applied only $143 of this sum toward the policy premium. Without Ms. Jacques' knowledge, Respondent, or someone at his direction, signed Ms. Jacques' name to a premium finance agreement, evidencing an unpaid premium balance of $504. At the same time, also without Ms. Jacques' knowledge, Respondent used $300 of the initial $468 that Ms. Jacques paid to purchase ancillary coverage that she had not agreed to purchase. This ancillary coverage included towing, supplemental medical coverage, replacement rental car, and emergency cash. These coverages supplemented a $647 personal injury protection policy containing no personal liability or uninsured motorist coverage. At no time has American Security designated a primary agent. By Immediate Final Order entered March 12, 1991, the Florida Department of Insurance, now known as Petitioner, ordered Respondent to cease and desist from the unlicensed sale of insurance. However, Respondent has made substantial restitution to Ms. Jacques, who suffered no significant financial injury as a result of Respondent's misdealings.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order suspending Respondent's license for one year. DONE AND ENTERED this 18th day of November, 2004, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 2004. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Gregg S. Marr Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Charles P. Randall Charles P. Randall, P.A. Bank of America Tower, Suite 500 150 East Palmetto Park Road Boca Raton, Florida 33432-4832
The Issue The issue in this case is whether discipline should be imposed upon Respondents' license to do business as a Fire Equipment Dealer, based on allegations that Respondents failed to maintain continuously in force a policy of comprehensive general liability insurance, failed to provide proof of insurance to Petitioner, and failed to maintain a qualification for licensure.
Findings Of Fact Respondent Ricardo Cabrera, as the qualifier for Respondent BC & ABC Fire Extinguisher Maintenance ("BC"), is licensed by the State of Florida to do business under BC's name as a Class C Fire Equipment Dealer. For the purposes of this case, the actions of BC and the actions of Mr. Cabrera are indistinguishable. Thus, Respondents will be referred to collectively as "Cabrera." As a licensed Fire Equipment Dealer, Cabrera is subject to the regulatory jurisdiction of Petitioner Department of Financial Services (the "Department"). Class C licensees are required by law to maintain comprehensive general liability ("CGL") insurance in an amount not less than $100,000 and to provide the Department with proof of such coverage. In compliance with Florida law, Cabrera maintained CGL coverage in the amount of $300,000 for the policy period from January 29, 2003 to January 29, 2004, and he submitted proof of such coverage to the Department. By letter dated December 1, 2003, the Department notified Cabrera that, because his existing CGL policy was due to expire on January 29, 2004, he would need to submit evidence of continuing coverage beyond that date. Enclosed with this letter was a blank Certificate of Insurance in the form required by the Department as proof of insurance, for Cabrera to complete and return. Cabrera failed to timely renew his CGL policy and the coverage lapsed following January 29, 2004, which was the last day of the policy period. A few weeks later, Cabrera obtained another CGL policy for his business, in the amount of $300,000. This policy provides coverage for the period from February 23, 2004 to February 23, 2005. Cabrera was without the required CGL coverage for 24 days, from January 30, 2004 through February 22, 2004. On February 24, 2004, the Department received, by facsimile transmission, a Certificate of Insurance, in the proper form, showing that Cabrera was insured for the period from February 23, 2004 to February 23, 2005, in the amount $300,000.1 Cabrera was erroneously identified on the form as a "Class A Fire Equipment Dealer." This misidentification, the undersigned reasonably infers from the evidence presented, was the result of a scrivener's mistake; it had no effect whatsoever on Cabrera's coverage, which was, in fact, for an amount well in excess of the statutory minimum for Class C licensees. By letter dated February 25, 2004, the Department notified Cabrera of three alleged deficiencies relating to his recently filed proof of insurance, namely: (1) the misidentification of Cabrera as a Class A licensee; (2) the 24- day coverage gap; and (3) the fact that a copy of the Certificate of Insurance, rather than the original, had been submitted. The Department requested a response. Cabrera failed to respond to the Department's deficiency letter. Consequently, by letter dated April 21, 2004, the Department gave Cabrera a "final notice" of his alleged noncompliance with the statutory requirements concerning proof of insurance. Cabrera still did not respond. On June 29, 2004, the Department issued an Administrative Complaint against Cabrera, charging him with failing to provide proof of insurance or failing to maintain coverage in force, an offense described in Section 633.162(4)(e), Florida Statutes; and failing to maintain one or more qualifications for licensure, an offense pursuant to Section 633.162(4)(f). Thereafter, around July 21, 2004, the Department received a corrected copy of Cabrera's Certificate of Insurance, one which identified him accurately as a Class C licensee. Ultimate Factual Determinations Cabrera is guilty of failing to maintain continuously in force the statutorily required insurance coverage, which is a specific offense disciplinable pursuant to Section 633.162(4)(e), Florida Statutes. Although Cabrera's failure to maintain continuously in force the statutorily required insurance coverage also necessarily constituted a failure to maintain a qualification for licensure——which latter is a general offense disciplinable pursuant to Section 633.162(4)(f), Florida Statutes——his misconduct in allowing a gap in insurance coverage is, as a matter of ultimate fact, a single wrong and hence should be treated as a single violation. Since the particular wrong that Cabrera committed is specifically punishable under Section 633.162(4)(e) as a failure to maintain insurance coverage continuously in force, that is the offense for which he should be disciplined, not the general offense described in Section 633.162(4)(f). Cabrera is not guilty of failing to provide proof of insurance to the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding Cabrera guilty of failing to maintain continuously in force the required CGL insurance coverage, an offense under Section 633.162(4)(e), Florida Statutes. For this violation, it is further RECOMMENDED that Cabrera be ordered to pay an administrative fine of $1,000 and be placed on probation for a period of one year, on such reasonable terms and conditions as the Department may specify in its final order. DONE AND ENTERED this 22nd day of December, 2004, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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, 2004.
The Issue The issue presented is whether Respondent is guilty of the allegations contained in the Administrative Complaint, and, if so, what disciplinary action should be imposed.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the extensive factual stipulations set forth in the parties' Statement of Facts Admitted3: Respondent works as the manager of a Cash Register Insurance ("Cash Register") office in New Port Richey. Cash Register is owned by Direct General Insurance Agency, Inc. ("Direct General"). Respondent sells automobile insurance to individual customers. During the relevant period, Respondent also sold four ancillary products: a vehicle protection plan, an accident medical protection plan, a travel protection plan, and a term life insurance policy.4 Respondent is paid a salary, and receives no commission on the sale of automobile insurance. Respondent does receive a ten percent commission on the sale of ancillary products. Respondent received 34 percent of her overall income from the sale of ancillary products during the relevant time period. Respondent deals with at least 50 customers per day, six days per week. She sells between seven and ten automobile insurance policies per day, on average. Given her customer volume, Respondent cannot remember each customer to whom she has sold insurance. Respondent frankly testified that she had no specific recollection of selling the policies to the individuals named in the Statement of Facts Admitted. However, Respondent also testified that she sells insurance according to a script, and that in light of this unvarying practice she could state with confidence whether she had or had not engaged in the specific sales techniques alleged by the Department and its witnesses. Respondent testified at length as to her sales routine. When talking to potential customers on the telephone, Respondent must follow the script provided by Direct General. Respondent testified that agents are not required to follow the script when customers come in to the office, but that she generally adheres to the format provided by her employer. All of the sales at issue in this proceeding were generated via in-person sales at Respondent's Cash Register office. Respondent first obtains basic information from the customer: name, address, date of birth, Social Security number, whether there are persons over age 14 in the household and whether those persons will drive the insured vehicle. She then asks the type of vehicle and the type of coverage the customer wants to purchase. Respondent enters the information into her computer, which generates a price quote. If the customer wants only basic personal injury protection ("PIP") and property damage coverage, Respondent informs the customer that the quoted price includes PIP with an optional deductible of $1,000, a coverage limit of $10,000, and property damage coverage of $10,000. The price quote includes a down payment and monthly payments. The quoted amounts vary depending on whether the customer chooses to make 10 or 12 payments. During her presentation, Respondent mentions that the price quoted for the monthly payments includes the ancillary products. Once the customer has agreed to the price quote, Respondent makes a computer inquiry to obtain the customer's driving record. While waiting on these records, Respondent goes over a "pen sale" document with the customer. The pen sale document is a handwritten sheet that Respondent draws up in the presence of the customer to explain the policies. Respondent's pen sale sheets for Mr. Gatlin, Ms. Johnson, Mr. Hansen, and Mr. Dossantos (hereinafter referred to collectively as the "Complaining Customers") were admitted into evidence. At the top of the page, under the heading "Mandatory," Respondent outlined the PIP and property damage coverages, with the customer's options regarding deductibles. Lower on the page, under the heading "Optional," Respondent outlined the details of the ancillary coverages included in the price quote. Respondent testified that she sits with the customer and uses the pen sale sheet to explain the mandatory coverages in detail. She explains that Florida law requires that she offer bodily injury liability coverage, but that the customer has the option to reject it, and she indicates the customer's decision on the pen sale sheet. She explains the ancillary policies, and indicates on the pen sale sheet which of these policies the customer accepts and which ones the customer rejects. The customer is asked to sign the bottom of the sale sheet. When shown the pen sale sheet for each Complaining Customer, Respondent was able to state with confidence which ancillary policies each of them has accepted or rejected. None of the Complaining Customers denied having been shown the pen sale sheet, though none of them appeared to grasp its significance. Each of the Complaining Customers conceded that the signature at the bottom of his or her respective pen sale sheet was genuine. After Respondent obtains the customer's signature on the pen sale sheet, and has received the customer's driving records, she prints out the policy paperwork and goes over it with the customers. The earliest of the Complaining Customers was James Gatlin (Counts I, II, and III of the Administrative Complaint), who purchased insurance from Respondent on October 7, 2005.5 Mr. Gatlin's signed pen sale sheet indicated that he accepted the accident medical protection plan, the travel protection plan, and the term life policy. It also indicated that he rejected optional uninsured motorist, medical payment, accidental death, and comprehensive and collision policies offered by Respondent. Mr. Gatlin's policy paperwork was admitted into evidence. After explaining the automobile policy, Respondent explained the ancillary products that Mr. Gatlin had initially accepted on the pen sale sheet.6 Respondent first showed Mr. Gatlin a spreadsheet titled, "Explanation of Policies, Coverages and Cost Breakdown (Including Non-Insurance Products)." Under the subheading "Auto Policy Coverages," the spreadsheet set forth the amount and type of coverage for each of the two cars for which Mr. Gatlin was buying insurance, as well as a premium estimate for each vehicle. Under the subheading "Optional Policies," the spreadsheet set forth the following: "American Bankers Travel Protection Plan," "Lloyds Accident Medical Protection Plan," and "Life Insurance." A monthly premium amount was set forth next to each of the three optional coverages. The subheading "Optional Policies," the list of the optional policies, the premium amounts for each optional policy, and the total estimated cost of all products are separately circled by hand on the spreadsheet. Respondent testified that it is her practice to circle these items as she explains them to the customer. Mr. Gatlin's initials appear above the list of optional policies. Below the grids of the spreadsheet is the following text (emphasis added): I, the undersigned, acknowledge that: The above premiums are estimates and that the actual premium charged to me will be determined by the Insurance Company issuing the policy. Further, I am responsible for the amount of the premium charged at the time the policy is issued. I agree that if my down payment or full payment check is returned by the bank for any reason, coverage will be null and void from the date of inception. I acknowledge that I have been advised of and understand the above coverage(s), and cost breakdowns, including non-insurance products, if any, and further [sic] that I have received a complete copy of this product. This document is only an explanation of insurance coverage and other products, if applicable—it is not a contract. The policy, if issued, will contain the terms and conditions of coverage. The level of coverage illustrated above is based on preliminary information which I have supplied. My eligibility for coverage is subject to the acceptance of my application in accordance with the Insurance Company's underwriting requirements. Customer Signature Date The signature line was signed by "James D. Gatlin" and dated October 7, 2005. At the hearing, Mr. Gatlin conceded the authenticity of his initials and signature on the spreadsheet. Respondent next explained the details of the accident medical protection plan to Mr. Gatlin. She explained the coverage options (individual, husband and wife, or family), and the annual premium for each. On the application, Respondent circled the "Individual Coverage Only" option. Mr. Gatlin placed his initials in the space provided to indicate his choice of coverage, and signed the application on the line provided. A second page, titled "Accident Medical Protection Plan," detailed the coverage provided and the method of filing a claim under the policy. The following text is provided at the bottom of the page (emphasis added): THE ACCIDENT MEDICAL PLAN IS A LIMITED POLICY. READ IT CAREFULLY. I, the undersigned, understand and acknowledge that: The Accident Medical Plan does not provide Liability Coverage insurance for bodily injury or property damage, nor does it meet any financial responsibility law. I am electing to purchase an optional coverage that is not required by the State of Florida. My agent has provided me with an outline of coverage and a copy of this acknowledgement. If I decide to select another option, or cancel this policy, I must notify the company or my agent in writing. I agree that if my down payment or full payment check is returned by the bank for any reason, coverage will be null and void from the date of inception. Insured's Signature Date I hereby REJECT this valuable coverage: Insured's Signature Date Mr. Gatlin signed and dated the form on the first line provided, indicating his acceptance of the accident medical protection plan. Respondent next explained the travel protection plan. The two forms associated with this plan set forth the coverages provided, the limits of those coverages, and the premium associated with the plan. The first form was titled, "American Bankers Insurance Company Optional Travel Protection Plan." After listing the coverages and their limits, the form read as follows: Purchasing the Optional Travel Protection Plan is not a condition of purchasing your automobile liability policy. I hereby acknowledge I am purchasing an Optional Travel Protection Plan, and that I have received a copy of this acknowledgement. Insured Signature Date I HEREBY REJECT THIS VALUABLE COVERAGE: Insured Signature Date Mr. Gatlin signed and dated the first line of the form, indicating his acceptance of the policy. The second form, titled "Travel Protection Plan—Florida Declarations," listed the effective dates of the policy, the premium, the automobile covered, repeated the coverages and their limitations, and gave notice to the insured of his 30-day right to examine the policy and return it for a full refund provided no loss has occurred. Mr. Gatlin signed and dated the "Applicant's Signature" line. Respondent next went over the documents relating to the term life policy that Mr. Gatlin accepted on the pen sale sheet. The policy named Carol Burinskas, with whom Mr. Gatlin lived, as the beneficiary on the $10,000 policy, and stated an annual premium of $276.00. Mr. Gatlin initialed his "no" answers to six standard insurability questions dealing with recent medical history and exposure to HIV. Mr. Gatlin signed and dated his acceptance of the policy on the signature line provided. After completing her explanation of the various policies and obtaining Mr. Gatlin's acceptance, Respondent next explained the premium finance agreement. On the first page of the agreement, under the heading, "Itemization of Amounts Financed," was stated the type of policy, the insurance company, and the annual premium for each of the four policies accepted by Mr. Gatlin, totaling $1,363.00, plus $4.55 in documentary stamp tax, less a down payment of $151.00, for a total amount financed of $1,216.55. The page disclosed the finance charge ($139.99) and the annual percentage rate of the loan (24.37%). Mr. Gatlin opted to make 10 monthly payments of $135.65, and initialed the bottom of the first sheet of the premium finance agreement, then signed the second page to indicate his acceptance of the loan terms. Finally, Respondent showed Mr. Gatlin a document titled "Insurance Premium Financing Disclosure Form," which redundantly set forth in a simplified form exactly what Mr. Gatlin was purchasing and a breakdown of what each element of his purchase contributed to the total cost of the loan. The itemization read as follows: Insurance you are REQUIRED by law to have: Personal Injury Protection (PIP) $578 Property Damage Liability (PD) $314 Other insurance which you MAY be required by law to have: Bodily Injury (if an SR-22 has been issued)7 $0 OPTIONAL insurance coverage: Bodily Injury (if an SR-22 has NOT been issued) $0 Medical Payments $0 Uninsured Motorist $0 Comprehensive $0 Collision $0 Accidental Death $0 Towing $0 Travel Protection Plan $60 Rental $0 Hospital Indemnity $110 Life Insurance $266 Life Policy Fee $10 SR-22 Fee $0 Recoupment Fee, if applicable $0 Policy Fee, if applicable $25 TOTAL INSURANCE PREMIUMS $1,363 Document Stamp Tax, if applicable $4.55 Less Down Payment applied $151.00 AMOUNT FINANCED (loaned to you) $1,216.55 I, James Gatlin, have read the above and understand the coverages I am buying and how much they cost. _ Signature of Named Insured Date Mr. Gatlin signed and dated the Insurance Premium Financing Disclosure Form on the spaces indicated. As noted above, Carol Burinskas lives with Mr. Gatlin and was named as the beneficiary in the term life policy the Respondent sold to Mr. Gatlin. Ms. Burinskas testified that she went into Respondent's Cash Register office on Mr. Gatlin's behalf a day or two before he completed the transaction. Ms. Burinskas had obtained quotes from several agencies in the course of doing the legwork for Mr. Gatlin's insurance purchase. Ms. Burinskas testified that she told Respondent that she was shopping for Mr. Gatlin, and was seeking quotes on the bare minimum insurance, "just what we needed to get a tag for the car." Based on information provided by Ms. Burinskas, Respondent provided a price quote, which Ms. Bruinskas showed to Mr. Gatlin at home that evening. Mr. Gatlin looked over the quote and pronounced it acceptable. He told Ms. Burinskas that he would stop in at the Cash Register office the next day and complete the paperwork for the policy. Mr. Gatlin testified that he believed the Cash Register quote offered the most reasonable price he had seen, but he was unaware that Respondent's quote included the ancillary policies discussed above. When he went into Respondent's office, he reiterated to her that he wanted only "the bare minimum insurance." Mr. Gatlin owned his vehicles outright and saw no need to carry extra coverage on them. Mr. Gatlin testified that Respondent asked him if he wanted life insurance, and he declined. Mr. Gatlin already had a $250,000 life insurance policy through his employer, Pasco County, for which Mr. Gatlin's sister is the beneficiary. He testified that if he had known he was purchasing a life insurance policy from Respondent, he would have made his sister the beneficiary. As noted above, Ms. Burinskas is the stated beneficiary of the term life policy Respondent sold to Mr. Gatlin. Mr. Gatlin testified that Respondent "was speaking very quickly and putting the papers in front of me just as fast as she was talking, so I was busy signing and dating." By the end of the process, "there was a stack of papers, rather thick" in front of Mr. Gatlin. Mr. Gatlin never heard Respondent say that some of the items he was purchasing were optional. In fact, he could not remember much at all about the content of Respondent's presentation. He remembered that Respondent talked while he initialed and signed in the places where she pointed. On cross-examination, Mr. Gatlin conceded that Respondent may have explained the ancillary policies, but so fast that he could not understand. He even conceded that he had allowed Respondent to talk him into buying the policies, though he later amended his answer to assert that he had been "bamboozled." Mr. Gatlin made no effort to slow down Respondent's presentation, and he had no questions about anything Respondent was saying. Mr. Gatlin stated that his only concern was how much he was paying, and that he was satisfied with the price quoted by Respondent at the time he bought the policies. Mr. Gatlin stated that it should have been obvious to Respondent that he was not reading the documents he was signing. He trusted Respondent to treat him the right way, and not sell him products without his knowledge. Respondent denied that she ever rushes anyone through the sales process, or has ever sold a customer a policy the customer did not agree to purchase. Ms. Burinskas discovered the ancillary policies only after reading a newspaper article about Direct General and the practice of sliding. She asked Mr. Gatlin if he had purchased any policies mentioned in the article, and he said that he had not, "as far as he knew." Ms. Burinskas pulled out the insurance paperwork, and in short order was able to ascertain that Mr. Gatlin had purchased the ancillary products described above. The next Complaining Customer was Gabriella Jungling, now known by her married name of Johnson (Counts IV and V). On August 17, 2006, Ms. Jungling and her future husband, Jeremy Johnson, were at a Division of Highway Safety and Motor Vehicles ("DHSMV") office. Mr. Johnson was attempting to have his suspended license reinstated, but was informed that he must obtain the SR-22 form before his license could be issued. A DHSMV employee gave Ms. Jungling the names of several insurance companies that could immediately write a policy. Ms. Jungling noted that Respondent's Cash Register office was near the DHSMV office. Ms. Jungling and Mr. Johnson drove to Respondent's office. Ms. Jungling testified that she handled all the transactions that occurred at Respondent's office. She and Mr. Johnson intended to obtain "full coverage," whatever they needed to fulfill the SR-22 requirement and satisfy the bank that financed Mr. Johnson's truck, which was the only vehicle on the resulting policy. Ms. Jungling told Respondent that she wanted full coverage for a financed truck. Respondent made her standard sales presentation to Ms. Jungling. She gathered the basic information described in Finding of Fact 7 above, then gave Ms. Jungling a price quote that included the amount of the down payment and monthly payment amounts. Included in the price quote were the optional vehicle protection plan and a term life insurance policy. Respondent explained to Ms. Jungling that the optional vehicle protection plan included $125 per day for hospitalization resulting from an accident and $25 per day for a rental car if the insured car is in an accident or is stolen. Ms. Jungling agreed to the price quote. Respondent next went over a pen sale sheet with Ms. Jungling. As noted in the general pen sale findings above, Ms. Jungling did not deny having seen the pen sale sheet and admitted that she signed it. The pen sale document was different from that shown to Mr. Gatlin because Direct General had ceased offering the travel protection plan and instead offered the vehicle protection plan. See footnote 4, supra. The signed pen sale sheet indicated that Ms. Jungling accepted the vehicle protection plan and the term life insurance policy. It also indicated that she rejected optional uninsured motorist, medical payment, accidental death, comprehensive and collision policies. Respondent next printed the policy paperwork and reviewed it with Ms. Jungling. Ms. Jungling signed the vehicle protection plan application on the signature line, directly beneath the following language: "The purchase of this plan is optional and is not required with your auto insurance policy. I hereby request that the above coverages be placed in effect on the date and for the term indicated." The application indicated that Ms. Jungling was opting for a "family plan"8 with a term of one year. Ms. Jungling also signed a separate page titled, "Optional Vehicle Protection Plan Summary & Acknowledgement." This form listed the coverages and limitations provided under the vehicle protection plan. Below this listing, in bold type, was the statement, "Please Read Your Policy Carefully For A Full Explanation of Benefits." Beneath the bold type was the following language: Purchasing the Vehicle Protection Plan is not a condition of purchasing your automobile policy. I hereby acknowledge that my agent has fully explained to me and I understand: the coverage provided under the Vehicle Protection Plan; that the Vehicle Protection Plan is an optional insurance product that is separate from my automobile insurance policy; that purchasing this optional Vehicle Protection Plan is not a condition of purchasing my automobile insurance policy; I have made an informed decision to purchase the Vehicle Protection Plan, and I have received a copy of my signed acknowledgement. Insured Signature Date I HEREBY REJECT THIS VALUABLE COVERAGE: Insured Signature Date Ms. Jungling signed the first signature line, indicating her acceptance of the policy. Respondent went over the documents relating to the term life policy that Ms. Jungling accepted on the pen sale sheet. The policy named Mr. Johnson as the beneficiary on the $10,000 policy, and stated an annual premium of $108.00. Ms. Jungling initialed her "no" answers to the standard insurability questions, and signed and dated her acceptance of the policy on the signature line provided. Respondent showed Ms. Jungling an "Explanation of Policies, Coverages and Cost Breakdown (Including Non-Insurance Products)" spreadsheet identical in form to that shown Mr. Gatlin. The "Optional Policies" subheading listed the optional policies, their premium amounts, and the total estimated cost of all products. These optional items were individually circled by Respondent and initialed by Ms. Jungling. The spreadsheet contained language identical to that set forth in Finding of Fact 18 above. Ms. Jungling signed and dated the sheet in the spaces provided. Respondent presented the premium finance agreement to Ms. Jungling in the same fashion described in Finding of Fact 26 above. On the first page of the agreement, under the heading, "Itemization of Amounts Financed," was stated the type of policy, the insurance company, and the annual premium for each of the three policies (auto, life, and vehicle protection) accepted by Ms. Jungling, totaling $3,052.00, plus $9.80 in documentary stamp tax, less a down payment of $295.00, for a total amount financed of $2,766.80. The page disclosed the finance charge ($308.35) and the annual percentage rate of the loan (23.51%). Ms. Jungling opted to make 12 monthly payments of $256.26, and initialed the bottom of the first sheet of the premium finance agreement, then signed the second page to indicate her acceptance of the loan terms. Finally, Respondent showed Ms. Jungling the Insurance Premium Financing Disclosure Form. The itemization for Ms. Jungling's policies read as follows: Insurance you are REQUIRED by law to have: Personal Injury Protection (PIP) $491 Property Damage Liability (PD) $405 Other insurance which you MAY be required by law to have: Bodily Injury (if an SR-22 has been issued)[9] $0 OPTIONAL insurance coverage: Bodily Injury (if an SR-22 has NOT been issued) $782 Medical Payments $0 Uninsured Motorist $0 Comprehensive $131 Collision $830 Accidental Death $20 Towing $0 Rental $0 Life Insurance $98 Accident Medical Plan $0 Vehicle Protection Insurance $260 Life Policy Fee $10 SR-22 Fee $0 Recoupment Fee, if applicable $0 Policy Fee, if applicable $25 TOTAL INSURANCE PREMIUMS $3,052 Document Stamp Tax, if applicable $9.80 Less Down Payment applied $295.00 AMOUNT FINANCED (loaned to you) $2,766.80 I, Gabriella N. Jungling, have read the above and understand the coverages I am buying and how much they cost. Signature of Named Insured Date Ms. Jungling signed and dated the Insurance Premium Financing Disclosure Form on the spaces indicated. Ms. Jungling testified that she already has a life insurance policy through her employer, Wells Fargo, and that she told Respondent that she was not interested in buying more. She admitted that the initials and signatures on the life insurance policy were hers, but had no recollection of Respondent's explanation of the policy. Ms. Jungling believed that she would have recalled an explanation had one been given by Respondent, and stated that she would have rejected the policy had Respondent told her it would cost $108.00 over and above the amount she was paying for auto insurance. However, Ms. Jungling conceded that Respondent did not rush her through the signing process. Ms. Jungling was in a hurry to purchase insurance and get back to her job. She admitted that Respondent presented the paperwork page by page, and that nothing prevented her from reading the paperwork. Ms. Jungling had no problem with the price quoted by Respondent. The life insurance paperwork plainly states, in bold lettering above Ms. Jungling's signature, that the annual premium for the policy is $108.00. The price of the policy is also stated on the Explanation of Policies, Coverages and Cost Breakdown page and on the Insurance Premium Financing Disclosure Form, both of which were signed by Ms. Jungling. Ms. Jungling also did not recall the explanation given to her by Respondent of the vehicle protection plan paperwork. She testified that she would have rejected the policy if Respondent had told her that it was separate and apart from the automobile insurance required by law. However, as noted above, the Optional Vehicle Protection Plan Summary & Acknowledgement page clearly stated that the vehicle protection plan was not a condition of purchasing an automobile policy and was an optional product separate from the automobile insurance policy. Ms. Jungling acknowledged that she signed this page. Ms. Jungling testified that she did not really read her insurance paperwork until she received a call from a Department investigator, who asked if she had knowingly purchased life insurance and the vehicle protection plan. Ms. Jungling gave a statement to a Department investigator in February 2007. On March 16, 2007, she went to Respondent's office and signed the paperwork to cancel the term life and vehicle protection policies, for which she received a pro-rated refund. The next Complaining Customer was Bruce Hansen (Counts VI and VII). On August 19, 2006, Mr. Hansen entered Respondent's Cash Register office to purchase insurance. Mr. Hansen testified that he has done business with Cash Register for years, but this was the first time he had done business with Respondent's office. Mr. Hansen stated that he had never bought anything other than basic auto coverage from Cash Register, and had no intention of buying anything else when he walked into Respondent's office. Mr. Hansen was purchasing new insurance, not renewing an existing policy. In fact, his driver's license had been suspended for lack of insurance coverage. Mr. Hansen testified that he told Respondent he wanted the most basic insurance that would get his license reinstated. He owned his car outright, and therefore was unconcerned about satisfying a financing entity. Respondent made her standard presentation to Mr. Hansen. She gathered the basic information described in Finding of Fact 7 above, then gave Mr. Hansen a price quote that included the amount of the down payment and monthly payment amounts. Included in the price quote were the optional vehicle protection plan and a term life insurance policy. Mr. Hansen agreed to the price quote. Respondent next went over a pen sale sheet with Mr. Hansen. As noted in the general pen sale findings above, Mr. Hansen did not deny having seen the pen sale sheet and admitted that he signed it. The pen sale document was identical to that shown to Ms. Jungling. Respondent used the pen sale sheet to explain to Mr. Hansen that the optional vehicle protection plan included a $1,000 medical expense that could be used toward his PIP deductible, hospital coverage of $125 per day, and rental car reimbursement of $25 per day if the insured car is in an accident or is stolen. Respondent also used the pen sale sheet to explain the term life insurance offered in the price quote. The signed pen sale sheet indicated that Mr. Hansen accepted the vehicle protection plan and the term life insurance policy. It also indicated that he rejected optional uninsured motorist, medical payment, accidental death, comprehensive and collision policies. Respondent next printed the policy paperwork and reviewed it with Mr. Hansen. The paperwork for the vehicle protection plan application was identical to that described in Findings of Fact 45 and 46 relating to Ms. Jungling. Mr. Hansen opted for the "individual plan" with a term of one year. He signed on the signature line of the application page, and signed the "Optional Vehicle Protection Plan Summary & Acknowledgement" page indicating his acceptance of this optional policy. Respondent went over the documents relating to the term life policy. The policy named Mr. Hansen's mother, who lived with Mr. Hansen, as the beneficiary on the $10,000 policy, and stated an annual premium of $108.00. Mr. Hansen initialed "no" answers to the standard insurability questions, and signed and dated his acceptance of the policy on the signature line provided. Respondent showed Mr. Hansen an "Explanation of Policies, Coverages and Cost Breakdown (Including Non-Insurance Products)" spreadsheet identical in form to that shown Mr. Gatlin and Ms. Jungling. The "Optional Policies" subheading listed the optional policies, their premium amounts, and the total estimated cost of all products. These optional items were individually circled by Respondent and initialed by Mr. Hansen. The spreadsheet contained language identical to that set forth in Finding of Fact 18 above. Mr. Hansen signed and dated the sheet in the spaces provided. Respondent presented the premium finance agreement to Mr. Hansen in the same fashion described in Finding of Fact 26 above. On the first page of the agreement, under the heading, "Itemization of Amounts Financed," was stated the type of policy, the insurance company, and the annual premium for each of the three policies (auto, life, and vehicle protection) accepted by Mr. Hansen, totaling $833.00, plus $2.80 in documentary stamp tax, less a down payment of $92.00, for a total amount financed of $743.80. The page disclosed the finance charge ($93.36) and the annual percentage rate of the loan (26.56%). Mr. Hansen opted to make 10 monthly payments of $83.72, initialed the bottom of the first sheet of the premium finance agreement, then signed the second page to indicate his acceptance of the loan terms. Finally, Respondent showed Mr. Hansen the Insurance Premium Financing Disclosure Form. The itemization for Mr. Hansen's policies read as follows: Insurance you are REQUIRED by law to have: Personal Injury Protection (PIP) $311 Property Damage Liability (PD) $219 Other insurance which you MAY be required by law to have: Bodily Injury (if an SR-22 has been issued)[10] $0 OPTIONAL insurance coverage: Bodily Injury (if an SR-22 has NOT been issued) $0 Medical Payments $0 Uninsured Motorist $0 Comprehensive $0 Collision $0 Accidental Death $0 Towing $0 Rental $0 Life Insurance $98 Accident Medical Plan $0 Vehicle Protection Insurance $170 Life Policy Fee $10 SR-22 Fee $0 Recoupment Fee, if applicable $0 Policy Fee, if applicable $25 TOTAL INSURANCE PREMIUMS $833 Document Stamp Tax, if applicable $2.80 Less Down Payment applied $92.00 AMOUNT FINANCED (loaned to you) $743.80 I, Bruce K. Hansen, have read the above and understand the coverages I am buying and how much they cost. Signature of Named Insured Date Mr. Hansen signed and dated the Insurance Premium Financing Disclosure Form on the spaces indicated. Mr. Hansen testified that he left Respondent's office believing he had bought only basic automobile insurance. He did not recall Respondent's explanations of the optional policies, and conceded that he was in a hurry to complete the transaction and spent a total of a half-hour in Respondent's office that day. Mr. Hansen testified that "I was flipping page after page, just signing my name to get out of there . . . I was trusting the person I was working with." Mr. Hansen testified that he did not recall Respondent explaining that the vehicle protection plan was a separate optional policy that would cost him an extra $170. He did recall Respondent asking the insurability questions related to the life insurance policy, but he thought they were just "procedure." Mr. Hansen conceded that Respondent might have explained every page of the paperwork to him, but that he was not paying attention. Mr. Hansen left Respondent's office with a copy of all the paperwork on his policies. He never looked at the paperwork until he was contacted by a Department investigator in February 2007. Mr. Hansen gave a statement to the Department investigator and agreed to testify in order to "stop stuff like this from happening," as well as try to obtain a full refund for the vehicle protection and term life policies. On March 3, 2007, he went to Respondent's office and signed the paperwork to cancel the term life and vehicle protection policies, for which he received a pro-rated refund. The final Complaining Customer was Sidney Dossantos (Counts VIII and IX). On July 20, 2006, Mr. Dossantos entered Respondent's Cash Register office to purchase insurance. Mr. Dossantos was renewing his policy with Direct General, though this was the first time he had done business with Respondent's office. In August 2005, Mr. Dossantos had purchased auto insurance plus an optional accident medical protection plan, a travel protection plan, and a term life insurance policy. Mr. Dossantos testified that he told Petitioner that he wished to purchase only basic automobile insurance, and that he rejected the optional term life and vehicle protection policies when Petitioner offered them. Respondent testified that her initial procedure is different with a renewing customer. She looks up the customer on her computer to verify the existing policies and determine if any money is owed. She verifies the customer's name, address and phone number. Respondent testified that the address is important because the customer's zip code is partially determinative of the rates offered on auto insurance. Respondent stated that the computer also lists the optional policies that are also due for renewal, and that it is her practice to go over these and inquire whether the customer wants to renew them. Mr. Dossantos' case was complicated by the fact that Direct General no longer offered the travel protection plan as a separate product. In these cases, Respondent would explain the vehicle protection plan, which was the current equivalent of the accident medical protection and travel protection plans that Mr. Dossantos purchased in 2005. See footnote 4, supra. Respondent testified that, after the customer verifies the information on file and states which policies he wishes to renew, she goes over a pen sale sheet with the customer. As noted in the general pen sale findings above, Mr. Dossantos did not deny having seen the pen sale sheet and admitted that he signed it. The pen sale document was identical to those shown to Ms. Jungling and Mr. Hansen. The signed pen sale sheet indicated that Mr. Dossantos accepted the vehicle protection plan and the term life insurance policy. It also indicated that he rejected optional uninsured motorist, medical payment, accidental death, comprehensive and collision policies. Respondent next printed the policy paperwork and reviewed it with Mr. Dossantos. The paperwork for the vehicle protection plan application was identical to that described in Findings of Fact 45 and 46 relating to Ms. Jungling. Mr. Dossantos opted for the "individual plan" with a term of one year. He signed on the signature line of the application page, and signed the "Optional Vehicle Protection Plan Summary & Acknowledgement" page indicating his acceptance of this optional policy. Respondent went over the documents relating to the term life policy. The policy named Mr. Dossantos' parents as the beneficiaries on the $10,000 policy, and stated an annual premium of $108.00. Mr. Dossantos was not asked the standard insurability questions, because this was a renewal of an existing policy. Mr. Dossantos signed and dated his acceptance of the policy on the signature line provided. Respondent showed Mr. Dossantos an "Explanation of Policies, Coverages and Cost Breakdown (Including Non-Insurance Products)" spreadsheet identical in form to that shown to Mr. Gatlin, Ms. Jungling, and Mr. Hansen. The "Optional Policies" subheading listed the optional policies, their premium amounts, and the total estimated cost of all products. These optional items were individually circled by Respondent and initialed by Mr. Dossantos. The spreadsheet contained language identical to that set forth in Finding of Fact 18 above. Mr. Dossantos signed and dated the sheet in the spaces provided. Respondent presented the premium finance agreement to Mr. Dossantos in the same fashion described in Finding of Fact 26 above. On the first page of the agreement, under the heading, "Itemization of Amounts Financed," was stated the type of policy, the insurance company, and the annual premium for each of the three policies (auto, life, and vehicle protection) accepted by Mr. Dossantos, totaling $913.00, plus $3.15 in documentary stamp tax, less a down payment of $80.00, for a total amount financed of $836.15. The page disclosed the finance charge ($102.47) and the annual percentage rate of the loan (25.93%). Mr. Dossantos opted to make 10 monthly payments of $93.86, initialed the bottom of the first sheet of the premium finance agreement, then signed the second page to indicate his acceptance of the loan terms. Finally, Respondent showed Mr. Dossantos the Insurance Premium Financing Disclosure Form. The itemization for Mr. Dossantos' policies read as follows: Insurance you are REQUIRED by law to have: Personal Injury Protection (PIP) $368 Property Damage Liability (PD) $242 Other insurance which you MAY be required by law to have: Bodily Injury (if an SR-22 has been issued)[11] $0 OPTIONAL insurance coverage: Bodily Injury (if an SR-22 has NOT been issued) $0 Medical Payments $0 Uninsured Motorist $0 Comprehensive $0 Collision $0 Accidental Death $0 Towing $0 Rental $0 Life Insurance $98 Accident Medical Plan $0 Vehicle Protection Insurance $170 Life Policy Fee $10 SR-22 Fee $0 Recoupment Fee, if applicable $0 Policy Fee, if applicable $25 TOTAL INSURANCE PREMIUMS $913 Document Stamp Tax, if applicable $3.15 Less Down Payment applied $80.00 AMOUNT FINANCED (loaned to you) $836.15 I, Sidney Dossantos, have read the above and understand the coverages I am buying and how much they cost. Signature of Named Insured Date Mr. Dossantos signed and dated the Insurance Premium Financing Disclosure Form on the spaces indicated. As noted above, Mr. Dossantos testified that he told Respondent he only wanted basic automobile insurance. Mr. Dossantos, a 25-year-old college student at the time he purchased insurance from Respondent, acknowledged having purchased the optional policies the previous year, when he was still living with his parents. However, in July 2006 he was living in an apartment with his girlfriend and money was tighter. He received life insurance through his employer, Publix Supermarkets, and did not want more. Mr. Dossantos conceded that his policy paperwork clearly stated that the vehicle protection plan was optional, but that he did not read it during the sale. Mr. Dossantos simply signed whatever papers Respondent placed in front of him. Mr. Dossantos testified that when he walked out of Respondent's office on July 20, 2006, he believed that he had bought basic auto insurance and nothing else. Like Ms. Jungling and Mr. Hansen, he learned otherwise only after being contacted by the Department's investigator in February 2007. Unlike Ms. Jungling and Mr. Hansen, Mr. Dossantos did not later cancel the optional policies. All four of the Complaining Customers credibly testified that the Department made no promises that they would obtain full refunds of the premiums paid on the optional policies in exchange for their written statements or their testimony in this proceeding. On or about August 9, 2006, Respondent changed her principal business street address from 6318 U.S. Highway 19 North, New Port Richey, Florida, to 5116 U.S. Highway 19 North, New Port Richey, Florida, but did not notify the Department of this change in principal business street address until on or about March 3, 2007.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Petitioner issue a final order finding Respondent guilty of committing the violation alleged in Count X of the Administrative Complaint, fining her $250.00 for such violation, and dismissing the remaining counts of the Administrative Complaint. DONE AND ENTERED this 8th day of February, 2008, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 8th day of February, 2008.
The Issue Whether Respondent committed the violations alleged in the Amended Administrative Complaint issued against him, as modified at hearing, and, if so, what penalty should be imposed.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the extensive factual stipulations set forth in the parties' Statement of Facts Admitted3: Respondent has been employed by Direct General Insurance Agency, Inc. (Direct General) for the past five years. He is the manager of a Direct General office located at 7558 West Commercial Boulevard, Lauderhill, Florida. This has been Respondent's principal business address since September 2005. Prior to September 2005, Respondent was the manager of a Direct General office located at 8300 West Oakland Park Boulevard, Sunrise, Florida. Respondent did not notify Petitioner of this September 2005 change of his principal business address within 60 days of the change. He assumed, erroneously it turns out, that Direct General's "licensing department" would inform Petitioner of the change. At all times material to the instant case, Respondent, as a licensed agent acting on behalf of Direct General, sold automobile insurance, along with three ancillary or "add-on" products. The three "add-on" products Respondent sold were an accident medical protection plan, a travel protection plan, and a term life insurance policy (hereinafter referred to collectively as the "Add-Ons"). From September 2003 to May 2006, Respondent sold these Add-Ons to approximately 1300 customers, including Ms. Roberts- Hall, Mr. Bentivegna, and Mr. Moore. For his efforts on behalf of Direct General, Respondent was paid an hourly wage, plus a commission for each of the Add- Ons he sold. He did not receive a commission for any automobile insurance policy sales he made. Direct General had sales goals with respect to Add-Ons that it expected its agents to meet. How well an agent did in meeting these goals was an "important factor" in the job performance evaluation the agent received annually from his supervisor (as Respondent was aware). An agent's failure to meet a particular goal, however, did not inevitably lead to the "fir[ing]" of the agent. Nonetheless, it was obviously in the agent's best interest to sell as many Add-Ons as possible. Respondent's supervisor was Sara Silot, a Direct General District Manager. In addition to an annual job performance evaluation, Ms. Silot provided Respondent, as well as her other subordinates, with regular feedback during the course of the year regarding their Add-On sales numbers. Each of the customers (Ms. Roberts-Hall, Mr. Bentivegna, and Mr. Moore, hereinafter referred to collectively as the "Complaining Customers") referenced in Counts I through VII and XV through XVIII of the Amended Administrative Complaint (hereinafter referred to collectively as the "remaining sliding counts") purchased the policies referenced in these counts in person at Respondent's office, where they were given paperwork to review and to then initial, sign, and/or date in numerous places in order to consummate the transaction. This paperwork consisted of, depending on the transaction, as few as 14, and as many as 20, pages of various documents (hereinafter referred to collectively as the "Transactional Paperwork"). The Transactional Paperwork clearly and conspicuously informed the reader, consistent with what Petitioner orally explained at the time of purchase to each of the Complaining Customers, that the Add-Ons being purchased were optional policies that were separate and distinct from the automobile insurance policy also being purchased and that these Add-Ons carried charges in addition to the automobile insurance policy premium. In providing his oral explanation to the Complaining Customers, Respondent circled (with a writing utensil) language in the Transactional Paperwork that conveyed this information about the Add-Ons. His purpose in doing so was to bring this language to the attention of the Complaining Customers. In view of the contents of the Transactional Paperwork, including the portions highlighted by Respondent, and what Respondent told the Complaining Customers concerning the Add-Ons, it was reasonable for Respondent to believe that the Complaining Customers were informed about the Add-On products they were being sold and were (by executing the paperwork) consenting to purchase them. The Transactional Paperwork included, among other things, a one-page Accident Medical Protection Plan form; a one- page Accident Medical Protection Plan Application form; a one- page American Bankers Insurance Company Optional Travel Protection Plan form; a one-page Statement of Policy Cost and Benefit Information-One Year Term Life Insurance Policy form; a one-page Explanation of Policies, Coverages and Cost Breakdown form; a multi-page Premium Finance Agreement; and a one-page Insurance Premium Financing Disclosure form. Among the information contained on the top half of the Accident Medical Protection Plan form was the cost of the plan. The bottom half of the form read as follows: THIS IS A LIMITED POLICY. READ IT CAREFULLY. I the undersigned understand and acknowledge that: This Policy does not provide Liability Coverage for Bodily Injury and Property Damage, nor does it meet any Financial Responsibility Law. I am electing to purchase an optional coverage that is not required by the State of Florida. My agent has provided me with an outline of coverage and a copy of this acknowledgment. If I decide to select another option or cancel this policy, I must notify the company or my agent in writing. I agree that if my down payment or full payment check is returned for any reason, coverage will be null and void from the date of inception. Insured's Signature Date I HEREBY REJECT THIS VALUABLE COVERAGE: Insured's Signature Date The Accident Medical Protection Plan Application form indicated what the annual premium was for each of the three categories of coverage offered: individual, husband and wife, and family. The top half of the American Bankers Insurance Company Optional Travel Protection Plan form summarized the benefits available under the plan. The bottom half of the form read as follows: Please Read Your Policy Carefully for a Full Explanation of Benefits Purchasing the Optional Travel Protection Plan is not a condition of purchasing your automobile liability policy. I hereby acknowledge I am purchasing an Optional Travel Protection Plan, and that I have received a copy of this acknowledgement. ___ ____ Insured's Signature Date I HEREBY REJECT THIS VALUABLE COVERAGE: Insured's Signature ____ Date The Statement of Policy Cost and Benefit Information- One Year Term Life Insurance Policy form noted the amount of the "Annual Premium for this policy" and that the "Annual Premium included a $10.00 policy fee that [was] fully earned." On the Explanation of Policies, Coverages and Cost Breakdown form, the Add-Ons were listed under the heading of "optional Policies" and the cost of each Add-On was separately stated. The first page of the Premium Finance Agreement also contained an itemization of the cost of each Add-On, as did the Insurance Premium Financing Disclosure form. On this latter form, the Add-Ons were included in a section entitled "Optional insurance coverage." The form also advised, in its prefatory paragraph, that: Florida law requires the owner of a motor vehicle to maintain Personal Injury Protection and Property Damage liability insurance. Under certain circumstances as provided in Chapter 324, Florida Statutes, additional liability insurance may be required for Bodily Injury liability. Also, additional insurance is usually required by a lienholder of a financed vehicle. Florida law does not require other insurance. The direct or indirect premium financing of auto club membership and other non-insurance products is prohibited by state law. Each of the Complaining Customers was capable of reading the above-described documents and understanding that purchasing the Add-Ons was optional, not mandatory, and involved an additional cost.4 Respondent gave each of them as much time as they wanted to read these documents, and he did not refuse to answer any of their questions. Ms. Roberts-Hall rejected the travel protection plan, and signed and dated the American Bankers Insurance Company Optional Travel Protection Plan form so indicating, in 2004, 2005, and 2006. Mr. Bentivegna rejected the term life insurance policy, as documented by his signature next to the word "Rejected," which was written in by hand at the bottom of the Statement of Policy Cost and Benefit Information-One Year Term Life Insurance Policy form. As noted above, unlike Mr. Bentivegna, Ms. Roberts- Hall and Mr. Moore each signed up for a term life insurance policy. On Mr. Moore's Application for Life Insurance, his three children, Melissa Moore, Kenneth Moore, Jr., and Timothy Brown-Moore, were named as "Beneficiar[ies]." While Kenneth Moore, Jr., and Timothy Brown-Moore were listed as "Members of Applicant's Household" on Mr. Moore's application for automobile insurance, Melissa Moore (who, at the time, was away at college) was not. Elsewhere on Mr. Moore's Application for Life Insurance, in the "Insurability Data" section, the question, "Have you during the past two (2) years had, or been told you have, or been treated for . . . a) Heart trouble or high blood pressure?" was answered, incorrectly, in the negative. Mr. Moore placed his initials next to this answer. Several days after her May 2004 purchases, Ms. Roberts-Hall telephoned Respondent and told him that she was having second thoughts about her accident medical protection plan purchase. Respondent suggested that she come to his office and speak with him in person, which she did. During this follow-up visit, Respondent went over with her the benefits of the plan, after which she told him that she was going to keep the coverage. Ms. Roberts-Hall took no action to cancel either of the Add-Ons (the accident medical protection plan and term life insurance policy) she had purchased in May 2004. In fact, she renewed these coverages in May 2005 and again in May 2006 (along with her automobile insurance policy). Prior to these renewals, in February 2005, when contacted by one of Petitioner's investigators who was conducting an investigation of possible "sliding" by Respondent, Ms. Roberts-Hall had expressed her displeasure that Respondent had "given her these additional products." Mr. Bentivegna and Mr. Moore were also contacted by Petitioner's investigative staff to discuss the Add-On purchases they had made from Respondent. Mr. Moore was contacted approximately ten months after his May 2004 purchases. The three Add-Ons he had purchased were still in effect at the time, but he took no action to cancel any of these policies. He did not renew them, however; nor did he do any other business with Respondent following his May 2004 purchases. Petitioner's policy is have its investigators "make it very clear from the beginning," when interviewing aggrieved consumers, that no promises are being made that these consumers will be "getting their money back" if they cooperate in the investigation. It does not appear that there was any deviation from this policy in Petitioner's investigation of Respondent. The investigation of Respondent led to the charges against him that are the subject of the instant case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Petitioner issue a Final Order finding Respondent guilty of committing the violation of Section 626.551, Florida Statutes, alleged in Count X of the Amended Administrative Complaint, fining him $250.00 for such violation, and dismissing the remaining counts of the Amended Administrative Complaint. DONE AND ENTERED this 29th day of March, 2007, in Tallahassee, Leon County, Florida. S 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 29th day of March, 2007.
The Issue Whether petitioner should take action against respondent for the reasons alleged in the administrative complaint?
Findings Of Fact The parties stipulated that respondent Kenneth E. Schneider has been a general lines agent and so licensed by respondent, at all pertinent times. He has been doing business in Pensacola, Florida, as Friendly Auto Insurance of Pensacola, Inc. (Friendly). Mr. Schneider was "agent for Friendly," Petitioner's Exhibit No. 16, and he and his wife ran the office (T. 124) with the help of a clerical assistant. Respondent was the licensed agent who "waited on customers." (T. 125) At the time of the final hearing, he was licensed to represent Protective Casualty Insurance Company, and Allied Fidelity Insurance Company. Petitioner's Exhibit 20. Additionally, and "only during 1982," petitioner was licensed to represent Dixie Insurance Company, Kenilworth Insurance Company, Colonial Insurance Company of California, and Fortune Insurance Company. Petitioner's Exhibit No. 19. When Mr. Schneider wrote policies for insurance companies other than those he was licensed to represent, he did so by agreement with "a managing general agency." (T. 141). Not all of these agreements he had with managing general agencies were in writing and the Department of Insurance was apprised of none of them. (T. 142, 143). Respondent "broker[ed] . . . business through a general agency in the State of Florida . . . [or] in Atlanta." (T. 141). Time Premium Company (TPC) of Hollywood, Florida, finances insurance premiums. TPC supplies Friendly (and other insurance agencies) with form contracts and blank drafts. Customers of Friendly wanting to borrow money to pay part of their insurance premiums sign a form contract filled in by a Friendly employee obligating the customer to repay TPC the portion of the premium it finances, on an installment basis. Among other things, the form contract provides: That in consideration of the payment by TIME to the respective insurance companies, or their agents, of the balance of the premiums upon the policies of insurance hereinbefore described, the assured agrees with TIME as follows: The assured hereby assigns to TIME as security for the total amount payable hereunder, any and all unearned return premiums and dividends which may become payable under the policies listed in the schedule and loss payments under said policies which reduce the unearned premiums. . . . 4. The assured hereby appoints TIME his attorney in fact to cancel and give notice of cancellation of said policies for non-payment of any amounts due hereunder, and said insurance companies are hereby authorized and directed, upon the demand or request of TIME, to cancel said policies and to pay TIME the unearned return premiums pursuant to the assignment contained in paragraph 1 about thereon without proof of default hereunder or breach thereof or of the amount owning hereunder. In the event that the unearned return premiums are not sufficient to pay the total amount due hereunder, the assured shall pay the deficiency with interest at the highest allowable rate. Petitioner's Exhibit No. 1. A Friendly employee consummates the loan by drawing on TPC and forwarding the draft to the insurance company (or agency) for whom Friendly is writing the insurance. In the event that a company fails to repay TPC, TPC causes the insurance coverage to be cancelled and applies return premiums against the outstanding indebtedness, including, when received, unearned commissions in Friendly's hands at the time of cancellation. TPC notifies Friendly of any shortfall, once it has received return premiums from the insurance companies (or agencies), and Friendly forwards all or part of its unearned commission to TPC, as appropriate. By print-out mailed four times monthly, TPC notifies Friendly of unearned commissions Friendly owes TPC. If return premiums, including unearned commissions, do not satisfy the debt, TPC duns the customer. Friendly is under an obligation to return to the customer any part of an unearned commission it does not owe to TPC or some other premium finance company. BARAHONA On November 29, 1982, Victor Barahona bought insurance from Friendly. Friendly wrote policy No. FAP508054 on Horizon Insurance Company (Horizon) on behalf of Guaranteed Insurance Underwriters (Guaranteed) for liability coverage; and, for comprehensive and collision coverage, policy No. SPP0401130 on Southern Insurance Company (Southern), on behalf of Florida General Agency. Mr. Barahona made a downpayment of $159.00 and Friendly effected a loan to him from TPC in the amount of $386.00 for the remainder of the combined premiums. Together with the finance charge and documentary stamps, Mr. Barahona's obligation to TPC aggregated $437.60, which he was to repay in eight monthly installments of $54.70 each, the first being due on December 30, 1982. On January 6, 1983, TPC notified Mr. Barahona that it had not received an installment payment, and that the policies would be cancelled if the payment was not received within ten days. On January 17, 1983, TPC requested cancellation of both policies. Later TPC notified Mr. Barahona that the policies were cancelled effective February 25, 1983. As a result of the cancellation of the Barahona policies, TPC received a total of $311.63 in return premiums, $127.95 from Florida General Agency and $183.68 from Horizon or Guaranteed. As of September 2, 1983, Barahona still owed TPC $114.78, and TPC had not received any part of the unearned commission on Barahona's policies from Friendly, but it was not until August that TPC had received the last insurance company return premium. Some time thereafter it billed Friendly on the entire unearned commission. In July of 1984, Friendly paid TPC the money it owed TPC on account of the cancellation of the Barahona policies. TAYLOR December 6, 1982, Friendly wrote policy No. SPP0401329 on Southern on behalf of Florida General Agency and policy No. 389868 on Protective Casualty Insurance Company (Protective) on behalf of Specialty Insurance Underwriters (Specialty) for James M. Taylor. Mr. Taylor made a down payment of $97.00, and Friendly effected a loan to him from TPC in the amount of $226.00 for the remainder of the combined premiums. Together with the finance charge and documentary stamps, Mr. Taylor's obligation to TPC aggregated $264.43, which he was to repay in eight equal monthly installments of $33.06, the first being due January 7, 1983. On January 12, 1983, TPC notified Mr. Taylor that it had not received an installment payment, and that the policies would be cancelled if the payment was not received within ten days. At TPC's behest, both policies were cancelled effective February 28, 1983, leaving an outstanding balance of $274.48. As a result of the cancellation of the Taylor policies, TPC received a total of $185.62 in return premiums, $88.02 from Florida General Agency and $97.60 from Protective in March of 1983. A notice of cancellation was sent to Friendly as well as to Protective and Southern, but Friendly did not pay the unearned commission it owed TPC until July of 1984. (T. 19). BIVINS On November 29, 1982, Friendly wrote policy No. 0401124 on Southern on behalf of Florida General Agency for Walter L. Bivins. Of the $159.00 total premium, Delores T. Bivins paid $99.00 as a cash downpayment, and Friendly effected a loan to her from TPC in the amount of $60.00 for the remainder of the premium. Together with the finance charge and documentary stamps, Mr. Bivins' obligation to TPC aggregated $81.93, which he was to repay in three equal installments of $27.31, the first of which was due December 30, 1982. Delores T. Bivins mailed TPC a check for $30.31 ($27.31 plus a $3.00 late charge) dated December 31, 1982. TPC deposited this check, but it was returned unpaid. As a result TPC assessed a $10.00 delinquency charge, and an additional $10 charge, because the check was returned, and caused the cancellation of Mr. Bivins' policy, effective March 2, 1983, claiming a balance due of $104.93. TPC received a return premium from Southern or Florida General Agency later the same month. TPC received the $12.80 unearned commission Friendly owed it in July of 1984. GORECKI On January 6, 1983, Friendly wrote policy No. SPP0403316 on Southern on behalf of Florida General Agency and policy No. 031555 on Allied Fidelity Insurance Company on behalf of Specialty Insurance Underwriters, Inc. for James T. Gorecki. The combined premiums amounted to $481.00. Mr. Gorecki made a down payment of $144.00 and financed the remaining $337.00 through TPC. Friendly effected the loan from TPC. Together with the finance charge and documentary stamps, Mr. Gorecki's total obligation to TPC aggregated $384.56, which he was to repay in eight equal monthly installments of $48.07, the first being due February 6, 1983. Mr. Gorecki sold his car and requested cancellation of both insurance policies in February of 1983. He executed documents at Friendly's office to effect the cancellation. Mr. Gorecki made no payment to TPC and TPC requested cancellation of both policies as a result, although at least one of them had already been cancelled. The Southern policy, No. SPP0403316, was cancelled March 3, 1983, and on March 17, 1983, a check for Southern's return premium, in the amount of $145.33, was sent to TPC, and TPC received it shortly thereafter. The return premium check for Allied Fidelity's policy No. 031555 reached TPC no later than May of 1983. (T. 26). On June 21, 1983, Mr. Gorecki's mother filled out an "insurance consumer service request" complaining that "[t]hey have been telling us since February they would send us a check for the unearned premium." After applying both return premium checks against Mr. Gorecki's indebtedness, a balance of $45.16 remained. TPC notified Friendly by written statement mailed June 23, 1983, that unearned commissions up to $45.16 should be forwarded to TPC. Unearned commissions in excess of $45.16, if any, should have been returned to Mr. Gorecki. (T. 41). BOURGEOIS On January 5, 1983, Friendly wrote policy No. SPP0403324 on Southern on behalf of Florida General Agency and policy No. 031572 on Allied Fidelity Insurance Company on behalf of American Underwriters, Inc. for Edward Bourgeois. The combined premiums amounted to $397.00. Mr. Bourgeois made a down payment of $119.00 and financed the remaining $278.00. Friendly effected the loan from TPC. Together with the finance charge and documentary stamps, Mr. Bourgeois' total obligation to TPC aggregated $320.64, which he was to repay An eight equal monthly installments of $40.08, the first being due February 8, 1983. Mr. Bourgeois made no payments to TPC and TPC caused the cancellation of both policies, effective March 29, 1983, as a result. Notice of cancellation went to both insurance companies and Friendly. On April 27, 1983, TPC received an insurance company return premium of $135.29 and the other insurance company return premium arrived in May of 1983. (T. 27). Friendly paid TPC the unearned commission in July of 1984. A YEAR BEHIND TPC deals with some four or five hundred insurance agencies in Florida. TPC normally receives unearned commissions from agencies within 45 to 60 days after billing, although a TPC employee testified that 90 days was "acceptable." (T. 30). TPC bills the agencies with a computer printout, representing an accumulation of accounts. Possibly one other agency has taken longer than a year to repay moneys owed under similar circumstances. (T. 29). When respondent Schneider fell behind in forwarding unearned commissions, TPC telephoned to discuss the problem. He began sending money to reduce his indebtedness and continues to do so. TPC "would like him to do better, but . . . [is] working with him on this." (T. 31-32). Respondent Schneider sent TPC checks for $800.00 on April 26, 1983, for $500.00 on July 21, 1983, for $400.00 on May 25, 1983, for $400.00 on June 15, 1983, and for $500.00 on July 21, 1983. At the time of the hearing, he was paying $3,000.00 a month "[a]gainst old accounts that . . . [TPC needs] money on on the unearned commissions," (T. 42) but TPC has "asked him to raise it to four or five." (T. 38). TPC applies money it gets from respondent to the oldest accounts first, and Mr. Schneider was aware of this. (T. 38). The money TPC received in 1983 was applied to "possibly `81 or `82 files." (T. 32). A TPC employee testified without contradiction that unearned commissions insurance agencies like Friendly owed it would be TPC's money in the hands of the agent. LE On September 9, 1982, Hang Thi Le purchased Allied Fidelity Insurance Company's policy No. 09-104802 from Friendly for automobile liability, property damage and personal injury protection coverage. She paid Friendly $123.00 on September 9, 1982. Friendly forwarded $104.55 to Allied Fidelity and retained the balance as its commission. On January 26, 1983, Ms. Le made a written request that coverage be cancelled, by executing a form which stated, "I have sold my car." Petitioner's Exhibit No. 12. Allied Fidelity Insurance Company cancelled the policy and, on April 22, 1985, mailed Friendly a check "in the amount of $532.10 with a notation on the bottom of the check indicating that this involved return premium[s] . . . for two policyholders, one being Hang Thi Le . . . indicating the amount of return [for Ms. Le] to be $50.15." (T. 51). Ms. Le was due a total return premium of $59.00, of which $8.85 was unearned commission still in respondent's hands. After she had telephoned Friendly three times and been told at least once that Mr. Schneider was not in, Ms. Le received a refund check in the amount of $50.15 dated July 21, 1983. The check bore the notation "returned premium" and was signed by respondent Schneider, Petitioner's Exhibit No. 12, but did not include the $8.85 respondent owed Ms. Le. In a separate transaction with Friendly, Ms. Le bought insurance and financed the premium. She "put a down payment and . . . ma[d]e a[nother] payment," (T. 69) before deciding to cancel her insurance and stop payment on a check. LOGOS On March 29, 1982, Edward T. Logos went to Friendly's office because he had seen an advertisement on the back of the Pensacola News-Journal's "TV Tab", to wit: [Graphic image of Petitioner's Exhibit 16, as displayed on page 16 of the original Recommended Order, has been omitted. To view this portion of this document, please contact the Clerk's Office.] Mr. Logos "told the lady [in Friendly's office that he] wanted to buy PIP and that's all. [He] assumed they were honorable enough that they would sell [him] what [he] asked for." (T. 91). He was quoted $52.00 and complained about the price. He had waited an hour and a half or two for his turn to buy insurance and signed multiple documents where a woman in respondent's employ had marked them with "x"s. Among the papers he signed was an application for membership in Nation Motor Club, Inc., even though he never asked to join and would have declined an offer to purchase a membership. He also signed the following document: [Graphic image of Petitioner's Exhibit 15, as displayed on pages 17-18 of the original Recommended Order, has been omitted. To view this portion of this document, please contact the Clerk's Office.] The premium for the PIP policy with its $8,000 deductible, was $17.00. The $35.00 difference between the PIP premium and what Mr. Logos paid was apparently the cost of the motor club membership. More than a month later Mr. Logos received his policy in the mail, along with papers indicating he was a member of the Nation Motor Club. Mr. Logos never asked to join Nation Motor Club and would not knowingly have paid to do so. He made inquiries, then complained to the Insurance Commissioner. Respondent refunded the entire $52.00 by check dated August 27, 1982.
The Issue Should discipline be imposed by Petitioner against Respondent’s insurance license held pursuant to Chapter 626, Florida Statutes? Although Respondent was unlicensed at the time of the specific insurance transactions enumerated in the Administrative Complaint, she since has become licensed. It is the existing license of Respondent that Petitioner seeks to discipline in this action.
Findings Of Fact The Parties Petitioner was created in accordance with Section 20.13, Florida Statutes. Petitioner has been conferred general power by the Legislature to regulate the insurance industry in Florida, in accordance with Section 624.307, Florida Statutes, and Chapter 626, Florida Statutes, grants Petitioner the authority to license and discipline insurance agents doing business in Florida. At times relevant to the inquiry, Respondent was not licensed by Petitioner to transact insurance. (Pet. Ex. 2) Respondent was employed by Beck-De Pratter, Inc., a Florida Corporation, doing business as William Dye Insurance, Inc./Brentwood (hereinafter referred to as the “Agency”) from 1996 until 2004. Count I: Aaron Curtis On August 16, 2000, Aaron Curtis came into the Agency to re-new the insurance on his vehicle. Respondent took down the information necessary for Curtis to re-new his insurance. The company that had insured Curtis' vehicle was no longer writing coverage in Florida, and the Agency placed Curtis' coverage without significant alternation with another carrier. John Beck signed this application as agent. Count II: Stacy Collier On October 7, 2002, Collier came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Collier to re-new the insurance. The company that had insured Collier's vehicle was no longer writing coverage in Florida, and the Agency placed Collier's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count III: Ruby Hubbard On October 11, 2002, Ruby Hubbard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Hubbard's vehicle was no longer writing coverage in Florida, and the Agency placed Hubbard's coverage without significant alternation with another carrier. John Beck signed this application as agent. Count IV: Mary Kennedy On March 6, 2002, Mary Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count V: Charles Howard On September 10, 2001, Charles Howard came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed the related vehicle inspection report. Count VI: Not appointed as Customer Representative Petitioner’s official records reveal that Respondent was not appointed as customer representative by any insurance agency at the time the preceding transactions occurred. Respondent’s employer, John Beck, testified that he never appointed Respondent as a customer representative. Count VII: John Kennedy On March 2, 2001, John Kennedy came into the Agency to re-new his automobile insurance. Respondent took down the information necessary for Hubbard to re-new the insurance. The company that had insured Kennedy's vehicle was no longer writing coverage in Florida, and the Agency placed Kennedy's coverage without significant alternation with another carrier. John Beck signed this application as agent.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered dismissing the allegations contained in the administrative complaint against Respondent, Sharon G. Taylor. DONE AND ENTERED this 2nd day of November, 2004, in Tallahassee, Leon County, Florida. S __ STEPHEN F. DEAN 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 2nd day of November, 2004. COPIES FURNISHED: Greg S. Marr, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Jed Berman, Esquire Infantino and Berman Post Office Box 30 Winter Park, Florida 32790 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Tom Gallagher, Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
