Findings Of Fact The Medicaid reimbursement program is a joint state and federal program which provides reimbursement to Florida-licensed nursing homes for long-term care provided to Medicaid eligible persons. The Florida Title XIX Long Term Care Reimbursement Plan (Plan) governs reimbursement to nursing homes for the provision of Medicaid services. The Agency for Health Care Administration (AHCA) is the State agency responsible for implementation of the Medicaid program in the State of Florida. The AHCA is the successor in interest to the Department of Health and Rehabilitative Services, the agency originally responsible for Medicaid reimbursement. At all times material to this case, Quality Health Care (Quality) is and has been a provider of services for purposes of the Medicaid program. Medicaid per diem reimbursement rates for nursing home care were historically based on a "cost" system, which included four components: operating costs, patient care costs, property asset costs and return on equity. Re-valuation of property due to property asset sales and refinancing mechanisms, resulted in a steadily increasing property cost component to the reimbursement formula. The Federal Deficit Reduction Act of 1984 (DEFRA) was enacted in part to limit the effect of property asset re-valuation on reimbursement. The DEFRA restricted the "step up" in property costs which occurred when existing facilities were sold and existing property was re-valued. The actual effect of the DEFRA provisions was to freeze property cost reimbursement. In response to DEFRA, the State of Florida revised its reimbursement program in 1984-85 to shift from the traditional cost system to the fair rental value system (FRVS.) The FRVS, designed to provide an alternative to the DEFRA imposed limits, was created by the State of Florida and the nursing home industry to address the industry's concerns about the effect of DEFRA on reimbursement rates and cash flow. The FRVS methodology imputes a provider's property asset value and indexes the value to specified inflation factors. A provider is reimbursed for a portion of the indexed value rather than actual property costs. The methodology itself is not at issue in this proceeding. On October 1, 1985, the State of Florida implemented Medicaid reimbursement on the FRVS program. At the time of implementation of the FRVS, it was determined that application of the FRVS should be temporarily deferred for some providers. The temporary deferment was intended to protect existing providers committed to long term property liability in anticipation of cost reimbursement rates from being injured by the altered reimbursement program and the resulting reduction in reimbursement rates. In order to provide for deferment of the FRVS, the creators of the system created a "hold harmless" provision designed to protect providers in existence and enrolled in the Medicaid program prior to the October 1, 1985 FRVS implementation date by continuing to reimburse such providers under the cost system for an extended period of time. For purposes of the "hold harmless" provision, Quality was in existence and was enrolled in the Medicaid program on October 1, 1985. In creating the FRVS and hold harmless provision, it was clear that facilities qualifying for cost reimbursement under the hold harmless system would receive a benefit unavailable to FRVS-reimbursed providers. It was necessary to create a mechanism by which the advantage of cost reimbursement could be negated. Accordingly the creators determined that the continued cost reimbursement would, be viewed as an "overpayment" by the agency to the facility which would need at some future date to be repaid. The overpayment is known as the "hold harmless payback liability." Because actual property costs decrease over time due to depreciation and retirement of debt, a provider's cost reimbursement eventually becomes less than the projected FRVS reimbursement rate. When a provider's projected reimbursement under the FRVS exceeds the costs system reimbursement, a provider would normally become entitled to reimbursement at the higher rate. In order to collect the hold harmless payback liability, a provider in the hold harmless program otherwise entitled to the higher FRVS reimbursement receives only cost reimbursement until the point when the "overpayment" by the agency has been "reimbursed." When the hold harmless payback liability is extinguished, the provider receives full FRVS reimbursement. Plan section IV.D. provides that during the transition period, some facilities shall continue receive cost reimbursement until such time as FRVS payments exceed cost reimbursement as specified in Section V.E.1.h. of the Plan, at which time a facility shall begin reimbursement under the FRVS. Plan section IV.D. provides as follows: Effective October 1, 1985, a fair rental value system (FRVS) shall be used to reimburse facilities for property. To prevent any facility from receiving lower reimbursement under FRVS than under the former method where depreciation plus interest costs were used to calculate payments, there shall be a transition period in which some facilities shall continue to be paid depreciation plus interest until such time as FRVS payments exceed depreciation and interest as specified in Section V.E.1.h. At that time a facility shall begin reimbursement under the FRVS. Facilities entering the program after October 1, 1985 that had entered into an armslength (not between related parties) legally enforceable agreement for construction or purchase loans prior to October 1, 1985 shall be eligible for the hold harmless clause per Section V.E.1.h. Plan section V.E.1.h. sets forth the hold harmless provision and provides that if after calculation of the FRVS rate FRVS reimbursement is lower than cost reimbursement, a facility shall continue to receive cost reimbursement until such time as the hold harmless payback liability is extinguished. Plan section V.E.1.h. provides as follows: A "hold harmless" provision shall be implemented to ensure that facilities existing and enrolled in the Medicaid program at October 1, 1985 do not receive reimbursement for property and return on equity or use allowance under the FRVS method less than the property cost reimbursement plus return on equity or use allowance given at September 30, 1985. If, after calculation of the FRVS rate, that reimbursement would be lower than depreciation plus interest costs under III.G. 3.-5. of this plan, a facility shall continue to be reimbursed depreciation plus interest according to III.G. 3.-5. of this plan until such time as the net difference in total payments between III.G. 3.-5. and FRVS is -0-. Plan section III.G. 3.-5. provides the methodology for calculation of cost reimbursement. As of October 1, 1985, Quality's cost reimbursement exceeded the FRVS reimbursement and the "hold harmless" provision was applicable to Quality. As of October 1, 1985, Quality was entitled to cost reimbursement under the "hold harmless" provision based on the Plan provisions cited herein. The Medicaid program establishes reimbursement rates on a semiannual basis. Rates are communicated to providers via rate notices. For all periods except the July 1, 1987 and January 1, 1988 rate cycles, Quality's cost reimbursement rate exceeded the projected FRVS reimbursement rate. For the July 1, 1987 and January 1, 1988 rate cycles, Quality's cost reimbursement rate was less than the projected FRVS reimbursement rate. The rate fluctuation experienced by Quality in the July 1, 1987 and January 1, 1988 rate periods is best described as an anomaly. On August 19, 1993, the agency issued a retroactive notice of rate adjustment from cost to FRVS beginning in the July 1989 rate cycle and for all subsequent periods. The evidence is unclear as to why the retroactive rate adjustment was to become effective beginning in the July 1989 rate cycle. By letter of September 24, 1993, the AHCA notified Quality that its hold harmless payback liability was $212,574.32. The agency asserts that based on Plan section IV.D., Quality should be shifted to the FRVS reimbursement program based on that fact that for the two rate cycles beginning in July 1, 1987, FRVS reimbursement payments exceeded costs reimbursement. The agency's position is contrary to the language of Plan section V.E.1.h. (the hold harmless provision) which states as follows: ...If, after calculation of the FRVS rate, that reimbursement would be lower than depreciation plus interest costs under III.G. 3.-5. of this plan, a facility shall continue to be reimbursed depreciation plus interest according to III.G. 3.-5. of this plan until such time as the net difference in total payments between III.G. 3.-5. and FRVS is -0-. Based on the Plan provisions cited herein, for the July 1, 1987 and January 1, 1988 rate periods, and for the subsequent period within the time frame at issue in this proceeding, Quality would be entitled to cost reimbursement because the net difference in total payments between cost and FRVS has not reached zero. It is not unusual for reimbursement rates to be set at times other than at the beginning of a rate cycle. Such rate changes result in additional rate notices to providers. On three occasions, the agency sent notices to Quality stating that the reimbursement rate was being set at the lower FRVS level. On each occasion, Quality inquired and was informed that the reimbursement rate would remain at cost. The AHCA asserts that the responses to the Quality inquiries were erroneous and that it is entitled to correct the errors. Quality asserts that it relied to its detriment on the responses to its inquiries and that the agency should be estopped from retroactively altering the reimbursement mechanism under which Quality is paid.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Agency for Health Care Administration enter a Final Order providing that Quality Health Care Center continue to be reimbursed under the cost reimbursement system until such time as Quality's hold harmless payback liability is extinguished. DONE and RECOMMENDED this 29th day of June, 1994 in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of June 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-0164 To comply with the requirements of Section 120.59(2), Florida Statutes, the following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 24. Rejected, cumulative. 27-28. Rejected, unnecessary. 30. Rejected, unnecessary. 39-56. Rejected, unnecessary. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 8. Rejected, cumulative. 11. Rejected, not supported by cited testimony. 20-23. Rejected, unnecessary. 24. Rejected as to use of term "discovered." ,The agency had sent three notices Quality prior to the August 1993 action. 26-36. Rejected, unnecessary. 37. Rejected, irrelevant. The testimony is clear that the drafters of the Plan did not contemplate the situation at issue in this case. 40-43. Rejected, irrelevant, not supported by the greater weight of the evidence. There is no credible evidence that any other provider has experienced this situation. Further, such treatment would be contrary to the clear provisions of the Plan. 47. Irrelevant. There is no deadline for payment of hold harmless payback liability. 48-52. Rejected, unnecessary. COPIES FURNISHED: Douglas M. Cook, Director 2727 Mahan Drive Tallahassee, Florida 32308 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Peter A. Lewis, Esquire 307 West Park Avenue Post Office Box 1017 Tallahassee, Florida 32302-1017 Heidi Garwood, Esquire 1317 Winewood Boulevard Building 6, Room 234 Tallahassee, Florida 32399-0700
The Issue The central issues in these cases are the Petitioners' challenges to proposed rules of the Department of Insurance (Department).
Findings Of Fact The Department is the state agency charged with the responsibility to promulgate and enforce rules pursuant to Chapters 624 through 651, Florida Statutes. The Petitioner, FAUA, is an association of automobile insurers whose interests would be substantially affected by the proposed rules, if adopted, as the subject matter of the proposed rules is within the FAUA's general scope of interest and activities. The other Petitioners are premium finance companies licensed pursuant to Chapter 627, Florida Statutes whose interests will also be substantially affected by the proposed rules, if adopted. Mary Russo is a financial examiner/analyst coordinator employed by the Department whose duties involve the regulation of premium finance companies. She has been so employed for approximately six years. Ms. Russo prepared or aided in the preparation of the economic impact statement and the detailed written statement of facts and circumstances drafted in connection with the proposed rules at issue in this proceeding. In pertinent part, the economic impact statement provided: An estimate of the cost or the economic benefit to all persons directly affected by the proposed action. It is anticipated that there will be a minimal increase in cost to a few of the entities regu- lated as some of them will probably need to seek accounting advice and/or computer programming advice to insure that its operations are in compliance with the rule. However, since most entities regulated already comply with this rule, only a few should be affected. RE: Proposed Rule 4-196.002 "Notice of Intent to Cancel to Be Mailed": Estimated cost to the agency-None. Estimated cost or economic benefit to all persons directly affected-cost will depend upon method of providing the required proof of mailing; however, as a matter of sound business practice as well as providing evidence of compliance with the requirements of Section 627.848, F.S., this should (sic) practice should already be in place. This will benefit the insured in assuring compliance with Florida Statutes in the cancellation of financed policies and will benefit the premium finance company in providing a defense in the event an insured brings action for wrongful cancellation of the financed policy alleging that the proper notice was not sent. Estimated impact of proposed action on competition and the open market for employment-none. Analysis of impact on small business-none. * * * Detailed statement of the data and methodology used in making the estimates required by this paragraph-Recent final decision reached by the Supreme Court of Florida in the case of "Insurance Company of North America, Petitioner, vs. Bobby Cooke, etc." wherein the Insurance Company was held liable for wrongfully cancelling an insured's policy. The Court held that "where an insured denies receipt of the notice of intent to cancel required by Section 627.848(1), an insurer who raises the defense of cancellation under Section 627.848 must prove that the premium finance company complied with the provisions of the statute in order to avoid liability under a contract of insurance." * * * The following rules have no cost or benefit to anyone directly affected by the rule, no negative impact on competition, employment, or small business, and no cost or benefit of adopting these rules other than as indicated above: Proposed Rule 4-196.001 "Standard Cancellation Notice" Proposed Rule 4-196.003 "Requirement of Net Worth of Premium Finance Companies" Proposed Rule 4-196.006 "Filing Other Acceptable Collateral in Lieu of Net Worth" * * * 7. Proposed Rule 4-196.010 "Refunds" * * * Proposed Rule 4-196.028 "Right to Cancel for Non-payment of Premium" Proposed Rule 4-196.030 "Definitions" Proposed Rule 4-196.038 "Limit on Additional $20 Service Charge" Proposed Rule 4-196.040 "Assignment of Premium Finance Contracts Permitted for Existing Business or Collateral for Extension of Credit Only" It is the Department's contention that the proposed rules have no economic impact (which the Department defines to mean no additional or new expenses to anyone) because the rules merely clarify and formally implement the Department's policy as it has existed for several years, at least since 1988. Therefore, the Department reasons, if someone has been complying in the past, there should be no changes in operations or new expenses for that entity. Proposed Rule 4-196.001, Florida Administrative Code, seeks to specify that all copies of the standard cancellation notice be printed on pink paper. The insurer only recognizes a cancellation notice if printed on pink paper, therefore, having all copies of the notice in pink will assure that the insurer receives the correct copy. Currently, the insured and the insurer receive pink copies of the notice but the rule has not specified that the premium finance company copy must also be on pink paper. Pink cancellation notices are the industry practice and standard. Proposed Rule 4-196.002, Florida Administrative Code, requires that the proof of mailing for the notice of intent to cancel must be retained in the files so that the Department may verify compliance with Section 627.848, Florida Statutes. This rule makes the retention of the proof specific whereas in the past the Department has merely suggested that the documentation be retained. Proposed Rule 4-196.003, Florida Administrative Code, requires premium finance companies to meet net worth criteria such that even if the standard is met by a means other than a net worth of $35,000, that the company must also be in sound financial condition with a "positive statutory net worth." The Department seeks to assure that premium finance companies are financially sound and maintains that the criteria are necessary and reasonable to meet that goal. Proposed Rule 4-196.006, Florida Administrative Code, identifies the types of collateral the Department will accept for purposes of establishing net worth. Proposed Rule 4-196.009, Florida Administrative Code, seeks to establish guidelines and methods through which the Department will determine whether an entity is eligible for licensure and whether a premium finance company is in an unsound financial condition. Proposed Rule 4-196.010, Florida Administrative Code, seeks to clarify the requirement that refunds must be made within the statutory time limit and that premium finance companies may not charge interest on the balance due under the contract beyond the statutory limit. Proposed Rule 4-196.028, Florida Administrative Code, specifies that an insured's policy may be cancelled for the nonpayment of premium but may not be cancelled for the nonpayment of miscellaneous fees or charges owed to the premium finance company. Proposed Rule 4-196.030, Florida Administrative Code, seeks to clarify the definitions of the following words: "affiliate," "gross amount available," "inducement," "rebates," and "statutory net worth." Proposed Rule 4-196.038, Florida Administrative Code, limits the service charge amount which may be charged for a twelve month period to one $20.00 assessment. Most premium finance contracts are for a period less than twelve months. Premium finance contracts charge a "set up" fee of $20.00 for each finance contract. For purposes of this rule, the "set up" fee would be limited to one $20.00 assessment per customer per twelve month period. Under the proposed rule, "customer" means per individual not per contract. Proposed Rule 4-196.040, Florida Administrative Code, seeks to clarify provisions allowing the assignment of premium finance contracts so that such procedure is not used to circumvent the statute prohibiting rebates to agents. A public hearing on the proposed rules was conducted by the Department on October 11, 1994. The record of the public hearing is set forth in the Department's composite exhibit 1. All changes in the proposed rules have been published by the Department. Section 288.703, Florida Statutes, defines "small business" to be: "Small business" means an independently owned and operated business concern that employs 50 or fewer permanent full-time employees and that has a net worth of not more than $1 million. As applicable to sole proprietorships, the $1 million net worth requirement shall include both personal and business investments. Based upon the record, none of the Petitioners in this cause is a "small business." Based upon the record of this case, together with the record of the public hearing conducted on October 11, 1994, the Department adhered to the procedure for preparation of the economic statement and considered information submitted to the agency regarding specific concerns about the economic impact of the proposed rules. Rule 4-196.001, Florida Administrative Code, as it now exists requires that the premium finance company furnish cancellation notices to the insured and insurer in a designated format, and printed "on a color paper of a shade of pink." The Petitioners have not challenged the existing language of the rule. The Department uses generally accepted accounting principles to determine whether a premium finance company has a net worth of $35,000. The unearned premium serves as the collateral in the premium finance contract. Premium is earned on a pro rated basis. The amount of the premium is divided by the length of time of the term to reach the daily pro rated amount. Unearned interest is refunded based upon the rule of 78s. For an eight month contract, a premium finance company earns 8/36 of the interest the first month, 7/36 of the interest the second month, and so on until all interest is paid. The failure to refund monies due an insured in accordance with the statute constitutes a business practice that would be hazardous to the insurance-buying public.
Findings Of Fact At all times pertinent to the allegations contained herein, Respondent was a licensed Mortgage Broker and the principal broker for Mortgage Associates of Countryside, located at 2623 Enterprise Rd., Clearwater, Florida. The Department was and is the state agency charged with regulating the activities of mortgage brokers in this state. In September, 1987, Andrew Grosmaire and Kevin Gonzalez, compliance officer and financial examiner, respectively, for the Department, pursuant to a complaint from Mark Snyder, conducted an examination of Respondent's affairs as they pertained to his operation as a mortgage broker. During the survey, which covered the period from August, 1986 through August, 1987, Mr. Grosmaire and Mr. Gonzalez examined between 50 and 60 loan files which had culminated in loan closings. In addition, they examined loan files which did not result in closings, bank account records, and other of Respondent's miscellaneous records. In order for an appropriate audit of a closed loan file to be conducted, it is imperative that the loan closing statement be included. Without it, the examiner cannot accurately determine what, if any, closing costs the borrower actually paid and if closing costs paid were consistent with those disclosed by the broker on the Good Faith Estimate Form at the initial interview. Of the closed loan files reviewed, these closing statements were missing from seven files. Respondent admits that several closed loan files did not have the required closing costs statement form enclosed. He attributes this, however, to the failure of his processor, an assistant, to place the closing statement in the file. They were not presented at hearing or thereafter. The investigators examined the Good Faith Estimate Forms in those files which culminated in loans and found that the form utilized by the Respondent failed to contain language, required by statute, which summarized the limits and conditions of recovery from the Mortgage Brokerage Guaranty Fund. Respondent contends that the pertinent statutory section was not in existence at the time he was engaged in mortgage brokerage activities. This was found to be not true. The Act became effective July 1, 1986 and the files surveyed were from the period August, 1986 through August, 1987. Examination of the Good Faith Estimate Forms used by the Respondent in each of the cases which culminated in loan closing revealed that Respondent consistently underestimated closing costs. This resulted in the borrowers generally paying higher closing costs than was initially disclosed to them. On -loans applied for by Mr. and Mrs. Snyder, Mr. Iyer, and Mr. Toland. Respondent redistributed loan points to himself in an amount higher than that which was agreed to by the parties. In the Toland case, Mr. Toland agreed to pay a 1% loan origination fee in the amount of $996.00. The settlement statement dated approximately 2 months later reflected that Toland paid Respondent a loan origination fee of $1,128.00 in addition to a 1% ($664.00) loan discount fee to the lender. This latter mentioned discount fee was not disclosed in advance to Mr. Toland on the estimate form nor was the excess loan origination fee charged. It should be noted here that a second Good Faith Estimate Form, dated nine days after the original, reflecting a 3% loan origination fee, was found in the file. Though signed by Respondent, this second form was not signed by the borrower as required. It cannot, therefore, serve to support Respondent's claim that he advised the Tolands of the higher cost by this second form. There is no showing that the Tolands were aware of it. In the Iyer case, the estimate form dated September 19, 1986 reflected a points and origination charge of $1,332.50 which is 1% of the mortgage loan amount of $133,250.00. The Iyers were subsequently approved for a mortgage in the amount of $145,600.00. The closing statement dated March 6, 1987, almost six months later, reflects that the Iyers paid a 2% loan origination fee of $2,740.00 to Mortgage Associates and a load discount fee of $685.00 to the lender. Here again the Respondent claims that a second cost estimate form reflecting a 2% point and origination fee of $2,912.00 was subsequently executed by the Iyers. However, this second form, found in Respondent's files, is undated and fails to reflect the signature of either Respondent or the Iyers. It cannot, therefore, serve as proof that the Iyers were made aware of the change. It does appear, as Respondent claims, that the bottom of the second form, (here, a copy) , was excluded from the copy when made, but there is no evidence either in the form of a signed copy or through the testimony of the Iyers, that they were aware of the change. Consequently, it is found that the Iyers had not been made aware of the second estimate and had not agreed to pay as much as they did, in advance. As to the Snyder closing, both Mr. Snyder and Respondent agree that it was their understanding at the time the loan was applied for, that Respondent would attempt to obtain a lower interest rate for them than that which was agreed upon in the application and in the event a lower rate was obtained, Respondent's commission points would remain the same as agreed upon in the brokerage agreement. In that case, as Respondent points out, his commission is based on the mortgage amount, not the interest rate, and he would be entitled to the agreed upon percentage of the loan face amount regardless of the interest rate charged by the lender on the loan. The Snyders had agreed to a 1% commission to Respondent plus a 1% loan origination fee to the lender. When the lender agreed to lend at par, without an origination fee, Respondent appropriated that 1% to himself, thereby collecting the entire 2% called for in the application. This was improper. Respondent's claim that it is an accepted practice in the trade is rejected. The Snyders initially made demand upon the Respondent for reimbursement of that additional 1% and ultimately had to hire an attorney to pursue their interests. Respondent subsequently made a $400 partial reimbursement payment of the amount owed but nothing further notwithstanding the fact that the Snyders ultimately secured a Judgement in Pinellas County Court against him for $1,082.52 plus interest, attorney's fees and costs. As a result, the Florida Mortgage Brokerage Guarantee Fund will reimburse the Snyders for their loss. According to the investigators, the Snyders Toland, and Iyer files, in addition to the problems described, also reflected that Respondent received payments for other items which should have gone into an escrow account. These included such things as credit reports and appraisal fees. The Department requires that any money received by a broker other than as commission, be placed in the broker's escrow account pending proper disbursement. Respondent did not have an escrow account. Mr. Gonzalez looked at Respondent's overall operation, including closed files, in an attempt to correlate between income and outgo to insure that Respondent's operation was in compliance with the statute. In addition to his search for an escrow account, Mr. Gonzalez also examined Respondent's "Loan Journal" which by statute is required to contain an entry for each transaction in each loan. The purpose of this journal is to provide a continuing record to show when each item in the loan processing was accomplished. In Mr. Gonzalez' opinion, the Respondent's journal was inadequate. It contained repeat and conflicting entries for specific items which hindered the investigators' ability to determine an audit trail. In addition, all required information was not put in the journal in complete form in each account. In the opinion of the investigators, the Respondent's violations were significant in that they made it impossible for the Department to determine compliance with statutes and Department rules and inhibited the compliance examination. All in all, Respondent's way of handling his accounts, his failure to maintain an escrow account, and his unauthorized increase in commission income, all indicated his actions were not in the best interest of his clients. The investigators concluded that clients funds were not being handled properly and that the purpose of Chapter 494, Florida Statutes, to protect the consumer, was not being met. In Mr. Gonzalez' opinion, Respondent's method of business constituted incompetence as a mortgage broker and "possibly" fraudulent practice. It is so found. Both Mr. Gonzalez and Mr. Grosmaire indicated they had extreme difficulty in attempting to locate Respondent after the complaint was filed by Mr. Snyder, in order to conduct their examination. They finally located him at a site different from that which appeared in the records of the Department. Respondent contends that the Department had been notified in writing within the required time, of his change of location when he filed a notice of fictitious name. He contends that after filing his notice of name change, he received no response from the state but took no action to inquire whether the change had been made. In any case, his current address was in the phone book and had the agents chose to look there, they would have found him. Respondent contends that the good faith estimates required by the statute are just that, an estimate, and that actual figures may vary from and exceed these estimates. This is true, but there is a procedure provided whereby the broker is to notify the client of a change in advance and if the change exceeds a certain amount, it may constitute grounds for voiding the contract. In paragraph 7 of the complaint, Petitioner alleges that Respondent used a form for the estimates which failed to contain a statement defining the maximum estimated closing costs. Review of the statement offered herein reflect this to be a fair analysis. However, Respondent claims that certain items cannot be predicted accurately in that some companies charge more than others for the same item and it was his practice to insert in the estimate portion of the form a "worst case scenario." However, at no time did he address in his form what could be the maximum a prospective purchaser might be expected to pay. Respondent "doesn't like" the total picture painted by the investigators concerning his operation. He claims it is cot a fair and accurate representation. In many cases, he claims, he expended funds on behalf of clients in excess of that he received in either commission or reimbursement and even though he may have received more than entitled in some cases, it "evens out over a period of time." Though this may be so, it is no way to do business. The state requires the keeping of accurate records and, just as the broker should not be required to assume responsibility for other than his own misconduct, neither should the client be required to pay more than is his legal obligation. Respondent professes to know the mortgage business and he resents having his qualifications as a mortgage broker questioned. In his opinion, he has trained himself well and has acted in good faith on the basis of the information available to him at the time. He ignores the impact of the Judgement of the court in the Snyder matter because he feels it was "unilateral." He believes the law is designed to protect the client and he wants to know who protects the broker. It is for that very reason, he contends, that fees paid in advance are not refundable. Mr. Sample feels the Department should be more informative to the brokers and get the governing regulations updated more quickly. Respondent cherishes his license and claims he needs it to make a living. He went out of business once before, several years ago, because of bad business conditions, (the reason he uses for not complying with the court order), but did not declare bankruptcy because he wanted to go back into business and pay off the judgements against him. Though he has been back in business for several years, he has failed to make any effort to pay off any of his former creditors even though in his former operation, he improperly tapped his escrow account for other business expenses.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Respondent, Howard E. Sample's license as a mortgage broker in Florida be revoked. RECOMMENDED this 15th day of September, 1988 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this day of September, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NUMBER 88-2858 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Insofar as Petitioner's submission refers to testimony of a witness, that is considered as a proposed finding of fact. FOR THE PETITIONER; Accepted and incorporated herein & 3. Accepted and incorporated herein 4. & 5. Accepted and incorporated herein Accepted and incorporated herein & 8. Accepted and incorporated herein Rejected as contra to the evidence A conclusion of law and not a finding of fact & 11a Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted and incorporated herein - 18. Accepted 19. - 21. Accepted and incorporated herein Accepted & 24. Accepted and incorporated herein 25. & 26. Accepted and incorporated herein Accepted &-29. Accepted 30. - 34. Accepted and incorporated herein FOR THE RESPONDENT: Nothing Submitted by way of Findings of Fact COPIES FURNISHED: Elise M. Greenbaum, Esquire Office of the Comptroller 400 West Robinson St. Suite 501 Orlando, Florida 32801 Howard E. Sample 2465 Northside Drive Apartment 505 Clearwater, Florida 34621 Honorable Gerald Lewis Ccmptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts, Esquire General Counsel Department of Banking and Finance Plaza Level, The Capitol Tallahassee, FL 3 2399-0350
The Issue Whether Respondent's application of the inflation protection clause of the agreement to purchase real estate, thereby increasing the purchase price, discriminated against Petitioner in violation of the Florida Fair Housing Act (FFHA) and Sections 760.20 through 760.37, Florida Statutes (2004).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Petition for Relief. DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 24th day of January, 2006. COPIES FURNISHED: Denise Crawford, Agency Clerk Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Tyrone Harrison 8412 Peterson Road Odessa, Florida 33556 Cristina A. Equi, Esquire Gray & Robinson, P.A. 301 East Pine Street, Suite 1400 Post Office Box 3068 Orlando, Florida 32802-3068 Cecil Howard, General Counsel Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
Findings Of Fact Parties Petitioner is the state agency responsible for regulating insurance and insurance related activities in Florida. Petitioner regulates persons engaged in activities prohibited under Chapters 626 and 627, Florida Statutes. 1/ Respondent, Koontz, is licensed as a general lines agent for property, casualty, surety, and miscellaneous insurance. 2/ His agent number is 300429666. Mr. Koontz is the primary agent and vice president for Cash Register Auto Insurance of Polk County, Inc., ("Cash Register"). Cash Register sells insurance and is an insurance agency within the meaning of Section 626.094. Respondent, Davis, is employed by Cash Register. She is licensed under customer service representative number 534548407. Mr. Koontz is the appointing and supervising agent for Ms. Davis. He is responsible for her acts and representations pursuant to Florida Administrative Code Rule 4-213.100. 3/ Cash Register is a Florida corporation wholly owned by Mr. Lloyd Register III and LR3 Enterprises, Inc. ("LR3"). 4/ Cash Register's principal place of business is 2810 South Florida Avenue, Number B, Lakeland, Florida 33803. Background Prior to August, 1994, Mr. Ernest C. Carey maintained automobile insurance on his 1987 Toyota truck through Allstate Insurance Company ("Allstate"). Allstate cancelled the policy. During August, 1994, Mr. Carey obtained replacement insurance. Mr. Carey telephoned five insurance agencies to obtain premium quotes for the minimum insurance required by law. One of the insurance agencies that Mr. Carey telephoned was Cash Register. Mr. Carey sought to finance the insurance premium, make the minimum down payment, and obtain the minimum monthly payment available. The quote given to Mr. Carey was stored in the Cash Register computer. On August 17, 1994, Mr. Carey went to the Cash Register office and discussed the purchase of insurance with Respondent, Davis. Ms. Davis retrieved Mr. Carey's quote from the computer and offered Mr. Carey the same premium, down payment, and terms that were quoted to Mr. Carey by telephone. The quoted premium was $275 for personal injury protection, a $2,000 deductible, and $10,000 in liability insurance. The insurer was Armor Insurance Company ("Armor"). The down payment was $67. The quote was based on Mr. Carey's purchase of two additional policies. One policy was a $1,000 accidental death benefit ("ADB"). The second was hospital indemnification. The additional premium for the ADB policy was $10. The additional premium for the hospital indemnity policy was $100. Mr. Carey had the option of rejecting the two additional policies. His down payment on the cost of automobile insurance alone would have increased to $97.50, and his monthly payment would have also increased. However, the finance charge and total cost would have decreased. Mr. Carey was unhappy with his financing alternatives but did not choose to pay the premium in full rather than finance it. Nor did he choose to reduce his total cost by purchasing automobile insurance only. Mr. Carey chose a lower down payment, lower monthly payment, ADB, and hospital indemnification. Mr. Carey paid $67 to Respondent, Davis, signed the appropriate documents including a premium finance agreement, and left. Premium Financing Respondents are each charged with violating former Sec. 627.8405(3), Fla. Stat. (1994 Supp.)("former Section 627.8405(3)"). 5/ Former Section 627.8405 provided inter alia: No premium finance company shall, in a premium finance agreement, provide financing for the cost of: * * * (3) Any amount in excess of 70 percent of the original premium . . . on any insurance contract . . . of 12 months' or more duration . . . . Respondents did not violate former Section 627.8405(3) in the Carey transaction unless they satisfied three conjunctive requirements. Respondents must have: provided financing; in a premium finance agreement; for more than 70 percent of the original premiums. Respondents satisfied only one of the foregoing requirements. Provided Financing The term "financing" is not defined in Chapter 627, Part XV. The plain and ordinary meaning of the term "finance" is to supply money, credit, or capital ("money or credit"). 6/ Respondents did not supply money or credit to pay insurance premiums in the Carey transaction. Equity Premium, Inc. ("Equity") 7/ provided financing in the Carey transaction. Equity supplied money to the insurer or insurance agent, supplied credit to Mr. Carey, and imposed a finance charge for the money and credit supplied. Equity is a premium finance company, within the meaning of Section 627.826, and, on August 17, 1994, was subject to the provisions of former Section 627.8405(3). However, Equity is not a party to this proceeding. Respondents do not own stock in Equity. Nor do they own stock in Cash Register or LR3. Equity, Cash Register, and LR3 may be related entities because the stock of each corporation may be owned by common shareholders. However, any such relationship does not include Respondents. Petitioner failed to show by clear and convincing evidence that Respondents provided financing as principals. Petitioner failed to show by clear and convincing evidence that Respondents were authorized as agents to bind Equity irrevocably without the subsequent consent and approval of Equity. In A Premium Finance Agreement The financing document used in the Carey transaction was labeled a premium finance agreement. However, a written agreement is not a premium finance agreement merely because of the label affixed to the document. To be a premium finance agreement, a written agreement must satisfy the statutory definition of a premium finance agreement. A premium finance agreement is defined in Section 627.827 8/ as: . . . a written agreement by which an insured promises or agrees to pay to . . . a premium finance company the [amount advanced] . . . to the insurer or insurance agent, in payment of premiums on an insurance contract, [together with a service charge]. . . . [emphasis supplied] In relevant part, a premium finance agreement is a written agreement in which the insured promises to pay the amount advanced together with a service charge A written agreement in which the insured promises to pay the amount advanced without a service charge is not a premium finance agreement. Section 627.826(3) 9/ clearly states: The inclusion of a charge for insurance on a bona fide sale of goods or services on installments is not subject to the provisions of this part Section 627.826(3) makes it clear that financing provided without a service charge was not subject to the prohibition in former Section 627.8405(3). Former Section 627.8405(3) prohibited only financing in a written agreement in which the insured agreed to pay the amount advanced together with a service charge The amount advanced in the Carey transaction was $319.40. The amount advanced was determined by reducing original premiums of $375 by $57 of the down payment and by increasing the $318 remainder by D.O.C. stamps of $1.40. Of the amount advanced, Mr. Carey agreed to pay only $137.69 together with a service charge. The $43.66 service charge was calculated at an annual interest rate of 31.71 percent. 10/ If Mr. Carey had agreed to pay the entire $319.40 together with a service charge of 31.71 percent, he would have agreed to pay a service charge of $101.28. 11/ If Respondents provided financing in the Carey transaction, they provided financing in a premium finance agreement for only $137.69 because that is the only part of the amount advanced that Mr. Carey agreed to pay together with a service charge. Respondents did not provide financing in a premium finance agreement for $181.71 because Mr. Carey agreed to pay that part of the amount advanced without a service charge. 12/ The single written agreement that was labeled a premium finance agreement was, by statutory definition, a dual-use document. That part of the document in which Mr. Carey agreed to pay $137.69 together with a service charge was a premium finance agreement within the meaning of Section 627.827. That part of document in which Mr. Carey agreed to pay $181.71 without a service charge did not satisfy an essential requirement in the statutory definition of a premium finance agreement. Financing provided in that part of the document that was not a premium finance agreement was not prohibited by former Section 627.8405(3). Section 627.826(3) provides that such financing is not subject to the finance provisions of Chapter 627, Part XV, including the prohibition in former Section 627.8405(3). More Than 70 Percent Of The Original Premium If Respondents provided financing in the Carey transaction, they did not violate former Section 627.8405(3) by providing financing in a premium finance agreement for more than 70 percent of the original premiums. The $137.69 that Mr. Carey agreed to pay together with a service charge is only 37 percent of the $375 in original premiums. Respondents failed to show by clear and convincing evidence that a disproportionate share of the $137.69 represented more than 70 percent of the $100 premium for hospital indemnification. Nor did Petitioner show that Mr. Carey agreed to pay the $100 premium together with a service charge. All of the $137.69 and the $43.66 service charge arguably could have been attributable to the $275 automobile premium. Even if the $100 premium for hospital indemnification were actually a charge for products other than insurance, $137.69 comprises only 50 percent of the $275 automobile premium. As the premium finance agreement stated, "FINANCE CHARGES HAVE BEEN CALCULATED ON NO MORE THAN 70 PERCENT OF THE PREMIUM." Automobile Club Section 627.8405(1) 13/ provides, in relevant part: No premium finance company shall, in a premium finance agreement, provide financing for the cost of: A membership in an automobile club. The term "automobile club" means a legal entity which, in consideration of dues, assessments, or periodic payments of money, promises its members or subscribers to assist them in matters relating to the ownership, operation, use, or maintenance of a motor vehicle. . . Respondents did not violate Section 627.8405(1). Respondents did not provide financing in a premium finance agreement for the cost of a membership in an automobile club. Both the ADB and hospital indemnification policies Mr. Carey purchased were issued by Home Insurance Company ("Home") to Colonial Touring Association, Inc. ("CTA") as group policies for CTA members. 14/ CTA is an automobile club within the meaning of Section 627.8405(1). 15/ Ms. Beverly Robinson operates CTA and maintains its books and records. Ms. Robinson is licensed as an insurance agent pursuant to agent number 081505068. On August 17, 1994, Ms. Robinson was authorized to sell ADB and hospital indemnity group insurance for Home. 16/ Respondents did not charge Mr. Carey for the cost of a membership in an automobile club. 17/ Respondents charged Mr. Carey $110 for ADB and hospital indemnification premiums. Respondents paid the entire $110 to CTA. CTA paid Home for the amount owed Home and retained the balance as commissions earned on the sale of group insurance. The ADB and hospital indemnification premiums were high commission items. Of the $10 charged to Mr. Carey for ADB, CTA paid only $1 to Home. CTA retained the remaining $9 as commission. Of the $100 charged to Mr. Carey for hospital indemnification, CTA paid Home only $10 and retained the balance. Neither Respondents, Ms. Robinson, nor the books and records of CTA treat any portion of the $99 commission included in the premiums for ADB and hospital indemnification as the cost of a membership in CTA. Mr. Carey was covered for ADB and hospital indemnification from August 17, 1994, through August 16, 1995. Petitioner failed to show by clear and convincing evidence the portion of the $99 commission, if any, that should be treated as the cost of the CTA membership. Similarly, Petitioner failed to show the portion of the $99 commission that should be treated as commission earned on the sale of insurance. Even if some or all of the $99 commission retained by CTA should be treated as the cost of membership in CTA, Respondents did not provide financing in a premium finance agreement for that cost. Petitioner failed to show by clear and convincing evidence that Mr. Carey agreed to pay the amount advanced for a CTA membership together with a service charge. 18/ ADB Section 627.8405(2) provides, in relevant part: No premium finance company shall, in a premium finance agreement, provide financing for the cost of: * * * (2) An accidental death and dismemberment policy sold in combination with a personal injury protection and property damage only policy. Respondents did not violate Section 627.8405(2). Respondents did not provide financing in a premium finance agreement for the cost of an ADB policy irrespective of whether it was sold in combination with a personal injury protection and property damage policy. The $10 premium for the ADB policy was paid entirely from Mr. Carey's $67 down payment. CTA received the $10 from Cash Register, retained a $9 commission, and transmitted the $1 cost for the group ADB policy to Home. No part of the $10 premium for the ADB policy was financed. Mr. Carey did not agree to pay any part of the amount advanced for the ADB premium together with a service charge. Informed Consent, Unfair Practices, And Deception Respondents did not violate Sections 626.611(7) or (9). Respondents did not demonstrate a lack of fitness or a lack of trustworthiness to engage in the business of insurance. Nor did they commit fraudulent or dishonest practices in their business. Respondents did not violate Sections 626.611(13) and 626.621(2). Respondents did not willfully fail to comply with applicable statutes, rules, or Petitioner's final orders. Respondents did not violate Section 626.611(5). Respondents did not willfully practice deception with regard to an insurance policy. Respondents did not violate Sections 626.621(6) and 626.9541(1) and (2). Respondents did not engage in unfair or deceptive acts or practices including misrepresentation and sliding. Respondents did not otherwise show themselves to be a source of injury or loss to the public or to be detrimental to the public interest. The Insured Mr. Carey made his choices for his own economic convenience. He was interested solely in complying with state requirements for insurance at the minimum down payment and at the minimum monthly cost. Mr. Carey was not interested in the details of the insurance he purchased. He was not interested in reading the documents he signed, and he chose not to do so. Mr. Carey does not travel frequently and has little or no need for the benefits of the ADB and hospital indemnity policies. However, he did have an economic need to obtain automobile insurance for the lowest down payment and for the lowest monthly cost. The Documents Mr. Carey signed a confirmation of coverages form disclosing his purchase of the ADB and hospital indemnity policies. The confirmation of coverage form signed by Mr. Carey expressly states that the ADB and hospital indemnity premiums are high commission items. The confirmation of coverages form made the following disclosure to Mr. Carey concerning his ADB policy: Separate in the price of some of our policies is separate coverage for accidental death and dismemberment resulting from an auto accident. Yours includes 1 THOUSAND DOLLARS coverage for 12 months and the premium is $10 . You may increase this coverage if you desire. Remember coverage is subject to the terms and conditions in the policy. If you do not wish this coverage please advise the agent. This is a high commission item that allows us to sell you auto insurance at the lowest possible premium. We will have to change your options if you do not wish this coverage. The confirmation of coverages form made the following disclosure to Mr. Carey concerning his hospital indemnification policy: Separate in the price of some of our policies is separate coverage for hospital indemni- fication resulting from an auto accident. Yours includes 1 THOUSAND DOLLARS coverage for 12 months and the premium is $100. You may increase this coverage if you desire. Remember coverage is subject to the terms and conditions in the policy. If you do not wish this coverage please advise the agent. This is a high commission item that allows us to sell you auto insurance at the lowest possible premium. We will have to change your options if you do not wish this coverage. Mr. Carey also signed an insurance application for automobile coverage with Armor Insurance, a premium finance agreement with Equity, and CTA forms including a designation of beneficiary form. Respondent, Davis, submitted each document to Mr. Carey separately. He signed each document in her presence in separate "intervals." Ms. Davis did not rush Mr. Carey through the transaction. The premium finance agreement adequately discloses the terms of financing. The agreement discloses: the types of premiums financed; the amount of premiums for each policy; a down payment of $57; an unpaid balance of $318; an amount financed of $319.40; a finance charge of $43.66; total payments of $363.06; a total sales price of $420.06; an annual percentage rate of 31.71; and nine monthly payments of approximately $40.30 each. 19/ Mr. Carey had a reasonable opportunity to read the documents he signed but declined to do so. Mr. Carey understood that by signing the confirmation of coverages form he certified that he understood the insurance he purchased even though he chose not to read the documents. Respondent, Davis, provided Mr. Carey with a copy of all of the documents that Mr. Carey signed except the confirmation of coverages form and the CTA forms. Both were available for Mr. Carey to review at the Cash Register office. 20/ Mr. Carey never requested copies of the confirmation of coverages form or the CTA forms. Nor did he object to not receiving copies of those forms. The Explanation Even though Mr. Carey did not read the documents he signed, Respondent, Davis, explained each document to Mr. Carey. Her explanation was adequate, accurate, and did not misrepresent material facts. Her explanation was consistent with the documents signed by Mr. Carey. Respondent, Davis, discussed the confirmation of coverages form with Mr. Carey, including the ADB and hospital indemnification. She explained to Mr. Carey that the ADB and hospital indemnity policies were optional. She further explained that the premium and down payment would be adjusted if Mr. Carey rejected the ADB and hospital indemnification and that an agent would have to provide a new quote to Mr. Carey. Ms. Davis reviewed the premium finance agreement with Mr. Carey. She explained the total premiums, finance charge, down payment, and monthly payments. She explained that the $100 charged in the agreement was the annual premium for the group hospital indemnity policy from Home. Ms. Davis explained that the premium for the ADB policy would not be financed but would be paid from Mr. Carey's $67 down payment. Mr. Carey recognized that he paid $67 as a down payment but received credit on the premium finance agreement for a down payment of only $57. Mr. Carey understood that the $10 difference paid for the ADB policy. Mr. Carey designated Ms. June Wilson, his mother, as the beneficiary of the ADB policy. Mr. Carey understands the meaning of a beneficiary. Mr. Carey is a high school graduate. 21/ He understands, speaks, and reads English as his primary language. At the time of the transaction, Mr. Carey was alert and was not under the influence of drugs or alcohol. Mr. Carey received his automobile insurance policy from Armor and kept the coverage until his first monthly payment was due. He failed to make the first payment and allowed the policy to lapse. Mr. Carey was covered for ADB and hospital indemnification from August 17, 1994, through August 16, 1995. Supervision Respondents did not violate Rules 4-213.100(1) and (2). Respondent, Koontz, did not fail to properly supervise Respondent, Davis, in her transaction with Mr. Carey. Neither Respondent knowingly aided, assisted, procured, advised, or abetted the other in violating applicable statutes or rules. Respondent, Davis, has extensive experience as a customer representative. She processes approximately six customers a day or approximately 1,000 to 1,500 customers a year. 22/ She has had only two complaints from customers other than Mr. Carey concerning her customary practice. Ms. Davis followed her customary practice in dealing with Mr. Carey. She did not conceal any documents from Mr. Carey, did not misrepresent material facts, and is not trained to do so by Respondent, Koontz. Apparent Authority Respondents did not violate Rule 4-213.130(5). Respondent, Davis, did not allow Mr. Carey to form the impression that she is an insurance agent rather than a customer service representative. Respondent, Koontz, did not allow Ms. Davis to create such an impression or to misrepresent herself as an insurance agent. Ms. Davis stated to Mr. Carey that if he elected to decline the ADB and hospital indemnity policies, an agent would need to quote Mr. Carey's new down payment and monthly payments. She explained to Mr. Carey that she would need to have an agent provide that information.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondents not guilty of the charges in the administrative complaints. RECOMMENDED this 17th day of December, 1996, in Tallahassee, Florida. DANIEL S. MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 17th day of December, 1996.
The Issue The issue in this case is whether Respondents have violated provisions of Section 627.837, Florida Statutes, through payment of alleged monetary inducements to insurance agents for the purpose of securing contracts which finance insurance premiums.
Findings Of Fact Petitioner is the Department of Insurance and Treasurer (Department). Respondents are Puritan Budget Plan, Inc., and Gibraltar Budget Plan, Inc., (Respondents). Findings contained in paragraphs 3- 23, were stipulated to by the parties. Stipulated Facts Common shares in Respondents' corporations were sold to insurance agent/shareholders for between $500.00 and $2,500.00 per share, depending on date purchased. Presently, and for the purposes of this litigation, marketing and/or administrative fees paid by Respondents to agent/shareholders range from $1.00 to $13.00 per contract produced, depending on the number of payments made, and the amount of the down payment. Each per contract marketing and/or administrative fee paid by Respondents to agent/shareholders is completely unrelated to the number of contracts produced by that agent/shareholder, and is based upon the characteristics of each contract, pursuant to the terms of the shareholder purchase agreement. Perry & Co., pursuant to a written agreement, manages the day to day activities of Respondents, including solicitation of new shareholder/agents. Alex Campos is currently President of Perry & Co. Perry & Co., Dick Perry or Alex Campos have no equity ownership, either direct or indirect, in Respondents corporations. No shareholder of Perry & Co. is also a shareholder in either Respondent, and no shareholder of the Respondents is a shareholder in Perry & Co. No officer or director of Perry & Co. is an officer or director of either Respondent, and no officer or director of either Respondent is an officer or director of Perry & Co. The individual management agreements between Perry & Co. and Respondents are terminable with proper notice by either party. Respondent Puritan Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Puritans' principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Respondent Gibraltar Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Gibraltar's principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Customers of Respondents are typically financing automobile insurance premiums. There is little if any variation among licensed premium finance companies in the State of Florida as to the interest rate charged to customers. In 1988, the Department inquired of Respondents' activities in relation to agent/shareholder compensation arrangements. After several meetings with representatives from Respondents, the Department closed the matter without taking any action. Also in 1988, the Department proposed the adoption of Rule 4-18.009, which in part would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes, but later withdrew the proposed rule. Again in 1994, the Department proposed a rule which would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes. After a hearing and adverse ruling by the hearing officer, the Department withdrew proposed Rule 4-196.030(8). Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in the unnecessary financing of contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in insurance agents adding or sliding unnecessary products to make the total cost of insurance more expensive and induce the financing of additional contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. An "inducement" is presently defined as "an incentive which motivates an insurance purchaser to finance the premium payment or which motivates any person to lead or influence an insured into financing the insurance coverage being purchased; or any compensation or consideration presented to a person based upon specific business performance whether under written agreement or otherwise." Rule 4-196.030(4), Florida Administrative Code (July 27, 1995). This rule is currently effective but presently on appeal. There is no evidence that Respondents unnecessarily financed any premium finance contracts or engaged in any "sliding" of unnecessary products to induce the unnecessary financing of contracts. Section 627.837, Florida Statutes, does not prohibit the payment of corporate dividends based on stock ownership to shareholders who are also insurance agents. According to the Final Bill Analysis for H.B. 2471, in 1995 the Legislature amended Section 627.837, Florida Statutes, relating to rebates and inducements. This section was amended to clarify that this statute does not prohibit an insurance agent or agents from owning a premium finance company. The statute, as amended, is silent on the issue of how owner-agents may be compensated. Other Facts Approximately 80 percent of Respondents' insureds will turn to the shareholder/agent to handle premium mailing and collection. When a shareholder/agent provides these valuable services and labor to Respondents through the servicing of the premium finance contract with an insured, payment for those services and/or recoupment of the expenses involved with their provision is made, at least in part, in the form of the marketing and administrative fees paid by Respondents to the shareholder/agent. The marketing and administrative fee payment by Respondents to shareholder/agents is made from the net profit of the corporation and represents payment of ownership interest (dividends) to shareholder/agents in addition to payment for shareholder/agent services or expenses. Respondents generally finance "non-standard" private passenger automobile insurance. Such insurance generally covers younger drivers and drivers with infraction points against their license. The average non-standard premium is $500 per year. Thirty percent of non-standard insureds will cancel their insurance prior to the renewal date. Cancellation of policies and financing arrangements by non-standard insurers require the agent to return unearned commissions, about $30 generally. In contrast, payment of an insurance premium in cash guarantees an agent his/her entire commission, an average of $90 per non-standard policy. Consequently, the financial interest of most agents is best served by cash sale of auto insurance as opposed to financing the insurance. The average amount generated by 95 percent of all premium finance contracts executed in Florida would yield an agent/shareholder approximately six dollars per contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaints. DONE and ENTERED in Tallahassee, Florida, this 28th day of November, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of November, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings 1.-11. Accepted to extent included within stipulated facts, otherwise rejected for lack of citation to the record. 12. First sentence is rejected as not substantially dispositive of the issues presented. Remainder rejected for lack of record citation if not included within stipulated facts. 13.-15. Rejected to extent not included within stipulation, no citation to record. Incorporated by reference. Rejected, no record citation, legal conclusion. 18.-19. Rejected, not materially dispositive. 20. Rejected, no record citation. 21.-23. Rejected, not materially dispositive. Rejected, record citation and relevancy. Rejected, weight of the evidence. Incorporated by reference. Respondent's Proposed Findings 1. Rejected, unnecessary to result. 2.-3. Accepted, not verbatim. 4. Rejected, unnecessary. 5.-7. Accepted, not verbatim. 8.-9. Rejected, unnecessary. 10. Accepted per stipulation. 11.-12. Rejected, unnecessary. 13. Accepted per stipulation. 14.-16. Accepted, not verbatim. Rejected, hearsay. Rejected, relevance. Rejected, unnecessary. 20.-22. Accepted per stipulation. 23. Rejected, unnecessary. 24.-57. Incorporated by reference. 58.-60. Rejected, unnecessary. 61.-62. Rejected, subordinate and not materially dispositive. 63.-67. Rejected as unnecessary to extent not included in stipulated facts. Accepted per stipulation. Rejected, unnecessary. Accepted per stipulation. 72.-76. Rejected, unnecessary. 77. Accepted per stipulation. 78.-79. Incorporated by reference. 80.-87. Accepted per stipulation. 88. Incorporated by reference. 89.-90. Accepted per stipulation. 91.-95. Rejected, subordinate. 96. Accepted. 97.-101. Rejected, unnecessary. 102. Incorporated by reference. COPIES FURNISHED: Alan Liefer, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Steven M. Malono, Esquire Cobb, Cole & Bell 131 N. Gadsden St. Tallahassee, FL 32301 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue Whether Respondent committed the offenses alleged in the Amended Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact At all times pertinent to this proceeding, Respondent was licensed as a limited surety agent pursuant to Chapter 648, Florida Statutes. At all times pertinent to this proceeding, Respondent was an agent of American Banker's Insurance Company with authority to write surety bonds and/or bail bonds. At all times pertinent to this proceeding, Respondent was doing business as, or on behalf of, a bail bond business known as A Aachen Express Bail and/or A Aachen Bail Out, 521 South Andrews Avenue, Suite 2, Fort Lauderdale, Florida. On January 13, 1999, Respondent entered into an agreement with BellSouth Advertising and Publishing Corporation that resulted in an advertisement for A Aachen Express Bail in the April 2000 Greater Fort Lauderdale BellSouth Yellow Pages. The subject advertisement contained the following: "GUARANTEED LOWEST RATES!" Underneath that statement, in smaller lettering, was the following: "ALLOWED BY LAW."1 There is only one approved bail bond rate in the State of Florida. The only bail bond rate that has been approved by Petitioner is ten percent (10%) for state bonds and fifteen percent (15%) on Federal bonds, with a minimum premium of fifty dollars. Respondent, as well as all other bail bond agents in Florida may only charge a consumer those approved rates. In addition to the foregoing bond rates, bail bond agents are authorized to impose against consumers certain incidental charges pursuant to Section 648.44(1)(i), Florida Statutes.2 It was Respondent's policy to charge ten percent (10%) for state bonds and fifteen percent (15%) on Federal bonds, with a minimum premium of fifty dollars. It was Respondent's policy not to impose any other charges against consumers, including the incidental charges authorized by Section 648.44(1)(i), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order that finds Respondent guilty of violating the provisions of Sections 648.44(6)(b) and 626.954(1)(b), Florida Statutes, and imposes against her an administrative fine in the amount of $100. It is further recommended that the other violations alleged in the Amended Administrative Complaint be dismissed. DONE AND ENTERED this 23rd day of May, 2000, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 23rd day of May, 2000.
The Issue The issues to be resolved in this consolidated proceeding concern whether the Department of Banking and Finance (Department) should take disciplinary action and impose sanction on the licensure registration previously granted to Emerald Coast Finance, Inc. (Emerald), as referenced in the legal authority cited below, as well as the issue of whether the application for a consumer finance license filed by Emerald should be granted, in view of alleged false responses given on its application for that license.
Findings Of Fact The Department is an agency of the State of Florida charged with regulating licensure of various types of financial institutions and finance- related businesses, including sales finance companies and consumer finance companies and their business practices. Emerald, at times pertinent hereto, was registered as a sales finance company pursuant to Section 520.50, Florida Statutes. Its registration number is HI-0004555. Emerald is located at 229 Beverly Parkway in Pensacola, Florida. Its mailing address is Post Office Drawer 17308, Pensacola, Florida 32522. William F. Duggan, Jr., at all times pertinent hereto, has been president, director and majority stockholder of Emerald. His address is 5568 Sound Side Drive, Gulf Breeze, Florida 32561. Mr. Duggan is thus an officer and director of the registered and applicant corporation, and the evidence establishes that he had ultimate power to direct the management or policies of the corporation, even though Ms. Godwin, as secretary and office manager, by common practice, directed the day-to-day operations of the business of Emerald. On or about September 13, 1991, the Department received an application for a sales finance company license from Emerald. Questions 1-3 on the second page of that application were not answered. Consequently, the applicant was required to submit a completed application. On or about September 30, 1991, a completed application for the sales finance company license was received from Emerald. Question no. 3 on the second page of the application for that license states as follows: Has the applicant, any of the persons listed herein, or any person with power to direct the management or policies of the applicant had a license, registration or the equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against? Yes No If yes, list such persons, give details, and provide a copy of the allegations and documentation of the final disposition of the case. Emerald's answer to question no. 3 on that application was "No". On or about December 2, 1991, the Department also received an application for a consumer finance license from Emerald. Question no. 3 on the second page of the consumer finance license application states as follows: Has the applicant, any of the persons listed herein, or any person with power to direct the management or policies of the applicant had a license, registration, or the equivalent, to practice any profession or occupation revoked, suspended or otherwise acted against? Yes No If yes, list such persons, give details, and provide a copy of the allegations and documentation of the final disposition of the case. The applicant corporation answered question no. 3 of the consumer finance license application in the negative. The Department conducted an investigation which revealed that Mr. Duggan, the applicant Petitioner and Respondent's president, had had his insurance agent's license acted against by the Department of Insurance in 1989. The prosecution by the Department of Insurance was initiated upon allegations in an Administrative Complaint concerning certain alleged fraudulent or dishonest dealings with customers by Mr. Duggan as an insurance agent. That administrative prosecution never proceeded to hearing and no findings of fact or conclusions of law were made establishing that fraudulent or dishonest conduct or similar reprehensible conduct had occurred on the part of Mr. Duggan. Rather, the proceeding culminated in a stipulated settlement embodied in a consent order whereby Mr. Duggan was fined the sum of $500.00 and placed on probation for two years by the Department of Insurance. Mr. Duggan paid the fine and was under the impression that that was the end of the matter and that he was not in a probationary status. The fact remains, however, that he did have his professional insurance agent's license acted against by the Department of Insurance. The corporation, of which he is president, majority stockholder, and for which he has the power to direct management and policies, in completing the subject license applications denied, in effect, that such a license possessed by him, as an officer, director, or person with power to direct the management or policies of the applicant had been "otherwise acted against". The Department had no knowledge of the previous action taken against Mr. Duggan's insurance license at the time the application for the sales finance company license was submitted, approved, and the subject license issued. This is chiefly because the same question on the sales finance company license application had been answered in the negative. Because of this revelation concerning the past prosecution by the Department of Insurance, the Emerald application for a consumer finance license was denied by denial letter mailed to Mr. Duggan on March 22, 1992. The Department also commenced the prosecution to revoke, suspend, or otherwise impose sanction against the sales finance company license already held by Emerald. The evidence thus establishes that Mr. Duggan is president, director, and majority stockholder of Emerald. His is the ultimate decision in the management and policies carried out by the business of Emerald. He has the power to direct management and policies of Emerald. While it is true that Ms. Godwin, due in large part to Mr. Duggan's ill health, makes the vast majority of the decisions involved in running the business, including hiring and firing of employees, major decisions such as large expenditures or purchases and any decisions he wishes to make and not delegate to Ms. Godwin are within the power of Mr. Duggan. Although by practice he lets Ms. Godwin run most aspects of the business, Mr. Duggan has the power to solely direct management and policy at Emerald if he so chooses. When Ms. Godwin filled out and completed the subject applications and answered "no" to the relevant questions, she was unaware that by answering the questions in the negative, she was being untruthful, and that, imputedly, the corporation and Mr. Duggan, its president, in making application, were being untruthful. Ms. Godwin was aware that the insurance agent's license held by Mr. Duggan personally was acted against by the Department of Insurance; however, she did not consider that he had been "convicted" of anything and was of the impression that Emerald's and her own past history, as the executor of the application and as an officer of the company, were the past licensure history to be considered in answering that question. For Mr. Duggan's part, he, no doubt ill-advisedly, allowed Ms. Godwin to complete the applications and merely signed his name at the appropriate blank, without reading them. Consequently, his error in the process of completing the applications was failing to inform himself of what questions were asked and what answers had been supplied by Ms. Godwin. In summary, however, although a misrepresentation of material fact was made, it was not shown to have been accomplished through any fraudulent intent by Ms. Godwin, Mr. Duggan, and therefore, derivatively, Emerald, the corporation. In summary, it has been established that the president, director, majority stockholder, and person with ultimate power to direct management and policies of the applicant and licensed corporations had previously had his insurance license acted against by an agency charged with regulating such licensure. It has also been established that Emerald failed to disclose that prior action on the initial sales finance company license, resulting in a grant of that license, and failed to disclose it on the application for the consumer finance license.
Recommendation Based on the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is RECOMMENDED that a Final Order be entered by the Department of Banking and Finance finding Emerald Coast Finance, Inc. guilty of violating Sections 520.53(1)(a), 520.53(3)(a) and (b), and 516.07(1)(a), Florida Statutes, and that Emerald Coast Finance, Inc.'s sales finance company license be subjected to a probationary status for a period of two years as to its License No. HI-0004555. It is FURTHER RECOMMENDED that an administrative fine in the amount of $500.00 be imposed against Emerald Coast Finance, Inc. It is FURTHER RECOMMENDED that a Final Order be entered granting the application for a consumer finance license. DONE AND ENTERED this 28th day of October, 1993, in Tallahassee, Florida. P. MICHAEL RUFF 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 28th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3393 and 92-4957 Department's Proposed Findings of Fact: 1-14. Accepted. COPIES FURNISHED: Leslie A. Meek, Esq. Office of the Comptroller State of Florida 401 North West Second Avenue, Suite 708 Miami, Florida 33128 John R. Grass, Esquire 120 South Alcaniz Street Pensacola, Florida 32501 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Floirda 32399-0350 William G. Reeves, Esquire General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
The Issue The issues for consideration are those promoted by an administrative complaint brought by the Petitioner against the Respondent in which the Petitioner alleges that the Respondent has violated various provisions of the insurance code, Chapter 626, Florida Statutes, in conducting business in Florida under licenses held with the Petitioner agency. The particulars of the administrative complaint are more completely set forth in the conclusions of law section to this recommended order.
Findings Of Fact Petitioner's exhibit 1 admitted into evidence is a document from Bill Gunter, Insurance Commissioner and Treasurer for Florida, announcing that the Petitioner, State of Florida, Department of Insurance and Treasurer, has records pertaining to the Respondent, Terry Vernon Smith, about his residence and business addresses. Those addresses are respectively, 4000 Southwest 5th Avenue, Ocala, Florida, 32670, and Silver Point Complex, Northeast 3rd Street and Silver Springs Boulevard, Ocala, Florida, 32670, effective April 9, 1979. Effective April 8, 1980, those addresses are, respectively, 4000 Southwest 5th Avenue, Ocala, Florida 32670, and 3423 Northeast Silver Springs Boulevard, Suite 5, Ocala, Florida 32670. At times relevant to the administrative complaint, Respondent was an independent insurance agent representing Nationwide Insurance in Florida. At times relevant to the administrative complaint, Respondent financed insurance premiums through Premium Service Company of Florida, Jacksonville, Florida. In this process, Respondent received from the insuring companies or through their managing or general agents, certain unearned refunds associated with three of the four contracts that the Premium Service Company of Florida had financed. That company attempted on numerous occasions to have those refunds given to it to make the company, Premium Service Company of Florida, whole concerning its exposure as finance agent for the insurance premiums. Eventually it was necessary for Premium Service Company of Florida to secure the assistance of the Petitioner agency to try to rectify the problem with the Respondent pertaining to the refunds. There was also a problem in which Respondent was responsible for paying over an unearned commission to the finance company in order to resolve a remaining balance in a customer account of Premium Service Company of Florida which had been financed by Premium Service Company of Florida. The details of the resolution of these problems with Respondent are set forth in the succeeding discussion. In the transactions involving Premium Service Company of Florida, Respondent would use that organization for premium financing by utilizing application materials furnished by the finance company. He would have the customers sign one of Premium Service Company of Florida's finance agreements in order to secure part of the payment of the premium. The finance company would prepay the premium to the insuring company on behalf of the customer to place the insurance in effect and the customers were to reimburse Premium Finance Company a monthly amount to satisfy the finance debt. One of the individuals who sought Premium Service Company of Florida's assistance in financing his insurance premium was William C. Erney. The details of that finance agreement are set forth in the composite Petitioner's Exhibit 3 admitted into evidence. On October 24, 1983, Erney completed a premium finance agreement with the Respondent's insurance agency which was known as Terry V. Smith Insurance Agency. Erney paid down $127 and financed an additional $236 through the Premium Service Company of Florida. The premium finance company was due the $236 borrowed plus documentary stamp charges and finance charges for the use of their money. The total amount to be reimbursed was $270.60. Six equal installments were to be paid at $45.10 per month starting on November 24, 1983, for Erney to satisfy his indebtedness to Premium Service Company of Florida. Erney did not make the installment payments, and as a consequence the premium finance company issued a notice of cancellation to the insuring company. The policy was cancelled effective November 24, 1983. This left the gross amount of unearned premium as $277. The net unearned refund in the policy was $242.38, which the insuring company sent to the Respondent on February 24, 1984. Respondent needed to add his unearned commission of $34.60 to the $242.38 in order to make the premium service company whole in the amount owed to it, which was $277. This total amount was not satisfied until after the premium service company had complained to the Petitioner agency on October 19, 1984, on the subject of Respondent's tardiness in remitting the $277 to the finance company. The payment which satisfied the Erney account outstanding with Premium Service Company of Florida came about on November 16, 1984, when Respondent paid that item off, together with others which will be subsequently discussed. A copy of the check paying off the account may be found as part of Petitioner's composite Exhibit 7 admitted into evidence. From March 1984 until receipt of its money in the Erney account in November 1984, the premium finance company made proper demands of the Respondent's insurance agency on a monthly basis, without positive results. On May 13, 1983, Herbert Holt bought insurance through the Respondent's insurance agency. The details of that purchase may be found in Petitioner's composite Exhibit 4 admitted into evidence. The purchase price of the insurance was $246 with a cash downpayment of $86. One hundred sixty dollars of the premium was financed through Premium Service Company of Florida, together with documentary stamps and a finance charge. Holt was to pay six equal installments of $31.65 beginning June 15, 1983, in order to pay off his financing arrangement with Premium Service Company of Florida. Holt did not honor the terms of his contract for repayment to the Premium Service Company of Florida, causing the cancellation of the policy effective October 23, 1983. That left owning to the premium finance company $76.46 for unearned refund. One hundred thirty-one dollars, the amount of gross unearned premium, had been credited to Respondent's agency effective October 1983. The premium finance company did not get its $76.46 refund from the Respondent's company until November 1984. On June 9, 1983, Edna A. Irmie purchased insurance from the Respondent's insurance agency. The cost of the policy was $299 with a cash downpayment of $104 and an unpaid balance financed in the amount of $195 plus documentary stamps and finance charges by Premium Service Company of Florida. The agreement between the premium service company and the purchaser of insurance was for a payment of six installments in the amount of $37.86 beginning July 9, 1983. The particulars of this purchase may be found in Petitioner's composite Exhibit 5 admitted into evidence. Ms. Irmie did not honor her agreement for payment of the installments in accordance with the repayment schedule, and on October 5, 1983, a notice of cancellation was issued by Premium Service Company of Florida, requesting cancellation due to nonpayment of the premium financing. The insuring company effected the cancellation on October 19, 1983, and returned a gross unearned premium in the amount of $191 to the Respondent's insurance agency in October 1983. The balance owed to the premium finance company from Respondent for its participation in the finance of the Irmie insurance was $161.44. That remittance was not presented to the premium finance company until November 1984. On June 30, 1983, D. N. S. Sharma, d/b/a Country Cupboard, purchased insurance from the Respondent's agency in which the price of the insurance was $1,003.50. Petitioner's composite Exhibit 6 admitted into evidence contains the details of this purchase. Three hundred fifty-three dollars and fifty cents was paid down and $650 plus documentary stamps and finance charges were financed through the Premium Service Company of Florida concerning this purchase of insurance. The insurance consumer was to pay six equal installments in the amount of $118.35 beginning August 1, 1983. None of the scheduled installment payments were paid, and on August 30, 1983, notice of cancellation was issued to the insurance company requesting cancellation for nonpayment of the premium financing. On October 5, 1983, $558 was received by Premium Service Company of Florida related to net unearned premiums/refund. The balance owed by Sharma related to the insurance premium financing was $720.10. This left a deficit in the amount of $77.13 which was due the finance company from the Respondent's unearned commission. That money from the Respondent was not received until November 1984 as a part of the settlement of all the aforementioned premium finance cases. The balance of the money owed to the premium service company, $720.10, excluding the net unearned refund and the Respondent's unearned commission, was written off as a bad debt loss when the Premium Service Company was unable to get the purchaser to pay the difference between $720.10 and the $635.51 collected in the two categories described. The settlement check was written in the amount of $592.03, which is set forth in Petitioner's Exhibit 7 admitted into evidence. In the Petitioner's composite Exhibit 7 which includes a copy of the check satisfying the Premium Service Company of Florida on the various accounts set forth recently, there is a copy of the letter which accompanied the check, and in this letter Smith acknowledges the lateness of payment in these accounts. His acknowledgment is confirmation of inordinate and unacceptable delay in the payment of monies to Premium Service Company of Florida which should have been presented much earlier. Respondent, in his association with Nationwide Insurance, was involved with that affiliation for seven years. During that time, his supervisor from Nationwide Insurance was Kenneth Collett. As established by the witness Collett, on September 20, 1985, Linda L. Humbertson purchased automobile insurance through the Respondent's agency from Nationwide Insurance. She paid $103.10 for the policy. That policy was later cancelled for nonpayment of the premium, when in fact Ms. Humbertson had paid the $103.10 for the insurance premium to Respondent's insurance agency. Petitioner's exhibit 8 admitted into evidence contains a receipt dated September 20, 1985, in the amount of $103.10 pertaining to the automobile insurance purchased by Humbertson and signed with the Respondent's name as receiving those moneys. What had happened in this instance is that Humbertson had renewed her insurance with Nationwide by paying the premium payment to Respondent's agency and that money had not been remitted to Nationwide. According to Collett, and his testimony is accepted, it was incumbent upon Respondent in the ordinary course of business to send the premium payment to Nationwide as Respondent had done in the past; however, in this situation with Humbertson, Respondent did not remit as required. Subsequently, Humbertson's policy which had been cancelled was reinstated and Respondent's account on commissions with Nationwide was debited for future commissions earned to make up the $103.10. On December 11, 1984, Econsul Corporation of Ocala, Florida, purchased a workers compensation policy from the Respondent's agency through Nationwide. The $785 check paid to the Respondent's agency may be found as Petitioner's exhibit 10. Respondent never submitted the application for the workers compensation insurance after completing the application form, nor the check related to the insurance purchase. This circumstance was later discovered by Collett. The consequence of the failure to submit the application form was that Econsul was without workers compensation coverage from December 11, 1984, through August 2, 1985. The Econsul premium payment of $785 was placed in the checking account of Respondent's insurance agency. On October 28, 1985, and again on November 7, 1985, Collett, in behalf of Nationwide, inquired of the Respondent concerning the whereabouts of the check from Econsul for workers compensation benefits. Respondent did not reply to these letters. The letters are set out in Petitioner's composite Exhibit 9 admitted into evidence. Subsequently, Nationwide Insurance Company charged a minimum premium to Econsul to comply with the laws related to workmen's compensation and refunded the balance of its premium payment, Econsul having made other arrangements for workmen's compensation insurance. The money which was associated with the coverage for Econsul in the requisite period for compliance with workmen's compensation was charged against the commission account of the Respondent, thereby satisfying the demands of Nationwide. From the evidence presented, it is inferred that Respondent is licensed by Petitioner to sell insurance in Florida.
