The Issue Whether petitioner has standing to challenge Rule 4-154.106(8)(c), Florida Administrative Code, pursuant to Section 120.56, Florida Statutes? If so, whether the rule is an invalid exercise of delegated legislative authority? Whether either party is entitled to attorney's fees?
Findings Of Fact The Challenged Rule Rule 4-154.106(8)(c), Florida Administrative Code, ("the challenged Rule") reads as follows: A policy which provides coverage for any one or more of the following services shall be considered a limited benefit policy if it either provides coverage for a benefit period of one year or less for each covered service, or provides coverage for only one of the following services; otherwise, such a policy shall be considered a long-term care policy as defined in s. 627.9404: Nursing home; Nursing service; Adult congregate living facility; Home health agency; Adult day care center; Adult foster home; Community care for the elderly; Personal care and social services. Petitioner's Ex. No. 2. New on January 1, 1975, and initially numbered Rule 4-37.06, the rule was amended on May 17, 1989. At the time of the amendment, the rule listed as specific authority "627.643, 624.308, 627.9407(1), Florida Statutes," id, and as law implemented "627.642, 627.643, 627.9404(1), Florida Statutes. The Parties Guarantee Trust Life Insurance Company is an insurance company which does business in Florida and is regulated by Respondent, the Department of Insurance. Guarantee Trust had and does issue insurance policies in those lines and kinds of insurance governed by the challenged rule. The Department of Insurance is the state agency invested with the responsibility of enforcing the provisions of the state Insurance Code and executing the duties imposed upon it by the code. Section 624.307(1), Florida Statutes. It is conferred with discretion to "adopt reasonable rules necessary to effect any of [its] statutory duties." Section 624.308, Florida Statutes. Standing A recent insurance policy filing by Petitioner was denied by the Department. Among the grounds for denial contained in a "letter of deficiencies" was one based on the policy's violation of the challenged rule. At the time of hearing, the Department had attempted to amend the letter of deficiencies by motion to eliminate application of the challenged rule to the policy filing as a ground for its denial. But the motion had not been ruled on by the time of hearing, having been filed only six or seven days earlier. Although the Department has not yet made an effort to provide general notice to the companies it regulates that it has or will cease relying on the challenged rule, the Department's current practice with regard to the rule is that it is not enforcing the rule. Consistent with this practice, the Department has received filings that it would not have approved had it been applying the challenged rule. Yet, these filings, four or five in number, have been approved. Instructions have been issued within the Department not to apply the challenged rule to filings. Consistent with the instructions with regard to application of the challenged rule, the Department is uniformly applying the change in policy. There is no insurance company subsequent to the policy change and decision to no longer apply the rule whose policy has been denied on the basis of application of the challenged rule. In the case of Petitioner's disapproved filing now the subject of a Section 120.57 proceeding, non-compliance with the challenged rule "no longer exists as a deficiency" (Tr. 43) in the view of the Department.
The Issue Whether Respondent's insurance agent licenses should be disciplined because selling a commercial note to an unqualified elderly person on February 11, 1999, demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Sections 626.611(7), Florida Statutes.
Findings Of Fact Petitioner is the state agency responsible for regulating and licensing the sale of insurance in Florida, in accordance with the provisions of Chapter 626, Florida Statutes. Respondent, Kevin Ira Frye, is currently eligible for licensure and licensed in the this state as a health insurance agent, life insurance agent, life and health insurance agent, and life, including variable annuity agent, pursuant to licensure number A090874, and was so licensed at all times relevant to these proceedings. In the fall of 1998, Juanita Crouch of Spring Hill, Florida, expressed an interest in purchasing a long-term care insurance policy by responding to a solicitation she received in the mail from Respondent's agency. In response to her inquiry, Respondent came out to her home to discuss the insurance. Ms. Crouch at this time was a 75-year-old retired homemaker and widow. Her only income was $1,100 a month stipend from her deceased husband's social security and her interest income from two Certificates of Deposit (CDs). She did not graduate from high school. She had never worked outside of the home, being a homemaker all of her life; her husband handled all of the family finances prior to his death. She does not own any stocks, bonds or any other investments. Mrs. Crouch resides in a home purchased for her by her daughter, Linda Bruno-Lagos, and placed in her name through a recorded Articles of Agreement. Mrs. Crouch could not be considered a sophisticated investor. In addition, her health was poor, and her memory was some-what impaired. Mrs. Crouch possessed $25,000 deposited in two bank CDs that were coming due during the relevant time period. Mrs. Crouch was looking for a investment with a reasonable rate of interest so that she could deposit the funds in order to augment her small income. This $25,000 represented her only savings. Respondent, at this time, became aware that the CDs were coming due and during their next appointment, solicited Mrs. Crouch to take her $25,000 in savings and purchase a commercial promissory note to be issued by First American Capital Trust (FACT). FACT uses the proceeds from the issuance of the notes to fund the medium credit purchases of vehicle loans secured by perfected liens on new and used automobiles and light trucks. Respondent represented to Mrs. Crouch that, by purchasing the FACT note, she would be investing in a guaranteed financial instrument similar to a bank Certificate of Deposit. Mrs. Crouch would enjoy a 9.75 percent guaranteed interest rate on her investment over a nine-month period. Respondent gave Mrs. Crouch various brochures, including a document entitled "Disclosure Statement." The brochures purported to show that the investment was fully insured and guaranteed. No provision of this disclosure statement was ever explained by Respondent to Mrs. Crouch, including the disclosure warning by FACT that this investment was "inherently risky." Mrs. Crouch testified that she did not understand the information and was relying on Respondent's representations. This testimony is credible. Respondent testified that he purposely avoided explaining any provision of the disclosure statement. Respondent believed that it was Mrs. Crouch's sole responsibility to read the brochures and understand the details of the investment. In fact, Respondent testified that telling potential investors that they could lose all of their money was something he didn't discuss, as it might discourage sales. Respondent left the brochures explaining the investment with Mrs. Crouch to read and review, which she did not do. Respondent was aware, or should of been aware, that Mrs. Crouch, given her age and financial circumstances as a retiree, desired to place her funds only in safe, low risk, investments. Mrs. Crouch did not meet the suitability standards to purchase the FACT note, as set forth in the disclosure statement prepared by FACT. FACT required potential investors to have either a net worth of $1,000,000, or an annual income in excess of $200,000 a year, or in the alternative, no more that 20 percent of an individuals total assets could be invested. The application submitted by Respondent lists her net worth as between $150,000 and $250,000. Mrs. Crouch's actual net worth is significantly less than this sum. Respondent prepared the application, which Mrs. Crouch signed, and he determined the estimate of Mrs. Crouch's net worth. Respondent was either aware or should have been aware that Mrs. Crouch did not have such a net worth as was listed on her application, and, therefore, did not meet FACT's eligibility requirements. She should not have been sold the note. Mrs. Crouch elected to invest her $25,000 with FACT to purchase the note. On February 11, 1999, she gave the funds to Respondent, which was promptly remitted to FACT. On March 8, 1999, FACT issued a Certificate of Commercial Note, at the full redemption value of $26,961.35 in the name of Juanita Crouch, with a maturity date nine months from the date of the note. In December of 1999, Mrs. Crouch received a letter from FACT informing her that FACT had filed for bankruptcy protection on September 30, 1999. A receiver has been appointed who is attempting to recover assets. Mrs. Crouch never received any return on her purchase of the FACT note. She filed a claim in the U.S. Bankruptcy Court, but with the exception of two small payments from the receiver, she has never received any payments on the note. She has apparently suffered a loss of most, if not all, of her principal of $25,000. Mrs. Crouch, relying on Respondent's representations, thought she was purchasing a note that would pay a fixed yield with very low risk. What she unknowingly purchased was a commercial note that carried a warning from FACT that "extending credits to retail buyers with medium credit ratings is inherently risky." Mrs. Crouch was clearly unaware of this risk and Respondent made no attempt to make her aware. Despite the representations made to Mrs. Crouch by Respondent, at no time was her investment insured or guaranteed by the Federal Deposit Insurance Corporation, or any insurance company, nor any other entity. In fact, the Disclosure Statement states that the private insurance covers the vehicle loans only and not the notes directly. Respondent failed to disclose to Mrs. Crouch that her note and investment was not insured, even though he testified that he was aware of and understood that the note itself was not insured at the time of the sale. Respondent has been a licensed insurance agent since December 9, 1997, and was employed by Senior American Insurance and Financial Services. Respondent has not previously been disciplined by Petitioner.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED as follows: Respondent, Kevin Ira Frye, be found guilty of violating Section 626.611(7), Florida Statutes. Pursuant to Rule 4-231.080, Florida Administrative Code, Respondent's licenses and eligibility for licensure be SUSPENDED for a period of six months, followed by a two-year period of probation upon such reasonable conditions as the Department may require. DONE AND ENTERED this 6th day of February, 2003, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 6th day of February, 2003. COPIES FURNISHED: James A. Bossart, Esquire Department of Financial Services 200 East Gaines Street, Room 612 Tallahassee, Florida 32399-0333 Sidney Werner, Esquire Piper, Ludian, Howie & Werner, P.A. 5720 Central Avenue St. Petersburg, Florida 33707 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether, for the reasons alleged in the Administrative Complaint dated February 10, 1984, the Petitioner should revoke the Respondent's license and eligibility for licensure as an insurance agent or impose some lesser penalty authorized by statute.
Findings Of Fact Based on the testimony of the witnesses and the exhibits admitted into evidence, I make the following Findings of Fact: 1/ On June 16, 1982, the Respondent, Shelby Dewey Blackman, executed an Application for Qualification as Nonresident Life Agent, which application he thereafter caused to be filed with the Petitioner, Department of Insurance and Treasurer. In that application Mr. Blackman stated that his residence address and his business address in his state of residence were both "2549 New York Avenue, Pascagoula, Miss. 39567." (Pet. Ex. 1; Tr. 12-13) The Department of Insurance and Treasurer does not issue Nonresident Life Agent licenses to people who are in fact residents of the State of Florida. Such licenses are only issued to people who are nonresidents of this state. Applicants for Resident Life Agent licenses are required to take an examination prior to licensure. Applicants for Nonresident Life Agent licenses are not required to take an examination prior to licensure. The Department would not have issued a Nonresident Life Agent license to Mr. Blackman if the Department had known that Mr. Blackman was a Florida resident. (Tr. 14) As a result of the filing of the application described above, the Department issued to Mr. Blackman a license as a Nonresident Life and Health Agent for the American Sun Life Insurance Company, which was the only company he was authorized to write insurance for in the State of Florida. When Mr. Blackman received his license, the license listed the name of the the only company he was authorized to write insurance for in this state. Licensees who are authorized to represent more than one insurance company in this state receive a separate license for each company they are authorized to represent. Mr. Blackman had only the one license to represent one company. (Pet. Ex. 1 and 2; Tr. 14-18) At all times material to this case, Mr. Blackman was a resident of Santa Rosa County, Florida. Specifically, Mr. Blackman was a resident of Santa Rosa County, Florida, at the time he applied for and was issued a Nonresident Life and Health Agent license and at the time of writing the four insurance applications which are described hereinafter. (Pet. Ex. 3; Tr. 20-21, 53) Continental Bankers Life Insurance Company of the South does not currently hold, and has never held, a Certificate of Authority to write insurance in the State of Florida. In November of 1982 Continental Bankers Life Insurance Company of the South was licensed to write insurance in the State of Alabama and Mr. Blackman was authorized by Continental to write insurance for Continental in the State of Alabama. (Pat. Ex. 8; Tr. 24-25) During November of 1982, Mr. Blackman wrote four applications for health insurance policies to be issued by the Continental Bankers Life Insurance Company of the South. One was an application dated November 2, 1982 from Mr. Thomas J. Barrow. Another was an application dated November 4, 1982, from Mr. Jimmie R. Williams. The last two were applications dated November 12, 1982, from Mr. Henry E. Marshall and Mr. Ercy L. Henderson, respectively. All four of the applications were written and signed in Jay, Florida. No part of the transactions which culminated in the writing of the four applications took place in the State of Alabama. On three of the applications Mr. Blackman wrote that the application was written and signed in Brewton, Alabama, and on one of the applications Mr. Blackman wrote that the application was written and signed in Flomaton, Alabama. The statements that the applications were written and signed in Alabama were false statements that Mr. Blackman knew to be false statements. (Pet. Ex. 4, 5, 6, 7; Tr. 37-38, 42, 49, 53-54) The false statements written on the four applications described above were relied upon by the Continental Bankers Life Insurance Company of the South and were, therefore, material misrepresentations. If Mr. Blackman had truthfully written on the applications that they were written and signed in the State of Florida, Continental would not have issued policies on the basis of those four applications because Continental was not licensed to write insurance in the State of Florida. The MM-6 policy is an insurance policy that Continental markets in Alabama and the false statements on the applications which indicated that the policies were applied for and completed in Alabama induced Continental to issue the policies. (Tr. 25-27, 32, 34-35)
Recommendation For all of the reasons set forth above, and particularly because of Mr. Blackman's demonstrated disregard for the truth, I RECOMMEND that the Department of Insurance and Treasurer enter a Final Order revoking Mr. Blackman's license and eligibility to hold a license. DONE AND ORDERED this 31st day of July, 1984, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 904/488-9575 Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1984.
The Issue The issue is whether Respondent is guilty of discrimination in employment on the basis of age.
Findings Of Fact Petitioner Boots is 56 years old. Prior to his termination, he had been employed in the life insurance business by Respondent or its predecessors for over 20 years. Until early 1988, Petitioner's employer was Security Trust Life Insurance Company. During that year, Respondent or its parent, Southlife Holding Company, purchased the assets or stock of Security Trust Life Insurance Company. In any event, the result from Petitioner's point of view was that Respondent became his new employer. Following the change in ownership, the operations of the two companies were combined. Prior and subsequent to the merger of operations, Petitioner was the manager of the Orlando district office, which was primarily involved in the sale of debit insurance. The physical turnover of operations in the Orlando office took place on or about March 7, 1988. Prior to this date, representatives of Respondent had conducted meetings with the employees of Security Trust Life Insurance Company and discussed with them, among other things, the compensation that they could expect to receive as employees of the new company, especially during the start-up period. Following the merger, Petitioner believed that Respondent was not living up to the promises that it had made to him and the employees under his supervision. Unable to reach his immediate supervisor, Petitioner called Ted Lazenby, who is president and chairman of the board of Southlife Holding Company. Petitioner voiced his complaints to Mr. Lazenby. Following the telephone conversation, Mr. Lazenby contacted Petitioner's immediate supervisor, Frank Gregor, and expressed his displeasure with Petitioner and his attitude. Mr. Gregor consulted with his immediate supervisor, James C. Bellamy, who is the senior vice president of Respondent. Messrs. Gregor and Bellamy had previously discussed Petitioner's attitude that Respondent was poorly managed and cheap with its employees. Messrs. Gregor and Bellamy had already discussed Petitioner's record with Respondent. In general, it was not good, and the Orlando district did not show signs of the kind of growth necessary for a successful debit insurance business. Petitioner's production record was the worst in the division and the region. The manager of the next-worst district was also fired. With Mr. Lazenby's complaint as a catalyst, Messrs. Gregor and Bellamy decided to terminate Petitioner. The following morning, Mr. Gregor visited Petitioner in the Orlando office and fired him, citing Petitioner's poor record combined with questionable judgment in complaining to the head of the holding company. Respondent replaced Petitioner with a 44 year old man, who had been assistant manager of the Orlando office.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Petition for Relief filed by Petitioner be dismissed. ENTERED this 16th day of June, 1989, in Tallahassee, Florida. ROBERT E. MEALE 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 on this 16th day of June, 1989. APPENDIX Treatment Accorded Proposed Findings of Petitioner 1-7 Adopted or adopted in substance. There was a conflict in testimony between Mr. Gregor and Petitioner as to when the merger took place. Mr. Gregor's testimony has been given the greater weight, but the difference is immaterial to the outcome of the case. 8-9 Rejected as subordinate to the finding that Petitioner's performance was substandard. Rejected as against the greater weight of the evidence. Adopted. Rejected as irrelevant. Treatment Accorded Proposed Findings of Respondent 1 Adopted 2-3 Rejected as legal argument. 4-6 Adopted. Rejected as recitation of testimony. Adopted. Rejected as irrelevant and subordinate. 10-12 Adopted in substance. 13-15 Rejected as subordinate. 16. Rejected as recitation of testimony. COPIES FURNISHED: Donald A. Griffin Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1925 Dana Baird, Esquire General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1925 Margaret Agerton, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1925 N. James Turner Buso & Turner, P.A. 17 South Lake Avenue, Suite 104 Orlando, FL 32801 Joseph A. Woodruff Waller Lansden Dortch & Davis 2100 One Commerce Place Nashville, TN 37239
Findings Of Fact Petitioner is the state agency charged with licensing insurance agents of all types, regulating licensure status, and enforcing the practice standards of licensed agents within the powers granted by the Legislature in Chapter 626, Florida Statutes. At all times material to the disciplinary action, Respondent Mahle was licensed as an insurance agent in the following areas: Life and Health Insurance and Health Insurance. During the last quarter of the year 1988, New Concept Insurance, Inc. mailed brochures to residents of Naples, Florida, which stated that representatives of the company were willing to provide information about long- term care insurance, including nursing facility benefits, to interested parties. Those who wanted to learn more about the insurance were asked to return their name, address and telephone number to the company on an enclosed card. Eleanor Drown responded to the advertisement, and an appointment was arranged for Thomas DiBello and Respondent Mahle to meet with her regarding the insurance program. On November 10, 1988, Thomas DiBello and Respondent Mahle met with Ms. Drown and discussed the benefits of a long-term care policy with a nursing facility daily benefit of one hundred dollars ($100.00). After the discussion, Ms. Drown completed an application for the insurance and gave it to Respondent Mahle, along with a check for five thousand one hundred and eighty-three dollars and forty-nine cents ($5,183.49). During the insurance transaction on November 10, 1988, Ms. Drown was given a receipt which states: This receipt is given and accepted with the express understanding that the insurance you applied for will not be in force until the policy is issued and the first premium is paid in full. If your application cannot be approved, we will promptly refund your money. Application is made to the company checked (/) on this receipt. On another area of the receipt, it is clearly written, as follows: If Acknowledgement of Application does not reach you within 20 days, write to: Mutual Protective Insurance Company, 151 South 75th Street, Omaha, Nebraska 68124. The Respondent Mahle did not forward the application and the check completed by Ms. Drown to Mutual Protective Insurance Company. The check issued by Ms. Drown to Mutual Protective Insurance Company was deposited into the account of New Concept Insurance, Inc. A cashier's check for the same amount of money was issued by New Concept Insurance, Inc. to Ms. Drown on March 7, 1989. The letter from New Concept that was mailed with the check represented that the check was the refund of the money paid to Mutual Protective Insurance Company by Ms. Drown. Mitigation An application for long-term care insurance from a different insurance company was sent to Ms. Drown by Respondent Mahle on March 2, 1989. Although this course of conduct was not directly responsive to the duties owed by the Respondent to Mutual Protective Insurance Company or his customer, Ms. Drown, it does demonstrate a concern about the insurance needs requested by the customer. This conduct also reveals that there was no intention to convert the funds received to the Respondent's own use, and it explains some of the delay in the return of the premium funds to the customer. The Respondent has been an insurance agent for twenty years. This was the only complaint against the Respondent the Hearing Officer was made aware of during the proceedings. The allegations in the Complaint involve a single insurance transaction.
Recommendation Accordingly, it is RECOMMENDED: That the Respondent be found guilty of one violation of Section 626.561(1), Florida Statutes, and one violation of Section 626.611(7), Florida Statutes, during a single insurance transaction. That the Respondent pay an administrative penalty of $500.00 for the two violations of the Insurance Code within thirty days of the imposition of the penalty. That the Respondent be placed upon six month's probation. During this probation period, he should file a report with the Department demonstrating the manner in which he intends to keep accurate business records which assure him, the insurance company, and the customer that he is continuously accounting for premium funds and promptly carrying out his fiduciary responsibilities. That the Respondent's requests for licensure dated October 10, 1989 and May 18, 1990, be granted. DONE and ENTERED this 12th day of September, 1990, in Tallahassee, Leon County, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of September, 1990. APPENDIX TO RECOMMENDED ORDER IN CASE No. 89-6040 The Petitioner's proposed findings of fact are addressed as follows: Accepted. See HO #2. Accepted. See HO #2. Accepted. Accepted. See HO #5. Accepted. See HO #5. Accepted. See HO #5. Accepted. See HO #5. Rejected. Conclusion of Law. Rejected. See HO #6. Accepted. See HO #7. Accepted. See HO #7. Accepted. See HO #7. Accept that Ms. Drown's funds remained in the insurance agency's financial accounts for four months. Reject that the interest bearing ability of these funds is relevant in any manner to this case. Respondent's proposed findings of fact are addressed as follows: Accepted. See HO #3 and #4. Accepted. See HO #5. Accepted. See HO #5. Accepted. See HO #5. Accepted. Rejected. This testimony was rejected by the hearing officer as self serving. It was not found to be credible. Rejected for the same reasons given immediately above. Accepted, but not particularly probative. Rejected. Contrary to the testimony of Ms. Drown which was believed by the hearing officer. Accepted. Rejected. Contrary to the testimony of Ms. Drown which was believed by the hearing officer. Accept that an application for Penn Treaty Insurance was sent to Ms. Drown on this date. Accepted. Rejected. Contrary to the testimony of Ms. Drown which was believed by the hearing officer. Rejected. Self serving. Not believed or found to be credible by the hearing officer. Accepted. See HO #9. COPIES FURNISHED: C. Christopher Anderson III, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Mark P. Smith, Esquire GOLDBERG, GOLDSTEIN & BUCKLEY, P.A. 1515 Broadway Post Office Box 2366 Fort Myers, Florida 33902-2366 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, Esquire Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue Whether the Respondent's licenses as an insurance agent should be disciplined for violations alleged in an Administrative Complaint of February 12, 1993?
Findings Of Fact At all times relevant to this proceeding, the Respondent, Samuel Bannister Love, was licensed in the State of Florida by the Department of Insurance and Treasurer (hereinafter referred to as the "Department"), as a life and health insurance agent and as a general lines insurance agent. On April 7, 1993, Florida Life Insurance Agency, Inc. (hereinafter referred to as "Florida Life"), was organized as a corporation in the State of Florida. From the time of Florida Life's formation until at least 1992, Mr. Love was an officer and director of Florida Life. Mr. Love was also an authorized signatory on the premium bank account of Florida Life. On August 15, 1994, Florida Life entered into an agency agreement (hereinafter referred to as the "Agency Agreement"), with Service Insurance Company (hereinafter referred to as "Service Insurance"). Pursuant to the Agency Agreement, Florida Life agreed to act as agent for Service Insurance and to receive and accept proposals for insurance on behalf of Service Insurance. For acting as agent, Florida Life was to receive a commission. Among other things, the Agent Agreement provided: TRUST AGREEMENT The Agent has full power and authority to collect, receive and receipt for premiums on insurance tendered by the Agent [Florida Life] to and accepted by the Company [Service Insurance]. All moneys paid by the policyholders to the Agent, or to anyone representing him shall be held by and chargeable to the Agent as a fiduciary trust for and on behalf of the Company, and shall be paid over to the Company as herein provided. Accounts of money due the Company on the business placed by Agent with the Company shall be rendered by the Company monthly; the balance therein shown to be due to the Company shall be paid not later than 45 days after the end of the month for which the account is rendered. Accounts of money due the Agent on the business shall be payable monthly and shall be paid by the Company not later than 45 days after the end of the month in which the amount became due. Mr. Love signed the Agency Agreement as an officer of Florida Life. Mr. Love registered with the Department as agent for Service Insurance for the period April 1, 1987 to December 30, 1988. Mr. Love was the only officer or director of Florida Life to register with the Department as agent for Service Insurance. In December, 1988, due to failure of Florida Life to remit premiums due to Service Life pursuant to the Agency Agreement, even after demand therefore, Service Life terminated the Agency Agreement. The total amount of premiums owed by Florida Life to Service Life after termination of the Agency Agreement was $84,088.15. Service Life and Florida Life eventually agreed that Service Life would be paid $47,000.00 as a settlement of Service Life's claims against Florida Life for unpaid premiums due under the Agency Agreement. Florida Life subsequently paid $22,000.00 of the $47,000.00 settlement to Service Life and a promissory note (hereinafter referred to as the "Note") for the $25,000.00 balance was entered into by Florida Life. Mr. Love did not personally sign the Note. In July, 1991, the Department entered an Administrative Complaint against Mr. Love as a result of the dispute between Service Life and Florida Life. This dispute was resolved by a Settlement Stipulation for Consent Order entered into by the Department and Mr. Love on January 14, 1991 (hereinafter referred to as the "Settlement"). Pursuant to the Settlement, Mr. Love was to pay an administrative fine and he was placed on probation subject to the following condition: That as a condition of probation Respondent shall use good faith and best efforts to facilitate payment by Florida Life Insurance Agency, Inc., to the Service Insurance Co. of Bradenton, Florida the sum of $25,000.00 together with interest at the rate of 9 percent per annum in accordance with the terms of the promissory note by Florida Life Insurance Agency, Inc., in favor of Service Insurance Company dated November 20, 1991 (copy attached). A copy of the Note was attached to the Settlement. The Settlement Agreement further provided: Violation of the conditions of probation as set forth in this Settlement Stipulation for Consent Order, or failure to pay on the debt owed to Service Insurance Company pursuant to the terms of the previously mentioned promissory note, shall result in immediate agency action seeking revocation of Respondent's licenses, which may result in revocation or other censure commensurate with the violation. . . . Pursuant to the conditions of Mr. Love's probation, he specifically agreed in paragraph (e) of the Settlement that his licenses with the Department could be revoked if he failed to adhere to the condition of paragraph (d) (to use his best efforts to see that Florida Life paid the Note) of the Settlement or if he failed to pay the debt owed to Service Insurance. Paragraph (e) of the Settlement and the Consent Order provided, however, the following: Notwithstanding anything to the contrary contained herein, the Respondent reserves and does not waive the right to assert all of his defenses to the violations alleged in the Administrative Complaint filed herein. The Settlement also provided: 7. By execution of this Settlement Stipulation for Consent Order and by the entry of the subsequent Consent Order in this case, the Department and the Respondent intend to and do resolve all issues which pertain to this matter in Case No. 91-L- 324JB, excpt as otherwise stated herein. Pursuant to the Settlement, a Consent Order was entered by the Department on February 6, 1991. The Consent Order specifically states that the Settlement "is hereby approved and fully incorporated herein by reference." In paragraphs (d) and (e) of the Consent Order the conditions of Mr. Love's probation set out in findings of fact 13, 14 and 16 are specifically included. The Note provided that the principal of the Note was to be paid on November 11, 1992. Florida Life failed to make this agreed payment. Demand for payment on the Note was made to Mr. Love. Mr. Love has not made any payment on the Note. As of the date of the final hearing, the premiums due to Service Insurance as represented in the Note have not been paid by Florida Life, Mr. Love or any other person. Florida Life has ceased operating and apparently does not have funds to pay the Note. In this proceeding, the Department has entered an Administrative Complaint containing two counts. Count I alleges several violations of Chapter 626, Florida Statutes, based essentially on the events which led up to the Settlement. Count II alleges that Mr. Love has violated the terms of the Settlement and Consent Order. Pursuant to the Settlement, as quoted in finding of fact 17, the Department and Mr. Love expressly agreed that the Settlement was intended to resolve all issues related to this matter. Based upon the language of the Settlement quoted in findings of fact 14 and 16, however, it appears that the parties may have intended that the Department would be required to prove the underlying facts of this matter in order to take further action against Mr. Love. The Department apparently agrees with the later interpretation in light of the fact that the Department, through Count I of the instant Administrative Complaint, has alleged that Mr. Love has committed the violations which the parties had attempted to resolve by the Settlement and the Consent Order. No objection to Count I has been raised by Mr. Love. Therefore, Count I will be considered and the Settlement and Consent Order will be interpreted to require proof of the violations alleged in Count I in order to discipline Mr. Love's licenses. Based upon the foregoing findings of fact, the Department has proved that Florida Life failed to keep premiums of Service Insurance in a separate account, and that Florida Life failed to pay Service Insurance those premiums. The Department also proved that Mr. Love, who registered on behalf of Florida Life with the Department as agent for Service Insurance, failed to keep premiums of Service Insurance in a separate account and failed to pay Service Insurance those premiums. Based upon the foregoing findings of fact, the Department has also proved that Florida Life demonstrated a lack of fitness or trustworthiness to engage in the business of insurance. The evidence failed to prove that Florida Life's actions were fraudulent or were the result of dishonest practices. The evidence proved that Florida Life misappropriated, converted or withheld unlawfully moneys belonging to Service Insurance. Although Mr. Love attempted to prove that he was not involved in the running of Florida Life, his legal authority and position with Florida Life does not absolve him from responsibility. Mr. Love was an officer and director of Florida Life and he had authority over the premiums account of Florida Life. Most importantly, Mr. Love, and only Mr. Love, held himself out as the insurance agent on behalf of Service Insurance. Mr. Love is now retired and does not intend to become active in the insurance business. Mr. Love has had no other charges brought against his insurance licenses, except those arising out of the Agency Agreement, during the more than twenty years that Mr. Love has held insurance licenses.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Office of the Treasurer and Department of Insurance enter a Final Order finding that Samuel Bannister Love has violated Sections 626.561(1), 626.611(7), 626.611(10), 626.611(13), 626.621(2) and 626.621(4), Florida Statutes. It is further RECOMMENDED that the allegation of Count I of the Administrative Complaint that Mr. Love violated Section 626.611(9), Florida Statutes, be DISMISSED. It is further RECOMMENDED that the Final Order find that Mr. Love violated the terms and conditions of his probation as agreed in the Settlement in violation of Section 626.611(13), Florida Statutes. It is further RECOMMENDED that the allegation of Count II of the Administrative Complaint that Mr. Love violated Section 626.611(7), Florida Statutes, be DISMISSED. It is further RECOMMENDED that Mr. Love's insurance licenses be suspended for a period of three years or until the Note is paid, which ever occurs first. Should the Note not be paid in full within the period of the suspension of Mr. Love's licenses, Mr. Love's insurance licenses should be revoked after the period of the suspension. DONE AND ENTERED this 3rd day of November, 1993, in Tallahassee, Florida. LARRY J. SARTIN 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 3rd day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-1473 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Department's Proposed Findings of Fact Accepted in 1. Accepted in 2-3. Accepted in 4-5. Accepted in 7. Accepted in 3. Accepted in 8 and hereby accepted. Accepted in 8. Accepted in 9. Hereby accepted. Accepted in 10. Accepted in 11 and hereby accepted. Accepted in 12-15 and 18. Accepted in 19. Accepted in 20-21. Accepted in 21. Accepted in 20 and hereby accepted. Accepted in 24. See 25-26. Mr. Love's Proposed Findings of Fact 1-2, First Page: Argument or not supported by the weight of the evidence. Second and Third Pages: Not relevant or not supported by the weight of the evidence. Argument, not relevant or not supported by the weight of the evidence. See 28. COPIES FURNISHED: James A. Bossart, Esquire Division of Legal Services Department of Insurance and Treasurer 612 Larson Building Tallahassee, Florida 32399-0333 Samuel Bannister Love 10835 South East Sunset Harbor Road Summerfield, Florida 34491 Tom Gallagher, Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
Findings Of Fact Respondent John Richard Klee is licensed by Petitioner as a disability insurance agent in the State of Florida. At all times material to these facts he has been so licensed. Mr. Klee was employed by the Interstate Insurance Agency for approximately 9 years. During that time Interstate wrote insurance for the Guaranty Trust Life Insurance Company and for the Founders Life Insurance Company. While an independent agent working through the Interstate Agency, Mr. Klee, on April 10, 1981 sold a hospital indemnity insurance policy through the Guaranty Trust Company to Marie D. Grantley. Subsequently, Mr. Klee left the Interstate Agency and began employment with the Diversified Health Insurance Company which writes policies for the American Guaranty Life Insurance Company. After he had begun his new employment, Mrs. Grantley called him in October, 1981 to, get assistance in determining what her benefits were under the Guaranty Trust Company policies. 1/ On October 13, 1981 Mr. Klee went to Mrs. Grantley's home to explain her coverage as it applied to her current medical bills. At that meeting Mr. Klee solicited and received her application for a medicare supplemental policy unwritten by American Guaranty Life Insurance Company. The new policy covered certain expenses such as out-patient medical bills which were not covered by the existing Guaranty Trust policies. During their discussion about the new policy, Mr. Klee explained to Mrs. Grantley that the new policy was to provide her supplemental coverage in addition to that which she already had under the Guaranty Trust policies. He did not tell her that the new policy was a direct replacement of the Guaranty Trust policies. Additionally, he did not tell her that she should cease paying the premium on her Guaranty Trust policies. These findings are the pivotal factual issues in the case. Mrs. Grantley's testimony which was received through a deposition 2/ is to the contrary. Mr. Klee's testimony that he thoroughly explained the coverage of the new policy and how it did not replace the existing Guaranty Trust Life policies is accepted as more credible than Mrs. Grantley's contrary testimony. This determination is based on the demeanor of Mr. Klee at the final hearing and on the apparent weakness of Mrs. Grantley's memory of the transaction as shown in her deposition. When Mr. Klee met with Mrs. Grantley, he gave her all the information she needed to reasonably understand the nature of the new policy she was applying for as it related to her existing policies. He did not represent to her that the American Guaranty Company was in any way related to the Guaranty Trust Company. When Mr. Klee took Mrs. Grantley's application for the American Guaranty Life Insurance policy, he gave her a receipt for three months' premium of $206.65. The receipt indicated that Mr. Klee is with the Diversified Health Agency and that the policy was to be issued by American Guaranty Life Insurance Company. Mrs. Grantley signed the American Guaranty Life Insurance Company application which indicated that the new coverage being applied for did not replace existing accident and sickness policies then in force. At the time Mrs. Grantley signed the application, Mr. Klee reasonably believed that she understood what she was doing. The check which Mrs. Grantley drew to pay for the first three months' premium on the new policy was made out to Diversified Health Services. Subsequent to her application for the American Guaranty Life policy, Mrs. Grantley called Mr. Gerald Schectman who had been Mr. Klee's supervisor at the Interstate Insurance Agency. She told Mr. Schectman that she was confused about her insurance coverage. Several days later, Mr. Schectman went to visit her at her home. She told him that she wanted to retain her original coverage purchased through the Interstate Agency and did not want the new American Guaranty Policy. As she recalled her transaction with Mr. Klee, she believed that he had told her that Guaranty Trust Life Insurance Company was being taken over by the American Guaranty Company or that they were otherwise the same company. When Mr. Schectman heard her version of Mrs. Grantley's transaction with Mr. Klee, he took her to the Insurance Commissioner's Office to file a complaint against the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance enter a Final Order dismissing the Amended Administrative Complaint filed against John Richard Klee. DONE and RECOMMENDED this 1st day of June, 1983, in Tallahassee, Florida. MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 1983.
